Exhibit 10.40
SANDISK
CORPORATION
PERFORMANCE 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
award of performance stock units and, subject to the terms hereof,
issuance of shares of Common Stock to the Participant under the
Stock Issuance Program. Participant acknowledges that
such award is in lieu of, and not in addition to, the grant of
performance stock units to the Participant putatively made by the
Plan Administrator on or about July 23, 2008.
C. In addition to providing the terms
and conditions of such award, this Agreement includes the
Participant’s agreement with respect to the satisfaction of
tax withholding obligations incurred in connection with prior
grants of restricted stock units by the Corporation to the
Participant (if any) as set forth in Paragraph 7(c)
below.
D. All capitalized terms in this
Agreement not otherwise defined herein shall have the meaning
assigned to them in the attached Appendix A.
NOW,
THEREFORE , it is hereby
agreed as follows:
1.
Grant of Performance Stock Units . The Corporation
hereby awards to the Participant, as of the Award Date, performance
stock units (“Performance Stock Units”) under the Plan.
Each Performance 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 Performance Stock
Units, the applicable vesting requirements 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
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Award
Date:
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________,
2008
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Number of
Shares Subject to Award:
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________ shares of Common Stock (the
“Shares”)
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Performance
Periods
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July 1, 2008 -
June 30, 2009 (the “2008-2009 Performance Period”) and
July 1, 2009 - June 30, 2010 (the “2009-2010 Performance
Period”)
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Vesting
Requirements:
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Subject to
Paragraphs 3 and 5 of this Agreement, the Award shall vest and
become nonforfeitable based on the achievement of the performance
goals established by the Plan Administrator and set forth on
Appendix B attached hereto for the Performance Periods identified
above.
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Issuance
Schedule
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The Shares in
which the Participant vests in accordance with the foregoing
Vesting Requirements 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.
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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 . Except as expressly provided
in Paragraph 5, should the Participant cease Service for any reason
prior to vesting in one or more Performance Stock Units subject to
this Award in accordance with the terms hereof, then the Award will
be immediately cancelled with respect to those unvested Performance
Stock Units; provided, however, that if the Participant’s
cessation of Service occurs as a result of the Participant’s
death, the Performance Stock Units subject to this Award, to the
extent outstanding and unvested as of the date of the
Participant’s death, shall be fully vested as of such
date. If any unvested Performance Stock Units are
cancelled pursuant to this Paragraph 3, 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
Performance Stock Units subject to this Award at the time of a
Change of Control (as defined in Appendix A hereto) 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 of Control and provides for subsequent payout of that
value in accordance with the vesting requirements 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, the following provisions shall apply:
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If the Change
of Control occurs after the Award Date and on or before the date on
which the Company files its quarterly report on Form 10-Q for the
fiscal quarter ending June 30, 2009 (or on or before September 1,
2009 if Form 10-Q for the quarter ending June 30, 2009 is not filed
by such date) (the “2009 Vesting Date”), (i) the
portion of the Award that is eligible to vest based on the
2008-2009 Performance Period, to the extent then outstanding and
unvested, shall be fully vested as of the date of the Change of
Control, and (ii) the portion of the Award that is eligible to vest
based on the 2009-2010 Performance Period, to the extent then
outstanding and unvested, shall continue to be eligible to vest in
accordance with the vesting requirements set forth herein,
including, without limitation, the Service requirement set forth in
Paragraph 3 and the performance requirements applicable for the
2009-2010 Performance Period set forth on Appendix B hereto;
provided, however, that in the event the Participant incurs an
Involuntary Termination (as defined in Appendix A hereto) on or
before the date on which the Company files its quarterly report on
Form 10-Q for the fiscal quarter ending June 30, 2010 (or on or
before September 1, 2010 if Form 10-Q for the quarter ending June
30, 2010 is not filed by such date) (the “2010 Vesting
Date”), the portion of the Award that is eligible to vest
based on the 2009-2010 Performance Period, to the extent then
outstanding and unvested, shall be fully vested as of the date of
such Involuntary Termination.
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If the Change
of Control occurs at any time after the 2009 Vesting Date and prior
to the 2010 Vesting Date, the portion of the Award that is eligible
to vest based on the 2009-2010 Performance Period, to the extent
then outstanding and unvested, shall be fully vested as of the date
of the Change of Control.
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In the event
the Award is assumed or otherwise continued in effect after a
Change of Control, the Performance Stock Units subject to the Award
shall be adjusted immediately after the consummation of the Change
of 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 of Control would have been converted in consummation of
that Change of 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 of Control, the
successor corporation (or parent entity) may, in connection with
the assumption or continuation of the Performance 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 of
Control transaction, provided such common stock is readily tradable
on an established U.S. securities exchange or market.
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(b) If
the Performance Stock Units subject to this Award at the time of
the Change of Control are not assumed or otherwise continued in
effect or replaced with a cash incentive program in accordance with
Paragraph 5(a), the Award, to the extent then outstanding and
unvested, shall be fully vested as of the date of the Change of
Control.
(c) Any Performance Stock Units that
vest pursuant to the
