CERTAIN CONFIDENTIAL PORTIONS HAVE BEEN REDACTED FROM THIS EXHIBIT BECAUSE THEY ARE BOTH (i) NOT MATERIAL AND (ii) A TYPE THE REGISTRANT TREATS AS PRIVATE OR COFIDENTIAL. INFORMATION THAT HAS BEEN OMITTED HAD BEEN IDENTIFIED IN THIS DOCUMENT WITH A...

1. Definitions and Interpretation

2. Closing and Post-Closing Transactions

3. Purpose of Flash Partners

4. Representations and Warranties of the Parties

5. Covenants

6. Covenants concerning NAND Flash Memory Products Business

7. Other Agreements

8. Termination

9. Miscellaneous

DEFINITIONS AND INTERPRETATION.

Certain Definitions.

Capitalized terms used but not defined in this Agreement shall have the respective meanings assigned to them in Appendix A (Definitions, Rules of Construction and General Terms and Conditions).

As used herein, the term “Agreement” means this Flash Partners Master Agreement together with any Exhibits, Schedules, Appendices and Attachments hereto.

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

TERM

DEFINED IN

TERM

DEFINED IN

TERM

DEFINED IN

Rules of Construction and Documentary Conventions. The rules of construction and documentary conventions and general terms and conditions set forth in Appendix A shall apply to this Agreement.

Precedence. The terms and provisions of this Agreement are binding on the Parties; provided, however, that to the extent that a description in this Agreement of another agreement (whether an Operative Document or otherwise) conflicts with or differs from the provisions of that agreement, then the provisions of that agreement shall control as to such conflict or difference.

CLOSING AND POST-CLOSING TRANSACTIONS

Closing Transactions.

Closing. The Parties shall effect the transactions set forth in this Section 2.1, all of which shall be considered to occur on the date hereof unless otherwise stipulated (the effecting of such transactions, collectively, the “Closing”).

Flash Partners Documents. Unless otherwise indicated in this Section 2.1(c), as of the Closing Date, the Parties shall enter into or cause to be entered into or otherwise become effective the following agreements and documents (collectively with this Agreement, the “FP Operative Documents”) to apply to their joint development, manufacture and selling of Y3 NAND Flash Memory Products by

a Unit Purchase Agreement between Toshiba and SanDisk International, dated as of the date hereof, in the form of Exhibit A1 (the “Unit Purchase Agreement”), and which concerns the sale by Toshiba and purchase by SanDisk International at the Closing of 49.9% of the FP Units;

an Operating Agreement between Toshiba and SanDisk International, dated as of the date hereof, in the form of Exhibit A2 (the “FP Operating Agreement”), and which concerns governance of Flash Partners;

Articles of Incorporation of Flash Partners in the form of Exhibit A to the FP Operating Agreement;

a Foundry Agreement, dated as of the date hereof, between Flash Partners and Toshiba in the form of Exhibit A3 (the “FP Foundry Agreement”);

a Purchase and Supply Agreement, dated as of the date hereof, by and between Flash Partners and SanDisk International in the form of Exhibit A4-1 (the “SanDisk Purchase and Supply Agreement”) and a Purchase and Supply Agreement, dated as of the date hereof, between Flash Partners and Toshiba in the form of Exhibit A4-2 (the “Toshiba Purchase and Supply Agreement” and together with the SanDisk Purchase and Supply Agreement, the “Purchase and Supply Agreements”), and which concern the forecasting and purchase commitments by SanDisk and Toshiba, respectively, of Y3 NAND Flash Memory Products;

a Patent Indemnification Agreement between SanDisk Corporation and Toshiba, dated as of the date hereof, in the form of Exhibit A5 (the “FP Patent Indemnification Agreement”), and which concerns patent indemnification obligations of Toshiba in favor of SanDisk and certain contribution obligations of SanDisk with respect to Y3 NAND Flash Memory Products;

a Mutual Contribution and Environmental Indemnification Agreement between SanDisk Corporation and Toshiba, dated as of the date hereof, in the form of Exhibit A6 (the “Environmental Indemnification Agreement”), and which concerns indemnification obligations of the Parties in favor of one another with respect to Flash Partners and the Yokkaichi Facility; and

a Lease Agreement between Flash Partners and Toshiba, as owner of the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, dated as of the date hereof, in the form of Exhibit A7 (the “Lease Agreement”), and which concerns the leasing of Flash Partners’ equipment to Toshiba as owner of the Yokkaichi Facility.

Joint Operative Documents. The Parties acknowledge and agree that the following agreements shall remain in force or be amended or executed as indicated below

the Amended and Restated Common R&D and Participation Agreement, dated as of the date hereof, between SanDisk Corporation and Toshiba (the “Common R&D Agreement”), a copy of which is Exhibit B1 and which concerns collaboration between the Parties with respect to research and development activities;

the Amended and Restated Product Development Agreement, dated as of the date hereof, between the SanDisk Corporation and Toshiba (the “Product Development Agreement”), a copy of which is Exhibit B2 and which concerns collaboration between the Parties with respect to product development activities;

an Amendment No. 3 to Patent Cross License Agreement, dated as of the date hereof, between SanDisk Corporation and Toshiba (the “Amendment No. 3 to Patent Cross License Agreement”), a copy of which is Exhibit B3, amending that certain Patent Cross License Agreement between SanDisk Corporation and Toshiba, dated as of July 30, 1997 (as amended by Amendment No. 1 to Patent Cross License Agreement, dated as of May 9, 2000, and Amendment No. 2 to Patent Cross License Agreement, dated as of April 10, 2002, the “Cross License Agreement”), and which concerns certain patent licenses granted by SanDisk Corporation and Toshiba to one another; and an Amendment No. 1 to Services Agreement, dated as of the date hereof, between SanDisk Corporation and Toshiba (“Toshiba-SanDisk Services Agreement”), a copy of which is Exhibit B4, amending that certain Toshiba-SanDisk Services Agreement, dated as of July 1, 2002, which concerns Toshiba’s provision of certain services to SanDisk and SanDisk’s payment to Toshiba for such services.

Further Assurances. Following the Closing, each Party shall, and shall cause its Affiliates and Flash Partners to, take all reasonable actions necessary or appropriate to effectuate the transactions contemplated by this Agreement, the FP Operative Documents and the Joint Operative Documents (collectively, the “Master Operative Documents”), and to obtain (and cooperate with the other Party in obtaining) any Governmental Action or third party consent required to be obtained or made by it in connection with any of the transactions contemplated by the Master Operative Documents; provided, that no Burdensome Condition shall be made to exist with respect to such Party or any of its Affiliates in connection therewith.

Continuation of FVC Japan Documents. The Parties agree that unless otherwise expressly stated herein (A) the FVC Japan Operative Documents shall not affect the interpretation of this Agreement or the governance or operation of Flash Partners or the Y3 Facility and (B) the FP Operative Documents shall not affect the interpretation of the FVC Japan Master Agreement or the governance operation of FVC Japan or the FVC Japan Equipment. The Parties further

PURPOSE OF FLASH PARTNERS

Purpose. The Parties acknowledge and agree that the purpose of the Master Operative Documents and Flash Partners is the manufacture, including by subcontract to Toshiba pursuant to the FP Foundry Agreement, and sale to the Parties of NAND Flash Memory Products manufactured at the facility of the Flash Partners known by the Parties as “Y3” (the “Y3 Facility”), which is a part of the Yokkaichi Facility (defined in Appendix A).

