S-8

As filed with the Securities and Exchange Commission on January 23, 2004

Registration No. 333-        

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

Under
The Securities Act of 1933

SANDISK CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation or organization) 77-0191793
(IRS Employer Identification No.)

140 Caspian Court
Sunnyvale, CA 94089
(Address of principal executive offices) (Zip Code)

SANDISK CORPORATION 1995 STOCK OPTION PLAN,
AS AMENDED AND RESTATED JANUARY 2, 2002

SANDISK CORPORATION EMPLOYEE STOCK PURCHASE PLAN,
AS AMENDED AND RESTATED JANUARY 2, 2002

SANDISK CORPORATION INTERNATIONAL EMPLOYEE STOCK PURCHASE PLAN,
AS AMENDED AND RESTATED JANUARY 2, 2002

SANDISK CORPORATION 1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN,
AS AMENDED AND RESTATED JANUARY 2, 2004
(Full title of the Plans)

Charles Van Orden, Esq.
Vice President, General Counsel and Secretary
SanDisk Corporation
140 Caspian Court
Sunnyvale, CA 94089
(Name and address of agent for service)
(408) 542-0500
(Telephone number, including area code, of agent for service)

CALCULATION OF REGISTRATION FEE

		Proposed		Proposed
	Amount to be	Maximum Offering		Maximum Aggregate		Amount of
Title of Securities to be Registered	Registered (1) (3)	Price per Share(2)		Offering Price(2)		Registration Fee
SanDisk Corporation 1995 Stock Option Plan, as amended and restated January 2, 2002
Common Stock, $0.001 par value	3,507,698 shares	$	61.44	$	215,512,965.12	$	17,435.00
SanDisk Corporation Employee Stock Purchase Plan, as amended and restated January 2, 2002
Common Stock, $0.001 par value	220,942 shares	$	61.44	$	13,574,676.48	$	1,098.20
SanDisk Corporation International Employee Stock Purchase Plan, as amended and restated January 2, 2002
Common Stock, $0.001 par value	125,000 shares	$	61.44	$	7,680,000.00	$	621.32
SanDisk Corporation 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004
Common Stock, $0.001 par value	160,903 shares	$	61.44	$	9,885,880.32	$	799.77
	4,014,543 shares			Aggregate Registration Fee		$	19,954.29

(1)	Represents additional shares issuable under the Registrant’s 1995 Stock Option Plan, as amended and restated January 2, 2002, the Employee Stock Purchase Plan, as amended and restated January 2, 2002, the International Employee Stock Purchase Plan, as amended and restated January 2, 2002 and the 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004, (collectively, the “Plans”) by reason of the automatic share increase provisions of each of the Plans. This Registration Statement shall also cover any additional shares of Common Stock attributable to these registered shares which become issuable under the Plans by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the Registrant’s receipt of consideration which results in an increase in the number of the outstanding shares of the Registrant’s Common Stock. As a result, the number of shares registered hereunder shall automatically increase to reflect the two-for-one split of the Registrant's Common Stock to be distributed to stockholders of record as of the close of business on February 3, 2004.
(2)	Calculated solely for purposes of this offering under Rule 457(h) of the Securities Act of 1933, as amended, on the basis of the average of the high and low selling price per share of the Registrant’s Common Stock on January 22, 2004, as reported by the Nasdaq National Market.
(3)	Each share is accompanied by a preferred stock purchase right pursuant to the Rights Agreement between SanDisk Corporation and Computershare Trust Company, Inc. dated September 15, 2003.

TABLE OF CONTENTS

PART II
	Item 3. Incorporation of Documents by Reference
	Item 4. Description of Securities
	Item 5. Interests of Named Experts and Counsel
	Item 6. Indemnification of Directors and Officers
	Item 7. Exemption from Registration Claimed
	Item 8. Exhibits
	Item 9. Undertakings
SIGNATURES
EXHIBIT INDEX
EXHIBIT 5.1
EXHIBIT 23.1
EXHIBIT 99.4

PART II

Information Required in the Registration Statement

Item 3. Incorporation of Documents by Reference

               SanDisk Corporation (the “Registrant”) hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange Commission (the “Commission”):

(a)	The Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, filed with the Commission on March 26, 2003;
(b)	The Registrant’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 30, 2003, June 29, 2003 and September 28, 2003 filed with the Commission on May 14, 2003, August 8, 2003 and November 17, 2003, respectively;
(c)	All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”) since the end of the fiscal year covered by the Registrant’s Annual Report referred to in (a) above;
(d)	The Registrant’s Registration Statement on Form 8-A filed with the Commission on September 8, 1995 pursuant to Section 12(g) of the 1934 Act, in which there is described the terms, rights and provisions applicable to the Registrant’s Common Stock; and
(e)	The Registrant’s Registration Statement on Form 8-A filed with the Commission on September 25, 2003 pursuant to Section 12(g) of the 1934 Act, in which there is described the terms, rights and provisions applicable to the Registrant’s rights to purchase Series A Junior Participating Preferred Stock (the “Preferred Stock”) and the associated Preferred Stock.

               All reports and definitive proxy or information statements filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Registration Statement and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which de-registers all securities then remaining unsold shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing of such documents. Unless expressly incorporated into this Registration Statement, a report furnished but not filed on Form 8-K shall not be incorporated by reference into this Registration Statement. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any subsequently filed document which also is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.

Item 4. Description of Securities

     The certificates evidencing the shares of Registrant’s Common Stock issued to employees of the Registrant, the Registrant’s Israeli subsidiary and the Registrant’s Israeli branch office, SanDisk Israel Ltd., in offerings subject to the securities laws of the State of Israel, shall be endorsed with the following legend:

“THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL HAS EXEMPTED SANDISK CORPORATION FROM THE REQUIREMENT UNDER ISRAELI LAW TO OBTAIN A PERMIT WITH REGARD TO THIS FORM S-8. NOTHING IN THE EXEMPTION GRANTED SHALL BE CONSTRUED AS AUTHENTICATING THE MATTERS CONTAINED IN THIS FORM S-8 OR AN APPROVAL OF THEIR RELIABILITY OR ACCURACY OR AN EXPRESSION OF AN OPINION AS TO THE QUALITY OF THE SECURITIES OFFERED HEREBY.”

II-1

Item 5. Interests of Named Experts and Counsel

     Not Applicable.

