Document:

exv10w47

 

EXHIBIT 10.47

FOIA Confidential Treatment Requested

[Signature Copy]

Basic Lease Contract

Flash memory manufacturing equipment

December 16, 2005

I  B  J 
   L  e  a  s  i  n  g      C  o  .  ,      L   t  d  .

S  u  m  i  s  h  o
   L  e  a  s  e
   C  o  .  ,      L  t  d  .

T  o  s  h  i  b  a
   F  i  n  a  n  c  e
   C  o  .  ,      L  t  d  .

SD Lessor

I
 B  J      L  e  a  s  i
 n  g      C  o  .  ,
   L  t  d  .

S  u  m  i  s  h  o
   L  e  a  s  e
   C  o  .  ,      L  t  d  .

Toshiba Lessor

 

 

Flash Partners Limited Company

Lessee

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Article 1
	 	(Definitions)	 	 	1	 
	
	
	
	

	Article 2
	 	(Composition of transactions)	 	 	9	 
	
	
	
	

	Article 3
	 	(Lease)	 	 	10	 
	
	
	
	

	Article 4
	 	(Delivery)	 	 	10	 
	
	
	
	

	Article 5
	 	(Prior conditions regarding delivery)	 	 	11	 
	
	
	
	

	Article 6
	 	(Related documents)	 	 	12	 
	
	
	
	

	Article 7
	 	(Payment of lease payment etc.)	 	 	12	 
	
	
	
	

	Article 8
	 	(Defective security indemnity)	 	 	15	 
	
	
	
	

	Article 9
	 	(Burden for loss, damage and danger)	 	 	16	 
	
	
	
	

	Article 10
	 	(Representation of owner)	 	 	18	 
	
	
	
	

	Article 11
	 	(Peaceful use)	 	 	18	 
	
	
	
	

	Article 12
	 	(Installation and use)	 	 	18	 
	
	
	
	

	Article 13
	 	(Possession and re-leasing)	 	 	18	 
	
	
	
	

	Article 14
	 	(Maintenance management)	 	 	19	 
	
	
	
	

	Article 15
	 	(Change in original condition)	 	 	20	 
	
	
	
	

	Article 16
	 	(Ownership of parts)	 	 	20	 
	
	
	
	

	Article 17
	 	(Inspection)	 	 	20	 
	
	
	
	

	Article 18
	 	(Burden etc.)	 	 	21	 
	
	
	
	

	Article 19
	 	(Insurance)	 	 	21	 
	
	
	
	

	Article 20
	 	(Representation and warranty)	 	 	22	 
	
	
	
	

	Article 21
	 	(Commitment matters)	 	 	23	 
	
	
	
	

	Article 22
	 	(Compensation and burden of expense)	 	 	25	 
	
	
	
	

	Article 23
	 	(Number of individual transactions and change of deliverable period)	 	 	26	 
	
	
	
	

	Article 24
	 	(Purchase option right)	 	 	27	 
	
	
	
	

	Article 25
	 	(Return)	 	 	28	 
	
	
	
	

	Article 26
	 	(Termination of contract)	 	 	30	 
	
	
	
	

	Article 27
	 	(Default interest)	 	 	33	 
	
	
	
	

	Article 28
	 	(Transfer of rights and obligations)	 	 	33	 
	
	
	
	

	Article 29
	 	(Responsible assets)	 	 	34	 
	
	
	
	

	Article 30
	 	(Notice etc.)	 	 	36	 
	
	
	
	

	Article 31
	 	(Revision of contract)	 	 	36	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Article 32
	 	(Confidentiality)	 	 	36	 
	
	
	
	

	Article 33
	 	(Governing law)	 	 	36	 
	
	
	
	

	Article 34
	 	(Court of competent jurisdiction)	 	 	37	 

	 	 	 
	Appendix 1

	 	Lease Conditions
	
	
	
	

	Appendix 2

	 	Loan Certificate
	
	
	
	

	Appendix 3

	 	Permitted Liens
	
	
	
	

	Appendix 4

	 	Certificate of Return
	
	
	
	

	Appendix 5

	 	Certificate of Transfer
	
	
	
	

	Appendix 6

	 	Situation requirements at the time of return
	
	
	
	

	Appendix 7

	 	Notification address

 

 

Basic Lease Contract

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

Article 1 (Definitions)

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

	 	 	 
	SD Group Companies

	 	San Disk Corporation and companies San Disk
Corporation directly or indirectly owns 50% or more of
their voting stocks
	 
	 	 
	SD Lessor RA

	 	Sumisho Lease Co., Ltd. acting on behalf of SD Lessor
with respect to common portions of SD Lessor at the
time of return, sale and other forms of disposition of
Subject property pursuant to the provision of Article
4 of Subject Statement of Mutual Agreement among
Involved Parties, or acting on behalf of the SD Lender
with respect to the Property or the common portions of
the SD Lessor.
	 
	 	 
	Reason for cancellation

	 	All or part of reasons stipulated in Article 26, Item 1
	 
	 	 
	Loan certificate

	 	Loan certificate for subject properties for respective
individual transaction to be prepared in the form
provided in Appendix 2 based on Article 4, Item 5
	 
	 	 
	Prescribed damages

	 	Amounts to be calculated for each Tranche on a certain
day based on Appendix 1, Item 9
	 
	 	 
	Taxes and public dues

	 	Present or future tax, levy, tax collected at the
source, fees, handling fees, burden charges as well as
other monies (regardless of their names) and penalty
charges, foul charges, additional charges, delayed
charges and delayed interest thereon (regardless of
their names)

 

 

	 	 	 
	 
	 	 
	Banking Business Day

	 	Days on which banks operate in Japan
	 
	 	 
	Purchase option exercise cost

	 	Amounts to be calculated on each Tranche on a payment
day based on Appendix 1, Item 6
	 
	 	 
	Individual transaction

	 	Each individual transaction to be conducted based on
this contract and each loan certificate
	 
	 	 
	Original purchase agreement

	 	Each purchase agreement concluded between the Lessee
and the manufacturer of properties on the purchase of
Subject properties
	 
	 	 
	Sub lessee

	 	Persons who are sub-leased based on the regulations of
Article 13
	 
	 	 
	Repayment base money

	 	Amounts to be calculated based on Appendix 1, Item 8
for the day of return stipulated in Article 25, Item 1
	 
	 	 
	Performance, etc.

