Document:

exv10w6

 

Exhibit 10.6

SANDISK CORPORATION

AUTOMATIC STOCK OPTION AGREEMENT

RECITALS

     A. The Corporation has implemented an automatic option grant program under the Plan pursuant
to which eligible non-employee members of the Board will automatically receive special option
grants at periodic intervals over their period of Board service in order to provide such
individuals with a meaningful incentive to continue to serve as members of the Board.

     B. Optionee is an eligible non-employee Board member, and this Agreement is executed pursuant
to, and is intended to carry out the purposes of, the Plan in connection with the automatic grant
of an option to purchase shares of Common Stock under the Plan.

     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,
a Non-Statutory 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 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 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.

               (b) Should the Optionee die while holding this option, then this option shall be transferred in
accordance with Optionee’s will or the laws of inheritance. 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.

          4. Exercisability/Vesting.

               (a) This option shall be immediately exercisable for any or all of the Option Shares, whether or
not the Option Shares are at the time vested in accordance with the Vesting Schedule, and
shall remain so exercisable until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.

               (b) Optionee shall, in accordance with the Vesting Schedule set forth in the Grant Notice, vest
in the Option Shares in one or more installments over his or her period of Service (whether as
a non-employee Board member, Employee or consultant). The Option Shares shall, however, be
subject to accelerated vesting pursuant to the provisions of Paragraph 5, 6 or 7, but in no
event shall any additional Option Shares vest following Optionee’s cessation of Service.

          5. Cessation of Service. Should Optionee’s Service cease while this option remains
outstanding, then the option term specified in Paragraph 2 shall terminate (and this option shall
cease to be outstanding) prior to the Expiration Date in accordance with the following provisions:

               (a) Should Optionee cease Service for any reason (other than death or Permanent Disability) while
this option is outstanding, then the period during which this option may be exercised shall be
reduced to a twelve (12)-month period measured from the date of such cessation of Service, but
in no event shall this option be exercisable at any time after the Expiration Date. During
such limited period of exercisability, Optionee (or the person or persons to whom this option
is transferred pursuant to a permitted transfer under Paragraph 3) may not exercise this
option in the aggregate for more than the number of Option Shares (if any) in which Optionee
is vested on the date of his or her cessation of Service. Upon the earlier of (i) the
expiration of such twelve (12)-month period or (ii) the specified Expiration Date, the option
shall terminate and cease to be exercisable with respect to any vested Option Shares for which
the option has not been exercised.

               (b) Should Optionee die during the twelve (12)-month period following his or her cessation of
Service but while this option is outstanding, then (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 or
(iii) the designated beneficiary or beneficiaries of this option (as the case may be) shall
have the right to exercise this option for any or all of the Option Shares in which Optionee
is vested at the time of Optionee’s cessation of Service (less any Option Shares purchased by
Optionee after such cessation of Service but prior to death). Any such right

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to exercise this option shall terminate, and this option shall accordingly cease to be
exercisable for such vested Option Shares, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee’s cessation of Service or (ii) the
specified Expiration Date.

               (c) Should Optionee cease Service by reason of death or Permanent Disability, then any Option
Shares at the time subject to this option but not otherwise vested shall vest in full so that
this option may be exercised for any or all of the Option Shares as fully vested shares of
Common Stock at any time prior to the earlier of (i) the expiration of the twelve (12)-month
period measured from the date of Optionee’s cessation of Service or (ii) the specified
Expiration Date, whereupon this option shall terminate and cease to be outstanding.

               (d) Upon Optionee’s cessation of Service for any reason other than death or Permanent Disability,
this option shall immediately terminate and cease to be outstanding with respect to any and
all Option Shares in which Optionee is not otherwise at that time vested in accordance with
the normal Vesting Schedule or the special vesting acceleration provisions of Paragraphs 6 and
7 below.

          6. Change in Control.

               (a) Should a Change in Control occur during Optionee’s period of Service, then any Option Shares
at the time subject to this option but not otherwise vested shall automatically vest so that
this option shall, immediately prior to the specified effective date for that Change in
Control, become exercisable for all of the Option Shares as fully vested shares of Common
Stock and may be exercised for any or all of those vested shares. Immediately following the
consummation of the Change in Control, this option shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its parent company
or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

               (b) 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 transaction, 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 transaction, provided
such common stock is readily tradable on an established U.S. securities exchange or market.