NAND Flash Memory Products. “NAND Flash Memory Products” are NAND (both binary and MLC Flash Memory) Flash Memory Integrated Circuits (“ICs”), excluding any products with process design rules generally greater than .25 microns. Embedded IC’s incorporating NAND Flash Memory Products shall be considered to constitute “NAND Flash Memory Products” if the main function and value of such IC is flash memory, but shall not be considered to constitute “NAND Flash Memory Products” if the main function and value of such IC is logic. For the purpose of the foregoing, the “main function and value” of any product shall be considered to be flash memory if (x) the total NAND flash memory array area is greater than [***] of the total die area or (y) the product is a cut-down or derivative of a standard NAND Flash Memory Product.

Products.

NAND Flash Memory Products manufactured at the Y3 Facility are referred to as “Y3 NAND Flash Memory Products,” NAND Flash Memory Products manufactured for FVC Japan using the FVC Japan Equipment are referred to as “FVC Japan NAND Flash Memory Products” and NAND Flash Memory Products manufactured at the Toshiba Foundry Facility (defined in Appendix A) are referred to as “Toshiba Foundry NAND Flash Memory Products”.

Each Party shall be permitted to market and sell all NAND Flash Memory Products to any third party in any form, including chips, packaged devices, wafers, die and cards.

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

Organization, Ownership Interest, etc.

It and each of its Affiliates that is a party to any Master Operative Document is duly organized, validly existing and in good standing under the laws of its

It and each of its Affiliates that is a party to any Master Operative Document is duly qualified to own or lease its properties and generally to conduct its business as currently, or proposed under the Master Operative Documents to be, conducted in each jurisdiction necessary for purposes of the transactions contemplated by the Master Operative Documents, except where failure to so qualify would not have a material adverse effect on either Party or Flash Partners.

Authorization; No Conflict.

It and each of its Affiliates has duly authorized by all necessary action (i) the execution, delivery and performance of each Master Operative Document to which it or any of its Affiliates is a party and (ii) the exercise of its rights as a holder of units (shusshi mochibun) of Flash Partners (the “FP Units”) to approve the execution, delivery and performance by Flash Partners of each Master Operative Document to which it is a party and for which the approval of the holders of FP Units is required.

Its and each of its Affiliates’ execution and delivery of each Master Operative Document to which it is a party, its and each of its Affiliates’ consummation of the transactions contemplated thereby and its and each of its Affiliates’ compliance therewith does not and will not (i) require any approval of its or any of such Affiliates’ stockholders or any approval or consent of any trustee or holder of any of its or any of such Affiliates’ Indebtedness or obligations, (ii) contravene any Governmental Rule applicable to or binding on it or any of such Affiliates or any of its or their properties if such contravention would have a material adverse effect on it or any of such Affiliates or on its or their ability to perform any of its or any of such Affiliates’ obligations under any Master Operative Document, (iii) contravene or result in any breach of, or constitute any default, with or without the passage of time, the giving of notice or both, under its charter or by-laws, or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Permitted Liens) upon any of its or any of such Affiliates property or the property of Flash Partners under, any material indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, loan or credit agreement, non-compete agreement, license agreement, partnership or joint venture agreement or other material agreement or document to which it or any of such Affiliates is a party or by which it or any of such Affiliates or any of its or their properties is or is intended to be bound or by which Flash Partners or any of its properties is or is intended to be bound, (iv) require any negotiation with, or notice to, any labor union or violate, or require any procedure to be followed under, any collective bargaining or other agreement with employees or (v) require any Governmental Action (other than immaterial Governmental Actions such as routine qualifications to do business intended to be obtained as needed or Governmental Actions needed in connection

Enforceability.

It has duly executed and delivered this Agreement and, upon the execution and delivery of this Agreement by the other Party, this Agreement will constitute its legal, valid and binding obligation, enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

It and each of its Affiliates have duly executed and delivered each other Master Operative Document to which it or any such Affiliate is a party and, upon the execution and delivery of each such other Master Operative Document by each other party thereto, each such other Master Operative Document will constitute its legal, valid and binding obligation, enforceable against it or its Affiliates in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or similar laws affecting the enforcement of creditors’ rights generally or the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity).

Proceedings. There are no actions, claims, investigations or proceedings pending, or to its knowledge threatened, by or before any Governmental Authority that, if adversely determined, would have a material adverse effect on it or any of its Affiliates that is a party to any Master Operative Document or, on the conduct of the business of Flash Partners following the Closing as contemplated in the Master Operative Documents or on it or any of its Affiliates’ ability to perform any material obligation under any Master Operative Document.

Litigation; Decrees. Except as set forth in Schedule 4.5, there are no lawsuits, arbitrations or other legal proceedings pending, or to its knowledge threatened, by or against or affecting it or any of its Affiliates or any of their respective properties that (i) are reasonably likely, based on information known to it as of the date hereof, to have a material adverse effect on the conduct of the business of Flash Partners following the Closing as contemplated by the Master Operative Documents or (ii) relate to any of the transactions contemplated by the Master

Compliance with Other Instruments. Neither it nor any of its Affiliates that is a party to any Master Operative Document is in default in any material respect in the performance of any material obligation, agreement, instrument or undertaking to which it or any of its Affiliates is a party or by which it or any of its Affiliates or any of its of their properties is bound, and there is no such obligation, agreement, instrument or undertaking to which it or any of its Affiliates is a party or by which it or any of its Affiliates or any of its or their properties is bound, in each case which is reasonably likely to have a material adverse effect on the conduct of the business of Flash Partners following the Closing as contemplated by the Master Operative Documents.

Patents and Proprietary Rights. Except as set forth in Schedule 4.7, to its knowledge, it owns or possesses sufficient legal rights to all patents, utility models, trademarks, service marks, trade names, copyrights, applications for any of the foregoing, mask works, software, trade secrets, licenses, information and proprietary rights and processes (collectively, “Intellectual Property”) necessary (i) to carry out its or any of its Affiliates’ obligations under the Master Operative Documents and (ii) for the conduct of the business of Flash Partners following the Closing as contemplated in the Master Operative Documents, without any conflict with or infringement of the rights of others, except as will not have a material adverse effect on either (i) or (ii) above. Except with respect to items referenced in Schedule 4.7, it has not received any communications alleging that its Intellectual Property violates, or by its or any of its Affiliates entering into the transactions contemplated by the Master Operative Documents, would violate the Intellectual Property of any other Person or entity, which violation could reasonably be expected to have a material adverse effect on either (i) or (ii) above.

Compliance with Laws. It and each of its Affiliates has complied and is complying in all material respects with all laws, statutes, permit requirements, licensing requirements, rules and regulations and judicial or administrative decisions, except where the failure to so comply would not have a material adverse effect on its or any of its Affiliates ability to perform its or their obligations hereunder or under any other Master Operative Document or on the conduct of the business of Flash Partners following the Closing as contemplated by the Master Operative Documents.

Patent Cross Licenses. Except as set forth on Schedule 4.9, with respect to (a) Toshiba, there are no patent cross licenses between it and any third party that would require Flash Partners to make any payment pursuant to Section 10 of the Cross License Agreement, and (b) SanDisk, there are no patent cross licenses between it and any third party that would require Flash Partners to make any payment pursuant to Section 8 of the Cross License Agreement.

COVENANTS

Covenants of the Parties. Each Party agrees that, during the term of this Agreement:

Performance of Obligations. It and each of its Affiliates shall fully and faithfully carry out (i) all its obligations under each Master Operative Document to which it or any Affiliate is a party, and (ii) once agreed, each applicable Business Plan (as defined in the FP Operating Agreement).

