Document:

Document

Exhibit 10.7

CERTAIN CONFIDENTIAL PORTIONS HAVE BEEN REDACTED FROM THIS EXHIBIT BECAUSE THEY ARE BOTH (i) NOT MATERIAL AND (ii) A TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.  INFORMATION THAT HAS BEEN OMITTED HAS BEEN IDENTIFIED IN THIS DOCUMENT WITH A PLACEHOLDER IDENTIFIED BY THE MARK “[***]”.

     EXECUTION VERSION

OPERATING AGREEMENT OF FLASH ALLIANCE, LTD.

Dated as of July 7, 2006 between
TOSHIBA CORPORATION

and

SANDISK (IRELAND) LIMITED

												
	TABLE OF CONTENTS
		Page
	1.	DEFINITIONS, RULES OF CONSTRUCTION AND DOCUMENTARY CONVENTIONS	1
				
		1.1	Certain Definitions	1
		1.2	Additional Definitions	1
		1.3	Rules of Construction and Documentary Conventions	2
				
	2.	GENERAL PROVISIONS	2
				
		2.1	Ownership of Shares; Capital Increase 	2
		2.2	Name 
	3
		2.3	Principal Office	3
		2.4	Term; Extension	3
		2.5	Scope of Activity	3
		2.6	Powers	3
		2.7	Articles of Incorporation	3
		2.8	Company Actions	3
				
	3.	BUSINESS OPERATIONS	3
				
		3.1	Business Dealings with the Company	3
		3.2	Other Activities	4
		3.3	Personnel	4
		3.4	Business Plans and Related Matters	6
		3.5	Standard of Care	7
		3.6	Use of Names	7
				
	4.	ACTIONS BY THE SHAREHOLDERS 	7
				
		4.1	Matters Requiring the Approval of the Shareholders	8
		4.2	General Meetings of Shareholders	10
		4.3	Restrictions on Shareholders	10
				
	5.	MANAGEMENT AND OPERATIONS OF COMPANY	11
				
		5.1	Meetings of the Directors	11
		5.2	Officers; Employees	16
		5.3	Y4 Representatives; Y4 Operating Committee	16
		5.4	Insurance	17
		5.5	Records 	17
				
	6.	CAPITAL CONTRIBUTIONS; DISTRIBUTIONS	18
				
		6.1	Capital Contributions	18
		6.2	Distributions	18
		6.3	No Interest.	19
		6.4	Return of Capital Contributions	19
				
	7.	ADDITIONAL CONTRIBUTIONS	19
				
				
				
				

												
	TABLE OF CONTENTS
(continued)

				Page
	8.	ACCOUNTING AND TAXATION	19
				
		8.1	Financial Accounting Conventions	19
		8.2	Maintenance of Books of Account	20
		8.3	Financial Statements 	20
		8.4	Other Reports and Inspection	22
		8.5	Characterization	22
		8.6	Deposit of Funds	22
				
	9.	SHARES OF CONTRIBUTION; DISPOSITION OF SHARES	22
				
		9.1	Restrictions on Transfer of Shares	22
		9.2	Admission of New Shareholders	24
		9.3	Withdrawal Prohibited	24
		9.4	Purchase of Additional Interest.	24
				
	10.	CERTAIN AGREEMENTS OF THE SHAREHOLDERS	25
				
		10.1	Taxes and Charges; Governmental Rules	25
		10.2	Fu1ther Assurances	25
		10.3	Dispute Resolution; Deadlock	25
		10.4	Remedies Upon Event of Default; Termination on Breach	27
		10.5	Mechanics of Sale	27
				
	11.	DISSOLUTION	28
				
		11.1	Events of Dissolution	28
		11.2	Dissolution by Agreement 	28
		11.3	Dissolution Upon Event of Default	28
		11.4	Dissolution by Unilateral Option	29
		11.5	Dissolution upon Notice	29
		11.6	Financing Defaults	29
		11.7	Winding Up	30
		11.8	Liquidation Proceeds	30
				
	12.	INDEMNIFICATION AND INSURANCE	30
				
		12.1	Indemnification	30
		12.2	Insurance	31
		12.3	Indemnification by the Shareholders	31
		12.4	Assertion of Claims	
				
	13.	MISCELLANEOUS	32
				
		13.1	Governing Law	32
		13.2	Effectiveness	32
				
				

									
	TABLE OF CONTENTS
(continued)

			
	EXHIBITS
		
			
	Exhibit A	Articles of Incorporation of the Company
			
	SCHEDULES		
			
	Schedule 2.1(b) 	Committed Additional Capital Contributions 

	Schedule 5.3	Management and Operating Reports
	Schedule 6.1	Capital Contributions 
	Schedule 8.3	Monthly Reports
			

			
	EXECUTION VERSION

OPERATING AGREEMENT of FLASH ALLIANCE, LTD., a Japanese limited liability company (tokurei yugen kaisha), dated as of July 7, 2006, between TOSHIBA CORPORATION, a Japanese c01poration. ("Toshiba"), and SANDISK (IRELAND) LIMITED, a company organized under the laws of the Republic of Ireland ("SanDisk").    
WHEREAS, Flash Alliance, Ltd. (the "Company") is a Japanese limited liability company (tokurei yugen kaisha);
WHEREAS, pursuant to that certain Share Purchase Agreement, dated as of the date hereof, by and between SanDisk and Toshiba, concurrently with the execution hereof, SanDisk has acquired from Toshiba 1,497 shares in the Company ("Shares''), representing 49.9% of all issued and outstanding Shares;
WHEREAS, Toshiba holds the remaining 1,503 Shares, representing 50.1% of all issued and outstanding Shares; and
WHEREAS, SanDisk and Toshiba (each a "Shareholder") desire to enter into this Operating Agreement in order to provide, subject to the Companies Act and the Articles of Incorporation of the Company (as amended from time to time, the "Articles") for (i) the business of the Company, (ii) the conduct of the Company's affairs and (iii) the rights, powers, preferences, limitations and responsibilities of the Company's Shareholders, employees and Directors.
Accordingly, Toshiba and SanDisk agree as follows:
1.DEFINITIONS, RULES OF CONSTRUCTION AND DOCUMENTARY CONVENTIONS
1.1 Certain Definitions.
(a)Capitalized terms used but not defined in the main body of this Agreement shall have the respective meanings assigned to them in that certain Flash Alliance Master Agreement, dated as of the date hereof, among SanDisk, SanDisk Corporation and Toshiba (the "Master Agreement") or in Appendix A to the Master Agreement.
(b)As used herein, the term "Agreement" means this Operating Agreement together with any Exhibits, Schedules, Appendices and Attachments hereto.
1.2Additional Definitions. The following capitalized terms used in this Agreement shall have the respective meanings assigned in the sections indicated below:

EXECUTION VERSION

						
	Term	Defined in
	"Appendix A"	Recitals
	"Articles"	Recitals
	"Bankruptcy Event"	Section 11.1(f)
	"Claim"	Section 12.4(a)
	"Company"	Recitals
	"Deadlock"	Section 10.3(c)
	"Deadlock Dissolution Notice"	Section 10.3(e)
	"Defaulting Shareholder'' 	Section 10.4
	"Designated Individuals''	Section 10.3(b)
	"Director(s)"	Section 3.5(a)
	"Executive Vice President"	Section 5.2(a)
	 "General Meeting of Shareholders'' 	Section 4.l(b) 
	"Indemnified Party"	Section 12.4(a)
	"Indemnifying Party"	Section 12.4(a)
	"Initiating Shareholder"	Section 10.3(e)
	"Losses"	Section 12.l(a)
	"Master Agreement"	Section l.l(a)
	"Nondefaulting Shareholder"	Section 10.4
	"Notified Patty"	Section 11.5
	"Notifying Party"	Section 11.5
	"Permissible Assignee"	Section 9. l(c)
	·"Permissible Assignment Agreement"	Section 9.l(c) 
	"President"	Section 5.2(a)
	"Responding Shareholder''	Section 10.3(e)
	"SanDisk Representative"	Section 5.3(a)
	"Shares"	Recitals
	"Shareholder"	Recitals
	"Termination Date"	Section 11.4
	"Toshiba Representative"	Section 5.3(a)
	"Y4 Operating Committee"	Section 5.3(a)

1.3Rules of Construction and Documentary Conventions. The rules of construction, documentary conventions and general terms and conditions set forth in Appendix A shall apply to, and are hereby incorporated in, this Agreement.
2.GENERAL PROVISIONS
2.1Ownership of Shares; Capital Increase.
(a)The rights and obligations of the Shareholders shall be as set forth herein, subject to the Articles and mandatory provisions of the Companies Act.
(b)The Shareholders shall effect the capital increases in the amounts and at the times stipulated in Schedule 2.1(b).

EXECUTION VERSION

2.2Name. The name of the Company is “Flash Alliance Yugen Kaisha,” which translates to "Flash! Alliance, Ltd." in English, and all Company business shall be conducted in that name or such other name as the Shareholders shall mutually agree.
2.3Principal Office. The principal office of the Company shall be located in Yokkaichi, Mie, or such other place as the Shareholders shall mutually agree.
2.4Term: Extension. The Company shall be terminated on December 31, 2021, unless extended by mutual written agreement of all of the Shareholders or earlier terminated in accordance with Section 11 (Dissolution). Any such extension shall be effective only upon the written agreement of all of the Shareholders and shall be on such terms and for such period as set forth in such agreement. The Shareholders agree to meet, no later than December 31, 2020, to discuss the possible extension of the term of the Company.
2.5Scope of Activity. The scope of activity of the Company shall be as set forth in Section 3.1 (Purpose) and 6.7 (Capacity Sharing Arrangement) of the Master Agreement.
2.6Powers. The Company shall have all the powers now or hereafter conferred by applicable law on limited liability companies formed under the Companies Act and may do any and all acts and things necessary, incidental or convenient to the purpose specified in Section 2.5 (Scope of Activity).
2.7Articles of Incorporation. On the date hereof and immediately following the execution of this Agreement, the Shareholders shall hold a general meeting of the Shareholders and, among other matters agreed between them, vote their Shares to amend the Articles so that they will be in the form of Exhibit A. In the event of any conflict between this Agreement and the Articles, the Shareholders confirm their intent that the terms of this Agreement shall prevail, and on the request of either Shareholder, the Shareholders shall amend the Articles to conform with this Agreement to the extent legally possible; provided that the inability to implement such amendment shall not relieve any Shareholder from liability for any breach of its obligations hereunder.
2.8Company Actions. The Shareholders hereby authorize the Company, and ratify (including for purposes of Section 4.1 (Matters Requiring the Approval of the Shareholders)) all action having been taken by or on behalf of the Company (including by its Shareholders and Directors) prior to the date hereof, to execute and deliver the FA Operative Documents to which it is a party, including all certificates, agreements and other documents required in connection therewith.
3.BUSINESS OPERATIONS
3.1Business Dealings with the Company. Subject to Sections 4.1(a) (Matters Requiring the Approval of the Shareholders) and 5.1(d) (Matters Requiring the Approval of the Board of Directors), the Company may enter into contracts or agreements, or otherwise enter into transactions or dealings, with any Shareholder or any of their respective Affiliates, and derive and retain profits therefrom. The validity of any such contract, agreement, transaction or dealing or any payment or profit related thereto or derived therefrom shall not be affected by any relationship between the Company and any Shareholder or any of their respective Affiliates, subject to the Companies Act. The Shareholders agree that where pract1 able and contractually allowable (based on competitive price, availability and other material terms), the Board of Directors will consider whether to utilize any Shareholder or any of their respective Affiliates as the preferred providers of products and services that may be required in the manufacturing operations of the Company, subject to the ability of such Shareholder or Affiliate to meet the Company's manufacturing requirements on competitive terms. Unless otherwise approved by the Shareholders or otherwise expressly provided in the FA Operative Documents, all business dealings of the Company with any Shareholder or any of their respective Affiliates shall be on the most beneficial standard 

EXECUTION VERSION

commercial terms and conditions, including volume, price and credit terms, currently offered or made available to unaffiliated customers by such Shareholder or Affiliate, as the case may be, with respect to the products and services to be offered and provided to the Company.
3.2Other Activities. The provisions- of Section 6.13 (Other Activities) of the Master Agreement are hereby incorporated herein by reference.
3.3Personnel. The provisions of Section 6.10 (FA Management Structure and Headcount) of the Master Agreement are hereby incorporated herein by reference.
3.4Business Plans and Related Matters.
(a)Initial and Subseguent Business Plans. The initial Business Plan of the Company, setting forth the Company's products, pricing, operating budget, capital expenditures, expense budgets, financing plans and other business activities of the Company through the [***], will be agreed upon and certified by the Board of Directors as soon as practicable after the Closing.
(i)The initial Business Plan and each successive Business Plan will, at the time such Business Plan is in effect, represent the Company's then-current forecast of the proposed operations of the Company.
(ii)An updated Business Plan complying with Section 3.4(b) (Form and Scope) in respect of each successive Fiscal Year after the [***] shall be prepared under the direction of the Chief Executive Officer of the Company and submitted to the Board of Directors for review and approval not later than the [***] preceding the commencement of such Fiscal Year.
(iii)When the proposed Business Plan in respect of a Fiscal Year is approved by the Board of Directors, it shall constitute the Business Plan of the Company for such Fiscal Year and the Company and its directors and employees shall implement such Business Plan, which shall be the basis of the Company's operations for such Fiscal Year. Upon approval, the approved Business Plan shall constitute the approved operational, financing and capital expenditure budget. The Board of Directors shall have the authority pursuant to Section 5.l(d) (Matters Requiring the Approval of the Board of Directors) to amend the most recently approved Business Plan, including the operating budget contained therein, and any Shareholder may request that the Board of Directors review the Company's operating results and prospects, as well as market conditions, and consider a proposal for amendment or review of the most recently approved Business Plan at any regularly scheduled or special meeting of the Board of Directors and upon such request, the Board of Directors shall in good faith make such review and/or consider such proposal.
(b)Form and Scope. Each Business Plan shall contain a statement of long-range strategy and short-range tactics detailing quantitative and qualitative goals for the Company and relating the attainment of those goals to the Company's manufacturing objectives, and shall include such items as planned capital expenditures, planned product development, planned product output and projected product cost, sales forecasts, total headcount, total spending and revenue and profit projections, financing plans and tax planning. No Business Plan shall be deemed to be an amendment of this Agreement. Any capital commitments made in any Business Plan for a period after the Fiscal Year to which the Business Plan applies shall be considered non-binding for purposes of any FA Operative Document.