Item 6. Indemnification of Directors and Officers

     Section 145 of the Delaware General Corporation Law authorizes a court to award or a corporation’s board of directors to grant indemnification to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the “1933 Act”). The Registrant’s Bylaws provide for permissible indemnification of officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law. In addition, the Registrant’s Certificate of Incorporation (the “Certificate of Incorporation”) provides that, pursuant to Delaware law, its directors shall not be liable for monetary damages for breach of their fiduciary duty as directors to the Registrant and its stockholders. However, this provision in the Certificate of Incorporation does not eliminate the fiduciary duty of the directors, and in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for (i) any breach of the director’s duty of loyalty to the Registrant or its stockholders, (ii) acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law, (iii) payment of dividends or approval of stock repurchases and redemptions that are unlawful under Delaware law and (iv) any transaction from which the director derived any improper personal benefit. The provision also does not affect a director’s responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. The Registrant has entered into Indemnification Agreements with certain of its officers and directors which provide certain of the Registrant’s officers and directors with further indemnification to the maximum extent permitted by the Delaware General Corporation Law.

Item 7. Exemption from Registration Claimed

     Not Applicable.

Item 8. Exhibits

Exhibit Number	Exhibit
4.1	Instruments Defining the Rights of Stockholders. Reference is made to Registrant’s Registration Statement on Form 8-A, together with any exhibits thereto, which is incorporated herein by reference pursuant to Item 3(d) to this Registration Statement.
4.2	Instruments Defining the Rights of Stockholders. Reference is made to Registrant’s Registration Statement on Form 8-A, together with any exhibits thereto, which is incorporated herein by reference pursuant to Item 3(e) to this Registration Statement.
5.1	Opinion and consent of Morgan, Lewis & Bockius LLP.
23.1	Consent of Ernst & Young LLP, Independent Auditors.
23.2	Consent of Morgan, Lewis & Bockius LLP is contained in Exhibit 5.
24.1	Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 (1)	SanDisk Corporation 1995 Stock Option Plan, as amended and restated January 2, 2002.
99.2 (1)	SanDisk Corporation Employee Stock Purchase Plan, as amended and restated January 2, 2002.
99.3 (1)	SanDisk Corporation International Employee Stock Purchase Plan, as amended and restated January 2, 2002.
99.4	SanDisk Corporation 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004.

(1) Exhibits 99.1, 99.2 and 99.3 are incorporated herein by reference to Exhibits 99.1, 99.2 and 99.3, respectively, to Registrant’s Form S-8 filed with the Commission on April 1, 2002.

II-2

Item 9. Undertakings

               A. The undersigned Registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the 1933 Act, (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if the information required to be included in a post-effective amendment by those clauses is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are incorporated by reference into this Registration Statement; (2) that for the purpose of determining any liability under the 1933 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the Registrant’s 1995 Stock Option Plan, as amended and restated January 2, 2002, the Employee Stock Purchase Plan, as amended and restated January 2, 2002, the International Employee Stock Purchase Plan, as amended and restated January 2, 2002 and the 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004.

               B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the 1933 Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is incorporated by reference into this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

               C. Insofar as indemnification for liabilities arising under the 1933 Act may be permitted to directors, officers or controlling persons of the Registrant pursuant to the indemnification provisions summarized in Item 6 or otherwise, the Registrant has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the 1933 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1933 Act and will be governed by the final adjudication of such issue.

II-3

SIGNATURES

               Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California on this 23rd day of January, 2004.

SanDisk Corporation
By:	/s/ Michael Gray
	Michael Gray Chief Financial Officer and Senior Vice President, Finance and Administration

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

               That the undersigned officers and directors of SanDisk Corporation, a Delaware corporation, do hereby constitute and appoint Dr. Eli Harari and Michael Gray, and each of them, the lawful attorneys-in-fact and agents with full power and authority to do any and all acts and things and to execute any and all instruments which said attorneys and agents, and any one of them, determine may be necessary or advisable or required to enable said corporation to comply with the Securities Act of 1933, as amended, and any rules or regulations or requirements of the Securities and Exchange Commission in connection with this Registration Statement. Without limiting the generality of the foregoing power and authority, the powers granted include the power and authority to sign the names of the undersigned officers and directors in the capacities indicated below to this Registration Statement, to any and all amendments, both pre-effective and post-effective, and supplements to this Registration Statement, and to any and all instruments or documents filed as part of or in conjunction with this Registration Statement or amendments or supplements thereof, and each of the undersigned hereby ratifies and confirms that all said attorneys and agents, or any one of them, shall do or cause to be done by virtue hereof. This Power of Attorney may be signed in several counterparts.

               IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated.

               Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Dr. Eli Harari Dr. Eli Harari	President, Chief Executive Officer and Director (Principal Executive Officer)	January 23, 2004
/s/ Michael Gray Michael Gray	Chief Financial Officer and Senior Vice President, Finance & Administration (Principal Financial and Accounting Officer)	January 23, 2004

II-4

Signature	Title	Date
/s/ Irwin Federman Irwin Federman	Chairman of the Board and Director	January 23, 2004
/s/ Judy Bruner Judy Bruner	Director	January 23, 2004
/s/ Michael E. Marks Michael E. Marks	Director	January 23, 2004
/s/ Dr. James D. Meindl Dr. James D. Meindl	Director	January 23, 2004
/s/ Alan F. Shugart Alan F. Shugart	Director	January 23, 2004

II-5

EXHIBIT INDEX

Exhibit Number	Exhibit
4.1	Instruments Defining the Rights of Stockholders. Reference is made to Registrant’s Registration Statement on Form 8-A, together with any exhibits thereto, which is incorporated herein by reference pursuant to Item 3(d) to this Registration Statement.
4.2	Instruments Defining the Rights of Stockholders. Reference is made to Registrant’s Registration Statement on Form 8-A, together with any exhibits thereto, which is incorporated herein by reference pursuant to Item 3(e) to this Registration Statement.
5.1	Opinion and consent of Morgan, Lewis & Bockius LLP.
23.1	Consent of Ernst & Young LLP, Independent Auditors.
23.2	Consent of Morgan, Lewis & Bockius LLP is contained in Exhibit 5.
24.1	Power of Attorney. Reference is made to page II-4 of this Registration Statement.
99.1 (1)	SanDisk Corporation 1995 Stock Option Plan, as amended and restated January 2, 2002.
99.2 (1)	SanDisk Corporation Employee Stock Purchase Plan, as amended and restated January 2, 2002.
99.3 (1)	SanDisk Corporation International Employee Stock Purchase Plan, as amended and restated January 2, 2002.
99.4	SanDisk Corporation 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004.

