Document:

exv10w3

 

Exhibit 10.3

INITIAL GRANT

SANDISK CORPORATION

NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR

AUTOMATIC STOCK OPTION

     Notice is hereby given of the following option grant (the “Option”) to purchase shares of the
Common Stock of SanDisk Corporation (the “Corporation”):

	 	 	 	 	 
	

	 	Optionee:	 	 
	

	 	 	 	

	 	 	 	 
	

	Grant Date:	 	 
	

	 	 	

	 	 	 	 	 	 	 
	

	 	Exercise Price: $
	 	 	 	per share
	

	 	 	 	
	 	 

	 	 	 	 
	

	Number of Option Shares:
	 	  [Not to exceed 150,000] shares of Common Stock

	 	 	 	 
	

	Expiration Date:	 	 
	

	 	 	

     Type of Option: Non-Statutory Stock Option

     Date Exercisable: Immediately Exercisable

Vesting Schedule: The Option Shares shall initially be unvested and subject
to repurchase by the Corporation at the lower of (i) the Exercise Price paid per
share or (ii) the Fair Market Value per share at the time of repurchase. Optionee
shall acquire a vested interest in, and the Corporation’s repurchase right shall
accordingly lapse with respect to, the Option Shares in a series of four (4)
successive equal annual installments upon Optionee’s completion of each year of
Service (whether as a non-employee Board member, Employee or consultant) over the
four (4)-year period measured from the Grant Date. In no event shall any additional
Option Shares vest after Optionee’s cessation of Service.

     Optionee understands and agrees that the Option is granted subject to and in accordance with
the terms of the automatic option grant program under the SanDisk Corporation 2005 Stock Incentive
Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of
the Option as set forth in the Automatic Stock Option Agreement attached hereto as Exhibit
A. Optionee hereby acknowledges receipt of a copy of the official prospectus for the Plan in
the form attached hereto as Exhibit B. A copy of the Plan is available upon request made
to the Corporate Secretary at the Corporation’s principal offices.

     REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ANY UNVESTED OPTION SHARES ACQUIRED
UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO A REPURCHASE RIGHT EXERCISABLE BY THE

 

 

CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHT SHALL BE SPECIFIED IN A STOCK PURCHASE
AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME
OF THE OPTION EXERCISE.

     No Impairment of Rights. Nothing in this Notice or the attached Automatic Stock
Option Agreement or in the Plan shall interfere with or otherwise restrict in any way the rights of
the Corporation and the Corporation’s stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.

     Definitions. All capitalized terms in this Notice shall have the meaning assigned to
them in this Notice or in the attached Automatic Stock Option Agreement.

DATED: _________________, 200____

	 	 	 	 	 
	 	 	SANDISK CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 
	

	 	 	 	, OPTIONEE
	

	 	Address:	 	 
	

	 	 	 	 
	 
	 
	 	 	 	 
	

	 	 	 	 

ATTACHMENTS

Exhibit A — Automatic Stock Option Agreement

Exhibit B — Plan Summary and Prospectus

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EXHIBIT A

AUTOMATIC STOCK OPTION AGREEMENT

 

 

EXHIBIT B

PLAN SUMMARY AND PROSPECTUSexv10w4

 

Exhibit 10.4

ANNUAL GRANT

SANDISK CORPORATION

NOTICE OF GRANT OF NON-EMPLOYEE DIRECTOR

AUTOMATIC STOCK OPTION

     Notice is hereby given of the following option grant (the “Option”) to purchase shares of the
Common Stock of SanDisk Corporation (the “Corporation”):

	 	 	 	 	 
	

	 	Optionee:	 	 
	

	 	 	 	

	 	 	 	 	 
	

	Grant Date:	 	 
	

	 	 	 	

	 	 	 	 	 	 	 
	

	 	Exercise Price: $
	 	 	 	per share
	

	 	 	 	
	 	 

	 	 	 	 	 
	

	Number of Option Shares:
	 	[Not to exceed 40,000] shares of Common Stock

	 	 	 	 	 
	

	Expiration Date:	 	 
	

	 	 	 	