Ownership Interest. Except as otherwise expressly permitted by the FP Operating Agreement and this Agreement, it shall not Transfer or permit any of its Affiliates to Transfer all or any portion of its FP Units (or all or any portion of its interest in any Affiliate through which it beneficially owns its FP Units), to any Person without the consent of the other Party.

Public Announcements.

At or following the Closing, neither Party shall, nor shall it permit any of its Affiliates to, without the prior written consent of the other Party:

issue any public release, announcement or other document, or otherwise publicly disclose any information or make any public statement, concerning the operations of Flash Partners or that refers to the other Party or any of its Affiliates in connection therewith (other than a general reference to affiliation with Flash Partners) that (A) concerns the financial condition or results of operations of Flash Partners other than as required by any Governmental Rule, Japanese GAAP, Japanese GAAS, US GAAP or US GAAS, with respect to the financial disclosure obligations of either Party or (B) disparages either Party, or Flash Partners’ performance or reflects negatively on either Party’s commitment to either of Flash Partners; or

other than as may be required in connection with filings required to be made with Governmental Authorities with respect to the transactions contemplated by the FP Operative Documents pursuant to the Japanese Foreign Exchange and Foreign Trade Law and related regulations, (A) publicly file all or any part of any Master Operative Document or any description thereof or (B) issue or otherwise make publicly available any press release, announcement or other document that contains Confidential Information belonging to the other Party (or its Affiliates) or Flash Partners, except as may be required by any applicable Governmental Rule, in which case such Party shall (or shall cause the Person required to make such filing to) cooperate with the other Party, to the extent reasonable and practicable, in obtaining any confidential treatment for such filing requested by the other Party.

Each Party shall use commercially reasonable efforts to grant or deny any approval required under this Section 5.2 within five (5) days of receipt of written request by the other Party; provided, however, a Party’s failure to respond within said time period shall not be deemed to constitute such Party’s approval or consent.

Expenses. Each Party shall bear its own expenses in connection with the negotiation, execution and delivery of the Master Operative Documents.

Undertaking as to Affiliate Obligations. Each Party shall cause all covenants, conditions and agreements to be performed, observed or satisfied by each of its Affiliates that is a party to any Master Operative Documents to be fully and faithfully observed, performed and satisfied by such Affiliate, and shall not cause or permit to exist (i) an Event of Default with respect to such Affiliate or (ii) except as otherwise permitted by the FP Operating Agreement, any event of dissolution of Flash Partners caused by such Affiliate. Nothing in Section 5.1 or in this Section 5.4 shall be construed to create any right in any Person other than the Parties. Without limiting the generality of the foregoing, SanDisk hereby guarantees the obligations of SanDisk International hereunder and under any Master Operative Document to which SanDisk International is a party.

Continuity and Maintenance of Operations. During the term of this Agreement, each Party agrees on behalf of itself and each of its Affiliates that is a party to any Master Operative Document to use all reasonable efforts consistent with past practice and policies to (i) preserve intact in all material respects its and their present business operations, (ii) keep available the services of its and their key employees as a group, and (iii) preserve its relationships with suppliers, licensors, licensees, and others having business relationships with it or them, each to the extent necessary to allow it and such Affiliates to perform its and their obligations under the Master Operative Documents and to allow Flash Partners to conduct its business as contemplated in its most recently approved Business Plan.

Certain Deliveries and Notices. Each Party shall promptly inform in writing the other Party of (i) any event or occurrences which could be reasonably expected to have a material adverse effect on its or any of its Affiliates’ ability to perform its or their obligations under any of the Master Operative Documents or the ability of Flash Partners to conduct its business as contemplated in its most recently approved Business Plan, or (ii) any breach or failure to satisfy any condition or covenant contained herein or in any other Master Operative Document by such Party or any of its Affiliates.

COVENANTS CONCERNING NAND FLASH MEMORY PRODUCTS BUSINESS

Technology Transfers.

Toshiba will make available to Flash Partners its 90 nanometer [***] process technology applicable to the manufacturing and testing of NAND Flash Memory Products (“NAND Process Technology”) on the fastest practicable

Whenever a technology transfer is required hereunder, Toshiba shall deliver such level of NAND Process Technology to the Y3 Facility as would be normal practice by the Toshiba Semiconductor Company whenever it transfers a technology to a new manufacturing facility or transfers a new or advanced technology to an existing manufacturing facility in order to achieve successful implementation of the newly transferred technology.

A technology transfer hereunder shall be deemed complete when the transferred technology passes a reasonable qualification procedure to be mutually agreed upon by the Parties.

[***]

[***]

Start-Up Services for Y3. The Parties acknowledge that either or both of the Parties and Flash Partners have incurred or will incur costs in connection with developing Flash Partners and the Y3 Facility and preparing the Y3 Facility for production, including personnel costs, materials costs and other operating expenses, that are properly allocable to Flash Partners and for which each Party has the obligation ultimately to bear 50% of the responsibility (“Start-Up Costs”). The Parties shall discuss in good faith and agree upon the Start-Up Costs, the allocation to Flash Partners of Start-Up Costs borne by either Party and the means and timing of each Party being reimbursed or credited for having incurred more than 50% of the Start-Up Costs or of making payments due to having incurred less than 50% of the Start-Up Costs.

Y3 Facility Ramp-Up Plan.

Equal Participation and Purchase Price Per Unit. The Parties intend to meet demand for increased capacity by equally investing in, and jointly building, and sharing, on equal or substantially equal terms, equal amounts of new capacity for Y3 NAND Flash Memory Products, except as they may otherwise agree as contemplated herein. [***]

Ramp-Up Plan. The Parties acknowledge that they intend to expand their Y3 NAND Flash Memory Product manufacturing capacity through development of the Y3 Facility according to volumes and timing set forth in Schedule 6.3(b) (including to [***] L/M, the “Ramp-Up Plan”). The Parties will discuss in good

Ramp-Up Plan Commitments and Changes. The Parties agree as follows concerning the Ramp-Up Plan:

The initial 600 L/M in aggregate increases in production capacity of the Y3 Facility identified on the Ramp-Up Plan shall be considered firmly committed by each Party (i.e., 300 L/M each) as of the times specified in the Ramp-Up Plan and in accordance with this Section 6.3(c)(i) (the “Minimum RUP Commitment”). The Parties shall agree upon one or more Business Plans that provide for implementing the Minimum RUP Commitment. [***]

Capacity.

Priority.

SanDisk’s manufacturing capacity for, and purchased supply of, NAND Flash Memory Products shall be sourced by SanDisk and its Subsidiaries from, and in, the following priority:

from Flash Partners,

[***]

[***]

from [***] and/or from other third parties (so long as [***], and SanDisk shall have fulfilled its 50% share of the Ramp-Up Plan for the Y3 Facility).

[***]

In no event will [***] SanDisk [***] source NAND Flash Memory Products from a source other than Flash Partners if the effect of such sourcing is the diversion of resources or other (intended or collateral) effects which reduce the economic or other efficiency of the Y3 Facility (including not fully executing the Ramp-Up Plan).