(1) Exhibits 99.1, 99.2 and 99.3 are incorporated herein by reference to Exhibits 99.1, 99.2 and 99.3, respectively, to Registrant’s Form S-8 filed with the Commission on April 1, 2002.

EX-5.1 3 f95777orexv5w1.txt EXHIBIT 5.1 EXHIBIT 5.1 OPINION AND CONSENT OF MORGAN, LEWIS & BOCKIUS LLP January 23, 2004 SanDisk Corporation 140 Caspian Court Sunnyvale, CA 94089 Re: SanDisk Corporation - Registration Statement for Offering of an Aggregate of 4,014,543 Shares (the "Shares") of Common Stock Dear Ladies and Gentlemen: We have acted as counsel to SanDisk Corporation, a Delaware corporation (the "Company"), in connection with the registration on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended, of the following shares of the Company's common stock (i) an additional 3,507,698 shares issuable under Company's 1995 Stock Option Plan, as amended and restated January 2, 2002 (the "Option Plan"), (ii) an additional 220,942 shares issuable under the Company's Employee Stock Purchase Plan, as amended and restated January 2, 2002 (the "ESPP"), (iii) an additional 125,000 shares issuable under the Company's International Employee Stock Purchase Plan, as amended and restated January 2, 2002 (the "IESPP") and (iv) an additional 160,903 shares issuable under Company's 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004 (the "Directors Plan"). This opinion is being furnished in accordance with the requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K. We have reviewed the Company's charter documents and the corporate proceedings taken by the Company with respect to the establishment and amendment of the Option Plan, the ESPP, the IESPP and the Directors Plan. Based on such review, we are of the opinion that, if, as and when the Shares have been issued and sold (and the consideration therefor received) pursuant to (a) the provisions of stock option agreements duly authorized under the Option Plan and in accordance with the Registration Statement, (b) duly authorized stock purchases effected in accordance with the ESPP and the Registration Statement, (c) duly authorized stock purchases effected in accordance with the IESPP and the Registration Statement or (d) the provisions of the stock option agreements duly authorized under the Directors Plan and in accordance with the Registration Statement, such Shares will be duly authorized, legally issued, fully paid and nonassessable. We consent to the filing of this opinion letter as Exhibit 5.1 to the Registration Statement. This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Option Plan, the ESPP, the IESPP, the Directors Plan or the Shares. Very truly yours, /s/ Morgan, Lewis & Bockius LLP MORGAN, LEWIS & BOCKIUS LLP EX-23.1 4 f95777orexv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the 1995 Stock Option Plan, as amended and restated January 2, 2002, the Employee Stock Purchase Plan, as Amended and Restated January 2, 2002, the International Employee Stock Purchase Plan, as amended and restated January 2, 2002, and the 1995 Non-Employee Directors Stock Option Plan, as amended and restated January 2, 2004, of SanDisk Corporation, of our report dated January 20, 2003 (except for the second paragraph on Note 3, as to which the date is February 21, 2003 and except for the first paragraph of Note 3 as to which the date is February 27, 2003), with respect to the consolidated financial statements of SanDisk Corporation included in its Annual Report (Form 10-K) for the year ended December 31, 2002, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP San Jose, California January 20, 2004 EX-99.4 5 f95777orexv99w4.txt EXHIBIT 99.4 Exhibit 99.4 SANDISK CORPORATION 1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN AMENDED AND RESTATED JANUARY 2, 2004 ARTICLE ONE GENERAL PROVISIONS I. PURPOSE OF THE PLAN This 1995 Non-Employee Directors Stock Option Plan is intended to promote the interests of SanDisk Corporation, a Delaware corporation, by providing the non-employee members of the Board with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation. Capitalized terms shall have the meanings assigned to such terms in the attached Appendix. All share numbers in this document reflect the 2-for-1 split of the Common Stock effected on February 22, 2000. II. ADMINISTRATION OF THE PLAN The terms of each option grant (including the timing and pricing of the option grant) shall be determined by the express terms of the Plan, and neither the Board nor any committee of the Board shall exercise any discretionary functions with respect to option grants made pursuant to the Plan. III. ELIGIBILITY The individuals eligible to receive option grants under the Plan shall be (i) those individuals who are serving as non-employee Board members on the Effective Date or who are first elected or appointed as non-employee Board members on or after such date, whether through appointment by the Board or election by the Corporation's stockholders, and (ii) those individuals who continue to serve as non-employee Board members after one or more Annual Stockholders Meetings beginning with the 1996 Annual Meeting. A non-employee Board member who has previously been in the employ of the Corporation (or any Parent or Subsidiary) shall not be eligible to receive an option grant under the Plan on the Effective Date or at the time he or she first becomes a non-employee Board member, but shall be eligible to receive periodic option grants under the Plan upon his or her continued service as a non-employee Board member following one or more Annual Stockholders Meetings. IV. STOCK SUBJECT TO THE PLAN A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 1,236,142 shares. Such share reserve includes (i) the initial share reserve of 300,000 shares approved by the stockholders in August 1995, (ii) an additional 100,000 share increase authorized by the Board on February 10, 1997 and approved by the stockholders at the 1997 Annual Stockholders Meeting, (iii) an additional 400,000 share increase authorized by the Board on December 17, 1998, and approved by the stockholders at the 1999 Annual Meeting, (iv) an additional increase of 136,928 shares effected in January 2002 pursuant to the automatic share increase provisions of Section IV.B., (v) an additional increase of 138,311 shares effected in January 2003 pursuant to the automatic share increase provisions of Section IV.B. and (vi) an additional increase of 160,903 shares effected in January 2004 pursuant to the automatic share increase provisions of Section IV.B. B. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year during the term of the Plan, beginning with calendar year 2002, by an amount equal to two tenths of one percent (0.2%) of the shares of Common Stock outstanding on the last trading day in December of the immediately preceding calendar year, but in no event shall any such annual increase exceed 200,000 shares. C. Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent the options expire or terminate for any reason prior to exercise in full. In addition, unvested shares issued under the Plan and subsequently repurchased by the Corporation, at the original exercise price paid per share, pursuant to the Corporation's repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option grants under the Plan. However, shares subject to any option or portion thereof surrendered in accordance with Article Two shall reduce on a share-for-share basis the number of shares of Common Stock available for subsequent issuance under the Plan. Should the exercise price of an option under the Plan be paid with shares of Common Stock, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the gross number of shares for which the option is exercised, and not by the net number of shares of Common Stock issued to the holder of such option. D. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities by which the share reserve is to increase each calendar year pursuant to the provisions of Section IV.B of this Article One, (iii) the number and/or class of securities for which option grants are to be subsequently made per Eligible Director and (iv) the number and/or class of securities and the 2 exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments to the outstanding options shall be made by the Board and shall be final, binding and conclusive. 3 ARTICLE TWO OPTION GRANT PROGRAM I. OPTION TERMS The provisions of this Article Two reflect the changes to the number of shares of Common Stock subject to the initial and annual option grants to be made to the non-employee Board members pursuant to the amendment authorized by the Board on December 17, 1998, and approved by the stockholders at the 1999 Annual Meeting. Stockholder approval of such amendment shall constitute pre-approval of each option grant made on or after the date of the 1999 Annual Meeting to the non-employee Board members pursuant to the amended provisions of this Article Two and the subsequent exercise of that option in accordance with such provisions. A. GRANT DATES. Option grants shall be made on the dates specified below: 1. Each Eligible Director who is first elected or appointed as a non-employee Board member on or after the date of the 1999 Annual Stockholders Meeting shall automatically be granted, on the date of such initial election or appointment (as the case may be), a Non-Statutory Option to purchase 64,000 shares of Common Stock. 2. On the date of each Annual Stockholders Meeting, beginning with the 1999 Annual Meeting, each individual who is to continue to serve as an Eligible Director shall automatically be granted, whether or not such individual is standing for re-election as a Board member at that Annual Meeting, a Non-Statutory Option to purchase an additional 16,000 shares of Common Stock, provided such individual has served as a non-employee Board member for at least six (6) months prior to the date of such Annual Meeting. There shall be no limit on the number of such 16,000-share option grants any one Eligible Director may receive over his or her period of Board service. B. EXERCISE PRICE. 