EXHIBIT 10.A.22
June 9, 1995
Mr. Michael H. Spindler
1 Infinite Loop
Cupertino, California 95014
Retention Agreement
Dear Mr. Spindler:
Apple Computer, Inc., a California corporation
(the "Company"), considers it essential to the best interests of its
stockholders to take reasonable steps to retain key management personnel.
Further, the Board of Directors of the Company (the "Board") recognizes that
the uncertainty and questions which might arise among management in the
context of a change in control of the Company could result in the departure
or distraction of management personnel to the detriment of the Company and its
stockholders.
The Board has determined, therefore, that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the management of the Company and its subsidiaries,
including yourself, to their assigned duties without distraction in the face
of potentially disturbing circumstances arising from any possible change in
control of the Company.
In order to induce you to remain in the employ of the Company,
the Company has determined to enter into this letter agreement
(this "Agreement") which addresses the terms and conditions of your employment
in the event of a change in control of the Company. Capitalized words which
are not otherwise defined herein shall have the meanings assigned to such
words in Section 8 of this Agreement.
1. Term of Employment Under the Agreement. The term of
your employment under this Agreement shall commence on the Change in Control
Date and shall continue until the third anniversary of the Change in Control
Date (the "Term").
2. Employment During the Term. During the Term, the
following terms and conditions shall apply to your employment with the
Company:
(a) Titles; Reporting and Duties. Your position, titles,
nature and status of responsibilities and reporting obligations shall be no
less favorable to you than those that you enjoyed immediately prior to the
Change in Control Date.
(b) Salary and Bonus. Your base salary and annual bonus
opportunity may not be reduced, and your base salary shall be periodically
reviewed and increased in the manner commensurate with increases awarded to
other senior executives of the Company.
(c) Incentive Compensation. You shall be eligible to
participate in each long-term incentive plan or arrangement established by
the Company for its executive employees, in accordance with the terms and
provisions of such plan or arrangement and at a level consistent with the
Company's practices applicable to you prior to the Change in Control Date.
(d) Benefits. You shall be eligible to participate in
all pension, welfare and fringe benefit plans and arrangements that the
Company provides to its executive employees in accordance with the terms of
such plans and arrangements, which shall be no less favorable to you,
in the aggregate, than the terms and provisions available to other executive
employees of the Company.
(e) Location. You will continue to be employed at the
business location at which you were employed prior to the Change in Control
Date and the amount of time that you are required to travel for business
purposes will not be increased in any significant respect from the amount
of business travel required of you prior to the Change in Control Date.
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3. Involuntary Termination During the Term.
(a) Severance Payment. In the event of your Involuntary
Termination during the Term, the Company shall pay you within 5 days of the
date of such Involuntary Termination the full amount of any earned but unpaid
base salary through the Date of Termination at the rate in effect at the time
of the Notice of Termination, plus a cash payment (calculated on the basis
of your Reference Salary) for all unused vacation time which you may have
accrued as of the Date of Termination. The Company shall also pay you
within 5 days of the Date of Termination a pro rata portion of the annual
bonus for the year in which your Involuntary Termination occurs, calculated
on the basis of your target bonus for that year and on the assumption that
all performance targets have been or will be achieved. In addition, the
Company shall pay you in a cash lump sum, within 8 days following the date
of your execution of the release described in the last sentence of this
Section 3(a) (or the Date of Termination, if later), an amount (the
"Severance Payment") equal to three times the sum of your Reference Salary
and your Reference Bonus. The Severance Payment shall be in lieu of any
other severance payments which you are entitled to receive under any other
severance pay plan or arrangement sponsored by the Company and its
subsidiaries. Your right to the Severance Payment shall be conditioned
upon your execution of a release in favor of the Company in substantially
the form of the release required for the receipt of severance payments
under the Severance Plan (as in effect on the date of this Agreement) which
is not revoked by you within the seven-day revocation period specified
therein.
