Equipment Purchase Agreement – SanDisk Corp. and Toshiba Corp. and Flash Alliance Ltd.

Page

1.

Definitions and Interpretation

1

2.

The Transaction

3

3.

Purchase Price; Closing

6

4.

Representations and Warranties of Each of the Parties

10

5.

Representations and Warranties of the Sellers

11

6.

Covenants

12

7.

Conditions Precedent to the Sellers153 Obligations at the First Closing

13

8.

Conditions Precedent to Toshiba153s Obligations at the First Closing

14

9.

Conditions Precedent to the Subsequent Closings

15

10.

Indemnification

15

11.

Termination of the Agreement

16

12.

General Provisions

16

Attachments:

i

1.1

Certain Definitions. The following capitalized terms used in this
Agreement shall have the respective meanings assigned in this Agreement:

Term

Defined In

Action

Section 2.3(d)

Agreement

Heading

Applicable Law

Section 5.1

Assumed Liabilities

Section 2.4

Closing

Section 3.2(a)

Closing Date

Section 3.2(c)

Equipment

Section 2.1

Equipment Leases

Section 2.1(b)(ii)

Equipment Purchase Closing

Section 3.2(b)

Equipment Transactions

Section 3.2(a)

Excluded Assets

Section 2.2

Excluded Liabilities

Section 2.3

FA

Heading

FA Equipment

Section 2.1(b)(ii)

FA Leased Equipment

Section 2.1(b)(ii)

FA Leases

Section 2.1(b)(ii)

FA Owned Equipment

Section 2.1(b)(i)

FA Purchase Price

Section 3.1(a)(ii)

FA Purchased Assets

Section 2.1(b)

FP

Heading

FP Equipment

Section 2.1(a)(ii)

FP Leased Equipment

Section 2.1(a)(ii)

FP Leases

Section 2.1(a)(ii)

FP Owned Equipment

Section 2.1(a)(i)

FP Purchase Price

Section 3.1(a)(i)

FP Purchased Assets

Section 2.1(a)

Governmental Authority

Section 2.3

[***]*

Section 10.3

Indemnifying Party

Section 10.1

JVRA

Recitals

Lease Closing

Section 3.2(b)

Lease Transfer Costs

Section 3.7(a)

Leased Equipment

Section 2.1(b)(ii)

Lien

Section 4.4

[***]*

Section 8.5

Material Adverse Effect

Section 8.10

Material Consent

Section 6.3

[***]*

Section 3.1

Owned Equipment

Section 2.1

Party

Heading

Permit

Section 5.2

Person

Section 4.4

Post-Closing Period

Section 3.7(d)

Pre-Closing Period

Section 3.7(d)

Purchased Assets

Section 2.1

Resolution

Section 3.6(c)

Resolution Period

Section 3.6(c)

SanDisk

Heading

SanDisk Cayman

Heading

SanDisk Ireland

Heading

SanDisk Party

Heading

Seller

Heading

Subsequent Closing

Section 3.2(c)

Subsequent Closing Date

Section 3.2(c)

Tax

Section 2.3

Toshiba

Heading

1.2

Interpretation. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed, as the context
indicates, to be followed by the words “but (is/are) not limited to.” Wherever
in this Agreement words indicating the plural number appear, such words will be
considered as words indicating the singular number and vice versa where the
context indicates the propriety of such use.

1.3

The terms “Y3 Facility” and “Y4 Facility” as used in this
Agreement shall have the meanings assigned to them in the JVRA.

2.1

Purchased Assets. Subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties, covenants and
agreements set forth herein, at the applicable Closing, the Sellers shall sell,
transfer, convey, assign and deliver to Toshiba, and Toshiba shall purchase from
the Sellers, all right, title and interest in and to the following assets
(collectively, the “Purchased Assets“):

(a)

FP Purchased Assets. To be purchased from FP (collectively, the
“FP Purchased Assets“):

(i)

FP Owned Equipment. The machinery, equipment and other assets
described on the attached Schedule 2.1(a)(i), [***]* which shall
represent approximately [***]* of the wafer output capacity of FP and which
shall have been calculated from the list of assets owned by FP (the “FP Owned
Equipment“);

(ii)

FP Leased Equipment. All rights and obligations of FP in connection
with the machinery, equipment and other assets, [***]* set forth on attached
Schedule 2.1(a)(ii), which shall represent approximately [***]* of the
wafer output capacity of FP (the “FP Leased Equipment” and together with
the FP Owned Equipment, the “FP Equipment“), that are subject to the
leases specified thereon (the “FP Leases“), it being understood that the
assignment and assumption of such rights and obligations shall be effected as
set forth in Section 3.6; and

(iii)

FP Documents. All books, records and materials in the possession or
control of FP and that are reasonably necessary or appropriate for Toshiba to
operate the FP Equipment in substantially the same manner as operated by FP as
of the date of this Agreement and as of each Closing Date, including vendor
agreements, title documents, user manuals, operating guides, bills of materials,
records, maintenance schedules and records, supplier and other vendor ordering
information and records, warranties for both materials and equipment purchased
and products sold, and all other operational, commercial and technical
information related to the FP Equipment.

