Master Lease Agreement Flash memory manufacturing equipment

1

Unless the context makes it clear that the term has a different meaning, the terms in the left column below, used in this Agreement, shall have the meanings set forth in the right column below, corresponding to the relevant terms.

SD Group Companies

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

SD Tranches

Collectively refers to SD Tranche 1-A, SD Tranche 1-B, SD Tranche 1-C, and SD Tranche 2, and individually, "each SD Tranche".

SD Tranche 1-A

SD Tranche 1-A composed pursuant to Article 7, Paragraph 1 in relation to lease payments and other claims under this Agreement.

SD Tranche 1-AB

Collectively, SD Tranche 1-A and SD Tranche 1-B.

SD Tranche 1-B

SD Tranche 1-B composed pursuant to Article 7, Paragraph 1 in relation to lease payments and other claims under this Agreement.

SD Tranche 1-C

SD Tranche 1-C composed pursuant to Article 7, Paragraph 1 in relation to lease payments and other claims under this Agreement.

2

With respect to quoting other agreements and documents in this Agreement, if the relevant agreements and documents are revised, added or changed after the Agreement was initially executed, they shall mean the relevant agreements and documents after they were revised, added or changed.

3

With respect to quoting provisions in this Agreement, the provisions shall mean, unless otherwise specially stated, the provisions of this Agreement.

4

With respect to referring to parties to the related agreements to this Agreement, the parties shall also include their successors and accredited assignees.

1

Lessee and Lessor confirm that transactions listed in Attachment 1, Paragraph 16 are planned with respect to the Property and they are inextricably linked with each other.

2

Lessee confirms that Lessor has the ownership of the Property during the lease period under this Agreement.

1

Pursuant to Master Sale and Purchase Agreement, Lessor shall receive from Lessee each unit component composing the Property on each delivery date and, in the meantime, shall lease said unit component to Lessee.

2

A lease of the Property and each unit component under this Agreement shall exist for each individual transaction during its lease period and it shall commence from the issuance date of each loan certificate pursuant to Article 4, Paragraph 5. Except where explicitly provided in this Agreement, a lease of the Property shall neither be cancelled nor terminated prior to its lease expiration date.

3

Lessee shall pay the lease payment pursuant to Article 7, Paragraph 2 as compensations for the lease under this Agreement.

4

Lessee shall have the right to quiet enjoyment of the Property pursuant to Article 11 and other provisions of this Agreement.

1

Lessee shall designate a scheduled date to deliver each unit component composing the Property to Lessor pursuant to Attachment 1, Paragraph and Lessee shall submit to Lessor the request for lease and approval in the form of Attachment 2 at least five (5) bank business days prior to the scheduled delivery date. Lessor shall confirm and agree on the contents and conditions of the request for lease and approval received from Lessee, and thereupon shall deliver to Lessee the relevant request for lease and approval after printing its name and sealing it.

2

Subject to the satisfaction of the conditions set forth in Article 5, and to receive from Lessee a unit component on each delivery date at a delivery location in accordance with Master Sale and Purchase Agreement, Lessor shall deliver said unit component in as is, where is condition to Lessee on the same date and at the same location for the purpose of the leasing stipulated in the previous Article, and Lessee shall receive said unit component from Lessor.

3

If it becomes necessary to change any scheduled delivery date, Lessee shall notify Lessor to that effect as soon as possible (at the latest by 5 bank business days prior). Lessee and Lessor shall agree on each amount of lease payment, payment for exercise of purchase options, Return Adjustment Fee, repayment standard fee and stipulated loss payment for each individual transaction, based on the actual property purchase price of and delivery date for said unit component. In such case, the agreed amount of lease payment, payment for exercise of purchase options, Return Adjustment Fee, repayment standard fee and

stipulated loss payment, together with the actual property purchase price and the delivery date, shall be documented and attached to each loan certificate in the form specified in Attachment 3.

4

Lessee shall bear the cost and liabilities (including break funding cost; further, if Lessee bears the liability for break funding cost in accordance with this Agreement, Lessee shall pay the amount calculated based on the definition stipulated in Article 1 for each Tranche. Provided however, if respective amounts and payment periods for each Tranche are different, they shall be appropriately adjusted. Hereinafter, the same in this Agreement.) incurred as a result of a change of delivery date or delayed or failed delivery (excluding cases where the cause is attributable to Lessor, the SD Receivables Assignee or the Lenders).