     Type of Option: Non-Statutory Stock Option

     Date Exercisable: Immediately Exercisable

Vesting Schedule: The Option Shares shall initially be unvested and subject
to repurchase by the Corporation at the lower of (i) the Exercise Price paid per
share or (ii) the Fair Market Value per share at the time of repurchase. Optionee
shall acquire a vested interest in, and the Corporation’s repurchase right shall
accordingly lapse with respect to, the Option Shares upon the earlier of (i)
Optionee’s completion of one year of Service (whether as a non-employee Board
member, Employee or consultant) measured from the Grant Date or (ii) Optionee’s
continuation in Service through the day immediately preceding the day on which the
next annual meeting of the Corporation’s stockholders is held following the Grant
Date. In no event shall any Option Shares vest after Optionee’s cessation of
Service.

     Optionee understands and agrees that the Option is granted subject to and in accordance with
the terms of the automatic option grant program under the SanDisk Corporation 2005 Stock Incentive
Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of
the Option as set forth in the Automatic Stock Option Agreement attached hereto as Exhibit
A. Optionee hereby acknowledges receipt of a copy of the official prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is
available upon request made to the Corporate Secretary at the Corporation’s principal offices.

 

 

     REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ANY UNVESTED OPTION SHARES ACQUIRED
UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO A REPURCHASE RIGHT EXERCISABLE BY THE
CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHT SHALL BE SPECIFIED IN A STOCK PURCHASE
AGREEMENT, IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME
OF THE OPTION EXERCISE.

     No Impairment of Rights. Nothing in this Notice or the attached Automatic Stock
Option Agreement or in the Plan shall interfere with or otherwise restrict in any way the rights of
the Corporation and the Corporation’s stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.

     Definitions. All capitalized terms in this Notice shall have the meaning assigned to
them in this Notice or in the attached Automatic Stock Option Agreement.

DATED: _________________, 200___

	 	 	 	 	 
	 	 	SANDISK CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 
	

	 	 	 	, OPTIONEE
	

	 	Address:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 

ATTACHMENTS

Exhibit A — Automatic Stock Option Agreement

Exhibit B — Plan Summary and Prospectus

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EXHIBIT A

AUTOMATIC STOCK OPTION AGREEMENT

 

 

EXHIBIT B

PLAN SUMMARY AND PROSPECTUSexv10w5

 

Exhibit 10.5

SANDISK CORPORATION

STOCK OPTION AGREEMENT

RECITALS

     A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board (or the board of directors of any Parent or
Subsidiary) and consultants and other independent advisors who provide services to the Corporation
(or any Parent or Subsidiary).

     B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.

     C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.

          NOW, THEREFORE, it is hereby agreed as follows:

          1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date,
an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option
Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at
the Exercise Price.

          2. Option Term. This option shall have a maximum term of seven (7) years measured
from the Grant Date and shall accordingly expire at the close of business on the Expiration Date,
unless sooner terminated in accordance with Paragraph 5 or 6

          3. Limited Transferability.

               (a) This option shall be neither transferable nor assignable by Optionee other than by will or
the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s
lifetime, only by Optionee. However, Optionee may designate one or more persons as the
beneficiary or beneficiaries of this option, and this option shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the
transferred option subject to all the terms and conditions of this Agreement, including
(without limitation) the limited time period during which this option may, pursuant to
Paragraph 5, be exercised following Optionee’s death.

               (b) If this option is designated a Non-Statutory Option in the Grant Notice, then this option may
be assigned in whole or in part during Optionee’s lifetime to one or more of the Optionee’s
Family Members or to a trust established for the exclusive benefit of Optionee and/or one or
more such Family Members, to the extent such assignment is in

 

 

connection with the Optionee’s estate plan or pursuant to a domestic relations order. The
assigned portion shall be exercisable only by the person or persons who acquire a proprietary
interest in the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this option immediately prior to such
assignment.

          4. Dates of Exercise. This option shall become exercisable for the Option Shares in
one or more installments in accordance with the Exercise Schedule set forth in the Grant Notice.
As the option becomes exercisable for such installments, those installments shall accumulate, and
the option shall remain exercisable for the accumulated installments until the Expiration Date or
sooner termination of the option term under Paragraph 5 or 6.