[***]

Technology Transfer. If the Parties mutually agree to secure external manufacturing sources other than the Yokkaichi Facility through joint investment, Flash Partners and Toshiba, as applicable, will jointly transfer the applicable manufacturing technology and know-how to such source. Flash Partners (with respect to 300 millimeter wafers) and FVC Japan (with respect to 200 millimeter wafers) will conduct all negotiations with the external manufacturing source; provided, however, the terms and conditions of any agreement shall be subject to prior consultation with and the approval of Toshiba. In connection with any technology transfer to such external source, Toshiba will be reimbursed its mutually agreed transfer costs for assisting in the transfer of manufacturing technology and know-how. If the new capacity secured at such external manufacturing source is requested by only one of the Parties, such Party will pay the transfer costs and be entitled to purchase the full output of NAND Flash Memory Products purchased by FVC Japan or Flash Partners, as applicable, from such external manufacturing source. If both Parties request such new external capacity, then FVC Japan or Flash Partners, as applicable, will pay the transfer costs to Toshiba. Neither Party shall have the right to grant manufacturing licenses to such external manufacturing source or to disclose or transfer to any such external manufacturing source, manufacturing know-how related to the manufacture of NAND Flash Memory Products, except through FVC Japan or Flash Partners.

Capacity Sharing Arrangement.

Equal right to capacity. Subject to Section 6.3(c), each of the Parties will have the right and obligation, through Flash Partners, to utilize 50% of the wafers produced

Alternative use of allotted capacity.

If a Party is unable to utilize its allotted manufacturing capacity for Y3 NAND Flash Memory Products (such Party, an “Excess Capacity” or “EC Party”), it may do any of the following:

An EC Party may request the other Party to negotiate the terms of transfer of its capacity shortfall to the other Party, which may choose whether to accept such additional capacity and on what terms in its sole discretion.

An EC Party may use its capacity for Embedded NAND Products, as defined in and subject to Section 6.5(c).

An EC Party may use its capacity for Proprietary NAND Flash Memory Products and non-Proprietary NAND Flash Memory Products, in accordance with and subject to Sections 6.5(d) and (e).

If both Parties are EC Parties because demand for both Parties’ Y3 NAND Flash Memory Products are significantly below expectations, the Parties will discuss in good faith whether to permit products which are not Y3 NAND Flash Memory Products to be produced at the Y3 Facility; provided that (A) the inability of the Parties so to agree shall not constitute a Deadlock (as defined in the FP Operating Agreement) and (B) the foregoing shall not limit either Party’s rights in the remainder of this Section 6.5.

Either Party shall have the right use a portion of its total allocated capacity with respect to the Y3 Facility to run a memory product which is not a Y3 NAND Flash Memory Product (solely because the NAND flash memory array area is equal to or less than [***] of the total die area (“Embedded NAND Product”)) so long as such Embedded NAND Product [***]. If a Party exercises its option to run Embedded NAND Products, it must [***]. The conditions stated in Sections 6.5(d) and (e) do not apply to Embedded NAND Products.

Each Party may use a portion of its total allocated capacity to cause to be manufactured NAND Flash Memory Products which are proprietary to that Party (“Proprietary NAND Flash Memory Products”) and which need not be shared with the other Party. Proprietary NAND Flash Memory Products may be produced at the Y3 Facility so long as such products [***]. If a Party exercises such option, it must [***]. No such Proprietary NAND Flash Memory Products may be run if doing so [***]. Each Party shall give the other Party at least ninety (90) days’ advance written notice of its intention to use a portion of its allocated capacity to manufacture Proprietary NAND Flash Memory Products and the Parties shall refer the matter to the Board of Directors for consultation and planning, with the intention to minimize the impact of such allocation. Such notifying Party will limit the output volume of such Proprietary NAND Flash Memory Products to [***] of such Party’s total allocated output at the Y3 Facility unless it receives the consent of the other Party to an increase in such output volume above such limit.

Each Party (the “Originating Party”) shall inform the other (the “Non-Originating Party”) of the development plans by the Originating Party to develop NAND Flash Memory Products, and the Originating Party and the Non-Originating Party shall each refer such matter to the Coordinating Committee (as defined in the Product Development Agreement). If the Coordinating Committee unanimously decides that such planned development shall be undertaken jointly, then the cost

Engineering Wafers and Development Expense. Each Party will have full access to all operational and engineering data and reports related to engineering wafers manufactured at Y3.

Engineering wafers and development expenses are further and more completely defined in four categories: Common R&D Development Expenses, Y3 Direct R&D Development Products, Evaluation Wafers, and Qualification Wafers (each as defined below).

“Common R&D Development Expenses” means [***]. The Parties agree to set up pilot-line(s) [***]. The Parties confirm their intent that [***]. Notwithstanding the foregoing, the Parties shall meet from time to time [***]. The Parties shall meet at the end of each quarter to determine if any engineering activities performed during the quarter [***], whether agreed in advance or not [***]. If any activities performed [***] are agreed by the parties to [***].

[***].

“Evaluation Wafers” are those wafers manufactured [***]. Both parties are entitled to receive evaluation wafers [***]. The cost of Evaluation Wafers is [***].

“Qualification Wafers” are those wafers [***]. The Parties will discuss and agree on the appropriate quantity of Qualification Wafers required for each Y3 NAND Flash Memory Product. [***].

[***].

Creation of Management Committee. The management committee established by the Parties pursuant to the FVC Japan Master Agreement to facilitate management of the operations of FVC Japan (the “Management Committee”) shall do the same for Flash Partners, as detailed in this Section 6.7.

Authority. The Management Committee shall have the authority to (i) advise Flash Partners with respect to policy and operating matters common to Toshiba and SanDisk as well as on such other matters as Flash Partners may refer to the Management Committee from time to time, (ii) hear and seek to resolve any disputes regarding operational matters or alleged breaches of any Master Operative Documents (including dispute resolution), and (iii) take the actions specified to be taken by the Management Committee in this Agreement or any Master Operative Document, including in this Section 6.7 and in Section 6.1.

Members of the Management Committee; Voting; etc.

The Management Committee shall consist of six members (the “Committee Representatives”), three of whom shall be appointed by ▇▇▇▇▇▇▇, and three of whom shall be appointed by SanDisk (for such purpose, each of the Parties is referred to in this Section 6.7 as an “Appointing Party”). Each Appointing Party shall be entitled to appoint an alternate Committee Representative to serve in the place of any Committee Representative appointed by such Appointing Party should any such Committee Representative be unable to attend a meeting. Each Party shall be entitled to invite a reasonable numbers of observers to all Management Committee meetings.

Each Committee Representative or alternate Committee Representative shall serve at the pleasure of the designating Appointing Party and may be removed as such, with or without cause, and his successor designated, by the designating Appointing Party. Each Appointing Party shall have the right to designate a replacement Committee Representative in the event of any vacancy among such Appointing Party’s appointees.

Each Appointing Party shall bear any cost and expense incurred by any Committee Representative or alternate Committee Representative designated by such Appointing Party to serve on the Management Committee, and no Committee Representative or alternate Committee

Each Appointing Party shall notify the other Appointing Party and Flash Partners in writing of the name, business address and business telephone and facsimile numbers of each Committee Representative and each alternate Committee Representative that such Appointing Party has been appointed to the Management Committee. Each Appointing Party shall promptly notify the other Appointing Party and Flash Partners of any change in such Appointing Party’s appointments or of any change in any such address or number.

For purposes of any approval or action taken by the Management Committee, each Committee Representative shall have one vote. All of the votes eligible to be cast at any meeting must be voted in favor of any action to be taken by the Management Committee at such meeting.

At any meeting of the Management Committee, a Committee Representative, in the absence of one or more other Committee Representatives appointed by the same Appointing Party or an alternate Committee Representative, may cast the vote such absent Committee Representatives would otherwise be entitled to cast.