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          7. Hostile Take-Over. In the event of a Hostile Take-Over effected during Optionee’s
period of Service, any Option Shares at the time subject to this option but not otherwise vested
shall automatically vest so that this option shall, immediately prior to the effective date of that
Hostile Take-Over, become exercisable for all of the Option Shares as fully vested shares of Common
Stock and may be exercised for any or all of those vested shares. This option shall remain
exercisable for such fully vested Option Shares until the earlier of (i) the specified Expiration
Date, or (ii) the sooner termination of this option in accordance with Paragraph 5 or 6.

          8. 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.

          9. 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.

          10. 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) To the extent the option is exercised for vested Option Shares, 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. To the extent the option is exercised for unvested Option Shares, execute and
deliver to the Corporation a Purchase Agreement for those unvested 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 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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                         (C) to the extent the option is exercised for vested Option Shares, 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 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.

                       (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.

               (b) 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 process (or the Purchase Agreement, if applicable) delivered to the Corporation
in connection with the option exercise.

               (c) As soon after the Exercise Date as practical, 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. To the extent any such
Option Shares are unvested, the certificates for those Option Shares shall be endorsed with an
appropriate legend evidencing the Corporation’s repurchase rights and may be held in escrow
with the Corporation until such shares vest.

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

          11. No Impairment of Rights. This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise make changes in its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets. In addition, this Agreement shall not in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the Corporation or the
stockholders to remove Optionee from the Board at any time in accordance with the provisions of
applicable law.

          12. 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

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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.

          13. Successors and Assigns. Except to the extent otherwise provided in Paragraph 3 or
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.

          14. 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.

          15. 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.

          16. 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.

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APPENDIX

          The following definitions shall be in effect under the Agreement:

          A. Agreement
shall mean this Automatic 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.

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          G. Employee
shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary, whether now existing or
subsequently established), 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
Dateshall mean the date on which the option shall have been exercised in accordance with Paragraph 10 of the Agreement.

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

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

          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 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.

          L. 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.

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

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

          O. Hostile
Take-Over shall mean a change in ownership or control of the Corporation effected through either of the following transactions:

               (i) 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, or

               (ii) 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.

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

          S. Option
Shares shall mean the number of shares of Common Stock subject to the option.

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

          U. 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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          V. Permanent
Disability shall mean the inability of Optionee to perform his or her usual duties as a member
of the Board or other Service status by reason of any medically determinable physical or mental impairment
which is expected to result in death or has lasted or can be expected to last for a continuous period of
twelve (12) months or more.

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

          X. Purchase
Agreement shall mean the stock purchase agreement (in form and substance satisfactory to the Corporation) which grants
the Corporation the right to repurchase, at the Exercise Price, any and all unvested Option Shares held by Optionee at the time of
Optionee’s cessation of Service and which precludes the sale, transfer or other disposition of any purchased Option Shares while
those shares are unvested and subject to such repurchase right.

          Y. Service
shall mean the Optionee’s performance of services for the Corporation (or any Parent or
Subsidiary, whether now existing or subsequently established) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent advisor.

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

          AA. 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.

          BB. Vesting Schedule shall mean the vesting schedule specified in the Grant Notice, pursuant to which the
Option Shares will vest in one or more installments over the Optionee’s period of Service, subject to
acceleration in accordance with the provisions of the Agreement.

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Exhibit 10.7

SANDISK CORPORATION

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

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

          B. Participant 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 issuance of shares of Common Stock to the Participant under
the Stock Issuance Program.

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

NOW, THEREFORE, it is hereby agreed as follows:

          1. Grant of Restricted Stock Units. The Corporation hereby awards to the Participant,
as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit represents
the right to receive one share of Common Stock on the vesting date of that unit. The number of
shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting
schedule for those shares, the dates on which those vested shares shall become issuable to
Participant and the remaining terms and conditions governing the award (the “Award”) shall be as
set forth in this Agreement.

AWARD SUMMARY

	 	 	 
	Award
Date:

	 	                                        , 200___
	 
	 	 
	Number of Shares

	 	                    shares of Common Stock (the “Shares”)
	Subject to Award:
	 	 
	 
	 	 
	Vesting Schedule:

	 	To be determined by the Plan Administrator.
	 
	 	 
	Issuance Schedule

	 	The Shares in which the Participant vests in
accordance with the foregoing Vesting Schedule will
be issuable immediately upon vesting, subject to the
Corporation’s collection of the applicable
Withholding Taxes. The procedures pursuant to which
the applicable Withholding Taxes are to be collected
are set forth in Paragraph 7 of this Agreement.

