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Table of Contents
 PageArticle 1
    
    (Definitions)
    
    
    1Article 2
    
    (Transaction Structure)
    
    
    12Article 3
    
    (Lease)
    
    
    13Article 4
    
    (Delivery)
    
    
    13Article 5
    
    (Prior conditions regarding delivery)
    
    
    14Article 6
    
    (Related documents)
    
    
    15Article 7
    
    (Payment of lease payment etc.)
    
    
    16Article 8
    
    (Immunity from defect liability)
    
    
    19Article 9
    
    (Burden of loss, damage and risk)
    
    
    20Article 10
    
    (Representation of Owner)
    
    
    21Article 11
    
    (Quiet Enjoyment)
    
    
    22Article 12
    
    (Installation and Use)
    
    
    22Article 13
    
    (Possession and Sublease)
    
    
    22Article 14
    
    (Maintenance Management)
    
    
    23Article 15
    
    (Change in Original Condition)
    
    
    23Article 16
    
    (Ownership of Parts)
    
    
    24Article 17
    
    (Inspection)
    
    
    24Article 18
    
    (Obligations)
    
    
    24Article 19
    
    (Insurance)
    
    
    25Article 20
    
    (Representations and Warranties)
    
    
    26Article 21
    
    (Covenants)
    
    
    27Article 22
    
    (Indemnity and Expenses Liabilities)
    
    
    29Article 23
    
    (Number of individual transactions and change of deliverable period)
    
    
    31Article 24
    
    (Purchase Options)
    
    
    31Article 25
    
    (Return)
    
    
    32Article 26
    
    (Termination of Agreement)
    
    
    35Article 27
    
    (Default Interest)
    
    
    39Article 28
    
    (Transfer of Rights and Obligations)
    
    
    39Article 29
    
    (Limitations on Recourse to the Property)
    
    
    40Article 30
    
    (Notices, etc.)
    
    
    42Article 31
    
    (Communication of Intention or Reporting of Facts or Receipt thereof by
each Lessor)
    
    
    42




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PageArticle 32
    
    (Modification of Agreement)
    
    
    42Article 33
    
    (Confidentiality)
    
    
    42Article 34
    
    (Governing Law)
    
    
    43Article 35
    
    (Jurisdiction)
    
    
    43




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Attachment 1
    
    Lease Terms and ConditionsAttachment 2
    
    Request for Lease and ApprovalAttachment 3
    
    Loan CertificateAttachment 4
    
    Permitted LiensAttachment 5
    
    Certificate of ReturnAttachment 6
    
    Certificate of TransferAttachment 7
    
    Conditions at the Time of ReturnAttachment 8
    
    Notification address




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1
    
    Unless the context makes it clear that the term has a different meaning, the terms
in the left column below, used in this Agreement, shall have the meanings set forth in
the right column below, corresponding to the relevant terms.
 SD Group Companies
    
    San Disk Corporation and companies of which San
Disk Corporation directly or indirectly owns
50% or more of their voting stocksSD Tranches
    
    Collectively refers to SD Tranche 1-A, SD
Tranche 1-B, SD Tranche 1-C, and SD Tranche 2,
and individually, each SD Tranche.SD Tranche 1-A
    
    SD Tranche 1-A composed pursuant to Article 7,
Paragraph 1 in relation to lease payments and
other claims under this Agreement.SD Tranche 1-AB
    
    Collectively, SD Tranche 1-A and SD Tranche 1-B.SD Tranche 1-B
    
    SD Tranche 1-B composed pursuant to Article 7,
Paragraph 1 in relation to lease payments and
other claims under this Agreement.SD Tranche 1-C
    
    SD Tranche 1-C composed pursuant to Article 7,
Paragraph 1 in relation to lease payments and
other claims under this Agreement.




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SD Tranche 2
    
    SD Tranche 2 composed pursuant to Article 7,
Paragraph 1 in relation to lease payments and
other claims under this Agreement.SD Lessor RA
    
    A person who named as the SD Lessor RA in
Attachment 1 Item 15.Reason for cancellation
    
    Any of all of the reasons stipulated in Article
26, Paragraph 1Loan certificate
    
    Loan certificate for the Property prepared for
each individual transaction in a manner
provided in Attachment 3 pursuant to Article
4, Paragraph 5Stipulated loss payment
    
    Amount calculated for each Tranche on a certain
day in accordance with Attachment 1, Paragraph
9Taxes and public dues
    
    Present or future tax, levy, withholding tax,
fees, handling fees, monetary obligations as
well as other monies (regardless of their
names) and penalties, default assessments,
surcharges, late charges and late interest
thereon (regardless of their names) imposed by
a tax authority or public office (both domestic
and foreign)Bank Business Day
    
    Days on which banks operate in JapanPayment for exercise of
purchase options
    
    Amount
calculated pursuant to Attachment 1, Paragraph 6 with respect to each Tranche for
each lease payment dateIndividual transaction
    
    Each individual transaction to be conducted
pursuant to this Agreement and each loan
certificateOriginal Purchase
Agreement
    
    Each purchase agreement executed between Lessee
and a property manufacturer in connection with
the purchase of the PropertySublessee
    
    Person who holds a sublease pursuant to the
stipulation in Article 13Repayment standard fee
    
    Amount calculated pursuant to Attachment 1,
Paragraph 8 for the return date stipulated in
Article 25, Paragraph 1
 - 2 -




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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 the PropertyReason for total loss
    
    Any of the following incidents that occur to
the Property or its unit component or component
part: (a) Loss or whereabouts unknown (b)
damage or failure, reasonably recognized by
Lessee as impossible to repair or reuse from an
economic viewpoint, which is confirmed by an
appraisal company appointed by Lessor or (c)
confiscation, expropriation or theftLoss, etc.
    
    Losses, damage, costs, fees, handling fees,
liabilities, responsibilities, penal charges,
penalties, delinquency charges, claims and
lawsuitsUnit component part
    
    A set of each property (including subject parts
fixed to or furnished with said property)
listed by serial number separately in each loan
certificate of the Property. Provided, however,
that when a part or unit component part subject
to said individual transaction is excluded from
this Agreement, the remaining unit component
part/s shall compose unit component parts
subject to the said individual transaction
thereafter.Bankruptcy proceedings, 
etc,
    
    General term referring to bankruptcy, civil
rehabilitation or corporate reorganizations and
other bankruptcy proceedingsToshiba group companies
    
    Toshiba Corporation and companies of which
Toshiba Corporation directly or indirectly owns
50% or more of their voting sharesToshiba Tranches
    
    Collectively refers to Toshiba Tranche 1-A,
Toshiba Tranche 1-B and Toshiba Tranche 2, and
individually, each Toshiba Tranche.
 - 3 -




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Toshiba Tranche 1-A
    
    Toshiba Tranche 1-A composed pursuant to
Article 7, Paragraph 1 in relation to lease
payments and other claims under this Agreement.Toshiba Tranche 1-AB
    
    Collectively, Toshiba Tranche 1-A and Toshiba
Tranche 1-BToshiba Tranche 1-B
    
    Toshiba Tranche 1-B composed pursuant to
Article 7, Paragraph 1 in relation to lease
payments and other claims under this Agreement.Toshiba Tranche 2
    
    Toshiba Tranche 2 composed pursuant to Article
7, Paragraph 1 in relation to lease payments
and other claims under this Agreement.Toshiba Lessor RA
    
    A person who named as the Toshiba Lessor RA in
Attachment 1 Item 15.Tranches
    
    Collectively, SD Tranches and Toshiba Tranches,
and individually, each Tranche.Delivery Period
    
    Period from the day of the execution of this
Agreement to the final deliverable date
stipulated in Attachment 1, Item 1 (provided
however, when there is an agreement between
Lessor and Lessee to extend the delivery period
pursuant to Article 4, Paragraph 8, the period
shall be such agreed delivery period).Delivery place
    
    Place, on each scheduled delivery day, where
the Property or its unit component part is
located, which the Lessee notifies the Lessor
on a Banking Business Day immediately prior to
the relevant scheduled delivery day.Delivery date
    
    Date on which each unit component part
composing the Property is delivered pursuant to
Article 4.Scheduled delivery date
    
    Each day stipulated in Attachment 1, Paragraph
1 as a scheduled delivery date for each
individual transaction or other bank business
day as agreed upon by Lessee and Lessor.
 - 4 -




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Person to be compensated
    
    Lessor, the Borrower, or the Lender and all or
either of successor, director, employee or
agent thereof.Obligation 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 rights and rights based on
attachment or provisional attachment.Property purchase price
    
    Sales price determined by Article 3, Paragraph
1 of the Master Sale and Purchase Agreement
with respect to the Property or its each unit
component part.Property manufacturer
    
    Person indicated in the column manufacturer
on an itemized property list attached to a loan
certificate.Cause of default
    
    Cause of cancellation or cancellation by
notification or cause of cancellation as a
result of passing of time or other conditions.
 - 5 -




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Break funding cost
    
    Damages or penalty or other monies (provided,
however, that if Lessee has doubts about other
monies, Lessor, Lessee and the Lender shall
negotiate) borne by each Lessor with respect to
raising funds for purchasing the Property upon
nonperformance or early termination of a lease,
pursuant to this Agreement. Such amount shall
be calculated based on the aggregate of (1) the
amount calculated by the relevant Lessor
pursuant to its prescribed calculation method
pursuant to the difference between the funding
cost (shown in per annum) applicable to each
Lessor in respect of its own share of the
purchase price of the Property and the
reinvestment rate in the market of the relevant
Lessor, (2) the amount calculated by the SD
Receivables Assignee pursuant to its prescribed
calculation method pursuant to the difference
between the funding cost (shown in per annum)
applicable to the SD Receivables Purchaser in
respect of the claims of the purchase price of
the Property related to SD Tranche 1-C and the
reinvestment rate in the market of the SD
Receivables Assignee, and (3) the amounts of
the damages or penalties or other monies the
Lenders impose on the Borrowers pursuant to the
Loan Agreements in relation to the failure to
drawdown or the acceleration, etc., under the
Loan Agreements (provided however, if Lessee
has doubts about other monies, Lessor, Lessee
and the Lenders shall consult with each other).Return Adjustment Fee
    
    Amount to be calculated pursuant to Attachment
1, Paragraph 7 with respect to the return date
stipulated in Article 25, Paragraph 1.The Lenders
    
    Collective term for the SD Lenders and Toshiba
Lenders.The SD Lenders
    
    Collective term for persons listed as the SD
Lenders in Attachment 1, Paragraph 11.
 - 6 -




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The Toshiba Lenders
    
    Collective term for persons listed as the
Toshiba Lenders in Attachment 1, Paragraph 11.Toshiba Lender Agent
    
    The person named as Toshiba Lender Agent
in Attachment 1, Item 11.The Loan Agreements
    
    Collective term for the SD Loan Agreement and
the Toshiba Loan Agreement.The SD Loan Agreement
    
    Collective term for Revolving Loan Agreement
(SD Tranches 1-AB) concluded between the SD
Borrower and the SD Lender on the same date as
the execution of this Agreement and its
Acknowledgement of Debts and Repayment
Agreement thereunder.The Toshiba Loan Agreement
    
    Collective term for Revolving Loan Agreement
(Toshiba Tranches 1-AB) concluded between the
Toshiba Borrower, Toshiba Lender, and Toshiba
Lender Agent on the same date as the execution
of this Agreement and its Acknowledgment of
Debts and Repayment Agreement thereunder.The Borrowers
    
    Collective term for the SD Borrower and the
Toshiba Borrower.The SD Borrower
    
    Persons listed as SD Borrower in Attachment 1,
Paragraph 12The Toshiba Borrower
    
    Persons listed as Toshiba Borrower in
Attachment 1, Paragraph 12All Parties Agreement
    
    Agreement setting forth priority executed by
the Lenders, the Toshiba Lender Agent,
Administrative Custodian, Lessor, the Borrowers
and the SD Receivables Assignee on the same
date as this Agreement
 - 7 -




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Related Agreements
    
    This Agreement, Sale and Purchase Agreement,
Sale and Purchase Agreement regarding
Receivables, SD Receivables Assignment
Agreement, All Parties Agreement, Master
Agreement on Security Assignment regarding
Claims, Master Agreement on Commitment for
Security Assignment regarding Claims,
Administrative Services Agreement, Guarantee
Agreement, Letter of Agreement, agreements and
other documents related theretoMaster Agreements on 
Security Assignment 
regarding Claims
    
    Collective term for SD Master Agreement on
Security Assignment regarding Claims and
Toshiba Master Agreement on Security Assignment
regarding ClaimsSD Master Agreement on 
Security Assignment 
regarding Claims
    
    Collective term for Master Agreement on
Security Assignment regarding Claims (SD
Tranches 1-AB) executed between the SD Borrower
and the SD Lenders on the same date as this
Agreement regarding the right to claim
performance of guaranteed obligations with
respect to (i) claims associated with SD Tranches 1-AB under this Agreement and (ii)
claims associated with SD Tranches 1-AB under
this Agreement based on SD Guarantee Agreement
and each individual agreement based thereon.Toshiba Master Agreement 
on Security Assignment 
regarding Claims
    
    Collective term for Master Agreement on
Security Assignment regarding Claims (Toshiba
Tranches 1-AB) executed between the Toshiba
Borrower and the Toshiba Lender on the same
date as this Agreement regarding the right to
claim performance of guaranteed obligations
with respect to (i) claims associated with
Toshiba Tranches 1-AB under this Agreement and
(ii) claims associated with Toshiba Tranches
1-AB under this Agreement based on Toshiba
Guarantee Agreement and each individual
agreement based thereon.
 - 8 -




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Sale and Purchase
Agreements regarding
Receivables
    