EXECUTION VERSION

(c)Approval. Other than the initial Business Plan (which shall be approved in accordance with Section 3.4(a)), the Board of Directors shall vote upon the proposed Business Plan, with such modifications as it may deem necessary, before [***] preceding the commencement of each Fiscal Year. Subject to Sections 10.3(c), (e) and (f) (Dispute Resolution; Deadlock), pending approval by the Board 9f Directors of any proposed Business Plan, the most recently approved Business Plan shall continue in effect; provided, however, the Board of Directors may, by unanimous vote, adopt an amended interim business plan for the Company's operations until it is able to reach agreement on the proposed Business Plan for the forthcoming year.
3.5Standard of Care.
(a)Each Shareholder, and each director of the Company, as defined in the Companies Act (each, a "Director''), shall be entitled to rely (unless such Person has knowledge or information concerning the matter in question that makes reliance unwarranted) on information, opinions, reports or statements, including financial statements and other financial data, if prepared or presented by:
(i)one or more managers or employees of the Company who such Shareholder or Director believes in good faith to be reliable and competent in the matters presented; or
(ii)legal counsel, public accountants or other Persons as to matters that such Shareholder or Director believes to be within such Person's professional or expert competence,
(b)Each Shareholder shall also be entitled to rely upon information, opinions, repo1ts or statements, including financial statements and other financial data, prepared or presented by the Board of Directors pursuant to the responsibilities delegated to the Board of Directors pursuant to this Agreement.
3.6Use of Names. Except as may be expressly provided in the FA Operative Documents, nothing in this Agreement shall be construed as conferring on the Company or any Shareholder the right to use in advertising, publicity or other promotional activities any name, trade name, trademark or other designation of any other Shareholder or any of its Affiliates, including any contraction, abbreviation or simulation of any of the foregoing.
4.ACTIONS BY THE SHAREHOLDERS
4.1Matters Requiring the Approval of the Shareholders.
(a)Notwithstanding any provision of the Articles to the contrary, no action shall be taken by or on behalf of the Company in connection with any of the following matters. without the prior unanimous written approval of the Shareholders:
(i)any amendment, restatement or revocation of the Articles;
(ii)any amendment to or renewal of any FA Operative Document between the Company and any Shareholder or any of their respective Affiliates;
(iii)any change in the scope of activity or strategic direction of the Company's business;
(iv)any merger, consolidation or other business combination to which the Company or any of its Subsidiaries is a party, or any other transaction to which the Company is a party resulting in a Change of Control of the Company;

EXECUTION VERSION

(v)any sale, lease, pledge, assignment or other disposition of assets of the Company in an amount (in terms of consideration to be received by the Company) in excess of ¥5,000,000 in one transaction or a series of related transactions, other than as expressly provided for in the FA Operative Documents or as set forth in the most recently approved Business Plan;
(vi)the approval of any transaction or agreement between the Company and any Shareholder or any of their respective Affiliates (other than transactions or agreements expressly provided for or authorized by an FA Operative Document or the most recently approve Business Plan) or any amendment thereto (including the waiver of any material term thereof), other than any such transaction, agreement or amendment that contains generally available, arm's length commercial terms and is in an amount (in terms of payments to be made or the value of services or products to be provided or delivered) less than ¥5,000,000 for any single transaction or agreement or for substantially identical transactions within a 24 month period (or a waiver that does not materially adversely affect the rights and benefits of the Company), other than as set forth in the most recently approved Business Plan;
(vii)incurring Indebtedness in an amount in excess of¥1,000,000 or an increase in aggregate Indebtedness in excess of ¥1,000,000 in any calendar quarter, other than as authorized by Section 5.1(d) (Matters Requiring the Approval of the Board of Directors);
(viii)with respect to the Company or any of its Subsidiaries, (A) the voluntary commencement of any proceeding or the voluntary filing of any petition seeking relief under Japanese or foreign bankruptcy, insolvency, receivership or similar law, (B) the consent to the institution of, or the failure to contest in a timely and appropriate manner, any involuntary proceeding or any involuntary filing of any petition of the type described in clause (A) above, (C) the application for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Company, or for a substantial part of its property or assets, (D) the filing of an answer admitting the material allegations of a petition filed against the Company in any such proceeding described above, (E) the consent to any order for relief issued with respect to any such proceeding described above, (F) the making of a general assignment for the benefit of creditors, (G) the admission in writing of the Company's inability, or the failure of the Company generally, to pay its debts as they become due or (H) the taking of any action for the purpose of effecting any of the foregoing;
(ix)subject to Section 9.1(a) and Appendix A, the granting of consent to the transfer of any Shares;
(x)the winding up, dissolution or liquidation of the Company or any of its Subsidiaries (other than the dissolution of the Company pursuant to and as contemplated by Sectio11 11 (Dissolution));
(xi)the acquisition of any business, entry into any joint venture or partnership, or creation of any direct or indirect Subsidiary of the Company;
(xii)the commitment of the Company to any development project;
(xiii)the sale, license, assignment or other Transfer of any of the Company's intellectual property owned or in its possession (including any technology or 

EXECUTION VERSION

know-how, whether or not patented, any trademark, trade name or service mark, any copyright or any software or other method or process);
(xiv)any increase or decrease in the capital amount of the Company, whether by increasing the number of the Shares or otherwise;
(xv)any other matter material to the operation, staffing, business or financial condition of the Company; and
(xvi)any matter required by the Companies Act to be decided, in the case of a limited liability company (tokurei yugen kaisha) by its shareholders.
(b)Each Shareholder may exercise its vote by proxy; provided, that such proxy shall submit to the Company, prior to the relevant General Meeting of Shareholders, as defined in the Companies Act (the "General Meeting of Shareholders"), a power of attorney duly signed by the Shareholder and/or other document establishing its power of representation; and provided, further, that the conferment of the power of proxy for one General Meeting of Shareholders shall not be deemed to be a conferment of the power of proxy for any subsequent General Meeting of Shareholders.
(c)Notwithstanding the requirements of Section 4.1(a) (Matters Requiring the Approval of the Shareholders) relating to agreements between the Company and any Shareholder or any of their respective Affiliates, any question regarding a material default or alleged material default (including any question regarding a breach of representation or alleged breach of representation) under ;my FA Operative Document between the Company and any Shareholder or any of their respective Affiliates shall be subject to the dispute resolution process set forth in Sections 10.3(a) and (b) (Dispute Resolution; Deadlock).
4.2General Meetings of Shareholders.
(a)An annual General Meeting of Shareholders shall be held within three (3) months from the date immediately following the last day of each fiscal Year of the Company. A special General Meeting of Shareholders may be held at any time and may be called by a resolution of the Board of Directors or in any other manner permitted by the Companies Act or the Articles. All General Meetings of Shareholders shall be called and held in accordance with the Articles and the Companies Act. The General Meetings of Shareholders may be held at the Company's principal office or at any other location, or, if all the Shareholders agree, and to the extent then permitted by the Companies Act, by telecommunications conferences by means of which all persons pa1ticipating in the meeting can hear and be heard by each other, provided that such communications equipment continues to be operational throughout the meeting. To the extent then permitted by the Companies Act, the Shareholders may by unanimous written consent effect any resolution that could otherwise be resolved at a meeting of the Shareholders.
(b)Except as otherwise provided in this Agreement, each Shareholder shall be entitled to one vote for each Share owned by such Shareholder.
(c)The minutes of every General Meeting of Shareholders shall be kept with the· Company's records referred to in Section 5.5 (Records).
(d)The quorum necessary for any General Meeting of Shareholders shall be those Persons entitled to cast all of the votes held by the Shareholders. A quorum shall be deemed not to be present at any meeting for which notice was not properly given under the A1iicles or the Companies Act, unless the Shareholder as to whom such notice was not properly 

EXECUTION VERSION

given attends such meeting without protesting the lack of notice or duly executes and delivers a written waiver of notice or a written consent to the holding of such meeting.
4.3Restrictions on Shareholders. No Shareholder may, without the prior written consent of the other Shareholder:
(a)confess any judgment against the Company;
(b)enter into any agreement on behalf of or otherwise purport to bind the other Shareholder or the Company;
(c)do any act in contravention of this Agreement;
(d)except as contemplated by Section 11 (Dissolution), dispose of the goodwill or the business of the Company; or
(e)assign the property of the Company in trust for creditors or on the assignee's promise to pay any Indebtedness of the Company.
5.MANAGEMENT AND OPERATIONS OF COMPANY
5.1Meetings of the Board of Directors.
(a)General. The Shareholders agree to form a steering committee consisting of Directors nominated by each of the Shareholders. The Shareholders acknowledge and agree that while. under the Companies Act a limited liability company (tokurei yugen kaisha) does not have a board of directors, for convenience they will in this Agreement (and elsewhere in the FA Operative Documents) refer to such committee as the "Board of Directors'' ("yakuin kai"). Except as otherwise provided herein, as between the parties the Board of Directors is vested with complete and exclusive power to direct and control the Company and to manage the Company as provided by the Articles and this Agreement, as it may be amended from time to time. The Board of Directors shall have the power to delegate such responsibilities as it' may deem appropriate from time-to-time (including ce1tain day-to-day responsibilities set forth in Section 5.2 (Officers; Employees) and Section 5.3 (Y4 Operating Committee)). The Shareholders shall cooperate in taking any necessary corporate steps under the Companies Act to attain the purposes of this Section 5, including without limitation, approval by the Directors and general meeting of shareholders with respect to decisions made by the Board of Directors.
(b)Members of the Board of Directors; Voting; etc.
(i)The Board of Directors of the Company shall consist of six (6) Directors, three (3) of which shall be nominated by Toshiba, and the other three (3) of which shall be nominated by SanDisk; provided that the total number of Directors of the Company may be changed by mutual agreement of the Shareholders. Each Shareholder shall vote its Shares to elect as Directors those persons nominated by the other Shareholder.
(ii)Directors shall be elected to serve until complete adjournment of the annual meeting of Shareholders for the fiscal year last to end within one (1) year after his or her assumption of the directorship, and shall be eligible for re-election.
(iii)Subject to the fiduciary duty of Directors under the Companies Act, each Director shall serve at the pleasure of the designating Shareholder and may be removed as such, with or without cause, and his successor designated, by the designating Shareholder. Each Shareholder shall have the right to designate a replacement 

EXECUTION VERSION

Director in the event of any vacancy among such Shareholder's appointees. Each Shareholder shall vote its Shares in favor of any such removal and in favor of any such replacement Director.
(iv)Each Shareholder shall bear any cost incurred by any Direct01· nominated by it to serve on the Board of Directors, and no Director shall be entitled to compensation from the Company for serving in such capacity.
(v)Each Shareholder shall notify the other Shareholder and the Company of the name, business address and business telephone, e-mail address and facsimile numbers of each Director that such Shareholder h s nominated. Each Shareholder shall promptly notify the other Shareholder and the Company of any change in such Shareholder's nominated or of any change in any such address or number.
(vi)For purposes of any approval or action taken by the Board of Directors, each Director shall have one vote. Unless otherwise required under Japanese law, unanimous agreement of all Directors is required for valid action to be taken by the Board of Directors.
(vii)At any meeting of the Board of Directors, each Director may exercise his vote by proxy; provided, that such proxy shall submit to the Company, prior to the relevant meeting, a power of attorney duly signed by the Director and/or other document establishing its power of representation; and provided, further, that the conferment of the power of proxy for one meeting of the Board of Directors shall not be deemed to be a conferment of the power of proxy for any subsequent meeting of the Board of Directors.
(viii)The quorum necessary for any meeting of the Board i of Directors shall be those Directors entitled to cast all of the votes held by the members of the Board of Directors. A quorum shall be deemed not' to be present at any meeting for which notice was not properly given under Section 5.l(c) (Meetings, Notices, etc.), unless the Director or Directors as to whom such notice was not properly given attend such meeting without protesting the lack of notice or duly execute and deliver a written waiver of notice or a written consent to the holding of such meeting.
(c)Meetings, Notice, etc.    Meetings of the Board of Directors shall be held at such location or locations as may be selected by the Board of Directors from time to time.
(i)Regular meetings of the Board of Directors shall be held on such dates and at such times as shall be determined by the Board of Directors and shall be held at least on a quarterly basis, unless otherwise agreed by the Directors.
(ii)Notice of any regular meeting or special meeting pursuant to Section 5.l(c)(iii) shall be given to each Director at least ten (10) Business Days prior to such meeting in the case of a meeting in person or at least five (5) Business Days prior to such meeting in the case of a meeting by conference telephone or similar communications equipment pursuant to Section 5.l(c)(vii), which notice shall state the purpose or purposes for which such meeting is being called and include any supporting documentation relating to any action to be taken at such meeting.
(iii)Special meetings of the Board of Directors may be called by any Director by notice given in accordance with the notice requirements set forth in Section 5.l(c)(ii); provided that the Directors appointed by the Shareholder that is not 

EXECUTION VERSION

represented by the Director calling such special meeting shall be entitled to select a convenient location for the meeting and to suggest an alternative time or times if the designated time is not convenient for them. No action may be taken and no business may be transacted at such special meeting which is not identified in such notice unless (A) such action or business is incidental to the action or business for which the special meeting is called or (B) such action or business does not materially adversely affect any Shareholder or the Company.
(iv)Each Shareholder may invite a reasonable number of observers to all meetings of the Board of Directors.
(v)The minutes of each meeting of the Board of Directors shall be delivered to all Directors within twenty (20) calendar days after such meeting. Material to be presented at a Board of Directors meeting shall be delivered to all Directors ten (10) Business Days prior to such meeting if feasible in light of the circumstances giving rise to the need for such meeting, or in any event a minimum of five (5) Business Days prior to such meeting.
(vi)The actions taken by the Board of Directors at any meeting, however called and noticed, shall be as valid as though taken at a meeting duly held after regular call and notice if (but not until), either before, at or after the meeting, each Director as to whom such meeting was improperly held duly executes and delivers a written waiver of notice or a written consent to the holding of such meeting; provided, however, any Director who is present at a meeting and does not protest the failure of notice shall be deemed to have received adequate notice thereof. A vote of the Board of Directors may be taken only (A) at a meeting of the members thereof duly called and held or (B) without a meeting by the execution by the Directors eligible to cast all the votes on the Board of Directors of a consent setting forth the action so taken, and identified as a unanimous written consent of the Directors.
(vii)Upon the consent of both Representative Directors, meetings of the Board of Directors may be held by conference telephone or similar communications equipment by means of which all Directors participating in the meeting can be heard by all other participants; provided that such communications equipment continues to be operational throughout the meeting. Any Director may elect to pa1ticipate in a meeting by conference telephone or similar communications equipment upon sufficient advance notice to permit arrangements therefor to be made.
(viii)At each meeting, the Board of Directors shall consider (A) any of the items set forth in Section 5.l(d) (Matters Requiring the Approval of the Board of Directors) that may require the Board of Directors' attention, (B) any items added to the Board of Directors' agenda for discussion by any Shareholder and (C) such other matters as the Board of Directors decides to review; provided, however, that the Directors shall not be required to vote or take other action (other than carrying on discussions) on matters that were not placed on the meeting agenda at least five (5) Business Days in advance of the time set for the meeting unless such action or business is incidental to the action or business which was otherwise properly on the agenda and considered at such meeting.
(ix)The Board of Directors shall, from time to time, elect one of its members to preside at its meetings. The Board of Directors may establish reasonable rules and 

