SanDisk 2006 Annual Report Download - page 45

below, had the Named Executive Officers (other than Mr. Chan and Dr. Thakur) terminated employment under their
respective change in control agreements on December 31, 2006, the Company estimates that no gross-up payment
would have been payable to the Named Executive Officers. The value of this acceleration of vesting would be higher
if the accelerated awards were assumed by the acquiring company rather than terminated upon the transaction;
however, the Company estimates that this increase in value would not have been significant enough to trigger a
gross-up payment. For purposes other than calculating the Section 280G excise tax, we have calculated the value of
any option or stock award that may be accelerated in connection with a change in control of the Company to be the
full value of such award (i.e., the full “spread” value for option awards and the full price per share of Common Stock
for stock awards).
Change of Control Benefits Agreements with Named Executive Officers Other than Nelson Chan and
Dr. Randhir Thakur
As indicated above, the Company has entered into a change of control agreement with each Named Executive
Officer other than Mr. Chan and Dr. Thakur. The agreements are substantially identical (except as noted below with
respect to Dr. Harari) and provide for certain benefits to be paid to the Named Executive Officer in connection with a
change of control and/or termination of employment with the Company under the circumstances described below.
Change of Control Benefits. Upon a “Change of Control” (as defined in the change in control agreement) of
the Company, for purposes of the Named Executive Officer’s vesting in then outstanding and unvested equity
awards, the Named Executive Officer will be treated as having completed one (1) additional year of vesting service
as of the date of the Change of Control. The remaining unvested portions of the equity awards will continue to vest
in accordance with their normal terms, but subject to the Named Executive Officer’s additional year of deemed
vesting service. If a Change in Control of the Company had occurred on December 31, 2006, the Company
estimates that the value of the one (1) year acceleration of equity awards for each Named Executive Officer with a
change in control agreement other than Mr. Chan would have been as follows: Dr. Harari ($5,413,188), Ms. Bruner
($3,704,313), Mr. Mehrotra ($3,797,300) and Mr. Cedar ($1,779,031). The Company estimates that this accel-
eration of vesting by itself would not trigger excise taxes under Section 280G for any Named Executive Officer.
Severance Benefits — Termination of Employment in Connection with Change in Control. In the event a
Named Executive Officer’s employment is terminated by the Company (or a successor) without “Cause” (and not
on account of the Named Executive Officer’s death or disability) or by the Named Executive Officer for “Good
Reason” (as those terms are defined in the change in control agreement) within twelve (12) months following a
Change of Control of the Company, the Named Executive Officer will be entitled to severance pay that includes: (i) a
lump sum cash payment equal to one (1) times (two (2) times for Dr. Harari) the sum of (A) the Named Executive
Officer’s annual base salary as of the Change of Control or termination of employment, whichever is greater, plus
(B) the Named Executive Officer’s target annual bonus for the year of termination; (ii) for a period of twenty-four
(24) months following the termination date, continuation of the same or equivalent life, health, disability, vision,
dental and other insurance coverage for the Named Executive Officer and his or her spouse and eligible dependents
as the Named Executive Officer was receiving immediately prior to the Change of Control; (iii) accelerated vesting
of the Named Executive Officer’s equity awards to the extent outstanding on the termination date and not otherwise
vested, with accelerated options to remain exercisable for twelve (12) months following the termination (subject to
the maximum term of the option); (iv) for a period of twelve (12) months following the termination, executive-level
outplacement benefits (which shall include at least resume assistance, career evaluation and assessment, individual
career counseling, financial counseling, access to one or more on-line employment databases, private office and
office support); and (v) in the event that the Named Executive Officer’s benefits are subject to the excise tax
imposed under Section 280G, a gross-up payment so that the net amount of such payment (after taxes) he or she
receives is sufficient to pay the excise tax due.
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