Document:

SECOND AMENDMENT TO THE RIGHTS AGREEMENT

     Pursuant to Section 27 of the Rights  Agreement dated as of April 18, 1997,
as amended by the First  Amendment to the Rights  Agreement  dated as of October
22,  1998  (collectively,  the  "Agreement"),  between  SanDisk  Corporation,  a
Delaware  corporation  (the  "Company"),  and Harris Trust and Savings  Bank, an
Illinois banking corporation (the "Rights Agent"),  the Company,  and the Rights
Agent at the Company's direction,  hereby amend the Agreement as of December 17,
1999, as provided below.

     1. Exercise of Rights;  Purchase Price;  Expiration Date of Rights. Section
7(b) of the Agreement shall be amended as follows:

     a.   The number  "$65.00"  in the second  line shall be  replaced  with the
          number "$500.00".

     The undersigned officer of the Company, being an appropriate officer of the
Company and  authorized  to do so by resolution of the board of directors of the
Company dated as of December 17, 1999, hereby certifies to the Rights Agent that
these  amendments  are  in  compliance  with  the  terms  of  Section  27 of the
Agreement.

                               SANDISK CORPORATION

                               By        /s/ Cindy Burgdorf
                                         -----------------------
                               Name:     Cindy Burgdorf
                               Title:    Chief Financial Officer

ACKNOWLEDGED AND AGREED:

HARRIS TRUST AND SAVINGS BANK,
as Rights Agent

By:
         ----------------------
Name:
Title:EXHIBIT 10.42

                         CORNERSTONE ACQUISITION COMPANY
                            ARTICLES OF INCORPORATION

                                    ARTICLE I
                                      NAME

         The name of the Corporation is Cornerstone Acquisition Company.

                                   ARTICLE II
                                     PURPOSE

         The  Corporation  is  organized  to engage in any lawful  business  not
required by the Virginia Stock  Corporation  Act to be stated in the Articles of
Incorporation.
                                   ARTICLE III
                                AUTHORIZED SHARES

         3.1 Number and  Designation.  The  Corporation  shall have authority to
issue 2,000,000 Common Shares, no par value.

         3.2 Preemptive  Rights. No holder of outstanding  shares shall have any
preemptive right with respect to (i) any shares of any class of the Corporation,
whether now or hereafter  authorized,  (ii) any  warrants,  rights or options to
purchase any such shares,  or (iii) any  obligations  convertible  into any such
shares or into  warrants,  rights or options to purchase  any such  shares.

         3.3 Voting; Distributions.  The holders of the Common Shares shall have
unlimited  voting  rights  and are  entitled  to  receive  the net assets of the
Corporation  upon the  liquidation,  dissolution or winding up of the affairs of
the Corporation.

<PAGE>

                                   ARTICLE IV
                     REGISTERED OFFICE AND REGISTERED AGENT

         The address of the initial registered office of the Corporation,  which
is located in the City of Richmond,  Virginia,  is c/o McGuire,  Woods, Battle &
Boothe  LLP,  901 East Cary  Street,  Richmond,  Virginia,  23219.  The  initial
registered agent of the Corporation is Martin B. Richards, whose business office
is identical with the registered  office and who is a resident of Virginia and a
member of the Virginia State Bar.

                                    ARTICLE V
                                 INDEMNIFICATION

         5.1 Mandatory Indemnification.  The Corporation (the term "Corporation"
as used in this Section 5.1 shall mean this  Corporation only and no predecessor
entity or other legal entity) shall  indemnify any  individual who is, was or is
threatened   to  be  made  a  party  to  a  civil,   criminal,   administrative,
investigative or other proceeding  (including a proceeding by or in the right of
the Corporation or by or on behalf of its shareholders)  because such individual
is or was a  director  or  officer  of the  Corporation  or of any legal  entity
controlled by the Corporation,  or is or was a fiduciary of any employee benefit
plan  established at the direction of the  Corporation,  against all liabilities
and reasonable  expenses incurred by him on account of the proceeding,  provided
that  the  directors  of  the  Corporation  (excluding  the  indemnified  party)
determine  in good faith that his  course of  conduct  which  caused the loss or
liability was in the best  interests of the  Corporation,  and provided  further
that such  liabilities  and expenses  were not  incurred  because of his willful
misconduct,  bad faith, reckless disregard of duties or knowing violation of the
criminal law. Before any  indemnification is paid a determination  shall be made
that  indemnification  is  permissible in the  circumstances  because the person
seeking indemnification is eligible for indemnification and has met the standard
of  conduct  set forth  above.  Such  determination  shall be made in the manner
provided by Virginia law for determining that

<PAGE>

indemnification  of a director  is  permissible,  provided,  however,  that if a
majority of the directors of the  Corporation  has changed after the date of the
alleged conduct giving rise to a claim for  indemnification,  the  determination
that  indemnification is permissible shall, at the option of the person claiming
indemnification,  be made by special legal  counsel  agreed upon by the Board of
Directors  and  such  person.   Unless  a  determination   has  been  made  that
indemnification  is not  permissible,  the  Corporation  shall make advances and
reimbursement  for  expenses  incurred  by any of the  persons  named above upon
receipt of an undertaking  from him or her to repay the same if it is ultimately
determined  that  such  individual  is  not  entitled  to  indemnification.  The
Corporation is authorized to contract in advance to indemnify any of the persons
named  above to the extent it is  required  to  indemnify  them  pursuant to the
provisions of this Section 5.1.