          2. Limited Transferability. Prior to actual receipt of the Shares which vest
hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any
Shares which vest hereunder but which otherwise remain unissued at the time of the

 

 

Participant’s death may be transferred pursuant to the provisions of the Participant’s will or
the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this
Award. The Participant may also direct the Corporation to issue the stock certificates for any
Shares which in fact vest and become issuable under the Award during his or her lifetime to one or
more designated family members or a trust established for the Participant and/or his or her family
members. The Participant may make such a beneficiary designation or certificate directive at any
time by filing the appropriate form with the Plan Administrator or its designee.

          3. Cessation of Service. Should the Participant cease Service for any reason prior to
vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled
with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced
accordingly. The Participant shall thereupon cease to have any right or entitlement to receive any
Shares under those cancelled units.

          4. Stockholder Rights and Dividend Equivalents

               (a) The holder of this Award shall not have any stockholder rights, including voting or
dividend rights, with respect to the Shares subject to the Award until the Participant becomes the
record holder of those Shares following their actual issuance upon the Corporation’s collection of
the applicable Withholding Taxes.

               (b) Notwithstanding the foregoing, should any dividend or other distribution payable other
than in shares of Common Stock, whether regular or extraordinary, be declared and paid on the
outstanding Common Stock while one or more Shares remain subject to this Award (i.e., those Shares
are not otherwise issued and outstanding for purposes of entitlement to the dividend or
distribution), then a special book account shall be established for the Participant and credited
with a phantom dividend equivalent to the actual dividend or distribution which would have been
paid on those Shares had they been issued and outstanding and entitled to that dividend or
distribution. As the Shares subsequently vest hereunder, the phantom dividend equivalents credited
to those Shares in the book account shall be distributed to the Participant (in cash or such other
form as the Plan Administrator may deem appropriate in its sole discretion) concurrently with the
issuance of the vested Shares to which those phantom dividend equivalents relate. However, each
such distribution shall be subject to the Corporation’s collection of the Withholding Taxes
applicable to that distribution.

          5. Change of Control.

               (a) Any Restricted Stock Units subject to this Award at the time of a Change in Control may be
assumed by the successor entity or otherwise continued in full force and effect or may be replaced
with a cash incentive program of the successor entity which preserves the Fair Market Value of the
unvested shares of Common Stock subject to the Award at the time of the Change in Control and
provides for subsequent payout of that value in accordance with the vesting schedule applicable to
the Award. In the event of such assumption or continuation of the Award or such replacement of the
Award with a cash incentive program, no accelerated vesting of the Restricted Stock Units shall
occur at the time of the Change in Control.

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               (b) In the event the Award is assumed or otherwise continued in effect, the Restricted Stock
Units subject to the Award shall be adjusted immediately after the consummation of the Change in
Control so as to apply to the number and class of securities into which the Shares subject to those
units immediately prior to the Change in Control would have been converted in consummation of that
Change in Control had those Shares actually been issued and outstanding at that time. To the
extent the actual holders of the outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation (or parent entity)
may, in connection with the assumption or continuation of the Restricted Stock Units subject to the
Award at that time, 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 the Change in Control
transaction, provided such common stock is readily tradable on an established U.S. securities
exchange or market.

               (c) If the Restricted Stock Units subject to this Award at the time of the Change in Control
are not assumed or otherwise continued in effect or replaced with a cash incentive program in
accordance with Paragraph 5(a), then those units will vest immediately prior to the closing of the
Change in Control. The Shares subject to those vested units will be issued immediately upon such
vesting (or otherwise converted into the right to receive the same consideration per share of
Common Stock payable to the other stockholders of the Corporation in consummation of that Change in
Control), subject to the Corporation’s collection of the applicable Withholding Taxes pursuant to
the provisions of Paragraph 7.

               (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.