	 	Performance, structure, design, design specification,
practical value, exchange value, usability, sales
possibility, commercial value, durability,
operability, economical efficiency, compatibility with
purpose, legality and any other performance, function,
characteristics, value and utility of Subject
properties
	 
	 	 
	Reason for total loss

	 	(a) Loss or missing location, (b) damage or glitch
reasonably recognized by the Lessee as impossible to
repair or re-use from an economic viewpoint, which is
confirmed by the appraisal company appointed by the
Lessor or (c) confiscation, expropriation or theft
occurred to Subject property, its unit component part
or Subject property composing unit component part
	 
	 	 
	Loss, etc.

	 	Losses, damages, costs, fees, handling fees,
liabilities, responsibilities, penal charges, penalty,
delinquency charges, complaints and judicial actions

- 2 -

 

	 	 	 
	 
	 	 
	Unit component part

	 	A set of each property (including the Subject parts
fixed or furnished in the relevant properties) to be
independently listed in the loan certificate of
Subject property. Provided, however, that when a part
of the unit component part subject to the relevant
Individual transaction is excluded from this contract,
the remaining unit component part shall compose the
unit component part subject to the relevant Individual
transaction thereafter.
	 
	 	 
	Toshiba Lessor RA

	 	Sumisho Lease Co., Ltd. acting on behalf of Toshiba
Lessor with respect to common portions of Toshiba
Lessor at the time of return, sale and other forms of
disposition of Subject property pursuant to the
provision of Article 4 of Subject Statement of Mutual
Agreement among Involved Parties, or acting on behalf
of the SD Lender with respect to the Property or the
common portions of the SD Lessor.
	 
	 	 
	Toshiba group companies

	 	Toshiba Corporation and companies Toshiba Corporation
directly or indirectly owns 50% or more of their
voting shares
	 
	 	 
	Tranche

	 	Collective term for SD Tranche 1, SD Tranche 2,
Toshiba Tranche 1 and Toshiba Tranche 2 composed with
respect to lease payment or other claimable assets
under this contract pursuant to Article 7, Item 1.
	 
	 	 
	Delivery period

	 	Period from the day of this contract to the final
deliverable day stipulated in Appendix 1, Item 1
	 
	 	 
	Delivery place

	 	Place where Subject property or each unit component
part exists on the relevant scheduled delivery day to
be notified by the Lessee to the Lessor by a Banking
Business Day immediately prior to each scheduled
delivery day
	 
	 	 
	Deliver day

	 	Each day on which each unit component part composing
Subject property is delivered based on Article 4

- 3 -

 

	 	 	 
	 
	 	 
	Scheduled delivery day

	 	Each day stipulated in Appendix 1, Item 1 as a
scheduled delivery day for each Individual transaction
or other banking business days during the delivery
period to be agreed upon by the Lessee and the Lessor
	 
	 	 
	Person to be compensated

	 	Lessor, Subject borrower, Subject lender and all or
either of the successor thereto, director, employee or
agent
	 
	 	 
	Burden etc.

	 	Ownership, right of possession, lease right, lease,
mortgage, right of pledge, lien, security interests,
right of mortgage and conditional rights thereto,
subscription rights thereto, any other usufructuary
right as well as security right and rights based on
attachment or provisional attachment
	 
	 	 
	Property purchase cost

	 	Sales cost to be determined pursuant to Article 3,
Item 1 of the Subject Sales Contract with respect to
Subject property or each unit component part
	 
	 	 
	Property manufacturing agency

	 	A person described in the column of “manufacturer” of
the itemized property list to be attached in a loan certificate
	 
	 	 
	Default reason

	 	Reason for cancellation or reasons constituting
reasons for cancellation due to notification, passing
of time or other conditions
	 
	 	 
	Break funding cost

	 	Damages or expenses to be borne with respect to
raising of purchase cost for Subject property when
each Lessor fails to implement or terminates this
contract before expiration. The cost shall be
calculated as damage cost, penal charge or other
monies (provided, however, that if Lessee has doubts
about other monies, Lessor, Lessee and Subject Lender
shall have consultations thereon) imposed by Subject
lender on Subject borrower with respect to
non-performance of loans or prepayment, etc. based on
the Subject Loan Agreement.
	 
	 	 
	Reimbursement adjustment fee

	 	Amounts to be calculated about the day of return
stipulated in Article 25, Item 1 pursuant to Appendix
1, Item 7

- 4 -

 

	 	 	 
	 
	 	 
	Subject lender

	 	Collectively means Subject SD lender and Subject
Toshiba lender.
	 
	 	 
	Subject SD lender

	 	Collectively means persons listed as Subject SD lender
in Appendix 1, Item 11
	 
	 	 
	Subject Toshiba lender

	 	Persons listed as Subject Toshiba lender in Appendix
1, Item 11
	 
	 	 
	Subject Loan Agreement

	 	Collectively means Subject SD Loan Agreement and
Subject Toshiba Loan Agreement
	 
	 	 
	Subject SD Loan Agreement

	 	Collectively means Limited Loan Agreement (SD Tranche)
to be concluded between Subject SD borrower and
Subject SD lender as of the same date as this Contract
and Acknowledgement of debts and Repayment Agreement
based on Limited Loan Agreement.
	 
	 	 
	Subject Toshiba Loan Agreement

	 	Collectively means Limited Loan Agreement (Toshiba
Tranche) to be concluded between Subject Toshiba
borrower and Subject Toshiba lender as of the same
date as this Contract and Acknowledgment of debts and
Repayment Agreement based on Limited Loan Agreement.
	 
	 	 
	Subject borrower

	 	Collectively means Subject SD borrower and Subject
Toshiba borrower.
	 
	 	 
	Subject SD borrower

	 	Persons listed as Subject SD borrower in Appendix 1,
Item 12
	 
	 	 
	Subject Toshiba borrower

	 	Persons listed as Subject Toshiba borrower in Appendix
1, Item 12
	 
	 	 
	Subject Statement of Mutual Agreement among Involved Parties

	 	Agreement on senior or subordinated relations, etc.
among Subject lender, Lessor and Subject borrower as
of the same date as this Contract

- 5 -

 

	 	 	 
	 
	 	 
	Subject related contracts

	 	This Contract, Subject Sales Contract, Subject Loan
Sales Contract, Subject Statement of Mutual Agreement
among Involved Parties, Subject Loan Agreement,
Subject Loan Transfer Security Contract, Subject
property transfer security reservation contract,
Subject Contract of Clerical Work Commission, Subject
Guarantee Agreement, Subject Letter of Agreement and
agreements and other documents related thereto
	 
	 	 
	Subject Loan Transfer Security Contract

	 	Collectively means Subject SD Loan Transfer Security
Contract and Subject Toshiba Loan Transfer Security
Contract.
	 