(b)

FA Purchased Assets. To be purchased from FA (collectively, the
“FA Purchased Assets“):

(i)

FA Owned Equipment. The machinery, equipment and other assets
described on the attached Schedule 2.1(b)(i), [***]* which shall
represent approximately [***]* of the wafer output capacity of FA and which
shall have been calculated from the list of assets owned by FA (the “FA Owned
Equipment“);

(ii)

FA Leased Equipment. All rights and obligations of FA in connection
with the machinery, equipment and other assets, [***]* set forth on attached
Schedule 2.1(b)(ii), which shall represent approximately [***]* of the
wafer output capacity of FA (the “FA Leased Equipment” and, together with
the FA Owned Equipment, the “FA Equipment” or together with the FP Leased
Equipment, the “Leased Equipment“), that are subject to the leases
specified thereon (the “FA Leases” and, together the with FP Leases, the
“Equipment Leases“), it being understood that the assignment and
assumption of such rights and obligations shall be effected as set forth in
Section 3.6; and

(iii)

FA Documents. All books, records and papers in the possession or
control of FA and that are reasonably necessary for Toshiba to operate the FA
Equipment in substantially the same manner as operated by FA as of the date of
this Agreement and as of each Closing Date, including vendor agreements, title
documents, user manuals, operating guides, bills of materials, records,
maintenance schedules and records, supplier and other vendor ordering
information and records, warranties for both materials and equipment purchased
and products sold, and all other operational, commercial or technical
information related to the FA Equipment.

(c)

Tool Selection Methodology; Substitution of Purchased Assets.

(i)

To the extent that the Parties determine that the purchase of Owned Equipment
or assignment and assumption of the Equipment Leases with respect to Leased
Equipment (1) requires consents of third parties that cannot be obtained in a
timely manner or without undue difficulty or expense, (2) would not release
SanDisk from the guaranty obligations related to the Leased Equipment, or (3)
involves Equipment which, prior to the relevant Closing, is materially damaged,
the Parties shall endeavor in good faith to promptly reach agreement on such
adjustments to Schedules 2.1(a)(i), 2.1(a)(ii),
2.1(b)(i) and/or 2.1(b)(ii) as are necessary to address the
foregoing issues.

2.2

Excluded Assets. Notwithstanding anything to the contrary set forth in
this Agreement, except for the Purchased Assets, the Sellers shall not transfer
at Closing any other assets of the Sellers (such assets, the “Excluded
Assets“), which Excluded Assets shall be retained by the Sellers.

2.3

Excluded Liabilities. Notwithstanding anything to the contrary set
forth in this Agreement, except for the Assumed Liabilities, the Sellers shall
not transfer at Closing any liability for any contracts, agreements, commitments
or liabilities of the Sellers or any SanDisk Party whatsoever, including any of
the following (collectively, the “Excluded Liabilities“), which Excluded
Liabilities shall be retained by the Sellers and/or the SanDisk Parties as
applicable:

(a)

any liability relating to, arising out of or incurred in connection with the
Purchased Assets, or use, operation or possession thereof, prior to the Closing;
and

(b)

any trade accounts payable, accrued liability or other liability of the
Sellers as of the Closing whether or not such amounts are known or payable on or
prior to the Closing;

(c)

except as expressly provided for in Sections 3.1(a) and 3.7 below, any Taxes
or similar charges that may become payable in any jurisdiction by the Sellers by
reason of the sale and transfer of the Purchased Assets pursuant hereto, or
arising from or relating to Sellers153 receipt of the FP Purchase Price or FA
Purchase Price (or relief from any Assumed Liability); and

(d)

any liability relating to, arising out of or incurred in connection with any
final nonappealable decision arising out of any suit, litigation, arbitration or
administrative proceeding before any Governmental Authority (all
“Actions“) prior to the Closing or initiated after the Closing but based
in whole or part on an act or omission of a Seller,

2.4

Assumed Liabilities. Subject to the terms and conditions of this
Agreement, at each Closing, each Seller shall assign to Toshiba, and Toshiba
shall assume, the related Assumed Liabilities (as defined below). Thereafter,
Toshiba shall pay and discharge all such Assumed Liabilities as and when such
Assumed Liabilities become due and owing. The term “Assumed Liabilities”
as used in this Agreement means only those liabilities which relate to, arise
out of or are incurred in connection with the Purchased Assets on or after the
Closing at which such assets are transferred, including the Equipment Leases to
the extent assigned, but not including any Excluded Liabilities and not
including any liabilities in connection with the Purchased Assets that are
specifically allocated to the Sellers or the SanDisk Parties under other
agreements relating to the operation of the Y3 Facility and the Y4 Facility.

