SanDisk 2010 Annual Report Download - page 38

Board service. The shares subject to each initial 150,000-or-less-share automatic option grant will vest in four
successive equal annual installments upon the optionee’s completion of each year of Board service over the four-
year period measured from the grant date. The shares subject to each annual automatic option grant made to a
continuing Board member will vest upon the earlier of (i) that individual’s completion of one (1) year of Board
service measured from the grant date or (ii) such individual’s continuation in Board service through the day
immediately preceding the date of the next annual stockholders meeting following such grant date. However, the
shares will immediately vest in full upon the optionee’s death or disability while a Board member or upon the
occurrence of certain changes in ownership or control.
The option grants under the automatic option grant program will be taxable as non-statutory options under
the U.S. Federal income tax laws.
The Company’s Compensation Committee will have the authority to award to one or more non-employee
Board members, in lieu of all or a portion of the initial or annual automatic option grants, unvested shares of
Common Stock or restricted stock units covering such shares which in each instance have an aggregate fair
market value substantially equal to the fair value (as determined for financial reporting purposes in accordance
with ASC 718 or any successor standard) of the automatic option grant which such award replaces. Any such
alternative award will be made at the same time the automatic option grant which it replaces would have been
made, and the vesting provisions (including vesting acceleration) applicable to such award will be substantially
the same as in effect for the automatic option grant so replaced.
General Provisions
Repricing Prohibition. The plan administrator may not implement any of the following repricing programs
without obtaining stockholder approval: (i) the cancellation/regrant of outstanding options or stock appreciation
rights in return for new options or stock appreciation rights with a lower exercise price per share, (ii) the
cancellation of outstanding options or stock appreciation rights with exercise prices per share in excess of the
then current fair market value per share of Common Stock for consideration payable in the Company’s equity
securities, or (iii) the direct reduction of the exercise price in effect for outstanding options or stock appreciation
rights.
Vesting Acceleration. In the event the Company should experience a change in control, the following
special vesting acceleration provisions will be in effect for all options, stock appreciation rights and other awards
granted or made under the discretionary grant and stock issuance programs:
(i) Each outstanding option or stock appreciation right under the discretionary grant program will
automatically accelerate in full upon a change in control, if that option or stock appreciation right is not
assumed or otherwise continued in effect by the successor corporation or replaced with a cash retention
program which preserves the spread existing on the unvested shares subject to the option or stock
appreciation right (the excess of the fair market value of those shares over the exercise or base price
payable for such shares) and provides for subsequent payout of that spread in accordance with the same
vesting schedule in effect for those shares.
(ii) All unvested shares outstanding under the discretionary grant and stock issuance programs will
immediately vest upon a change in control, except to the extent the Company’s repurchase rights with
respect to those shares are to be assigned to the successor corporation or otherwise continued in effect.
Each outstanding restricted stock unit or other stock-based award under the stock issuance program
will vest as to the number of shares of Common Stock subject to such unit or award upon the
occurrence of a change in control, unless the unit or award is assumed by the successor corporation or
otherwise continued in effect or is replaced with a cash retention program which preserves the fair
market value of the underlying shares and provides for subsequent payout of that value in accordance
with the same vesting schedule in effect for those shares.
(iii) The plan administrator will have complete discretion to grant one or more options or stock appreciation
rights under the discretionary grant program which will vest and become exercisable for all the shares
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