	 	 
	Subject SD Loan Transfer Security Contract

	 	Collectively means Basic Loan Transfer Security
Contract (SD Tranche) on the Right to claim
performance of obligations of guarantee for (i)
credits with respect to SD Tranche 1 under this
Contract and (ii) credits with respect to SD Tranche 1
under this Contract under Subject SD Guarantee
Agreement to be concluded between Subject SD borrower
and Subject SD lender as of the same date as this
Contract and each individual agreement based thereon.
	 
	 	 
	Subject Toshiba Loan Transfer Security Contract

	 	Collectively means Basic Loan Transfer Security
Contract (Toshiba Tranche) on the Right to claim
performance of obligations of guarantee for (i)
credits with respect to Toshiba Tranche 1 under this
Contract and (ii) credits with respect to Toshiba
Tranche 1 under Subject Toshiba Guarantee Agreement to
be concluded between Subject Toshiba borrower and
Subject Toshiba lender as of the same date as this
Contract and each individual agreement based thereon.
	 
	 	 
	Subject Loan Sales Contract

	 	Collectively means Subject SD Loan Sales Contract and
Subject Toshiba Loan Sales Contract

- 6 -

 

	 	 	 
	 
	 	 
	Subject SD Loan Sales Contract

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

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

	 	Collectively means the Subject SD Contract of Clerical
Work Commission and the Subject Toshiba Contract of
Clerical Work Commission
	 
	 	 
	Subject SD Contract of Clerical Work Commission

	 	Contract of Clerical Work Commission (SD Tranche) to
be concluded between the SD Lessor and the Subject
Clerical Work Assignee as of the same date as this
contract
	 
	 	 
	Subject Toshiba Contract of Clerical Work Commission

	 	Contract of Clerical Work Commission (Toshiba Tranche)
to be concluded between Toshiba Lessor and Subject
Clerical Work Assignee as of the same date as this
contract
	 
	 	 
	Subject Clerical Work Assignee

	 	Persons described in Appendix 1, Item 14

- 7 -

 

	 	 	 
	 
	 	 
	Subject Letter of Agreement

	 	Letter of consent by Subject guarantor and Lessee in a
specified form with respect to transfer of receivables
based on each Subject Loan Transfer Security Contract
and establishment of transfer security reservation
completion right based on Subject property transfer
security reservation contract
	 
	 	 
	Subject Sales Contract

	 	Collectively means Basic Sales Contract on Subject
property to be concluded between Lessee and Lessor as
of the same date as this Contract and each individual
agreement based thereon.
	 
	 	 
	Subject property

	 	Each unit component part (including Subject parts) in
each Individual transaction to be notified by Lessee
to Lessor pursuant to Article 4, Item 1 of the Subject
Sales Contract and to be confirmed by certificate of
transfer, receipt and loan certificate to be delivered
on the delivery day for the relevant Individual
transaction. Provided, however, that if a part of unit
component part is excluded from this Contract due to
occurrence of reasons for all-loss and the exercise of
the purchase selection right, the remaining unit
component part shall be Subject property thereafter.
	 
	 	 
	Subject property transfer security reservation contract

	 	Collectively means the Basic Property Transfer
Security Reservation Contract for Subject property to
be concluded between the Lessor and the Subject lender
as of the same date as this contract and individual
contracts pursuant thereto
	 
	 	 
	Subject parts

	 	Equipment and parts composing unit component part as
well as equipment, accessories, attachments and parts
(including aggregates of single parts and similar
kinds) fixed or furnished as needed with Subject
property
	 
	 	 
	Subject Guarantee Agreement

	 	Collectively means Subject SD Guarantee Agreement and
Subject Toshiba Guarantee Agreement.
	 
	 	 
	Subject SD Guarantee Agreement

	 	Guarantee Agreement to be concluded between SanDisk
and SD Lessor as of the same date as this contract

- 8 -

 

	 	 	 
	 
	 	 
	Subject Toshiba Guarantee Agreement

	 	Guarantee Agreement to be concluded between Toshiba
and Toshiba Lessor as of the same date as this
contract
	 
	 	 
	Subject guarantor

	 	Collectively means SanDisk and Toshiba.
	 
	 	 
	SanDisk

	 	Persons described as SanDisk in Appendix 1, Item 13.
	 
	 	 
	Toshiba

	 	Persons described as Toshiba in
Appendix 1, Item 13
	 
	 	 
	Waived burdens, etc.

	 	Burdens, etc. excluded pursuant to Article 18, Item 1
	 
	 	 
	Lease period

	 	A period starting on a delivery day stipulated in
Appendix 1, Item 2. Provided, however, that if this
contract is cancelled before expiration, lease period
shall terminate on the relevant cancellation day.
	 
	 	 
	Lease period expiration period

	 	The last day of Lease period
	 
	 	 
	lease payment

	 	Lease payment to be determined for each unit component
part of each Tranche based on Appendix 1, Item 3
	 
	 	 
	lease payment calculation period

	 	A period stipulated in Appendix 1, Item 5
	 
	 	 
	lease payment day

	 	A day stipulated in Appendix 1, Item 4

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

Article 2 (Composition of transactions)

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

- 9 -

 

Article 3 (Lease)

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

Article 4 (Delivery)

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

- 10 -

 

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

Article 5 (Prior conditions regarding delivery)

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

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

- 11 -

 

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

Article 6 (Related documents)

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

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

Article 7 (Payment of lease payment etc.)

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

- 12 -

 

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

- 13 -

 

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

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

- 14 -

 

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

Article 8 (Defective security indemnity)

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

- 15 -

 

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

Article 9 (Burden for loss, damage and danger)

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

- 16 -

 

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

- 17 -

 

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

Article 10 (Representation of Owner)

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

Article 11 (Peaceful Use)

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

Article 12 (Installation and Use)

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

Article 13 (Possession and Re-leasing)

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

- 18 -

 

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

Article 14 (Maintenance Management)

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

- 19 -

 

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

Article 15 (Change in Original Condition)

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

Article 16 (Ownership of Parts)

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

Article 17 (Inspection)

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

- 20 -

 

Article 18 (Burden etc.)

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

Article 19 (Insurance)

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

- 21 -

 

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

Article 20 (Representation and Warranty)

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

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

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

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

- 22 -

 

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

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

Article 21 (Commitment Matters)

	 	1	 	Lessee shall make the following commitment to Lessor:

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

- 23 -

 

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

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

- 24 -

 

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

Article 22 (Compensation and Burden of Expense)

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

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

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

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

- 25 -

 

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

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

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

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

 

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

- 26 -

 

Article 24 (Purchase Option Right)

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

 

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

- 27 -

 

Article 25 (Return)

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

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

 

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

- 28 -

 

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

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

 

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

- 29 -

 

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

Article 26 (Termination of Contract)

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

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

 

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

- 30 -

 

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

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

- 31 -

 

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

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

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

- 32 -

 

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

Article 27 (Default Interest)

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

Article 28 (Transfer of Rights and Obligations)

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

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

 

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

- 33 -

 

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

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

Article 29 (Responsible Assets)

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

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

- 34 -

 

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

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

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

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

- 35 -

 

	 	 	 	related contracts or security right held of Lessor.