          5. Cessation of Service. The option term specified in Paragraph 2 shall terminate
(and this option shall cease to be outstanding) prior to the Expiration Date should any of the
following provisions become applicable:

               (a) Should Optionee cease to remain in Service for any reason (other than death, Permanent
Disability or Misconduct) while this option is outstanding, then Optionee (or any person or
persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3)
shall have a period of three (3) months (commencing with the first date following such
cessation of Service) during which to exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.

               (b) Should Optionee die while this option is outstanding, then this option may be exercised by
(i) the personal representative of Optionee’s estate or (ii) the person or persons to whom the
option is transferred pursuant to Optionee’s will or the laws of inheritance following
Optionee’s death or to whom the option is transferred during Optionee’s lifetime pursuant to a
permitted transfer under Paragraph 3, as the case may be. However, if Optionee dies while
holding this option and has an effective beneficiary designation in effect for this option at
the time of his or her death, then the designated beneficiary or beneficiaries shall have the
exclusive right to exercise this option following Optionee’s death. Any such right to
exercise this option shall lapse, and this option shall cease to be outstanding, upon the
earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s
death or (ii) the Expiration Date.

               (c) Should Optionee cease Service by reason of Permanent Disability while this option is
outstanding, then Optionee (or any person or persons to whom this option is transferred
pursuant to a permitted transfer under Paragraph 3) shall have a period of twelve (12) months
(commencing with the first day following such cessation of Service) during which to exercise
this option. In no event shall this option be exercisable at any time after the Expiration
Date.

               (d) During the limited period of post-Service exercisability, this option may not be exercised in
the aggregate for more than the number of Option Shares for which this option is, at the time
of Optionee’s cessation of Service, vested and exercisable pursuant to the Exercise Schedule
specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6. This option shall not vest or become exercisable for any additional
Option Shares,

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whether pursuant to the normal Exercise Schedule specified in the Grant Notice or
the special vesting acceleration provisions of Paragraph 6, following the Optionee’s cessation
of Service, except to the extent (if any) specifically authorized by the Plan Administrator
pursuant to an express written agreement with the Optionee. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease
to be outstanding for any exercisable Option Shares for which the option has not otherwise been
exercised.

               (e) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in
any Misconduct while this option is outstanding, then this option shall terminate immediately
and cease to remain outstanding.

          6. Special Acceleration of Option.

               (a) This option, to the extent outstanding at the time of a Change in Control but not otherwise
fully exercisable, shall automatically accelerate so that this option shall, immediately prior
to the effective date of such Change in Control, become exercisable for all of the Option
Shares at the time subject to this option and may be exercised for any or all of those Option
Shares as fully vested shares of Common Stock. However, this option shall not become
exercisable on such an accelerated basis, if and to the extent: (i) this option is to be
assumed by the successor corporation (or parent thereof) or is otherwise to be continued in
full force and effect pursuant to the terms of the Change in Control transaction or (ii) this
option is to be replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on any Option Shares for
which this option is not otherwise at that time exercisable (the excess of the Fair Market
Value of those Option Shares over the aggregate Exercise Price payable for such shares) and
provides for subsequent payout of that spread in accordance with the same Exercise Schedule
for those Option Shares as set forth in the Grant Notice.

               (b) Immediately following the Change in Control, this option shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in effect pursuant to the terms of the Change in Control transaction.

               (c) If this option is assumed in connection with a Change in Control or otherwise continued in
effect, then this option shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would have been issuable to
Optionee in consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control, and appropriate adjustments shall also be made to the
Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent
the actual holders of the Corporation’s outstanding Common Stock receive cash consideration
for their Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption or continuation of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration
paid per share of Common Stock in such Change in Control, provided such common stock is readily tradable on an established U.S. securities
exchange or market.

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               (d) This Agreement shall not in any 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.

          7. Adjustment in Option Shares. 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 total number and/or
class of securities subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.

          8. Stockholder Rights. The holder of this option shall not have any stockholder
rights with respect to the Option Shares until such person shall have exercised the option, paid
the Exercise Price and become a holder of record of the purchased shares.

          9. Manner of Exercising Option.

               (a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons
exercising the option) must take the following actions:

                    (i) Execute and deliver to the Corporation a Notice of Exercise for the Option Shares for
which the option is exercised or comply with such other procedures as the Corporation
may establish for notifying the Corporation of the exercise of this option for one or
more Option Shares.