3.1

Purchase Price.

(a)

Timing of Purchase Price Payment by Toshiba. Subject to the terms and
conditions of this Agreement, as full consideration for the sale, assignment,
transfer and delivery of the Owned Equipment by the Sellers to Toshiba, and the
execution and delivery by the Sellers of this Agreement and any and all
certificates and instruments executed or contemplated to be executed by SanDisk
in connection with the Equipment Purchase Closing, Toshiba shall deliver [***]*,
by wire transfer of immediately available funds to an account designated by FP
or FA, as applicable, an amount equal to:

(i)

for FP, [***]* (the “FP Purchase Price“); and

(ii)

for FA, [***]* (the “FA Purchase Price“);

(b)

[***]* by Joint Venture. No later than [***]*, each Seller shall
transfer the entire FP Purchase Price and FA Purchase Price, as applicable and
[***]*, to each of SanDisk and Toshiba (with each of SanDisk and Toshiba
receiving 50% of the applicable purchase price), by wire transfer of immediately
available funds to accounts designated by SanDisk and Toshiba, [***]*. SanDisk
and Toshiba each agree to provide acknowledgment of such repayment to each
Seller.

3.2

Closing.

(a)

The transactions contemplated by this Agreement (the “Equipment
Transactions“) shall be consummated at a series of closings (each a
“Closing“).

(b)

At each Closing, Toshiba will either purchase Owned Equipment (the
“Equipment Purchase Closing“) or acquire rights and obligations of the
Sellers in connection with the Leased Equipment or, as applicable, the Equipment
Leases, each as provided in Section 3.6 below (a “Lease Closing“).

(c)

Provided that all of the conditions to a Closing have been met or waived in
writing by the Party that has the benefit thereof, each Closing will take place
on the date set forth on Schedule 3.2, or at such other place, date and
time as the Parties mutually agree. As set forth on Schedule 3.2, the
first Closing is contemplated to be a Lease Closing. As used in this Agreement,
the term “Subsequent Closing” shall mean each of (i) any Lease Closing
after the first Closing and (ii) the Equipment Purchase Closing (the date of
each such Closing a “Subsequent Closing Date,” and the first Closing Date
together with the Subsequent Closing Dates, the “Closing Dates“).

3.3

Deliveries by the Sellers. At each Closing, the Sellers shall (i) take
all steps necessary to place Toshiba in actual possession and operating control
of all Purchased Assets to be transferred at such Closing, and (ii) deliver the
following items, duly executed by the Sellers, in each case in form and
substance acceptable to Toshiba:

(a)

FP Assignment and Assumption Agreements and Bill of Sale.

(i)

At each Closing, an Assignment and Assumption Agreement executed by FP
covering any rights and obligations under any FP Leases and other agreements to
be transferred at such Closing, substantially in the form of attached
Exhibit A.

(ii)

At the Equipment Purchase Closing, a Bill of Sale executed by FP covering all
of the FP Owned Equipment that is to be transferred at such Closing,
substantially in the form of attached Exhibit B.

(b)

FA Assignment and Assumption Agreement and Bill of Sale.

(i)

At each Closing, an Assignment and Assumption Agreement executed by FA
covering any rights and obligations under any FA Leases and other

agreements to be transferred at such Closing, substantially in the form of
attached Exhibit C.

(ii)

At the Equipment Purchase Closing, a Bill of Sale executed by FA covering all
of the FA Owned Equipment that is to be transferred at such Closing,
substantially in the form of attached Exhibit D.

(c)

Sellers153 Invoices. An invoice issued to Toshiba by each of FA and FP,
in each case dated the applicable Closing Date and requiring payment of the FA
Purchase Price and the FP Purchase Price, respectively, not later than
[***]^*
following such Closing Date.

(d)

Other Conveyance Instruments. Such other instruments of sale,
transfer, conveyance and assignment as Toshiba deems are necessary or useful to
transfer all right, title and interest in all Purchased Assets to be transferred
at such Closing to Toshiba, or to evidence the same.

(e)

Closing Condition Documents. All of the documents provided for in
Articles 8 and, as applicable, 9 below.

3.4

Deliveries by Toshiba. At the Closing, Toshiba shall deliver the
following items, duly executed by Toshiba, in each case in form and substance
acceptable to the Sellers:

(a)

Assumption Instruments. Such other instruments of assumption as are
reasonably necessary for Toshiba to assume the Assumed Liabilities being assumed
at such Closing.

