As filed with the Securities and Exchange Commission on July 19, 1999
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 of (I.R.S. Employer Identification No.)
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 Plan)
--------------------
Eliyahou Harari
President and Chief Executive Officer
Sandisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
(Name and address of agent for service)
(408) 562-0500
(Telephone number, including area code, of agent for service)
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
Title of Securities to be Amount to be Proposed Maximum Offering Proposed Maximum Aggregate Amount of
Registered Registered (1) Price Per Share (2) Offering Price (2) Registration Fee
<S> <C> <C> <C> <C>
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
1995 Stock Option Plan 3,500,000 $52.75 $184,625,000 $51,325.75
Common Stock, shares
$0.001 par value
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
1995 Non-Employee Directors 200,000 shares $52.75 $ 10,550,000 $ 2,932.90
Stock Option Plan
Common Stock,
$0.001 par value
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
Employee Stock 300,000 shares $52.75 $ 15,825,000 $ 4,399.35
Purchase Plan
Common Stock,
$0.001 par value
- ----------------------------- ---------------- ------------------------------ -------------------------------- ------------------
- ----------------------------- ---------------- ------------------------------ ---------------------------------------------------
Aggregated Registration Fee $58,658.00
- ----------------------------- ---------------- ------------------------------ ---------------------------------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Registrant's Common Stock which become issuable under the 1995 Stock Option
Plan, the 1995 Non-Employee Director 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
Registrant's receipt of consideration which results in an increase in the
number of the outstanding shares of the Registrant's Common Stock.
(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 the Registrant's Common Stock on
July 14, 1999 as reported on the Nasdaq National Market.
================================================================================
<PAGE>
II-3
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Certain 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 "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed with the Commission on March 26, 1999,
together with the amendment thereto filed on April 2, 1999, pursuant
to Section 13 of the Securities Exchange Act of 1934, as amended (the
"1934 Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999 filed with the Commission on May 12, 1999; and
(c) The Registrant's Registration Statements on Form 8-A and Form 8-A12G
filed with the Commission on September 8, 1995, and April 28, 1997,
respectively, 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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which is also deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
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 officers, employees and other agents to the maximum extent
permitted by the Delaware General Corporation Law. However, the Registrant's
Certificate of Incorporation provides that, pursuant to Delaware law, its
directors shall not be liable for monetary damages for breach of their fiduciary
duty as directors to the Registrant and its stockholders. However, 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 directors
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
Exhibit Number Exhibit
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statements on Form 8-A and Form 8-A12G,
including the exhibits thereto, incorporated herein by reference
pursuant to Item 3(c) of this Registration Statement.
5 Opinion 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
5.1.
24.1 Power of Attorney. Reference is made to page II-4 of this
Registration Statement. 99.1 SanDisk Corporation 1995 Stock Option
Plan (As amended and restated as of December 17, 1998).
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 SanDisk Corporation 1995 Non-Employee Directors Stock Option Plan
(As amended and restated as of December 17, 1998).
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 Automatic Stock Option Agreement.
99.11 SanDisk Corporation Employee Stock Purchase Plan (As amended and
restated as of December 17, 1998).
99.12* Form of Stock Purchase Agreement.
99.13* Form of Enrollment/Change Form.
* Exhibits 99.2 through 99.6, 99.8 through 99.10, and Exhibits 99.12
and 99.13 are incorporated herein by reference to Exhibits 99.2 through 99.6,
99.8 through 99.10, and Exhibits 99.12 and 99.13, respectively, to Registrant's
Registration Statement No. 33-96298 on Form S-8, filed with the Commission on
November 10, 1995.
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 1995 Stock Option
Plan, the 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 in 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 indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that in the opinion of the Commission 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.
<PAGE>
II-5
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 19th
day of July, 1999.
SANDISK CORPORATION
By: /s/ Eliyahow Harari
---------------------------------------
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 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 all that said attorneys and agents
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.