5

Lessee shall prepare and deliver to Lessor a loan certificate in the form specified in Attachment 3 as the delivery of each unit component takes place pursuant to the above Paragraph 2.

6

Delivery of each unit component as part of leasing in each individual transaction under this Agreement shall be deemed complete by delivery of a loan certificate referenced in the preceding paragraph. Lessee may use each unit component from such delivery date of said loan certificate.

7

Lessee shall bear all the cost of delivering the Property under this Article.

8

In the event where delivery of the Property is not completed during a delivery period in accordance with Article 4 Paragraph 2, Lessee and Lessor shall faithfully negotiate a possibility of extending such delivery period.

Lessor’s obligation to deliver each unit component for each individual transaction under Article 4 is conditional upon meeting the following conditions before the scheduled delivery date. Provided, however, that this shall not apply if Lessor notifies Lessee before completion of delivery that Lessor waives these conditions.

(1)

That no event has occurred by a scheduled delivery date that triggers Lessor or Lessee to expect changes in laws, orders, notices or other legal, administrative guidance or tax changes that, in light of the purpose [of the transaction], Lessor or Lessee reasonably considers appropriate reasons to suspend or postpone the execution of such transaction planned in accordance with the related agreements, or that such transaction is illegal. (However, if Lessor or Lessee determines that an event applicable under this Item has occurred, Lessor or Lessee shall immediately

notify and negotiate with the other party.)

(2)

That Lessee has purchased from a manufacturer of the Property said unit components before such scheduled delivery date from a manufacturer in accordance with the Original Purchase Agreement, and Lessee has acquired the ownership thereof without incurring any obligations etc. (excluding waived obligations).

(3)

That said unit component is insured under Article 19 by an insurance that is effective as of said scheduled delivery date.

(4)

That no events of default have occurred.

(5)

That no events have occurred that cause Lessor to determine that events constituting a total loss or leading to a total loss of said unit component.

(6)

That related agreements to which Lessor or Lessee shall be a party are signed by all the parties, issued and continued to be in effect.

(7)

That representations and warranties by Lessee under Article 20 are entirely correct as of said scheduled delivery date under existing conditions on the same day.

(8)

That no significant change has been added to the FLASH PARTNERS MASTER AGREEMENT executed on September 10, 2004 between the Guarantors and SanDisk International Limited, or that this Agreement has not been cancelled, dissolved or terminated, and that there is no such material risk to the extent known to Lessee.

(9)

That the long-term loan rating of SanDisk by Standard & Poor’s Rating Services or Moody’s Investors Service is BB- or above Ba3, respectively, as of said scheduled delivery date.

1

Lessee and Lessor shall take steps necessary for execution of this Agreement and other related agreements and for authorization required to carry out obligations under this Agreement by the date of execution of this Agreement or each delivery date and, in the meantime, shall exchange certificates of seal impression for the seals used in these agreements (issued within three months prior to each signing), certified copy of company registration (issued within three months prior to the day of each signing) and Articles of Incorporation (valid as of the date of signing of this Agreement).

2

Lessee shall submit the following documents to Lessor by each scheduled delivery date:

(1)

Insurance certificate for said unit component designated in Article 19

(2)

Original Letter of Agreement, notarized and dated, for said unit component

(3)

Other documents reasonably requested by Lessor

1

Lessee and each Lessor agree that monetary claims of Lessor against Lessee in the form of lease payment, stipulated loss payment, Return Adjustment Fee, payments for exercise of purchase options and other payments connected to each individual transaction under this Agreement comprise Tranche 1-A, SD Tranche 1-B, SD Tranche 1-C, SD Tranche 2 and Toshiba Tranche 1-A and Toshiba Tranche 1-B. Each Tranche regarding each individual transaction shall consist of claims obtained by dividing such monetary claims by a rate provided in the loan certificate for said individual transaction. Further, a specific amount for each Tranches in the form of lease payment, stipulated loss payment, Return Adjustment Fee and payment for exercise of purchase options for each individual transaction shall be determined by Attachment 1, Paragraph 3, Paragraph 6, Paragraph 7 and Paragraph 9 of this Agreement and the loan certificate related to said individual transaction.