(b)

Closing Condition Documents. All of the documents provided for in
Articles 7 and, as applicable, 9 below.

3.5

Transfer of Title; Risk of Loss. Legal and equitable title and risk of
loss with respect to all of the Purchased Assets shall pass from the Sellers to
Toshiba at the relevant Closing pursuant to, and in accordance with, the terms
of this Agreement.

3.6

Equipment Leases.

(a)

Transfer of Leased Equipment. Subject to Toshiba, SanDisk and the
Seller obtaining consent from the applicable financing parties, the Parties
contemplate that Toshiba153s acquisition of the Sellers153 interests in the Leased
Equipment shall be conducted as follows: Toshiba and the parties to the existing
lease shall, on the day of the next scheduled payment under the relevant lease
following the execution of this Agreement, and subject to FA or FP, as
applicable, making such scheduled payment, or on such other day as may be
mutually agreed between the applicable financing parties and the current lessee
of such Leased Equipment, effect a partial assignment of the relevant lease from
the Seller to Toshiba as lessee.

(b)

Financed Equipment. [***]*.

(c)

Breach of Condition Failure. [***]*

(i)

[***]*

(ii)

[***]*.

(d)

Other Condition Failure. In the event any Equipment Lease fails to
transfer [***]*, or the Equipment Purchase Closing fails to occur [***]*, due to
a failure of [***]*, then Toshiba and SanDisk will discuss in good faith
alternative arrangements to effect such transfer on a commercially reasonable
basis.

3.7

Costs and Taxes.

(a)

SanDisk shall be responsible for and shall pay (i) [***]* and (ii) [***]*
collectively the “Lease Transfer Costs“).

(b)

SanDisk shall pay to Toshiba, FP or FA, as applicable, the invoiced Lease
Transfer Costs [***]*, accompanied by evidence itemizing the Lease Transfer
Costs and indicating that such costs were actually paid by Toshiba, FP or FA, as
applicable.

(c)

After the Closing, upon reasonable written notice, the Parties agree to
furnish or cause to be furnished to each other party, and its officers,
directors, employees, managers, agents, attorneys, accountants, advisors and
representatives, as applicable, access, during normal business hours, to such
information and assistance relating to the Purchased Assets as are reasonably
necessary for financial reporting and accounting matters relating to the
Purchased Assets, the preparation and filing of any Tax returns or other filings
with any Governmental Authority, reports or forms relating to the Purchased
Assets, the defense of any Tax or other claim or assessment relating to the
Purchased Assets or, in the case of the Sellers, relating to the operation of
the Purchased Assets prior to the Closing, provided, however, that such access
and assistance do not unreasonably disrupt the normal operations of Toshiba, FP
or FA.

(d)

To the extent not otherwise allocated in this Agreement, the Sellers shall be
responsible for and shall promptly pay when due all Taxes levied with respect to
the Purchased Assets transferred at such Closing attributable to the taxable
period ending on the day immediately preceding such Closing Date (such period
the “Pre-Closing Period“). To the extent not otherwise allocated in this
Agreement, Toshiba shall be responsible for and shall promptly pay when due all
Taxes levied with respect to the

4.1

Lease Agreements. Except as it has previously informed the other
Parties hereto, no event has occurred which constitutes a default by such Party
under, or with the giving of notice or passage of time, would constitute a
default by such Party under, any provision of an Equipment Lease, and the
execution, delivery and (assuming receipt of the requisite Material Consents)
performance of this Agreement by it do not and will not breach, violate or
conflict with any provision of, or constitute (or with the giving of notice or
passage of time, constitute) a default under, any Equipment Lease.

4.2

Organization and Standing. It is duly organized and validly existing
and, where applicable, in good standing under the laws of the jurisdiction in
which it is organized.

4.3

Authority; Enforceability. It has the requisite corporate or
equivalent power and authority to enter into this Agreement, to execute any
certificates or other instruments to be executed by it in connection with the
Equipment Transactions, and otherwise carry out the Equipment Transactions. All
corporate or equivalent proceedings required to be taken by it to authorize the
execution, delivery and performance of this Agreement, and any such certificates
and instruments, and the consummation of the Equipment Transactions, have been
or will be as of the Closing properly taken. This Agreement has been duly and
validly executed and delivered by it and constitutes a valid and binding
obligation of it, enforceable against it in accordance with its terms.

