SanDisk 2005 Annual Report Download - page 66

Proxy StatementProxy Statement
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Should a Change in Control occur prior to the Optionee's cessation of Service, then the shares of
Common Stock at the time subject to each outstanding option held by such Optionee under this Automatic
Grant Program but not otherwise vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Change in Control, become exercisable for all the option shares
as fully vested shares of Common Stock and may be exercised for any or all of those vested shares.
Immediately following the consummation of the Change in Control, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent
thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.
B. Should a Hostile Take-Over occur prior to the Optionee's cessation of Service, then the shares of
Common Stock at the time subject to each outstanding option held by such Optionee under this Automatic
Grant Program but not otherwise vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Hostile Take-Over, become exercisable for all the option shares
as fully vested shares of Common Stock and may be exercised for any or all of those vested shares. Each such
option shall remain exercisable for such fully vested option shares until the expiration or sooner termination of
the option term.
C. All outstanding repurchase rights under this under this Automatic Grant Program shall automatically
terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full,
in the event of any Change in Control or Hostile Take-Over.
D. Each option which is assumed in connection with a Change in Control or otherwise continued in
effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and
class of securities which would have been issuable to the Optionee in consummation of such Change in
Control had the option been exercised immediately prior to such Change in Control. Appropriate adjustments
shall also be made to the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities 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 options under the Automatic Grant Program, substitute 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 such Change in Control transaction.
III. REMAINING TERMS
The remaining terms of each grant shall be the same as the terms in effect for option grants made under
the Discretionary Grant Program.
IV. ALTERNATIVE AWARDS
The Compensation Committee shall have full power and authority to award, in lieu of one or more initial
or annual automatic option grants under this Article Four, unvested shares of Common Stock or restricted
stock units which in each instance have an aggregate Fair Market Value substantially equal to the fair value
(as determined for financial reporting purposes in accordance with Financial Accounting Standard 123R or
any successor standard) of the automatic option grant which such award replaces. Any such alternative award
shall be made at the same time the automatic option grant which it replaces would have been made, and the
vesting provisions (including vesting acceleration) applicable to such award shall be substantially the same as
in effect for the automatic option grant so replaced.
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