(b) Benefit Payment. In the event of your Involuntary
Termination during the Term, you and your eligible
dependents shall continue to be eligible to participate during the Benefit
Continuation Period (as hereinafter defined) in the medical,
dental, health, life and other fringe benefit plans and arrangements
applicable to you immediately prior to your Involuntary
Termination on the same terms and conditions in effect for you and your
dependents immediately prior to such Involuntary
Termination. For purposes of the previous sentence, "Benefit Continuation
Period" means the period beginning on the Date of
Termination and ending on the earlier to occur of (i) the third anniversary
of the Date of Termination and (ii) the date that you and
your dependents are eligible and elect coverage under the plans of a
subsequent employer which provide substantially equivalent or
greater benefits to you and your dependents.
(c) Date and Notice of Termination. Any termination of
your employment by the Company or by you during
the Term shall be communicated by a notice of termination to the other
party hereto (the "Notice of Termination"). The Notice of
Termination shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated. The date of
your termination of employment with the Company and its subsidiaries (the
"Date of Termination") shall be determined as follows: (i)
if your employment is terminated for Disability, thirty (30) days after a
Notice of Termination is given (provided that you shall not
have returned to the full-time performance of your duties during such thirty
(30) day period), (ii) if your employment is terminated by
the Company in an Involuntary Termination, five (5) days after the date the
Notice of Termination is received by you and (iii) if your
employment is terminated by the Company for Cause, the later of the date
specified in the Notice of Termination or ten (10) days
following the date such notice is received by you. If the basis for your
Involuntary Termination is your resignation for Good Reason,
the Date of Termination shall be ten (10) days after the date your Notice
of Termination is received by the Company. The Date of
Termination for a resignation of employment other than for Good Reason
shall be the date set forth in the applicable notice, which
shall be no earlier than ten (10) days after the date such notice is
received by the Company.
(d) No Mitigation or Offset. You shall not be required
to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this
Agreement be reduced by any compensation earned by you as the result of
employment by another employer or by pension benefits
paid by the Company or another employer after the Date of Termination or
otherwise except as specifically provided in clause (ii) of
the last sentence of Section 3(b).
4. Additional Payment.
(a) Gross-Up Payment. Notwithstanding anything herein
to the contrary, if it is determined that any Payment
would be subject to the excise tax imposed by Section 4999 of the Code or
any interest or penalties with respect to such excise tax
(such excise tax, together with any interest or penalties thereon, is
herein referred to as an "Excise Tax"), then you shall be entitled to
an additional payment (a "Gross-Up Payment") in an amount that will place
you in the same after-tax economic position that you
would have enjoyed if the Excise Tax had not applied to the Payment. The
amount of the Gross-Up Payment shall be determined by
the Accounting Firm in accordance with the formula
{(E x (1 - M)/(1 - T)) - E} (or such other formula as the Accounting Firm
deems appropriate which is intended to achieve the same
result), where
E equals the Payments which are determined to be "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code;
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M equals the sum of the highest marginal rates1 for Taxes
applicable to you at the time of the Payment; and
T equals M plus the rate of Excise Tax applicable to the
Payment.
No Gross-Up Payments shall be payable hereunder if the Accounting Firm
determines that the Payments are not subject to an Excise Tax.
