SanDisk 2005 Annual Report Download - page 56

Proxy StatementProxy Statement
(iii) permit the option to be exercised, during the applicable post-Service exercise period, not only
with respect to the number of vested shares of Common Stock for which such option is exercisable at the
time of the Optionee's cessation of Service but also with respect to one or more additional installments in
which the Optionee would have vested had the Optionee continued in Service.
D. 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.
E. Repurchase Rights. The Plan Administrator shall have the discretion to grant options which are
exercisable for unvested shares of Common Stock. Should the Optionee cease Service while such shares are
unvested, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per
share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of
Common Stock at the time of repurchase. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Transferability of Options. The transferability of options granted under the Plan shall be governed
by the following provisions:
(i) Incentive Options: During the lifetime of the Optionee, Incentive Options shall be exercisable
only by the Optionee and shall not be assignable or transferable other than by will or the laws of
inheritance following the Optionee's death.
(ii) Non-Statutory Options. Non-Statutory Options shall be subject to the same limitation on
transfer as Incentive Options, except that the Plan Administrator may structure one or more Non-
Statutory Options so that the option may be assigned in whole or in part during the Optionee's lifetime to
one or more Family Members of the Optionee or to a trust established exclusively for one or more such
Family Members, to the extent such assignment is in connection with the Optionee's estate plan or
pursuant to a domestic relations order. The assigned portion 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.
(iii) Beneficiary Designations. Notwithstanding the foregoing, the Optionee may designate one or
more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two
(whether Incentive Options or Non-Statutory Options), and those options shall, in accordance with such
designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death
while holding those options. Such beneficiary or beneficiaries shall take the transferred options subject to
all the terms and conditions of the applicable agreement evidencing each such transferred option,
including (without limitation) the limited time period during which the option may be exercised
following the Optionee's death.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options. Except as modified by the
provisions of this Section II, all the provisions of Articles One, Two and Five shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when issued under the Plan shall
not be subject to the terms of this Section II.
A. Eligibility. Incentive Options may only be granted to Employees.
B. Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined
as of the respective date or dates of grant) for which one or more options granted to any Employee under the
Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become
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