In addition, (i) claims related to lease payment, stipulated loss payment, Return Adjustment Fee, and payment for exercise of purchase options regarding each SD Tranche shall be attributed to only the SD Lessors (each SD Lessor holds claims divided by the ratio of its share of the Property), and money for such claims shall be paid only to the SD Lessors, and (ii) claims related to lease payment, stipulated loss payment, Return Adjustment Fee, payment for exercise of purchase options regarding each Toshiba Tranche shall be attributed to only the Toshiba Lessors (each Toshiba Lessor holds claims divided by the ratio of its share of the Property), and money for such claims shall be paid only to the Toshiba Lessors.

2

Lessee shall, for each individual transaction, make a lease payment to Lessor for the lease payment calculation period that ends on each payment date by 11 am on such payment date.

3

In the event that the day that Lessee is supposed to make payment in any amount that Lessee has payment obligations for each individual transaction under this Agreement on a day other than a bank business day, with respect to such lease payment, stipulated loss payment, Return Adjustment Fee, and payment for exercise of purchase options, Lessee shall make payment on the following bank business day (if the following bank business day falls in next month, then use the previous bank business day shall apply). With respect to the lease payments, such payment amount shall be adjusted accordingly. With respect to other payments, payments shall be made on the following bank business day and such payments shall not be adjusted.

4

The amount that Lessee owes under this Agreement shall be paid according to provisions set forth in Attachment 1, Paragraph 10(2), unless as otherwise agreed by the parties concerned. However, lease payment, stipulated loss payment, payment for exercise of purchase options and Return Adjustment Fee, Break Funding Cost and the related late fees thereto due under this Agreement regarding each SD Tranche shall be paid to the SD Borrower, and lease payment, stipulated loss payment, payment for exercise of purchase options and Return Adjustment Fee, Break Funding Cost, and the related late fees thereto due under this Agreement regarding each Toshiba Tranche shall be paid to the Toshiba Borrower, in accordance with Attachment 1, Paragraph 10(1). Lessee confirms that in connection with receiving said payments into the bank account of the Borrowers, the SD Lessors and the SD Receivables Assignee have delegated to the SD Borrower, and the Toshiba Lessors have delegated to the Toshiba Borrower, and each Borrower has accepted such delegations. If such delegation is terminated by prior written notice by the SD Lessors, the SD Receivables Assignee or Toshiba Lessors to the SD Borrower or the Toshiba Borrower, Lessor shall notify Lessee to that effect by at least one bank business day prior to the first lease payment due date after such termination. (In such case, with respect to lease payment, stipulated loss payment, payment for exercise of purchase options and Return Adjustment Fee, Break Funding Cost and the related late fees thereto due under this Agreement, the amount with respect to SD Tranches 1-AB shall be paid in the bank account of each SD Lender provided in Attachment 1, Paragraph 10(2); the amount with respect to SD Tranche 1-C shall be paid in the bank account of the SD Receivables Assignee provided in Attachment 1, Paragraph 10(2); the amount with respect to Toshiba Tranches 1-AB shall be paid in the bank account of each Toshiba Lender provided in Attachment 1, Paragraph 10(2); the amount with respect to SD Tranche 2 shall be paid in the bank account of each SD Lessor provided in Attachment 1, Paragraph 10(2); and the amount with respect to Toshiba Tranche 2 shall be paid in the bank account of each Toshiba Lessor provided in Attachment 1, Paragraph 10(2).).

5

Pursuant to this Agreement, Lessee is obliged to pay Lessor in full amount without any deduction, offsetting or defense regardless of any reasons (except where Lessor, the SD Receivables Assignee or the Lenders are responsible), including defective performance etc. by the Property, obligations against the Property, infringement against use of the Property or bankruptcy proceedings of the parties concerned. If Lessee is required by decree to withhold tax for the applicable payment, Lessee shall make an additional payment that is needed to ensure the amount that the receiving party would have received should such withholding have not been necessary.

6

If a lease pursuant to this Agreement for each individual transaction is terminated on a day other than its lease payment date, regardless of the occurrence of a total loss of the Property or its unit component, cancellation, exercising of purchase options or return options by Lessee or other reasons (except where Lessor, SD Receivables Assignee or the Lenders are responsible for causing such termination), Lessee shall pay break funding cost to Lessor on said termination day.

7

If the amount that Lessee has paid to Lessor or the amount received by Lessor by disposition of the Property under this Agreement is less than the total amount of Lessee’s debts due on said payment date or receipt date under this Agreement for liquidation, such amount shall be appropriated to each debt in the following order. However, the claims of the same priority shall be distributed proportionally according to the amount of debt corresponding to the claims of the same priority each Lessor holds.