    Collective term for SD Sale and Purchase
Agreement regarding Receivables and Toshiba
Sale and Purchase Agreement regarding
ReceivablesSD Sale and Purchase
Agreement regarding
Receivables
    
    Collective term for Sale and Purchase Agreement
regarding Master Lease Receivables (SD Tranches
1-AB) executed between the SD Lessors and the
SD Borrower on the same date as this Agreement
regarding the right to claim performance of
guaranteed obligations with respect to (i)
claims associated with SD Tranches 1-AB under
this Agreement and (ii) claims associated with
SD Tranches 1-AB under this Agreement based on
the SD Guarantee Agreement and each individual
agreement based thereonToshiba Sale and Purchase
Agreement regarding
Receivables
    
    Collective term for Sale and Purchase Agreement
regarding Master Lease Receivables (Toshiba
Tranches 1-AB) executed between the Toshiba
Lessors and the Toshiba Borrower on the same
date as this Agreement regarding the right to
claim performance of guaranteed obligations (i)
claims associated with Toshiba Tranches 1-AB
under this Agreement and (ii) claims associated
with Toshiba Tranches 1-AB under this Agreement
based on the Toshiba Guarantee Agreement and
each individual agreement based thereonSD Receivables Assignment 
Agreement
    
    Collective term for Master Lease Receivables
Purchase and Sale Agreement (SD Tranche 1-C)
executed between the SD Lessors and the SD
Receivables Assignee on the same date as this
Agreement regarding the right to claim
performance of guaranteed obligations for (i)
claims associated with SD Tranche 1-C under
this Agreement and (ii) claims associated with
SD Tranche 1-C under this Agreement based on
the SD Guarantee Agreement and each individual
agreement based thereon.
 - 9 -




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SD Receivables Assignee
    
    The persons listed as SD Receivables Assignee
in Attachment 1, Item 13.The Administrative 
Services Agreement
    
    Collective term for SD Administrative Services
Agreement and Toshiba Administrative Services
AgreementSD Administrative 
Services Agreement
    
    SD Administrative Services Agreement concluded
between the SD Lessors and the Administrative
Custodian on the same date as this AgreementToshiba Administrative 
Services Agreement
    
    Toshiba Administrative Services Agreement
concluded between the Toshiba Lessors and the
Administrative Custodian on the same date as
this AgreementAdministrative Custodian
    
    Collectively means the SD Administrative
Custodian and the Toshiba Administrative
Custodian.SD Administrative 
Custodian
    
    The persons listed as SD Administrative
Custodian in Attachment 1, Item 15.Toshiba Administrative 
Custodian
    
    The persons listed as Toshiba Administrative
Custodian in Attachment 1, Item 15.Letter of Agreement
    
    Letter of consent by the Guarantors and Lessees
in a specified form with respect to assignment
of receivables based on each Agreement on
Security Assignment regarding Claims and
establishment of the right to complete
commitment for security assignment based on the
Agreement on Commitment for Security Assignment
regarding ClaimsMaster Sale and Purchase
Agreement
    
    Collective term for Master Sale and Purchase
Agreement with respect to the Property executed
between Lessee and Lessor on the same date as
this Agreement and each individual agreement
based thereon.
 - 10 -




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The Property
    
    Each unit component (including subject parts)
in each individual transaction reported by
Lessee to Lessor pursuant to Article 4,
Paragraph 1 of Master Sale and Purchase
Agreement, confirmed by the request for lease
and approval to be submitted five (5) bank
business days prior to the relevant individual
transaction (or if agreed otherwise between
Lessee and Lessor, such date as agreed), a
certificate of transfer, receipt and loan
certificate delivered on the delivery date for
said individual transaction. Provided, however,
that if some portion of unit components is
excluded from this Agreement due to the
occurrence of total loss, or by exercise of
purchase options, the remaining unit components
shall constitute the Property thereafter.Master Agreement on 
Commitment for Security 
Assignment regarding 
Claims
    
    Collective term for Master Agreement on
Commitment for Security Assignment regarding
Claims concluded between Lessor and the Lenders
on the same date as this Agreement and
individual agreements pursuant theretoParts
    
    Equipment and parts composing a unit component,
and/or equipment, accessories, attachments and
parts (including collection of parts and parts
of similar kinds) fixed to or furnished with
the PropertyThe Guarantee Agreements
    
    Collective term for SD Guarantee Agreement and
the Toshiba Guarantee AgreementSD Guarantee Agreement
    
    Guarantee Agreement concluded between SanDisk
and the SD Lessors on the same date as this
AgreementToshiba Guarantee 
Agreement
    
    Guarantee Agreement concluded between Toshiba
and the Toshiba Lessors on the same date as
this AgreementThe Guarantors
    
    Collectively refers to SanDisk and ToshibaSanDisk
    
    Person/s described as SanDisk in Attachment 1,
Paragraph 14.
 - 11 -




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Toshiba
    
    Person/s described as Toshiba in Attachment 1,
Paragraph 14Waived obligations, etc.
    
    Obligations, etc. excluded pursuant to Article
18, Paragraph 1Lease period
    
    Period starting on delivery date stipulated in
Attachment 1, Paragraph 2. Provided, however,
that if this Agreement is cancelled before
expiration, the lease period shall terminate on
such cancellation day.Lease period expiration 
date
    
    The last day of a lease periodLease payment
    
    Lease payment determined for each unit
component of each Tranche pursuant to
Attachment 1, Paragraph 3Lease payment calculation 
period
    
    Period stipulated in Attachment 1, Paragraph 5Lease payment date
    
    Date stipulated in Attachment 1, Paragraph 4
 2
    
    With respect to quoting other agreements and documents in this Agreement, if the
relevant agreements and documents are revised, added or changed after the Agreement was
initially executed, they shall mean the relevant agreements and documents after they were
revised, added or changed.3
    
    With respect to quoting provisions in this Agreement, the provisions shall mean,
unless otherwise specially stated, the provisions of this Agreement.4
    
    With respect to referring to parties to the related agreements to this Agreement,
the parties shall also include their successors and accredited assignees.
  1
    
    Lessee and Lessor confirm that transactions listed in Attachment 1, Paragraph 16 are
planned with respect to the Property and they are inextricably linked with each other.2
    
    Lessee confirms that Lessor has the ownership of the Property during the lease
period under this Agreement.
 - 12 -




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1
    
    Pursuant to Master Sale and Purchase Agreement, Lessor shall receive from Lessee
each unit component composing the Property on each delivery date and, in the meantime,
shall lease said unit component to Lessee.2
    
    A lease of the Property and each unit component under this Agreement shall exist
for each individual transaction during its lease period and it shall commence from the
issuance date of each loan certificate pursuant to Article 4, Paragraph 5. Except where
explicitly provided in this Agreement, a lease of the Property shall neither be cancelled
nor terminated prior to its lease expiration date.3
    
    Lessee shall pay the lease payment pursuant to Article 7, Paragraph 2 as
compensations for the lease under this Agreement.4
    
    Lessee shall have the right to quiet enjoyment of the Property pursuant to Article
11 and other provisions of this Agreement.
  1
    
    Lessee shall designate a scheduled date to deliver each unit component composing
the Property to Lessor pursuant to Attachment 1, Paragraph and Lessee shall submit to
Lessor the request for lease and approval in the form of Attachment 2 at least five (5)
bank business days prior to the scheduled delivery date. Lessor shall confirm and agree
on the contents and conditions of the request for lease and approval received from
Lessee, and thereupon shall deliver to Lessee the relevant request for lease and approval
after printing its name and sealing it.2
    
    Subject to the satisfaction of the conditions set forth in Article 5, and to
receive from Lessee a unit component on each delivery date at a delivery location in
accordance with Master Sale and Purchase Agreement, Lessor shall deliver said unit
component in as is, where is condition to Lessee on the same date and at the same
location for the purpose of the leasing stipulated in the previous Article, and Lessee
shall receive said unit component from Lessor.3
    
    If it becomes necessary to change any scheduled delivery date, Lessee shall notify
Lessor to that effect as soon as possible (at the latest by 5 bank business days prior).
Lessee and Lessor shall agree on each amount of lease payment, payment for exercise of
purchase options, Return Adjustment Fee, repayment standard fee and stipulated loss payment for
each individual transaction, based on the actual property purchase price of and delivery
date for said unit component. In such case, the agreed amount of lease payment, payment
for exercise of purchase options, Return Adjustment Fee, repayment standard fee and
 - 13 -




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stipulated loss payment, together with the actual property purchase price and the
delivery date, shall be documented and attached to each loan certificate in the form
specified in Attachment 3.4
    
    Lessee shall bear the cost and liabilities (including break funding cost; further,
if Lessee bears the liability for break funding cost in accordance with this Agreement,
Lessee shall pay the amount calculated based on the definition stipulated in Article 1
for each Tranche. Provided however, if respective amounts and payment periods for each
Tranche are different, they shall be appropriately adjusted. Hereinafter, the same in
this Agreement.) incurred as a result of a change of delivery date or delayed or failed
delivery (excluding cases where the cause is attributable to Lessor, the SD Receivables
Assignee or the Lenders).5
    
    Lessee shall prepare and deliver to Lessor a loan certificate in the form specified
in Attachment 3 as the delivery of each unit component takes place pursuant to the above
Paragraph 2.6
    
    Delivery of each unit component as part of leasing in each individual transaction
under this Agreement shall be deemed complete by delivery of a loan certificate
referenced in the preceding paragraph. Lessee may use each unit component from such
delivery date of said loan certificate.7
    
    Lessee shall bear all the cost of delivering the Property under this Article.8
    
    In the event where delivery of the Property is not completed during a delivery
period in accordance with Article 4 Paragraph 2, Lessee and Lessor shall faithfully
negotiate a possibility of extending such delivery period.
  Lessors obligation to deliver each unit component for each individual transaction under
Article 4 is conditional upon meeting the following conditions before the scheduled
delivery date. Provided, however, that this shall not apply if Lessor notifies Lessee
before completion of delivery that Lessor waives these conditions.
 (1)
    
    That no event has occurred by a scheduled delivery date that triggers
Lessor or Lessee to expect changes in laws, orders, notices or other legal,
administrative guidance or tax changes that, in light of the purpose [of the
transaction], Lessor or
Lessee reasonably considers appropriate reasons to suspend or postpone the
execution of such transaction planned in accordance with the related agreements, or
that such transaction is illegal. (However, if Lessor or Lessee determines that an
event applicable under this Item has occurred, Lessor or Lessee shall immediately
 - 14 -




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notify and negotiate with the other party.)(2)
    
    That Lessee has purchased from a manufacturer of the Property said unit
components before such scheduled delivery date from a manufacturer in accordance
with the Original Purchase Agreement, and Lessee has acquired the ownership thereof
without incurring any obligations etc. (excluding waived obligations).(3)
    
    That said unit component is insured under Article 19 by an insurance that
is effective as of said scheduled delivery date.(4)
    
    That no events of default have occurred.(5)
    
    That no events have occurred that cause Lessor to determine that events
constituting a total loss or leading to a total loss of said unit component.(6)
    
    That related agreements to which Lessor or Lessee shall be a party are
signed by all the parties, issued and continued to be in effect.(7)
    
    That representations and warranties by Lessee under Article 20 are
entirely correct as of said scheduled delivery date under existing conditions on the
same day.(8)
    
    That no significant change has been added to the FLASH PARTNERS MASTER
AGREEMENT executed on September 10, 2004 between the Guarantors and SanDisk
International Limited, or that this Agreement has not been cancelled, dissolved or
terminated, and that there is no such material risk to the extent known to Lessee.(9)
    
    That the long-term loan rating of SanDisk by Standard & Poors Rating
Services or Moodys Investors Service is BB- or above Ba3, respectively, as of said
scheduled delivery date.
  1
    
    Lessee and Lessor shall take steps necessary for execution of this Agreement and
other related agreements and for authorization required to carry out obligations under
this Agreement by the date of execution of this Agreement or each delivery date and, in
the meantime, shall exchange certificates of seal impression for the seals used in these
agreements (issued within three months prior to each signing), certified copy of company
registration (issued within three months prior to the day of each signing) and Articles
of Incorporation (valid as of the date of signing of this Agreement).2
    
    Lessee shall submit the following documents to Lessor by each scheduled delivery
date:
 (1)
    
    Insurance certificate for said unit component designated in Article 19(2)
    
    Original Letter of Agreement, notarized and dated, for said unit
component(3)
    
    Other documents reasonably requested by Lessor
 - 15 -




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1
    
    Lessee and each Lessor agree that monetary claims of Lessor against Lessee in the
form of lease payment, stipulated loss payment, Return Adjustment Fee, payments for
exercise of purchase options and other payments connected to each individual transaction
under this Agreement comprise Tranche 1-A, SD Tranche 1-B, SD Tranche 1-C, SD Tranche 2
and Toshiba Tranche 1-A and Toshiba Tranche 1-B. Each Tranche regarding each individual
transaction shall consist of claims obtained by dividing such monetary claims by a rate
provided in the loan certificate for said individual transaction. Further, a specific
amount for each Tranches in the form of lease payment, stipulated loss payment, Return
Adjustment Fee and payment for exercise of purchase options for each individual
transaction shall be determined by Attachment 1, Paragraph 3, Paragraph 6, Paragraph 7
and Paragraph 9 of this Agreement and the loan certificate related to said individual
transaction.In addition, (i) claims related to lease payment, stipulated loss payment,
Return Adjustment Fee, and payment for exercise of purchase options regarding each
SD Tranche shall be attributed to only the SD Lessors (each SD Lessor holds claims
divided by the ratio of its share of the Property), and money for such claims shall
be paid only to the SD Lessors, and (ii) claims related to lease payment, stipulated
loss payment, Return Adjustment Fee, payment for exercise of purchase options
regarding each Toshiba Tranche shall be attributed to only the Toshiba Lessors (each
Toshiba Lessor holds claims divided by the ratio of its share of the Property), and
money for such claims shall be paid only to the Toshiba Lessors.2
    