EXECUTION VERSION

regulations to (A) require officers to call meetings and perform other administrative duties, (B) limit the number and participation of observers, if any, and require them to observe confidentiality obligations and[(C) otherwise provide for the keeping and distribution of minutes and other internal Board of Directors governance matters not inconsistent with the terms of this Agreement.
(x)Subject to the Companies Act, the Board of Directors shall have the authority to establish subcommittees and to delegate to any such subcommittee any of the Board of Directors' responsibilities; provided, however, the power of the Board of Directors to approve the matters set forth in Section 5.1(d) (Matters Requiring the Approval of the Board of Directors) may not be delegated to a subcommittee.
(d)Matters Requiring the Approval of the Board of Directors. Notwithstanding any provision of the Articles to the contrary, no action may be taken by or on behalf of the Company in connection with any of the following matters without the unanimous written approval of the Board of Directors:
(i)any sale, lease, pledge, assignment or other disposition of assets of the Company in an amount (in terms of consideration to be received by the Company) in excess of ¥1,000,000 in one transaction or a series of related transactions, other than as set forth in the most recently approved Business Plan;
(ii)the approval of any transaction or agreement between the Company and any Shareholder or any of their respective Affiliates (other than transactions or agreements expressly provided for or authorized by an FA Operative Document or the most recently approved Business Plan) or any amendment thereto (including the waiver of any material term thereof), other than any such transaction, agreement or amendment that contains generally available, arm's length commercial terms and is in an amount (in terms of payments to be made or the value of services or products to be provided or delivered) less than ¥1,000,000 for any single transaction or agreement or for substantially identical transactions within a 24 month period (or a waiver that does not materially adversely affect the rights and benefits of the Company), other than as set forth in the most recently approved Business Plan;
(iii)the purchase, lease, license or other acquisition of (A) personal property or services or (B) any list of capital equipment approved by the Shareholders, in each case in an amount (in terms of payments to be made or the value of services of products to be provided or delivered) exceeding ¥1,000,000 in any one transaction or a series of related transactions, other than as provided for in the most recently approved Business Plan;
(iv)the selection of attorneys, accountants, auditors and financial advisors; 
(v)the adoption of accounting and tax policies, procedures and principles; 
(vi)incurring any Indebtedness; 
(vii)the hiring or termination of any employees referenced in Section 5.2(a) (Officers; Employees) who are not members of the SanDisk Team, if any;
(viii)the adoption of or changes to the forms of confidentiality, assignment or disclosure of intellectual property or employment agreements to be entered into between the Company and its employees;

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(ix)the adoption of or changes to any employee benefit plan, including any incentive compensation plan;
(x)the amount and timing of any distributions;
(xi)the commencement or settlement of litigation by or against the Company;
(xii)the purchase, sale or lease (as lessor or lessee) of any real property;
(xiii)any acquisition of securities or any other ownership interest in any entity;
(xiv)the making of any public announcements by or on behalf of the Company; provided, that in any case any such public announcements must otherwise comply with the requirements of Section 5.2 (Public Announcements) of the Master Agreement, if applicable;
(xv)the entry into or amendment of any collective bargaining arrangements or the waiver of any material provision or requirement thereof;
(xvi)the approval of a proposed Business-Plan, or the amendment to the most recently approved Business Plan, in each case including the operating budget contained therein;
(xvii)the incurrence of capital expenditures in excess of those provided for in the most recently approved Business Plan or the commitment of the Company to any development projects other than as provided for in the most recently approved Business Plan;
(xviii)subject to Section 5.1(c)(x), the establishment of any subcommittees or delegation of authority of the Board of Directors;
(xix)the authorization and approval of any filing with, public comments to, or negotiation/discussion with, any Governmental Authority (excluding regular operating filings and other routine administrative matters);
(xx)the approval of Unique Activities to be performed by the Company at the request of any Shareholder, in connection with which the Board of Directors shall be satisfied that such Shareholder has reached agreement with the Company as to the payment by such Shareholder of all costs incurred in connection with such Unique Activities and that adequate provision has been made by such Shareholder for the funding of any additional required capital expenditures required in conjunction with such Unique Activities;
(xxi)the decision of the Company to negotiate external sources of additional wafer fabrication capacity for NAND Flash Memory Products;
(xxii)any dispute referred to the Board of Directors by the Y4 Operating Committee pursuant to Section 5.3(b); and
(xxiii)such other matters as the Board of Directors decides, in its sole discretion, to review.
5.2Officers; Employees.
(a)Unless otherwise mutually agreed by the Shareholders, the Directors of the Company with specific titles shall be designated as the Representative Director/President/Chief Executive Officer ("President") and the Representative Director/Executive Vice President 

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("Executive Vice President"). The President and Executive Vice President shall be elected by the Board of Directors and serve three successive one-year terms, with the first such set of terms ending at complete adjournment of the annual meeting of Shareholders for the fiscal year last to end within one (1) year after his 01· her assumption of the officership. Toshiba shall have the right to nominate the first President and SanDisk shall have the right to nominate the first Executive Vice President, and then the Shareholders will then alternate such nominating rights for each three year term for such positions. Each nominee for the President and for the Executive Vice President shall be subject to the consent of the non-nominating Shareholder, which consent shall not unreasonably be withheld. In addition to the President and Executive Vice President, the Board of Directors may appoint such other officers from time to time as it deems necessary or advisable in the conduct of the business and affairs of the Company. Any individual may hold more than one office,
(b)The President shall have the authority to retain other senior management of the Company, subject to the prior approval of the Board of Directors.
(c)The Company shall have agreements with and policies applicable to each of its officers, employees and consultants who are not members of the SanDisk Team, in fo1ms acceptable to each Shareholder, and shall also have appropriate arrangements with its members of the SanDisk Team, in each case with respect to (i) protection of confidential information, (ii) patent and copyright assignment, (iii) invention disclosure (including improvements and advances) and assignments thereof and (iv) in respect of certain employees who are not members of the SanDisk Team, non competition.
5.3Y4 Representatives: Y4 Operating Committee.
(a)The Company shall have an Operating Committee for Y4 Facility operations (the "Y4 Operating Committee") consisting of a senior executive designated by each of SanDisk and Toshiba (each such individual the "SanDisk Representative'' and the "Toshiba Representative," respectively) each of whom shall represent the designating Party on a day-to-day basis at the Y4 Facility. Each Shareholder shall notify the other Shareholder in advance of any replacement of its representative. If a Shareholder requests in good faith that the other Shareholder's representative be replaced with another person from the other Shareholder's organization, the other Shareholder shall consider and discuss in good faith with the requesting Shareholder such request, provided that such replacement, if any, shall be determined solely by such other Shareholder. [***]
(b)The Y4 Operating Committee shall work together and endeavor to make the Y4 Facility the most advanced and competitive memory fabrication facility in the world. The Y4 Operating Committee shall have the authority to determine all matters concerning the day-to-day operations of the Company and the Y4 Facility [***] subject to those matters reserved herein to the Board of Directors or the Shareholders as well as to the requirements of this Agreement, the Articles and the Companies Act The Y4 Operating Committee shall communicate on a day-to-day basis with respect to the status of Y4 Facility operations and any other issues that may arise, and shall meet in person no less than two (2) times per week, or such other times and frequency as may be agreed upon by all members of such committee. If the members of the Y4 Operating Committee are unable to agree on any issue after thirty (30) days, they shall submit such matter together with their respective recommendations to the Board of Directors, which shall endeavor to immediately resolve the issue. If the Board of Directors is unable to agree on any such issue after ten (10) days, such issue shall be submitted to the Management Committee for final resolution.

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(c)The Y4 Operating Committee shall hold a monthly review meeting in English at the Yokkaichi Facility on [***] of each calendar month, unless otherwise agreed by the Shareholders or the Y4 Operating Committee. The Y4 Operating Committee shall prepare and distribute to each Shareholder (at least three Business Days in advance of the monthly review meetings) monthly reports in English with respect to the engineering activities, operations and financial affairs of the Company and the Y4 Facility.
(d)Upon the request of either Shareholder, the Y4 Operating Committee shall provide the Shareholders with (i) any management or operation reports of the Company related to the Y4 Facility (which neither Shareholder shall have an obligation to translate) and (ii) simultaneously in Japanese and English, those management and operating reports identified on Schedule 5.3 as mutually agreed upon from time to time by the Parties. Upon reasonable request from SanDisk, Toshiba employees shall explain such reports to SanDisk's employees and respond to questions from SanDisk's employees; provided, however that SanDisk acknowledges and agrees that Toshiba shall not be responsible for SanDisk's failure to understand any such reports.
5.4Insurance. The Company shall maintain insurance against such liabilities and other risks associated with the conduct by the Company of its business and in such amounts and against such risks as agreed by the Shareholders, and in any event as is generally maintained by companies engaged in a business similar to that of the Company.
5.5Records. The Company shall maintain the following records at its principal office:
(a)a current list of the full name set forth in alphabetical order and last known business address of each Shareholder and Director;
(b)a copy of the Articles, and all articles of amendment thereto; 
(c)a copy of this Agreement and all amendments hereto;
(d)a copy of all financial statements of the Company for the three most recent Fiscal Years;
(e)a copy of the Company's income tax or information returns and reports, if any, for the three most recent years;
(f)a copy of all indentures, loan agreements, lease agreements, guarantees, security , agreements, promissory notes, licensing or other intellectual property agreements, agreements that relate to the payment or receipt by the Company of amounts in excess of ¥5,000,000 or that are not terminable by the Company upon ninety (90) days’ notice, documents, if any, evidencing employee compensation arrangements, employee pension or other benefit arrangements, and similar documents and instruments executed and delivered by the Company;
(g)a list of all contributions made to the Company by the Shareholders; and a record of all distributions by the Company to each Shareholder.
The Shareholders and/or the Directors and/or their respective designees (which shall be limited to its employees or professional advisers subject to appropriate confidentiality obligations) shall have reasonable access to the records during normal business hours upon reasonable request. Copies of records shall be made available and delivered to the Shareholders and/or the Directors promptly after reasonable request for same, provided the requesting party pays for copy and delivery charges.
6.CAPITAL CONTRIBUTIONS; DISTRIBUTIONS

EXECUTION VERSION

6.1Capital Contributions.
(a)The Shareholders shall be deemed to have made Capital Contributions to the Company in the amounts set forth opposite their respective names on Schedule 6.1.
(b)Except as provided in Section 2.1(b), no Shareholder shall be obligated to make any additional Capital Contributions to the Company, unless otherwise mutually agreed upon by the Shareholders in writing, in which case such additional Capital Contributions shall be made in proportion to the Shareholders' respective Percentages as of the date of such additional Capital Contribution.
6.2Distributions.
(a)General. Notwithstanding any provision of the Articles to the contrary, and subject to Section 11.8 (Liquidation Proceeds), unless otherwise agreed by the Shareholders, no distributions of cash (or in the case of Section 11.8, other property) shall be made by the Company to the Shareholders for a period of three (3) years from the date of this Agreement, and thereafter all distributions of cash (or, in the case of Section 11.8, other property) by the Company to the Shareholders shall be made in Japanese Yen at the times and in the amounts determined by the Board of Directors. Except as provided in Section 11.8, each distribution to the Shareholders shall be made on a pro rata basis based upon the respective Percentages of the Shareholders as of the date of such distribution.
(b)Distribution for Taxes. Notwithstanding Section 6.2(a), subject to the Companies Act and other applicable law, the Company shall make, in respect of each Fiscal Year in which SanDisk must recognize taxable income of the Company in SanDisk's US federal, state and local income and franchise tax returns, a distribution to SanDisk to the extent necessary to meet SanDisk's aggregate US tax liability with respect to such taxable income, with such liability calculated at the highest US, state and local corporate tax rates as may be then applicable to SanDisk. SanDisk will make a request upon the Company for such distribution as soon as is practicable after the filing of SanDisk Corporation's applicable US tax returns. Following receipt of such request, the Company shall make the requested distribution on the next date on which the Company is permitted to make distributions pursuant to the Companies Act. Simultaneously therewith, the Company shall also make a distribution to Toshiba in an amount equal to the amount of the per Share distribution made to SanDisk pursuant to this Section 6.2(b). Any such prior distributions shall be taken into account upon any purchase and sale of Shares under Section 10 (Certain Agreements of the Shareholders) or dissolution of the Company under Section 11 (Dissolution) hereof. If necessary, the Board of Directors shall consider capital reductions to the extent that any such capital reduction will not adversely affect the Y4 Facility's operations.
6.3No Interest. No interest shall be payable to the Shareholders on their Capital Contributions or otherwise in respect of the capital of the Company.
6.4Return of Capital Contributions. Except as expressly provided herein, no Shareholder shall be entitled to the return of any part of such Shareholder's Capital Contributions.
7.ADDITIONAL CONTRIBUTIONS
No Shareholder shall be obligated under this Agreement or the At1icles to contribute any additional amounts to the Company or otherwise to be liable for the debts and obligations of the Company.
8.ACCOUNTING AND TAXATION

EXECUTION VERSION

8.1Financial Accounting Conventions.
(a)The Company shall adopt and follow Japanese GAAP.
(b)Notwithstanding anything to the contrary in Appendix A, the first Fiscal Year shall begin on the date of formation of the Company and end on March 31, 2007.
(c)The Company shall in principle (but subject to applicable Law) utilize a five-year straight line depreciation method for manufacturing equipment.
8.2Maintenance of Books of Account. The Company shall keep or cause to be kept at its principal office, or such other location as the Board of Directors shall designate, full and complete books of account. The books of account shall be maintained in a manner that provides sufficient assurance that transactions of the Company are recorded so as to comply with all applicable laws and to permit (a) the preparation of the Company's consolidated financial statements in accordance with Japanese GAAP and (b) the Shareholders to account for their interest in the Company in accordance with Japanese GAAP.
8.3Financial Statements.
(a)Annual Statements. As soon as practicable following the end of each Fiscal Year (and in any event not later than fifty-two (52) days after the end of such Fiscal Year), the Company shall prepare and deliver to each Shareholder and each Director, audited consolidated and consolidating balance sheets of the Company as of the end of such Fiscal Year and the related audited consolidated and consolidating statements of operations, the Shareholders' capital accounts and cash flows of the Company for such Fiscal Year (or similar statements if such statements change as the result of changes in Japanese GAAP), together with appropriate notes to such consolidated financial statements, and in each case setting forth in comparative form the corresponding figures for the preceding Fiscal Year and for the budget for the Fiscal Year just completed. Such financial statements shall be accompanied by (i) the report of the Accountants to the effect that such financial statements (except for the comparison to the budget) have been prepared in conformity with Japanese GAAP (except as otherwise specified in such report) and that the audit of such financial statements has been performed in accordance with Japanese GAAP and (ii) a report as to all transactions (including the nature, type and amount) between the Company and each Shareholder and their respective Affiliates. The Company shall conduct its business such that the report of the Accountants shall not contain any qualifications as to the scope of the audit or with respect to the Company's compliance with Japanese GAAP, except for changes in methods of accounting in which such Accountants concur and except that the foregoing shall not be deemed to obligate any Shareholder to contribute any capital to the Company. The Company shall also provide SanDisk with an English version of such report, which shall contain sufficient data to enable SanDisk to prepare a reconciliation of the Company's financial reports from Japanese GAAP to United States GAAP. The Company shall deliver to SanDisk, at SanDisk's request and expense, any other financial information related to the Company that is reasonably requested by SanDisk for US Federal, state, and local income or franchise tax purposes.
(b)Quarterly Statements.
(i)As soon as practicable following the end of each Fiscal Quarter (and in any event not later than ten (10) days after the end of such Fiscal Quarter), the Company shall prepare and deliver to each Shareholder and each Director unaudited consolidated and consolidating balance sheets of the Company as of the. end of 