                    (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the
following forms:

                         (A) cash or check made payable to the Corporation;

                         (B) shares of Common Stock held by Optionee (or any other person or persons exercising
the option) for any 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

                         (C) through a special sale and remittance procedure pursuant to which Optionee (or any
other person or persons exercising the option) shall concurrently provide irrevocable
instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for
purposes of administering such procedure in accordance with the Corporation’s
pre-clearance/pre-notification policies) to effect the

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	 	   	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 income and
employment taxes required to be withheld by the Corporation by reason of such exercise
and (ii) to the Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm on such settlement date in order to complete the sale.

               Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Notice of Exercise (or other notification procedure) delivered
to the Corporation in connection with the option exercise.

                    (iii) Furnish to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this option.

                    (iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all applicable income and employment
tax withholding requirements applicable to the option exercise.

               (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of
Optionee (or any other person or persons exercising this option) a certificate for the
purchased Option Shares, with the appropriate legends affixed thereto.

               (c) In no event may this option be exercised for any fractional shares.

          10. Compliance with Laws and Regulations.

               (a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed for trading at the
time of such exercise and issuance.

               (b) The inability of the Corporation to obtain approval from any regulatory body having authority
deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.

5

 

          11. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and
6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the
Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal
representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option
designated by Optionee.

          12. Notices. Any notice required to be given or delivered to the Corporation under
the terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices. Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant
Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S.
mail, postage prepaid and properly addressed to the party to be notified.

          13. Construction. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in this option.

          14. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California without resort to that State’s
conflict-of-laws rules.

          15. Excess Shares. If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without stockholder approval be issued
under the Plan, then this option shall be void with respect to those excess shares, unless
stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock
issuable under the Plan is obtained in accordance with the provisions of the Plan.

          16. Additional Terms Applicable to an Incentive Option. In the event this option is
designated an Incentive Option in the Grant Notice, the following terms and conditions shall also
apply to the grant:

               (a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and
to the extent) this option is exercised for one or more Option Shares: (A) more than three (3)
months after the date Optionee ceases to be an Employee for any reason other than death or
Permanent Disability or (B) more than twelve (12) months after the date Optionee ceases to be
an Employee by reason of Permanent Disability.

               (b) No installment under this option shall qualify for favorable tax treatment as an Incentive
Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date)
of the Common Stock for which such installment first becomes exercisable hereunder would, when
added to the aggregate value (determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or any other Incentive Options granted
to Optionee prior to the Grant Date (whether under the Plan or any

6

 

other option plan of the
Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in
any calendar year, this option shall nevertheless become exercisable for the excess shares in
such calendar year as a Non-Statutory Option.

               (c) Should the exercisability of this option be accelerated upon a Change in Control, then this
option shall qualify for favorable tax treatment as an Incentive Option only to the extent the
aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this
option first becomes exercisable in the calendar year in which the Change in Control
transaction occurs does not, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities for which this
option or one or more other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the applicable One Hundred Thousand
Dollar ($100,000) limitation be exceeded in the calendar year of such Change in Control, the
option may nevertheless be exercised for the excess shares in such calendar year as a
Non-Statutory Option.

               (d) Should Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first time in the same calendar year as this
option, then for purposes of the foregoing limitations on the exercisability of such options
as Incentive Options, this option and each of those other options shall be deemed to become
first exercisable in that calendar year, on the basis of the chronological order in which such
options were granted, except to the extent otherwise provided under applicable law or
regulation.

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APPENDIX

          The following definitions shall be in effect under the Agreement:

          A. Agreement shall mean this Stock Option Agreement.

          B. Board shall mean the Corporation’s Board of Directors.

          C. Change in Control shall mean a change in ownership or control of the Corporation
effected through any of the following transactions:

               (i) a merger, consolidation or other reorganization approved by the Corporation’s
stockholders, unless securities representing more than fifty percent (50%) of the
total combined voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in substantially
the same proportion, by the persons who beneficially owned the Corporation’s
outstanding voting securities immediately prior to such transaction, or

               (ii) a stockholder-approved sale, transfer or other disposition (including in whole or in
part through one or more licensing arrangements) of all or substantially all of the
Corporation’s assets, or

