SanDisk 2005 Annual Report Download - page 22

Proxy Statement
performance-based compensation that is not subject to the Section 162(m) limitation, if the vesting of those
shares is tied solely to the attainment of one or more of the corporate performance milestones discussed below
in the summary description of that program.
The shares of Common Stock issuable under the 2005 Plan may be drawn from shares of the Company's
authorized but unissued Common Stock or from shares of Common Stock that the Company acquires,
including shares purchased on the open market or in private transactions.
Shares subject to any outstanding options or other awards under the 2005 Plan that remain unissued
when those options or awards expire or terminate will be available for subsequent grants and awards under the
2005 Plan. Any unvested shares issued under the 2005 Plan that are subsequently forfeited or that the
Company repurchases, at a price not greater than the original issue price paid per share, pursuant to the
Company's repurchase rights under the 2005 Plan will be added back to the share reserve under the 2005 Plan
and will accordingly be available for subsequent issuance.
There are no net counting provisions in effect under the 2005 Plan. Accordingly, the following share
counting procedures will apply:
‚ Should the exercise price of an option be paid in shares of the Company's Common Stock, then the
number of shares reserved for issuance under the 2005 Plan will be reduced by the gross number of
shares for which that option is exercised, and not by the net number of new shares issued under the
exercised option.
‚ Should shares of Common Stock otherwise issuable under the 2005 Plan be withheld by the Company
in satisfaction of the withholding taxes incurred in connection with the exercise of an option or stock
appreciation right or the issuance or vesting of shares under the stock issuance program, then the
number of shares of Common Stock available for issuance under the 2005 Plan will be reduced by the
full number of shares issuable under the exercised option or stock appreciation right or the full number
of shares issuable or vesting under the stock issuance program, calculated in each instance prior to any
such share withholding.
‚ Upon the exercise of any stock appreciation right granted under the 2005 Plan, the share reserve will be
reduced by the gross number of shares as to which such stock appreciation right is exercised, and not
by the net number of shares actually issued upon such exercise.
Equity Incentive Programs
Discretionary Grant Program. Under the discretionary grant program, eligible persons may be granted
options to purchase shares of the Company's Common Stock or stock appreciation rights tied to the value of
the Common Stock. The plan administrator will have complete discretion to determine which eligible
individuals are to receive option grants or stock appreciation rights, the time or times when those options or
stock appreciation rights are to be granted, the number of shares subject to each such grant, the vesting
schedule (if any) to be in effect for the grant, the maximum term for which the granted option or stock
appreciation right is to remain outstanding and the status of any granted option as either an incentive stock
option or a non-statutory option under the federal tax laws.
Each granted option will have an exercise price per share determined by the plan administrator, but the
exercise price will not be less than one hundred percent of the fair market value of the option shares on the
grant date. No granted option will have a term in excess of seven (7) years. The shares subject to each option
will generally vest in one or more installments over a specified period of service measured from the grant date.
However, one or more options may be structured so that they will be immediately exercisable for any or all of
the option shares. The shares acquired under such immediately exercisable options will be subject to
repurchase by the Company, at the lower of the exercise price paid per share or the fair market value per
share, if the optionee ceases service prior to vesting in those shares.
Upon cessation of service, the optionee will have a limited period of time in which to exercise his or her
outstanding options to the extent exercisable for vested shares. The plan administrator will have complete
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