    Lessee shall, for each individual transaction, make a lease payment to Lessor for
the lease payment calculation period that ends on each payment date by 11 am on such
payment date.3
    
    In the event that the day that Lessee is supposed to make payment in any amount
that Lessee has payment obligations for each individual transaction under this Agreement
on a day other than a bank business day, with respect to such lease payment, stipulated
loss payment, Return Adjustment Fee, and payment for exercise of purchase options, Lessee
shall make payment on the following bank business day (if the following bank business
day falls in next month, then use the previous bank business day shall apply). With
respect to the lease payments, such payment amount shall be adjusted accordingly. With
respect to other payments, payments shall be made on the following bank business day and
such payments shall not be adjusted.
 - 16 -




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##### 



4
    
    The amount that Lessee owes under this Agreement shall be paid according to
provisions set forth in Attachment 1, Paragraph 10(2), unless as otherwise agreed by the
parties concerned. However, lease payment, stipulated loss payment, payment for exercise
of purchase options and Return Adjustment Fee, Break Funding Cost and the related late
fees thereto due under this Agreement regarding each SD Tranche shall be paid to the SD
Borrower, and lease payment, stipulated loss payment, payment for exercise of purchase
options and Return Adjustment Fee, Break Funding Cost, and the related late fees thereto
due under this Agreement regarding each Toshiba Tranche shall be paid to the Toshiba
Borrower, in accordance with Attachment 1, Paragraph 10(1). Lessee confirms that in
connection with receiving said payments into the bank account of the Borrowers, the SD
Lessors and the SD Receivables Assignee have delegated to the SD Borrower, and the
Toshiba Lessors have delegated to the Toshiba Borrower, and each Borrower has accepted
such delegations. If such delegation is terminated by prior written notice by the SD
Lessors, the SD Receivables Assignee or Toshiba Lessors to the SD Borrower or the Toshiba
Borrower, Lessor shall notify Lessee to that effect by at least one bank business day
prior to the first lease payment due date after such termination. (In such case, with
respect to lease payment, stipulated loss payment, payment for exercise of purchase
options and Return Adjustment Fee, Break Funding Cost and the related late fees thereto
due under this Agreement, the amount with respect to SD Tranches 1-AB shall be paid in
the bank account of each SD Lender provided in Attachment 1, Paragraph 10(2); the amount
with respect to SD Tranche 1-C shall be paid in the bank account of the SD Receivables
Assignee provided in Attachment 1, Paragraph 10(2); the amount with respect to Toshiba
Tranches 1-AB shall be paid in the bank account of each Toshiba Lender provided in
Attachment 1, Paragraph 10(2); the amount with respect to SD Tranche 2 shall be paid in
the bank account of each SD Lessor provided in Attachment 1, Paragraph 10(2); and the
amount with respect to Toshiba Tranche 2 shall be paid in the bank account of each
Toshiba Lessor provided in Attachment 1, Paragraph 10(2).).5
    
    Pursuant to this Agreement, Lessee is obliged to pay Lessor in full amount without
any deduction, offsetting or defense regardless of any reasons (except where Lessor, the
SD Receivables Assignee or the Lenders are responsible), including defective performance
etc. by the Property, obligations against the Property, infringement against use of the
Property or bankruptcy proceedings of the parties concerned. If Lessee is required by
decree to withhold tax for the applicable payment, Lessee shall make an additional
payment that is needed to ensure the amount that the receiving party would have received
should such withholding have not been necessary.
 - 17 -




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6
    
    If a lease pursuant to this Agreement for each individual transaction is terminated
on a day other than its lease payment date, regardless of the occurrence of a total loss
of the Property or its unit component, cancellation, exercising of purchase options or
return options by Lessee or other reasons (except where Lessor, SD Receivables Assignee
or the Lenders are responsible for causing such termination), Lessee shall pay break
funding cost to Lessor on said termination day.7
    
    If the amount that Lessee has paid to Lessor or the amount received by Lessor by
disposition of the Property under this Agreement is less than the total amount of
Lessees debts due on said payment date or receipt date under this Agreement for
liquidation, such amount shall be appropriated to each debt in the following order.
However, the claims of the same priority shall be distributed proportionally according to
the amount of debt corresponding to the claims of the same priority each Lessor holds.
 (1)
    
    Amount Lessee is required to pay Lessor under the related agreements
(provided however, excluding items listed in sub-paragraphs (2) through (7) of this
paragraph).(2)
    
    Default interest related to lease payment, stipulated loss payment,
Return Adjustment Fee, payment for exercise of purchase options due under SD
Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB.(3)
    
    As between lease payments and stipulated loss payments with respect to SD
Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB, the amount equivalent to
lease payment interest (each amount due under said Tranche, provided in Attachment
1, Paragraphs 3 1 (2), 2 (2), 3 (2), 5 (2) and 6 (2), and Attachment
1, Paragraphs 9 (3), (6), (9), (15) and (18) specified in the loan certificate for
each individual transaction).(4)
    
    Break funding cost regarding SD Tranches 1-AB, SD Tranche 1-C and Toshiba
Tranches 1-AB.(5)
    
    As between lease payments and stipulated loss payments with respect to SD
Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB, the amount equivalent to
the original principal of the lease payments (each amount due under the relevant
Tranche, provided in Attachment 1, Paragraphs 3 1 (1), 3 (1), 3 (1), 5
(1) and 6 (1) and Attachment 1, Paragraphs 9 (1), (2), (4), (5), (7), (8), (13),
(14), (16) and (17) specified in the loan certificate for each individual
transaction), or
amount equivalent to payments for exercise of purchase options or Return Adjustment
Fees.(6)
    
    Default interest on lease payment, stipulated loss payment, and payment
for exercise of purchase options related to SD Tranche 2 and Toshiba Tranche 2.
 - 18 -




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##### 



(7)
    
    As between lease payments and stipulated loss payments with respect to SD
Tranche 2 and Toshiba Tranche 2, the amount equivalent to lease payment interest
(each amount due under the relevant Tranche provided in Attachment 1, Paragraphs 3
4 (2) and 7 (2) and Attachment 1, Paragraphs 9 (12) and (21) specified in the loan
certificate for each individual transaction).(8)
    
    Break funding cost regarding SD Tranche 2 and Toshiba Tranche 2.(9)
    
    As between lease payments and stipulated loss payments with respect to
SD Tranche 2 and Toshiba Tranche 2, the amount equivalent to the original principal
of lease payments (each amount due under the relevant Tranches provided in
Attachment 1, Paragraphs 3 4 (1) and 7 (1) and Attachment 1, Paragraphs 9 (10),
(11), (19) and (20) specified in the loan certificate for each individual
transaction), or the amounts equivalent to the payments for exercise of purchase
options.(10)
    
    Other debts of Lessee pursuant to this Agreement that has become due.
  1
    
    Lessor shall lease the Property to Lessee on an as is basis, without warranty of
any kind regarding the Property, whether express or implied, and shall not be liable for
defects (provided however, excluding defects which arose due to the Lessors intentional
acts or gross negligence) in the Property, whether apparent or hidden. Further, Lessor
shall make no guarantee regarding existing obligations etc. (provided however, excluding
obligations, etc. which arose due to the Lessors intentional acts or gross negligence)
regarding the Property or its parts and shall not be liable for defects irrespective of
whether the defects are known or not.2
    
    Lessee, assuming its own responsibility and at its own expense, shall acquire
appropriate quality assurance from the manufacturer of the Property or its parts
supplier, and at the same time make an arrangement for after-sale service and hereby
assigns to Lessor (except where such assignment is prohibited) the rights regarding the
Property, such as the right to claim damages and warranties (including the right to claim
warranty against defects). However, Lessee may exercise the applicable right to claim
damages and warranties in its own name, provided that no event of cancellation has
occurred, and may directly receive the benefit of the execution of the right to claim
damages and warranties
during the lease period from a manufacturer of the Property or its parts suppliers.3
    
    In the event that Lessee suffers damage or a loss due to lack of performance by the
Property, Lessee may, assuming its own responsibility and at its own expense, demand
recovery of such damage or loss directly from a manufacturer of the Property or its parts
 - 19 -




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##### 



manufacturer under the right set forth in the provision of the previous paragraph, and
Lessor shall not be responsible for this. However, Lessees obligations under Article 14
shall not be affected.
  1
    
    If an event of total loss occurs to all or any unit component of the Property
(except where Lessor is responsible), Lessee shall immediately notify Lessor of such
event and provide Lessor stipulated loss payment and other amounts of debts that are due
with respect to the Property and its unit component as of the date it intends to make the
relevant payment on the earlier date of the following dates: (a) 90th day since the
occurrence of said event of total loss (except where Lessee is not responsible for the
total loss event and Lessor and Lessee have otherwise agreed); or (b) the following bank
business day after the day when an amount greater than the stipulated loss payments is
paid as insurance coverage prescribed in Article 19.2
    
    When Lessee has paid the amount prescribed in the previous paragraph, Lessor shall
assign Lessee the right to the Property or its unit component that suffered a total loss
or the right to a third party acquired as a result of such total loss event (excluding
the right to claim compensation for damages for which Lessor should be held liable) on an
as is basis with respect to performance without the third party providing funds, credits
or other type of guarantee.3
    
    In the event that Lessor has received compensation from a third party as a result
of the occurrence of a total loss event with respect to the Property or its unit
component (including, irrespective of characterization, an amount paid to compensate for
loss and financial burdens due to the occurrence of such total loss event, but excluding
the amount that Lessor should incur to compensate for damage) or received insurance
coverage for the total loss, when Lessee has not met the payment date due under Paragraph
1 (irrespective of whether or not Lessee is aware that the payment date due under
Paragraph 1 has arrived as a result of the payment of total loss insurance coverage ),
the received amount shall be appropriated for payment of stipulated loss payment, and if
there is a surplus after the appropriation, the surplus amount shall be immediately
returned to Lessee upon subtracting unpaid amounts that Lessee owes Lessor under the
related
agreements (including late charges), and if there is still deficiency after such
appropriation, Lessee shall not avoid payment of said deficient amount. Further, if
Lessee has paid said stipulated loss payment at the time referenced above, Lessor shall
immediately return the remaining balance of the received amount to Lessee upon
 - 20 -




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subtracting, if any, unpaid amounts due from Lessee due under the related agreements.4
    
    During the lease period, Lessee shall incur all the risk and relevant expenses
related to a loss (including total loss events) or damage (in either case, except when
Lessor is responsible) to the Property or its unit component.5
    
    In the event that a total loss event occurs to a unit component and Lessee has paid
stipulated loss payment with respect to said component and paid other unpaid amounts with
respect to such component or the total loss, said unit component shall be removed from
transactions set forth in the related agreements, and Lessee shall be exempt from
obligations to pay future lease payment with respect to said unit component part.6
    
    With respect to a unit component that Lessee reasonably determines, through
Lessees consultation with a manufacturer or maintenance company of the Property after
delivery of such component, that it does not meet Lessees required specification, a
total loss event is deemed to have occurred immediately after delivery on the delivery
date for reasons for which Lessee is not responsible, and the provisions of this Article
shall apply accordingly.7
    
    In the event that a total loss event has occurred to the Property or its unit
component part, or that Lessee judges that the Property or its unit component needs to be
replaced for the purpose of doing business, Lessee may request replacement of the
Property or its unit component, subject to consent by Lessor, the Borrower, the SD
Receivables Assignee and the Lenders (Lessor, the Borrower, the SD Receivables Assignee
or the Lenders may not refuse such consent without any rational reasons, which include
the case where Lessor judges, at its own discretion, that the value of the Property or
its unit component after replacement will decrease compared to the value before
replacement (excluding a minor decrease)). Such replacement shall take place at the
expense of Lessee if Lessor, the Borrower, SD Receivables Assignee and the Lenders agree
on conditions with respect to a replacement property, its cost and other matters of
consideration. Provided however, only where obtaining prior written consent is difficult
due to the urgent need to replace the relevant property or unit component part with
equivalent items, Lessee can request the consent ex post facto from Lessor, the Borrower,
the SD Receivables Assignee and the Lenders regarding the replacement of the relevant
property or unit component part.
  Lessee shall, on its own responsibility and at its own expense, in a manner clearly
recognizable by a third party, place signs indicating Lessors ownership of the Property
where the Property is located and on main unit components of the Property and certain
unit components that Lessor requests.
 - 21 -




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##### 



Lessee shall, unless a cancellation event has occurred, have the quiet enjoyment of the
Property, and Lessor shall not disturb such use by Lessee without valid reasons.
  1
    
    Lessee shall, on its own responsibility and at its own expense, install the
Property in Toshiba Yokkaichi Factory in accordance with installation standards or
methods provided by the manufacturers of the Property and regulatory authorities, and
shall not change the installation location without prior consent of Lessor. If
installation of the Property or its unit components takes place outside of Japan, in
addition to prior consent of Lessor, the following must be observed: compliance outside
of Japan of with the provisions of each Article of this Agreement regarding the Property
or its unit components, no compromising of the rights of Lessor, the Borrower, the SD
Receivables Assignee and the Lenders with respect to the Property and rights under the
related agreements, and compliance with laws of Japan and the United States regarding
export and re-export control.2
    
    Lessee shall comply with all applicable laws with respect to installation, use,
operation and handling of the Property (including environmental laws), any request,
conditions imposed and instructions provided by the manufacturers of the Property, parts
suppliers and the insurers and agreements with such parties and, at the same time, shall
use the Property only for legal purposes.3
    
