SanDisk 2005 Annual Report Download - page 33

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On March 10, 2006, the Company had approximately 194,527,482 shares of Common Stock issued and
outstanding. Also on that date, the Company had approximately 22,317,585 shares of Common Stock subject
to outstanding equity-based awards under the Company's 2005 Plan, including awards incorporated from
predecessor plans and options assumed in connection with acquisitions, 566,600 shares available for future
grant under such plan and an aggregate of approximately 4,886,091 shares available for issuance under the
Company's Employee Stock Purchase Plan and International Employee Stock Purchase Plan. Approximately
225 million shares of the Company's 400 million authorized shares have been issued or are reserved for
issuance and thus few shares are available to the Company for use in connection with its future financing and
other corporate needs. The lack of authorized Common Stock available for issuance could unnecessarily limit
or delay the Company's ability to pursue opportunities for future financings, acquisitions and other
transactions. The Company could also be limited in its ability to effectuate future stock splits or stock
dividends. At this time, the Company has no plans, proposals or arrangements, written or otherwise, to issue
any of the additional shares of Common Stock.
The availability of authorized but unissued shares of Common Stock might be deemed to have the effect
of preventing or discouraging an attempt by another person to obtain control of the Company, because the
additional shares could be issued by the Board of Directors, which could dilute the stock ownership of such
person. The Company has no plans for such issuances and this proposal is not being proposed in response to a
known effort to acquire control of the Company.
In addition, an issuance of additional shares by the Company could have an effect on the potential
realizable value of a stockholder's investment. In the absence of a proportionate increase in the Company's
earnings and book value, an increase in the aggregate number of outstanding shares of the Company caused by
the issuance of the additional shares would dilute the earnings per share and book value per share of all
outstanding shares of the Company's capital stock. If such factors were reflected in the price per share of
Common Stock, the potential realizable value of a stockholder's investment could be adversely affected.
The additional shares of Common Stock to be authorized by adoption of the amendment to the
Certificate of Incorporation would have rights identical to the currently outstanding shares of Common Stock,
and adoption of the proposed amendment to the Certificate of Incorporation would not affect the rights of the
holders of currently outstanding shares of Common Stock.
Required Vote
Adoption of the amendment to the Certificate of Incorporation to increase the Company's authorized
Common Stock requires the vote of a majority of the issued and outstanding shares of the Company's
Common Stock. Votes, abstentions and broker non-votes will be counted as set forth above in ""VOTING
RIGHTS.'' If the proposal is approved, the Company intends to file an amendment to its Certificate of
Incorporation in substantially the form attached to this proxy statement as Annex B promptly after the
Meeting. The amendment to the Certificate of Incorporation will be effective immediately upon acceptance of
filing by the Secretary of State of the State of Delaware. Thereafter, the Board of Directors would generally be
free to issue Common Stock without further action on the part of the stockholders.
Recommendation of the Board of Directors
The Board believes that Proposal No. 3 is in the Company's best interests and in the best interests of its
stockholders and recommends a vote FOR the increase in the number of shares of the Company's authorized
Common Stock from 400,000,000 shares to 800,000,000 shares.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Company's Board of Directors has appointed Ernst & Young LLP as the
Company's independent registered public accounting firm for the fiscal year ending December 31, 2006, and is
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