As filed with the Securities and Exchange Commission on July 25, 1997
Registration No. 333-
----------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
SANDISK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0191793
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
140 Caspian Court, Sunnyvale, California 94089
(Address of principal executive offices) (Zip Code)
SANDISK CORPORATION
1995 STOCK OPTION PLAN
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the Plans)
Dr. Eli Harari
President and Chief Executive Officer
SanDisk Corporation
140 Caspian Court, Sunnyvale, California 94089
(Name and address of agent for service)
(408) 542-0500
(Telephone number, including area code, of agent for service)
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CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price per Offering Registration
Registered Registered(1) Share(2) Price(2) Fee
---------- ------------- --------- ---------- ------------
1995 Stock Option Plan
Options to purchase 2,500,000 N/A N/A N/A
Common Stock
Common Stock, $0.001 par value 2,500,000 $21.125 $52,812,500 $16,004
1995 Non-Employee Directors
Stock Option Plan
Options to purchase 50,000 N/A N/A N/A
Common Stock
Common Stock, $0.001 par value 50,000 $21.125 $1,056,250 $320
Employee Stock Purchase Plan
Common Stock, $0.001 par value 450,000 $21.125 $9,506,250 $2,881
------
Aggregate Filing Fee: $19,205
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<PAGE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the SanDisk Corporation 1995
Stock Option Plan, the 1995 Non-Employee Directors Stock Option Plan
and the Employee Stock Purchase Plan by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the receipt of consideration which results in an increase in
the number of the outstanding shares of Common Stock of SanDisk
Corporation.
(2) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933, as amended, on the basis of the average of
the high and low selling prices per share of Common Stock of SanDisk
Corporation on July 21, 1997 as reported on the Nasdaq National Market.
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Documents by Reference
SanDisk Corporation (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC"):
(a)The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 filed with the SEC on March 13, 1997;
(b)The Registrant's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, filed with the SEC on May 14, 1997;
(c)The Registrant's Current Report on Form 8-K, filed with the SEC on April
28, 1997, as amended on May 16, 1997; and
(d)The Registrant's Registration Statement No. 0-26734 on Form 8-A filed
with the SEC on September 8, 1995, pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), together
with the amendments thereto, in which there is described the terms, rights
and provisions applicable to the Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court
to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "1933 Act"). The Registrant's Bylaws provide for permissible
indemnification of employees and other agents to the maximum extent permitted by
the Delaware General Corporation Law. The Registrant's Certificate of
Incorporation provides that, pursuant to Delaware law, its directors
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<PAGE>
shall not be liable for monetary damages for breach of their fiduciary duty as
directors to the Registrant and its stockholders. This provision in the
Certificate of Incorporation does not eliminate the fiduciary duty of the
directors, and in appropriate circumstances equitable remedies such as
injunctive or other forms of non-monetary relief will remain available under
Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Registrant for
acts or omissions not in good faith or involving intentional misconduct, for
knowing violations of law, for payment of dividends or approval of stock
repurchases or redemptions that are unlawful under Delaware law and for actions
leading to improper personal benefit to the director. The provision also does
not affect a director's responsibilities under any other law, such as the
federal securities laws or state or federal environmental laws. The Registrant
has entered into Indemnification Agreements with its officers and director which
provide such officers and directors with further indemnification to the maximum
extent permitted by the Delaware General Corporation Law.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to Registrant's
Registration Statement No. 0-18225 on Form 8-A which is incorporated herein by reference
pursuant to Item 3(d).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 1995 Stock Option Plan (as Amended and Restated February 10, 1997).
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Limited Stock Appreciation Right).
99.5* Form of Addendum to Stock Option Agreement (Involuntary Termination).
99.6* Form of Addendum to Stock Option Agreement (Special Tax Elections).
99.7 1995 Non-Employee Directors Stock Option Plan (as Amended and Restated February 10, 1997).
99.8* Form of Notice of Grant of Automatic Stock Option (Initial Grant).
99.9* Form of Notice of Grant of Automatic Stock Option (Annual Grant).
99.10* Form of Automatic Stock Option Agreement.
99.11 Employee Stock Purchase Plan (as Amended and Restated February 10, 1997).
99.12* Form of Stock Purchase Agreement.
99.13* Form of Enrollment/Change Form.
</TABLE>
* Exhibits 99.2 through 99.6, 99.8 through 99.10 and 99.12 and 99.13 are
incorporated herein by reference to Exhibits 99.2 through 99.6, 99.8 through
99.10 and 99.12 and 99.13 to Registrant's Registration Statement on Form
S-8, filed with the SEC on November 10, 1995.
II-2
<PAGE>
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this Registration Statement (i) to include any prospectus required by Section
10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Registrant's 1995
Stock Option Plan, 1995 Non-Employee Directors Stock Option Plan and the
Employee Stock Purchase Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the indemnification provisions summarized in Item 6, or
otherwise, the Registrant has been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the 1933 Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8, and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sunnyvale, State of California on this
21st day of July, 1997.
SANDISK CORPORATION
By: /s/ Eliyahou Harari
-------------------------------------
Dr. Eliyahou Harari
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of SanDisk
Corporation, a Delaware corporation, do hereby constitute and appoint Dr.
Eliyahou Harari and Cindy Burgdorf and each of them, the lawful
attorneys-in-fact and agents with full power and authority to do any and all
acts and things and to execute any and all instruments which said attorneys and
agents, and any one of them, determine may be necessary or advisable or required
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules or regulations or requirements of the Securities and
Exchange Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms that all said attorneys and agents, or any one of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Eliyahou Harari President and July 21, 1997
- ----------------------------- Chief Executive Officer
Dr. Eliyahou Harari (Principal Executive
Officer)
II-4
<PAGE>
Signature Title Date
/s/ Cindy Burgdorf Senior Vice President, July 21, 1997
- ----------------------------- Finance and Administration,
Cindy Burgdorf Chief Financial Officer
and Secretary (Principal
Financial and Accounting
Officer)
/s/ Irwin Federman Director July 21, 1997
- -----------------------------
Irwin Federman
/s/ William V. Campbell Director July 21, 1997
- -----------------------------
William V. Campbell
/s/ James D. Meindl Director July 21, 1997
- -----------------------------
Dr. James D. Meindl
/s/ Catherine P. Lego Director July 21, 1997
- -----------------------------
Catherine P. Lego
/s/ Joseph Rizzi Director July 21, 1997
- -----------------------------
Joseph Rizzi
/s/ Alan F. Shugart Director July 21, 1997
- -----------------------------
Alan F. Shugart
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SANDISK CORPORATION
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is made to Registrant's
Registration Statement No. 0-18225 on Form 8-A which is incorporated herein by reference
pursuant to Item 3(d).