Article 30 (Notice etc.)

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

Article 31 (Revision of Contract)

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

Article 32 (Confidentiality)

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

Article 33 (Governing Law)

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

 

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

- 36 -

 

Article 34 (Court of Competent Jurisdiction)

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

- 37 -

 

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

- 38 -

 

	 	 	 	 	 
	 

	 	 	 	(basic lease contract)
	SD Lessor

	 	:
	 	IBJ Leasing Co., Ltd.
	as well as
	 	 	 	 
	Toshiba Lessor
	 	 	 	 

- 39 -

 

	 	 	 	 	 
	 

	 	 	 	(basic lease contract)
	SD Lessor

	 	:
	 	Sumisho Lease Co., Ltd.
	as well as
	 	 	 	 
	Toshiba Lessor
	 	 	 	 

- 40 -

 

	 	 	 	 	 
	 

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

- 41 -

 

	 	 	 	 	 
	 

	 	 	 	(basic lease contract)
	Lessee  
	 	:
	 	Flash Partners Limited Company

- 42 -

 

Lease Contract Appendix 1

Lease Conditions

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

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

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

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

	 	(a)	 	(SD Tranche 1)

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

(SD Tranche 1 spread)

 

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

- 43 -

 

	 	 	 
	In the event that long-term loan rating of SanDisk by
Standard & Poor’s Rating Services or Moody’s Investors Service
(hereinafter collectively referred to as the “designated rating
agency” as of the day of this Contract is “BB-” or “Ba3” or
below respectively;

	 	[*]% p.a.
	In the event that long-term loan rating of SanDisk by the
designated rating agency is “BB” or “Ba2” respectively;

	 	[*]% p.a.
	In the event that long-term loan rating of SanDisk by the
designated rating agency is “BB+” or “Ba1” or above
respectively.

	 	[*]% p.a.

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

(SD Tranche 2 spread)

	 	 	 
	In the event that long-term loan rating of San Disk as of the
day of the Contract by the designated rating agency is “BB-” or
“Ba3” or below respectively;

	 	[*]% p.a.
	In the event that long-term loan rating of SanDisk by the
designated rating agency is “BB” or “Ba2” respectively;

	 	[*]% p.a.
	In the event that long-term loan rating of SanDisk by the
designated rating agency is “BB+” or “Ba1” or above
respectively;

	 	[*]% p.a.

 

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

- 44 -

 

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

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

 

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

- 45 -

 

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

- 46 -

 

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

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

	 	 	 
	In the event that long-term loan rating of SanDisk by the
designated rating agency as of the day of this Contract is
“BB-” or “Ba3” or below respectively;

	 	[*]% p.a.
	Long-term loan rating of SanDisk by the designated rating
agency is “BB” or “Ba2” respectively;

	 	[*]% p.a.
	Long-term loan rating of SanDisk by the designated rating
agency is “BB+” or “Ba1” or more respectively.

	 	[*]% p.a.

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

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

 

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

- 47 -

 

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

	 	 	 
	Long-term loan rating of SanDisk as of the day of this Contract
by the designated rating agency is “BB-” or “Ba3” or below
respectively;

	 	[*]% p.a.
	Long-term loan rating of SanDisk is “BB” or
“Ba2” respectively;

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

	 	[*]% p.a.

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

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

 

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

- 48 -

 

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

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

	10	 	Payment method

	 	 	 	 	 
	(1)

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

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]
	 
	 	 	 	 
	 

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

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]
	 
	 	 	 	 
	 

	 	 	 	[*]

 

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

- 49 -

 

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

 

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

- 50 -

 

	11	 	Subject lender

(Subject SD lender)

IBJ Leasing Co., Ltd.

Sumisho Lease Co., Ltd.

Toshiba Finance Co., Ltd.

Agricultural and Forestry Central Bank

Bank of Yokohama, Ltd.

(Subject Toshiba lender)

Mizuho Corporate Bank Co., Ltd.

	12	 	Subject borrower

(Subject SD borrower)

Lancelot Leasing Limited Company

(Subject Toshiba borrower)

Facile Princeps Limited Company

	 	13	 	Subject guarantor (SanDisk)

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

          Toshiba Corporation a guarantor of debts related to Toshiba Tranche 1 and Toshiba
Tranche 2 under this Contract

	14	 	Subject Clerical Work Assignee

IBJ Leasing Co., Ltd.

	15	 	Composition of transactions

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

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

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

 

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

- 51 -

 

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

 

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

- 52 -

 

(Loan certificate, Appendix 2)

Ratio of each Tranche based on the Subject Lease Contract, Article 7, Item 1

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

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

	 	 	 	 	 	 	 	 	 
	[*]

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

- 2 -

 

Subject Lease Contract Appendix 1, Item 6 Purchase option exercise price

Amounts to be obtained by multiplying the property purchase cost by the following ratios.
Provided, however, that the lease payment as of the relevant lease payment day shall be
paid separately.

	 	 	 
	[*]

	 	[*]
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	[*]

	 	[*]

Subject Lease Contract Appendix 1, Item 7 reimbursement adjustment fee

Amount to be obtained by multiplying the property purchase cost for Subject property or
the relevant unit component part by the following ratios. Provided, however, that the
lease payment as of the relevant lease payment day shall be paid separately.

	 	 	 
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]

 

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

- 3 -

 

Subject Lease Contract Appendix 1, Item 8 Repayment standard money

Amounts to be obtained by multiplying the property purchase cost for Subject property or
the relevant unit component part by the following ratios.

	 	 	 
	[*]

	 	[*]
	[*]

	 	[*]
	[*]

	 	[*]
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	 	[*]
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	 	[*]

Subject Lease Contract Appendix 1, Item 9 Prescribed damages

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

- 4 -

 

[*]

 

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

- 5 -

 

Lease Contract Appendix 3

Permitted Liens

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

- 6 -

 

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

Related Definitions

“Acquired Indebtedness” means indebtedness of any Person (a) existing at the time such Person
becomes a Subsidiary of SanDisk, including by designation, or is merged or consolidated into or
with SanDisk or one of its Subsidiaries or (b) assumed in connection with the Acquisition of assets
from such Person.

“Capital Lease Obligations” means any amount capitalized under any lease which is required under
GAAP to be capitalized by SanDisk or one of its consolidated Subsidiaries.