    Lessee shall, on its own responsibility and at its own expense, keep and maintain
records regarding use and operation of the Property.
  1
    
    Lessee shall not, without prior consent of Lessor, transfer the possession of the
Property to a third party, or sublease the Property. However, Lessee may, on its own
responsibility and at its own expense, without consent of Lessor, transfer the possession
of the Property for maintenance or repair to a manufacturer of the Property or approved
maintenance or
repair provider, and sublease the Property to an SD Group company or a Toshiba Group
company.2
    
    In the event that the transfer of possession or sublease is executed in accordance
with the previous paragraph, the transfer of possession or sublease shall not affect
Lessees obligations under this Agreement and shall be subject to the Agreements
Articles,
 - 22 -




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survival and other provisions, and even if Lessee incurs taxes and public dues
as a result of the transfer of possession or subleasing, there shall be no affect on the
lease payment or other lease conditions under this Agreement. Further, Lessee shall, on
its own responsibility and at its own expense, take all reasonable measures so that
Lessor and the Lenders maintain security interests as before (not limited to those
expressed in this Agreement).
  1
    
    Lessee shall, on its own responsibility and at its own expense, keep the Property
in safe condition at all time.2
    
    Lessee shall, on its own responsibility and at its own expense, perform maintenance
and management of the Property in accordance with provisions of law, perform maintenance
and repair using a method approved or recommended by a manufacturer of the Property or a
parts supplier and a similar method that Lessee has employed with respect to other
similar properties and, in the meantime, retain the Property in the same condition at all
time as the initial condition of the delivery date (excluding normal wear and tear).
Under any circumstances, Lessee shall not perform acts that might cause a significant
adverse effect to the manufacturers warranty of the Property.3
    
    Lessee shall, on its own responsibility and at its own expense, keep and maintain
records regarding maintenance and repair of the Property, including maintenance log.4
    
    Lessee may, for the purpose of maintenance and repair provided in Paragraph 2, on
its own responsibility and at its own expense, replace parts with substitutes that are
similar in performance to the respective parts and owned by Lessee without any obligation
to itself (excluding the waived obligations) or may install parts owned by Lessee without
any obligation for itself (excluding the waived obligations) in the Property without
replacing the parts of the Property. However, in either case, the replacement or
installation shall not cause any changes that are reasonably expected to decrease
performance etc. of the Property, or have adverse effect on its performance etc.5
    
    Lessee may, on its own responsibility and at its own expense, after delivery of the
Property to Lessee in accordance with Article 4, remove, without installing substitutes,
parts that are installed to the Property as an addition, not as a replacement of the
parts, or the parts of which removal does not cause reduced performance etc. of the
Property.
 - 23 -




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##### 



Lessee may, on its own responsibility and at its own expense, perform changes,
alterations or additions to the Property that are considered necessary or desirable for
operations so long as such act does not reduce or negatively affect performance of the
Property.
  1
    
    Except for circumstances under Paragraph 2, parts that Lessee installed in the
Property under Article 14, Paragraph 4, upon installation, shall comprise the Parts that
constitute the Property and automatically belong to Lessor and be leased from Lessor to
Lessee under this Agreement. With respect to parts that are removed from the Property,
the ownership of the removed parts shall be transferred to Lessee while the ownership of
the substitutes is transferred to Lessor. However, the parts that are exchanged and
removed, though not replaced by similar substitutes, shall still be owned by Lessor
regardless of their location and are subject to this Agreement.2
    
    Lessee may retain the ownership of parts that are installed to the Property, after
the Property was delivered to Lessee under Article 4, as an addition, not as
replacements, under Article 14, if removal of such parts from the Property is possible
without compromising performance of the Property. Lessor may consider said parts in
accordance with Article 26, Paragraph 3.
  Lessor and its designated parties may, upon prior notice to Lessee no less than 5 bank
business days in advance, with respect to the Property or its parts, enter an office,
factory or facility of Lessee or its installation location, or on a premise of Lessee and
inspect the Property with respect to 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, reasonable confidentiality, safety, and security restrictions imposed by Lessee or
its installation location shall apply.
  1
    
    Lessee shall not establish, approve, or cause to create any obligation to the
Property and its parts, rights or benefits under this Agreement. Provided, however, such
shall not apply to any obligation arising out of (a) rights of Lessor and Lessee provided
in this Agreement, (b) retention rights or similar security rights of employees,
maintenance providers and repair providers that arise during normal operations of Lessee,
for which a payment due
 - 24 -




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date has not arrived and there is no risk of enforcement of
obligations with respect to the Property, and (c) rights under the related agreements
executed by Lessor, SD Receivables Assignee, the Lenders and their successor/s and
assignee/s (including loan and security agreements ).
 2
    
    In the event that an obligation arises that is not excluded by the conditions
stipulated in the previous paragraph, Lessee, on its own responsibility and at its own
expense, shall remove the same in an appropriate method.
  1
    
    Lessee shall, on its own responsibility and at its own expense, personally, execute
an insurance agreement to cover damage to and loss of the Property at all times during
the lease period through the Guarantor, Toshiba Group companies or SD Group companies
with an insurance company recognized by Lessor as internationally reliable.2
    
    Regarding insurance referred to in the previous paragraph, the amount of insurance
shall be no less than the amount equivalent to 100% of stipulated loss payment as of the
lease payment date immediately before the date of loss event.3
    
    Lessee shall, in the event that an event insured against, whether total or partial,
occurs to the Property, promptly notify Lessor.4
    
    In the event that damage (partial loss) occurs to the Property, where restoration
or repair of the Property is possible, Lessee shall receive the insurance money paid for
such event. Upon receiving such insurance money, unless the damage has already been
restored or repaired, Lessee shall apply the entire amount of the insurance money to
restoration and repair of the Property. Further, in the event that a total loss event
occurs, the provisions stipulated in Article 9 shall apply.5
    
    Prior to the date of transfer of the Property stipulated in Article 4 and at the
start of each insurance coverage for the period for which insurance coverage is required
pursuant to this Article (at least once a year), Lessee shall obtain documentation that
proves the coverage that meets the above conditions from an insurance company prescribed
in Paragraph 1 and deliver such document to Lessor.6
    
    Terms and conditions for insurance set forth in this Article shall, in all respects
under any circumstances, not be less than insurance that covers property that is similar
to the Property. In the event that terms and conditions of the insurance set forth in
this Article become less than the terms and conditions of such other insurance, the terms
and conditions of the insurance set forth in this Article shall be improved to the terms
and conditions of such other insurance, and Lessee shall promptly conform to the improved
terms and conditions.
 - 25 -




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1
    
    Lessee represents and warrants the following items as of the day of this Agreement:
 (1)
    
    That Lessee has concluded the related agreements to which Lessee is a
party, has capacity and authority by law and internal corporate rules and
regulations of the company to exercise the rights and fulfill the obligations under
the related agreements and has processed resolutions of the general meetings of
shareholders and other measures necessary by law and internal corporate rules and
regulations of the company for the approval of such related agreements and exercise
of its own rights and fulfillment of its obligations.(2)
    
    That preparation, delivery and execution by Lessee of the related
agreements to which Lessee is a party does not, in any respects, violate laws,
Lessees Articles of Association and other documents related to its organizations
and provisions of agreements to which Lessee is a party.(3)
    
    That the related agreements, to which Lessee is a party, are legal,
effective and binding agreements against Lessee where implementation in accordance
with each provision is possible.(4)
    
    That preparation and delivery of the related agreements to which Lessee
is a party, and performance or fulfillment by Lessee of each intended transaction
thereunder do not require in any way approval and license by any government or other
public office or court, notification to or registration with government or other
public office or court, or other procedure, except for those already completed.(5)
    
    That there is no pending judicial or administrative procedure in any way
that would adversely affect execution of the rights or fulfillment of the
obligations by Lessee with respect to the related agreements to which Lessee is a
party.(6)
    
    That Lessee has disclosed to Lessor, the Borrower, the SD Receivables
Assignee and the Lenders business plans for the fiscal year during which the
execution date of this Agreement falls within the scope determined by Lessees
directors as
reasonably necessary for implementation of this Agreement.(7)
    
    To the extent of Lessees knowledge, no event of default has occurred.
 2
    
    Lessor represents and warrants the following items as of the execution date of this
Agreement:
 (1)
    
    That Lessor has concluded the related agreements to which Lessor is a
party has capacity and authority by law and internal corporate rules and regulations
of the
 - 26 -




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##### 



company to exercise the rights and fulfill the obligations under the related
agreements and has processed passed resolutions of internal corporate meetings and
other measures necessary by law and internal corporate rules and regulations of the
company for the approval of such related agreements and exercise of its own rights
and fulfillment of its obligations.(2)
    
    That preparation, delivery and execution by Lessor of the related
agreements to which Lessor is a party does not, in any respects, violate laws,
Lessors Articles of Association and other documents related to its organizations,
and provisions of agreements to which Lessor is a party.(3)
    
    That the related agreements, to which Lessor is a party, are legal,
effective and binding agreements against Lessor where implementation in accordance
with each provision is possible.(4)
    
    That preparation and delivery of the related agreements to which Lessor
is a party, and performance or fulfillment by Lessor of each intended transaction
thereunder do not require in any way approval and license by government or other
public office or court, notification to or registration with any government or other
public office or court, or other procedure, except for those already completed.(5)
    
    That there is no pending judicial or administrative procedure in any way
that would adversely affect execution of rights or fulfillment of obligations by
Lessor with respect to the related agreements to which Lessor is a party.
 3
    
    Representations and warranties of each item in the previous two paragraphs shall be
deemed to be repeated by Lessee and Lessor on the delivery date of each individual
transaction and each lease payment date under the circumstances existing on those days.
Provided however, in relation to item 1 (7), where the event of default is cured within
the cure period prescribed in each of the sub-paragraphs in Article 26, Paragraph 1, and
did not become a termination event, such shall be deemed not in violation of this Article
and Lessee shall not be responsible for damages and other liabilities.
  1
    
    Lessee shall make the following commitments to Lessor:
 (1)
    
    Lessee shall manage in accordance with Article 10 during the lease period
the Property, its unit components and its parts distinctly from other properties.(2)
    
    Lessee shall fulfill and comply with Lessees obligations pursuant to the
provisions stipulated in the related agreements (including the Original Purchase
Agreements to the extent related to this Agreement).
 - 27 -




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##### 



(3)
    
    In the event that a cause for default or cause that may have a
significantly adverse effect on Lessors full rights under the related agreements or
fulfillment of Lessees obligations thereunder arises, Lessee shall notify Lessor to
that effect promptly after learning of the occurrence of such events.(4)
    
    As regards to the related agreements, Lessee shall acquire each consent,
permission, approval, license or acceptance from any government or other public
office or court that such government or public office or court requires Lessee to
acquire in order to continue essentially the same business operations as the
present, shall maintain its effect, and also shall abide by all conditions or
restrictions imposed thereby.(5)
    
    Lessee shall provide Lessor, the SD Receivables Assignee and the Lenders,
upon reasonable request by Lessor with information regarding the financial
circumstances and business conditions of Lessor and the Guarantors as Lessor
reasonably requests, including financial statements for which Lessee or the
Guarantor has no specific confidentiality obligation, and information regarding
installation, condition, storage, use, maintenance and repair of the Property after
the end of a fiscal year (however, with respect to the Guarantor, at the end of its
half year period and fiscal year).(6)
    
    Lessee shall perform all acts that Lessor reasonably requests as
necessary for establishment, transfer or formation of rights or fulfillment of
perfection, to the extent that such act is recognized and intended by the related
agreements and within the limitations provided thereunder.(7)
    
    Lessee shall, for each fiscal year, report promptly after the end of each
fiscal year to Lessor progress status of business plans of the fiscal years that are
reasonably recognized by Lessees directors as necessary for implementation of this
Agreement.(8)
    
    If Lessor reasonably demands, Lessee shall cooperate with Lessor, the SD
Receivables Assignee and the Lenders to achieve objectives of the related contracts.(9)
    
    Lessee and the Guarantor shall handle, at their own discretion and
responsibility, accounting and financial matters of Lessee and the Guarantor with
respect to the transaction under this Agreement and its related agreements.(10)
    
    Lessee shall ensure that the Guarantor makes no significant changes to
the FLASH PARTNERS MASTER AGREEMENT executed between the Guarantor and SanDisk
International Limited on September 10, 2004. Provided, however, that this shall not
apply in the event that the Lessor, the SD Receivables Assignee and the Lenders
agree otherwise.(11)
    
    Lessee shall cause SanDisk to abide by the following provisions.
Provided, however, that this shall not apply in the event that the Lessor, the SD
Receivables Assignee and the Lenders agree otherwise as to (1) and (3) below.
 - 28 -




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##### 



(1)
    
    SanDisk shall maintain a long-term debt rating by Standard &
Poors Rating Services or Moodys Investors Service at BB-, Ba3 or above
respectively.(2)
    
    SanDisk shall undertake that no lien shall be attached to any
SanDisk assets without prior written approval by Lessor. Provided, however,
that this shall exclude cases involving normal securitization transactions
regarding loan or inventory or any of the permitted liens listed in Attachment
3 below (Permitted Liens).(3)
    
    SanDisk shall maintain the amount of equity (Total
Stockholders Equity) indicated in consolidated balance sheet as of the end of
each accounting term and mid accounting term of each fiscal year at no less
than 1,514 million US dollars until the termination of this Agreement and
completion of fulfillment of all of Lessees and SanDisks obligations to
Lessor under this Agreement.
 2.
    