(1)

Amount Lessee is required to pay Lessor under the related agreements (provided however, excluding items listed in sub-paragraphs (2) through (7) of this paragraph).

(2)

Default interest related to lease payment, stipulated loss payment, Return Adjustment Fee, payment for exercise of purchase options due under SD Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB.

(3)

As between lease payments and stipulated loss payments with respect to SD Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB, the amount equivalent to lease payment interest (each amount due under said Tranche, provided in Attachment 1, Paragraphs 3 1 (2), 2 (2), 3 (2), 5 (2) and 6 (2), and Attachment 1, Paragraphs 9 (3), (6), (9), (15) and (18) specified in the loan certificate for each individual transaction).

(4)

Break funding cost regarding SD Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB.

(5)

As between lease payments and stipulated loss payments with respect to SD Tranches 1-AB, SD Tranche 1-C and Toshiba Tranches 1-AB, the amount equivalent to the original principal of the lease payments (each amount due under the relevant Tranche, provided in Attachment 1, Paragraphs 3 1 (1), 3 (1), 3 (1), 5 (1) and 6 (1) and Attachment 1, Paragraphs 9 (1), (2), (4), (5), (7), (8), (13), (14), (16) and (17) specified in the loan certificate for each individual transaction), or amount equivalent to payments for exercise of purchase options or Return Adjustment Fees.

(6)

Default interest on lease payment, stipulated loss payment, and payment for exercise of purchase options related to SD Tranche 2 and Toshiba Tranche 2.

(7)

As between lease payments and stipulated loss payments with respect to SD Tranche 2 and Toshiba Tranche 2, the amount equivalent to lease payment interest (each amount due under the relevant Tranche provided in Attachment 1, Paragraphs 3 4 (2) and 7 (2) and Attachment 1, Paragraphs 9 (12) and (21) specified in the loan certificate for each individual transaction).

(8)

Break funding cost regarding SD Tranche 2 and Toshiba Tranche 2.

(9)

As between lease payments and stipulated loss payments with respect to SD Tranche 2 and Toshiba Tranche 2, the amount equivalent to the original principal of lease payments (each amount due under the relevant Tranches provided in Attachment 1, Paragraphs 3 4 (1) and 7 (1) and Attachment 1, Paragraphs 9 (10), (11), (19) and (20) specified in the loan certificate for each individual transaction), or the amounts equivalent to the payments for exercise of purchase options.

(10)

Other debts of Lessee pursuant to this Agreement that has become due.

1

Lessor shall lease the Property to Lessee on an as is basis, without warranty of any kind regarding the Property, whether express or implied, and shall not be liable for defects (provided however, excluding defects which arose due to the Lessor’s intentional acts or gross negligence) in the Property, whether apparent or hidden. Further, Lessor shall make no guarantee regarding existing obligations etc. (provided however, excluding obligations, etc. which arose due to the Lessor’s intentional acts or gross negligence) regarding the Property or its parts and shall not be liable for defects irrespective of whether the defects are known or not.

2

Lessee, assuming its own responsibility and at its own expense, shall acquire appropriate quality assurance from the manufacturer of the Property or its parts supplier, and at the same time make an arrangement for after-sale service and hereby assigns to Lessor (except where such assignment is prohibited) the rights regarding the Property, such as the right to claim damages and warranties (including the right to claim warranty against defects). However, Lessee may exercise the applicable right to claim damages and warranties in its own name, provided that no event of cancellation has occurred, and may directly receive the benefit of the execution of the right to claim damages and warranties during the lease period from a manufacturer of the Property or its parts suppliers.

3

In the event that Lessee suffers damage or a loss due to lack of performance by the Property, Lessee may, assuming its own responsibility and at its own expense, demand recovery of such damage or loss directly from a manufacturer of the Property or its parts

manufacturer under the right set forth in the provision of the previous paragraph, and Lessor shall not be responsible for this. However, Lessee’s obligations under Article 14 shall not be affected.

1

If an event of total loss occurs to all or any unit component of the Property (except where Lessor is responsible), Lessee shall immediately notify Lessor of such event and provide Lessor stipulated loss payment and other amounts of debts that are due with respect to the Property and its unit component as of the date it intends to make the relevant payment on the earlier date of the following dates: (a) 90th day since the occurrence of said event of total loss (except where Lessee is not responsible for the total loss event and Lessor and Lessee have otherwise agreed); or (b) the following bank business day after the day when an amount greater than the stipulated loss payments is paid as insurance coverage prescribed in Article 19.