1. The exercise price per share shall be equal to one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date. 2. The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the forms specified below: (i) cash or check made payable to the Corporation, (ii) shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or (iii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions to (A) a Corporation-designated 4 brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (B) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date. C. OPTION TERM. Each option shall have a term of ten (10) years measured from the option grant date. D. EXERCISE AND VESTING OF OPTIONS. Each option shall be immediately exercisable for any or all of the option shares. However, any shares purchased under the option shall be subject to repurchase by the Corporation, at the exercise price paid per share, upon the Optionee's cessation of Board service prior to vesting in those shares. Each initial grant shall vest, and the Corporation's repurchase right shall lapse, in a series of four (4) equal and successive annual installments over the Optionee's period of continued service as a Board member, with the first such installment to vest upon the Optionee's completion of one (1) year of Board service measured from the option grant date. Each annual grant shall vest, and the Corporation's repurchase right shall lapse, upon the Optionee's completion of one (1) year of Board service measured from the option grant date. E. EFFECT OF TERMINATION OF BOARD SERVICE. The following provisions shall govern the exercise of any options held by the Optionee at the time the Optionee ceases to serve as a Board member: (i) The Optionee (or, in the event of Optionee's death, the personal representative of the Optionee's estate or the person or persons to whom the option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution) shall have a twelve (12)-month period following the date of such cessation of Board service in which to exercise each such option. (ii) During the twelve (12)-month exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable at the time of the Optionee's cessation of Board service. (iii) Should the Optionee cease to serve as a Board member by reason of death or Permanent Disability, then all shares at the time subject to the option shall immediately vest so that such option may, during the twelve (12)-month exercise period following such cessation of Board service, be exercised for all or any portion of such shares as fully-vested shares. (iv) In no event shall the option remain exercisable after the expiration of the option term. Upon the expiration of the twelve (12)-month exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. 5 However, the option shall, immediately upon the Optionee's cessation of Board service, terminate and cease to be outstanding to the extent it is not exercisable for vested shares on the date of such cessation of Board service. F. STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares. G. LIMITED TRANSFERABILITY OF OPTIONS. An automatic option granted under the Plan may, in connection with the Optionee's estate plan, be assigned in whole or in part during the Optionee's lifetime to one or more members of the Optionee's immediate family or to a trust established exclusively for one or more such family members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER A. In the event of any Corporate Transaction, the shares of Common Stock at the time subject to each outstanding option but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the specified effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Immediately following the consummation of the Corporate Transaction, each option grant shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof). B. In connection with any Change in Control, the shares of Common Stock at the time subject to each outstanding option but not otherwise vested shall automatically vest in full so that each such option shall, immediately prior to the effective date of the Change in Control, become fully exercisable for all of the shares of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares as fully-vested shares of Common Stock. Each such option shall remain exercisable for such fully-vested option shares until the expiration of the option term or the surrender of the option in connection with a Hostile Take-Over. C. Upon the occurrence of a Hostile Take-Over, the Optionee shall have a thirty (30)-day period in which to surrender to the Corporation each option held by him or her. The Optionee shall in return be entitled to a cash distribution from the Corporation in an amount equal to the excess of (i) the Take-Over Price of the shares of Common Stock at the time subject to the surrendered option (whether or not the Optionee is otherwise at the time vested in those shares) over (ii) the aggregate exercise price payable for such shares. Such cash distribution shall be paid within five (5) days following the surrender of the option to the Corporation. Stockholder approval of the December 17, 1998 amendment and restatement of the Plan shall constitute pre-approval of each option surrender right subsequently granted under the Plan and 6 the subsequent exercise of that right in accordance with the terms and provisions of this Section II.C. No additional approval of the Board or any committee of the Board shall be required at the time of the actual option surrender and cash distribution. D. The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 7 ARTICLE THREE MISCELLANEOUS I. EFFECTIVE DATE AND TERM OF THE PLAN A. The Plan became effective on the November 7, 1995 Effective Date after adoption by the Board on July 25, 1995 and approval by the Corporation's stockholders in August 1995. B. The Plan was amended on February 10, 1997 (the "February 1997 Amendment") to effect the following changes: (i) increase the number of shares of Common Stock authorized for issuance over the term of the Plan by an additional 100,000 shares, (ii) allow unvested shares issued under the Plan and subsequently repurchased by the Corporation at the option exercise price paid per share to be reissued under the Plan and (iii) effect a series of technical changes to the provisions of the Plan (including stockholder approval requirements) in order to take advantage of the recent amendments to Rule 16b-3 of the Securities Exchange Act of 1934 which exempts certain officer and director transactions under the Plan from the short-swing liability provisions of the Federal securities laws. The February 1997 Amendment was approved by the stockholders at the 1997 Annual Meeting. The Plan was amended on December 17, 1998 (the "December 1998 Amendment") to effect the following changes: (i) increase the number of shares of Common Stock authorized for issuance over the term of the Plan by an additional 400,000 shares, (ii) implement the automatic share increase provisions of Section IV.B of Article One, (iii) increase the size of the initial grants to non-employee Board members from 32,000 to 64,000 shares of Common Stock and (iv) increase the size of the annual grants to non-employee Board members from 8,000 to 16,000 shares of Common Stock. The December 1998 Amendment was approved by the stockholders at the 1999 Annual Meeting. All option grants made prior to the December 1998 Amendment shall remain outstanding in accordance with the terms and conditions of the respective instruments evidencing those options or issuances, and nothing in the December 1998 Amendment shall be deemed to modify or in any way affect those outstanding options or issuances. Subject to the foregoing limitations, options may be granted under the Plan at any time before the date fixed herein for the termination of the Plan. C. The Plan shall terminate upon the earliest of (i) July 24, 2005, (ii) the date on which all shares available for issuance under the Plan shall have been issued or cancelled pursuant to the exercise or cash-out of the options under the Plan or (iii) the termination of all outstanding options in connection with a Corporate Transaction. Upon such Plan termination, all option grants and unvested stock issuances outstanding on such date shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances. II. AMENDMENT OF THE PLAN The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to options or unvested stock issuances at 8 the time outstanding under the Plan unless the Optionee consents to such amendment or modification. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations. III. USE OF PROCEEDS Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes. IV. REGULATORY APPROVALS A. The implementation of the Plan, the granting of any option under the Plan and the issuance of any shares of Common Stock upon the exercise of any option shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it. B. No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading. V. NO EMPLOYMENT/SERVICE RIGHTS Nothing in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) and the Corporation's stockholders or of the Optionee, which rights are hereby expressly reserved by each, to terminate such person's Service at any time for any reason, with or without cause. 9 APPENDIX The following definitions shall be in effect under the Plan: A. BOARD shall mean the Corporation's Board of Directors. B. CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation effected through either of the following transactions: (i) the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders; or (ii) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time such election or nomination was approved by the Board. C. CODE shall mean the Internal Revenue Code of 1986, as amended. D. COMMON STOCK shall mean the Corporation's common stock. E. CORPORATE TRANSACTION shall mean either of the following stockholder-approved transactions to which the Corporation is a party: (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those immediately prior to such transaction; or (ii) the sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation. F. CORPORATION shall mean SanDisk Corporation, a Delaware corporation. G. EFFECTIVE DATE shall mean November 7, 1995, the date on which the Underwriting Agreement was executed and the initial public offering price of the Common Stock was established. A-1 H. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible to participate in the Plan. I. EXERCISE DATE shall mean the date on which the Corporation shall have received written notice of the option exercise. J. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange which serves as the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. K. HOSTILE TAKE-OVER shall mean a change in ownership of the Corporation through the direct or indirect acquisition by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board does not recommend such stockholders to accept. L. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended. M. NON-STATUTORY OPTION shall mean an option not intended to satisfy the requirements of Code Section 422. N. OPTIONEE shall mean any person to whom an option is granted under the Plan. O. PARENT shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A-2 P. PERMANENT DISABILITY shall mean the inability of the Optionee to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more. Q. PLAN shall mean the Corporation's 1995 Non-Employee Directors Stock Option Plan, as set forth in this document. R. SECTION 16 INSIDERS shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act. S. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York Stock Exchange. T. SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. U. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value per share of Common Stock on the date the option is surrendered to the Corporation in connection with a Hostile Take-Over or (ii) the highest reported price per share of Common Stock paid by the tender offeror in effecting such Hostile Take-Over. V. UNDERWRITING AGREEMENT shall mean the agreement between the Corporation and the underwriter or underwriters which managed the initial public offering of the Common Stock. A-3 -----END PRIVACY-ENHANCED MESSAGE-----

