SanDisk 2005 Annual Report Download - page 65

D. Exercise and Vesting of Options. Each option shall be immediately exercisable for any or all of the
option shares. However, any unvested shares purchased under the option shall be subject to repurchase by the
Corporation, at 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, upon the Optionee's cessation of Service prior to vesting in those
shares. The shares subject to each initial 150,000-share-or-less grant shall vest, and the Corporation's
repurchase 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.
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