Signatures Title Date
---------- ----- ----
- -------------------------- President, Chief Executive Officer July 19, 1999
Eliyahou Harari and Director
(Principal Executive Officer)
- -------------------------- Chief Financial Officer, July 19, 1999
Cindy Burgdorf Senior Vice President, Finance
and Administration and Secretary
(Principal Financial and
Accounting Officer)
- -------------------------- Director July 19, 1999
Irwin Federman
- -------------------------- Director July 19, 1999
William V. Campbell
- -------------------------- Director July 19, 1999
James D. Meindl
- -------------------------- Director July 19, 1999
Catherine P. Lego
- -------------------------- Director July 19, 1999
Thomas Mulvaney
- -------------------------- Director July 19, 1999
Alan F. Shugart
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SANDISK CORPORATION
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
4 Instruments Defining Rights of Stockholders. Reference is made to
Registrant's Registration Statements on Form 8-A and Form 8-A12G,
including the exhibits thereto, incorporated herein by reference
pursuant to Item 3(c) of this Registration Statement.
5 Opinion 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
5.1.
24.1 Power of Attorney. Reference is made to page II-4 of this
Registration Statement. 99.1 SanDisk Corporation 1995 Stock Option
Plan (As amended and restated as of December 17, 1998).
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 SanDisk Corporation 1995 Non-Employee Directors Stock Option Plan.
(As amended and restated as of December 17, 1998).
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 Automatic Stock Option Agreement.
99.11 SanDisk Corporation Employee Stock Purchase Plan (As amended and
restated as of December 17, 1998).
99.12* Form of Stock Purchase Agreement.
99.13* Form of Enrollment/Change Form.
* Exhibits 99.2 through 99.6, 99.8 through 99.10 and Exhibits 99.12 and
99.13 are incorporated herein by reference to Exhibits 99.2 through 99.6, 99.8
through 99.10, and Exhibits 99.12 and 99.13, respectively, to Registrant's
Registration Statement No. 33-96298 on Form S-8, filed with the Commission on
November 10, 1995.
<PAGE>
EXHIBIT 5.1
OPINION OF BROBECK, PHLEGER & HARRISON LLP
July 19, 1999
Sandisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
Re: Sandisk Corporation (the "Company")
Registration Statement for Offering of 4,000,000
Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Sandisk Corporation, a Delaware corporation
(the "Company") in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of an
aggregate of 4,000,000 additional shares of common stock (the "Shares") and
related stock options for issuance under the Company's (i) 1995 Stock Option
Plan, (ii) 1995 Non-Employee Directors Stock Option Plan (together the "Option
Plans") and (iii) Employee Stock Purchase Plan (the "Purchase Plan").
This opinion is being furnished in accordance with the requirements of
Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment and
amendment of the Option Plans and Purchase Plan. Based on such review, we are of
the opinion that, if, as an when the Shares are issued and sold (and the
consideration therefor received) pursuant to (a) the provisions of option
agreements duly authorized under the Option Plans and in accordance with the
Registration Statement, or (b) duly authorized stock purchase rights granted and
exercised under the Purchase Plan and in accordance with the Registration
Statement, such Shares will be duly authorized, legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above and
we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Option Plans or the Purchase Plan or the Shares issuable under such plans.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 No. 333- 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 22, 1999, with respect
to the consolidated financial statements and schedule of SanDisk corporation
included in this Annual Report (Form 10-K) for the year ended December 31, 1998
filed with the Securities Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
July 15, 1999
<PAGE>
EXHIBIT 99.1
SANDISK CORPORATION
1995 STOCK OPTION PLAN
(AS AMENDED AND RESTATED DECEMBER 17, 1998)
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.
III. ELIGIBILITY
A. The persons eligible to participate in the Plan are as follows:
<PAGE>
(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 9,498,711 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, (ii) the additional
increase of 2,500,000 shares authorized by the Board on February 10, 1997, and
approved by the stockholders at the 1997 Annual Meeting and (iii) an additional
increase of 3,500,000 shares authorized by the Board on December 17, 1998,
subject to stockholder approval at the 1999 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. The number of shares of Common Stock available for issuance under the Plan
shall automatically increase on the first trading day of January each calendar
year during the term of the Plan, beginning with calendar year 2002, by an
amount equal to four and thirty-six hundreds percent (4.36%) of the shares of
Common Stock outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase exceed
2,000,000 shares.
C. 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.
2
<PAGE>
D. 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, 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.
E. 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 maximum number and/or class of securities by which the share reserve is to
increase automatically each calendar year pursuant to the provisions of Section
IV.B of this Article One, (iii) 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 (iv) 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.
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.
4
<PAGE>
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.
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.
5
<PAGE>
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.
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.
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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 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.
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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 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.
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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.
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 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.
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(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.C. 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 Withholding Taxes to which such holders may
be subject 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 Withholding Taxes (not
to exceed one hundred percent (100%)) designated by the holder.