4.4

No Conflict. The execution, delivery and performance of this Agreement
by it do not and will not (a) breach, violate or conflict with any provision of
its charter documents as amended to date, (b) conflict with or violate any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to it, or (c) result in the creation or imposition of any Lien
on any of the Purchased Assets. Other than pursuant to the Equipment Leases or
this Agreement, it is under no obligation, absolute or contingent, to any
Person, with respect to the sale, assignment, lease or sublease or other
transfer, conveyance or placement of any Lien on any of the Purchased Assets.
The term “Lien” as used in this Agreement means any lien, pledge,
hypothecation, security interest, claim, lease, charge, option, right of first
refusal, transfer restriction, encumbrance or any other restriction or
limitation whatsoever. The term “Person” as used in this Agreement means
any individual, corporation, partnership, limited liability company, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other entity.

4.5

Brokers153 or Finders153 Fees. It has not incurred and will not incur,
directly or indirectly, any liability for brokerage or finders153 fees or agents153
commissions or any similar charges in connection with this Agreement or the
Equipment Transactions [***]*. It has not taken any action or entered into any
agreement or understanding that will cause any other Party to incur any of the
foregoing liabilities.

4.6

Litigation. There is no Action pending, or, to its knowledge,
threatened, or directly relating to the Equipment Transactions and which, if
successful, would materially impair such Party153s ability to consummate the
Equipment Transactions. There is no judgment, order, writ or decree that
substantially restrains its ability to consummate the Equipment Transactions.

5.1

Equipment. It holds good and marketable title to the Owned Equipment,
free and clear of any Liens other than any security interest held by the Parties
which shall be removed from the applicable Equipment as such Equipment is
transferred pursuant to this Agreement, and is a lessee of the Leased Equipment.
Such Equipment is in good operating condition and repair, subject only to
ordinary wear and tear. To its knowledge, the current use and operation of such
Equipment are in compliance in all material respects with all Applicable Laws.
Except as set forth on Schedule 5.1, it has not received any notice that
the possession or operation of any such Equipment does not or did not comply
with Applicable Law. There is no Action pending or, to its knowledge,
threatened, relating to or affecting the Purchased Assets. The term
“Applicable Law” as used in this Agreement means, with respect to a
Person, any domestic or foreign, national, federal, territorial, state or local
constitutions, statues, laws (including principles of common law), treaties,
ordinances, rules, administrative interpretations, regulations, orders, writs,
injunctions, legally binding directives, judgments, decrees or other
requirements or restrictions of any arbitrator or Government Authority
applicable to such Person or any of its affiliates, properties, assets,
officers, directors, employees, consultants or agents in connection with such
officer153s, director153s, employee153s, consultant153s or agent153s activities on behalf
of such Person or any of its affiliates.

5.2

Permits. It has obtained all material permits and other authorizations
(collectively, “Permits“) necessary for the ownership, operation and use
of the Purchased Assets in substantially the same manner as currently owned,
operated and used and each Permit is valid and remains in full force and effect.
It is not in default (nor has it failed to comply), nor has it received any
notice of any claim of default or failure to comply, with respect to any Permit.

5.3

Equipment Leases. Each of the Equipment Leases to which it is a Party
is in full force and effect and each constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency, and the relief of debtors, and
no term or condition thereof has been amended from the form provided to Toshiba.
Except as it has previously informed the other Parties hereto, there are no
defaults by it under any of the Equipment Leases and no events have occurred
that with notice or the lapse of time, or action or inaction by any party
thereto, would result in a violation thereof or a default thereunder. There is
no Action to which it is a party in which relief is sought involving, affecting
or relating in any manner to any of the Equipment Leases, and, to its knowledge,
there is no Action pending or threatened against it involving, affecting or
relating to any of the Equipment Leases. None of its rights under any of the
Equipment Leases will be materially impaired by the Equipment Transactions, and
all rights to be transferred to Toshiba in accordance with this Agreement will
inure to, and be enforceable by, Toshiba after the applicable Closing Date
without any authorization, approval, permission or license of, or filing with,
any Person.

5.4

No Other Agreements. It has no legal obligation, absolute or
contingent, to any Person other than Toshiba to sell, assign, lease or sublease
or otherwise transfer, convey or place any Lien on any of the Purchased Assets.

6.1

Operation of the Business.

(a)

The Sellers agree, prior to the Closing, (i) to operate the Purchased Assets
in the ordinary course of business, and (ii) to maintain the Equipment in good
operating condition, subject, only to ordinary wear and tear, each as consistent
with the Sellers153 past practices, and (iii) to promptly inform Toshiba of any
destruction, damage to or loss of any of the Purchased Assets that has resulted
in a material reduction in the value of the Purchased Assets. The Sellers
further agree, prior to the Closing, to use all commercially reasonable efforts
to transfer or otherwise make available to Toshiba, at each Seller153s expense,
the benefit of all warranties and similar protections applicable to the
Equipment.

6.2

Equipment Leases. Until the Closing, the Sellers agree to maintain all
rights and obligations in, to and under the Equipment Leases in full force and
effect.