The quorum necessary for any meeting of the Management Committee shall be those Committee Representatives entitled to cast all of the votes held by the members of the Management Committee. A quorum shall be deemed not to be present at any meeting for which notice was not properly given under Section 6.7(c), unless the Committee Representative or Committee Representatives as to whom such notice was not properly given attend(s) such meeting without protesting the lack of notice or duly execute(s) and deliver(s) a written waiver of notice or a written consent to the holding of such meeting.

Each appointment by an Appointing Party to the Management Committee shall remain in effect until the Appointing Party making such appointment notifies the other Appointing Party and Flash Partners in writing of a change in such appointment. The resignation or removal of a Committee Representative shall not invalidate any act of such Committee Representative taken before the giving of such written notice of the removal or resignation of such Committee Representative (or alternate Committee Representative).

Meetings, Notice, etc.

Meetings of the Management Committee shall be held at such location or locations as may be selected by the Management Committee from time to time.

Regular meetings of the Management Committee shall be held on such dates and at such times as shall be determined by the Management Committee and shall be held as required or as requested by the Board of Directors.

Notice of any regular meeting or special meeting pursuant to Section 6.7(c)(iv) shall be given to each Committee Representative at least ten (10) Business Days prior to such meeting in the case of a meeting in person or at least five (5) Business Days prior to such meeting in the case of a meeting by conference telephone or similar communications equipment pursuant to Section 6.7(c)(vi), which notice shall state the purpose or purposes for which such meeting is being called and include any supporting documentation relating to any action to be taken at such meeting.

Special meetings of the Management Committee may be called by any Committee Representative by notice given in accordance with the notice requirements set forth in this Section 6.7, which notice shall state in reasonable detail the purpose or purposes for which such meeting is being called; provided, that, the Committee Representatives appointed by the Appointing Party that is not represented by the Committee Representative calling such special meeting shall be entitled to in good faith select a convenient location for the meeting and to suggest an alternative time or times if the designated time is not convenient for them. Except as set forth in Section 6.7(c)(vi), no action may be taken and no business may be transacted at such special meeting which is not identified in such notice unless (A) such action or business is incidental to the action or business for which the special meeting is called or (B) such action or business does not materially adversely affect the Parties, any of their respective Affiliates which are parties to any of the Master Operative Documents or Flash Partners. Minutes of each Management Committee meeting shall be sent by facsimile to all Committee Representatives within ten (10) Business Days after such meeting. Material to be presented at any Management Committee meeting shall be sent by facsimile, electronic mail or delivered in hard copy to all Committee Representatives together with the notice described in Section 6.7(c)(vi).

The actions taken by the Management Committee at any meeting, however called and noticed, shall be as valid as though taken at a meeting duly held after regular call and notice if (but not until), either before, at or after the meeting, any Committee Representative as to whom such meeting was improperly held duly executes and delivers a written waiver of notice or a written consent to the holding of such meeting; provided, however, any Committee Representative who is present at a meeting and does not protest the failure of notice shall be deemed to have received adequate notice thereof. A vote of the Management Committee may be taken only either in a meeting of the members ▇▇▇▇▇▇▇ ▇▇▇▇ called and held or by the execution by the Committee Representatives eligible to cast all

Upon the consent of all Committee Representatives, a meeting of the Management Committee may be held by conference telephone or similar communications equipment by means of which all Committee Representatives participating in the meeting can hear and be heard by all other participants, provided, that, such communications equipment continues to be operational throughout the meeting. Any Committee Representative may elect to participate in a meeting by conference telephone or similar communications equipment upon sufficient advance notice to permit arrangements therefor to be made. At any meeting, the Management Committee shall consider (A) any items added to the Management Committee agenda for discussion by the Parties and (B) such other matters as the Management Committee decides to review.

The Management Committee shall, from time to time, elect one of its members to preside at its meetings, which presiding member shall alternate annually if requested by either Party. The Management Committee may establish reasonable rules and regulations to (A) require officers to call meetings and perform other administrative duties, (B) limit the number and participation of observers, if any, and require them to observe confidentiality obligations and (C) otherwise provide for the keeping and distribution of minutes and other internal Management Committee governance matters not inconsistent with the terms of this Agreement.

FP Secondees. SanDisk will have the right (after consultation with Toshiba) to second employees to Flash Partners (“FP Secondees”), provided that the numbers and responsibilities of such FP Secondees will be discussed by the Parties in advance of seconding such employees. [***]:

[***]

[***]

[***]

[***]

[***]

[***]

All FP Secondees will remain employees of SanDisk. Each Party will indemnify the other Party and Flash Partners from any claim by any of such Party’s employees, consultants or agents (such Party being the “Employer”) (i) based on other than willful misconduct of such Employer, its employees, consultants or

Non-solicitation of Employees. So long as the business of Flash Partners continues, each Party (and each of its respective Affiliates) shall not, without the prior written consent of the other Party, directly recruit or solicit any employee or director of Flash Partners to leave his or her employment with Flash Partners prior to the period ending twenty-four (24) months after the FP Termination Date; provided, however, that placement of employment advertisements or other general solicitation for employees not specifically targeted to the employees or directors of Flash Partners shall not constitute direct recruitment. In the event of the dissolution and liquidation of Flash Partners, either Party (or any Affiliate of either Party) may solicit any former employee of such dissolved and liquidated company, but neither Party (nor any of its Affiliates) shall be required to employ any such Person. If all of the FP Units held by one Party are purchased by the other Party or its designee, if requested by the acquiring Party the Parties shall reach agreement on a reasonable transition plan (without profit to the seller) in connection with the services provided to Flash Partners, as applicable, by employees and contractors of the selling Party.

Debt and Lease Financing.

[***]

The Parties currently intend, but are not obligated, to structure the financing for equipment purchases by Flash Partners necessary to implement the Ramp-Up Plan as follows:

Flash Partners will enter into equipment lease or loan agreements and pledge the financed equipment as collateral;

Flash Partners will secure external financing for approximately 50% of the initial purchase price of its tools and each Party will provide equity capital contributions and loans (on a subordinated basis) for the remaining cash requirements of Flash Partners necessary to execute the Ramp-Up Plan;

each Party will severally and not jointly and through separate arrangements guarantee as close as possible to 50% of Flash Partners’ obligations under such lease or loan agreements (any financing separately guaranteed or provided by Toshiba for Flash Partners or otherwise for investment in the Y3 Facility, “Toshiba Financing”, any such financing separately guaranteed or provided by SanDisk for Flash Partners or otherwise for investment in the Y3 Facility “SanDisk Financing” and the Toshiba Financing and SanDisk Financing, each a “Financing”); and

the Parties will attempt to obtain the foregoing financing from the same financial institution, but under separate agreements that expressly disclaim any joint and several liability of the Parties.

With respect to any Toshiba Financing or SanDisk Financing, the following shall apply:

[***].

Unless otherwise expressly agreed by both Parties in writing in each case, all Toshiba Financing and all SanDisk Financing shall create only several obligations of the Parties and no joint and several obligations or liability. Toshiba (with respect to Toshiba Financing) and SanDisk (with respect to SanDisk Financing) hereby indemnifies and holds harmless the other Party and its Indemnified Parties from any claims by any financial institution or other Person that the other Party has any liabilities or obligations with respect to, respectively, any Toshiba Financing or SanDisk Financing (unless joint liability has been agreed pursuant to the first sentence of this Section 6.10(c)(ii)).

