SanDisk 2005 Annual Report Download - page 28

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Proxy Statement
but not increase, the amount of the bonus payable pursuant to each executive's award based on individual
performance during 2006.
General Provisions
Vesting Acceleration. In the event the Company should experience a change in control, the following
special vesting acceleration provisions will be in effect for all options, stock appreciation rights and other
awards granted or made under the discretionary grant and stock issuance programs:
(i) Each outstanding option or stock appreciation right under the discretionary grant program will
automatically accelerate in full upon a change in control, if that option or stock appreciation right is not
assumed or otherwise continued in effect by the successor corporation or replaced with a cash retention
program which preserves the spread existing on the unvested shares subject to the option or stock
appreciation right (the excess of the fair market value of those shares over the exercise or base price
payable for such shares) and provides for subsequent payout of that spread in accordance with the same
vesting schedule in effect for those shares.
(ii) All unvested shares outstanding under the discretionary grant and stock issuance programs will
immediately vest upon a change in control, except to the extent the Company's repurchase rights with
respect to those shares are to be assigned to the successor corporation or otherwise continued in effect.
Each outstanding restricted stock unit or other stock-based award under the stock issuance program will
vest as to the number of shares of the Company's Common Stock subject to such unit or award upon the
occurrence of a change in control, unless the unit or award is assumed by the successor corporation or
otherwise continued in effect or is replaced with a cash retention program which preserves the fair market
value of the underlying shares and provides for subsequent payout of that value in accordance with the
same vesting schedule in effect for those shares.
(iii) The plan administrator will have complete discretion to grant one or more options or stock
appreciation rights under the discretionary grant program which will vest and become exercisable for all
the shares in the event the individual's service with the Company or the successor entity is terminated
(actually or constructively) within a designated period following a change in control transaction in which
those options or stock appreciation rights are assumed or otherwise continued in effect. The vesting of
outstanding shares and the vesting and issuance of the shares of Common Stock subject to outstanding
restricted stock units or other stock-based awards under the stock issuance program may also be
structured to accelerate upon similar terms and conditions.
(iv) The plan administrator will have the discretion to structure one or more option grants or stock
appreciation rights under the discretionary grant program so that those options or stock appreciation
rights will immediately vest upon a change in control, whether or not the options or stock appreciation
rights are to be assumed or otherwise continued in effect. The plan administrator may also structure
unvested stock issuances or restricted stock units or other share rights awards under the stock issuance
program so that those issuances or awards will in all events vest immediately upon a change in control.
(v) A change in control will be deemed to occur in the event (a) the Company is acquired by
merger or asset sale, (b) there occurs a stockholder-approved sale, transfer or other disposition (including
in whole or in part through one or more licensing arrangements) of all or substantially all of the
Company's assets, or (c) there occurs any transaction or series of related transactions pursuant to which
any person or group of related persons becomes directly or indirectly the beneficial owner of securities
possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of
the total combined voting power of the Company's securities outstanding immediately after the
consummation of such transaction or series of related transactions, whether such transaction involves a
direct issuance from the Company or the acquisition of outstanding securities held by one or more of the
Company's stockholders.
(vi) The plan administrator will also have the discretionary authority to structure one or more
outstanding options or stock appreciation rights under the discretionary grant program so that those
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