    Lessor shall promptly submit to Lessee copies of notices, requests, demands,
waivers, acceptances, consents, or other communications between the Lenders and the SD
Receivables Assignee which has legal effects under the related agreements.
  1
    
    Lessee shall, except as otherwise provided in this Article, be responsible and
indemnify for all obligations and loss etc. related to expenses that arise from
ownership, possession, use, application, operation, lease, sublease, installation,
storage, maintenance, repair, improvement, modification, insurance, obligations etc.,
delivery, purchase, transfer, return, performance etc., structure, design, specification,
functions, durability, operability, manufacture of the Property, unit component or its
parts and/or payments due under the related agreements (except payment of property
purchase price under the Sale and Purchase Agreement and payment of principal and
interest under the Loan Agreement), taxes and public duties imposed on all or any of
persons to be indemnified in direct or indirect relation to any of the subject
transactions, and loss etc. to be incurred by all or
any of persons to be indemnified and, if there is an instruction from the persons to be
indemnified, directly pay to the authorities or a third party. However, Lessee shall have
no obligation of indemnity or payment stipulated under this paragraph for either taxes or
public duties imposed with respect to net profit of the persons to be indemnified or
taxes or public duties imposed based on or in respect of net profit, or taxes and public
duties otherwise provided in this paragraph.
 2
    
    In respect of the expenses for preparation, drafting and execution of the related
 - 29 -




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##### 



agreements, each party shall pay its own attorneys fee.3
    
    Expenses arising from fulfillment of obligations and transactions under the related
agreements shall be determined by the express provisions thereof and by the following:
 (1)
    
    Lessee shall bear the bank fees with respect to payments etc. stipulated
in Article 7.(2)
    
    Lessee shall bear the expenses including attorneys fees with respect to
Lessee exercising purchase options or returning the Property.(3)
    
    Expenses including attorneys fees that arise from default under this
Agreement by any of parties involved shall be incurred by the defaulting party.
 4
    
    Taxes and public duties with respect to the related agreements shall be determined
by the express provisions thereof and by the following.
 (1)
    
    Except as otherwise agreed by and between parties to this Agreement, with
respect to consumption tax imposed on payment of sales and purchase price and lease
payments for the Property due under the related agreements (including the fixed
property tax provided in sub-paragraph (2)), the parties involved that make these
payments shall pay the amount of consumption tax to the receiving parties along with
these payments. Provided, however, this shall not apply in the case that any of the
parties to this Agreement may be exempt from consumption tax under the provisions of
consumption tax law.(2)
    
    If payment of Fixed property tax imposed on the Property is payable by
Lessor, Lessee shall pay Lessor the amount equivalent to the fixed property tax.
 5
    
    Taxes and public duties that Lessee indemnifies or pays those persons to be
indemnified under this Article shall be based upon net amount after tax.6
    
    If the loan interest rate is increased based on each Subject Borrowing Contract
(including where the subsidy becomes unavailable in whole or in part to the SD Lender B
or the Toshiba Lender B pursuant to the provisions of the summary for subsidizing
business expenses for promotion of special loans for the advancement of areas having
power plants (enacted on January 14, 1991, Agency for Natural Resources and Energy 2, No.
14534)), or each Borrower is charged with additional costs in accordance with each Loan
Agreement, Lessor may, upon written notice, based on charges from each Borrower, increase
the lease payment applicable to SD Tranches 1-A or SD Tranche 1-B, or Toshiba Tranche 1-A
or Toshiba Tranche 1-B based on reasonable calculation method or may demand payment of
the relevant additional expense to Lessee. In such case, each amount of the applicable
purchase option exercise cost, Return Adjustment Fee, repayment standard fee and
stipulated damages shall also be recalculated. Further, if the SD Receivables Assignee is
charged with additional expense, Lessor may, upon demand by
 - 30 -




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##### 



the SD Receivables Assignee,
by written notice, increase the lease payment applicable to SD Tranche 1-C based on
reasonable calculation method, or may demand payment of the relevant additional costs to
Lessee. In such case, each amount of the applicable payment for the exercise of purchase
options, Return Adjustment Fee, repayment standard fee and stipulated loss payment shall
be recalculated as well.7
    
    In the event that taxes and public duties and other expenses to be incurred by
Lessee pursuant to the related agreements are charged to Lessor or paid in advance by
Lessor, Lessee shall immediately pay Lessor, upon request by Lessor, the amount of the
relevant payment and interest calculated from the payment date in accordance with
provisions of Article 27. Provided, however, Lessor shall immediately notify Lessee with
proof of advance payment if Lessor is charged with such taxes and public duties and other
expenses, or has paid such amount.
  1
    
    Lessee and Lessor shall perform the first individual transaction in the period
starting [*] and ending [*], and thereafter may execute
up to [*] transactions (total of 5 transactions) until
[*].2
    
    Lessee and Lessor may, if prior written approval of the Lender, the Borrower and
the SD Receivables Assignee are obtained, change the execution period of individual
transactions and the number of individual transactions provided in the previous
paragraph, and in this case Lessee and Lessor shall, if a change is needed regarding
terms and conditions of payment, including lease payment, stipulated loss payment,
payment for exercise of
purchase option payments and Return Adjustment Fee, discuss such changes.
  1
    
    Lessee may, for each individual transaction, by notifying Lessor no less than 30
days in advance of each lease payment date, purchase all of the Property or any unit
component (provided, however, exercise of purchase options for any unit component shall
be in accordance with the provisions in Paragraph 4 below) by paying Lessor the relevant
 
 *
    
    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. - 31 -




---



##### 



payment for exercise of purchase option and the other amounts that are due with respect
to the Property or said unit component as of said lease payment date (provided, however,
for each individual transaction on the final lease payment date, whether or not there is
notification from Lessee, unless the leased item is returned pursuant to Article 25, the
purchase options shall be deemed to have been exercised). Notice of exercise of purchase
options under this paragraph shall not be withdrawn.2
    
    If Lessee exercises purchase options stipulated in the previous paragraph and has
paid the amount as prescribed in the previous paragraph, Lessors ownership and any other
rights with respect to such Property or its unit component shall be transferred to Lessee
on an as is basis without warranty and others at the time of completion of its payment.
Provided, however, Lessor shall warrant to Lessee that no obligations etc. with respect
to the Property or its unit component that arise from causes created by Lessor or
attributable to Lessor exist at the time of such transfer.3
    
    Lessor shall immediately deliver a certificate of transfer provided in Attachment 6
to Lessee when receiving the amount as prescribed in Paragraph 1 has been paid.4
    
    Exercise of purchase options with respect to some unit components and not the
entire Property may be allowed only if the total amount of property purchase cost of said
unit component that Lessee is to purchase on a lease payment date pursuant to this
Article exceeds [*] Yen and Lessors consent is obtained (Lessor may not
reject such consent without any rational reasons, which include the case that Lessor
determines, at its own discretion, that the relative value of the remaining Property
against payment for exercise of purchase options of the Property after the purchase of
said unit component is less than that of the Property before such purchase.) Further, of
the payment for exercise of purchase options, the maximum amount that is appropriated to
the original principal of each of SD Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches
1-AB shall be the
amount calculated by multiplying a property purchase cost of said unit component by rates
provided in the stipulated loss payments column (A), (B), (C), (E) and (F) of a loan
certificate.5
    
    Lessee shall incur all expenses regarding exercise of purchase options by Lessee.
  1
    
    Lessee, in accordance with the following provisions, for each 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. - 32 -




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##### 



return to Lessor all unit components that are subject to said individual
transaction at the location designated by Lessor on the lease payment date immediately
preceding the first anniversary of the delivery date within the lease period, and on each
anniversary date of the relevant lease payment dates (hereinafter referred to as return
date) by notifying Lessor and the Lenders no less than [*] days in advance.
In such case, Lessor must specify Lessee the return location or the storage location of
the relevant unit component part (including the location of all unit component parts at
the time specified) [*] days before the return date. Provided, however, if
any of reasons for cancellation or default (including reasons for cancellation and for
default with respect to provisions regarding return in this Article) has occurred on such
return date, or purchase by exercising purchase options pursuant to Article 24 takes
place on the same day as the return date, Lessee may not return the Property under this
Article. Notification of exercise of return options pursuant to this Article may be
withdrawn until [*] days before such return date by obtaining prior
written consent from Lessor.
 (1)
    
    When Lessee returns the Property to Lessor pursuant to this Article, the
Property shall be in a good condition as at the time of delivery in Article 4, its
normal use is possible, and that Lessor can determine that all of the requirements
for conditions at the time of return of the Property prescribed in Attachment 7 are
met, except for normal wear and tear and changes etc. performed in accordance with
provisions of Article 14, Paragraph 4 or 5, or Article 15.(2)
    
    Lessee shall deliver, with return of the Property to Lessor, in addition
to a maintenance and repair log of the Property, all records or copy thereof of
installation, storage, use, operation, maintenance and repair of the Property and,
if Lessor requests, a certificate by the Property manufacturer, the Property parts
supplier or a property maintenance and repair provider approved by the property
manufacturer
that certifies the items provided in Item (1) of this paragraph.(3)
    
    Lessee shall approve that Lessor, the Lenders or a party that is to
become a buyer of the Property that Lessor has designated (and related parties
thereof) enters the office and factory of Lessee or its installation location to
inspect the Property prior to return of the Property in accordance with Article 17.(4)
    
    Lessee shall, on the return date, with return of the Property, pay Lessor
the Return Adjustment Fee for retuning the Property as of the return date and other
amounts due under the related agreements.
 
 *
    
    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. - 33 -




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##### 



(5)
    
    If Lessor incurs a debt against Lessee under the related agreements on
the return date, Lessor shall, on the return date, upon return of the Property, pay
Lessee the relevant amount which relates to returned Property.(6)
    
    Return of the Property under this Article shall be allowed only with
respect to all unit components subject to the relevant individual transaction, and
shall not be allowed with respect to only some unit components.(7)
    
    Lessee shall, in electing return under this Article, upon discussion with
Lessor, work to offer a third party who purchases the Property with purchase
conditions with which Lessor is objectively satisfied. Provided, however, this shall
not apply in the case where the Property or any of its unit components is discarded
in accordance with Paragraph 4.
 2
    
    Lessor shall, when receiving the returned Property, prepare a certificate of return
as provided in Attachment 5 and immediately delivery it to Lessee.3
    
    Lessee shall, if requested by Lessor, on its own responsibility and at its own
expense, hold in trust the Property for Lessor for maximum of [*] after
the return date, and shall perform maintenance management, inspection and maintenance in
accordance with this Agreement in order to maintain the same level of performance etc. as
on the delivery date by the Property at all times, and if the Property is damaged,
regardless of the cause, shall restore it to its original condition.4
    
    Notwithstanding the provisions of Paragraph 1, Lessor may request Lessee to dispose
all or a part of unit components that constitute the Property before the return date. In
this case, Lessee shall, upon delivery of acknowledgement to Lessor, on its own
responsibility and at its own expense, immediately dispose of the requested unit
components within Japan. Lessee shall, for such disposition, comply with the applicable
laws (including
environmental laws). Provided, however, if Lessor needs to dispose on its own behalf,
Lessee shall bear such cost and provide necessary support. In any event, Lessor may
request Lessee to provide documentation that confirms disposition or any related
documents, or copies thereof.5
    
    Lessee shall incur maintenance expense, removal expense, transport expense, storage
expense in item 3, resale expense and all other expenses. Provided however, the amounts
to be borne by Lessee shall be limited to the expenses stated in the previous paragraph.
 
 *
    
    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. - 34 -




---



##### 



6
    
    If Lessor sells the Property to a third party within [*] of return
of the Property by Lessee to Lessor under this Article, and if the net amount after
deducting taxes and public dues, sales fee, resale expenses and any other expenses which
Lessor incurs from the received amount of the sales proceeds exceeds the Return
Adjustment Fee of the Property as of the return date, Lessor shall 1 return the resale
expenses borne by Lessee and 2 if there remains further balance after such return pay
Lessee the amount equivalent to [*]% thereof. Lessee shall incur taxes
and public duties charged on such payment.7
    
    In disposing Property that is returned pursuant to this Article, conditions and
methods etc. of disposition shall be determined by discussion with SD Lessor RA and
Toshiba Lessor RA. Provided however, in the case of disposition of such Property under
terms of sale and method which recovers an amount less than the amount equivalent to the
repayment standard fee, consent from both SD Lessor RA and Toshiba Lessor RA shall be
required.8
    
    All actions conducted pursuant to this Article and Attachment 7 in Lessees and the
office, factory or facilities of the installation location and within the facilities of
the installation location shall be in accordance with the conditions and restrictions
stated in Article 17.
  1
    
    Lessor may, upon the occurrence of any one of the following events, with only
written notice without formal demand, accelerate all payments owing by Lessee under this
Agreement or any or all of the individual transactions and terminate this Agreement or
any or all of the individual transactions.
 (1)
    
    If Lessee defaults a lease payment, purchase option exercise cost, Return
Adjustment Fee and stipulated damages under the relevant agreements for 2 bank
business days or more or if Lessee defaults payment of lease payment and payment
for other debts due under the related agreements and does not make the relevant
payments within 2 bank business days of receipt of written notice to that effect
from Lessor. Lessor shall notify Lessee by the next succeeding day of the
scheduled date of receipt if there is delay in the receipt of lease payment and
other monetary obligations under the related agreements from Lessee.(2)
    
    If Lessee neglects to obtain and keep required insurance in accordance
with this Agreement.
 