2

When Lessee has paid the amount prescribed in the previous paragraph, Lessor shall assign Lessee the right to the Property or its unit component that suffered a total loss or the right to a third party acquired as a result of such total loss event (excluding the right to claim compensation for damages for which Lessor should be held liable) on an as is basis with respect to performance without the third party providing funds, credits or other type of guarantee.

3

In the event that Lessor has received compensation from a third party as a result of the occurrence of a total loss event with respect to the Property or its unit component (including, irrespective of characterization, an amount paid to compensate for loss and financial burdens due to the occurrence of such total loss event, but excluding the amount that Lessor should incur to compensate for damage) or received insurance coverage for the total loss, when Lessee has not met the payment date due under Paragraph 1 (irrespective of whether or not Lessee is aware that the payment date due under Paragraph 1 has arrived as a result of the payment of total loss insurance coverage ), the received amount shall be appropriated for payment of stipulated loss payment, and if there is a surplus after the appropriation, the surplus amount shall be immediately returned to Lessee upon subtracting unpaid amounts that Lessee owes Lessor under the related agreements (including late charges), and if there is still deficiency after such appropriation, Lessee shall not avoid payment of said deficient amount. Further, if Lessee has paid said stipulated loss payment at the time referenced above, Lessor shall immediately return the remaining balance of the received amount to Lessee upon

subtracting, if any, unpaid amounts due from Lessee due under the related agreements.

4

During the lease period, Lessee shall incur all the risk and relevant expenses related to a loss (including total loss events) or damage (in either case, except when Lessor is responsible) to the Property or its unit component.

5

In the event that a total loss event occurs to a unit component and Lessee has paid stipulated loss payment with respect to said component and paid other unpaid amounts with respect to such component or the total loss, said unit component shall be removed from transactions set forth in the related agreements, and Lessee shall be exempt from obligations to pay future lease payment with respect to said unit component part.

6

With respect to a unit component that Lessee reasonably determines, through Lessee’s consultation with a manufacturer or maintenance company of the Property after delivery of such component, that it does not meet Lessee’s required specification, a total loss event is deemed to have occurred immediately after delivery on the delivery date for reasons for which Lessee is not responsible, and the provisions of this Article shall apply accordingly.

7

In the event that a total loss event has occurred to the Property or its unit component part, or that Lessee judges that the Property or its unit component needs to be replaced for the purpose of doing business, Lessee may request replacement of the Property or its unit component, subject to consent by Lessor, the Borrower, the SD Receivables Assignee and the Lenders (Lessor, the Borrower, the SD Receivables Assignee or the Lenders may not refuse such consent without any rational reasons, which include the case where Lessor judges, at its own discretion, that the value of the Property or its unit component after replacement will decrease compared to the value before replacement (excluding a minor decrease)). Such replacement shall take place at the expense of Lessee if Lessor, the Borrower, SD Receivables Assignee and the Lenders agree on conditions with respect to a replacement property, its cost and other matters of consideration. Provided however, only where obtaining prior written consent is difficult due to the urgent need to replace the relevant property or unit component part with equivalent items, Lessee can request the consent ex post facto from Lessor, the Borrower, the SD Receivables Assignee and the Lenders regarding the replacement of the relevant property or unit component part.

Lessee shall, on its own responsibility and at its own expense, in a manner clearly recognizable by a third party, place signs indicating Lessor’s ownership of the Property where the Property is located and on main unit components of the Property and certain unit components that Lessor requests.

Lessee shall, unless a cancellation event has occurred, have the quiet enjoyment of the Property, and Lessor shall not disturb such use by Lessee without valid reasons.

1

Lessee shall, on its own responsibility and at its own expense, install the Property in Toshiba Yokkaichi Factory in accordance with installation standards or methods provided by the manufacturers of the Property and regulatory authorities, and shall not change the installation location without prior consent of Lessor. If installation of the Property or its unit components takes place outside of Japan, in addition to prior consent of Lessor, the following must be observed: compliance outside of Japan of with the provisions of each Article of this Agreement regarding the Property or its unit components, no compromising of the rights of Lessor, the Borrower, the SD Receivables Assignee and the Lenders with respect to the Property and rights under the related agreements, and compliance with laws of Japan and the United States regarding export and re-export control.

2

Lessee shall comply with all applicable laws with respect to installation, use, operation and handling of the Property (including environmental laws), any request, conditions imposed and instructions provided by the manufacturers of the Property, parts suppliers and the insurers and agreements with such parties and, at the same time, shall use the Property only for legal purposes.

