SanDisk 2010 Annual Report Download - page 35

Proxy Statement
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. The holder of an option or stock appreciation right will have no stockholder rights
(including dividend or dividend equivalent rights) with respect to the shares subject to the option or stock
appreciation right until such person has exercised the option or stock appreciation right, paid the exercise price
and become a holder of record of the purchased shares.
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
discretion to extend the period following the optionee’s cessation of service during which his or her outstanding
23