“F, F&E Financing Agreement” means an agreement which creates a Lien upon any after-acquired
tangible personal property and/or other items constituting operating assets, which are financed,
purchased or leased for the purpose of engaging in or developing SanDisk’s and its Subsidiaries’

- 7 -

 

respective businesses.

“GAAP” means generally accepted accounting principals as in effect from time to time in the
applicable jurisdiction.

“Lien” means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security
interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real
or personal, movable or immovable, now owned or hereafter acquired by SanDisk.

“Person” means any individual, corporation, company, partnership, or governmental agency.

“Subsidiary” of any Person means (i) a corporation a majority of whose Voting Stock is at the time,
directly or indirectly, owned by such Person, by such Person and one or more Subsidiaries of such
Person or by one or more Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or such Person and one
or more Subsidiaries of such Person, directly or indirectly, at the date of determination thereof
has a majority ownership interest, or (iii) a partnership in which such Person of a Subsidiary of
such Person is, at the time, a general partner and has a majority ownership interest.

“Voting Stock” means all classes of equity interests then outstanding and normally entitled to vote
in the election of directors (or similar body) of the issuer of such Voting Securities.

“Working Capital Indebtedness” means indebtedness incurred under a credit facility available to
SanDisk or any of its Subsidiaries the proceeds of which are used for working capital or similar
purposes.

[Reference Translation]

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

- 8 -

 

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

- 9 -

 

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

- 10 -

 

Lease Contract Appendix 6

Situational requirements at the time of return

     When Flash Partners Limited Company (hereinafter referred to as “Lessee”) returns the Subject
property to Lessor (hereinafter referred to as “Lessors”) based on the provision of Clause 25 of
the Lease, in addition to the provision of Clause 25 of the Lease the following requirements shall
be satisfied.

     When Lessee returns the Equipment pursuant to Clause 25 of the Lease, Lessee shall
satisfy the following conditions, in addition to the conditions specified in Clause 25 of the
Lease.

     (A) Lessee shall no later than [*] days prior to the expiration or other termination of the
lease (with regard to all but not less than all Equipment) provide, at its expense:

          1. a detailed inventory of the Equipment (including the model and serial number of each major
component thereof), including, without limitation, all internal circuit boards, module boards, and
software features

          2. a complete and current set of al manuals, blue prints, process flow diagrams, equipment
configuration diagrams, operation, maintenance and repair records and other data (in Japanese and
English) reasonably requested by Lessors concerning the configuration and operation of the
Equipment, and

          3. a certification of the manufacturer or of a maintenance provider acceptable to Lessors that
the Equipment (a) has been tested and is operating in accordance with manufacturer’s specifications
together with a report detailing the condition of the Equipment, the results of such test (s) and
inspection (s) and all repairs that were performed as a result of such test (s) and inspection (s),
and (b) that the Equipment qualifies for the manufacturer’s used equipment maintenance program.

     (B) Upon the request of Lessors and at the expense of Lessee, Lessee shall, not later than [*]
days prior to the expiration or other termination of the Lease make the Equipment available for
on-site operational inspection by persons designated by Lessors who shall be qualified to inspect
the Equipment in its operational environment.

     (C) At the expense of Lessee, all Equipment shall be cleaned and treated with respect to rust,
corrosion and appearance in accordance with manufacturer’s recommendations and consistent with the
best practices of dealers in used equipment similar to the Equipment. At Lessors’ option and at
the expense of Lessee, Lessee shall (a) properly remove all Lessee installed markings which are not
necessary for the operation, maintenance or repair of the Equipment; or (b) translate said markings
to a language as specified by Lessors and reattach those markings.

 

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

 

 

     (D) Lessee shall, at its expense, ensure all Equipment and Equipment operations conform
to all applicable local, state, and federal laws, health and safety guidelines which may be in
effect at the time of return, or as specified by Lessors.

     (E) Lessee shall, at its expense, provide for the deinstallation, packing, transporting, and
certifying of the Equipment to include, but not limited to, the following: (1) the manufacturer’s
representative or such other person acceptable to Lessors shall de-install all Equipment (including
all wire, cable and mounting hardware) in accordance with the specifications of Lessors; (2) each
item of Equipment will be returned with a certificate supplied by the manufacturer’s representative
qualifying the Equipment to be in good condition and (where applicable) to be eligible for the
manufacturer’s maintenance plan; the certificate of eligibility shall be transferable to another
operator of the Equipment; this assignment shall extend to any software licensing or relicensing or
other requirements of the manufacturer to enable an alternate user/purchaser of the Equipment to
enjoy all rights and privileges as would the original purchaser of the Equipment directly from the
manufacturer; (3) the Equipment shall be packed properly and in accordance to Lessors’
specifications; (4) upon sale of the Equipment to a third party, provide transportation in a manner
and to locations specified by Lessors; (5) without limitation, as applicable, all Equipment shall
be professionally de-contaminated and certified for removal and transport by appropriate
authorities, in accordance with industry standards, and consistent with the mode of transport
specified by Lessors; all internal fluids and/or gases shall be purged and properly disposed of,
any applicable reservoirs etc. shall be secured in accordance with manufacturers recommendations
and in accordance with all applicable laws, rules, and regulations.

     (F) At the expense of Lessee all Equipment shall conform to or be modified to conform to
established standards in Japan, the United States or Taiwan; including, but not limited to wiring
codes, software, keyboards, control consoles, all fittings and lines for gas, water, exhaust;
Equipment labeling i.e. (operational, warning, safety labels) all current operational and service
manuals. At the expense of Lessee accommodation of power requirements different from where
originally shall be provided including but not limited to step-up/step-down transformers shall be
fitted by original manufacturer or by certified party in compliance with manufacturers
specifications.

     (G) All tariffs, duties, taxes, import/export fees, bonding fees, bonded warehousing fees,
licenses, permits, approvals, permissions, and/or freight forwarder fees without limitation shall
be the responsibility of the Lessee.

     (H) Lessee shall, at its expense, obtain and pay for a policy of transit insurance for the
redelivery period in an amount equal to the replacement value of the Equipment and Lessors shall be
named as the loss payee on all such policies of insurance;

     (I) Lessee shall, at its expense, provide insurance and safe, secure storage for the Equipment
for a period specified by Lessors after expiration of the Lease at locations acceptable to Lessors
which shall not exceed three (3) years from the return of the Equipment;

- 2 -

 

     (J) With regard to any Equipment that has been modified or reconfigured by the Lessee, at
Lessors’ options, Lessee shall, at its expense: (a) return or restore the Equipment to its
original configuration, as specified by the manufacturer, or (b) make available for a period of [*]
days following successful re-installation and test runs, as required, any engineering and technical
personnel necessary for the training of personnel with respect to the operation, maintenance and
repair of the Equipment (said engineering and technical personnel will be made available by Lessee
for an additional [*] day period for consultation regarding the operation of the Equipment);

     (K) Lessee shall, at its expense, allow Lessors the right to attempt resale of the Equipment
from the Toshiba’s Yokkaichi facility with the Lessee’s full cooperation and assistance, for a
period of [*] days from the Lease expiration. Lessee will allow Lessors to show prospective buyers
the Equipment while it is operational during the [*] days from the Lessee’s notification of its
intent to return the Equipment and the Lease expiration date. Lessee shall, at its expense,
provide safe, secure storage for Equipment if requested by Lessors for a [*] period. If an
equipment auction is necessary, Lessors should be permitted to auction the Equipment on-site.