 *
    
    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. - 35 -




---



##### 



(3)
    
    If Lessee neglects to remove obligations etc. in accordance with this
Agreement, and Lessee fails to eliminate within 5 bank business days after receipt
of written notice from Lessor of such event.(4)
    
    If Lessee violates the provisions of the related agreements, in addition
to the previous Item, and does not correct the relevant violations within 10 bank
business days of receipt of written notice to that effect from Lessor.(5)
    
    If Lessee or a Guarantor is subject to compulsory execution, petition for
auction or disposition for failure to pay taxes and public duties, or petition for
the commencement of bankruptcy proceedings (including petition for similar
procedures or dispositions under foreign law). Provided, however, except where the
relevant petition or disposition is cancelled or dissolved within 30 days.(6)
    
    If Lessee or a Guarantor starts private dissolution, passes a resolution
to liquidate or dissolve all or the major part of the business operation (provided,
however, except in the case of corporate reorganization that does not follow a
procedure provided in Item (5) for Lessee or the Guarantor, and Lessor, the
Borrower, the SD Receivables Assignee and the Lenders have consented thereto), or
receives an order 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
a public office (It shall be considered to fall under this Item (6) if operation of
the Property by Lessee has ceased for more than 2 months and without any prospect
for resumption).(7)
    
    If Lessee or a Guarantor transfers all or major part of its business.
Provided, however, except in the case of corporate reorganization that does not
follow a procedure of Item (5) for Lessee or the Guarantor, and Lessor, the
Borrower, the SD Receivables Assignee, the Lenders have consented thereto.(8)
    
    If Lessee or a Guarantor stops payment or suffers suspension by a bill
clearing house.(9)
    
    If the direct or indirect rate of equity participation by each Guarantor
with respect to Lessee changes. Provided, however, except where Lessor, the
Borrower, the SD Receivables Assignee and the Lenders otherwise have consented
thereto.(10)
    
    If the FLASH PARTNERS MASTER AGREEMENT executed between Toshiba
Corporation, SanDisk Corporation and SanDisk International Limited on September 10,
2004 is cancelled, dissolved, or terminated.(11)
    
    If (i) Lessee or a Guarantor suffers acceleration with respect to debt
greater than 20 million US dollars arising from a default of monetary obligations
(including where monetary obligations of Lessee or a Guarantor that is greater than
20 million US dollars and which did not arise from a default of monetary obligations
is accelerated,
 - 36 -




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##### 



and the relevant monetary obligation is not repaid by Lessee or
Guarantor within the period scheduled by the agreement regarding the relevant
monetary obligations (including any periods necessary for the procedures for
repayment if such procedures are set forth in the agreement) or within a reasonable
period if no such period is scheduled in such agreement), or (ii) Lessee or a
Guarantor suffers acceleration with respect to monetary obligations greater than 100
million US. Provided, however, this shall exclude cases where it is determined that
the creditor has consented or agreed to the delay (including implied consents
pursuant to commercial practices) or cases where Lessee or the Guarantor is
disputing the relevant obligation and has not yet been legally settled.(12)
    
    If the amount of equity (Total Stockholders Equity) in consolidated the
balance sheet as of the last of accounting term and mid accounting term of each
fiscal year of SanDisk becomes less than 1,514 million US dollars.(13)
    
    If a long-term debt rating of SanDisk by Standard & Poors Rating
Services or Moodys Investors Service is decreased to below BB- or Ba3, respectively
 2
    
    If this Agreement is terminated under the previous paragraph, Lessee shall return
the Property to Lessor on the date specified by Lessor for termination (hereinafter
referred to as termination date), and pay all amounts due that have not been paid as of
the termination date, including unpaid lease payments due to be paid on a lease payment
date before the termination date and late charges thereof and stipulated loss payment as
of the termination date as provided in Attachment 1, Paragraph 9.3
    
    In the event that this Agreement is terminated in accordance with Paragraph 1,
Lessor shall, following its selection, liquidate all or a portion of debts of the
previous paragraph by method provided in each of the following Items.
 (1)
    
    Upon disposing of the Property by sale under sales conditions determined
at its own discretion, the amount equivalent to the amount of such net sales
proceeds from which expenses have been deducted is less than the amounts owing
under the previous paragraph.(2)
    
    Upon appraising fair market price of the Property, the amount equivalent
to such appraisal amount from which expenses are deducted is less than the amounts
owning under the previous paragraph.
 In addition, of the amounts owing under the previous paragraph, Lessee shall not avoid
liability for any of such amount remaining after such liquidation. Lessor shall
immediately return to Lessee the remaining balance after the total amounts owing under
the previous paragraph is satisfied by such liquidation.
 - 37 -




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##### 



4
    
    When Lessee returns the Property pursuant to Paragraph 2, conditions of the
Property, method of return and others shall be determined by the provisions of Article
25, unless otherwise provided in this Article.5
    
    Notwithstanding the provisions of each of the previous paragraphs, Lessee may,
until Lessor disposes of the Property or its unit components by sale in accordance with
Paragraph 3, purchase the Property or its unit component that have not been sold by
paying to Lessor stipulated loss payment with respect to the Property or unit component
as of the termination date, unpaid lease payments and other amounts that Lessee is
required to pay to Lessor under Paragraph 2 (including late charges) (provided, however,
except for a case of purchasing the entire Property, this may be approved only when
Lessors consent is provided ). If Lessee purchases the Property or its unit component by
making such payment to Lessor, Lessor shall transfer title to the Property or its unit
component to Lessee on an as is basis without warranty. (Provided however, where there
exists burden etc. created by the relevant agreements or arising from events attributable
to either of Lessor, SD Receivables Assignee, the Lenders and their respective successors
and permitted assigns in relation to such property or unit component part, Lessor shall
eliminate at the Lessors expense.) Such transfer shall be pursuant to provisions of
certificate of transfer in the form provided in Attachment 6.6
    
    Lessor may, in relation to the termination events set forth in each of the
sub-paragraphs of paragraph 1, seek injunction of defaults or specific performance,
claims for compensation regarding losses or liability suffered by Lessor, and any other
remedies recognized by law.7
    
    In the event that any reason for termination set forth in Paragraph 1 (12) or (13)
occurs, that termination event shall be deemed not to have occurred if SanDisk, the all
SD Lessors, SD Receivables Assignee and all SD Lenders have agreed, within 30 days of the
date the occurrence of such event has become known, on the supplementary security to be
supplied by SanDisk, or if they have agreed on the amount of lease and stipulated loss
payment pursuant to this Agreement and on revision of the spread used to calculate the
interest rate pursuant to the Loan Agreement.8
    
    Lessee may, in the event that any reason for termination provided in each Item of
Paragraph 1 occurs, (excluding where termination events set forth in sub-paragraphs (9),
(10), (12) and (13) has occurred in respect of the Guarantors) by obtaining prior written
consent of Lessor or the Lenders within 30 days of the date the occurrence of such event
has become known, transfer the status of Lessee under this Agreement and its related
agreements to both or either of the Guarantors. In such case, the relevant reason for
termination is cured and shall be deemed to not have occurred.
 - 38 -




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##### 



9
    
    In the event that a reason for termination provided in Paragraph 1 (5) through (8)
and (10) through (13) occurs for either Guarantor, the other Guarantor may succeed the
status of Guarantor within 30 days of the date of the occurrence of said event if such
other Guarantor delivers a guarantee or security acceptable to Lessor, SD Receivables
Assignee and the Lenders, then in such case, such termination event shall be deemed not
to have occurred.10
    
    If there is significant cause, objectively and reasonably recognized, whereby
voluntary and smooth performance of the obligations due under this Agreement becomes
difficult due to a material change in conditions regarding assets and creditworthiness of
Lessee or a Guarantor other than the events set forth in each sub-paragraphs of paragraph
1, Lessor shall notify Lessee to such effect and consult with Lessee regarding
countermeasures.
  If Lessee defaults in the payment of money to Lessor under this Agreement, Lessee shall
pay (a) for each Tranche other than SD Tranche 1-B and Toshiba Tranche 1-B, late charges
at the interest rate of [*]% per annum (on a prorated daily basis with 1
year as 360 days) and (b) for SD Tranche 1-B and Toshiba Tranche 1-B, late charges at
the rate of [*]% annual interest (on a prorated daily basis with 1 year
as 365 days), for the period from the due date to the actual date of payment.
  Lessee and Lessor shall not, without obtaining prior written approval of the other party,
transfer to a third party the right of use of the Property and rights and obligations
under this Agreement, or give the same as security. Provided, however, except for the
following
cases:
 (1)
    
    For each individual transaction, SD Lessor may transfer to the SD
Borrower under the SD Sale and Purchase Agreement regarding Receivables any and all
obligations related to the lease payments, stipulated loss payments, payments for
purchase options, exercise, Return Adjustment Fees, break funding costs, late
charges, and any other amounts related to SD Tranches 1-AB.(2)
    
    For each individual transaction, SD Lessor may transfer to the SD
Receivables
 
 *
    
    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. - 39 -




---



##### 



Assignee under the SD Receivables Assignment Agreement any and all
obligations related to the lease payments, stipulated loss payments, payments for
purchase options exercise, Return Adjustment Fees, break funding costs, late
charges, and any other amounts related to SD Tranche 1-C.(3)
    
    For each individual transaction, Toshiba Lessor may transfer to Toshiba
Borrower under Toshiba Sale and Purchase Agreement regarding Receivables any and
all obligations related to the lease payments, stipulated loss payments, payments
for purchase options exercise, Return Adjustment Fees, break funding costs, late
charges, and any other amounts related to Toshiba Tranches 1-AB.(4)
    
    For each individual transaction, the SD Borrower may, as security for the
SD Loan Agreement for the SD Lenders, transfer the assigned obligations of Paragraph
1 under the SD Agreement on Security Assignment regarding Claims.(5)
    
    For each individual transaction, the Toshiba Borrower may, as security
for the Toshiba Loan Agreement for the Toshiba Lenders, transfer the assigned
obligations of Paragraph 3 under the Toshiba Agreement on Security Assignment
regarding Claims.(6)
    
    For each individual transaction, Lessor may, as security for the Loan
Agreement for the Lenders, assign the Property under the Master Agreement on
Commitment for Security Assignment regarding Claims.
 Lessee shall hereby approve such transfers of the obligations and the establishment of
security rights/liens and shall cooperate with Lessor in preparation and delivery of
documents requested by Lessor. In addition, Lessee and SD Lessor shall approve the
exercise of the SD Lessors rights provided in this Agreement to the extent necessary for
performance of assigned obligations the SD Borrower and the SD Receivables Assignee
acquired pursuant to the SD Sale and Purchase Agreement regarding Receivables or the SD
Receivables Assignment Agreement, and Lessee and the Toshiba Lessor shall approve the
exercise of Toshiba Lessors rights provided in this Agreement to the extent necessary
for performance of the assigned obligations that the Toshiba Borrower has acquired under
the Toshiba Sale and Purchase Agreement regarding Receivables.
  1
    
    Except as provided in Paragraph 3 of this Article, performance of monetary
obligations that Lessee owes to the SD Lessor under this Agreement shall be recoverable
against only the following money and other assets (hereinafter referred to as SD
recourse property), and Lessee shall not be responsible for default by any parties to
the related agreements
 - 40 -




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##### 



other than itself or price fluctuations or any inability to
dispose of the Property. Except in respect of the SD recourse property, the SD Lessor
shall not file petition for attachment, provisional attachment or other compulsory
procedures, or protective orders against Lessees assets, and shall not seek bankruptcy
procedures against Lessee.
 (1)
    
    Amounts equal to lease payment, stipulated loss payment, Return
Adjustment Fee, payment for exercise of purchase options, break funding costs and
late charges related to each SD Tranche and other monies related to each SD Tranche
under the Master Lease Agreement.(2)
    
    Monetary amounts that the SD Lessor may claim pursuant to the SD
Guarantee Agreement with respect to the rights related to the monies stipulated in
the previous Item.(3)
    
    The SD Lessors shared equity of the Property.(4)
    
    Amounts that the SD Lessor receives as a result of exercise or execution
of rights under the related agreements (irrespective of compulsory or voluntary
procedures).
 2
    
    Except as provided in Paragraph 3 of this Article, performance of monetary
obligations that Lessee owes to the Toshiba Lessor under this Agreement shall be
recoverable against only the following money and other assets (hereinafter referred to as
Toshiba recourse property) and Lessee shall not be responsible for default by any
parties to the related agreements other than itself, price fluctuations or any inability
to dispose of the Property. Except in respect of the Toshiba recourse property, the
Toshiba Lessor shall not file petition for attachment, provisional attachment or other
compulsory procedures, or protective orders against Lessees assets, and shall not seek
bankruptcy procedures against Lessee.
 (1)
    
    Amounts equal to lease payment, stipulated loss payment, Return
Adjustment Fee, payments for exercise of purchase options, break funding costs and
late charges related to each Toshiba Tranche and other monies related to each
Toshiba Tranche 1 under the Master Lease Agreement..(2)
    
    Monetary amounts that the Toshiba Lessor may claim pursuant to the
Toshiba
Guarantee Agreement with respect to the rights related to the monies stipulated in
the previous Item.(3)
    
    The Toshiba Lessors shared equity of the Property.(4)
    
    Amounts that the Toshiba Lessor receives as a result of exercise or
execution of rights under the related agreements (irrespective of compulsory or
voluntary procedures).
 3
    
    Notwithstanding the provisions of the previous two paragraphs, Lessee shall not be
 - 41 -




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##### 



exempt from liability and shall owe absolute obligations and responsibility to Lessor
under the Master Lease Agreement or its related agreements with respect to loss, damage,
expenses and cost Lessor incurs or suffers pursuant to the intentional actions or gross
negligence of Lessee and in that case the provisions of the previous two paragraphs shall
not apply. Further, this paragraph shall not extend to the other Tranches the several
obligations for each Tranche of the respective Guarantor under the Guarantee Agreements.4
    
    The provisions of Paragraph 1 and Paragraph 2 shall only restrict sources of
payment with respect to payment of monetary obligations provided in the same paragraphs,
and shall not affect the existence of such debts or reduce such debts, nor restrict
exercise of Lessors rights under the related agreements or security rights/liens held by
Lessor.
  All written notices necessary under this Agreement shall be sent by postal mail, personal
delivery, E-mail or facsimile transmission to the notified parties provided on Attachment
8.
  Where the SD Lessor or the Toshiba Lessor are expected to express its intent or
notify facts as a whole, each SD Lessor shall express its intent or notify and receive
facts through the SD Lessor Agent and each Toshiba Lessor do the same through the Toshiba
Lessor Agent.
  This Agreement shall not be modified or amended without written consent of all parties
concerned.
  1
    
    Each party to this Agreement shall pledge to keep strictly confidential contents of this
Agreement and its related agreements and information or documents received through
negotiations thereon in accordance with the provisions thereof for [*]
years from the day of execution of this Agreement. Provided, however, except as in the
case of disclosure of information or documents that are already publicly known,
disclosure that accompanies
 
 *
    
    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. - 42 -




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##### 



marketing of the Property, disclosure that is necessary for
exercise of rights or fulfillment of obligations under the related agreements, and
disclosure at the request of tax authorities and other related authorities or disclosure
due to prior consent of all parties to this Agreement.2
    
    Period of confidentiality provided in the previous paragraph shall be automatically
renewed for [*] year, unless there is notice of cancellation of
confidentiality from Lessee, and the same shall apply thereafter. Provided, however,
Lessor may request confirmation from Lessee with respect to the extension of period of
confidentiality at the [*] year or at the end of an extended period.3
    
    In the event that a party to this Agreement infringes the obligations of Paragraph
1, said party shall compensate economic damages incurred by other parties.
  This Agreement shall be in every respect governed by, and construed in accordance with, the
laws of Japan.
   