EXECUTION VERSION

such Fiscal Qua1ier and the related unaudited consolidated and consolidating statements of operations, the Shareholders' capital accounts and cash flows of the Company for such Fiscal Quarter and for the Fiscal Year to date (or similar statements if such statements change as the result of changes in Japanese GAAP), in each case setting forth in comparative form the corresponding figures for the preceding Fiscal Quarter, for the corresponding Fiscal Qua1ier of the preceding Fiscal Year and for the budget for the Fiscal Quarter just completed and for the Fiscal Year to date.
(ii)The financial statements for such Fiscal Quarter shall be accompanied by a certificate of the principal accounting or financial officer of the Company to the effect that such financial statements have been prepared under such officer's supervision and that, although such financial statements do not contain the footnotes and other disclosures required to be presented in interim financial statements by Japanese GAAP, such financial statements, in such officer's judgment, fairly present the financial condition and results of operations of the Company as of the date and for the periods indicated, subject to normal recurring year-end audit adjustments. The Company shall deliver to SanDisk, at SanDisk's request and expense, any other financial information related to the Company that is reasonably requested by SanDisk for US financial reporting or Federal, state, and local income or franchise tax purposes.
(c)The Company shall obtain a professional tax audit from a qualified accountant complying with Japanese GAAP by May 22 of each year (including an English translation thereof). As part of its engagement of its auditors, the Company shall cause its auditors to provide such English language financial statements, audit reports, US GAAP reconciliations and consents as are required (or reasonably requested by SanDisk) in connection with SanDisk Corporation's filings with the United States Securities and Exchange Commission; provided that SanDisk shall pay for all the costs relating to such auditors' work. SanDisk may also request that the Company provide SanDisk with "comfort letters'' in the manner customary for Japanese auditors in connection with public offerings in the United States, at SanDisk's own expense.
(d)Monthly Reports. Each month, the Company shall prepare and deliver to each Shareholder and each Director the reports and other information set forth on Schedule 8.3. Such reports and other information will become available at the respective times set forth on Schedule 8.3.
(e)Business Plan. Subject to Sections 10.3(c), (e) and (f), and provided that the most recently approved Business Plan does not provide for the next Fiscal Year, the Company shall, not later than [***] prior to the commencement of each Fiscal Year, deliver to each Shareholder a copy of the Business Plan, including the Company's monthly budgets, for the upcoming Fiscal Year, as approved by the Board of Directors.
(f)Legal Proceedings. The Company shall promptly inform each Shareholder and each Director with regard to litigation, governmental investigations, material government notices and threatened legal proceedings.
8.4Other Reports and Inspection. The Company shall furnish promptly to each Shareholder such other reports, financial data and information relating to the Company as such Shareholder may reasonably request and shall require the Accountants to provide to each Shareholder copies of any document related to the Company in the possession of the Accountants as such Shareholder may reasonably request. The Company shall, upon reasonable prior notice and during normal business 

EXECUTION VERSION

hours, make available to each Shareholder and their respective professional advisors, from time to time as requested by such Shareholder, all properties, assets, books of account, corporate records, contracts and documentation, if any, relating to employee benefits of the Company, and any other material requested by such Shareholder for inspection and, in the case of books of account, corporate records, contracts and documentation, if any, relating to employee benefits, copying, and shall use reasonable efforts to make available to such Shareholder the Accountants and the key employees of the Company for interviews to verify any information furnished or to enable such Shareholder otherwise to review the Company and its operations. The Company may condition such availability upon the entering into of reasonable and appropriate confidentiality agreements. Notwithstanding the foregoing, the Company will not make available to any Shareholder information provided to the Company on a confidential basis by any other Shareholder without the consent of such other Shareholder.
8.5Deposit of Funds. All funds of the Company and its Subsidiaries not otherwise employed shall be deposited from time to time to its credit in such banks, trust companies or other depositories, or invested in such other investments held as cash equivalents, as the Board of Directors shall authorize. The funds of the Company and its Subsidiaries shall not be commingled with the funds of any Shareholder or any of their respective Affiliates.
9.SHARES OF CONTRIBUTION; DISPOSITION OF SHARES
9.1Restrictions on Transfer of Shares.
(a)No Shareholder (nor any permitted transferees of any Shareholder) may Transfer any interest in the Company, including any of such Shareholder's Shares, to any Person, except by a Change of Control; provided, that any Shareholder may Transfer all of its interest in the Company, including all of its Shares, subject to the Companies Act, to any one (1) of their respective Affiliates, with the prior written consent of every other Shareholder, which consent shall not be unreasonably withheld; and provided, further, that (i) the transferee agrees in writing to become a party hereto and assumes all the obligations of the transferring Shareholder hereunder and under each other FA Operative Document to which the transferring Shareholder is a party (except to the extent the express terms of the Patent Indemnification Agreement condition its transferability on the consent of the non-transferring Shareholder and such Shareholder has not consented to Transfer thereof), and (ii) immediately after giving effect to such Transfer, no Event of Default or an event or condition that with the giving of notice or lapse of time or both would constitute an Event of Default with respect to the transferee Shareholder shall exist. Following the effectiveness of any such Transfer, the transferring Shareholder shall no longer have the transferred right, title or interest in the Company or any rights under this Agreement and the transferee shall be substituted as a Shareholder for all purposes of this Agreement. The transferring Shareholder shall, however, remain responsible for all obligations under this Agreement and the other FA Operative Documents for any transferee which is an Affiliate of the transferring Shareholder and shall not be released or discharged from any existing liability or obligation to any Person. Any subsequent Transfer of an ownership interest in such Affiliate by the transferring Shareholder shall be deemed to constitute a Transfer of Shares requiring compliance with this Section 9.1.
(b)If a Shareholder Transfers its entire interest in the Company pursuant to Section 9.1(a), the transferee shall succeed to all the rights and obligations of such Shareholder under this Agreement.
(c)Any Shareholder may agree to pay amounts equal to distributions received by such Shareholder from the Company to a third party in its sole discretion pursuant to a 

EXECUTION VERSION

Permissible Assignment Agreement. "Permissible Assignment Agreement" means an agreement between a Shareholder and another Person (the "Permissible Assignee") which:
(i)provides for the grant by such Shareholder to the Permissible Assignee of the right to receive amounts equal to distributions received by such Shareholder from the Company pursuant to Section 6 or 11 of this Agreement, but does not give the Permissible Assignee any Shares or any other rights whatsoever with respect to the Company; 
(ii)provides that under no circumstances (including any Bankruptcy Event in respect of such Shareholder) may any claim be made by the Pe1missible Assignee against the Company or any such Shareholder or any Affiliate of any such Shareholder or any of their respective assets, under or in connection with such agreement, even if such Shareholder defaults in performance thereunder;
(iii)provides that the rights of the Permissible Assignee under such agreement may not be transferred without the prior written consent of each Shareholder and that any such Transfer without such consents shall be null and void;
(iv)may not be amended, nor any provision thereof waived, in a manner that would cause it not to be a Permissible Assignment Agreement, without the prior written consent of the non-assigning Shareholder;
(v)provides that the assigning Shareholder is authorized to Transfer its entire interest in the Company pursuant to Section 9.1(a) free and clear of any interest of the Permissible Assignee and without any liability on the part of the transferee thereunder to the Permissible Assignee; and
(vi)contains an express acknowledgment by the Permissible Assignee, for the benefit of the non-assigning Shareholder and the Company, to the effect of clauses (i)-(v) above.
(d)The assigning Shareholder shall ensure that any payment due to a Permissible Assignee pursuant to or in connection with a Permissible Assignment Agreement shall be made in full to such Permissible Assignee when due.
9.2Admission of New Shareholders. No Person shall have the right to become a Shareholder unless and until all the following conditions are satisfied:
(a)except in the case of a Transfer of all of a Shareholder's Shares to an Affiliate of such Shareholder in accordance with Section 9.l(a) (Restrictions on Transfer of Shares), such Person, the terms and conditions of such Person's admission as a Shareholder and the rights appurtenant to the Shares to be issued or Transferred, as applicable, to such Person are approved by all existing Shareholders and, if applicable, the creation of any new class or group of Shares in the Company having different rights, powers and duties is reflected in amendments to the Articles and to this Agreement;
(b)such Person executes a counterpart of this Agreement and such other instrument or instruments as the Company and a non-transferring Shareholder may reasonably deem appropriate to affirm that the representations and warranties contained in the Master Agreement are true and correct with respect to such Person and that such Person agrees to be bound as a Shareholder by this Agreement and all of the covenants and agreements herein; and

EXECUTION VERSION

(c)if requested by the Company, an opinion of counsel, a purchaser representation letter or other appropriate documentation is furnished to the Company establishing that the issuance or Transfer, as applicable, of Shares to the new Shareholder will comply with the Companies Act.
Except to the extent required by law, the Company shall have no obligation to recognize or to furnish information or make distributions to any new Shareholder or any transferee of a Shareholder who does not become a Shareholder in accordance with Section 9.1 (Restrictions on Transfer of Shares) or this Section 9.2.
9.3Withdrawal Prohibited. Except as otherwise expressly permitted by this Agreement, (i) no Shareholder may withdraw from the Company and (ii) no Shareholder may effect or cause a termination or dissolution of the Company without the prior written consent of all other Shareholders (which consent may be withheld in such other Shareholder's sole discretion).
9.4Purchase of Additional Interest. At any time during the term of this Agreement and so long as SanDisk is a Shareholder, SanDisk shall have the right to purchase from Toshiba that number of Shares which is equal to 0.1% of the total number of Shares then issued and outstanding in the event that (i) Toshiba's patent umbrella does not adequately protect the Company or (ii) dissolution of the Company is commenced pursuant to Section 11 hereof. The purchase price of such Shares shall equal [***] as of the date of such transaction.
10.CERTAIN AGREEMENTS OF THE SHAREHOLDERS
10.1Truces and Charges; Governmental Rules. Each Shareholder shall (a) promptly pay all applicable Taxes and other governmental charges imposed against such Shareholder except to the extent any such Taxes or other charges are being contested in good faith by appropriate proceedings and (b) comply with all applicable Governmental Rules, in each case except to the extent that nonpayment or noncompliance will not have a material adverse effect on the Company.
10.2Further Assurances. Following the Closing, each Shareholder shall, and shall cause its Affiliates and the Company to take all reasonable actions necessary or appropriate to, effectuate the transactions contemplated by this Agreement, and to obtain (and cooperate with the other Shareholder in obtaining) any Governmental Action or third party consent required to be obtained or made by it in connection with the transactions contemplated by this Agreement; provided, that no Burdensome Condition shall be made to exist with respect to such Shareholder or any of its Affiliates in connection therewith.
10.3Dispute Resolution; Deadlock.
(a)The Shareholders shall endeavor to settle, through their respective designees to the Board of Directors, any disputes· which may arise between them, including without limitation, failure by the Board of Directors to reach agreement (or failure to take a vote) on any matter requiring Directors approval pursuant to Section 5.1(d) (Matters Requiring the Approval of the Board of Directors). The Shareholders shall attempt to resolve the issue or proposed action in question, to the extent practicable, in a manner consistent with the Company's most recently approved Business Plan, unless the issue in dispute is the adoption of a new Business Plan, in which case the provisions of Sections 10.3(c), (e) and (f) shall apply.
(b)If (i) the Shareholders are unable to agree on any matter requiring the approval of the Shareholders pursuant to Section 4.l(a) (Matters Requiring the Approval of the Shareholders), (ii) the Board of Directors is unable to agree on any matter requiring the approval of the Board of Directors pursuant to Section 5.1 (d) (Matters Requiring the 

EXECUTION VERSION

Approval of the Board of Directors) (other than the approval of any Business Plan, with respect to which the failure to agree shall be governed by Sections 10.3(c), (e) and (f)) or (iii) the Shareholders or the Board of Directors are otherwise unable to resolve a dispute on any other item (other than the approval of any Business Plan, with respect to which the failure to agree shall be governed by Sections 10.3(c), (e) and (f)), then any Shareholder may bring the matter to the attention of the General Manager Memory Division, Semiconductor Company of Toshiba, and the Chief Operating Officer of SanDisk (the "Designated Individuals"), who will attempt to find a resolution. If the matter has not been resolved within thirty (30) days of referral to the Designated Individuals, the matter will be refe11·ed to the Management Committee for a final decision, which decision will be final and binding on the Company and the Shareholders with respect to any matter specified in Sections 10.3(b)(i) and (ii) above. If an agreement is reached by the Management Committee, the mutually agreed resolution shall be implemented by the Company. Should no solution be agreed upon within thirty (30) days after submission of the matter to the Management Committee with respect to the matters specified in (iii) above, such matter shall be submitted to arbitration in accordance with Section 2.5 of the Appendix A·. Should no solution be agreed upon within sixty (60) days after submission of the matter to the Management Committee with respect to the matters specified in Sections 10.3(b)(i) and (ii) above, then the action for which approval was requested will not occur, unless it is already included in the most recently approved Business Plan.
(c)Except as provided below, if by [***] of any calendar year during the term of this Agreement, commencing [***], the Board of Directors and the Shareholders have not approved and agreed upon a Business Plan for the upcoming Fiscal Year, then any Shareholder may refer the dispute to the Management Committee for a decision, which decision shall be final and binding on the Company and the Shareholders. If a decision is reached by agreement of the Management Committee, such decision shall be implemented by the Company. Should no decision be reached within ninety (90) days after submission of the matter to the Management Committee, and unless the Shareholders have agreed to continue operations under the most recently approved Business Plan until a new Business Plan is approved, then within ten (10) Business Days thereafter any Shareholder may elect by written notice to all other Shareholders to declare a deadlock ("Deadlock"), except with respect to any issue where the Master Agreement expressly prohibits declaration of a Deadlock.
(d)If demand for both Shareholder's NAND Flash Memory Products is significantly below expectations, they shall address the matter as contemplated in Section 6.7(b)(ii) of the Master Agreement.
(e)Within thirty (30) days after a Shareholder has notified :the other Shareholder of a Deadlock, either Shareholder (the "Initiating Shareholder") may submit to the other Shareholder (the "Responding Shareholder") a written irrevocable notice (the "Deadlock Dissolution Notice") to the effect that the Initiating Shareholder offers to sell to the Responding Shareholder or its designee the Initiating Shareholder's Shares for a cash payment, by wire transfer of immediately available Japanese Yen, in an amount equal to the [***] as of the date of such transaction multiplied by the Initiating Shareholder's Percentage as of such date.
(f)The Responding Shareholder may accept such offer by written response to the Initiating Shareholder within forty"-five (45) days of receipt of the Deadlock Dissolution Notice indicating that the Responding Shareholder elects to purchase the Shares of the Initiating Shareholder. If the Responding Shareholder declines to exercise its right to purchase the Shares of the Initiating Shareholder pursuant to this Section 10.3 or fails to respond to 