3

Lessee shall, on its own responsibility and at its own expense, keep and maintain records regarding use and operation of the Property.

1

Lessee shall not, without prior consent of Lessor, transfer the possession of the Property to a third party, or sublease the Property. However, Lessee may, on its own responsibility and at its own expense, without consent of Lessor, transfer the possession of the Property for maintenance or repair to a manufacturer of the Property or approved maintenance or repair provider, and sublease the Property to an SD Group company or a Toshiba Group company.

2

In the event that the transfer of possession or sublease is executed in accordance with the previous paragraph, the transfer of possession or sublease shall not affect Lessee’s obligations under this Agreement and shall be subject to the Agreement’s Articles,

survival and other provisions, and even if Lessee incurs taxes and public dues as a result of the transfer of possession or subleasing, there shall be no affect on the lease payment or other lease conditions under this Agreement. Further, Lessee shall, on its own responsibility and at its own expense, take all reasonable measures so that Lessor and the Lenders maintain security interests as before (not limited to those expressed in this Agreement).

1

Lessee shall, on its own responsibility and at its own expense, keep the Property in safe condition at all time.

2

Lessee shall, on its own responsibility and at its own expense, perform maintenance and management of the Property in accordance with provisions of law, perform maintenance and repair using a method approved or recommended by a manufacturer of the Property or a parts supplier and a similar method that Lessee has employed with respect to other similar properties and, in the meantime, retain the Property in the same condition at all time as the initial condition of the delivery date (excluding normal wear and tear). Under any circumstances, Lessee shall not perform acts that might cause a significant adverse effect to the manufacturer’s warranty of the Property.

3

Lessee shall, on its own responsibility and at its own expense, keep and maintain records regarding maintenance and repair of the Property, including maintenance log.

4

Lessee may, for the purpose of maintenance and repair provided in Paragraph 2, on its own responsibility and at its own expense, replace parts with substitutes that are similar in performance to the respective parts and owned by Lessee without any obligation to itself (excluding the waived obligations) or may install parts owned by Lessee without any obligation for itself (excluding the waived obligations) in the Property without replacing the parts of the Property. However, in either case, the replacement or installation shall not cause any changes that are reasonably expected to decrease performance etc. of the Property, or have adverse effect on its performance etc.

5

Lessee may, on its own responsibility and at its own expense, after delivery of the Property to Lessee in accordance with Article 4, remove, without installing substitutes, parts that are installed to the Property as an addition, not as a replacement of the parts, or the parts of which removal does not cause reduced performance etc. of the Property.

Lessee may, on its own responsibility and at its own expense, perform changes, alterations or additions to the Property that are considered necessary or desirable for operations so long as such act does not reduce or negatively affect performance of the Property.

1

Except for circumstances under Paragraph 2, parts that Lessee installed in the Property under Article 14, Paragraph 4, upon installation, shall comprise the Parts that constitute the Property and automatically belong to Lessor and be leased from Lessor to Lessee under this Agreement. With respect to parts that are removed from the Property, the ownership of the removed parts shall be transferred to Lessee while the ownership of the substitutes is transferred to Lessor. However, the parts that are exchanged and removed, though not replaced by similar substitutes, shall still be owned by Lessor regardless of their location and are subject to this Agreement.

2

Lessee may retain the ownership of parts that are installed to the Property, after the Property was delivered to Lessee under Article 4, as an addition, not as replacements, under Article 14, if removal of such parts from the Property is possible without compromising performance of the Property. Lessor may consider said parts in accordance with Article 26, Paragraph 3.

Lessor and its designated parties may, upon prior notice to Lessee no less than 5 bank business days in advance, with respect to the Property or its parts, enter an office, factory or facility of Lessee or its installation location, or on a premise of Lessee and inspect the Property with respect to conditions, installation, use, operation, storage, maintenance and repair. However, when performing the applicable inspection, normal operations of Lessee or its installation location shall not be disturbed and, at the same time, reasonable confidentiality, safety, and security restrictions imposed by Lessee or its installation location shall apply.

1

Lessee shall not establish, approve, or cause to create any obligation to the Property and its parts, rights or benefits under this Agreement. Provided, however, such shall not apply to any obligation arising out of (a) rights of Lessor and Lessee provided in this Agreement, (b) retention rights or similar security rights of employees, maintenance providers and repair providers that arise during normal operations of Lessee, for which a payment due

date has not arrived and there is no risk of enforcement of obligations with respect to the Property, and (c) rights under the related agreements executed by Lessor, SD Receivables Assignee, the Lenders and their successor/s and assignee/s (including loan and security agreements ).

