SanDisk 2005 Annual Report Download - page 23

discretion to extend the period following the optionee's cessation of service during which his or her outstanding
options may be exercised and/or to accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain outstanding, whether before or after
the optionee's actual cessation of service.
The 2005 Plan will allow the issuance of two types of stock appreciation rights under the discretionary
grant program:
‚ Tandem stock appreciation rights provide the holders with the rights to surrender their options for an
appreciation distribution from the Company in an amount equal to the excess of (i) the fair market
value of the vested shares of Common Stock subject to the surrendered option over (ii) the aggregate
exercise price payable for those shares.
‚ Stand-alone stock appreciation rights allow the holders to exercise those rights as to a specific number
of shares of Common Stock and receive in exchange an appreciation distribution from the Company in
an amount equal to the excess of (i) the fair market value of the shares of Common Stock as to which
those rights are exercised over (ii) the aggregate base price in effect for those shares. The base price
per share may not be less than the fair market value per share of Common Stock on the date the stand-
alone stock appreciation right is granted, and the right may not have a term in excess of seven
(7) years.
The distribution on any exercised tandem or stand-alone stock appreciation right will be made in shares
of the Company's Common Stock. Stock appreciation rights will remain exercisable for a limited period
following the holder's cessation of service, but only to the extent those rights are exercisable at the time of
such cessation of service. The plan administrator will have complete discretion to extend the period following
the holder's cessation of service during which his or her outstanding stock appreciation rights may be exercised
and/or to accelerate the exercisability or vesting of those stock appreciation rights in whole or in part. Such
discretion may be exercised at any time while the stock appreciation right remains outstanding, whether before
or after the holder's actual cessation of service.
Repricing Prohibition. The plan administrator may not implement any of the following repricing
programs without obtaining stockholder approval: (i) the cancellation of outstanding options or stock
appreciation rights in return for new options or stock appreciation rights with a lower exercise price per share,
(ii) the cancellation of outstanding options or stock appreciation rights with exercise prices per share in excess
of the then current fair market value per share of Common Stock for consideration payable in the Company's
equity securities or (iii) the direct reduction of the exercise price in effect for outstanding options or stock
appreciation rights.
Stock Issuance and Cash Bonus Programs. Shares may be issued under the stock issuance program at a
price per share not less than their fair market value, payable in cash or other valid consideration under
Delaware law. Shares may also be issued as a bonus for past services without any cash purchase price required
of the recipient. Shares of Common Stock may also be issued under the program pursuant to share right
awards or restricted stock units, which entitle the recipients to receive those shares, without the payment of
any cash purchase price, upon the attainment of designated performance goals or the completion of a
prescribed service period or upon the expiration of a designated time period following the vesting of those
awards or units, including (without limitation), a deferred distribution date following the termination of the
recipient's service with the Company.
The maximum number of shares which may be issued without cash consideration under the stock
issuance program (whether as direct stock issuances or pursuant to restricted stock units or other share-right
awards) may not exceed ten percent (10%) of the total number of shares of Common Stock from time to time
authorized for issuance under the 2005 Plan, including (without limitation): (i) any shares added to the 2005
Plan reserve by reason of the expiration or termination of outstanding options under the Predecessor Plans
prior to exercise, (ii) any increases to the reserve under the 2005 Plan approved by the Company's
stockholders, including the increase which is the subject of this Proposal, and (iii) any adjustments to the
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