 *
    
    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. - 43 -




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- 44 -




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- 45 -




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- 46 -




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- 47 -




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- 48 -




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- 49 -




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- 50 -




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- 51 -




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- 52 -




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Lease Terms and Conditions
 1
    
    Designation of scheduled delivery day, the last possible date for delivery and of Property
 Lessee shall designate the unit components with serial numbers, etc. for the purpose of
objective identification and a delivery date that falls on a business day [*]
on [*], to [*] which Lessee notifies to Lessor 20 days to the
delivery date (provided, however, that for the first transaction, Lessee and Lessor have
agreed otherwise) as a delivery date for each individual transaction and the last
delivery date during this period as the last delivery date under this Agreement. Lessee
and Lessor shall conduct the first individual transaction during the period from
[*] through [*], and thereafter may execute up to [*]
transactions (total 5 transactions) until [*]. 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 periodFor each individual transaction, the period up to the date specified by Lessee which shall be
either March 10 or September 10 falling within the period up to the fourth or fifth
anniversary date from the delivery date described in the related request for lease and
approval (including the delivery date).3
    
    Calculation of lease paymentsThe total amount of the following SD Tranches 1-A, SD Tranche 1-B, SD Tranche 1-C, SD Tranche
2, Toshiba Tranche 1-A, Toshiba Tranche 1-B and Toshiba Tranche 2.
 (1)

    (SD Tranche 1-A)For each lease payment calculation period, the total sum of (1) property purchase price
for the Property in each individual transaction multiplied by the ratio in the following
(A); and (2) the interest amount calculated pursuant to the following Paragraph 9 (1) as
of the lease payment date with respect to the lease payment calculation period
immediately
 
 *
    
    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. - 53 -




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##### 



prior to the relevant lease payment calculation period (in the event that the prior lease
payment calculation period does not exist, delivery date is used) multiplied by the
interest rate of Euro Yen TIBOR (as defined below) with respect to the first date through
the last date of the lease payment calculation period plus annual percentage rate of
[*]% from the first date to the last date of the relevant lease payment
calculation period (calculated on a pro rate basis with 360 days a year).(2)
    
    (SD Tranche 1-B)For each lease payment calculation period, the total sum of (1) the amount obtained by
multiplying the purchase price of the Property in each individual transaction by the
ratio in the following (B); and (2) the interest amount calculated pursuant to the
following Paragraph 9 (4) as of the lease payment date with respect to 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 date is used) multiplied by the interest rate of standard fixed interest
rate (as defined below) plus annual percentage rate of [*]% from the first
date through the last date of the lease payment calculation period (calculated on a pro
rate basis with 365 days a year). In addition, if the SD Borrower B (as defined in the
SD Loan Agreement) receives the amount equivalent to subsidy as prescribed in Article 7,
Paragraph 3 of the SD Loan Agreement, the amount equivalent to the relevant subsidy
shall be deducted from the above total amount.(3)
    
    (SD Tranche 1-C)For each lease payment calculation period, the total sum of (1) property purchase price
for the Property in each individual transaction multiplied by the ratio in the following
(C); and (2) the interest amount calculated pursuant to the following Paragraph 9 (7) as
of the lease payment date with respect to the lease payment calculation period
immediately prior to the relevant lease payment calculation period (in the event that the
prior lease payment calculation period does not exist, delivery date is used) multiplied
by the interest rate of Euro Yen TIBOR with respect to the first date through the last
date of the lease payment calculation period plus annual percentage rate of
[*]% from the first date to the last date of the relevant lease payment
calculation period (calculated on a pro rate basis with 360 days a year).
 
 *
    
    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. - 54 -




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(4)
    
    (SD Tranche 2)For each lease payment calculation period, the total sum of (1) property purchase price
for the Property in each individual transaction multiplied by the ratio in the following
(D); and (2) the interest amount calculated pursuant to the following Paragraph 9 (10)
as of the lease payment date with respect to the lease payment calculation period
immediately prior to the relevant lease payment calculation period (in the event that
the prior lease payment calculation period does not exist, delivery date is used)
multiplied by the interest rate of Euro Yen TIBOR with respect to the first date through
the last date of the lease payment calculation period plus annual percentage rate of
[*]% from the first date to the last date of the relevant lease payment
calculation period (calculated on a pro rate basis with 360 days a year).(5)
    
    (Toshiba Tranche 1-A)For each lease payment calculation period, the total sum of (1) property purchase price
for the Property in each individual transaction multiplied by the ratio in the following
(E); and (2) the interest amount calculated pursuant to the following Paragraph 9 (13) as
of the lease payment date with respect to the lease payment calculation period
immediately prior to the relevant lease payment calculation period (in the event that the
prior lease payment calculation period does not exist, delivery date is used) multiplied
by the interest rate of Euro Yen TIBOR with respect to the first date through the last
date of the lease payment calculation period plus annual percentage rate of
[*]% from the first date to the last date of the relevant lease payment
calculation period (calculated on a pro rate basis with 360 days a year).(6)
    
    (Toshiba Tranche 1-B)For each lease payment calculation period, the total sum of (1) the amount obtained by
multiplying the purchase price of the Property in each individual transaction by the
ratio in the following (F); and (2) the interest amount calculated pursuant to the
following Paragraph 9 (16) as of the lease payment date with respect to the lease
payment calculation period immediately prior to the relevant lease payment calculation
period (in
 
 *
    
    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. - 55 -




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##### 



the event that the immediately prior lease payment calculation period does not exist,
delivery date is used) multiplied by the interest rate of standard fixed interest rate
(as defined below) plus annual percentage rate of [*]% from the first
date through the last date of the lease payment calculation period (calculated on a pro
rate basis with 365 days a year). In addition, if the Toshiba Borrower B (as defined in
the Toshiba Loan Agreement) receives the amount equivalent to subsidy as prescribed in
Article 7, Paragraph 3 of the Toshiba Loan Agreement, the amount equivalent to the
relevant subsidy shall be deducted from the above total amount.(4)
    
    (Toshiba Tranche 2)For each lease payment calculation period, the total sum of (1) property purchase price
for the Property in each individual transaction multiplied by the ratio in the following
(G); and (2) the interest amount calculated pursuant to the following Paragraph 9 (19)
as of the lease payment date with respect to the lease payment calculation period
immediately prior to the relevant lease payment calculation period (in the event that
the prior lease payment calculation period does not exist, delivery date is used)
multiplied by the interest rate of Euro Yen TIBOR with respect to the first date through
the last date of the lease payment calculation period plus annual percentage rate of
[*]% from the first date to the last date of the relevant lease payment
calculation period (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(E)
    
    Provided in loan certificate regarding the relevant individual transaction(F)
    
    Provided in loan certificate regarding the relevant individual transaction(G)
    
    Provided in loan certificate regarding the relevant individual transaction
 In this Clause, Standard Fixed Interest Rates shall mean j and k below.
 (1)
    
    The interest rate as of 3 P.M. (Japan time) on the date designated in advance by
 
 *
    
    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. - 56 -




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##### 



Development Bank of Japan (hereinafter referred to as DBJ) as the determination date for the
base rate (if such date is not a business day in Japan, then the immediately preceding
business day in Japan) calculated by DBJ based on the Yen rate which appears on the Bridge
Information Systems, Inc.s Telerate17143 page or its equivalent or alternative page as the
value according to maturity for the six months Yen denominated London Interbank Offered Rate.
   4
    
    Lease payment dateIn each individual transaction, each March 10 and September 10 falling after each delivery
date. However, in the event that the relevant corresponding date is not a bank business day,
the payment date shall be determined pursuant to the provisions of Article7, Paragraph 3 of
this Agreement.5
    
    Lease payment calculation periodIn each individual transaction, each of the following periods for each of the following
Tranches (Provided, however, that in the event that this Agreement is cancelled before
termination, the
 - 57 -




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last lease payment calculation period is until the relevant cancellation date.):(1) SD Tranche 1-A, 1-C, and SD Tranche 2 and Toshiba Tranche 1-A and Toshiba Tranche 2
The period commencing from the delivery date and ending on the day immediately preceding the
first lease payment calculation date shall be the first lease payment calculation period and
thereafter the period commencing from the day immediately succeeding the last date of the
immediately preceding lease payment calculation period and ending the day immediately
preceding the next lease payment calculation date.(2) SD Tranche 1-B and Toshiba Tranche 1-BThe period commencing from the delivery date and ending on the first lease payment calculation
date shall be the first lease payment calculation period and thereafter the period commencing
from the day immediately succeeding the last date of the immediately preceding lease payment
calculation period and ending the day immediately preceding the next lease payment calculation
date.
 6
    
    Payment for exercise of purchase option amountsAs described in the relevant request for lease and consent for each individual transaction.7
    
    Return Adjustment FeeAs described in the relevant request for lease and consent for each individual transaction.8
    
    Repayment standard feeAs described in the relevant request for lease and consent for each individual transaction.9
    
    Stipulated loss paymentThe total sum of the following (1), (4), (7), (10), (13), (16) and (19) with respect to the
delivery date or each lease payment date. Provided, however, that the lease payment as of the
relevant lease payment date shall be paid separately. In the event that a date on which a
stipulated loss payment shall be paid is neither a delivery date nor lease payment date, it
shall be the total sum of the following (2), (3), (5), (6), (8), (9), (11), (12), (14), (15),
(17), (18), (20) and (21).(SD Tranche 1-A)
 (1)
    
    The amount obtained by multiplying the purchase price for the Property or unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (A)(2)
    
    The amount obtained by multiplying by the rate in the following (A) with respect to
the
 - 58 -




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delivery date immediately before the date on which payment should be made for the
purchase price of the Property or its unit component part or lease payment date.(3)
    
    The amount of interest calculated by multiplying the amount mentioned above in (2)
by the interest rate of Euro Yen TIBOR stipulated in the list attached to the Loan
Agreement, Paragraph 6 (1) (c) with respect to a period from the first date of the lease
payment calculation period through the date on which a stipulated loss payment should be
paid plus [*]% (calculated on pro-rate basis with 360 days a year).
 (SD Tranche 1-B)
 (4)
    
    The amount obtained by multiplying the purchase price for the Property or its unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (B)(5)
    
    The amount obtained by multiplying by the rate in the following (B) with respect to
the delivery date immediately before the date on which their payment should be made for
the purchase price of the Property or its unit component part or lease payment date.(6)
    
    The amount of interest calculated by multiplying the amount mentioned above in (5)
by the interest rate of standard fixed interest rate stipulated in the list attached to
the Loan Agreement, Paragraph 6 (2) (c) with respect to a period from the first date of
the lease payment calculation period through the date on which a stipulated loss payment
should be paid plus [*]% (calculated on a pro-rate basis with 360 days a
year). In addition, if the SD Borrower B (as defined in the SD Loan Agreement) receives
the amount equivalent to subsidy as prescribed in Article 7, Paragraph 3 of the SD Loan
Agreement, the amount equivalent to the relevant subsidy shall be deducted from the above
total amount.(SD Tranche 1-C)(7)
    
    The amount obtained by multiplying the purchase price for the Property or unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (C)(8)
    
    The amount obtained by multiplying by the rate in the following (C) with respect to
the delivery date immediately before the date on which payment should be made for the
purchase price of the Property or its unit component part or lease payment date.
 