(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 Withholding Taxes)
with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated
by the holder.
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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 was approved at the
1997 Annual Meeting. 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. The Plan was amended on December 17, 1998 (the
"December 1998 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 3,500,000 shares and (ii) implement the automatic share
increase provisions of Section IV.B of Article One. The December 1998 Amendment
is subject to stockholder approval at the 1999 Annual Meeting and no option
grants made on the basis of the 3,500,000-share increase authorized by that
amendment shall become exercisable in whole or in part unless and until the
December 1998 Amendment is approved by the stockholders. Should such stockholder
approval not be obtained at the 1999 Annual Meeting, then each option grant made
pursuant to the 3,500,000-share increase authorized by the December 1998
Amendment shall terminate and cease to remain outstanding, and no further option
grants shall be made on the basis of that share increase, and the automatic
share increase provisions of Section IV.B of Article One shall not be
implemented. 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 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 Corporation's stockholders, be
incorporated into the Plan and 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.
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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.
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.
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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
(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.
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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.
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.
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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.
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.
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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.
BB. Stock Exchange shall mean either the American Stock Exchange or the New York
Stock Exchange.
CC. 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.
DD. 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.
EE. 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).
FF. 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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GG. Withholding Taxes shall mean the Federal, state and local income and
employment withholding taxes to which the holder of Non-Statutory Options or
unvested shares of Common Stock may become subject in connection with the
exercise of such holder's options or the vesting of his or her shares.
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EXHIBIT 99.7
SANDISK CORPORATION
1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(AS AMENDED AND RESTATED DECEMBER 17, 1998)
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.
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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 400,000 shares.1 Such share
reserve includes (i) the initial share reserve of 150,000 shares approved by the
stockholders in August 1995, (ii) an additional 50,000 share increase authorized
by the Board on February 10, 1997 and approved by stockholders at the 1997
Annual Stockholders Meeting and (iii) an additional 200,000 share increase
authorized by the Board on December 17, 1998, subject to stockholder approval at
the 1999 Annual Meeting. No shares of Common Stock shall become exercisable
under the Plan on the basis of the 200,000- share increase unless that increase
is approved by the stockholders at the 1999 Annual Meeting.
B. The number of shares of Common Stock available for issuance under the Plan
shall automatically increase on the first trading day of January each calendar
year during the term of the Plan, beginning with calendar year 2002, by an
amount equal to two tenths of one percent (0.2%) of the shares of Common Stock
outstanding on the last trading day in December of the immediately preceding
calendar year, but in no event shall any such annual increase exceed 75,000
shares.
C. 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.
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 maximum number and/or class of securities by which the share reserve is to
increase each calendar year pursuant to the provisions of Section IV.B of this
Article One, (iii) the number and/or class of securities for which option grants
are to be
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1. This number reflects the 2:3 stock split adopted by the Board on July 25,
1995.
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subsequently made per Eligible Director and (iv) 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.
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ARTICLE Two
OPTION GRANT PROGRAM
I. OPTION TERMS
The provisions of this Article Two reflect the changes to the
number of shares of Common Stock subject to the initial and annual option grants
to be made to the non-employee Board members pursuant to the amendment
authorized by the Board on December 17, 1998, subject to stockholder approval at
the 1999 Annual Meeting. Stockholder approval of such amendment shall constitute
pre-approval of each option grant made on or after the date of the 1999 Annual
Meeting to the non-employee Board members pursuant to the amended provisions of
this Article Two and the subsequent exercise of that option in accordance with
such provisions.
A. GRANT DATES. Option grants shall be made on the dates specified below:
1. Each Eligible Director who is first elected or appointed as a
non-employee Board member on or after the date of the 1999 Annual Stockholders
Meeting shall automatically be granted, on the date of such initial election or
appointment (as the case may be), a Non-Statutory Option to purchase 32,000
shares of Common Stock.
2. On the date of each Annual Stockholders Meeting, beginning with the
1999 Annual Meeting, each individual who is to continue to serve as an Eligible
Director 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 8,000 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 8,000-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.
(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.
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(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).