EX-5.1

                                                                     EXHIBIT 5.1

               OPINION AND CONSENT OF MORGAN, LEWIS & BOCKIUS LLP

                                January 23, 2004

SanDisk Corporation
140 Caspian Court
Sunnyvale, CA 94089

             Re:       SanDisk Corporation - Registration Statement for Offering
                       of an Aggregate of 4,014,543 Shares (the "Shares") of
                       Common Stock

Dear Ladies and Gentlemen:

                  We have acted as counsel to SanDisk Corporation, a Delaware
corporation (the "Company"), in connection with the registration on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended, of
the following shares of the Company's common stock (i) an additional 3,507,698
shares issuable under Company's 1995 Stock Option Plan, as amended and restated
January 2, 2002 (the "Option Plan"), (ii) an additional 220,942 shares issuable
under the Company's Employee Stock Purchase Plan, as amended and restated
January 2, 2002 (the "ESPP"), (iii) an additional 125,000 shares issuable under
the Company's International Employee Stock Purchase Plan, as amended and
restated January 2, 2002 (the "IESPP") and (iv) an additional 160,903 shares
issuable under Company's 1995 Non-Employee Directors Stock Option Plan, as
amended and restated January 2, 2004 (the "Directors Plan").

                  This opinion is being furnished in accordance with the
requirements of Item 8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.

                  We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company with respect to the establishment and
amendment of the Option Plan, the ESPP, the IESPP and the Directors Plan. Based
on such review, we are of the opinion that, if, as and when the Shares have been
issued and sold (and the consideration therefor received) pursuant to (a) the
provisions of stock option agreements duly authorized under the Option Plan and
in accordance with the Registration Statement, (b) duly authorized stock
purchases effected in accordance with the ESPP and the Registration Statement,
(c) duly authorized stock purchases effected in accordance with the IESPP and
the Registration Statement or (d) the provisions of the stock option agreements
duly authorized under the Directors Plan and in accordance with the Registration
Statement, such Shares will be duly authorized, legally issued, fully paid and
nonassessable.