EXECUTION VERSION

such Deadlock Dissolution Notice (or if both Shareholders submit Deadlock Dissolution Notices), the Company shall be dissolved pursuant to Section 11.1(d) (Events of Dissolution), at the end of a one-year period for the wind-down of operations commencing with the receipt of the Deadlock Dissolution Notice by the Responding Shareholder. During such one-year period, the Company's business shall be conducted in accordance with the most recently approved Business Plan except that additional capital expenditures will not be made except as required for line maintenance.
10.4Upon Event of Default: Termination on Breach. If there has occurred and is continuing an Event of Default with respect to a Shareholder (upon: such occurrence, such Shareholder is referred to herein as the "Defaulting Shareholder''), in addition to all other remedies available to the Company or the other Shareholder (the "Nondefaulting Shareholder''), whether under any of the FA Operative Documents or other agreements or by law, the Nondefaulting Shareholder shall have the option to take one or more of the following actions:
(a)give written notice to the Defaulting Shareholder of its intention to acquire all of the Shares of the Defaulting Shareholder for a cash payment, by wire transfer of immediately available Japanese Yen, in an amount equal to the [***] as of the date of such transaction multiplied by the Defaulting Shareholder's Percentage as of such date; and/or
(b)elect to dissolve the Company pursuant to Section 11.3 (Dissolution Upon Event of Default), in which case the affairs of the Company shall be wound up and the Company shall be dissolved in accordance with Section 11 (Dissolution).
10.5Mechanics of Sale.
(a)The closing of any purchase and sale of Shares pursuant to Section 10.3 (Dispute Resolution; Deadlock), 10.4 (Remedies Upon Event of Default; Termination on Breach), 11.4 (Dissolution by Unilateral Option) or 11.5 (Dissolution Upon Notice) shall take place not later than the thirtieth (30th) Business Day after notice of the purchase is given, as the case may be, except that such period shall be extended as necessary in order to comply with any Governmental Rule. The purchasing Shareholder shall pay for the Shares being acquired by wire transfer of immediately available funds in Japanese Yen to an account specified by the selling Shareholder. The selling Shareholder shall execute all documents necessary to effect the conveyance of its Shares, free and clear of all Liens, to the purchasing Shareholder. In addition, the Shareholders shall enter into an indemnity and release agreement, in a form reasonably satisfactory to each Shareholder, indemnifying and holding harmless the selling Shareholder and its Affiliates for liabilities or claims made after the date of the purchase and sale under any guarantees or other agreements supporting the obligations of the Company which may have been extended by the selling Shareholder or any of its Affiliates. The Shareholders shall also reach agreement on a reasonable transition plan of up to six months in connection with services provided to the Company by members of the SanDisk Team assigned to the Company by the Selling Shareholder.
(b)If a Shareholder elects to acquire all of the Shares of the other Shareholder pursuant to Section 10.3 (Dispute Resolution; Deadlock), 10.4 (Remedies Upon Event of Default; Termination on Breach), 11.4 (Dissolution by Unilateral Option) or 11.5 (Dissolution Upon Notice), such Shareholder shall be obligated to take all actions required of it to consummate the applicable purchase and sale on the date determined pursuant to this Section 10.5 (Mechanics of Sale). If any Shareholder has the right to purchase the Shares of any othe1· Shareholder, such Shareholder shall have the right to assign such right to purchase to any other Person.

EXECUTION VERSION

11.DISSOLUTION
11.1Event of Dissolution. The Company shall be dissolved and shall commence winding up its affairs upon the first to occur of the following. The Shareholders shall cooperate in taking any necessary corporate steps under the Companies Act to attain the purpose of this Section 11:
(a)the expiration of the term of the Company pursuant to Section 2.4 (Term; Extension);
(b)the agreement of the Shareholders to dissolve the Company pursuant to Section 11.2 (Dissolution by Agreement);
(c)the election of the Nondefaulting Shareholder pursuant to Section 11.3 (Dissolution Upon Event of Default);
(d)the first anniversary of the receipt by either Shareholder of a Deadlock Dissolution Notice submitted with respect to a failure of the Shareholders to approve and agree upon a Business Plan pursuant to Section 10.3 (Dispute Resolution; Deadlock) if either (i) the Responding Shareholder declines to exercise its right to purchase the Shares of the Initiating Shareholder or fails to respond to such Deadlock Dissolution Notice, or (ii) both Shareholders submit Deadlock Dissolution Notices with respect to such failure to agree;
(e)the election by Toshiba to dissolve the Company pursuant to Section 11.4 (Dissolution by Unilateral Option);
(f)the bankruptcy, death, dissolution, expulsion or incapacity of a Shareholder or the occurrence of any other event which terminates the membership of a Shareholder in the Company ("Bankruptcy Event"); or
(g)the election of the Notifying Party to dissolve the Company pursuant to Section 11.5 (Dissolution Upon Notice) unless the Notified Party elects to purchase the Shares of the Notifying Party pursuant to Section 11.5 (Dissolution Upon Notice).
11.2Dissolution by Agreement. The Company may be dissolved at any time by the unanimous written consent of the Shareholders.
11.3Dissolution Upon Event of Default. During the occurrence and continuation of an Event of Default (other than a Bankruptcy Event) with respect to a Shareholder, the Nondefaulting Shareholder may elect, by written notice to the Defaulting Shareholder, to dissolve the Company, in which event the Company shall be dissolved and the Shareholders shall take all actions necessary to wind up the affairs of the Company in accordance with Section 11.7 (Winding Up). This Section 11.3 shall not be construed to limit the rights of the Nondefaulting Shareholder under Section 10.4 (Remedies Upon Event of Default) or to seek damages from the Defaulting Shareholder or any other Person for the breach of its obligations under any of the FA Operative Documents.
11.4Dissolution by Unilateral Option. At any time between April 1, 2009 and March 31, 2010, SanDisk may, by giving written notice to Toshiba, elect to withdraw from the Company, in which case Toshiba must, directly or through any of its Affiliates, either (i) purchase from SanDisk all of SanDisk's Shares within one (1) year following SanDisk's notice to withdraw for a cash payment, by wire transfer of immediately available Japanese Yen, in an amount equal to the [***] as of the FA Termination Date multiplied by SanDisk's Percentage as of the Termination Date (the estimated [***] as of the Termination Date to be agreed by the Shareholders in good faith and any necessary true up payments promptly after the actual [***] as of the Termination Date is determined), or (ii) cooperate with SanDisk to dissolve the Company within one (1) year of the notice of withdrawal and to wind-up its affairs in accordance with Section 11.7 (Winding Up) (the 

EXECUTION VERSION

date as of which any Shareholder, itself or together with its Affiliates, holds all Shares of the Company or the date the Company is dissolved in accordance with applicable Law, the "Termination Date," but in no event shall the Termination Date occur later than one (1) year following SanDisk's notice to withdraw).
11.5Dissolution upon Notice. At any time between April 1, 2013 and March 31, 2014, any Shareholder (the "Notifying Party") may elect, by giving notice to all other Shareholders (the ''Notified Party"), to dissolve the Company, in which event the Company will be dissolved and, within the one (1) year period following the giving of such notice, the Shareholders shall mutually agree upon a plan for winding up the affairs of the Company in accordance with Section 11.7 (Winding Up),·unless the Notified Party, directly or through any of its Affiliates, elects in writing within three (3) months of receiving such notice, to purchase from the Notifying Party all of its Shares for a cash payment, by wire transfer of immediately available Japanese Yen, in an amount equal to the [***] as of the date of such transaction multiplied by the Notifying Patty's Percentage as of such date.
11.6Financing Defaults.
(a)If pursuant to Section 6.5(c)(i) of the Master Agreement either Party, as the Investing Party, exercises its election to terminate this Agreement, the Shareholders shall cooperate in good faith to effect the purchase by Toshiba (or its designated Affiliate) and sale by SanDisk of all of SanDisk's Shares, at a price equal to SanDisk's percentage share of the issued and outstanding Shares in the Company multiplied by the [***] as of the date such transaction is closed (with estimated [***] as agreed by the Shareholders in good faith paid on the closing of such transaction and any true-up payment made by the appropriate Party promptly after determination of the actual [***] as of the closing of such purchase and sale transaction).
(b)[***]
(c)If pursuant to Section 6.12(d)(ii)of the Master Agreement either Party, as the Non Defaulting Party, exercises its election to terminate this Agreement, the Non Defaulting Party shall have the same rights as provided in Section 1l.6(a) and the Shareholders shall cooperate in good faith to effect the purchase by the Non Defaulting Party (or its designated Affiliate) and sale by the Defaulting Patty of all of the Defaulting Party's Shares.
11.7Winding Up.
(a)Upon the dissolution of the Company, the Shareholders shall proceed as promptly as practicable to (i) wind up the affairs of the Company and satisfy the Company's liabilities, (ii) dispose of the Company's assets as quickly as possible consistent with obtaining the :full fair market value of the Company, preferably, to the extent it is commercially practicable to do so, by selling the Company as a going concern (provided, however, no Shareholder shall be under any obligation to extend the terms of any FA Operative Document or to offer to enter into any other agreement with a prospective purchaser of the Company for the purchase or sale of goods or services or the use of facilities or any other business arrangement), and (iii) distribute any net proceeds to the Shareholders in accordance with Section 11.8 hereof and applicable Law. In connection with a sale of the Company's assets under clause (ii), each Shareholder or any of their respective Affiliates shall have a right of first offer to acquire the Company's tangible personal property in the liquidation process and may also acquire such property through participation at auction except in the event of a dissolution pursuant to Section 11.3 (Dissolution Upon Event of Default), in which event the Defaulting Shareholder and its Affiliates shall not have such 

EXECUTION VERSION

right of first offer to acquire the Company's tangible personal property. Each of the Shareholders shall be furnished with a statement setting forth the assets and liabilities of the Company as of the· date of the complete liquidation of the Company. The Accountants shall review the final accounting and shall render their opinion with respect thereto.
(b)During the period of winding-up, the Company shall continue to operate and all the provisions of this Agreement shall remain in effect, except as otherwise expressly provided· herein. The Company shall notify all known creditors and claimants of the dissolution of the Company in accordance with applicable law.
11.8Liquidation Proceeds.
(a)In the case of the dissolution and liquidation of the Company, the Company may make a distribution in kind. Any cash and all distributions in kind that are to be distributed shall be distributed to the Shareholders, on a pro rata basis based upon the respective Percentages of the Shareholders as of the date of such distribution.
(b)Unless otherwise agreed by the Shareholders, and to the extent permitted under any agreements with third parties, all assets to be distributed upon the dissolution and liquidation of the Company shall be distributed as follows:
(i)first, to creditors, including Shareholders who are creditors, to the extent permitted by law, in satisfaction of liabilities of the Company, other than for distributions to Shareholders pursuant to Section 6.2 (Distributions); and
(ii)second, to the Shareholders on a pro rata basis based upon the respective Percentages of the Shareholders as of the date of such distribution.
For purposes of this Section 11.8, instruments of transfer and other documents reasonably requested by the distributee shall be executed by the Company or the other Shareholder, or both.
(c)Any distribution made pursuant to this Section 11.8 shall be made as soon as practicable under and in accordance with applicable Japanese law.
12.INDEMNIFICATION AND INSURANCE
12.1Indemnification.
(a)Subject to Section 12.1(c), the Company shall indemnify each Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of a Shareholder or the Company), by reason of the fact that such Person is or was a Shareholder or is or was or has agreed to become a Director or is or was serving or has agreed to serve at the request of the Company as a director, officer, employee or agent of the Company or of another partnership, corporation, joint venture, trust or other enterprise, arising from any action alleged to have been taken in any such capacity or by reason of any liability or obligation of the Company, against any and all losses, damages, liabilities, costs, charges, expenses (including interest, penalties and reasonable attorneys' fees and expenses), judgments, fines and amounts paid in settlement (collectively, "Losses") actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom. Without limiting the generality of the foregoing, any of such Losses shall be deemed to arise out of a Company liability or obligation if it arises out of or is based upon the conduct of the 

EXECUTION VERSION

business of the Company (or any of its Subsidiaries) or the ownership of the property of the Company (or any of its Subsidiaries).
(b)The indemnification provided under this Section 12.1 shall inure to the benefit of the successors, heirs and personal representatives of any Person entitled to the benefit of such indemnification. Such indemnification shall be a contract right and shall include the right to be paid advances of reasonable expenses incurred by any such Person in connection with such action, suit or proceeding.
(c)The indemnification provided under this Section 12.1 shall not inure to the benefit of any Person in respect of Losses to the extent that such Losses (i) arise out of or are based upon the gross negligence or willful misconduct of such Person or (ii) constitute a tax, levy or similar governmental charge not imposed upon the Company (or any of its Subsidiaries) or on their respective properties. The indemnification provided under this Section 12.1 shall also not be available to any Person in respect of any Losses if a judgment or other final adjudication adverse to such Person establishes (x) that such Person's acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated or (y) that such Person gained in fact a financial profit or other advantage to which such Person was not legally entitled. It is understood and agreed that, for the purposes of this Section 12.1, Losses shall be deemed not to arise out of or be based upon the gross negligence or willful misconduct of a Person solely because it arises out of or is based upon the gross negligence, willful misconduct, bad faith or active and deliberate dishonesty of a director, officer or employee of such Person if at the time of such gross negligence, willful misconduct, bad faith or active and deliberate dishonesty, such director, officer or employee was also a member of the SanDisk Team or a Director acting in his capacity as such.
(d)The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the indemnified Person did not meet the standard set forth in Section 12.l(c) (Indemnification).
12.2Insurance. The Com any may, to the fullest extent permitted by law, purchased and maintain insurance against any liability that may be asserted against any Person entitled to indemnity pursuant to Section 12.1.
12.3Indemnification by the Shareholders.
(a)Each Shareholder agrees to, and does hereby, indemnify and hold harmless the Company and the other Shareholder from and against any and all Losses arising out of, or based upon, the gross negligence or willful misconduct of such Shareholder under this Agreement or such Shareholder exceeding its authority under this Agreement.
(b)The provisions of this Section 12.3 shall survive each of the termination of this Agreement, the dissolution of the Company and the withdrawal of any Shareholder.
12.4Assertion of Claims.
(a)In the event that a Person (the "Indemnified Party") desires to assert its right to indemnification from a Person (an "Indemnifying Party") required to indemnify such Indemnified Party under this Section 12, the Indemnified Party will give the Indemnifying Party prompt notice of the claim giving rise thereto (a "Claim"), and the Indemnifying Party shall undertake the defense thereof (unless the Claim is asserted against or related to or results from any action or failure to take action by such Indemnifying Party). The 

EXECUTION VERSION

failure to promptly notify the Indemnifying Party hereunder shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent that the Indemnifying Party is actually prejudiced by the failure to so notify promptly.
(b)The Indemnified Party shall not settle or compromise any Claim without the written consent of the Indemnifying Patty unless the Indemnified Patty agrees in writing to· forego any and all claims for indemnification from the Indemnifying Party with respect to such Claim. However, if the Indemnifying Party, within a reasonable time after notice of any such Claim, fails to defend such Claim, the Indemnified Pa1ty shall have the right to undertake the defense, compromise or settlement of such Claim on behalf of and for the account and risk of the Indemnifying Party, subject to the right of the Indemnifying Party to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof
13.IF THE INDEMNIFYING PARTY HAS UNDERTAKEN THE DEFENSE OF A CLAIM AND (I) IF THERE IS A REASONABLE EXPECTATION THAT (X) A CLAIM MAY MATERIALLY AND ADVERSELY AFFECT THE INDEMNIFIED PARTY OTHER THAN AS A RESULT OF MONEY DAMAGES OR OTHER MONEY PAYMENTS OR (Y) THE INDEMNIFIED PARTY OR SHAREHOLDERS MAY HAVE LEGAL DEFENSES AVAILABLE TO IT OR THEM THAT ARE DIFFERENT FROM OR ADDITIONAL TO THE DEFENSES AVAILABLE TO THE INDEMNIFYING PARTY, OR (II) IF THE INDEMNIFYING PARTY SHALL NOT HAVE EMPLOYED COUNSEL REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY, THE INDEMNIFIED PARTY SHALL NEVERTHELESS HAVE THE RIGHT, AT THE INDEMNIFYING PARTY'S COST AND EXPENSE, TO DEFEND SUCH CLAIM. MISCELLANEOUS.
13.1Governing Law. Notwithstanding anything to the contrary in Appendix A, this Agreement shall in all respects be governed by and construed in accordance with the laws of Japan, without regard to the conflict of laws principles.
13.2Effectiveness. This Agreement shall be effective as of the date first written above and shall remain in effect until the Termination Date. Sections 7, 11.7, 11.8 and 13 shall survive the Termination Date.