Flash Partners will use commercially reasonable efforts to comply with the requirements of any financing sources. Flash Partners will make available to each Party one-half of its assets (with as near as practicable cost, collateral value and type) to secure such Party’s Financing (whether external or loans from a Party or its Affiliates).

If the lender under the Financing for either Party (as the “Defaulting Party”) takes significant actions to enforce its right in the collateral, then the other Party (as the “Non-Defaulting Party”) shall have the right, but not the obligation, to cure the default giving rise to the lender’s enforcement action. If the Non-Defaulting Party exercises such cure right, then the Non-Defaulting Party’s rights in any subject collateral shall be superior to the Defaulting Party’s and the Non-Defaulting Party may exercise one of the following options:

the Non-Defaulting Party (A) shall have a claim against the Defaulting Party for reimbursement of any payments made by the Non-Defaulting Party on the Defaulting Party’s behalf (which will be subordinate to the lender’s claims and bear interest at a rate 500 basis points in excess of the rate being charged by the lender to the Defaulting Party) and (B) shall have the right, until and unless the Defaulting Party pays in full the

the Non-Defaulting Party shall have the right to terminate the Operating Agreement pursuant to Section 11.6 thereof (Foreclosure Default).

Other Activities. Except as expressed in Section 5.6 and in the Common R&D Agreement, neither Party nor any of their respective Affiliates shall: (i) fabricate NAND Flash Memory Integrated Circuits at any location other than the Yokkaichi Facility or any other fabrication facility agreed upon by the Parties in writing; (ii) have any third party fabricate NAND Flash Memory Integrated Circuits; or (iii) have any right to fabricate NAND Flash Memory Integrated Circuits beyond the capacity as limited pursuant to this Section 6, as such capacity limitations may be amended from time to time in accordance with this Section 6. For the avoidance of doubt, nothing contained in the foregoing shall restrict the Parties from engaging in any other activities, including, without limitation, (i) designing any NAND Flash Memory Product; (ii) selling any NAND Flash Memory Product to any customer; (iii) entering into any equipment purchase or material supply agreements; or (iv) entering into any patent licensing arrangement; and nothing in the foregoing shall restrict Toshiba from installing any manufacturing line in the Toshiba Foundry Facility subject to the capacity limitations set forth in Section 6 of the FVC Japan Master Agreement and as provided herein, as such capacity limitations may be amended from time to time in accordance with this Section 6. For purposes of this Section 6.11, “NAND Flash Memory Integrated Circuits” means ICs included in the definition of NAND Flash Memory Products pursuant to Section 3.2.

Protection of Intellectual Property. Both Parties recognize that it is important for the success of the Y3 NAND Flash Memory Products business to promote the adoption of such Y3 NAND Flash Memory Products with a wide variety of customers and applications, whether for card use or non-card use, and with such recognition, each Party shall use reasonable efforts to protect and enhance the value of Y3 NAND Flash Memory Products. Further, where feasible, each Party shall share with Flash Partners internally prepared analyses of competitive products prepared by either Party so as to allow Flash Partners to respond to such information and remain competitive in the marketplace; provided, that neither Party warrants as to the accuracy or completeness of any such analysis so provided.

Tools.

All tools for the Y3 Facility shall be purchased by Flash Partners (or a lessor for Flash Partners’ benefit as contemplated by Section 6.10(a)) and all such purchases shall be agreed upon by the Parties. Toshiba shall, from the Toshiba Semiconductor Company headquarters and at its own expense, provide Flash Partners with tool purchase service support and negotiate with vendors on Flash

All purchases of replacement tools for Flash Partners, to the extent the procedures or requirements therefor are not set forth in a Master Operative Document, shall be done only by agreement of the Parties.

OTHER AGREEMENTS

Flash Partners Management.

As contemplated by the FP Operating Agreement, the Y3 Operating Committee’s purpose is to give both Parties the ability to influence the day to day operating decisions of Flash Partners and the Y3 Facility. The Y3 Operating Committee is intended to be a collaborative body with real-time communications, respectful consultation and dispute resolution with the goal of making the Y3 Facility the most competitive (cost and technology) memory fabrication facility in the world.

If the Y3 Operating Committee is unable to decide an issue (by agreement of its two members) such issue shall be referred to the Board of Directors. Special meetings of the Board of Directors may be noticed for issues requiring urgent resolution. The Parties contemplate that while a special meeting of the Board of Directors is being noticed, their respective management teams will discuss any issue that the Y3 Operating Committee could not resolve.

If the Board of Directors is unable to decide an issue (by unanimous agreement), such issue shall be referred to the Management Committee for resolution, which shall be vested with final decision making authority. This Agreement separately provides for procedures if the Management Committee is unable to reach agreement on such issue.

Y3 Facility. Toshiba has designed and is constructing the Y3 Facility at its sole cost and expense. The Y3 Facility is scheduled to be completed by [***], provided that Toshiba shall have no liability to SanDisk, any SanDisk Affiliate or Flash Partners if completion is not achieved by such time. The depreciation charges for Y3 will be passed on to Flash Partners as further described in Section 7.3(d).

FP Foundry Agreement. Flash Partners and Toshiba shall enter into the FP Foundry Agreement at the Closing. The FP Foundry Agreement provides for ordering procedures, prices, delivery, cost reporting and other specific terms and conditions for the manufacture by Toshiba and supply to Flash Partners of Y3 NAND Flash Memory Products, which shall be consistent with the following basic terms:

Facilities, Equipment and Raw Materials. The manufacturing facilities will be located at the Y3 Facility and die sort will be located [***] or such other place as the Parties may agree upon. Flash Partners and Toshiba will enter into an exclusive lease agreement with respect to the Y3 Facility and Flash Partners’ manufacturing equipment located in the Y3 Facility to be used in the manufacture of Y3 NAND Flash Memory Products by Toshiba. Toshiba shall be responsible for obtaining the raw materials and services to be used in the manufacture of Y3 NAND Flash Memory Products.

Production. Toshiba will manufacture Y3 NAND Flash Memory Products at the Y3 Facility for Flash Partners ordered by Toshiba and SanDisk under the terms and conditions of the FP Purchase and Supply Agreements. Flash Partners and Toshiba (from the Yokkaichi Facility) will use their best efforts to achieve the Ramp-Up Plan manufacturing capacity (the “Y3 Facility Target Capacity”). Wafers will be sorted between the Parties such that aggregate yield losses will be shared on an equal basis.

Operating Relationship. Toshiba shall provide all employees necessary for the manufacturing of the Y3 NAND Flash Memory Products.

Consideration to be Paid to Toshiba. Toshiba will be compensated by Flash Partners as provided in Section 4 of the FP Foundry Agreement.

No Duplication of Costs or Expenses. It is the intent of the Parties that any payments made by SanDisk under or pursuant to any Master Operative Documents or FVC Japan Operative Documents shall not be duplicative and SanDisk shall in no event be required to pay or contribute more than once for any service or product provided under such agreements, if such service is provided under more than one agreement. In addition, if SanDisk makes a direct payment for any service provided under any such agreement, the cost incurred by Toshiba (from the Yokkaichi Facility), FVC Japan or Flash Partners, as the case may be, in connection with the provision of such service shall not be included in the applicable wafer price charged to SanDisk.

Exclusivity. The Yokkaichi Facility shall be Flash Partners’ exclusive manufacturing source for output of Y3 NAND Flash Memory Products. Flash Partners may seek external manufacturing sources for output in excess of the Yokkaichi Facility’s capacity upon unanimous approval by the Management Committee.