 

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

- 3 -exv4w1

 

Exhibit 4.1

 

 

 

 

 

ADVANTA BUSINESS CARD MASTER TRUST

as Issuer

and

DEUTSCHE BANK TRUST COMPANY AMERICAS

as Indenture Trustee

CLASS A(2006-A1) TERMS DOCUMENT

dated as of March 15, 2006

to

ADVANTASERIES INDENTURE SUPPLEMENT

dated as of November 1, 2004

to

INDENTURE

dated as of August 1, 2000

 

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	
ARTICLE I

Definitions and Other Provisions of General Application
	 
	 	 	 	 	 	 
	Section 1.01
	 	Definitions	 	 	3	 
	 
	 	 	 	 	 	 
	Section 1.02
	 	Governing Law	 	 	5	 
	 
	 	 	 	 	 	 
	Section 1.03
	 	Counterparts	 	 	6	 
	 
	 	 	 	 	 	 
	Section 1.04
	 	Ratification of Master Indenture and AdvantaSeries Indenture Supplement	 	 	6	 
	 
	 	 	 	 	 	 
	
ARTICLE II

The Class A(2006-A1) Asset Backed Notes
	 
	 	 	 	 	 	 
	Section 2.01
	 	Creation and Designation	 	 	7	 
	 
	 	 	 	 	 	 
	Section 2.02
	 	Interest Payment	 	 	7	 
	 
	 	 	 	 	 	 
	Section 2.03
	 	[Reserved]	 	 	7	 
	 
	 	 	 	 	 	 
	Section 2.04
	 	Required Deposits of Available Principal Collections to the Principal Funding Account; Payment of Principal	 	 	7	 
	 
	 	 	 	 	 	 
	Section 2.05
	 	Holders' Rights to Payments of Interest and Principal	 	 	8	 
	 
	 	 	 	 	 	 
	Section 2.06
	 	Cash Collateral Account	 	 	8	 
	 
	 	 	 	 	 	 
	Section 2.07
	 	Spread Account	 	 	8	 
	 
	 	 	 	 	 	 
	Section 2.08
	 	Delivery and Payment of the Class A(2006-A1) Notes; Form And Denomination	 	 	9	 
	 
	 	 	 	 	 	 
	Section 2.09
	 	Manner of Payment of Class A(2006-A1) Notes	 	 	9	 
	 
	 	 	 	 	 	 
	Section 2.10
	 	Monthly Servicing Fee	 	 	9	 

i

 

     CLASS A(2006-A1) TERMS DOCUMENT, dated as of March 15, 2006 (the “Terms Document”),
between WILMINGTON TRUST COMPANY, as Owner Trustee of ADVANTA BUSINESS CARD MASTER TRUST, a common
law trust organized and existing under the laws of the State of Delaware (herein, the
“Issuer” or the “Trust”), and DEUTSCHE BANK TRUST COMPANY AMERICAS (formerly known
as Bankers Trust Company), a banking corporation organized and existing under the laws of the State
of New York, not in its individual capacity, but solely as indenture trustee (herein, together with
its successors in the trusts thereunder as provided in the Master Indenture, (the “Indenture
Trustee”)) under the Master Indenture, dated as of August 1, 2000 (as amended and supplemented
from time to time, the “Master Indenture”), between the Issuer and the Indenture Trustee.
This Terms Document supplements the AdvantaSeries Indenture Supplement, dated as of November 1,
2004 (as amended and supplemented from time to time, the “AdvantaSeries Indenture
Supplement”) between the Issuer and the Indenture Trustee, which supplements the Indenture.

     Pursuant to this Terms Document, the Issuer shall create a new tranche of Class A Notes and
shall specify the principal terms thereof.

ARTICLE I

Definitions and Other Provisions of General Application

     Section 1.01 Definitions. For all purposes of this Terms Document, except as otherwise
expressly provided or unless the context otherwise requires:

          (1) the terms defined in this Article have the meanings assigned to them in this Article, and
include the plural as well as the singular;

          (2) all other terms used herein which are defined in the AdvantaSeries Indenture Supplement or
the Master Indenture, either directly or by reference therein, have the meanings assigned to them
therein;

          (3) all accounting terms not otherwise defined herein have the meanings assigned to them in
accordance with generally accepted accounting principles and, except as otherwise herein expressly
provided, the term “generally accepted accounting principles” with respect to any computation
required or permitted hereunder means such accounting principles as are generally accepted in the
United States of America at the date of such computation;

          (4) all references in this Terms Document to designated “Articles,” “Sections” and other
subdivisions are to the designated Articles, Sections and other subdivisions of this Terms
Document;

          (5) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Terms Document as a whole and not to any particular Article, Section or other subdivision;

- 1 -

 

          (6) in the event that any term or provision contained herein shall conflict with or be
inconsistent with any term or provision contained in the AdvantaSeries Indenture Supplement, the
Master Indenture or the Transfer and Servicing Agreement, the terms and provisions of this Terms
Document shall be controlling;

          (7) each capitalized term defined herein shall relate only to the Class A(2006-A1) Notes and
no other Tranche of Notes issued by the Issuer; and

          (8) “including” and words of similar import will be deemed to be followed by “without
limitation.”

     “Accumulation Amount” shall mean, for any Payment Date occurring during the
Accumulation Period, $25,000,000; provided, however, that if the Accumulation Period Length is
determined to be less than 8 months pursuant to Section 2.04(b), the Accumulation Amount for each
Payment Date with respect to the Accumulation Period will be equal to (i) the Outstanding Principal
Balance of the Class A(2006-A1) Notes divided by (ii) the Accumulation Period Length.

     “Accumulation Deposit Amount” means, for any Payment Date occurring during the
Accumulation Period, an amount equal to the sum of the Accumulation Amount for such Payment Date
and any existing Accumulation Shortfall.