5 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.
24 Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 1995 Stock Option Plan (as Amended and Restated February 10, 1997).
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Limited Stock Appreciation Right).
99.5* Form of Addendum to Stock Option Agreement (Involuntary Termination).
99.6* Form of Addendum to Stock Option Agreement (Special Tax Elections).
99.7 1995 Non-Employee Directors Stock Option Plan (as Amended and Restated February 10, 1997).
99.8* Form of Notice of Grant of Automatic Stock Option (Initial Grant).
99.9* Form of Notice of Grant of Automatic Stock Option (Annual Grant).
99.10* Form of Automatic Stock Option Agreement.
99.11 Employee Stock Purchase Plan (as Amended and Restated February 10, 1997).
99.12* Form of Stock Purchase Agreement.
99.13* Form of Enrollment/Change Form.
</TABLE>
*Exhibits 99.2 through 99.6, 99.8 through 99.10 and 99.12 and 99.13 are
incorporated herein by reference to Exhibits 99.2 through 99.6, 99.8
through 99.10 and 99.12 and 99.13 to Registrant's Registration
Statement on Form S-8, filed with the SEC on November 10, 1995.
EXHIBIT 5
July 21, 1997
Opinion and Consent of Brobeck, Phleger & Harrison LLP
SanDisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
Re: SanDisk Corporation Form S-8 Registration Statement for
Offering of 3,000,000 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) an additional
2,500,000 shares of the common stock ("Common Stock") of SanDisk Corporation
(the "Company") issuable under the Company's 1995 Stock Option Plan (the "Option
Plan"), (ii) an additional 50,000 shares of Common Stock issuable under the
Company's 1995 Non-Employee Directors Stock Option Plan (the "Directors Plan")
and (iii) an additional 450,000 shares of Common Stock issuable under the
Company's Employee Stock Purchase Plan (the "Purchase Plan"). We advise you
that, in our opinion, when such shares have been issued and sold pursuant to the
applicable provisions of the Option Plan, the Directors Plan and the Purchase
Plan and in accordance with the Registration Statement, such shares will be
validly issued, fully paid and non-assessable shares of Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the SanDisk Corporation 1995 Stock Option Plan, 1995
Non-Employee Directors Stock Option Plan, and Employee Stock Purchase Plan, of
our report dated January 17, 1997 (except Note 4, as to which the date is
February 26, 1997), with respect to the consolidated financial statements and
schedule of SanDisk Corporation included in its Annual Report (Form 10-K) for
the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
- ---------------------
ERNST & YOUNG LLP
San Jose, California
July 21, 1997
SANDISK CORPORATION
1995 STOCK OPTION PLAN
AMENDED AND RESTATED AS OF FEBRUARY 10, 1997
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Stock Option Plan is intended to promote the
interests of SanDisk Corporation, a Delaware corporation, by providing eligible
persons with the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an incentive for them
to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and exclusive authority to
administer the Plan with respect to Section 16 Insiders. Administration of the
Plan with respect to all other persons eligible to participate may, at the
Board's discretion, be vested in the Committee, or the Board may retain the
power to administer the Plan with respect to all such persons.
B. Members of the Committee shall serve for such period of
time as the Board may determine and shall be subject to removal by the Board at
any time.
C. The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the provisions of such
program and any outstanding options thereunder as it may deem necessary or
advisable. Decisions of the Plan Administrator within the scope of its
administrative functions under the Plan shall be final and binding on all
parties who have an interest in the Plan or any option thereunder.
D. Service on the Committee shall constitute service as a
Board member, and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service. No member
of the Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any option grants made under the Plan.
<PAGE>
III. ELIGIBILITY
A. The persons eligible to participate in the Plan are as
follows:
(i) Employees,
(ii) Non-employee Board members, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or
Subsidiary).
B. The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine
which eligible persons are to receive option grants, the time or times when such
option grants are to be made, the number of shares to be covered by each such
grant, the status of the granted option as either an Incentive Option or a
Non-Statutory Option, the time or times at which each option is to become
exercisable and the vesting schedule (if any) applicable to the option shares
and the maximum term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 5,998,711
shares. Such share reserve includes (i) the initial reserve of 3,498,711 shares
which reflects the 2:3 stock split adopted by the Board on July 25, 1995, and
(ii) the additional increase of 2,500,000 shares authorized by the Board on
February 10, 1997, subject to stockholder approval at the 1997 Annual Meeting.
The initial authorized share reserve was comprised of the number of shares which
remained available for issuance, as of the Effective Date, under the Predecessor
Plan as last approved by the Corporation's stockholders prior to such date,
including the shares subject to the outstanding options incorporated into the
Plan and any other shares which would have been available for future option
grants under the Predecessor Plan.
B. No one person participating in the Plan may receive options
and separately exercisable stock appreciation rights for more than 1,000,000
shares of Common Stock in the aggregate over the term of the Plan.
C. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent (i) the
options (including any options incorporated from the Predecessor Plan) expire or
terminate for any reason prior to exercise in full or (ii) the options are
cancelled in accordance with the cancellation-regrant provisions of Article Two.
In addition, unvested shares issued under the Plan and subsequently repurchased
by the Corporation, at the original exercise price paid per share,
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<PAGE>
pursuant to the Corporation's repurchase rights under the Plan shall be added
back to the number of shares of Common Stock reserved for issuance under the
Plan and shall accordingly be available for reissuance through one or more
subsequent option grants under the Plan. However, should the exercise price of
an option under the Plan (including any option incorporated from the Predecessor
Plan) be paid with shares of Common Stock or should shares of Common Stock
otherwise issuable under the Plan be withheld by the Corporation in satisfaction
of the withholding taxes incurred in connection with the exercise of an option
under the Plan, then the number of shares of Common Stock available for issuance
under the Plan shall be reduced by the gross number of shares for which the
option is exercised, and not by the net number of shares of Common Stock issued
to the holder of such option.
D. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
any one person may be granted options and separately exercisable stock
appreciation rights over the term of the Plan and (iii) the number and/or class
of securities and the exercise price per share in effect under each outstanding
option (including any option incorporated from the Predecessor Plan) in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments
determined by the Plan Administrator shall be final, binding and conclusive.
3
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. Exercise Price.
1. The exercise price per share shall be fixed by the
Plan Administrator but shall not be less than eighty-five percent (85%) of the
Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Section I of
Article Three and the documents evidencing the option, be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable written
instructions to (a) a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares plus all applicable Federal, state and local income
and employment taxes required to be withheld by the Corporation by
reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
4
<PAGE>
B. Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise
of any options held by the Optionee at the time of cessation of Service or
death:
(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable
for such period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but
no such option shall be exercisable after the expiration of the option
term.
(ii) Any option exercisable in whole or in part by
the Optionee at the time of death may be subsequently exercised by the
personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution.
(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of vested shares for which the option is exercisable on the
date of the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding to the extent it is not
exercisable for vested shares on the date of such cessation of Service.
(iv) Should the Optionee's Service be terminated
for Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(v) In the event of a Corporate Transaction, the
provisions of Section III of this Article Two shall govern the period
for which the outstanding options are to remain exercisable following
the Optionee's cessation of Service and shall supersede any provisions
to the contrary in this section.
5
<PAGE>
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option
is to remain exercisable following the Optionee's cessation of Service
from the period otherwise in effect for that option to such greater
period of time as the Plan Administrator shall deem appropriate, but in
no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the
Optionee would have vested under the option had the Optionee continued
in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of
the Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than by will or by the laws of
descent and distribution following the Optionee's death. However, a
Non-Statutory Option may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
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<PAGE>
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of the Plan shall be applicable to Incentive Options. Options which
are specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to
Employees.
B. Exercise Price. The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date.
C. Dollar Limitation. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one (1) calendar
year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% Stockholder. If any Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the exercise price per share shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout
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in accordance with the same vesting schedule applicable to such option or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan Administrator,
and its determination shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
C. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of Common
Stock subject to those rights) upon the occurrence of a Corporate Transaction,
whether or not those options are to be assumed or replaced (or those repurchase
rights are to be assigned) in the Corporate Transaction.
D. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
E. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.
F. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time, shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary
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Termination within twelve (12) months following the effective date of such
Corporate Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the earlier of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.
G. The Plan Administrator shall have the discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to (i) provide for the automatic acceleration of one
or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights with the immediate vesting of the shares of Common
Stock subject to those rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period following the effective date of
such Change in Control. Any options accelerated in connection with a Change in
Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
H. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One Hundred
Thousand Dollar limitation is not exceeded. To the extent such dollar limitation
is exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.
I. The grant of options under the Option Grant Program shall
in no way affect the right of the Corporation to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected option holders,
the cancellation of any or all outstanding options under the Option Grant
Program (including outstanding options incorporated from the Predecessor Plan)
and to grant in substitution new options covering the same or different number
of shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority
to grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
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B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:
(i) One or more Optionees may be granted the
right, exercisable upon such terms as the Plan Administrator may
establish, to elect between the exercise of the underlying option for
shares of Common Stock and the surrender of that option in exchange for
a distribution from the Corporation in an amount equal to the excess of
(A) the Fair Market Value (on the option surrender date) of the number
of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such shares.
(ii) No such option surrender shall be effective
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in
cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
(iii) If the surrender of an option is rejected by
the Plan Administrator, then the Optionee shall retain whatever rights
the Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (A) five (5) business days after the
receipt of the rejection notice or (B) the last day on which the option
is otherwise exercisable in accordance with the terms of the documents
evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be granted
limited stock appreciation rights with respect to their outstanding
options.
(ii) Upon the occurrence of a Hostile Take-Over,
each such individual holding one or more options with such a limited
stock appreciation right shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile
Take-Over) to surrender each such option to the Corporation, to the
extent the option is at the time exercisable for vested shares of
Common Stock. In return for the surrendered option, the Optionee shall
receive a cash distribution from the Corporation in an amount equal to
the excess of (A) the Take-Over Price of the shares of Common Stock
which are at the time vested under each surrendered option (or
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surrendered portion thereof) over (B) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within
five (5) days following the option surrender date.
(iii) The Plan Administrator shall pre-approve, at
the time the limited right is granted, the subsequent exercise of that
right in accordance with the terms of the grant and the provisions of
this Section V. No additional approval of the Plan Administrator or the
Board shall be required at the time of the actual option surrender and
cash distribution.
(iv) The balance of the option (if any) shall
continue in full force and effect in accordance with the documents
evidencing such option.
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ARTICLE THREE
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee to pay the
option exercise price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. Promissory notes may be authorized with or without security
or collateral. In all events, the maximum credit available to the Optionee may
not exceed the sum of (i) the aggregate option exercise price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee in connection with the option exercise.
B. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options or stock appreciation rights under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options with the right to use shares of Common
Stock in satisfaction of all or part of the Taxes incurred by such holders in
connection with the exercise of their options. Such right may be provided to any
such holder in either or both of the following formats:
(i) Stock Withholding: The election to have the
Corporation withhold, from the shares of Common Stock otherwise
issuable upon the exercise of such Non-Statutory Option, a portion of
those shares with an aggregate Fair Market Value equal to the
percentage of the Taxes (not to exceed one hundred percent (100%))
designated by the holder.
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(ii) Stock Delivery: The election to deliver to
the Corporation, at the time the Non-Statutory Option is exercised, one
or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise triggering the
Taxes) with an aggregate Fair Market Value equal to the percentage of
the Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective on the November 7, 1995 Effective
Date after adoption by the Board on July 25, 1995, and approval by the
Corporation's stockholders in August 1995.