[REST OF PAGE INTENTIONALLY LEFT BLANK]

EXECUTION VERSION

EXHIBIT A
ARTICLES OF INCORPORATION OF THE COMPANY

[***]

EXECUTION VERSION

Unofficial English Translation

ARTICLES OF INCORPORATION
OF
FLASH ALLIANCE, LTD.

[***]

EXECUTION VERSION

Unofficial English Translation

Schedule 2.1(b)

[***]

EXECUTION VERSION

Schedule 5.3

Management and Operating Reports

[***]

EXECUTION VERSION

Schedule 6.1

Capital Contributions

[***]

EXECUTION VERSION

Schedule 8.3

[***]Document

Exhibit 10.1
Immutable X Protocol Services and License Agreement

1.    Important Information
1.1    This is a legally binding agreement between GME Entertainment, LLC, a Delaware limited liability company (‘Licensee’, ‘you,’ ‘your’) and Immutable X Pty Ltd ACN 644 717 840 (“Immutable X”, “Immutable”, “us”), an Australian company (the “Agreement”). Licensee and Immutable, each a “Party” and, collectively, the “Parties.” This Agreement governs the use by Licensee of the Protocol (as defined in Section 16.2.

1.2    The parties each agree to do, or cause to be done, the obligations set out in Exhibit C in accordance with the terms of this Agreement.
1.3    The Licensee’s continued use of any part of the Protocol shall constitute your acknowledgement and agreement to the terms of this agreement.
2.    Protocol License
2.1    Subject to the terms and restrictions set forth in this agreement, Immutable hereby grants to the Licensee a worldwide, non-exclusive, revocable, non-transferable, royalty-free License to use the Immutable X Materials (including the Protocol) only for the Permitted Purpose (hereafter, the “License”).  The Licensee may grant sublicenses to the rights granted in this Agreement to it to its affiliates and contractors solely to support the Permitted Purposes and such sublicensees.
3.    Brand Asset License and Immutable Intellectual Property
3.1    Subject to the terms and restrictions set forth in this agreement, Immutable hereby grants to the Licensee a worldwide, nonexclusive, non-transferable, royalty-free License to use the Brand Assets in connection with the Permitted Purpose for the Term (the “Brand Asset License”) for the Permitted Purpose provided always that:
(a) any use of the Brand Assets by the Licensee is always using only the published colors and logo style notified from time to time by Immutable, and such notification will be via email and the Licensee may only exercise the Brand Asset License upon Immutable’s prior written approval in each instance;
(b) any goodwill derived from the Licensee’s use of the Brand Assets shall inure to the benefit of Immutable and if requested, the Licensee must execute such documents as are reasonably required by Immutable to confirm assignment of such goodwill;
(c) the Licensee shall not do, or omit to do, anything which may weaken, damage or be detrimental to the Brand Assets or the reputation or goodwill associated with the Brand Assets, or that may invalidate or diminish the validity of any trademark within the Brand Assets, in each case, in any material respect;

(d) the Licensee shall not apply for, or obtain, whether directly or indirectly, registration of any trade or service mark, trade name or domain name in any country anywhere in the world which contains the words forming part of the Brand Assets, or which Immutable, acting reasonably, considers is confusingly similar to the Brand Assets; and
(e) if the Licensee becomes aware of any actual, suspected or threatened infringement of any Brand Assets, or any claim that the Brand Assets are infringing a third party’s Intellectual Property rights, the Licensee must promptly inform Immutable.
3.2    The Licensee may grant sublicenses to the rights granted in this Agreement to it to its affiliates and contractors solely to support the Permitted Purposes, and such sublicensees will be bound by the terms of this Agreement.
3.3.    The Licensee acknowledges that, as between the Licensee and Immutable, Immutable owns all right, title, and interest, including all intellectual property rights, in and to the Protocol and the Immutable X Materials.
4.    Licensee Brand Assets License and Licensee Intellectual Property
4.1    The Licensee hereby grants to Immutable a worldwide, nonexclusive, non-transferable, royalty-free License to use the Licensee Brand Assets for the sole purposes of the publishing an announcement, press release or other statement or materials of the Licensee’s collaboration with Immutable (the “Licensee Brand Asset License”).  Immutable may identify Licensee as a customer to Immutable's other potential customers or investors.  Immutable may only exercise the Licensee Brand Asset License upon Licensee’s prior written approval in each instance.
4.2    The Licensee hereby warrants that it has the necessary rights to use and to grant the Licensee Brand Asset License.
4.3    Immutable acknowledges that, as between Immutable and the Licensee, the Licensee owns all right, title, and interest, including all intellectual property rights, in and to the Licensee Data and the content, systems, and other aspects of Licensee’s platform, systems, and offerings. Licensee hereby grants to Immutable a non-exclusive, royalty-free, revocable worldwide license during the Term to reproduce, distribute and otherwise use and display the Licensee Data and perform all other acts with respect to the Licensee Data and any data provided by end users solely as may be necessary for Immutable to provide the Protocol to the Licensee.
4.4    Feedback. The Licensee acknowledges that it does not have any obligation to provide any ideas, suggestions or recommendations to Immutable regarding the Protocol (“Feedback”). 
5.    License Restrictions and Licensee’s Obligations
5.1    Licenses are conditional.
Other than to the extent expressly permitted in this agreement, or if express written authorization is provided by Immutable, the License and Brand Assets License are conditional upon the Licensee’s 
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material adherence to all of the obligations of the Licensee set out in this agreement; provided, however, that Immutable may not suspend or terminate such licenses except as expressly provided in Section 7.2.
5.2    Licensee’s Obligations.
The Licensee must:
(a) only access the Protocol by such means as are notified via email to the Licensee by Immutable from time to time and in no other manner;
(b) ensure that its systems and network connections meet the minimum requirements necessary to support the access and use of the Protocol., as required by Immutable, from time to time and published online.  Immutable will consult with the Licensee prior to making any material changes to the minimum requirements.
(c) Licensee acknowledges that it is a wholly-owned subsidiary of GameStop Corp., a publicly traded company listed on the New York Stock Exchange.  To the extent any change of control occurs that results in Licensee no longer being a wholly-owned subsidiary of a publicly traded U.S. company, Licensee must, upon written request of Immutable, identify itself and its beneficial owners to Immutable and must not hide its identity;
(d) ensure that: (a) any employees, affiliates or contractors who use the Protocol comply with the terms of this Agreement; and (b)  any End Users engaging with the Licensee’s Platform and/or any NFTs offered in connection with the Protocol are subject to terms and conditions which are consistent with the terms of this agreement;
(e) To the extent any anti-money laundering/counter terrorism financing (AML/CTF) or know-your-customer (KYC) procedures are required by Applicable Law, the Licensee must keep copies of any information required to be kept under those procedures for a period as required by Applicable Law and provide copies of such information as required by Immutable to comply with any legal obligations upon request and at Immutable’s cost.
(f) include in the Licensee’s End User License Agreement (EULA) (or similar documents) terms and conditions substantially meeting those requirements set out at Section 5.3 to this agreement;
(g) remain responsible at all times for ensuring the legality, reliability, integrity, accuracy and quality of any Licensee Data.  The Licensee is solely responsible for maintaining adequate security and protection of all Licensee Data transmitted to the Protocol, which may include encryption to protect the Licensee Data from unauthorized access as well as keeping any backup of Licensee Data and securing consent from End Users to the sharing of the Licensee Data;
h) ensure that the Licensee Data does not include any personally identifiable or confidential End User information, including private keys, usernames, passwords, or 
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bank account details;(i) notify Immutable of any  material investigation relating to Immutable during the term, and of any material problems, defects, bugs or errors encountered with the Protocol.
5.3    Limitations on use of the Protocol.
The Licensee must not use the Protocol in any way which, and must cause all End Users to agree to not use the Protocol via the Licensee’s Platform in any way which; provided that Licensee shall not have the obligations to moderate any End User’s use of the Protocol:
(a) is beyond the Permitted Purpose;
(b) seeks to pre-fetch, cache, index, copy, re-utilize, extract, incorporate, store (including in a database) or otherwise utilize any of the Protocol in a way which would effectively circumvent the Protocol or any automated Fee calculation or collection, to take steps which would exposes the Immutable X Materials to any viruses or other harmful program;
(c) would have the effect of reselling the services and functions which the Protocol provide other than as permitted via this agreement;
(d) seeks to compromise, break or circumvent any technical processes or security associated with the Protocol;
(e) is intended to be, or is part of, an effort to build a similar product or a competitive product to the Protocol;
(f) publishes or seeks to disseminate any defamatory material;
(g) promotes discrimination or is, in the reasonable opinion of Immutable, misleading or promotes misinformation;
(h) infringes the intellectual property rights of another person, or which infringes any rights in the Brand Assets or permits any infringement of rights by an End User of the Brand Assets;
(e) breaches any legal duty owed to a third party;
(f) knowingly promotes illegal activity;
(g) is threatening or abusive; 
(l) gives the impression that the End User’s conduct originates from Immutable or is approved by Immutable; or
(h) intentionally breaches any Applicable Law. 
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5.4    Warranties.
The Licensee warrants:
(a) it is sufficiently experienced and educated to make decisions regarding the use of NFTs via the Protocol, including sufficient experience in dealing with and storing NFTs and operating digital assets / crypto assets and blockchain systems and smart contracts generally;
(b) that it has all necessary experience, resources, certificates, Licenses, permits and approvals to use NFTs for the Permitted Purpose, and to meet all other obligations under and in accordance with this agreement and material comply with Applicable Laws (on the understanding that Applicable Laws related to cryptocurrency are evolving and uncertain, and the parties agree that attempts at compliance require adoption of risk-based approaches to compliance);
(c) that in operating any Platform it will contractually prohibit market manipulation by End Users including dummy bidding and wash trading;
6.    Service Levels; Support; Updates and Upgrades.
6.1    Service Levels. 
Subject to the terms and conditions of this Agreement, Immutable shall use commercially reasonable efforts to make the Services available in accordance with the service levels set out in Exhibit B.
6.2    Support. 
Immutable shall provide Licensee with technical support for the Services, including support with integration and by being otherwise available to answer Licensee’s questions about the Services from time to time during the Term. Technical support for the Services, above and beyond what is provided by Immutable as defined in Exhibit C, will be at the Licensee’s cost. Scope and cost for the technical support will be mutually agreed upon by both parties.
6.3    Updates and Upgrades. 
Immutable shall use commercially reasonable efforts to promptly provide Licensee with prior written notice of any material improvements or other updates or upgrades to the Services, including details of the changes, to enable Licensee to make necessary changes to continue its use of the Protocol. If such updates or upgrades will have a material adverse impact on Licensee’s ability to use the Services, Immutable shall provide Licensee with at least fifteen (15) days’ prior written notice of such updates or upgrades
7.     Term and Termination
7.1    Commencement.
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This Agreement commences on the date each party has signed and continues for a period of two years therefrom (the “Initial Term”).  After the Initial Term this Agreement shall continue until either the Licensee ceases using the Protocol, or this Agreement is terminated.
7.2    Suspension or Termination.
(a) Either Party may terminate this Agreement for cause (i) upon written notice if a material breach  remains uncured thirty (30) days after written notice of the breach, or (ii) if the other Party becomes the subject of a petition in bankruptcy or any other proceeding relating to insolvency, receivership, liquidation or assignment for the benefit of creditors.

7.3    Effect of Termination.
(a) Any termination (howsoever occasioned) shall not affect any accrued rights or liabilities of either party, nor shall it affect the coming into force or the continuance in force of any provision hereof which is expressly or by implication intended to come into or continue in force on or after such termination.
(b) On termination, for any reason:
(1) The Brand Asset License and the Licensee Brand Asset License are automatically revoked; and
(2) The Licensee shall cease using the Protocol and shall promptly delete and destroy any copies of the Immutable X Materials then in its possession; and
(3) Any NFTs minted and sold remain the property of the owners of those NFTs at the time of termination, and such owners will be entitled to continue to use and enjoy such NFTs.
(4) For a period of ninety (90) days after the conclusion of the Transition Period, Immutable will make available to Licensee for download the Licensee Confidential Information maintained by Immutable in a format reasonably acceptable to Licensee.  At the end of such period, or earlier if requested by Licensee, Immutable shall, unless legally prohibited, delete all Licensee Confidential Information retained by Immutable and certify destruction of the same in writing.  Upon termination or expiration of this Agreement, Licensee will securely destroy (at the Immutable’s election) all Immutable’s Confidential Information then in its possession.
(5) Upon any termination or expiration of the Term, with respect to the License and the Brand Asset License for any reason (each such terminated license, a “Terminated License”), Licensee shall have the 
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right and option (exercisable at its own discretion) to continue to access and use such Terminated License (subject to the terms of this Agreement) for up to ninety (90) days following the effective date of termination (“Transition Period”) to transition to a substitute product or service.  Licensee will continue to pay fees for such Terminated License at fees set forth in this Agreement for any portion of the Transition Period that Licensee opts to use.  During the Transition Period, Immutable shall provide all reasonable assistance and cooperation as requested by Licensee, including without limitation by transferring copies of all Licensee Confidential Information and Licensee Data stored within the Terminated License, in order to facilitate an orderly wind-down and transition.
7.5    Survival. The following Sections shall survive termination or expiration of this agreement for any reason: Section 7.5, Section 11, Section 12, and Section 15. 
8.    Fees
8.1    The Licensee agrees to pay the Primary Sales Fee and the Trading Fee. The Licensee will not be responsible for paying any other fees to Immutable or any other party for transactions occurring off Licensee’s Platform. as set forth in Exhibit A.
8.2    Fees will be denominated in USD at the time of the transaction for the purposes of accounting and any invoicing. Should the transaction currency at clause 8.1 not be USD, the Fees will be calculated by using the relevant current market exchange rate as determined by Immutable in accordance with customary industry standards.
8.3    [Reserved.]
8.4    Fees      will be automatically collected by the Protocol for trades of NFTs executed using the Protocol and paid to the party entitled to receive that payment (being the Licensee for Licensee Fees, Immutable for Primary Sales Fees and Trading Fees, and sellers of NFTs for any sale proceeds)     . Immutable will make available to the Licensee a dashboard showing information relating to the calculation of the Fees as reasonably required by the Licensee.  Immutable will remain solely responsible for and liable to the Licensee for errors or failures in the Protocol which cause a failure in payment of any amount due to the Licensee.
                         8.5    Audit Rights.
At Licensee’s reasonable request and only in connection with determining the accuracy of the Fees, Immutable must make available their records to a third-party auditor agreed upon by the parties (“Auditor”) within 21 days of a request being made, for the purposes of the Auditor reviewing Immutable’s records to verify that the Fees have been accurately calculated and paid.  Immutable must provide all assistance and accommodation at their own cost to the Auditor in each instance. If, as a result of the audit, an underpayment of Fees is identified by the Auditor exceeding 10% of the fees due in an applicable period, then Immutable shall immediately pay the underpayment and the costs of the audit 
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(including the Auditor’s fees) save that the parties agree that the blockchain record of transactions shall be determinative.