     “Accumulation Period” shall mean, unless a Pay Out Event shall have occurred prior
thereto, the period commencing at the close of business on February 28, 2007, or such later date as
is determined in accordance with Section 2.04(b), and ending on the first to occur of (a) the
commencement of the Early Amortization Period, (b) the payment in full of the Outstanding Principal
Balance of the Class A(2006-A1) Notes and (c) the Class A(2006-A1) Final Maturity Date.

     “Accumulation Period Factor” shall mean, for the purpose of calculating the
Accumulation Period Length for the Class A(2006-A1) Notes, with respect to any Monthly Period, a
fraction, the numerator of which is equal to the sum of the initial invested amounts (or, if no
initial invested amount is defined in the applicable Indenture Supplement, then the initial
principal balance) of all outstanding Series, and the denominator of which is equal to the sum of
(a) the Initial Principal Balance of Class A(2006-A1) Notes, (b) the initial invested amounts (or,
if no initial invested amount is defined in the applicable Indenture Supplement, then the initial
principal balance) of all other Outstanding Classes and Tranches (without duplication) (other than
the AdvantaSeries Class A(2006-A1) Notes) which are not expected to be in their revolving periods,
and (c) the initial invested amounts (or, if no initial invested amount is defined in the
applicable Indenture Supplement, then the initial principal balance) of all other Outstanding
Classes and Tranches (without duplication) (other than the AdvantaSeries Class A(2006-A1) Notes)
which are not allocating Shared Principal Collections to other Series and are in their revolving
periods; provided, however, that this definition may be changed at any time if the Rating Agency
Condition is satisfied.

- 2 -

 

     “Accumulation Period Length” means the number of whole months such that the sum of the
Accumulation Period Factors for each month during such period will be equal to or greater than the
Required Accumulation Factor Number; provided, however, that the Accumulation Period Length will
not be determined to be less than one month; provided further, however, that the determination of
the Accumulation Period Length may be changed at any time if the Rating Agency Condition is
satisfied.

     “Accumulation Shortfall” shall mean (a) on the first Payment Date during the
Accumulation Period, zero and (b) on each subsequent Payment Date during the Accumulation Period,
the excess, if any, of the Accumulation Deposit Amount for the previous Payment Date over the
amount deposited into the Principal Funding Account pursuant to Section 2.04(b) for the previous
Payment Date.

     “Class A(2006-A1) Final Maturity Date” means October 20, 2010.

     “Class A(2006-A1) Note” means any Note substantially in the form set forth in Exhibit
A-1 to the AdvantaSeries Indenture Supplement, designated therein as a Class A(2006-A1) Asset
Backed Note and duly executed and authenticated in accordance with the Master Indenture.

     “Class A(2006-A1) Noteholder” means a Person in whose name a Class A(2006-A1) Note is
registered in the Note Register.

     “Class A(2006-A1) Note Interest Rate” means a rate per annum equal to 5.15%.

     “Class A(2006-A1) Termination Date” means the earliest to occur of (a) the Principal
Payment Date on which the Outstanding Principal Balance of the Class A(2006-A1) Notes is paid in
full, (b) the Class A(2006-A1) Final Maturity Date and (c) the date on which the Master Indenture
is discharged and satisfied pursuant to Article XI thereof.

     “Closing Date” means March 15, 2006.

     “Expected Final Principal Payment Date” means November 20, 2007.

     “Initial Principal Balance” means $200,000,000.

     “Interest Payment Date” means the scheduled due date of any payment of interest on the
Class A(2006-A1) Notes, which shall be each Payment Date. The first Interest Payment Date shall be
April 20, 2006.

     “Paying Agent” means Deutsche Bank Trust Company Americas.

     “Required Accumulation Factor Number” shall be equal to a fraction, rounded upwards to
the nearest whole number, the numerator of which is one and the denominator of which is equal to
the lowest monthly principal payment rate on the Accounts, expressed as a decimal, for the twelve
months preceding the date of such calculation; provided, however, that this definition may be
changed at any time if the Rating Agency Condition is satisfied.

- 3 -

 

     Section 1.02 Governing Law. THIS TERMS DOCUMENT WILL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE GENERAL
OBLIGATION LAW, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

     Section 1.03 Counterparts. This Terms Document may be executed in any number of
counterparts, each of which so executed will be deemed to be an original, but all such counterparts
will together constitute but one and the same instrument.

     Section 1.04 Ratification of Master Indenture and AdvantaSeries Indenture Supplement.
As supplemented by this Terms Document, each of the Master Indenture and the AdvantaSeries
Indenture Supplement is in all respects ratified and confirmed and the Master Indenture as so
supplemented by the AdvantaSeries Indenture Supplement and this Terms Document shall be read, taken
and construed as one and the same instrument.

[END OF ARTICLE I]

- 4 -

 

ARTICLE II

The Class A(2006-A1) Asset Backed Notes

     Section 2.01 Creation and Designation. There is hereby created a tranche of Class A
Notes to be issued pursuant to the Master Indenture and the AdvantaSeries Indenture Supplement to
be known as the “AdvantaSeries Class A(2006-A1) Asset Backed Notes.”

     Section 2.02 Interest Payment. For each Interest Payment Date other than the first
Interest Payment Date, the amount of interest due and payable with respect to the Class A(2006-A1)
Notes shall be an amount equal to the product of (i) (A) a fraction, the numerator of which is
thirty (30) and the denominator of which is 360, multiplied by (B) the Class A(2006-A1) Note
Interest Rate, multiplied by (ii) the Outstanding Principal Balance of the Class A(2006-A1) Notes
determined as of the Record Date preceding the related Interest Payment Date. Any interest on the
Class A(2006-A1) Notes will be calculated on the basis of a 360-day year and twelve 30-day Interest
Periods. For the first Interest Payment Date, interest on the Class A(2006-A1) Notes will be
$1,001,388.89.

     Section 2.03 [Reserved].

     Section 2.04 Required Deposits of Available Principal Collections to the Principal Funding
Account; Payment of Principal. With respect to any Payment Date, the amount to be deposited in
the Principal Funding Sub-Account pursuant to Section 4.16 of the AdvantaSeries Indenture
Supplement will be the amount determined pursuant to clause (a), (b), (c) or (d) below for such
Payment Date, as applicable, or if more than one such clause is applicable, the highest amount
determined pursuant to any one of such clauses; provided, however, in no case shall the amount
required to be deposited exceed the Class A(2006-A1) Adjusted Invested Amount (calculated
immediately before giving effect to such deposit but after giving effect to any Investor
Charge-Offs and any reallocations of principal on such date).

     (a) Revolving Period. On each Payment Date during the Revolving Period, the required
deposit to the Principal Funding Sub-Account for the Class A(2006-A1) Notes will be zero.