(b) Determination of Gross-Up Payment. Subject to the
provisions of Section 4(c), all determinations required
under this Section 4, including whether a Gross-Up Payment is required, the
amount of the Payments constituting excess parachute
payments, and the amount of the Gross-Up Payment, shall be made by the
Accounting Firm, which shall provide detailed supporting
calculations both to you and the Company within fifteen days of the Change
in Control Date, your Date of Termination or any other
date reasonably requested by you or the Company on which a determination
under this Section 4 is necessary or advisable. The
Company shall pay to you the initial Gross-Up Payment within 5 days of the
receipt by you and the Company of the Accounting
Firm's determination. If the Accounting Firm determines that no Excise Tax
is payable by you, the Company shall cause the
Accounting Firm to provide you with an opinion that the Accounting Firm has
substantial authority under the Code and Regulations
not to report an Excise Tax on your federal income tax return. Any
determination by the Accounting Firm shall be binding upon you
and the Company. If the initial Gross-Up Payment is insufficient to cover
the amount of the Excise Tax that is ultimately determined
to be owing by you with respect to any Payment (hereinafter an
"Underpayment"), the Company, after exhausting its remedies under
Section 4(c) below, shall promptly pay to you an additional Gross-Up
Payment in respect of the Underpayment.
(c) Procedures. You shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up Payment.
Such notice shall be given as soon as practicable
after you know of such claim and shall apprise the Company of the nature of
the claim and the date on which the claim is requested to
be paid. You agree not to pay the claim until the expiration of the
thirty-day period following the date on which you notify the
Company, or such shorter period ending on the date the Taxes with respect
to such claim are due (the "Notice Period"). If the
Company notifies you in writing prior to the expiration of the Notice
Period that it desires to contest the claim, you shall: (i) give the
Company any information reasonably requested by the Company relating to the
claim; (ii) take such action in connection with the
claim as the Company may reasonably request, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company and reasonably acceptable
to you; (iii) cooperate with the Company in good faith
in contesting the claim; and (iv) permit the Company to participate in any
proceedings relating to the claim. You shall permit the
Company to control all proceedings related to the claim and, at its option,
permit the Company to pursue or forgo any and all
administrative appeals, proceedings, hearings, and conferences with the
taxing authority in respect of such claim. If requested by the
Company, you agree either to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner and to prosecute
such contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts
as the Company shall determine; provided, however, that, if the Company
directs you to pay such claim and pursue a refund, the
Company shall advance the amount of such payment to you on an after-tax and
interest-free basis (the "Advance"). The Company's
control of the contest related to the claim shall be limited to the issues
related to the Gross-Up Payment and you shall be entitled to
settle or contest, as the case may be, any other issues raised by the
Internal Revenue Service or other taxing authority. If the Company
does not notify you in writing prior to the end of the Notice Period of its
desire to contest the claim, the Company shall pay to you an
additional Gross-Up Payment in respect of the excess parachute payments
that are the subject of the claim, and you agree to pay the
amount of the Excise Tax that is the subject of the claim to the applicable
taxing authority in accordance with applicable law.
(d) Repayments. If, after receipt by you of an Advance,
you become entitled to a refund with respect to the
claim to which such Advance relates, you shall pay the Company the amount
of the refund (together with any interest paid or credited
thereon after Taxes applicable thereto). If, after receipt by you of an
Advance, a determination is made that you shall not be entitled to
any refund with respect to the claim and the Company does not promptly
notify you of its intent to contest the denial of refund, then
the amount of the Advance shall not be required to be repaid by you and the
amount thereof shall offset the amount of the additional
Gross-Up Payment then owing to you.
(e) Further Assurances. The Company shall indemnify
you and hold you harmless, on an after-tax basis, from
any costs, expenses, penalties, fines, interest or other liabilities
("Losses") incurred by you with respect to the exercise by the
Company of any of its rights under this Section 4, including, without
limitation, any Losses related to the Company's decision to
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________________________
1To be expressed in up to three decimal places. For example, a combined
federal, state and local marginal rate of 56% would be
expressed as .560.
contest a claim or any imputed income to you resulting from any Advance or
action taken on your behalf by the Company hereunder.
The Company shall pay all legal fees and expenses incurred under this
Section 4, and shall promptly reimburse you for the reasonable
expenses incurred by you in connection with any actions taken by the
Company or required to be taken by you hereunder. The
Company shall also pay all of the fees and expenses of the Accounting Firm,
including, without limitation, the fees and expenses
related to the opinion referred to in Section 4(b).
