SanDisk 2007 Annual Report Download - page 17

Once vested, each option will generally remain exercisable for fully vested shares of Common Stock (i.e.,
shares which are not subject to the Company’s repurchase right) until its normal expiration date. Each of the options
granted to our Non-Employee Directors under the 2005 Plan has a term of seven years. However, vested stock
options may terminate earlier in connection with a change in control of the Company. Shares subject to the option
that have not vested will immediately terminate (or be subject to the Company’s repurchase right to the extent
already purchased under the option) upon the cessation of the Non-Employee Director’s service. However, the
shares subject to options vest, and the Company’s repurchase right lapses, in full if the Non-Employee Director’s
cessation of service is as a result of the director’s death or permanent disability. Non-Employee Directors generally
have twelve months to exercise the vested portion of the option following a cessation of service.
The options granted to Non-Employee Directors do not include any dividend or dividend equivalent rights.
However, Non-Employee Directors are entitled to dividends with respect to shares purchased under an option,
whether or not such shares have vested under the option, at the same rate as of the Company’s other stockholders.
Initial and Annual Restricted Stock Unit Grants.
Each restricted stock unit awarded to our Non-Employee Directors represents a contractual right to receive one
share of the Company’s Common Stock if the time-based vesting requirements described below are satisfied.
Restricted stock units are credited to a bookkeeping account established by the Company on behalf of each Non-
Employee Director.
Subject to the Non-Employee Director’s continued service, the units subject to the Initial Unit Grant vest in
four substantially equal annual installments on each of the first through fourth anniversaries of the grant date.
Subject to the Non-Employee Director’s continued service, the units subject to the Annual Unit Grant vest in one
installment on the earlier of (i) the first anniversary of the grant date or (ii) the day immediately preceding the next
annual meeting of the Company’s stockholders following the grant date. Upon the cessation of the Non-Employee
Director’s service, any unvested restricted stock units will generally terminate. However, restricted stock units
granted to a Non-Employee Director vest in full if the Non-Employee Director’s cessation of service is as a result of
the director’s death or permanent disability.
Restricted stock units will generally be paid in an equivalent number of shares of the Company’s Common
Stock as they become vested. Non-Employee Directors are not entitled to voting or dividend rights with respect to
the restricted stock units, and the restricted stock units generally may not be transferred, except to the Company or
to a beneficiary of the Non-Employee Director upon his or her death. Non-Employee Directors are, however,
entitled to the following dividend equivalent rights with respect to the restricted stock units. If the Company pays a
cash dividend on its Common Stock and the dividend record date occurs after the grant date and before all of the
restricted stock units have either been paid or terminated, then the Company will credit the Non-Employee
Director’s bookkeeping account with an amount equal to (i) the per-share cash dividend paid by the Company on its
Common Stock with respect to the dividend record date, multiplied by (ii) the total number of outstanding and
unpaid restricted stock units (including any unvested restricted stock units) as of the dividend record date. These
dividend equivalents will be subject to the same vesting, payment and other terms and conditions as the original
restricted stock units to which they relate (except that the dividend equivalents may be paid in cash or such other
form as the plan administrator may deem appropriate).
The Board of Directors administers the 2005 Plan as to Non-Employee Director awards and has the ability to
interpret and make all required determinations under the plan, subject to plan limits. This authority includes making
required proportionate adjustments to outstanding awards to reflect any impact resulting from various corporate
events such as reorganizations, mergers and stock splits. Pursuant to the terms of the 2005 Plan, stock options and
restricted stock units granted to our Non-Employee Directors may vest on an accelerated basis in connection with a
change in control of the Company.
Required Vote
The affirmative vote of the holders of a plurality of the shares present in person or represented by proxy at the
Annual Meeting and entitled to vote on Proposal No. 1 is required for approval of Proposal No. 1.
14