     (b) Accumulation Period. On each Payment Date during the Accumulation Period, the
required deposit to the Principal Funding Sub-Account for the Class A(2006-A1) Notes will be the
Accumulation Deposit Amount for such Payment Date. The Accumulation Period is scheduled to
commence at the close of business on February 28, 2007, provided, however, that, if the
Accumulation Period Length is less than 8 months, the date on which the Accumulation Period
actually commences will be delayed to the close of business on the last day of the month prior to
the month that is the number of whole months prior to the Expected Final Principal Payment Date
which is at least equal to the Accumulation Period Length and, as a result, the number of Monthly
Periods in the Accumulation Period will at least equal the Accumulation Period Length. On the
Determination Date twelve (12) months prior to the Expected Final Principal Payment

- 5 -

 

Date and each Determination Date thereafter until the Accumulation Period begins, the Servicer
shall determine the Accumulation Period Length.

     (c) Early Amortization Period. On each Payment Date during an Early Amortization
Period, the required deposit to the Principal Funding Sub-Account for the Class A(2006-A1) Notes
will be the Adjusted Invested Amount for the Class A(2006-A1) Notes as of the close of business on
the last day of the preceding Monthly Period (after taking into account any reductions or increases
occurring on such date).

     (d) Coverage Funding of the Principal Funding Account of Senior Classes. If the
Transferor determines as of the end of the related Monthly Period that, after giving effect to all
allocations and payments with respect to that Monthly Period, the Coverage Funding Required Amount
of the Class A(2006-A1) Notes will be greater than zero, the required deposit to the Principal
Funding Sub-Account for the Class A(2006-A1) Notes will be the Coverage Funding Required Amount for
such Class A(2006-A1) Notes.

     (e) Distributions to Paying Agent. On each Principal Payment Date, the Indenture
Trustee, acting in accordance with written instructions from the Servicer, shall withdraw from the
Principal Funding Sub-Account for the Class A(2006-A1) Notes and distribute to the Paying Agent for
payment to the Class A(2006-A1) Noteholders the amounts deposited into the Principal Funding
Sub-Account for the Class A(2006-A1) Notes pursuant to this Section 2.04.

     Section 2.05 Holders’ Rights to Payments of Interest and Principal.

     (a) Any installment of interest or principal, if any, payable on any Class A(2006-A1) Note
which is punctually paid or duly provided for by the Issuer and the Indenture Trustee on the
applicable Interest Payment Date or Principal Payment Date shall be paid by the Paying Agent to the
Person in whose name such Class A(2006-A1) Note is registered on the Record Date, by wire transfer
of immediately available funds to such Person’s account as has been designated by written
instructions received by the Paying Agent from such Person not later than the close of business on
the third Business Day preceding the date of payment or, if no such account has been so designated,
by check mailed first-class, postage prepaid to such Person’s address as it appears on the Note
Register on such Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of Cede & Co., payment shall be made by wire transfer in immediately
available funds to the account designated by such nominee.

     (b) The right of the Class A(2006-A1) Noteholders to receive payments from the Issuer will
terminate on the first Business Day following the Class A(2006-A1) Termination Date.

     Section 2.06 Cash Collateral Account. In accordance with Section 4.22(a) of the
AdvantaSeries Indenture Supplement, on or prior to the Closing Date, the Transferor shall deposit,
cause to be deposited or maintain funds in the Cash Collateral Account such that immediately after
giving effect to the issuance of the Class A(2006-A1) Notes,

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the amount on deposit in the Cash Collateral Account for the AdvantaSeries is at least equal
to the Required Cash Collateral Account Amount.

     Section 2.07 Spread Account. In accordance with Section 4.24(a) of the AdvantaSeries
Indenture Supplement, on or prior to the Closing Date, the Transferor shall deposit, cause to be
deposited or maintain funds in the Spread Account such that immediately after the issuance of the
Class A(2006-A1) Notes, the ratio of the amount on deposit in the Spread Account to the Required
Spread Account Amount is equal to or greater than the same ratio immediately preceding such
issuance.

     Section 2.08 Delivery and Payment for the Class A(2006-A1) Notes; Form and
Denomination.

     (a) The Issuer shall execute and issue, and the Indenture Trustee shall authenticate, the
Class A(2006-A1) Notes in accordance with Section 2.03 of the Master Indenture. The Indenture
Trustee shall deliver the Class A(2006-A1) Notes to or upon the order of the Issuer when so
authenticated. The Class A(2006-A1) Notes shall be Book-Entry Notes.

     (b) The Depository for the Class A(2006-A1) Notes shall be The Depository Trust Company, and
the Class A(2006-A1) Notes shall initially be registered in the name of Cede & Co., its nominee.

     (c) The Class A(2006-A1) Notes will be issued in minimum denominations of $5,000 and integral
multiples of $1,000 in excess of that amount.

     Section 2.09 Manner of Payment of Class A(2006-A1) Notes. Except as provided in
Section 11.02 of the Master Indenture with respect to a final distribution, distributions to Class
A(2006-A1) Noteholders hereunder shall be made by (i) check mailed to each Class A(2006-A1)
Noteholder (at such Noteholder’s address as it appears in the Note Register), except that with
respect to any Class A(2006-A1) Notes registered in the name of the nominee of a Clearing Agency,
such payment shall be made in immediately available funds and (ii) without presentation or
surrender of any Class A(2006-A1) Note or the making of any notation thereon.

     Section 2.10 Monthly Servicing Fee. In accordance with Section 3.01(a) of the
AdvantaSeries Indenture Supplement, with respect to the April 20, 2006 Payment Date, the
AdvantaSeries Monthly Servicing Fee allocated to the Class A(2006-A1) Notes shall be $177,777.78.

[END OF ARTICLE II]

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     IN WITNESS WHEREOF, the undersigned have caused this Terms Document to be duly executed and
delivered by their respective duly authorized officers on the day and year first above written.

	 	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY,

     as Owner Trustee of

ADVANTA BUSINESS CARD MASTER TRUST

 	 
	 	By:  	 	/s/ Dorri E. Wolhar 	.
	 	Name:	 	Dorri E. Wolhar 	 
	 	Title:	 	Financial Services Officer 	 
	 

	 	 	 	 	 	 
	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,

     as Indenture Trustee

 	 
	 	By:  	 	/s/ Jenna Kaufman 	.	 
	 	Name:	 	Jenna Kaufman 	 
	 	Title:	 	Vice President 	 
	 

	 	 	 	 	 	 
	 	By:  	 	/s/ Louis Bodi 	.	 
	 	Name:	 	Louis Bodi 	 
	 	Title:	 	Vice President 	 
	 

[Signature Page to Class A(2006-A1) Terms Document]

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