2

In the event that an obligation arises that is not excluded by the conditions stipulated in the previous paragraph, Lessee, on its own responsibility and at its own expense, shall remove the same in an appropriate method.

1

Lessee shall, on its own responsibility and at its own expense, personally, execute an insurance agreement to cover damage to and loss of the Property at all times during the lease period through the Guarantor, Toshiba Group companies or SD Group companies with an insurance company recognized by Lessor as internationally reliable.

2

Regarding insurance referred to in the previous paragraph, the amount of insurance shall be no less than the amount equivalent to 100% of stipulated loss payment as of the lease payment date immediately before the date of loss event.

3

Lessee shall, in the event that an event insured against, whether total or partial, occurs to the Property, promptly notify Lessor.

4

In the event that damage (partial loss) occurs to the Property, where restoration or repair of the Property is possible, Lessee shall receive the insurance money paid for such event. Upon receiving such insurance money, unless the damage has already been restored or repaired, Lessee shall apply the entire amount of the insurance money to restoration and repair of the Property. Further, in the event that a total loss event occurs, the provisions stipulated in Article 9 shall apply.

5

Prior to the date of transfer of the Property stipulated in Article 4 and at the start of each insurance coverage for the period for which insurance coverage is required pursuant to this Article (at least once a year), Lessee shall obtain documentation that proves the coverage that meets the above conditions from an insurance company prescribed in Paragraph 1 and deliver such document to Lessor.

6

Terms and conditions for insurance set forth in this Article shall, in all respects under any circumstances, not be less than insurance that covers property that is similar to the Property. In the event that terms and conditions of the insurance set forth in this Article become less than the terms and conditions of such other insurance, the terms and conditions of the insurance set forth in this Article shall be improved to the terms and conditions of such other insurance, and Lessee shall promptly conform to the improved terms and conditions.

1

Lessee represents and warrants the following items as of the day of this Agreement:

(1)

That Lessee has concluded the related agreements to which Lessee is a party, has capacity and authority by law and internal corporate rules and regulations of the company to exercise the rights and fulfill the obligations under the related agreements and has processed resolutions of the general meetings of shareholders and other measures necessary by law and internal corporate rules and regulations of the company for the approval of such related agreements and exercise of its own rights and fulfillment of its obligations.

(2)

That preparation, delivery and execution by Lessee of the related agreements to which Lessee is a party does not, in any respects, violate laws, Lessee’s Articles of Association and other documents related to its organizations and provisions of agreements to which Lessee is a party.

(3)

That the related agreements, to which Lessee is a party, are legal, effective and binding agreements against Lessee where implementation in accordance with each provision is possible.

(4)

That preparation and delivery of the related agreements to which Lessee is a party, and performance or fulfillment by Lessee of each intended transaction thereunder do not require in any way approval and license by any government or other public office or court, notification to or registration with government or other public office or court, or other procedure, except for those already completed.

(5)

That there is no pending judicial or administrative procedure in any way that would adversely affect execution of the rights or fulfillment of the obligations by Lessee with respect to the related agreements to which Lessee is a party.

(6)

That Lessee has disclosed to Lessor, the Borrower, the SD Receivables Assignee and the Lenders business plans for the fiscal year during which the execution date of this Agreement falls within the scope determined by Lessee’s directors as reasonably necessary for implementation of this Agreement.

(7)

To the extent of Lessee’s knowledge, no event of default has occurred.

2

Lessor represents and warrants the following items as of the execution date of this Agreement:

(1)

That Lessor has concluded the related agreements to which Lessor is a party has capacity and authority by law and internal corporate rules and regulations of the

company to exercise the rights and fulfill the obligations under the related agreements and has processed passed resolutions of internal corporate meetings and other measures necessary by law and internal corporate rules and regulations of the company for the approval of such related agreements and exercise of its own rights and fulfillment of its obligations.

(2)

That preparation, delivery and execution by Lessor of the related agreements to which Lessor is a party does not, in any respects, violate laws, Lessor’s Articles of Association and other documents related to its organizations, and provisions of agreements to which Lessor is a party.

(3)

That the related agreements, to which Lessor is a party, are legal, effective and binding agreements against Lessor where implementation in accordance with each provision is possible.