B. The Plan was amended on February 10, 1997 (the "February
1997 Amendment") to effect the following changes: (i) increase the number of
shares of Common Stock authorized for issuance over the term of the Plan by an
additional 2,500,000 shares, (ii) render the non-employee Board members eligible
to receive option grants under the Plan, (iii) allow unvested shares issued
under the Plan and subsequently repurchased by the Corporation at the option
exercise price paid per share to be reissued under the Plan and (iv) effect a
series of technical changes to the provisions of the Plan (including the
stockholder approval requirements) in order to take advantage of the recent
amendments to Rule 16b-3 of the Securities Exchange Act of 1934 which exempts
certain officer and director transactions under the Plan from the short-swing
liability provisions of the Federal securities laws. The February 1997 Amendment
is subject to stockholder approval at the 1997 Annual Meeting, and no option
grants made on the basis of the February 1997 share increase shall become
exercisable in whole or in part unless and until the February 1997 Amendment is
approved by the stockholders. Should such stockholder approval not be obtained
at the 1997 Annual Meeting, then each option grant made pursuant to the February
1997 share increase shall terminate and cease to remain outstanding, and no
further option grants shall be made on the basis of that share increase.
However, the provisions of the Plan as in effect immediately prior to the
February 1997 Amendment shall automatically be reinstated, and option grants may
thereafter continue to be made pursuant to the reinstated provisions of the
Plan. All option grants made prior to the February 1997 Amendment shall remain
outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options or issuances, and nothing in the February
1997 Amendment shall be deemed to modify or in any way affect those outstanding
options or issuances. Subject to the foregoing limitations, the Plan
Administrator may make option grants under the Plan at any time before the date
fixed herein for the termination of the Plan.
C. The Plan shall serve as the successor to the Predecessor
Plan, and no further option grants shall be made under the Predecessor Plan
after the Effective Date. All options outstanding under the Predecessor Plan as
of such date shall, immediately upon approval of the Plan by the Corporations's
stockholders, be incorporated into the Plan and
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treated as outstanding options under the Plan. However, each outstanding option
so incorporated shall continue to be governed solely by the terms of the
documents evidencing such option, and no provision of the Plan shall be deemed
to affect or otherwise modify the rights or obligations of the holders of such
incorporated options with respect to their acquisition of shares of Common
Stock.
D. The provisions of the Plan (including, without limitation,
the option/vesting acceleration provisions of Article Two relating to Corporate
Transactions and Changes in Control) may, in the Plan Administrator's
discretion, be extended to one or more options incorporated from the Predecessor
Plan which do not otherwise provide for such acceleration.
E. The Plan shall terminate upon the earliest of (i) July 24,
2005, (ii) the date on which all shares available for issuance under the Plan
have been issued pursuant to the exercise of the options under the Plan or (iii)
the termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options outstanding on such date
shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such options.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or stock appreciation rights at the time outstanding under
the Plan unless the Optionee consents to such amendment or modification. In
addition, certain amendments may require stockholder approval in accordance with
applicable laws and regulations.
B. Options to purchase shares of Common Stock may be granted
that are in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued are held in escrow until
stockholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan is obtained. If
such stockholder approval is not obtained within twelve (12) months after the
date the first such excess issuances are made, then (i) any unexercised options
granted on the basis of such excess shares shall terminate and cease to be
outstanding and (ii) the Corporation shall promptly refund to the Optionees the
exercise price paid for any excess shares issued under the Plan and held in
escrow, together with interest (at the applicable Short Term Federal Rate) for
the period the shares were held in escrow, and such shares shall thereupon be
automatically cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
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VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
or stock appreciation right under the Plan and the issuance of any shares of
Common Stock upon the exercise of any option or stock appreciation right shall
be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options and stock appreciation rights granted under it and the shares of Common
Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have
been Board members continuously since the beginning of such period or
(B) have been elected or nominated for election as Board members during
such period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved such
election or nomination.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Committee shall mean the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Plan.
E. Common Stock shall mean the Corporation's common stock.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those immediately prior to
such transaction; or
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(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
G. Corporation shall mean SanDisk Corporation, a Delaware corporation.
H. Effective Date shall mean November 7, 1995, the date on which the
Underwriting Agreement was executed and the initial public offering price of the
Common Stock was established.
I. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.
K. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market for the
Common Stock, as such price is officially quoted in the composite tape
of transactions on such exchange. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
(iii) For purposes of option grants made on the date the
Underwriting Agreement is executed and the initial public offering
price of the Common Stock is established, the Fair Market Value shall
be deemed to be equal to the established initial offering price per
share.
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L. Hostile Take-Over shall mean a change in ownership of the
Corporation effected through the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.
M. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
N. Involuntary Termination shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
participation in corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of
such individual's place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected
by the Corporation without the individual's consent.
O. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).
P. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
Q. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
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R. Option Grant Program shall mean the option grant program in effect
under the Plan.
S. Optionee shall mean any person to whom an option is granted under
the Plan.
T. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
U. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
V. Plan shall mean the Corporation's 1995 Stock Option Plan, as set
forth in this document.
W. Plan Administrator shall mean the particular entity, whether the
Committee or the Board, which is authorized to administer the Option Grant
Program with respect to one or more classes of eligible persons, to the extent
such entity is carrying out its administrative functions under those programs
with respect to the persons under its jurisdiction.
X. Predecessor Plan shall mean the Corporation's existing 1989 Stock
Benefit Plan.
Y. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
Z. Section 12(g) Registration Date shall mean the first date on which
the Common Stock is registered under Section 12(g) of the 1934 Act.
AA. Service shall mean the provision of services to the Corporation (or
any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
AB. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
AC. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation
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(other than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
AD. Take-Over Price shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
AE. Taxes shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of such holder's options
or the vesting of his or her shares.
AF. 10% Stockholder shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
AG. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters which managed the initial public
offering of the Common Stock.
A-5
SANDISK CORPORATION
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
AMENDED AND RESTATED AS OF FEBRUARY 10, 1997
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1995 Non-Employee Directors Stock Option Plan is intended
to promote the interests of SanDisk Corporation, a Delaware corporation, by
providing the non-employee members of the Board with the opportunity to acquire
a proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation.
Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The terms of each option grant (including the timing and
pricing of the option grant) shall be determined by the express terms of the
Plan, and neither the Board nor any committee of the Board shall exercise any
discretionary functions with respect to option grants made pursuant to the Plan.
III. ELIGIBILITY
The individuals eligible to receive option grants under the
Plan shall be (i) those individuals who are serving as non-employee Board
members on the Effective Date or who are first elected or appointed as
non-employee Board members on or after such date, whether through appointment by
the Board or election by the Corporation's stockholders, and (ii) those
individuals who continue to serve as non-employee Board members after one or
more Annual Stockholders Meetings beginning with the 1996 Annual Meeting. A
non-employee Board member who has previously been in the employ of the
Corporation (or any Parent or Subsidiary) shall not be eligible to receive an
option grant under the Plan on the Effective Date or at the time he or she first
becomes a non-employee Board member, but shall be eligible to receive periodic
option grants under the Plan upon his or her continued service as a non-employee
Board member following one or more Annual Stockholders Meetings.