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
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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 December
17, 1998 amendment and 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
I. 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 was approved by the stockholders at the 1997 Annual
Meeting. The Plan was amended on December 17, 1998 (the "December 1998
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 200,000 shares, (ii) implement the automatic share increase
provisions of Section IV.B of Article One, (iii) increase the size of the
initial grants to non-employee Board members from 16,000 to 32,000 shares of
Common Stock and (iv) increase the size of the annual grants to non-employee
Board members from 4,000 to 8,000 shares of Common Stock. No option grants made
on the basis of the 200,000-share increase authorized by the December 1998
Amendment shall become exercisable in whole or in part unless and until that
amendment is approved by the stockholders. Should such stockholder approval not
be obtained at the 1999 Annual Meeting, then each option grant made pursuant to
the 200,000-share increase authorized by the December 1998 Amendment shall
terminate and cease to remain outstanding, no further option grants shall be
made on the basis of that share increase, and the automatic share increase
provisions of Section IV.B of Article One shall not be implemented. However, the
provisions of the Plan as in effect immediately prior to the December 1998
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 December 1998 Amendment shall remain outstanding
in accordance with the terms and conditions of the respective instruments
evidencing those options or issuances, and nothing in the December 1998
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 such Plan termination, all
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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.
II. 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.
III. 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.
IV. 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.
V. 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
(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.
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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.
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.
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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.
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.
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EXHIBIT 99.11
SANDISK CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED DECEMBER 17, 1998)
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 One Million One
Hundred Eighty-Three Thousand Three Hundred Thirty-Three (1,183,333) 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, (ii) an additional
450,000 share increase authorized by the Board on February 10, 1997 and approved
by the stockholders at the 1997 Annual Meeting and (iii) an additional 300,000
share increase authorized by the Board on December 17, 1998, subject to
stockholder approval at the 1999 Annual Meeting. No shares of Common Stock shall
be issued under the Plan on the basis of such 300,000-share increase unless that
increase is approved by the stockholders at the 1999 Annual Meeting. In no event
shall more than 741,455 shares of Common Stock be issued in the aggregate under
this Plan and the International Employee Stock Purchase Plan after March 15,
1999.
B. The number of shares of Common Stock available for issuance under the
combined reserve of this Plan and the International Plan shall automatically
increase on the first trading day of January each calendar year during the term
of the Plan, beginning with calendar year 2002, by an amount equal to
forty-three one hundredths of one percent (0.43%) of the shares of Common Stock
outstanding on the last trading day in December of the immediately preceding
calendar year, but in no event shall any such annual increase exceed 150,000
shares.
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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 class of securities issuable in the aggregate under
this Plan and the International Plan, (ii) the maximum number and/or class of
securities by which the combined share reserve under this Plan and the
International Plan is to increase each calendar year pursuant to the provisions
of Section III.B, (iii) the maximum number and class of securities purchasable
per Participant on any one Purchase Date and (iv) 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.
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.
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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 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.
However, the Plan Administrator shall have the discretionary authority,
exercisable prior to the start of any Offering Period, to increase or decrease
the limitation to be in effect for the number of shares purchasable per
Participant on the Purchase Date for that Offering Period.
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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, 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 (x) within ninety (90) days following the
commencement of such leave or (y) prior to the expiration of any longer
period for which such Participant's right to reemployment with the
Corporation is guaranteed by either statute or contract, his or her
payroll deductions under the Plan shall automatically resume at the
rate in effect at the time the leave began, unless the Participant
withdraws from the Plan prior to his or her return. An individual who
returns to active employment following a leave of absence which exceeds
in duration the applicable (x) or (y) time period will be treated as a
new
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Employee for purposes of subsequent participation in the Plan and must
accordingly re-enroll in the Plan (by making a timely filing of the
prescribed enrollment forms) on or before the start date of any new
Offering Period or Purchase Interval.
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.
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.
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.
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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 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.
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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, 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) 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 was approved by the stockholders at the 1997
Annual Meeting. On December 17, 1998, the Board adopted amendments to the plan
to (i) increase the number of shares of Common Stock authorized for issuance in
the aggregate under this Plan and the International Employee Stock Purchase Plan
by an additional 300,000 shares and (ii) to implement the automatic share
increase provisions of Section III.B. These amendments are subject to
stockholder approval at the 1999 Annual Meeting, and no shares may be issued on
the basis of the 300,000 share increase unless and until the share increase is
approved by the stockholders. Should such stockholder approval not be obtained
at the 1999 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 300,000-share increase
authorized by the Board on December 17, 1998, and the automatic share increase
provisions of Section III.B shall not be implemented.
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.
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.
<PAGE>
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.
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.
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.
A-2
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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.
A-3