                  We consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement.

                  This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company, the Option Plan, the ESPP, the IESPP, the Directors Plan or the Shares.

                                                 Very truly yours,

                                                 /s/ Morgan, Lewis & Bockius LLP

                                                 MORGAN, LEWIS & BOCKIUS LLP

EX-23.1

                                                                    EXHIBIT 23.1

                         CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1995 Stock Option Plan, as amended and restated January
2, 2002, the Employee Stock Purchase Plan, as Amended and Restated January 2,
2002, the International Employee Stock Purchase Plan, as amended and restated
January 2, 2002, and the 1995 Non-Employee Directors Stock Option Plan, as
amended and restated January 2, 2004, of SanDisk Corporation, of our report
dated January 20, 2003 (except for the second paragraph on Note 3, as to which
the date is February 21, 2003 and except for the first paragraph of Note 3 as to
which the date is February 27, 2003), with respect to the consolidated financial
statements of SanDisk Corporation included in its Annual Report (Form 10-K) for
the year ended December 31, 2002, filed with the Securities and Exchange
Commission.

/s/ Ernst & Young LLP


San Jose, California
January 20, 2004

EX-99.4

                                                                    Exhibit 99.4

                               SANDISK CORPORATION

                  1995 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

                      AMENDED AND RESTATED JANUARY 2, 2004

                                   ARTICLE ONE
                               GENERAL PROVISIONS

         I.       PURPOSE OF THE PLAN

                  This 1995 Non-Employee Directors Stock Option Plan is intended
to promote the interests of SanDisk Corporation, a Delaware corporation, by
providing the non-employee members of the Board with the opportunity to acquire
a proprietary interest, or otherwise increase their proprietary interest, in the
Corporation as an incentive for them to remain in the service of the
Corporation.

                  Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.

                  All share numbers in this document reflect the 2-for-1 split
of the Common Stock effected on February 22, 2000.

         II.      ADMINISTRATION OF THE PLAN

                  The terms of each option grant (including the timing and
pricing of the option grant) shall be determined by the express terms of the
Plan, and neither the Board nor any committee of the Board shall exercise any
discretionary functions with respect to option grants made pursuant to the Plan.

         III.     ELIGIBILITY

                  The individuals eligible to receive option grants under the
Plan shall be (i) those individuals who are serving as non-employee Board
members on the Effective Date or who are first elected or appointed as
non-employee Board members on or after such date, whether through appointment by
the Board or election by the Corporation's stockholders, and (ii) those
individuals who continue to serve as non-employee Board members after one or
more Annual Stockholders Meetings beginning with the 1996 Annual Meeting. A
non-employee Board member who has previously been in the employ of the
Corporation (or any Parent or Subsidiary) shall not be eligible to receive an
option grant under the Plan on the Effective Date or at the time he or she first
becomes a non-employee Board member, but shall be eligible to receive periodic
option grants under the Plan upon his or her continued service as a non-employee
Board member following one or more Annual Stockholders Meetings.



         IV.      STOCK SUBJECT TO THE PLAN

                  A.       The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 1,236,142
shares. Such share reserve includes (i) the initial share reserve of 300,000
shares approved by the stockholders in August 1995, (ii) an additional 100,000
share increase authorized by the Board on February 10, 1997 and approved by the
stockholders at the 1997 Annual Stockholders Meeting, (iii) an additional
400,000 share increase authorized by the Board on December 17, 1998, and
approved by the stockholders at the 1999 Annual Meeting, (iv) an additional
increase of 136,928 shares effected in January 2002 pursuant to the automatic
share increase provisions of Section IV.B., (v) an additional increase of
138,311 shares effected in January 2003 pursuant to the automatic share increase
provisions of Section IV.B. and (vi) an additional increase of 160,903 shares
effected in January 2004 pursuant to the automatic share increase provisions of
Section IV.B.

                  B.       The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the first trading day of
January each calendar year during the term of the Plan, beginning with calendar
year 2002, by an amount equal to two tenths of one percent (0.2%) of the shares
of Common Stock outstanding on the last trading day in December of the
immediately preceding calendar year, but in no event shall any such annual
increase exceed 200,000 shares.

                  C.       Shares of Common Stock subject to outstanding options
shall be available for subsequent issuance under the Plan to the extent the
options expire or terminate for any reason prior to exercise in full. In
addition, unvested shares issued under the Plan and subsequently repurchased by
the Corporation, at the original exercise price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. However, shares subject to any option or portion thereof
surrendered in accordance with Article Two shall reduce on a share-for-share
basis the number of shares of Common Stock available for subsequent issuance
under the Plan. Should the exercise price of an option under the Plan be paid
with shares of Common Stock, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the option is exercised, and not by the net number of shares of Common
Stock issued to the holder of such option.

                  D.       Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities
issuable under the Plan, (ii) the maximum number and/or class of securities by
which the share reserve is to increase each calendar year pursuant to the
provisions of Section IV.B of this Article One, (iii) the number and/or class of
securities for which option grants are to be subsequently made per Eligible
Director and (iv) the number and/or class of securities and the

                                        2



exercise price per share in effect under each outstanding option in order to
prevent the dilution or enlargement of benefits thereunder. The adjustments to
the outstanding options shall be made by the Board and shall be final, binding
and conclusive.

                                        3



                                   ARTICLE TWO
                              OPTION GRANT PROGRAM

         I.       OPTION TERMS

                  The provisions of this Article Two reflect the changes to the
number of shares of Common Stock subject to the initial and annual option grants
to be made to the non-employee Board members pursuant to the amendment
authorized by the Board on December 17, 1998, and approved by the stockholders
at the 1999 Annual Meeting. Stockholder approval of such amendment shall
constitute pre-approval of each option grant made on or after the date of the
1999 Annual Meeting to the non-employee Board members pursuant to the amended
provisions of this Article Two and the subsequent exercise of that option in
accordance with such provisions.

                  A.       GRANT DATES. Option grants shall be made on the dates
specified below:

                           1.       Each Eligible Director who is first elected
or appointed as a non-employee Board member on or after the date of the 1999
Annual Stockholders Meeting shall automatically be granted, on the date of such
initial election or appointment (as the case may be), a Non-Statutory Option to
purchase 64,000 shares of Common Stock.