<PAGE>
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 200,000
shares.1 Such share reserve includes (i) the initial share reserve of 150,000
shares approved by the stockholders in August 1995, and (ii) an additional
50,000 share increase authorized by the Board on February 10, 1997, subject to
stockholder approval at the 1997 Annual Stockholders Meeting. No shares of
Common Stock shall be issued under the Plan on the basis of the February 1997
share increase unless that increase is approved by the stockholders at the 1997
Annual Meeting.
B. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. In addition,
unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. However, shares subject to any option or portion thereof
surrendered in accordance with Article Two shall reduce on a share-for-share
basis the number of shares of Common Stock available for subsequent issuance
under the Plan. Should the exercise price of an option under the Plan be paid
with shares of Common Stock, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the option is exercised, and not by the net number of shares of Common
Stock issued to the holder of such option.
C. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the number and/or class of securities for which
option grants are to be subsequently made per Eligible Director and (iii) the
number and/or class of securities and the exercise price per share in effect
under each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments to the outstanding options shall be made by
the Board and shall be final, binding and conclusive.
- --------
1 This number reflects the 2:3 stock split adopted by the Board on July 25,
1995.
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ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
A. Grant Dates. Option grants shall be made on the dates
specified below:
1. Each Eligible Director who is a non-employee Board
member on the Effective Date and who has not previously received an option grant
from the Corporation shall automatically be granted, on the Effective Date, a
Non-Statutory Option to purchase 16,000 shares of Common Stock.
2. Each Eligible Director who is first elected or appointed
as a non-employee Board member on or after the Effective Date shall
automatically be granted, on the date of such initial election or appointment
(as the case may be), a Non-Statutory Option to purchase 16,000 shares of Common
Stock.
3. On the date of each Annual Stockholders Meeting,
beginning with the 1996 Annual Meeting, each individual who is to continue to
serve as an Eligible Director after such meeting, shall automatically be
granted, whether or not such individual is standing for re-election as a Board
member at that Annual Meeting, a Non-Statutory Option to purchase an additional
4,000 shares of Common Stock, provided such individual has served as a
non-employee Board member for at least six (6) months prior to the date of such
Annual Meeting. There shall be no limit on the number of such 4,000-share option
grants any one Eligible Director may receive over his or her period of Board
service.
B. Exercise Price.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
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(iii) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable written
instructions to (A) a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the
purchased shares plus all applicable Federal, state and local income
and employment taxes required to be withheld by the Corporation by
reason of such exercise and (B) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. Option Term. Each option shall have a term of ten (10)
years measured from the option grant date.
D. Exercise and Vesting of Options. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of four (4) equal and
successive annual installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each annual grant shall vest, and the Corporation's repurchase right shall
lapse, upon the Optionee's completion of one (1) year of Board service measured
from the option grant date.
E. Effect of Termination of Board Service. The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's
death, the personal representative of the Optionee's estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option.
(ii) During the twelve (12)-month exercise period,
the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable at the time
of the Optionee's cessation of Board service.
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(iii) Should the Optionee cease to serve as a Board
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following such
cessation of Board service, be exercised for all or any portion of such
shares as fully-vested shares.
(iv) In no event shall the option remain exercisable
after the expiration of the option term. Upon the expiration of the
twelve (12)-month exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Board service, terminate and cease to be outstanding to
the extent it is not exercisable for vested shares on the date of such
cessation of Board service.
F. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
G. Limited Transferability of Options. An automatic option
granted under the Plan may, in connection with the Optionee's estate plan, be
assigned in whole or in part during the Optionee's lifetime to one or more
members of the Optionee's immediate family or to a trust established exclusively
for one or more such family members. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion shall
be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each option grant shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).
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B. In connection with any Change in Control, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Each such option shall remain exercisable
for such fully-vested option shares until the expiration of the option term or
the surrender of the option in connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation
each option held by him or her. The Optionee shall in return be entitled to a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Take-Over Price of the shares of Common Stock at the time subject to the
surrendered option (whether or not the Optionee is otherwise at the time vested
in those shares) over (ii) the aggregate exercise price payable for such shares.
Such cash distribution shall be paid within five (5) days following the
surrender of the option to the Corporation. Stockholder approval of the February
10, 1997 restatement of the Plan shall constitute pre-approval of each option
surrender right subsequently granted under the Plan and the subsequent exercise
of that right in accordance with the terms and provisions of this Section II.C.
No additional approval of the Board or any committee of the Board shall be
required at the time of the actual option surrender and cash distribution.
D. The grant of options under the Plan shall in no way affect
the right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
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ARTICLE THREE
MISCELLANEOUS
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective on the November 7, 1995 Effective
Date after adoption by the Board on July 25, 1995 and approval by the
Corporation's stockholders in August 1995.
B. The Plan was amended on February 10, 1997 (the "February
1997 Amendment") to effect the following changes: (i) increase the number of
shares of Common Stock authorized for issuance over the term of the Plan by an
additional 50,000 shares, (ii) allow unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the option exercise price paid
per share to be reissued under the Plan and (iii) effect a series of technical
changes to the provisions of the Plan (including stockholder approval
requirements) in order to take advantage of the recent amendments to Rule 16b-3
of the Securities Exchange Act of 1934 which exempts certain officer and
director transactions under the Plan from the short-swing liability provisions
of the Federal securities laws. The February 1997 Amendment is subject to
stockholder approval at the 1997 Annual Meeting, and no option grants made on
the basis of the February 1997 share increase shall become exercisable in whole
or in part unless and until the February 1997 Amendment is approved by the
stockholders. Should such stockholder approval not be obtained at the 1997
Annual Meeting, then each option grant made pursuant to the February 1997 share
increase shall terminate and cease to remain outstanding, and no further option
grants shall be made on the basis of that share increase. However, the
provisions of the Plan as in effect immediately prior to the February 1997
Amendment shall automatically be reinstated, and option grants may thereafter
continue to be made pursuant to the reinstated provisions of the Plan. All
option grants made prior to the February 1997 Amendment shall remain outstanding
in accordance with the terms and conditions of the respective instruments
evidencing those options or issuances, and nothing in the February 1997
Amendment shall be deemed to modify or in any way affect those outstanding
options or issuances. Subject to the foregoing limitations, options may be
granted under the Plan at any time before the date fixed herein for the
termination of the Plan.