          6. Adjustment in 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 the total number and/or class of securities
issuable pursuant to this Award in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

          7. Issuance of Shares of Common Stock.

               (a) As soon as administratively practicable following each date one or more Shares vest in
accordance with the provisions of this Agreement, the Corporation shall issue to or on behalf of
the Participant a certificate (which may be in electronic form) for the shares of Common Stock
which vest on that date under the Award and shall concurrently distribute to the Participant any
phantom dividend equivalents with respect to those Shares, subject in each instance to the
Corporation’s collection of the applicable Withholding Taxes. The Withholding Taxes may be
collected from the Participant through any of the following alternatives:

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          - the Participant’s delivery of his or her separate check payable to the
Corporation in the amount of such Withholding Taxes, or

          - the use of the proceeds from a next-day sale of the Shares issued to the
Participant, provided and only if (i) such a sale is permissible under the Corporation’s
trading policies governing the sale of Common Stock, (ii) the Participant makes an
irrevocable commitment, on or before the vesting date for those Shares, to effect such sale
of the Shares and (iii) the transaction is not otherwise deemed to constitute a prohibited
loan under Section 402 of the Sarbanes-Oxley Act of 2002, or

          - with respect to the distributed phantom dividend equivalents, the Corporation’s
withholding a portion of that distribution, with the cash portion to be the first portion so
withheld.

               (b) The Plan Administrator may, in its sole discretion and pursuant to procedures authorized
and established by the Plan Administrator for such purpose, permit the Participant to satisfy the
Withholding Tax liability applicable to the Shares which vest under the Award by allowing the
Participant to direct the Corporation to withhold a portion of those vested Shares with a Fair
Market Value (measured as of the vesting date) equal to the amount of such Withholding Taxes;
provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary
to satisfy the Corporation‘s required tax withholding obligations using the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes, that are applicable
to supplemental taxable income. Participant shall be notified in writing in the event such Share
withholding mechanism is actually to be made available from time to time with respect to one or
more Shares which vest under this Agreement.

               (c) Except as otherwise provided in Paragraph 5 or this Paragraph 7, the settlement of all
Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock.
In no event, however, shall any fractional shares be issued. Accordingly, the total number of
shares of Common Stock to be issued at the time the Award vests shall, to the extent necessary, be
rounded down to the next whole share in order to avoid the issuance of a fractional share.

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          8. Compliance with Laws and Regulations. The issuance of shares of Common Stock pursuant
to the Award shall be subject to compliance by the Corporation and Participant 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 issuance.

          9. 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 Participant shall be in writing
and addressed to Participant at the address indicated below Participant’s signature line on this
Agreement. 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.

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

          11. Construction. This Agreement and the Award 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 the Award.

          12. 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.

          13. Employment at Will. Nothing in this Agreement or in the Plan shall confer upon
Participant 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 Participant) or of Participant, which rights are hereby expressly reserved
by each, to terminate Participant’s Service at any time for any reason, with or without cause.

5

 

          IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first
indicated above.

	 	 	 	 	 
	 	 	SANDISK CORPORATION
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	PARTICIPANT
	 
	 	 	 	 
	

	 	Signature:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	Address:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 

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APPENDIX A

DEFINITIONS

          The following definitions shall be in effect under the Agreement:

          A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

          B. Award shall mean the award of restricted stock units made to the
Participant pursuant to the terms of this Agreement.

          C. Award Date shall mean the date the restricted stock units are awarded to
Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the
Agreement.

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

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

          (i) a merger or consolidation approved by the Corporation’s stockholders,
unless securities possessing 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 substantially in the same
proportion, by the persons who beneficially owned the Corporation’s outstanding
voting securities immediately prior to such transaction,

          (ii) the 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 approved by the Corporation’s stockholders, or

          (iii) 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.

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

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

A-1

 

          H. 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.

          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. 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. 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.

          K. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from
time to time.

          L. Participant shall mean the person to whom the Award is made pursuant to the
Agreement.

          M. 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.

          N. Plan shall mean the Corporation’s 2005 Stock Incentive Plan, as amended and
restated.

A-2

 

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

          P. Service shall mean the Participant’s performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee
member of the board of directors or a consultant or independent advisor. For purposes of
this Agreement, Participant shall be deemed to cease Service immediately upon the
occurrence of the either of the following events: (i) Participant no longer performs
services in any of the foregoing capacities for the Corporation (or any Parent or
Subsidiary) or (ii) the entity for which Participant performs such services ceases to
remain a Parent or Subsidiary of the Corporation, even though Participant 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 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
Participant is on a leave of absence.

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

          R. 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.

          S. Withholding Taxes shall mean the federal, state and local income taxes and
the employee portion of the federal, state and local employment taxes required to be
withheld by the Corporation in connection with the issuance of the shares of Common Stock
which vest under of the Award and any phantom dividend equivalents distributed with respect
to those shares.

A-3

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