SanDisk 2010 Annual Report Download - page 100

right shall lapse, in four (4) successive equal annual installments upon the Optionee’s completion of each year of
Service (whether as a non-employee Board member, Employee or consultant) over the four (4)-year period
measured from the option grant date. The shares subject to each annual 40,000-share-or-less grant made to a
non-employee Board member for his or her continued Board service shall vest, and the Corporation’s repurchase
right shall lapse, in one installment upon the earlier of (i) the Optionee’s completion of the one (1)-year period of
Service (whether as a non-employee Board member, Employee or consultant) measured from the grant date or
(ii) the Optionee’s continuation in such Service capacity through the day immediately preceding the next annual
stockholders meeting following such grant date.
E. Limited Transferability of Options. Each option under this Article Four may be assigned in whole or in
part during the Optionee’s lifetime to one or more of his or her Family Members or to a trust established
exclusively for the Optionee and/or one or more such Family Members, to the extent such assignment is in
connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion 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. The Optionee may also designate one or more persons as the beneficiary or
beneficiaries of his or her outstanding options under this Article Four, and the 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.
F. Termination of Board Service. The following provisions shall govern the exercise of any options held
by the Optionee at the time the Optionee ceases Service:
(i) The Optionee (or, in the event of Optionee’s death while holding the option, 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 the laws of inheritance or the designated beneficiary or beneficiaries of such option)
shall have a twelve (12)-month period following the date of such cessation of Service in which to exercise
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 of Common Stock for which the option is exercisable at the time of
the Optionee’s cessation of Service. However, 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 any or all of those shares as fully vested shares of Common Stock.
(iii) 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. However, the option shall, immediately upon the Optionee’s cessation of Service for any reason
(other than cessation of Board service by reason of death or Permanent Disability), terminate and cease to be
outstanding to the extent the option is not otherwise at that time exercisable for vested shares.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Should a Change in Control occur prior to the Optionee’s cessation of Service, then the shares of
Common Stock at the time subject to each outstanding option held by such Optionee under this Automatic Grant
Program 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 exercisable for all the option shares as fully vested shares
of Common Stock and may be exercised for any or all of those vested shares. Immediately following the
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