FP Purchase and Supply Agreements. Flash Partners and each of the Parties or their respective Affiliates will enter into substantially identical FP Purchase and Supply Agreements providing for specific terms and conditions for the purchase by the Parties of Y3 NAND Flash Memory Products from Flash Partners, which shall be consistent with the following basic terms:

Manufacturing. Flash Partners shall manufacture or cause to be manufactured Y3 NAND Flash Memory Products as contemplated by Section 7.3.

Purchase Commitment. Except as contemplated in Section 6.3(c)(ii), each Party shall (itself or through Affiliates) purchase one half (based on a measure of equivalent lots out per week with the equivalency being weighed based on the process complexity factors (as calculated by a formula to be mutually determined by the Parties) of the Y3 NAND Flash Memory Products) of the total L/M of Y3 NAND Flash Memory Products. The foregoing purchase commitment of each Party shall not be subject to reduction unless agreed in writing by the other Party, which may grant or withhold such approval in its sole discretion.

Sales Price for Y3 NAND Flash Memory Products Purchased by the Parties. The sales price charged by Flash Partners to the Parties for wafers manufactured at Y3 shall be the sum of:

Other Cost Items. Other items related to the manufacture of Y3 NAND Flash Memory Products will be charged on a monthly basis from Flash Partners to the Parties and will include the following:

Other Matters.

Forecasts/Production Planning. Each Party will submit forecasts, on a rolling six-month basis, directly to Flash Partners, as further provided in the Purchase and Supply Agreements. The one-time cost necessary for [***] will be borne by SanDisk, which, together with the one-time production control cost described in Section 7.5(b) is to be approximately [***]. Flash Partners production planning will hold a monthly production planning meeting with representatives of each Party, as further provided in the Purchase and Supply Agreements. At such meetings, the Parties will agree on a production plan for [***] which plan will be final (and the related forecast will be deemed to be covered by a binding purchase order).

Production Control. Flash Partners will provide [***] on a non-discriminatory basis to SanDisk with respect to [***], provided that the actual, one-time cost necessary for establishing a new system to provide [***] to SanDisk will be borne by SanDisk, which, together with the one-time forecast submission system cost described in Section 7.5(a), is estimated to be [***]. Each Party (through the Y3 Management Committee) will have the right to discuss the production schedule, planned wafer starts and [***].

Operating Reports. SanDisk will have full access to any management or operation reports related to Flash Partners or Flash Partners’ business through the Y3 Operating Committee (as defined in the FP Operating Agreement). Management and operating reports related to Flash Partners or Flash Partners’ business as mutually agreed from time to time will be simultaneously made

Insurance. Toshiba shall maintain or arrange property insurance covering assets owned or leased by Flash Partners and business interruption insurance in respect of the business of Flash Partners, the scope and amounts of which shall be consistent with Toshiba’s practices at the Yokkaichi Facility and as required by any lender. This coverage shall provide basically full replacement value of all Flash Partners owned and leased equipment, subject to valuation as part of Toshiba’s annual insurance policy renewal, and shall name Flash Partners as a beneficiary in respect of assets owned or leased by it and Flash Partners’ employee expenses covered by business interruption insurance. On an annual basis, or when requested by either Party, the Y3 Operating Committee shall discuss and review the current insurance coverage and/or the need for any additional property or business interruption insurance in respect of Flash Partners’ assets or business. Further, SanDisk reserves the right to seek to arrange additional property or business interruption insurance for its own account in respect of Flash Partners’ assets or business. If SanDisk seeks such additional property or business interruption insurance, Toshiba shall cooperate in good faith to provide such information and access as is reasonably necessary for SanDisk to arrange such insurance. If Toshiba makes a recovery from a third party (other than an insurer per the above) in respect of both assets of Flash Partners and other assets, then Toshiba shall allocate to Flash Partners a share of the net amount of such recovery in proportion to the losses suffered by Flash Partners and total losses suffered by Flash Partners and Toshiba.

TERMINATION

Termination.

Termination of any Master Operative Document by either Party shall be done only in good faith.

This Agreement shall be terminated automatically upon the earlier of the Transfer of all of a Party’s FP Units to the other Party (or its Affiliate) or upon completion of the dissolution and liquidation of Flash Partners pursuant to Section 11

Upon termination of this Agreement resulting from an event of dissolution of Flash Partners due to the expiration of Flash Partners pursuant to Section 11.1(a) (Expiration) of the FP Operating Agreement:

the Parties shall further amend the Cross License Agreement, as then in effect, to specify that each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed on a royalty-free basis for the duration of such patents. The scope of the licenses as amended pursuant to this Section 8.1(c)(i) shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of the FP Termination Date.

Toshiba shall grant to SanDisk, effective upon the FP Termination Date, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FP Termination Date.

Upon a termination of this Agreement resulting from (i) an event of dissolution of Flash Partners or (ii) one Party’s acquisition of all of the other Party’s FP Units (the acquirer thereof referred to hereinafter as the “Acquiring Party” and the seller thereof referred to hereinafter as the “Selling Party”) pursuant to Section 11.5 (Dissolution Upon Notice) of the FP Operating Agreement:

Toshiba or the Acquiring Party, as the case may be, will, upon the request, prior to the FP Termination Date, of (A) SanDisk (such request to be made at the time of its notice pursuant to Section 11.5 of the FP Operating Agreement) in the case of the dissolution of Flash Partners or (B) the Selling Party (each, a “Requesting Party”), as the case may be, continue to manufacture NAND Flash Memory Products for the Requesting Party (not to exceed the Requesting Party’s capacity allocation available from Flash Partners under this Agreement as of the FP Termination Date (the “Termination Capacity”)) for a period of eighteen (18) months following the Termination Date in the following ramp-down manner:

During the first six months following the FP Termination Date: 100% of the Termination Capacity

During the 7th through the 12th month following the FP Termination Date: 75% of the Termination Capacity

During the 13th through the 18th month following the FP Termination Date: 50% of the Termination Capacity.

Toshiba and SanDisk and their respective Affiliates shall have a perpetual, fully paid-up, royalty-free right to use technology previously transferred to one another during the term of this Agreement.

The Parties shall further amend the Cross License Agreement to specify that each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed on a royalty free basis for the duration of such patents. The scope of the licenses as amended pursuant to this Section 8.1(d)(iii) shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of FP Termination Date.

Upon termination of this Agreement resulting from an event of dissolution of Flash Partners caused by Toshiba’s election to withdraw from Flash Partners pursuant to the FP Operating Agreement, Toshiba hereby grants to SanDisk, effective upon the FP Termination Date, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FP Termination Date.

Upon termination of this Agreement resulting from an event of dissolution of Flash Partners or Toshiba’s acquisition of SanDisk’s FP Units pursuant to Section 11.4 (Dissolution By Unilateral Option) of the FP Operating Agreement:

From the Yokkaichi Facility, Toshiba will, upon request of SanDisk given within sixty (60) days of the notice given by SanDisk pursuant to Section 11.4 of the FP Operating Agreement, continue to manufacture products for SanDisk for a period of eighteen (18) months following the FP Termination Date in accordance with the following ramp-down manner; provided, however, such capacity allocation for SanDisk shall not exceed its capacity allocation available from Flash Partners under this Agreement as of the FP Termination Date (the “SanDisk Termination Capacity”):

During the first six months following the FP Termination Date: 100% of the SanDisk Termination Capacity

During the 7th through the 12th month following the FP Termination Date: 75% of the SanDisk Termination Capacity

During the 13th through the 18th month following the FP Termination Date: 50% of the SanDisk Termination Capacity.

