SanDisk 2005 Annual Report Download - page 58

Proxy StatementProxy Statement
2. The number of shares of Common Stock underlying each Stand-alone Right and the base price in
effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the
Stand-alone Right is granted. In no event, however, may the base price per share be less than the Fair
Market Value per underlying share of Common Stock on the grant date. In the event outstanding Stand-
alone Rights are to be assumed in connection with a Change in Control transaction or otherwise
continued in effect, the shares of Common Stock underlying each such Stand-alone Right shall be
adjusted immediately after such Change in Control so as to apply to the number and class of securities
into which those shares of Common Stock would have been converted in consummation of such Change
in Control had those shares actually been outstanding at that time. Appropriate adjustments to reflect
such Change in Control shall also be made to the base price per share in effect under each outstanding
Stand-alone Right, provided the aggregate base price shall remain the same. To the extent the actual
holders of the Corporation's outstanding Common Stock receive cash consideration for their Common
Stock in consummation of the Change in Control, the successor corporation may, in connection with the
assumption or continuation of the outstanding Stand-alone Rights under the Discretionary Grant
Program, substitute, for the securities underlying those assumed rights, one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid per share of Common
Stock in the Change in Control transaction.
3. Stand-alone Rights shall be subject to the same transferability restrictions applicable to Non-
Statutory Options and may not be transferred during the holder's lifetime, except if such assignment is in
connection with the holder's estate plan and is to one or more Family Members of the holder or to a trust
established for the holder and/or one or more such Family Members or pursuant to a domestic relations
order covering the Stand-alone Right as marital property. In addition, one or more beneficiaries may be
designated for an outstanding Stand-alone Right in accordance with substantially the same terms and
provisions as set forth in Section I.F of this Article Two.
4. The distribution with respect to an exercised Stand-alone Right shall be made in shares of
Common Stock valued at Fair Market Value on the exercise date.
5. The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares
subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right
and become a holder of record of the shares of Common Stock issued upon the exercise of such Stand-
alone Right.
E. Post-Service Exercise. The provisions governing the exercise of Tandem and Stand-alone Rights
following the cessation of the recipient's Service shall be substantially the same as those set forth in
Section I.C of this Article Two for the options granted under the Discretionary Grant Program, and the Plan
Administrator's discretionary authority under Section I.C.2 of this Article Two shall also extend to any
outstanding Tandem or Stand-alone Appreciation Rights.
F. Gross Counting. Upon the exercise of any Tandem or Stand-alone Right under this Section III, the
share reserve under Section V of Article One shall be reduced by the gross number of shares as to which such
right is exercised, and not by the net number of shares actually issued by the Corporation upon such exercise.
IV. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of a Change in Control, each outstanding option or stock appreciation right under the
Discretionary Grant Program shall automatically accelerate so that each such option or stock appreciation
right shall, immediately prior to the effective date of that Change in Control, become exercisable as to all the
shares of Common Stock at the time subject to such option or stock appreciation right and may be exercised
as to any or all of those shares as fully vested shares of Common Stock. However, an outstanding option or
stock appreciation right shall not become exercisable on such an accelerated basis if and to the extent:
(i) such option or stock appreciation right is to be assumed by the successor corporation (or parent thereof) or
is otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or
(ii) such option or stock appreciation right is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the Change in Control on any shares as to which
A-9