         5.2 Limit on Liability.  In every  instance in which the Virginia Stock
Corporation  Act, as it exists on the date hereof or may  hereafter  be amended,
permits the limitation or elimination of liability of directors or officers of a
corporation to the corporation or its  shareholders,  the directors and officers
of the Corporation shall not be liable to the Corporation or its shareholders.

         5.3  Miscellaneous.  The rights of each  person or entity  entitled  to
indemnification  under this Article  shall inure to the benefit of such person's
or  entity's  heirs,   executors,   administrators,   successors,   or  assigns.
Indemnification  pursuant to this  Article  shall not be  exclusive of any other
right  of  indemnification  to  which  any  person  may be  entitled,  including
indemnification pursuant to a valid contract,  indemnification by legal entities
other than the  Corporation,  and  indemnification  under  policies of insurance
purchased and maintained by the Corporation or others.  However, no person shall
be entitled to  indemnification  by the Corporation to the extent such person is
indemnified by another, including an insurer.

<PAGE>

         5.4 Amendments. No amendment,  modification,  or repeal of this Article
shall  diminish the rights  provided  hereunder to any person or entity  arising
from  conduct  or  events  occurring  before  the  adoption  of such  amendment,
modification, or repeal.

Dated: March 15, 1999

                                         By:   /s/  Martin B. Richards
                                               ---------------------------------
                                               Martin B. Richards, Incorporator

<PAGE>

                         CORNERSTONE ACQUISITION COMPANY
                             A VIRGINIA CORPORATION

                              ARTICLES OF AMENDMENT

                                     TO THE

                            ARTICLES OF INCORPORATION

         These Articles of Amendment are being filed with the State  Corporation
Commission  of  Virginia  in  accordance  with  Section  13.1-710 of the Code of
Virginia.

1. The name of the corporation is CORNERSTONE  ACQUISITION  COMPANY,  a Virginia
corporation (the "Corporation").

2. The text of each  amendment  adopted  is set  forth in  Exhibit  A,  which is
attached hereto and made a part hereof by this reference. The amendments add new
Articles VI and VII to the Articles of Incorporation.

3. Each amendment was adopted as of July 22, 1999.

4. The Board of Directors of the Corporation,  by written consent dated July 22,
1999, found each amendment to be in the best interests of Corporation,  approved
and adopted each amendment, and directed that each amendment be submitted to the
sole shareholder of the Corporation for its approval.

5. Each  amendment was adopted by the sole  shareholder  of the  Corporation  by
written consent dated July 22, 1999.

DATE:  July 22, 1999

                                   CORNERSTONE ACQUISITION COMPANY
                                   a Virginia corporation

                                   By:   /s/  Stanley J. Olander, Jr.
                                         ---------------------------------------
                                         Stanley J. Olander, Jr., Vice President

<PAGE>

                                                                       Exhibit A

                                   ARTICLE VI
                           CERTAIN SHAREHOLDER ACTION

         Pursuant to and as permitted by Section  13.1-657 of the Virginia Stock
Corporation Act (which shall be deemed to include any successor  provision),  if
the  Corporation  is not a "public  corporation"  (within  the  meaning  of that
section or any successor  provision) at the time action is to be taken, then any
action  required or permitted by the Virginia Stock  Corporation Act to be taken
at a  shareholders'  meeting may be taken  without a meeting  and without  prior
notice (except as may be required by the Virginia Stock Corporation Act), if the
action is taken by  shareholders  who would be  entitled to vote at a meeting of
holders of outstanding  shares having the voting power to cast not less than the
minimum number (or numbers, in the case of voting by groups) of votes that would
be  necessary  to  authorize  or take the  action  at a  meeting  at  which  all
shareholders  entitled to vote thereon were present and voted. All actions taken
pursuant to this Article VI of the Articles of  Incorporation of the Corporation
shall be  taken in  accordance  with  Section  13.1-657  of the  Virginia  Stock
Corporation Act (or any successor provision).

                                  ARTICLES VII
                CERTAIN LIMITATIONS ON TRANSFERS OF COMMON SHARES

         To help ensure that the Corporation  qualifies and remains qualified as
a real estate  investment  trust ("REIT") for Federal  income tax purposes,  and
does  not  have  less  than  the  minimum  number  of   shareholders   for  such
qualification, no Common Shares may be voluntarily sold, exchanged,  transferred
or  otherwise  assigned  by any  holder  thereof  to  any  other  holder  of any
securities of the Corporation  without the prior written consent of the Board of
Directors of the  Corporation.  The Board of  Directors  shall be deemed to have
acted  reasonably  in  withholding  consent when,  in the Board's  opinion,  the
proposed sale, exchange,  transfer or assignment, if completed, would jeopardize
or  would  create  a  significant   risk  of  jeopardizing   the   Corporation's
qualification  as a REIT.  Any  attempted  sale,  exchange,  transfer  or  other
assignment  in violation of this Article VII shall be  ineffective  and void. In
accordance  with Section  13.1-649 of the Virginia  Stock  Corporation  Act, the
Corporation  shall use its best  efforts  to place a  conspicuous  notice of the
reasonable  restrictions  imposed  by  this  Article  VII  on  each  certificate
representing  the Common Shares and on each  information  statement  provided in
lieu of a certificate.

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