(4)

That preparation and delivery of the related agreements to which Lessor is a party, and performance or fulfillment by Lessor of each intended transaction thereunder do not require in any way approval and license by government or other public office or court, notification to or registration with any government or other public office or court, or other procedure, except for those already completed.

(5)

That there is no pending judicial or administrative procedure in any way that would adversely affect execution of rights or fulfillment of obligations by Lessor with respect to the related agreements to which Lessor is a party.

3

Representations and warranties of each item in the previous two paragraphs shall be deemed to be repeated by Lessee and Lessor on the delivery date of each individual transaction and each lease payment date under the circumstances existing on those days. Provided however, in relation to item 1 (7), where the event of default is cured within the cure period prescribed in each of the sub-paragraphs in Article 26, Paragraph 1, and did not become a termination event, such shall be deemed not in violation of this Article and Lessee shall not be responsible for damages and other liabilities.

1

Lessee shall make the following commitments to Lessor:

(1)

Lessee shall manage in accordance with Article 10 during the lease period the Property, its unit components and its parts distinctly from other properties.

(2)

Lessee shall fulfill and comply with Lessee’s obligations pursuant to the provisions stipulated in the related agreements (including the Original Purchase Agreements to the extent related to this Agreement).

(3)

In the event that a cause for default or cause that may have a significantly adverse effect on Lessor’s full rights under the related agreements or fulfillment of Lessee’s obligations thereunder arises, Lessee shall notify Lessor to that effect promptly after learning of the occurrence of such events.

(4)

As regards to the related agreements, Lessee shall acquire each consent, permission, approval, license or acceptance from any government or other public office or court that such government or public office or court requires Lessee to acquire in order to continue essentially the same business operations as the present, shall maintain its effect, and also shall abide by all conditions or restrictions imposed thereby.

(5)

Lessee shall provide Lessor, the SD Receivables Assignee and the Lenders, upon reasonable request by Lessor with information regarding the financial circumstances and business conditions of Lessor and the Guarantors as Lessor reasonably requests, including financial statements for which Lessee or the Guarantor has no specific confidentiality obligation, and information regarding installation, condition, storage, use, maintenance and repair of the Property after the end of a fiscal year (however, with respect to the Guarantor, at the end of its half year period and fiscal year).

(6)

Lessee shall perform all acts that Lessor reasonably requests as necessary for establishment, transfer or formation of rights or fulfillment of perfection, to the extent that such act is recognized and intended by the related agreements and within the limitations provided thereunder.

(7)

Lessee shall, for each fiscal year, report promptly after the end of each fiscal year to Lessor progress status of business plans of the fiscal years that are reasonably recognized by Lessee’s directors as necessary for implementation of this Agreement.

(8)

If Lessor reasonably demands, Lessee shall cooperate with Lessor, the SD Receivables Assignee and the Lenders to achieve objectives of the related contracts.

(9)

Lessee and the Guarantor shall handle, at their own discretion and responsibility, accounting and financial matters of Lessee and the Guarantor with respect to the transaction under this Agreement and its related agreements.

(10)

Lessee shall ensure that the Guarantor makes no significant changes to the FLASH PARTNERS MASTER AGREEMENT executed between the Guarantor and SanDisk International Limited on September 10, 2004. Provided, however, that this shall not apply in the event that the Lessor, the SD Receivables Assignee and the Lenders agree otherwise.

(11)

Lessee shall cause SanDisk to abide by the following provisions. Provided, however, that this shall not apply in the event that the Lessor, the SD Receivables Assignee and the Lenders agree otherwise as to (1) and (3) below.

(1)

SanDisk shall maintain a long-term debt rating by Standard & Poor’s Rating Services or Moody’s Investors Service at BB-, Ba3 or above respectively.

(2)

SanDisk shall undertake that no lien shall be attached to any SanDisk assets without prior written approval by Lessor. Provided, however, that this shall exclude cases involving normal securitization transactions regarding loan or inventory or any of the permitted liens listed in Attachment 3 below (Permitted Liens).

(3)

SanDisk shall maintain the amount of equity (Total Stockholders’ Equity) indicated in consolidated balance sheet as of the end of each accounting term and mid accounting term of each fiscal year at no less than 1,514 million US dollars until the termination of this Agreement and completion of fulfillment of all of Lessee’s and SanDisk’s obligations to Lessor under this Agreement.

2.

Lessor shall promptly submit to Lessee copies of notices, requests, demand