6.3

Approvals and Consents. The Parties agree to use commercially
reasonable efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary and proper under
Applicable Law to consummate and make effective the Equipment Transactions, to
obtain all necessary waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other impediments or
delays, legal or otherwise, in order to consummate and make effective the
Equipment Transactions for the purpose of securing to the Parties hereto the
benefits contemplated by this Agreement. Such waivers, consents and approvals
are listed on Schedule 6.3 attached hereto (the “Material
Consents“).

6.4

Shareholder Actions. The Parties that are shareholders of the Sellers
agree to exercise their voting and other governance powers over the Sellers to
further the execution,

delivery and performance of this Agreement and the consummation of the
Equipment Transactions. The Parties that are shareholders in the Sellers agree
to cause their representatives on the boards of directors of the Sellers, in a
manner consistent with their fiduciary duties under the Companies Act (Japan),
to vote and to take other director actions to further the execution, delivery
and performance of this Agreement, and the consummation of the Equipment
Transactions. The Parties that are shareholders in the Sellers agree to take no
action that would cause any representation or warranty of the Sellers contained
in Articles 4 or 5 to be untrue. The Sellers and the SanDisk Parties shall
provide reasonable cooperation to Toshiba in connection with the lease
arrangements described in Section 3.6 above.

6.5

Further Assurances. The Parties agree to cooperate to execute and
deliver such further documents, certificates, agreements and to take such other
actions as may be reasonably requested to evidence or reflect the transactions
contemplated by this Agreement and to carry out the intentions of this
Agreement.

7.1

No Legal Action. No Action relating to the Equipment Transactions
shall have been instituted against any of the Parties hereto before any court or
by any Governmental Authority which restrains or prohibits the Equipment
Transactions.

7.2

Accuracy of Representations and Warranties. Each of the
representations and warranties of Toshiba contained in this Agreement, or in any
other agreement signed and delivered contemporaneously with this Agreement by or
on behalf of Toshiba in connection with the transactions contemplated hereby,
shall be true and correct in all material respects as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date.

7.3

Performance of Obligations. Toshiba shall have in all material
respects performed and complied with all of the agreements, covenants and
obligations required under this Agreement (including each of the attached
Exhibits), and under the Transaction Agreements set forth in Section 2.1(a) of
the JVRA, to be performed or complied with by Toshiba prior to or at the
Closing.

7.4

Governmental Approvals. All material filings that are required, if
any, to have been made by the Parties with any Governmental Authority in order
to carry out this Agreement shall have been made and all material
authorizations, consents and approvals from any Governmental Authority required
to carry out this Agreement shall have been received and any applicable waiting
periods shall have expired.

7.5

Compliance Certificate. Toshiba shall have delivered to the Sellers a
certificate, executed by the appropriate officers of Toshiba, certifying that
the conditions specified in Sections 7.2 and 7.3 (insofar as they are to be
performed by Toshiba) have been fulfilled.

7.6

JVRA. The JVRA shall be in full force and effect, and each Party
thereto (other than the SanDisk Parties) shall have in all material respects
performed and complied with

7.7

all of the agreements, covenants and obligations required under the JVRA
(including each of the Exhibits thereto) to be performed or complied with by
them prior to or at such time.

8.1

Conveyance. The Sellers will have executed and delivered to Toshiba
the FP and FA Bills of Sale, the FP and FA Assignment and Assumption Agreements,
and any other certificates, instruments or documents required pursuant to the
provisions of this Agreement or otherwise necessary to transfer the Owned
Equipment to Toshiba in accordance with the terms hereof.

8.2

No Legal Action. No Action relating to the Equipment Transactions
shall have been instituted against any of the Parties hereto before any court or
by any Governmental Authority which restrains or prohibits the Equipment
Transactions.

8.3

Accuracy of Representations and Warranties. Each of the
representations and warranties of the Sellers and the SanDisk Parties contained
in this Agreement, or in any agreement signed and delivered contemporaneously
with this Agreement by or on behalf of FP, FA or any SanDisk Party in connection
with the transactions contemplated hereby, shall be true and correct in all
material respects as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date.

8.4

Performance of Obligations. The Sellers and the SanDisk Parties shall
have in all material respects performed and complied with all of their
agreements, covenants and obligations under this Agreement, and under the
Transaction Agreements set forth in Section 2.1(a) of the JVRA, to be performed
or complied with by them prior to or at the Closing.

8.5

[***]*.

8.6

Consents and Waivers. The Sellers shall have obtained all Material
Consents.

8.7

Governmental Approvals. All material filings that are required to have
been made by the Parties with any Governmental Authority in order to carry out
the terms of this Agreement shall have been made and all material
authorizations, consents and approvals from any Governmental Authority required
therefor shall have been obtained and any applicable waiting periods thereunder
shall have expired.

