SanDisk 2010 Annual Report Download - page 48

Change in Control
Should the Company be acquired by merger, sale of substantially all of its assets or sale of securities
possessing more than fifty percent of the total combined voting power of the Company’s outstanding securities,
then all outstanding purchase rights will automatically be exercised immediately prior to the effective date of
such acquisition. The purchase price will be not less than eighty-five percent of the lower of (i) the fair market
value per share of Common Stock on the start date of the offering period in which the participant is enrolled at
the time of such acquisition or (ii) the fair market value per share of Common Stock immediately prior to such
acquisition. The limitation on the maximum number of shares purchasable by each participant on any one
purchase date will be applicable to any purchase date attributable to such an acquisition.
Share Pro-Ration
Should the total number of shares of Common Stock to be purchased pursuant to outstanding purchase
rights on any particular date exceed the collective number of shares then available for issuance under the 2005
Purchase Plans, then the plan administrator will make a pro-rata allocation of the available shares on a uniform
and nondiscriminatory basis, and the payroll deductions of each participant, to the extent in excess of the
aggregate purchase price payable for the Common Stock pro-rated to such individual, will be refunded.
Amendment and Termination
The 2005 Purchase Plans will terminate upon the earliest to occur of (i) the last business day in July 2015,
(ii) the date on which all shares available for issuance thereunder are sold pursuant to exercised purchase rights
or (iii) the date on which all purchase rights are exercised in connection with a change in control or ownership.
The Company’s board of directors may amend or suspend the Purchase Plan and /or International Plan at the
end of any six-month purchase interval. However, the board may not, without stockholder approval, (i) increase
the number of shares issuable under the 2005 Purchase Plans (except as permissible adjustments in the event of
changes to the Company’s capitalization), (ii) alter the purchase price formula so as to reduce the purchase price
or (iii) modify the requirements for eligibility to participate in the 2005 Purchase Plans. The Company currently
intends to roll over any shares of Common Stock that remain available for issuance under the existing 2005
Purchase Plans when the plans expire and reserve those shares for issuance under the new employee stock
purchase plans.
U.S. Federal Tax Consequences
The Purchase Plan for the Company’s U.S. employees is intended to be an “employee stock purchase plan”
within the meaning of Section 423 of the Internal Revenue Code. Under a plan which so qualifies, no taxable
income will be recognized by a participant, and no deductions will be allowable to the Company, upon either the
grant or the exercise of the purchase rights. Taxable income will not be recognized until there is a sale or other
disposition of the shares acquired under the Purchase Plan or unless the participant should die while still owning
the purchased shares.
If the participant sells or otherwise disposes of the purchased shares within two years after the start date of
the offering period in which such shares were acquired or within one year after the actual purchase date of those
shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the amount
by which the fair market value of the shares on the purchase date exceeded the purchase price paid for those
shares, and the Company will be entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares more than two years after the start date of the
offering period in which the shares were acquired and more than one year after the actual purchase date of those
shares, then the participant will recognize ordinary income in the year of sale or disposition equal to the lesser of
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