C. The Plan shall terminate upon the earliest of (i) July 24,
2005, (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise or cash-out of the
options under the Plan or (iii) the termination of all outstanding options in
connection with a Corporate Transaction. Upon
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such Plan termination, all option grants and unvested stock issuances
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the documents evidencing such grants or
issuances.
IV. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or unvested stock issuances at the time outstanding under the
Plan unless the Optionee consents to such amendment or modification. In
addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of any shares of Common Stock upon the exercise
of any option shall be subject to the Corporation's procurement of all approvals
and permits required by regulatory authorities having jurisdiction over the
Plan, the options granted under it and the shares of Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) and the Corporation's
stockholders or of the Optionee, which rights are hereby expressly reserved by
each, to terminate such person's Service at any time for any reason, with or
without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Change in Control shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any
person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's stockholders; or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since
the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of
the Board members described in clause (A) who were still in office at
the time such election or nomination was approved by the Board.
C. Code shall mean the Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those immediately prior to
such transaction; or
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(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
F. Corporation shall mean SanDisk Corporation, a Delaware corporation.
G. Effective Date shall mean November 7, 1995, the date on which the
Underwriting Agreement was executed and the initial public offering price of the
Common Stock was established.
H. Eligible Director shall mean a non-employee Board member eligible to
participate in the Plan.
I. Exercise Date shall mean the date on which the Corporation shall
have received written notice
of the option exercise.
J. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
which serves as the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation
exists.
(iii) For purposes of any option grants made on the Effective
Date, the Fair Market Value shall be deemed to be equal to the price
per share at which the Common Stock is sold in the initial public
offering pursuant to the Underwriting Agreement.
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K. Hostile Take-Over shall mean a change in ownership of the
Corporation through the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept.
L. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
M. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
N. Optionee shall mean any person to whom an option is granted under
the Plan.
O. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
P. Permanent Disability shall mean the inability of the Optionee to
perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.
Q. Plan shall mean the Corporation's 1995 Non-Employee Directors Stock
Option Plan, as set forth in this document.
R. Section 16 Insiders shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
S. Stock Exchange shall mean either the American Stock Exchange or the
New York Stock Exchange.
T. Subsidiary shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
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U. Take-Over Price shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over.
V. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters which managed the initial public
offering of the Common Stock.
A-4
SANDISK CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
AMENDED AND RESTATED AS OF FEBRUARY 10, 1997
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of SanDisk Corporation by providing eligible employees with the
opportunity to acquire a proprietary interest in the Corporation through
participation in a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret
and construe any provision of the Plan and to adopt such rules and regulations
for administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common
Stock purchased on the open market. The maximum number of shares of Common Stock
which may be issued in the aggregate over the term of this Plan and the
Corporation's International Employee Stock Purchase Plan shall not exceed Eight
Hundred Eighty-Three Thousand Three Hundred Thirty-Three (883,333) shares. Such
share reserve includes (i) the initial share reserve of 433,333 shares (as
adjusted to reflect the 2:3 split of the Common Stock authorized by the Board on
July 25, 1995) approved by the stockholders in August 1996, and (ii) an
additional 450,000 share increase authorized by the Board on February 10, 1997,
subject to stockholder approval at the 1997 Annual Meeting. No shares of Common
Stock shall be issued under the Plan on the basis of the February 1997 share
increase unless that increase is approved by the stockholders at the 1997 Annual
Meeting, and in no event shall more than 674,063 shares of Common Stock be
issued in the aggregate under this Plan and the International Employee Stock
Purchase Plan after February 28, 1997, assuming stockholder approval of the
February 1997 share increase.
B. Should any change be made to the Common Stock by reason of
any stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or
<PAGE>
other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and class of securities
issuable in the aggregate under this Plan and the International Plan, (ii) the
maximum number and class of securities purchasable per Participant on any one
Purchase Date and (iii) the number and class of securities and the price per
share in effect under each outstanding purchase right in order to prevent the
dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of successive Offering Periods until such time as (i)
the maximum number of shares of Common Stock available for issuance under the
Plan shall have been purchased or (ii) the Plan shall have been sooner
terminated.
B. Each Offering Period (other than the Initial Offering
Period) shall have a duration of six (6) months. Offering Periods shall run from
the first business day in February to the last business day in July each year
and from the first business day of August each year to the last business day in
January in the following year. However, the Initial Offering Period shall
commence at the Effective Time and terminate on the last business day in
January, 1997. During the Initial Offering Period, there shall be three (3)
successive Purchase Intervals: the first shall run from the Effective Time to
the last business day in January 1996; the second shall run from the first
business day in February 1996 to the last business day in July 1996; and the
last shall run from the first business day in August to the last business day in
January 1997. A Purchase Date shall occur at the end of each Purchase Interval
within the Initial Offering Period. However, for each subsequent Offering
Period, there shall only be a single Purchase Date coincident with the last day
of that Offering Period.
V. ELIGIBILITY
A. Only individuals who are Eligible Employees on the start
date of an Offering Period shall be eligible to participate in the Plan for that
Offering Period. For the Initial Offering Period, the following special
eligibility provisions shall be in effect:
- Each individual who is an Eligible Employee at the
Effective Time may enter the Initial Offering Period at that time or on
the start date of any subsequent Purchase Interval within that Offering
Period, provided he or she remains an Eligible Employee on that date.
- Each individual who first becomes an Eligible
Employee after the Effective Time may enter the Initial Offering Period
on the start date of any subsequent Purchase Interval within that
Offering Period, provided he or she is an Eligible Employee on that
date.
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B. The date an Eligible Employee enters the Offering Period
shall be designated his or her Entry Date.