               (iii) the closing of any transaction or series of related transactions pursuant to which
any person or any group of persons comprising a “group” within the meaning of Rule
13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to
such transaction or series of related transactions, directly or indirectly controls,
is controlled by or is under common control with, the Corporation) becomes directly or
indirectly the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing (or convertible into or exercisable for securities possessing)
more than fifty percent (50%) of the total combined voting power of the Corporation’s
securities (as measured in terms of the power to vote with respect to the election of
Board members) outstanding immediately after the consummation of such transaction or
series of related transactions, whether such transaction involves a direct issuance
from the Corporation or the acquisition of outstanding securities held by one or more
of the Corporation’s existing stockholders.

          D. Code shall mean the Internal Revenue Code of 1986, as amended.

          E. Common Stock shall mean shares of the Corporation’s common stock.

          F. Corporation shall mean SanDisk Corporation, a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of SanDisk Corporation
which shall by appropriate action adopt the Plan.

A-1

 

          G. 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.

          H. Exercise Date shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 of the Agreement.

          I. Exercise Price shall mean the exercise price per Option Share as specified in the
Grant Notice.

          J. Exercise Schedule shall mean the schedule set forth in the Grant Notice pursuant to
which the option is to become exercisable for the Option Shares in one or more installments
over the Optionee’s period of Service.

          K. Expiration Date shall mean the date on which the option expires as specified in the
Grant Notice.

          L. 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 at the
close of regular hours trading (i.e., before after-hours trading begins) on the Nasdaq
National Market on the date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National Market. 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 at the close of
regular hours trading (i.e., before after-hours trading begins) 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.

          M. Family Member shall mean any of the following members of the Optionee’s family: any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, bother-in-law or
sister-in-law.

          N. Grant Date shall mean the date of grant of the option as specified in the Grant
Notice.

A-2

 

          O. Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of the option
evidenced hereby.

          P. Incentive Option shall mean an option which satisfies the requirements of Code
Section 422.

          Q. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty
by Optionee, any unauthorized use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way
preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge
or dismiss Optionee or any other person in the Service of the Corporation (or any Parent or
Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be
deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for
Misconduct.

          R. Non-Statutory Option shall mean an option not intended to satisfy the requirements of
Code Section 422.

          S. Notice of Exercise shall mean the notice of option exercise in the form prescribed
by the Corporation..

          T. Option Shares shall mean the number of shares of Common Stock subject to the option
as specified in the Grant Notice.

          U. Optionee shall mean the person to whom the option is granted as specified in the
Grant Notice.

          V. 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.

          W. Permanent Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical or mental
impairment which is expected to result in death or to be of continuous duration of twelve (12)
months or more.

          X. Plan shall mean the Corporation’s 2005 Stock Incentive Plan.

          Y. Plan Administrator shall mean either the Board or a committee of the Board acting in
its capacity as administrator of the Plan.

A-3

 

          Z. Service shall mean the Optionee’s performance of services for the Corporation (or any
Parent or Subsidiary, whether now existing or subsequently established) by a person in the
capacity of an Employee, a non-employee member of the board of directors or a consultant or
independent advisor. However, the Optionee shall be deemed to cease Service immediately upon
the occurrence of the either of the following events: (i) the Optionee no longer performs
services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or
(ii) the entity for which the Optionee is performing such services ceases to remain a Parent
or Subsidiary of the Corporation, even though the Optionee may subsequently continue to
perform services for that entity. Service shall not be deemed to cease during a period of
military leave, sick leave or other personal leave approved by the Corporation;
provided, however, that should such leave of absence exceed three (3) months,
then for purposes of determining the period within which the option may be exercised as an
Incentive Stock Option under the federal tax laws (if the option is designated as such in the
Grant Notice), the Optionee’s Service shall be deemed to cease on the first day immediately
following the expiration of such three (3)-month period, unless Optionee is provided with the
right to return to Service following such leave either by statute or by written contract.
Except to the extent otherwise required by law or expressly authorized by the Plan
Administrator or by the Corporation’s written policy on leaves of absence, no Service credit
shall be given for vesting purposes for any period the Optionee is on a leave of absence.

          AA. Stock
Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.

          BB. 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.

A-4

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