8.8

Compliance Certificate. Each of FP, FA and SanDisk (on behalf of all
the SanDisk Parties) shall have delivered to Toshiba a certificate, executed by
the appropriate officers of FP, FA or SanDisk as applicable, certifying that the
conditions specified in Sections 8.3 and 8.4 (insofar as they are to be
performed by FP, FA or SanDisk) have been fulfilled.

8.9

JVRA. The JVRA shall be in full force and effect, and each Party
thereto (other than Toshiba) shall have in all material respects performed and
complied with all of its agreements, covenants and obligations under the JVRA to
be performed or complied with by them prior to or at such time.

8.10

Material Adverse Effect. There shall not have been any Material
Adverse Effect with respect to the Purchased Assets. As used in this Agreement,
the term “Material Adverse Effect” means a change or changes or effect or
effects (including work stoppages) that individually or in the aggregate are or
may reasonably be expected to be materially adverse to the Purchased Assets or
the ownership, possession or use thereof as of the date of this Agreement or as
of the Closing Date; provided, however, that “Material Adverse Effect”
shall not include: (i) any changes in the ordinary course of business, (ii) any
changes in the financial or credit markets, including any adverse change in the
market prices of the securities or the credit ratings of Toshiba or SanDisk, and
(iii) any changes in the market for NAND flash, or affecting manufacturers of
NAND flash generally.

8.11

No Breach of Equipment Leases. There shall not have occurred and be
continuing a breach of any covenant under any of the existing leases with
respect to any equipment leased by the Sellers; provided, however, this Section
shall not apply to the transfer of Owned Equipment.

9.1

Prior Conditions. Each of the conditions to such Party153s obligations
in Article 7 or 8 shall be satisfied as of the relevant Subsequent Closing Date.

9.2

SanDisk Guarantee Obligations. SanDisk shall have received evidence of
the fact that its obligations as a guarantor of the Equipment Leases have been
reduced to reflect the transfer of the Leased Equipment to take place at such
Subsequent Closing.

9.3

Assignment and Assumption Agreement. The relevant Parties shall have
executed the FP and FA Assignment and Assumption Agreements and any other
certificates, instruments or documents required pursuant to the provisions of
this Agreement or otherwise necessary to transfer the Assumed Liabilities to
Toshiba in accordance with the terms hereof, and to consummate the Equipment
Transactions.

10.1

Each Party agrees to, and does hereby, indemnify (an “Indemnifying
Party“) and hold harmless each of the other Parties from and against any and
all losses arising out of, or based upon, the gross negligence or willful
misconduct of such Indemnifying Party under this Agreement.

10.2

Damages Limited. IN THE ABSENCE OF ACTUAL FRAUD, IN
NO EVENT SHALL ANY PARTY BE LIABLE TO OR BE REQUIRED TO INDEMNIFY ANY OTHER
PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES FOR ANY

10.3

[***]*.

10.4

Sole Remedy. Other than the payment of Lease Transfer Costs as set
forth in Section 3.7, rights to equitable relief and, to the extent available
under Applicable Law, claims for fraud, the sole remedy available to any Party
for breaches of this Agreement shall be limited to the rights set forth in this
Article 10.

11.1

Termination. This Agreement and the Equipment Transactions may be
terminated:

(a)

at any time, by mutual written consent of the Sellers, SanDisk and Toshiba;

(b)

at any time, by one Party (as between Toshiba and SanDisk) if it is not in
material breach of its representations, warranties, covenants and agreements
under this Agreement and there has been a material breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
other Party (as between Toshiba and SanDisk) and (i) such Party has not cured
such breach within the later of (a) [***]* after the other Party has given
notice of such breach to such Party (provided however, that, no cure period
shall be required for breach which by its nature cannot be cured) or (b) the end
of the Resolution Period set forth in Section 3.6(c) and (ii) as a result of
such breach any of the conditions set forth in Articles 7 or 8 would not be
satisfied prior to the Closing Date, as such date may be adjusted in accordance
with Section 3.6(c);

(c)

by any Party by written notice if there shall be a final nonappealable order
of a court of competent jurisdiction in effect preventing consummation of the
Equipment Transactions; or

(d)

by any Party by written notice if there shall be any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
Equipment Transactions by any Governmental Authority that would make
consummation of any of the Equipment Transactions illegal.

12.1

Payment of Expenses. Except as otherwise provided in this Agreement,
each of the Sellers, the SanDisk Parties and Toshiba will bear its own expenses
incurred in connection with this Agreement and the consummation of the Equipment
Transactions, including the fees and expenses of attorneys, accountants,
brokers, finders and any other advisors engaged by each Party.