C. To participate in the Plan for a particular Offering
Period, the Eligible Employee must complete the enrollment forms prescribed by
the Plan Administrator (including a stock purchase agreement and a payroll
deduction authorization form) and file such forms with the Plan Administrator
(or its designate) on or before his or her scheduled Entry Date.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan may be any multiple
of one percent (1%) of the Cash Compensation paid to the Participant during each
Offering Period, up to a maximum of ten percent (10%). The deduction rate so
authorized shall continue in effect from Offering Period to Offering Period,
except to the extent such rate is changed in accordance with the following
guidelines:
(i) The Participant may, at any time during an
Offering Period, reduce his or her rate of payroll deduction to become
effective as soon as possible after filing the appropriate form with
the Plan Administrator. The Participant may not, however, effect more
than one (1) such reduction per Offering Period or Purchase Interval.
(ii) The Participant may, prior to the start of
any new Offering Period or the start of any new Purchase Interval
within the Initial Offering Period, increase the rate of his or her
payroll deduction by filing the appropriate form with the Plan
Administrator. The new rate (which may not exceed the ten percent (10%)
maximum) shall become effective as of the start date of the first
Offering Period or Purchase Interval following the filing of such form.
B. Payroll deductions shall begin on the first pay day
following the Participant's Entry Date into the Offering Period and shall
(unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that Offering Period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.
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D. The Participant's acquisition of Common Stock under the
Plan on any Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted a
separate purchase right for each Offering Period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the Offering Period and shall provide the Participant with the right
to purchase shares of Common Stock upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan Administrator
may deem advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. The purchase right shall be
automatically exercised on each Purchase Date within the Offering Period, and
shares of Common Stock shall accordingly be purchased on behalf of the
Participant (other than any Participant whose payroll deductions have previously
been refunded in accordance with the Termination of Purchase Right provisions
below) on such Purchase Date. The purchase shall be effected by applying the
Participant's payroll deductions for the Offering Period or the Purchase
Interval to the purchase of whole shares of Common Stock at the purchase price
in effect for the Participant for the Purchase Date coincident with the last day
of that Offering Period or Purchase Interval. All shares purchased on
Participant's behalf shall be directly deposited into an account maintained for
such Participant at a Corporation-designated brokerage firm.
C. Purchase Price. The purchase price per share at which
Common Stock shall be purchased on the Participant's behalf on each Purchase
Date within the Offering Period shall be equal to eighty-five percent (85%) of
the lower of (i) the Fair Market Value per share of Common Stock on the
Participant's Entry Date into that Offering Period or (ii) the Fair Market Value
per share of Common Stock on that Purchase Date. However, for each Participant
who joins the Initial Offering Period after the start date, the clause (i)
amount shall in no event be less than the Fair Market Value per share of Common
Stock on the start date of the Initial Offering Period.
D. Number of Purchasable Shares. The number of shares of
Common Stock purchasable by a Participant on each Purchase Date shall be the
number of whole shares obtained by dividing the Participant's payroll deductions
for the Offering Period or
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Purchase Interval ending on such date by the purchase price in effect for the
Participant for that Purchase Date. However, the maximum number of shares of
Common Stock purchasable per Participant on any one Purchase Date shall not
exceed Seven Hundred Fifty (750) shares, subject to periodic adjustments in the
event of certain changes in the Corporation's capitalization.
E. Excess Payroll Deductions. Any payroll deductions not
applied to the purchase of shares of Common Stock on any Purchase Date because
they are not sufficient to purchase a whole share of Common Stock shall be held
for the purchase of Common Stock on the next Purchase Date. However, any payroll
deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the Participant on the
Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions
shall govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the
next scheduled Purchase Date, terminate his or her outstanding purchase
right by filing the appropriate form with the Plan Administrator (or
its designate), and no further payroll deductions shall be collected
from the Participant with respect to the terminated purchase right. Any
payroll deductions collected during the Offering Period or Purchase
Interval in which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of shares on
the next scheduled Purchase Date. If no such election is made at the
time such purchase right is terminated, then the payroll deductions
collected with respect to the terminated right shall be refunded as
soon as possible.
(ii) The termination of such purchase right
shall be irrevocable, and the Participant may not subsequently rejoin
the Offering Period for which the terminated purchase right was
granted. In order to resume participation in any subsequent Offering
Period, such individual must re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or before the start date
of that Offering Period.
(iii) Should the Participant cease to remain an
Eligible Employee for any reason (including death, disability or change
in status) while his or her purchase right remains outstanding, then
that purchase right shall immediately terminate, and all of the
Participant's payroll deductions for the Offering Period or Purchase
Interval in which the purchase right so terminates shall be immediately
refunded. However, should the Participant cease to remain in active
service by reason of an approved unpaid leave of absence, then the
Participant shall have the election, exercisable up until the last day
of the Offering Period or Purchase Interval in which such leave
commences,
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to (a) withdraw all the payroll deductions collected to date on his or
her behalf for such Offering Period or Purchase Interval or (b) have
such funds held for the purchase of shares on the next scheduled
Purchase Date. In no event, however, shall any further payroll
deductions be collected on the Participant's behalf during such leave.
Upon the Participant's return to active service, his or her payroll
deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began, provided the Participant returns to
service prior to the expiration date of the Offering Period in which
such leave began.
G. Corporate Transaction. Each outstanding purchase right
shall automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant to
the purchase of whole shares of Common Stock at a purchase price per share equal
to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share
of Common Stock on the Participant's Entry Date into the Offering Period in
which such Corporate Transaction occurs or (ii) the Fair Market Value per share
of Common Stock immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitation on the number of shares of
Common Stock purchasable per Participant shall continue to apply to each
purchase. Should the Corporate Transaction occur in the Initial Offering Period,
then the clause (i) amount above shall not, for any Participant whose Entry Date
into the Initial Offering Period is other than the start date of that Offering
Period, be less than the Fair Market Value per share of Common Stock on such
start date.
The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any Corporate
Transaction, and Participants shall, following the receipt of such notice, have
the right to terminate their outstanding purchase rights prior to the effective
date of the Corporate Transaction.
H. Proration of Purchase Rights. Should the total number of
shares of Common Stock to be purchased pursuant to outstanding purchase rights
on any particular date exceed the number of shares then available for issuance
under the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I. Assignability. During the Participant's lifetime, the
purchase right shall be exercisable only by the Participant and shall not be
assignable or transferable.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding purchase
right until the shares are purchased on the Participant's behalf in accordance
with the provisions of the Plan and the Participant has become a holder of
record of the purchased shares.
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VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value of such stock on the
date or dates such rights are granted) for each calendar year such rights are at
any time outstanding.