 *
    
    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. - 59 -




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(9)
    
    The amount of interest calculated by multiplying the amount mentioned above in (8)
by the interest rate of Euro Yen TIBOR stipulated in the list attached to the Loan
Agreement, Paragraph 6 (1) (c) with respect to a period from the first date of the lease
payment calculation period through the date on which a stipulated loss payment should be
paid plus [*]% (calculated on pro-rate basis with 360 days a year).
 (SD Tranche 2)
 (10)
    
    The amount obtained by multiplying the purchase price for the Property or unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (D)(11)
    
    The amount obtained by multiplying by the rate in the following (D) with respect to
the delivery date immediately before the date on which payment should be made for the
purchase price of the Property or its unit component part or lease payment date.(12)
    
    The amount of interest calculated by multiplying the amount mentioned above in (11)
by the interest rate of Euro Yen TIBOR stipulated in the list attached to the Loan
Agreement, Paragraph 6 (1) (c) with respect to a period from the first date of the lease
payment calculation period through the date on which a stipulated loss payment should be
paid plus [*]% (calculated on pro-rate basis with 360 days a year).
 (Toshiba Tranche 1-A)
 (13)
    
    The amount obtained by multiplying the purchase price for the Property or unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (E)(14)
    
    The amount obtained by multiplying by the rate in the following (E) with respect to
the delivery date immediately before the date on which payment should be made for the
purchase price of the Property or its unit component part or lease payment date.(15)
    
    The amount of interest calculated by multiplying the amount mentioned above in (14)
by the interest rate of Euro Yen TIBOR stipulated in the list attached to the Loan
Agreement, Paragraph 6 (1) (c) with respect to a period from the first date of the lease
payment calculation period through the date on which a stipulated loss payment should be
paid plus [*]% (calculated on pro-rate basis with 360 days a year).
 
 *
    
    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. - 60 -




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(Toshiba Tranche 1-B)
 (16)
    
    The amount obtained by multiplying the purchase price for the Property or its unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (F)(17)
    
    The amount obtained by multiplying by the rate in the following (F) with respect to
the delivery date immediately before the date on which their payment should be made for
the purchase price of the Property or its unit component part or lease payment date.(18)
    
    The amount of interest calculated by multiplying the amount mentioned above in (17)
by the interest rate of standard fixed interest rate stipulated in the list attached to
the Loan Agreement, Paragraph 6 (2) (c) with respect to a period from the first date of
the lease payment calculation period through the date on which a stipulated loss payment
should be paid plus [*]% (calculated on a pro-rate basis with 360 days a
year). In addition, if the Toshiba Borrower B (as defined in the Toshiba Loan
Agreement) receives the amount equivalent to subsidy as prescribed in Article 7,
Paragraph 3 of the Toshiba Loan Agreement, the amount equivalent to the relevant subsidy
shall be deducted from the above total amount.
 (Toshiba Tranches 2)
 (19)
    
    The amount obtained by multiplying the purchase price for the Property or unit
component purchase price with respect to the delivery date or lease payment date by the
rate referenced in the following (G)(20)
    
    The amount obtained by multiplying by the rate in the following (G) with respect to
the delivery date immediately before the date on which payment should be made for the
purchase price of the Property or its unit component part or lease payment date.(21)
    
    The amount of interest calculated by multiplying the amount mentioned above in (20)
by the interest rate of Euro Yen TIBOR stipulated in the list attached to the Loan
Agreement, Paragraph 6 (1) (c) with respect to a period from the first date of the lease
payment calculation period through the date on which a stipulated loss payment should be
paid plus [*]% (calculated on pro-rate basis with 360 days a year).
  
 *
    
    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. - 61 -




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10
    
    Payment method
  *  *  *  *
  
 *
    
    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. - 62 -




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*
 (2)
    
    Other monies, or in the event that proxy receipt for each Borrower stipulated in
Article 7, Paragraph 4 is cancelled, shall be remitted into the account of each Lessor,
each Lender or the SD Receivables Assignee in cash or by credit (Lessee shall bear the
bank remittance fee).
 *
 11
    
    The Lenders(The SD Lenders)
 
  
 
 
   
 *
    
    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. - 63 -




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12
    
    The Borrowers(SD Borrower)Tuolumne Funding Yugen Kaisha(Toshiba Borrower)Mariposa Funding Yugen Kaisha13
    
    SD Receivables AssigneeJapan Electric Computer Co., Ltd.14
    
    Guarantors(SanDisk)
 
  15
    
    Administrative Custodian, SD Lessor RA, and Toshiba Lessor RA(SD Administrative Custodian)SMBC Leasing Company, Limited(Toshiba Administrative Custodian)IBJ Leasing Co., Ltd.(SD Lessor RA)SMBC Leasing Company, Limited(Toshiba Lessor RA)Sumisho Lease Co., Ltd.
 16
    
    Composition of transactions
 (1)
    
    Lessor shall purchase from Lessee each unit component in each individual
transaction on the delivery date pursuant to the Sales and Purchase Agreement and
obtain the ownership thereof. The SD Lessor and the Toshiba Lessor share the
ownership of the Property in a ratio of 1:1.(2)
    
    The SD Lessor shall (1) pursuant to the SD Sale and Purchase Agreement regarding
Master Receivables, sell to the SD Borrower, at its own election and discretion, the
obligations related to SD Tranche 1-AB due under this Agreement on each delivery date
 - 64 -




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in order to raise an amount equivalent to about [*]% of the property
purchase price, and k pursuant to the SD Receivables Assignment Agreement, sell to
the SD Receivables Assignee, at its own election and discretion, the obligations related
to SD Tranche 1-C due under this Agreement on each delivery date in order to raise an
amount equivalent to about [*]% of the property purchase price(3) Pursuant to the Toshiba Sale and Purchase Agreement regarding Master Receivables, the
Toshiba Lessor shall sell to the Toshiba Borrower, at its own election and discretion,
the obligations related to Toshiba Tranche 1-AB due under this Agreement on each delivery
date in order to raise an amount equivalent to about [*]% of the property
purchase price.
 (4)
    
    To raise funds to purchase receivables/obligations, pursuant to the SD
Loan Agreement, the SD Borrower shall, at its own election and discretion, receive
financing from the SD Lenders on each delivery date.(5)
    
    To raise funds to purchase receivables/obligations, pursuant to the
Toshiba Loan Agreement, the Toshiba Borrower shall, at its own option and
discretion, receive financing from the Toshiba Lenders on each delivery date.(6)
    
    The SD Lessor and the Toshiba Lessor shall each raise an amount equivalent to about
[*]% of the property price from their own funds.(7)
    
    Lessor shall lease to Lessee the relevant unit component part on each
delivery date pursuant to this Agreement. The ratio of obligations with respect to
SD Tranche 1-AB, SD Tranche 1-C and Toshiba Tranche 1-AB and with respect to SD
Tranche 2 and Toshiba Tranche 2 shall be 1 to 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. - 65 -




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Request for Lease and Consent
 
         1
    
    Our company hereby applies to your company the property indicated below pursuant to the
Master Lease Agreement of September 22, 2006 (the Lease Agreement) executed between our
company and your companies.
 2
    
    Our company confirms that, with respect to each individual transaction subject to this
Request, its delivery date, lease period, the share of each Tranche, each amount of lease
payments, payment for exercise of purchase options, Return Adjustment Fee, repayment standard
fee and stipulated loss payment stipulated in Items 3, 6, 7, 8 and 9 of Attachment 1 to the
Master Lease Agreement after being agreed upon pursuant to
Article 4, Paragraph 3 of the Lease
Agreement, are as follows and provided in Attachment 2 to this Request.
 3
    
    Our company approves that all of the provisions of the Lease Agreement shall apply to each
individual transaction subject to this Request.
 1
    
    Property loanedProperty specifications : see Attachment 12
    
    Delivery date : (Month) (Day), 200
 - 66 -




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Lease period: [years ][months]from the date of delivery3
    
    Place of delivery: [800 Yamano-Issiki-cho, Yokkaichi City, Mie Prefecture]
  
          - 67 -




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- 68 -




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SD Tranche 1-A
    
    [*]SD Tranche 1-B
    
    [*]SD Tranche 1-C
    
    [*]SD Tranche 2
    
    [*]Toshiba Tranche 1-A
    
    [*]Toshiba Tranche 1-B
    
    [*]Toshiba Tranche 2
    
    [*]
   *
   *
   *
 Lease Agreement Attachment 1, Item 8 Repayment standard 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. - 69 -




---



##### 



Lease Agreement Attachment 1, Item 9 Stipulated loss payment
 *
 
 *
    
    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. - 70 -




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##### 



Loan Certificate
 
         1
    
    Our company hereby prepares and delivers to your company this Loan Certificate to certify the
receipt of the property indicated below pursuant to the Master Lease Agreement of September
22, 2006 executed between our company and your companies.2
    
    Our company confirms that, with respect to each individual transaction subject to this Loan
Certificate, its delivery date, lease period, the share of each Tranche, each amount of lease
payments, payment for exercise of purchase options, Return Adjustment Fee, repayment standard
fee and stipulated loss payment stipulated in Items 3, 6, 7, 8 and 9 of Attachment 1 of
Master Lease Agreement after being agreed upon pursuant to Article 4, Paragraph 3 of Master
Lease Agreement, are as follows and provided in Attachment 2 to this Loan Certificate.3
    
    Our company approves that all of the provisions of Master Lease Agreement set forth in Item
1, apply to each individual transaction subject to this Loan Certificate.1
    
    Property loanedProperty specifications : see Attachment 12
    
    Delivery date : (Month) (Day), 200Lease period : [years ][months]from the date of delivery3
    
    Place of delivery : [800 Yamano-Issiki-cho, Yokkaichi City, Mie Prefecture]
 - 71 -




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- 72 -




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##### 



SD Tranche 1-A
    
    [*]SD Tranche 1-B
    
    [*]SD Tranche 1-C
    
    [*]SD Tranche 2
    
    [*]Toshiba Tranche 1-A
    
    [*]Toshiba Tranche 1-B
    
    [*]Toshiba Tranche 2
    
    [*]
  *
   *
   *
 Lease Agreement Attachment 1, Item 8 Repayment standard 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. - 73 -




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##### 



Lease Agreement Attachment 1, Item 9 Stipulated loss payment
 *
 
 *
    
    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. - 74 -




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##### 



(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
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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 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.
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(a)
    
    Security interests/liens existing at the execution of
this Agreement and security interests/liens to guarantee refinancing debt
related to the secured debt.(b)
    
    Security interests/liens 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 ordinary course of business the right to select
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)
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in which SanDisk
independently, or SanDisk and its affiliated company, or a SanDisk affiliated company alone owns a majority interest directly or
indirectly on the date of decision, or (iii) any partnership in which
SanDisk or a SanDisk affiliated company is a general partner and owns a
majority 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/liens established in the assets of
SanDisk or its affiliated companies to secure accounts receivables or
inventory balances and financings thereof up to 50 percent of working
capital debt (debt borrowed under a credit facility available for use by
SanDisk or its affiliated companies, which is used for working capital or
some similar purpose) .(d)
    
    (i) Security interests/liens arising by reason of
court judgment, decision, or order (provided, however, that this shall
only apply if a bond sufficient for purposes of appealing such judgment,
decision, or order has been paid, and all legal procedures properly
instituted for the review of such judgment, decision, or order have not
been terminated, or the period within which such procedures may be
initiated has not expired); (ii) security interests to guarantee payment
of workers compensation insurance and other insurance; (iii) good-faith
deposit monies for deposits related to tenders, leases, and contracts
(excluding contracts for payment of money); and (4) deposits to secure a
public, government, or legal obligations, or appeal bonds.(e)
    
    Security interests to secure payable taxes, public
charges, and other governmental levies that are not yet due, and security
interests to secure taxes, public charges, and other governmental levies
that SanDisk or its affiliated companies are contested in court in good
faith and by appropriate procedures. Provided, however, that this shall
be limited to cases in which SanDisk or its affiliated 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
ordinary course of business.
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Provided, however, that this shall be
limited to assets acquired therein.(g)
    
    Judicial liens for carriers, warehousemen, workmen,
landlords, laborers,
material suppliers, and mechanics and other similar liens arising by
operation of law in the ordinary course of business and consistent with
standard industry practices, and any security interests on deposits 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 become due, or (ii) such lien is contested 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 title defects that are incurred by SanDisk or
its affiliated companies after it acquired the property subject thereto in
the ordinary course of business in a manner consistent with industry
practices and do not, whether in whole or in part, reduce the actual value
of the property and do not interfere with the ordinary operations of
SanDisk or its affiliated companies. Provided, however, that these
security interests are not incurred in connection with any borrowing of
money, any commitment to loan money or extending credit.(i)
    
    Security interests to secure acquired debt or
financings thereof ((i) debt existing at a time of any person who has
become a SanDisk affiliated company, or is merged with SanDisk or its
affiliated company, or (ii) debt assumed in connection with the
acquisition of assets from some person). Provided, however, that these
security interests shall be limited to those established in the assets
acquired.(j)
    
    A lease or sublease of assets of SanDisk or its
affiliated companies not materially interfering with the ordinary
operations of SanDisk or its affiliated company. Provided, however, that
such lease or sublease does not reduce the actual value of such assets.(k)
    
    Security interests arising from precautionary Uniform
Commercial Code financing statement filings related to operating leases
entered into by SanDisk or its affiliated company(l)
    
    Security interests arising from filing a notice of
intention by a mechanic, material supplier, or laborer under applicable
mechanics lien law or a
building contract filed by a contractor or
subcontractor thereunder
 - 79 -




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Certificate of Return
           1
    
    Property returnedProperty specifications : as listed in the attachment2
    
    Day of return : (Month) (Day), 200_3
    
    Place of return :
 - 80 -




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Certificate of Transfer
  
 1
    
    Transferee : Flash Partners Yugen Kaisha2
    
    Property specifications : as listed in the attachment
  Toshiba Finance Corporation.SMBC LeasingCompany, LimitedSumisho Lease Co., Ltd.Fuyo General Lease Co., Ltd.Tokyo Leasing Co., Ltd.STB Leasing Co., Ltd.IBJ Leasing Co., Ltd.
 - 81 -




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Conditions at the Time of Return
   *
     
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    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. - 82 -




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*
    
 *
    
    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. - 83 -




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*
 
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    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. - 84 -




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*
 * *
 
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    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. - 85 -




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Notification Address:
 
 *
  *
  *
  *
  *
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  *
 
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    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. - 86 -




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*
 
 *
    
    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. - 87 -