8.6    Immutable reserves the right to change the Primary Sales Fee or the Trading Fees as set out in Exhibit A.
9.    NFT Minting
9.1    No transfer of Intellectual Property.
Any NFT which is minted by the Licensee using the Protocol will remain the property of the Licensee or their End User (if the Licensee permits End Users to mint NFTs) and nothing in this agreement will transfer, or is intended to transfer, any Intellectual Property rights in any NFT to Immutable.
9.2    Private Keys
Immutable will not have access to, or keep any copies of any Private Key in respect of any NFT minted using the Protocol, nor will Immutable have any title or interest in the NFTs which are listed, minted or traded by the Licensee using the Protocol other than the right to the Fees set out in this agreement.
9.3    Licensee’s acknowledgements.
The Licensee acknowledges and agrees that:
(a) [Reserved]. 
(b) Immutable does not represent that any NFT minted using the Protocol is capable of being restricted to any particular platform; and
(c) Immutable makes no representation or promise as to any value (or lack thereof) in any NFT minted using the Protocol.
10.    Immutable X’s obligations
10.1    Availability of Protocol and Disaster Recovery.
For so long as Immutable maintains the Protocol, it will undertake best efforts to ensure the Protocol is available, including hosting any part of the Protocol which requires hosting and maintaining a commercially reasonable disaster recovery plan (DRP), regularly test such plan, and implement such plan, however, except as provided in Exhibit B, neither Immutable, nor any of its Personnel, will be liable for any times at which the Protocol is not accessible including if this is due to factors outside of Immutable X’s reasonable control.
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10.3    [Reserved].

11.    Limitation of liability and release; Insurance
11.1    Except as set forth below, Protocol provided “as is”.
The Immutable X Materials, including the APIs, SDKs and Back-End Infrastructure, are provided “AS IS”.  
All data, materials, performance, and other items provided by Licensee are “AS IS”.
11.2    Representations and Warranties.
(a) Mutual Warranties.  Each Party represents and warrants that (a) it has the legal right, power, and authority to enter into this Agreement and make the grants of rights hereunder , and (b) its performance of this Agreement will not conflict with any obligations it has to third parties.
(b) Immutable Warranties. Immutable warrants that (a) the Protocol will, to the best of Immutable’s knowledge, materially comply with all Applicable Laws; (b) it, the Protocol and Technical Services and Licensee’s use of the Protocol and the Immutable Materials in accordance with this Agreement does not misappropriate, infringe or violate any intellectual property or other right of any third party; (c) Immutable shall promptly take reasonable steps to repair any reported material errors in the Protocol;      and (d) Immutable will not negligently, recklessly, or intentionally introduce into the Protocol or Licensee systems any malicious code.  In addition, Immutable represents and warrants that (i) To the best of Immutable’s knowledge, Immutable has complied and will during the Term comply with all Applicable Law. Immutable warrants that (a) the Services will conform to the service levels set forth in Exhibit B when accessed and used in accordance with the Immutable Materials and will operate without material error, and (b) the Protocol functionality and Services will not be materially decreased during the Term. Immutable warrants that, to the extent necessary to enable it to comply with all of its obligations under this agreement, it will employ suitable trained and experienced personnel.

11.3 Disclaimers 
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH ABOVE, EACH PARTY HEREBY DISCLAIMS ALL (AND HAVE NOT AUTHORIZED ANYONE TO MAKE ANY) WARRANTIES RELATING TO THE PROTOCOL AND TECHNICAL SERVICES, IN THE CASE OF IMMUTABLE, AND LICENSEE CONFIDENTIAL INFORMATION, IN THE CASE OF LICENSEE OR OTHER SUBJECT MATTER OF THIS AGREEMENT, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF NON-INFRINGEMENT OF THIRD PARTY RIGHTS, TITLE, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.  
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IMMUTABLE MAKES NO WARRANTY REGARDING ANY THIRD-PARTY SERVICE WITH WHICH THE SERVICE MAY INTEROPERATE.
11.4    End User Release.
The Licensee must procure that all of its End Users agree to terms that state that  Immutable and its Personnel, and Immutable’s suppliers and contractors and their Personnel do not assume any liability or responsibility whatsoever relating to their End User’s use of the Protocol, including in respect of trading NFTs via the Protocol, including for any loss of an NFT Asset, digital assets or tokens, and including in respect of any loss of profit, loss of revenue, loss of opportunities or loss of use, whether due to security breach or cyber-attack, or electronic or technological failure, registration errors or for any other reason)
11.5    Limitation of liability.
EXCEPT FOR A PARTY’S GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT, DAMAGES ARISING FROM BREACHES OF A PARTY’S CONFIDENTIALITY OBLIGATIONS, IMMUTABLE X’s SUSPENSION OR TERMINATION OF SERVICES EXCEPT AS PERMITTED BY THIS AGREEMENT AND EACH PARTY’S INDEMNIFICATION OBLIGATIONS, IN NO EVENT SHALL EITHER PARTY’S LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR UNDER ANY OTHER THEORY OF LIABILITY, EXCEED THE GREATER OF: $5,000,000.  This Section will also not limit Immutable’s obligations to remedy payment errors under Sections 8.4(a)     .
Exclusion of Consequential and Related Damages.  OTHER THAN LIABILITY FOR PERSONAL INJURY, DEATH OR BREACH OF A THIRD PARTY’S INTELLECTUAL PROPERTY RIGHTS,      NEITHER LICENSEE, IMMUTABLE, NOR IMMUTABLE’S SUPPLIERS, SHALL BE RESPONSIBLE OR LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY (A) FOR ERROR OR INTERRUPTION OF USE, LOSS OR INACCURACY OR CORRUPTION OF DATA, (B) FOR COST OF PROCUREMENT OF SUBSTITUTE SERVICES, RIGHTS, OR TECHNOLOGY, (C) FOR ANY LOST PROFITS OR REVENUES, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER OR NOT A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
11.6     Insurance
(a)Insurance.  Immutable will, during the term of this Agreement and for a period of two years thereafter, maintain insurance in such amounts and with such types of coverage as is usual and customary for a sophisticated, prudent company in Immutable’s industry and, in any event, to include, at the minimum, Public & Products Liability in the sum of AUD$20,000,000 and Management Liability Insurance with coverage for data breaches in a sum of not less than $1,000,000.  Immutable will provide Licensee with current and valid certificates of insurance evidencing its compliance with this Section 11 upon request.
     12.    Indemnity
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12.1    Mutual Indemnity. Each Party (the “Indemnifying Party”) agrees to indemnify, defend, and hold harmless the other Party, their respective Affiliates, and their respective employees, officers, directors, and other representatives (collectively, the “Indemnified Party”) from and against any and all losses, costs, expenses (including reasonable fees and expenses for attorneys, experts, and consultants, and interest), penalties, fines, judgments, settlements, damages (of all types including special damages), or liabilities, including legal fees, costs, and expenses (collectively “Losses”), suffered or incurred by any of them in connection with any claim, cause of action, or other legal assertion, brought or threatened to be brought in a legal proceeding by a third party (who is not an Affiliate of the Indemnified Party), or any investigation, examination, or proceeding of a governmental agency (each a “Claim”), where such Claim is based on allegations of a breach of the Indemnifying Party’s representations and warranties under the Agreement, gross negligence, or wilful misconduct.
(a)The Indemnified Party will give prompt notice of any Claims to the Indemnifying Party. An Indemnified Party may participate in the defence of any Claims by counsel of its own choosing, at its cost and expense. Neither Party will settle any Claims without the other Party’s prior written approval, which will not be unreasonably withheld. The remedies in this Section are not exclusive and do not limit any other remedies a Party may have under the Agreement, Applicable Law, or otherwise.

(b)This “Mutual Indemnification” section states the Indemnifying Party’s sole liability to, and the Indemnified Party’s exclusive remedy against, the other Party for any type of Claim described in this section.
               13.    Confidentiality
13.1    [Reserved.]
13.2    Definition.  Each party acknowledges that, in the course of performing its respective obligations under this agreement, such party (“Recipient”) may obtain information relating to the other party (“Discloser”) and of a confidential and proprietary nature, including trade secrets, know-how, formulas, source code, inventions, and other code not commercially released, technical data, diagrams, drawings, samples, plans, schematics, presentation documents, financial and economic information, personnel data, business and technical information, and product, sales, and marketing plans (collectively, “Confidential Information”). Confidential Information includes any and all information disclosed in writing or orally that (i) is designated as confidential or proprietary at the time of disclosure to Recipient, (ii) due to the nature of the information, Recipient would reasonably understand to be confidential information of Discloser, and (iii) the terms of this agreement.
13.3    Exclusions. The obligations in Section 13.4 will not apply to the extent any information: (i) is or becomes generally known to the public through no fault of or breach of this agreement by Recipient; (ii) is rightfully known by Recipient at the time of disclosure without an obligation of confidentiality; (iii) is independently developed by Recipient without use of Discloser’s Confidential Information; or (iv) is rightfully obtained by Recipient from a third party without restriction on use or disclosure
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13.4    Use and Disclosure Restrictions. Recipient will not use Discloser’s Confidential Information, except as necessary for Recipient’s performance of this agreement, and Recipient will not disclose such Confidential Information to any third party, except to those of its employees, Affiliates, and subcontractors that need to know such Confidential Information for the performance of this agreement, provided that each such employee, Affiliates, and subcontractor is subject to a written agreement that includes binding use and disclosure restrictions that are at least as protective as those set forth herein. Recipient will strictly maintain the confidentiality of all of Discloser’s Confidential Information in its possession or control using the same degree of care as Recipient uses to protect its own confidential information, but in no event less than a reasonable degree of care given the nature and type of Confidential Information in Recipient’s possession.  The foregoing obligations will not restrict Recipient from disclosing Confidential Information or the terms and conditions of this agreement: (i) pursuant to the order or requirement of a court, administrative agency, or other governmental body, provided that Recipient (a) gives reasonable notice to Discloser to enable it to contest such order or requirement, and (b) only discloses the limited portion of Confidential Information necessary to comply with such order or requirement; (ii) on a confidential basis to its legal or professional financial advisors; or (iii) as required under applicable securities regulations. Notwithstanding the above. either Party may disclose the terms of this agreement in confidence, to its advisors, accountants and attorneys, to potential strategic partners, or for due diligence purposes to any actual or prospective acquirer, underwriter, or investor (or their respective advisors, accountants, and attorneys).
13.5    Breach Notification. Recipient shall immediately notify Discloser if it becomes aware of, or reasonable believes there is a threat of any unauthorized disclosure, access, or use of Recipient’s Confidential Information under this Section 12. In such case, Recipient will fully cooperate with Discloser to prevent any further disclosure of its Confidential Information, including, to the extent possible, the filing of legal actions and remedies by Recipient, to the extent that this may be successful.
14.    Disputes
14.1    [Reserved]
14.2    Governing Law; Arbitration. Any legal action, dispute or proceeding arising in connection with this Agreement will be settled exclusively by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce (the “ICC Rules”) by one arbitrator appointed in accordance with the ICC Rules (the “Arbitrator”). Notwithstanding anything to the contrary in the ICC Rules, discovery will be permitted to the extent permitted by the United States Federal Rules of Civil Procedure.  The arbitration shall be conducted in a location in California as agreed between the parties or, failing agreement, Los Angeles, California, USA in the English Language. The arbitration proceedings shall be conducted on an expedited and confidential basis and shall result in an award within no more than sixty (60) days. The award of the Arbitrator shall be final and binding on the parties. Notwithstanding the foregoing or anything to the contrary in the ICC Rules, in the event of any actual, suspected or threatened (i) infringement, misappropriation or other violation of any of Licensee’s intellectual property rights, or (ii) unauthorized disclosure or use of Confidential Information, in each case, Immutable acknowledges that Licensee will be irreparably damaged and that Licensee’s remedies at law will be inadequate, and that, without limiting any of its other rights or remedies, Licensee will be permitted to immediately seek injunctive, criminal or other equitable relief from any court of competent jurisdiction without posting a bond or other security. The prevailing Party (i.e., the Party whose major positions taken could fairly be said to have prevailed over the other Party’s major positions on material disputed issues) in any action 
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arising from or related to this Agreement will be entitled to an award of all costs, expenses and attorneys’ fees, in addition to any other relief to which it may be entitled. Any order or judgment entered in such action must contain a specific provision providing for such payment, separate from the judgment, for amounts incurred in enforcing such judgment and the previous sentence is intended to survive any judgment and is not to be deemed merged into any judgment. This Section 14.2 will survive any termination of this Agreement.
15.    General
15.1    Waiver.
Neither party will be taken as having waived any rights under this agreement unless the party has done so expressly in writing. The failure of any party to enforce their rights under this agreement at any time for any period shall not be construed as a waiver of such rights.
15.2    Notice.
All notices required or permitted under this agreement will be in writing and delivered by confirmed facsimile or other electronic transmission, including email, (with confirmation of delivery or read-receipt requested), by courier or overnight delivery services, or by certified mail, and in each instance will be deemed given upon receipt.  All communications will be sent to the addresses set forth above or to such other address as may be specified by either party to the other in accordance with this Section: 
If to Immutable:                If to Licensee:
Immutable                    GME Entertainment, LLC
Suite 9, Level 2, 56 Bowman Street        625 Westport Parkway, Grapevine, Texas 76051
Pyrmont NSW 2009, Australia
Immutable Contact: [Redacted            Licensee Contact: [Redacted]
          
With a copy to (which shall not constitute notice): [Redacted] and [Redacted].        
A Party may from time to time change its address or designee for notification purposes by giving the other prior written notice of the new address or designee and the date upon which it will become effective.