12.2

Relationship of the Parties. The Sellers, the SanDisk Parties and
Toshiba will at all times be independent contractors, and nothing in this
Agreement will be construed as creating a joint venture, partnership or agency
relationship between the Parties.

12.3

Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by telecopier) to the
address or telecopier or facsimile number set forth beneath the name of such
Party below (or to such other address or telecopier number as such Party shall
have specified in a written notice given to the other Party hereto):

12.4

Governing Law; Dispute Resolution. This Agreement will be governed by
and construed, and the rights and obligations of the Parties shall be
determined, in accordance with the laws of California without giving effect to
principles of conflict of laws. Any dispute concerning this Agreement shall be
referred to the Management Committee (as that term is defined in Section 6.9 of
the Flash Alliance Master Agreement) and handled by it in accordance with the
Flash Alliance Master Agreement. If the Management Committee cannot resolve such
dispute in accordance with the terms of the Master Agreement, then such dispute
will be settled by binding arbitration in San Francisco, California. The dispute
shall be heard by a panel of three arbitrators pursuant to the rules of the
International Chamber of Commerce. The awards of such arbitration shall be final
and binding upon the parties thereto. Each party will bear its own fees and
expenses associated with the arbitration. Filing fees and arbitrator fees
charged by the ICC shall be borne equally by the Parties.

12.5

Assignability; Third-Party Rights. This Agreement shall be binding
upon the Sellers and their successors and permitted assigns (if any), the
SanDisk Parties and their successors and permitted assigns (if any) and Toshiba
and its successors and permitted assigns (if any). This Agreement shall inure to
the benefit of the Sellers and Toshiba and their respective successors and
permitted assigns (if any). This Agreement may not be assigned by either Party
without the prior written consent of the other Party. Nothing in this Agreement,
express or implied, will be deemed to confer upon any other Person, any rights
or remedies under, or by reason of, this Agreement.

12.6

Waiver. No failure or delay on the part of any Party hereto to
exercise any right or remedy under this Agreement shall operate as a waiver of
such right or remedy, and no single or partial exercise of any such right or
remedy shall preclude any other or further exercise thereof. No Party shall be
deemed to have waived any claim arising out of this Agreement, or any right or
remedy under this Agreement, unless the waiver of such claim, right or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Party.

12.7

Amendments. This Agreement may not be amended, modified or
supplemented other than by a written instrument duly executed and delivered by a
duly authorized officer on behalf of each of the Parties.

12.8

Headings. The section and other headings contained in this Agreement
are for reference purposes only and will not in any way affect the meaning, or
interpretation of this Agreement.

12.9

Preparation of this Agreement. Each of Toshiba and the SanDisk Parties
hereby acknowledges and agrees that (a) Toshiba and the SanDisk Parties jointly
and equally participated in the drafting of this Agreement and all other
agreements contemplated

12.10

Severability. If any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent jurisdiction to be
illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
Parties hereto. The Parties153 further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.

12.11

Entire Agreement. The schedules and exhibits attached hereto are
incorporated into this Agreement by reference. This Agreement and the schedules
and exhibits hereto, and the JVRA, constitute the entire agreement between the
Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings both written and oral between the Parties with
respect to the subject matter hereof, including the memorandum of understanding
by and among Toshiba, SanDisk and SanDisk Ireland dated October 20, 2008.

12.12

Counterparts. This Agreement may be executed in counterparts, each of
which when so executed will be deemed to be an original, and all such
counterparts will together constitute but one and the same instrument. Execution
and delivery of this Agreement by exchange of facsimile copies bearing the
facsimile signature of a Party shall constitute a valid and binding execution
and delivery of this Agreement by such Party.

12.13

No Representations or Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NO PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES REGARDING THE STATUS OR CONDITION OF THE PURCHASED
ASSETS, WHETHER EXPRESS OR IMPLIED, AND NO WARRANTY OF MERCHANTABILITY, FITNESS
FOR INTENDED OR PARTICULAR USE OR OTHERWISE

“FP”

FLASH PARTNERS LIMITED

By ________________________________

Name ______________________________

Title _______________________________

“FA”

FLASH ALLIANCE LIMITED

By ________________________________

Name ______________________________

Title _______________________________

“TOSHIBA”

TOSHIBA CORPORATION

By ________________________________

Name ______________________________

Title _______________________________

“SANDISK”

SANDISK CORPORATION

By ________________________________

Name ______________________________

Title _______________________________

“SANDISK CAYMAN”

SANDISK (CAYMAN) LIMITED

By ________________________________

Name ______________________________

Title _______________________________

“SANDISK IRELAND”

SANDISK (IRELAND) LIMITED

By ________________________________

Name ______________________________

Title _______________________________

[***]*