B. For purposes of applying such accrual limitations to the
purchase rights granted under this Plan, the following provisions shall be in
effect:
(i) The right to acquire Common Stock under
each outstanding purchase right shall accrue in one or more
installments on each Purchase Date within the Offering Period for which
such right is granted.
(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the Participant
has already accrued in the same calendar year the right to acquire
Common Stock under one (1) or more other purchase rights at a rate
equal to Twenty-Five Thousand Dollars ($25,000) worth of Common Stock
(determined on the basis of the Fair Market Value of such stock on the
date or dates of grant) for each calendar year such rights were at any
time outstanding.
C. If by reason of such accrual limitations, the purchase
right of a Participant does not accrue for a particular Offering Period (or a
particular Purchase Interval within the Initial Offering Period), then the
payroll deductions which the Participant made during that Offering Period (or
Purchase Interval) with respect to such unaccrued purchase right shall be
promptly refunded.
D. In the event there is any conflict between the provisions
of this Article and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on July 25, 1995 and
shall become effective at the Effective Time, provided no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Corporation and (ii) the Corporation shall have complied
with all applicable requirements of the 1933 Act (including the registration
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of the shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
stockholder approval is not obtained, or such compliance is not effected, within
twelve (12) months after the date on which the Plan is adopted by the Board, the
Plan shall terminate and have no further force or effect and all sums collected
from Participants during the Initial Offering Period shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in July 2005, (ii) the
date on which all shares available for issuance under the Plan shall have been
sold pursuant to purchase rights exercised under the Plan or (iii) the date on
which all purchase rights are exercised in connection with a Corporate
Transaction. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.
X. AMENDMENT OF THE PLAN
A. The Board may alter, amend, suspend or discontinue the Plan
at any time to become effective immediately following the close of any Offering
Period or Purchase Interval. However, the Board may not, without the approval of
the Corporation's stockholders, (i) materially increase the number of shares of
Common Stock issuable under the Plan or the maximum number of shares purchasable
per Participant on any one Purchase Date, except for permissible adjustments in
the event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the shares
of Common Stock purchasable under the Plan or (iii) materially increase the
benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
B. On February 10, 1997, the Board adopted an amendment to the
Plan to increase the number of shares of Common Stock authorized for issuance
under this Plan and the International Employee Stock Purchase Plan by an
additional 450,000 shares in the aggregate. This amendment is subject to
stockholder approval at the 1997 Annual Meeting, and no shares may be issued on
the basis of the 450,000 share increase unless and until the share increase is
approved by the stockholders. Should such stockholder approval not be obtained
at the 1997 Annual Meeting, then the maximum number of shares available for
subsequent issuance in the aggregate under this Plan and the International
Employee Stock Purchase Plan shall not exceed the number of shares which
remained available for issuance immediately prior to the February 1997 share
increase.
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XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of
the Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant any
right to continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with or
without cause.
C. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws rules.
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Schedule A
Corporations Participating in
Employee Stock Purchase Plan
As of the Effective Time
------------------------
SanDisk Corporation
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Compensation shall mean the (i) regular base salary
paid to a Participant by one or more Participating Companies during such
individual's period of participation in one or more Offering Periods under the
Plan, plus (ii) any pre-tax contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate, plus (iii) all of the following amounts to the extent paid in cash:
overtime payments, bonuses, commissions, profit-sharing distributions and other
incentive-type payments. However, Eligible Earnings shall not include any
contributions (other than Code Section 401(k) or Code Section 125 contributions)
made on the Participant's behalf by the Corporation or any Corporate Affiliate
to any deferred compensation plan or welfare benefit program now or hereafter
established.
C. Code shall mean the Internal Revenue Code of 1986, as
amended.
D. Common Stock shall mean the Corporation's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section
424), whether now existing or subsequently established.
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation.
G. Corporation shall mean SanDisk Corporation, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of SanDisk Corporation which shall by appropriate action
adopt the Plan.
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H. Effective Time shall mean November 7, 1995,the time at
which the Underwriting Agreement was executed and finally priced. Any Corporate
Affiliate which becomes a Participating Corporation after such Effective Time
shall designate a subsequent Effective Time with respect to its
employee-Participants.
I. Eligible Employee shall mean any person who is employed by
a Participating Company on a basis under which he or she is regularly expected
to render more than twenty (20) hours of service per week for more than five (5)
months per calendar year for earnings considered wages under Code Section
3401(a).
J. Entry Date shall mean the date an Eligible Employee first
commences participation in the Offering Period in effect under the Plan. The
earliest Entry Date under the Plan shall be the Effective Time.
K. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If there
is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) For purposes of the Initial Offering Period which
begins at the Effective Time, the Fair Market Value shall be deemed to
be equal to the price per share at which the Common Stock is sold in
the initial public offering pursuant to the Underwriting Agreement.
L. Initial Offering Period shall mean the first Offering
Period in effect under the Plan which began at the Effective Time and ended on
the last business day in January 1997.
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M. 1933 Act shall mean the Securities Act of 1933, as amended.
N. Offering Period shall mean each successive period during
which payroll deductions are to be collected on the behalf of Participants and
applied to the purchase of Common Stock on one or more Purchase Dates within
that period.
O. Participant shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.
P. Participating Corporation shall mean the Corporation and
such Corporate Affiliate or Affiliates as may be authorized from time to time by
the Board to extend the benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective Time are listed in
attached Schedule A.
Q. Plan shall mean the Corporation's Employee Stock Purchase
Plan, as set forth in this document.
R. Plan Administrator shall mean the committee of two (2) or
more Board members appointed by the Board to administer the
Plan.
S. Purchase Date shall mean the last business day of January
and July each year on which shares of Common Stock shall be purchased on behalf
of each Participant.
T. Purchase Interval shall mean each of three (3) successive
periods within the Initial Offering Period at the end of which there shall be
purchased shares of Common Stock on behalf of each Participant. The first
Purchase Interval shall begin at the Effective Time and end on the last business
day in January 1996; the second Purchase Interval shall begin on the first
business day in February 1996 and end on the last business day in July 1996; and
the final Purchase Interval shall begin on the first business day in August 1996
and end on the last business day in January 1997.
U. Stock Exchange shall mean either the American Stock
Exchange or the New York Stock Exchange.
V. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters which managed the initial public
offering of the Common Stock.
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