                           2.       On the date of each Annual Stockholders
Meeting, beginning with the 1999 Annual Meeting, each individual who is to
continue to serve as an Eligible Director shall automatically be granted,
whether or not such individual is standing for re-election as a Board member at
that Annual Meeting, a Non-Statutory Option to purchase an additional 16,000
shares of Common Stock, provided such individual has served as a non-employee
Board member for at least six (6) months prior to the date of such Annual
Meeting. There shall be no limit on the number of such 16,000-share option
grants any one Eligible Director may receive over his or her period of Board
service.

                  B.       EXERCISE PRICE.

                           1.       The exercise price per share shall be equal
to one hundred percent (100%) of the Fair Market Value per share of Common Stock
on the option grant date.

                           2.       The exercise price shall become immediately
due upon exercise of the option and shall be payable in one or more of the forms
specified below:

                                    (i)      cash or check made payable to the
         Corporation,

                                    (ii)     shares of Common Stock held for the
         requisite period necessary to avoid a charge to the Corporation's
         earnings for financial reporting purposes and valued at Fair Market
         Value on the Exercise Date, or

                                    (iii)    to the extent the option is
         exercised for vested shares, through a special sale and remittance
         procedure pursuant to which the Optionee shall concurrently provide
         irrevocable written instructions to (A) a Corporation-designated

                                        4



         brokerage firm to effect the immediate sale of the purchased shares and
         remit to the Corporation, out of the sale proceeds available on the
         settlement date, sufficient funds to cover the aggregate exercise price
         payable for the purchased shares plus all applicable Federal, state and
         local income and employment taxes required to be withheld by the
         Corporation by reason of such exercise and (B) the Corporation to
         deliver the certificates for the purchased shares directly to such
         brokerage firm in order to complete the sale.

                  Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.

                  C.       OPTION TERM. Each option shall have a term of ten
(10) years measured from the option grant date.

                  D.       EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial grant shall vest, and the
Corporation's repurchase right shall lapse, in a series of four (4) equal and
successive annual installments over the Optionee's period of continued service
as a Board member, with the first such installment to vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date.
Each annual grant shall vest, and the Corporation's repurchase right shall
lapse, upon the Optionee's completion of one (1) year of Board service measured
from the option grant date.

                  E.       EFFECT OF TERMINATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any options held by the Optionee at the
time the Optionee ceases to serve as a Board member:

                           (i)      The Optionee (or, in the event of Optionee's
         death, the personal representative of the Optionee's estate or the
         person or persons to whom the option is transferred pursuant to the
         Optionee's will or in accordance with the laws of descent and
         distribution) shall have a twelve (12)-month period following the date
         of such cessation of Board service in which to exercise each such
         option.

                           (ii)     During the twelve (12)-month exercise
         period, the option may not be exercised in the aggregate for more than
         the number of vested shares for which the option is exercisable at the
         time of the Optionee's cessation of Board service.

                           (iii)    Should the Optionee cease to serve as a
         Board member by reason of death or Permanent Disability, then all
         shares at the time subject to the option shall immediately vest so that
         such option may, during the twelve (12)-month exercise period following
         such cessation of Board service, be exercised for all or any portion of
         such shares as fully-vested shares.

                           (iv)     In no event shall the option remain
         exercisable after the expiration of the option term. Upon the
         expiration of the twelve (12)-month exercise period or (if earlier)
         upon the expiration of the option term, the option shall terminate and
         cease to be outstanding for any vested shares for which the option has
         not been exercised.

                                        5



         However, the option shall, immediately upon the Optionee's cessation of
         Board service, terminate and cease to be outstanding to the extent it
         is not exercisable for vested shares on the date of such cessation of
         Board service.

                  F.       STOCKHOLDER RIGHTS. The holder of an option shall
have no stockholder rights with respect to the shares subject to the option
until such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.

                  G.       LIMITED TRANSFERABILITY OF OPTIONS. An automatic
option granted under the Plan may, in connection with the Optionee's estate
plan, be assigned in whole or in part during the Optionee's lifetime to one or
more members of the Optionee's immediate family or to a trust established
exclusively for one or more such family members. The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.

         II.      CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER

                  A.       In the event of any Corporate Transaction, the shares
of Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date of the Corporate Transaction,
become fully exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each option grant shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof).

                  B.       In connection with any Change in Control, the shares
of Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock. Each such option shall remain exercisable
for such fully-vested option shares until the expiration of the option term or
the surrender of the option in connection with a Hostile Take-Over.

                  C.       Upon the occurrence of a Hostile Take-Over, the
Optionee shall have a thirty (30)-day period in which to surrender to the
Corporation each option held by him or her. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. Stockholder approval
of the December 17, 1998 amendment and restatement of the Plan shall constitute
pre-approval of each option surrender right subsequently granted under the Plan
and

                                        6



the subsequent exercise of that right in accordance with the terms and
provisions of this Section II.C. No additional approval of the Board or any
committee of the Board shall be required at the time of the actual option
surrender and cash distribution.

                  D.       The grant of options under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

                                        7



                                  ARTICLE THREE
                                  MISCELLANEOUS

         I.       EFFECTIVE DATE AND TERM OF THE PLAN

                  A.       The Plan became effective on the November 7, 1995
Effective Date after adoption by the Board on July 25, 1995 and approval by the
Corporation's stockholders in August 1995.

                  B.       The Plan was amended on February 10, 1997 (the
"February 1997 Amendment") to effect the following changes: (i) increase the
number of shares of Common Stock authorized for issuance over the term of the
Plan by an additional 100,000 shares, (ii) allow unvested shares issued under
the Plan and subsequently repurchased by the Corporation at the option exercise
price paid per share to be reissued under the Plan and (iii) effect a series of
technical changes to the provisions of the Plan (including stockholder approval
requirements) in order to take advantage of the recent amendments to Rule 16b-3
of the Securities Exchange Act of 1934 which exempts certain officer and
director transactions under the Plan from the short-swing liability provisions
of the Federal securities laws. The February 1997 Amendment was approved by the
stockholders at the 1997 Annual Meeting. The Plan was amended on December 17,
1998 (the "December 1998 Amendment") to effect the following changes: (i)
increase the number of shares of Common Stock authorized for issuance over the
term of the Plan by an additional 400,000 shares, (ii) implement the automatic
share increase provisions of Section IV.B of Article One, (iii) increase the
size of the initial grants to non-employee Board members from 32,000 to 64,000
shares of Common Stock and (iv) increase the size of the annual grants to
non-employee Board members from 8,000 to 16,000 shares of Common Stock. The
December 1998 Amendment was approved by the stockholders at the 1999 Annual
Meeting. All option grants made prior to the December 1998 Amendment shall
remain outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options or issuances, and nothing in the December
1998 Amendment shall be deemed to modify or in any way affect those outstanding
options or issuances. Subject to the foregoing limitations, options may be
granted under the Plan at any time before the date fixed herein for the
termination of the Plan.

