SanDisk 2009 Annual Report Download - page 26

shares subject to the Annual Option Grant vest, and the Company’s repurchase right lapses, in one installment on
the earlier of (i) 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.
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 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 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
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