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15.3    Severability.
If any part of these terms is for any reason found to be unenforceable, that part is to be read down to the extent necessary to preserve its operation and if it cannot be read down it is to be severed, and the remainder of this agreement remains in full force.
15.4    No Assignment.
Neither party shall assign or transfer all or any part of its rights under this agreement without the written consent of the other party to the agreement, except that either party may assign or transfer all or part of its rights under this agreement in connection with corporate transaction or re-organization without such consent.
14.5    Sales Tax.
(a) All Fees referred to in this agreement are exclusive of any applicable goods and services tax (GST) sales tax, value added tax, use tax or analogous tax which shall be added to the amount of any Fees due and shall be paid by the Licensee.  In the event such tax is not paid and is later found to be applicable to any payments due under this agreement, the Licensee agrees to pay such taxation amounts on demand together with any interest, costs or penalties levied on Immutable.
(b) If the Licensee imposes any other fees or charges in addition to the Fees, the Licensee is solely responsible for the imposition and collection of any GST, sales tax, value added tax, use tax or analogous tax which may be payable on those fees.
15.5    Amendment.
This Agreement may be amended or modified only by a written document executed by duly authorized representatives of the Parties. 
15.6    Entire Agreement.
These terms constitute the entire agreement between the Licensee and Immutable in relation to its subject matter and supersedes all previous and contemporaneous and understandings between the parties in relation to its subject matter.
15.7    Independent Contractor.
The parties enter into this agreement on an arm’s length basis and nothing in this agreement and no conduct of the parties will be deemed to impose any other relationship, including employer-employee, principal-agent, trustee-beneficiary, fiduciary-beneficiary, joint venture, partner or other relationship.  Other than as set out in this agreement, neither party is responsible for the acts or omissions of the other party or the other party’s personnel.
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15.8    No further warranty or representations.
Neither the Licensee or Immutable have given any warranty or made any representation to the other about the subject matter of these terms, other than those warranties and representations appearing in these terms.
15.9    Order of Precedence.
To the extent there is any difference between these terms and any Documentation, advertisement or other communication, the content of these terms take precedence to the extent of such inconsistency.
15.10    Force Majeure.
Neither party shall be liable for any breach, or delay in performance of its obligations under this Agreement (other than payment obligations) if the breach or delay is caused by fire, flood, earthquake, act of God, war, riot, civil disorder, terrorism, pandemic disease or related government orders, telecommunications outages or disruptions, shortages in available capacity or supply, or any other event beyond the reasonable control of the affected party (a “Force Majeure Event”).  Notwithstanding the foregoing, if a Force Majeure Event continues for thirty (30) consecutive days, Licensee will have the right to terminate this Agreement immediately with written notice to Immutable. An impacted Party shall not be excused from its obligations under this Agreement until forty-eight (48) hours after it has provided notice to the other Party that the impacted Party intends to declare a Force Majeure Event in order to suspend performance in accordance with this provision. No amounts will be payable by Licensee under this Agreement for services provided and received as a result of a Force Majeure Event.
15.11    Jurisdiction.
These terms must be construed, and its provisions interpreted under and in accordance with the laws of the State of      Delaware. The parties submit to the exclusive jurisdiction of the Courts of the Delaware     , including any appellate Courts thereof for any claims not subject to arbitration above. The United Nations Convention on Contracts for the International Sale of Goods will not apply.
15.12    Further Assurances.  The Parties will take any act and execute and deliver any document necessary to effectuate the terms of this Agreement or the parties’ intent.
15.13 Counterparts; Signature.  This Agreement may be executed in counterparts, both of which taken together will constitute one and the same document.  This Agreement may be signed by electronic signature.  A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission will be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
16.    Interpretation and Definitions
16.1    Interpretation.
In this agreement, unless the context otherwise requires:
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(a) reference to a person includes any other entity recognized by law and vice versa;
(b) words importing the singular number include the plural number and vice versa;
(c) words importing one gender include every gender;
(d) any reference to any of the parties by their defined terms includes the Licensee or Immutable’s executors, administrators, legal personal representatives, successors and permitted assigns;
(e) a provision must be read down to the extent necessary to be valid. If it cannot be read down to that extent, it must be severed;
(f) clause headings are for reference purposes only and do not affect interpretation;
(g) a reference to these terms or any other document includes any variation or replacement of it;
(h) a reference to a statute or other law includes regulations and other instruments under it and any consolidations, amendments, re-enactments and replacements of it;
(i) a reference to a party means a person who is named as a Party to, and is bound to comply with the provisions of, these terms;
(j) a reference to ‘includes’ or ‘including’ means ‘includes, without limitation’ and ‘including, without limitation’ respectively;
(k) where a word or phrase is given a defined meaning in these terms, the other grammatical forms of the word or phrase have a corresponding meaning;
(l) a reference to an act includes an omission and doing an act includes executing a document.
16.2    Definitions.
In these terms, unless the context otherwise requires:
“Account” means the account that the Licensee may be required to create with Immutable in order to gain access to the Immutable X Materials;
“Affiliates” means as to any individual, corporation, partnership, limited liability company, association, trust, unincorporated entity or other legal entity (each a Person), any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the specified Person. The term “control” as used herein (including the terms controlling, 
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controlled by, or under common control with) shall mean possession, directly or indirectly of at least fifty percent (50%) of the voting equity of another entity (or other comparable interest for an entity other than a corporation), or the power to direct or cause the direction of the management or policies of an entity whether through ownership of securities, by contract or otherwise.
“API” means the Application Programming Interfaces made available from time to time by Immutable to Licensees and referred to in clause 1.1;
“Applicable Law” means any statute, law, regulation, , rule, rule of law, order, decree, , issued by any governmental authority having jurisdiction over the matter or matters in question, whether now or hereafter in effect, in United States.
“Auditor” has the meaning set out at clause 5.6;
“Back-End Infrastructure” means software, hardware and networking architecture supporting the APIs and SDKs;
“Brand Assets” means the name “Immutable X” and associated logo used by Immutable X in connection with the Immutable X brand
“Brand Asset License” has the meaning set out in clause 3.1;
“Dispute Notice” has the meaning set out in clause 13.2;
“Documentation” means any material which Immutable makes available to the Licensee in connection with the use of the API;
“End User” means any third parties trading NFTs by interfacing with the Protocol, including via any Platform operated by a Licensee;
“End User Release” has the meaning set out in clause 10.3;
“EULA” means such terms and conditions or End User License Agreement in force between the Licensee in respect of its Platform and users of that Platform as referred to in clause 5.2(f);
“Fees” includes:
(a) The Primary Sales Fees; 
(b) The Trading Fees;
(c) The Licensee Fees

“Immutable X” has the meaning set out in clause 1.2;
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“Immutable X Materials” means the Protocol, APIs, SDKs, Back-End Infrastructure and Documentation;
“Intellectual Property” means all intellectual property rights of any kind including but not limited to copyright (including rights in computer software), trade mark, service mark, design, patent, trade secret, code, trade, business, domain or company names, moral rights, rights in confidential information, know-how or other proprietary rights (whether or not any of these are registered and including any application for registration) and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world;
“License” has the meaning set out in clause 2.1;
“Licensee” has the meaning set out in clause 1.2;
“Licensee Data” means any information transmitted to the APIs by the Licensee of the Licensee’s operations which involves NFTs;
“Licensee Brand Asset License” has the meaning set out in clause 4.1;
“Licensee Fees” means those fees applicable to the Primary Sales and Secondary Sales of NFTs in excess of the Primary Fees and Secondary Fees payable to Immutable.
“NFT” means a non–fungible cryptographically secured token;
“Notice Period” has the meaning set out in clause 13.3(a);
“Permitted Purpose” means:
(a) Minting or wrapping of NFTs; and
(b) Operating software involving those NFTs; and
(c) Operating a Platform to enable the trading of NFTs;
“Personnel” means any employee, contractor, subcontractor, supplier, agent, partner, shareholder, ultimate beneficial owner, director or officer of a party;
“Platform” means an interface hosted by or on behalf of the Licensee or other integration between the Licensee’s software and the Protocol which allows for interactions with NFTs, which may involve End Users registering their digital wallets with Immutable X, and/or include sales and trading or minting, including sales trading of NFTs minted via the APIs;
“Primary Sales” means the first time that an NFT collection is sold by a Licensee to an End User using the Protocol, presently available here;
“Primary Sales Fee” means those fees applicable to the Primary Sales of NFTs using the Protocol as published by Immutable from time to time, presently available here;
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“Private Keys” mean the cryptographic private key corresponding to public keys in respect of NFTs;
“Protocol” includes the Immutable X Materials, APIs, SDKs and Back-End Infrastructure;
“SDK” means the software development kit(s) made available by Immutable from time to time in connection with the APIs;
“Services” has the meaning set out in Exhibit B;
“Smart Contract” means the system of software code running on the Ethereum Blockchain used as part of the Protocol;
“Term” has the meaning set out in clause 6.1; and
“Trading Fee” means those fees applicable to secondary trading of NFTs using the Protocol as published by Immutable from time to time, presently available here.

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     EXHIBIT A
Immutable X Fee Structure
Below we set out the fees which are applicable to those using the Immutable X Protocol License Agreement for the Immutable X Protocol.  Fees are payable in the currency (or cryptocurrency) in which the transaction occurs unless otherwise agreed between the parties in writing. The fees listed below are exclusive of GST. Immutable will deliver the initial sales price and secondary sales price, less the applicable Fee, to Licensee in layer one ETH, unless otherwise agreed upon by the parties in writing.
These fees are subject to change from time to time, with Immutable acting reasonably, and you will be informed in writing, which will take effect 30 days after this document is updated, save that Immutable will consult with the Licensee in the 30 days prior to any change to fees taking place.
									
		Fee	Description
	1	Primary Sales Fee	2% of the initial sales price.
	2	Secondary Sales Fee	2% of the secondary sales price

The above represents only those fees charged by Immutable X to Licensees to use the Immutable X Protocol.
The first USD250,000 of primary sales, in aggregate, will not be subject to the Primary Sales Fee.

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EXHIBIT B SERVICE LEVELS

Capitalized terms used but not defined in this Exhibit B have the meaning given to those terms in the Agreement.
Immutable shall use commercially reasonable efforts to make the Services available at or above the following levels:

						
	Services	Availability per Month
	ERC20 deposit, withdrawals, transfers	99.00%
	ERC20 swap and orderbook trades	99.00%
	NFT mints, deposits, withdrawals, transfers	99.00%
	NFT trades	99.00%

Availability shall be determined according to Immutable’s records, and shall include (a) planned downtime, (b) any downtime caused by circumstances beyond Immutable’s reasonable control, and (c) any downtime caused by Licensee.
If Immutable fails to meet any of the above service levels in a given calendar quarter and Licensee notifies Immutable of such failure within thirty (30) days following the end of such calendar quarter, Immutable’s Secondary Fee for the next calendar quarter shall be rebated to the Licensee in the amount of 0.1% of Secondary Sales for that quarter, paid in ETH.

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EXHIBIT C ADDITIONAL PARTY OBLIGATIONS

1. Preferred Partnership

•Immutable will make reasonable and good faith efforts to refer game studios to deploy NFT projects on Immutable X via the GameStop NFT marketplace.

•GameStop will make reasonable and good faith efforts to refer game studios to deploy NFT projects on Immutable X via the GameStop NFT marketplace.

2. Integration Design & Product Support

•Immutable will commit a reasonable level of design & scoping support to Gamestop, including access to Immutable CTO, our Product team, and Integration Engineers to help with integration architecture and scoping. Immutable will co-design the entire solution with the GameStop team.

•Immutable will introduce a third-party integrator to help with the integration between GameStop and Immutable X. Any engagement by that integrator will be at Gamestop’s cost.

3. Marketing & Other Commitments

•GameStop will use Immutable X as their first layer-2 NFT integration for trading and minting, other than Loopring;

•GameStop will not integrate any blockchain protocol, other than Ethereum Layer 1 and Loopring into their NFT marketplace without first having integrated Immutable;

•GameStop will commit & dedicate resources to co-pitching to gaming studios as reasonably requested by Immutable during the Term, including the Vice President of Business Development – Blockchain and the Vice President of Corporate Strategy for the first four months after contract execution, which can be extended and expanded upon mutual agreement by both parties..

•GameStop will use reasonable commercial efforts to support marketing efforts for the NFT marketplace, and will feature Immutable X protocol displayed prominently on the Gamestop NFT marketplace using mutually agreed upon methods (e.g. a site strip). 

•GameStop will prominently feature on the Gamestop NFT Marketplace the additional grants Digital Worlds is committing to make in connection with Gamestop NFT Marketplace for such time as the grants are being offered using mutually agreed upon methods (e.g. badging on the home page that re-directs to a dedicated landing page)..

•GameStop will dedicate resources to support engineering efforts for the NFT marketplace and will cover the costs of any third party development needed for the launch and upkeep of the project.

•GameStop will announce Immutable partnership/GameStop NFT marketplace in a shareholder company filing (either 10-K or 10-Q) if approved by GameStop investor relations team, legal team, and the Board of Directors. 

•GameStop will make reasonable efforts to include Immutable in a quarterly earnings update if approved by the GameStop investor relations team, legal team, and the Board of Directors. 

•GameStop will commit to quarterly meetings with applicable GameStop team members to review the program & strategy for future.

•GameStop will provide two dedicated Immutable X press releases:
◦one after contract execution which will be focused on the grant; and
◦the other at the integration launch, which will be focused on the integration.
◦For purposes of clarity, only the first press release focused on the grant announcement will be required to trigger Milestone Two in the Grants Agreement.

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•GameStop will use reasonable commercial efforts to refer Immutable X to game studios, and to support pitches where appropriate. GameStop will commit to twice a week meeting and pipeline / lead review for the first 4 months, to co-ordinate co-pitching to those leads, which may be extended if mutually agreed to.

4. Feature/Promotion Placement

•GameStop will have a dedicated landing page linked from the home page using a prominent badging image, which will be a page to promote the grants, and will include a sign-up form.

•GameStop and Immutable X will leverage the Immutable X grants pool to incentivize gaming studios, developers and artists to create pre-sale and/or special in-game items promotion using Immutable X minting through the GameStop NFT Marketplace, with any such promotion being as agreed between the parties.

•GameStop will provide a site stripe mid-page for grant promotion, for the duration between signing and integration of the grant application framework, that will include a promotional banner at the top indicating that Immutable X will be available soon.

•GameStop will provide placement and marketing text on Immutable X minting option and will provide order options dynamically by usage.

									
	Executed by Immutable X Pty Ltd
by it’s authorised representative:
	Dated:	1/27/2022
			
	/s/ Robbie Ferguson		
	Signature
		Signature

			
	Robbie Ferguson, Co-Founder & President		
	Name and Capacity 
		Name and Capacity 

									
	Executed by GME Entertainment, LLC
by it’s authorised representative:
	Dated:	1/27/2022
			
	/s/ Kurt Bierbower		
	Signature
		Signature

			
	Kurt Bierbower, VP Business Development, Blockchain		
	Name and Capacity 
		Name and Capacity 

23

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