The Parties and their respective Affiliates shall have a perpetual, fully paid-up, royalty-free right to use technology previously transferred to one another during the term of this Agreement.

The Parties shall further amend the Cross License Agreement to specify that, with respect only to Y3 NAND Flash Memory Products and any other Licensed Products defined in the License Agreement and manufactured with 300mm wafers at any facility, each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed at the royalty rates specified in Schedule 8.1(e) until March 31, 2013; provided, that after such five (5) year period, such license shall be on a royalty free basis and provided, further, that at any time during such five year period, both Parties shall negotiate in good faith for up to one hundred and eighty (180) days as requested by either Party to mutually agree on royalty rates for patents filed by each Party after the FP Termination Date. The scope of the licenses as amended pursuant to this Section 8.1(e)(iii) shall not be greater than the scope of those granted under the Cross License Agreement, as in effect as of the FP Termination Date.

Upon termination of this Agreement resulting from an event of dissolution of Flash Partners or one Party’s acquisition of the other Party’s FP Units following a Deadlock (as defined in the FP Operating Agreement) pursuant to Section 10.3 (Dispute Resolution; Deadlock) of the FP Operating Agreement:

In the case of one Party’s acquisition of the other Party’s FP Units pursuant to Section 10.4(e) of the FP Operating Agreement, the Acquiring Party shall continue to manufacture products for the other Party (not to exceed the other Party’s Termination Capacity) for a period of eighteen (18) months following the FP Termination Date in accordance with the following ramp down manner:

During the first six months following the FP Termination Date: 100% of the Termination Capacity

During the 7th through the 12th month following the FP Termination Date: 75% of the Termination Capacity

During the 13th through the 18th month following the FP Termination Date: 50% of the Termination Capacity.

The Parties and their respective Affiliates shall have a perpetual, fully paid-up, royalty-free right to use technology previously transferred to one another during the term of this Agreement.

The Parties shall further amend the Cross License Agreement to specify that, with respect only to Y3 NAND Flash Memory Products and any other Licensed Products defined in the License Agreement and manufactured with 300mm wafers at any facility, each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed: (x) at the royalty rates specified in Schedule 8.1(f) until March 31, 2012; (y) at the royalty rates specified in Schedule 8.1(e) from April 1, 2012 through December 31,

Upon termination of this Agreement resulting from an event of dissolution of Flash Partners or a Party’s acquisition of the other Party’s FP Units described in Section 11.3 (Dissolution Upon Event of Default) of the FP Operating Agreement:

The Parties shall further amend the Cross License Agreement to specify that, with respect only to Y3 NAND Flash Memory Products and any other Licensed Products defined in the License Agreement and manufactured with 300mm wafers at any facility, each Party’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed at the royalty rates specified in Schedule 8.1(g) for seven (7) years after the FP Termination Date or until the end of calendar 2019, whichever comes first, and thereafter such licenses shall be on a royalty-free basis.

In the event that Toshiba or an Affiliate of Toshiba is the Defaulting Party, Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the FP Termination Date.

Upon termination of this Agreement resulting from an event of dissolution described in Section 11.1(f) (Bankruptcy Event) of the FP Operating Agreement:

If such termination is caused by a Bankruptcy Event in respect of Toshiba, (x) the license granted to SanDisk under Toshiba Licensed Patents pursuant to the Cross License Agreement shall continue on a royalty-free basis, and (y) Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the Termination Date.

If such termination is caused by a Bankruptcy Event in respect of SanDisk, the license granted to Toshiba under SanDisk Licensed Patents (as defined in the Cross License Agreement) pursuant to the Cross License Amendment shall continue on a royalty-free basis.

Upon a termination of this Agreement resulting from a purchase and sale transaction described in Section 11.6 (Financing Default) of the FP Operating Agreement, there shall be no capacity ramp-down rights or obligations and:

If such termination is caused by a financing default in respect of Toshiba, (x) the Parties shall further amend the Cross License Agreement to specify that, with respect only to Y3 NAND Flash Memory Products and any other Licensed Products defined in the License Agreement and manufactured with 300mm wafers at any facility, Toshiba’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed to SanDisk on a royalty-free basis, and (y) Toshiba shall grant to SanDisk, effective upon such date of termination, a non-exclusive, non-transferable (except to Affiliates of SanDisk), non-sub-licensable, fully paid-up, royalty-free license to make, have made, use, sell and have sold NAND Flash Memory Products anywhere in the world utilizing the NAND technology transferred to and/or utilized at the Yokkaichi Facility, and SanDisk shall have full access to all such know-how at the Yokkaichi Facility which has been transferred to the Yokkaichi Facility prior to the Termination Date.

If such termination is caused by a financing default in respect of SanDisk, the Parties shall further amend the Cross License Agreement to specify that, with respect only to Y3 NAND Flash Memory Products and any other Licensed Products defined in the License Agreement and manufactured with 300mm wafers at any facility, SanDisk’s patents issued or issuing on patent applications entitled to an effective filing date prior to the FP Termination Date are licensed to Toshiba on a royalty-free basis.

Termination of this Agreement shall not affect any surviving rights or obligations of either Party set forth in the Product Development Agreement and the Common R&D Agreement.

MISCELLANEOUS

Survival. Sections 1.3, 6.9, 6.10(d), 8 and 9 and Appendix A shall survive the termination or expiration of this Agreement.

Entire Agreement. This Agreement, together with the exhibits, schedules, appendices and attachments thereto, constitutes the agreement of the Parties to this Agreement with respect to the subject matter hereof and supersedes all prior written and oral agreements and understandings with respect to such subject matter.

Governing Law. This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of California applicable to agreements made and to be performed entirely within such state without regard to the conflict of laws principles of such state. Each Master Operative Document shall be governed in accordance with its governing law provision and, in the absence of any such provision, by the first sentence of this Section 9.3.

Assignment. Neither Party may transfer this Agreement or any of its rights hereunder (except for any transfer to an Affiliate or in connection with a merger, consolidation or sale of all or substantially all the assets or the outstanding securities of such party, which transfer shall not require any consent of the other party) without the prior written consent of the other Party (which consent may be withheld in such other Party’s sole discretion), and any such purported transfer without such consent shall be void.

is already known to the Receiving Party at the time of its receipt from the Disclosing Party as reasonably evidenced by its written records; or

is or becomes publicly available without breach of this Agreement by the Receiving Party; or

is made available to a third party by the Disclosing Party without restriction on disclosure; or

is rightfully received by the Receiving Party from a third party without restriction and without breach of this Agreement; or

is independently developed by the Receiving Party as reasonably evidenced by its written records contemporaneous with such development; or

is disclosed with the prior written consent of the Disclosing Party, provided that each recipient from the Receiving Party shall execute a confidentiality agreement prohibiting further disclosure of the Confidential Information, under terms no less restrictive that those provided in this Agreement; or

is required to be disclosed by the order of a governmental agency or legislative body of a court of competent jurisdiction, provided that the Receiving Party shall give the Disclosing Party prompt notice of such request so that the Disclosing Party has an opportunity to defend, limit or protect such disclosure; or

is required to be disclosed by applicable securities of other laws or regulations, provided that SanDisk shall, prior to any such disclosure required by the U.S. Securities and Exchange Commission, provide Toshiba with notice which includes a copy of the proposed disclosure. Further, SanDisk shall consider Toshiba’s timely input with respect to the disclosure.