                  C.       The Plan shall terminate upon the earliest of (i)
July 24, 2005, (ii) the date on which all shares available for issuance under
the Plan shall have been issued or cancelled pursuant to the exercise or
cash-out of the options under the Plan or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such Plan
termination, all option grants and unvested stock issuances outstanding on such
date shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such grants or issuances.

         II.      AMENDMENT OF THE PLAN

                  The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to options or unvested stock issuances at

                                        8



the time outstanding under the Plan unless the Optionee consents to such
amendment or modification. In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.

         III.     USE OF PROCEEDS

                  Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

         IV.      REGULATORY APPROVALS

                  A.       The implementation of the Plan, the granting of any
option under the Plan and the issuance of any shares of Common Stock upon the
exercise of any option shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the shares of Common Stock
issued pursuant to it.

                  B.       No shares of Common Stock or other assets shall be
issued or delivered under the Plan unless and until there shall have been
compliance with all applicable requirements of Federal and state securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any stock exchange (or the Nasdaq National
Market, if applicable) on which Common Stock is then listed for trading.

         V.       NO EMPLOYMENT/SERVICE RIGHTS

                  Nothing in the Plan shall confer upon the Optionee any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) and the Corporation's
stockholders or of the Optionee, which rights are hereby expressly reserved by
each, to terminate such person's Service at any time for any reason, with or
without cause.

                                        9



                                    APPENDIX

                  The following definitions shall be in effect under the Plan:

                  A.       BOARD shall mean the Corporation's Board of
Directors.

                  B.       CHANGE IN CONTROL shall mean a change in ownership or
control of the Corporation effected through either of the following
transactions:

                           (i)      the acquisition, directly or indirectly by
         any person or related group of persons (other than the Corporation or a
         person that directly or indirectly controls, is controlled by, or is
         under common control with, the Corporation), of beneficial ownership
         (within the meaning of Rule 13d-3 of the 1934 Act) of securities
         possessing more than fifty percent (50%) of the total combined voting
         power of the Corporation's outstanding securities pursuant to a tender
         or exchange offer made directly to the Corporation's stockholders; or

                           (ii)     a change in the composition of the Board
         over a period of thirty-six (36) consecutive months or less such that a
         majority of the Board members ceases, by reason of one or more
         contested elections for Board membership, to be comprised of
         individuals who either (A) have been Board members continuously since
         the beginning of such period or (B) have been elected or nominated for
         election as Board members during such period by at least a majority of
         the Board members described in clause (A) who were still in office at
         the time such election or nomination was approved by the Board.

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

                  D.       COMMON STOCK shall mean the Corporation's common
stock.

                  E.       CORPORATE TRANSACTION shall mean either of the
following stockholder-approved transactions to which the Corporation is a party:

                           (i)      a merger or consolidation in which
         securities possessing more than fifty percent (50%) of the total
         combined voting power of the Corporation's outstanding securities are
         transferred to a person or persons different from the persons holding
         those immediately prior to such transaction; or

                           (ii)     the sale, transfer or other disposition of
         all or substantially all of the Corporation's assets in complete
         liquidation or dissolution of the Corporation.

                  F.       CORPORATION shall mean SanDisk Corporation, a
Delaware corporation.

                  G.       EFFECTIVE DATE shall mean November 7, 1995, the date
on which the Underwriting Agreement was executed and the initial public offering
price of the Common Stock was established.

                                       A-1



                  H.       ELIGIBLE DIRECTOR shall mean a non-employee Board
member eligible to participate in the Plan.

                  I.       EXERCISE DATE shall mean the date on which the
Corporation shall have received written notice of the option exercise.

                  J.       FAIR MARKET VALUE per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions:

                           (i)      If the Common Stock is at the time traded on
         the Nasdaq National Market, then the Fair Market Value shall be the
         closing selling price per share of Common Stock on the date in
         question, as such price is reported by the National Association of
         Securities Dealers on the Nasdaq National Market or any successor
         system. If there is no closing selling price for the Common Stock on
         the date in question, then the Fair Market Value shall be the closing
         selling price on the last preceding date for which such quotation
         exists.

                           (ii)     If the Common Stock is at the time listed on
         any Stock Exchange, then the Fair Market Value shall be the closing
         selling price per share of Common Stock on the date in question on the
         Stock Exchange which serves as the primary market for the Common Stock,
         as such price is officially quoted in the composite tape of
         transactions on such exchange. If there is no closing selling price for
         the Common Stock on the date in question, then the Fair Market Value
         shall be the closing selling price on the last preceding date for which
         such quotation exists.

                  K.       HOSTILE TAKE-OVER shall mean a change in ownership of
the Corporation through the direct or indirect acquisition by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept.

                  L.       1934 ACT shall mean the Securities Exchange Act of
1934, as amended.

                  M.       NON-STATUTORY OPTION shall mean an option not
intended to satisfy the requirements of Code Section 422.

                  N.       OPTIONEE shall mean any person to whom an option is
granted under the Plan.

                  O.       PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

                                       A-2



                  P.       PERMANENT DISABILITY shall mean the inability of the
Optionee to perform his or her usual duties as a Board member by reason of any
medically determinable physical or mental impairment expected to result in death
or to be of continuous duration of twelve (12) months or more.

                  Q.       PLAN shall mean the Corporation's 1995 Non-Employee
Directors Stock Option Plan, as set forth in this document.

                  R.       SECTION 16 INSIDERS shall mean an officer or director
of the Corporation subject to the short-swing profit liabilities of Section 16
of the 1934 Act.

                  S.       STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.

                  T.       SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

                  U.       TAKE-OVER PRICE shall mean the greater of (i) the
Fair Market Value per share of Common Stock on the date the option is
surrendered to the Corporation in connection with a Hostile Take-Over or (ii)
the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over.

                  V.       UNDERWRITING AGREEMENT shall mean the agreement
between the Corporation and the underwriter or underwriters which managed the
initial public offering of the Common Stock.

                                       A-3