EQUIPMENT PURCHASE AGREEMENT

1.1  

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

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 Sellers’ 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 Sal e.

(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

(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)  

Sellers’ 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 Toshiba’s acquisition of the Sellers’ 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)  

[***]*.