(f) Combined Payments. Anything in this Section 4 to
the contrary notwithstanding, the Company shall have
no obligation to pay you a required Gross-Up Payment under this Section 4
if the aggregate amount of all Combined Payments has at
the time such payment is due exceeded the Limit. If the amount of a Gross-Up
Payment to you under this Section 4 would result in
the Combined Payments exceeding the Limit, the Company shall pay you only
the portion, if any, of the Gross-Up Payment which can
be paid to you without causing the aggregate amount of all Combined Payments
to exceed the Limit. In the event that you are entitled
to a Gross-Up Payment under this Section 4 and other employees or former
employees of the Company are also entitled to gross-up
payments under the corresponding provisions of the applicable Combined
Arrangements and the aggregate amount of all such
payments would cause the Limit on Combined Payments to be exceeded, the
Company shall allocate the amount of the reduction
necessary to comply with the Limit among all such payments in the proportion
that the amount of each such gross-up payment bears to
the aggregate amount of all such payments. Nothing in this Section 4(f)
shall require you to repay to the Company any amount that
was previously paid to you under this Section 4.
5. Other Provisions.
(a) Vesting and Exercise. All Equity Awards granted to
you under the Equity Plans (including Short-Term
Awards) shall vest and become exercisable in the event of your Involuntary
Termination on or following the Change in Control Date.
If you are employed by the Company on the date of the Equity Plan Change in
Control, your Equity Awards will vest and become
exercisable as of such date.
(b) Effect of 30-Day Alternative. In accordance with
the terms of the Equity Plans, upon an Equity Plan
Change in Control, Equity Awards which are options or stock appreciation
rights are "cashed out," unless the Administrator in its
discretion determines not to do so. In the event that the Administrator
elects not to cash out such Equity Awards, the Administrator
has the discretion in the context of a merger or sale of all or
substantially all of the assets of the Company either (i) to cause such
Equity Awards to be assumed or an equivalent option or stock appreciation
right granted by the successor corporation to the Company
or a parent or subsidiary of such successor corporation, or (ii) to provide
that your Equity Awards will remain outstanding for a thirty-
day period beginning on the date that you are so notified of such action by
the Administrator and that such Equity Awards will expire
to the extent not exercised at the end of such thirty-day period (the
"30-Day Alternative"). If the Administrator determines to utilize
the 30-Day Alternative, the Company shall pay you with respect to each such
Equity Award the excess, if any (the "Additional
Amount"), of the Change in Control Price you would have received had the
Equity Award been cashed out on the date of the Equity
Plan Change in Control over the value of the consideration actually
received by you in settlement of such awards (determined as of the
date such consideration is received by you). Further, in the event of your
Involuntary Termination on or after the Change in Control
Date but on or prior to the date of the Equity Plan Change in Control, the
Company shall pay you the Additional Amount as if your
employment had continued through the date of the Equity Plan Change in
Control. In either case, the payment of the Additional
Amount shall be made within 5 days following the determination by the
Administrator of the Change in Control Price.
(c) Short-Term Awards. In the event that (i) the
transaction resulting in an Equity Plan Change in Control
occurs at such a time or is structured in such a manner so as to make it
reasonably likely that you would be subject to actual or
potential liability for short-swing profits under Section 16 of the
Exchange Act ("Short-Swing Profit Liability") if you were to
exercise, tender, sell or otherwise dispose (including through a merger) of
your Short-Term Awards as part of, or prior to, such
transaction and (ii) your inability to exercise, tender, sell or otherwise
dispose of your Short-Term Awards on or prior to the date of
such Equity Plan Change in Control eliminates or reduces the value of some
or all of your Short-Term Awards, then, on the date of the
Equity Plan Change in Control, the Company shall pay you in a cash lump sum
the amount of $0. The provisions of clause (ii) of the
previous sentence shall be deemed to apply where (a) you are precluded from
exercising, tendering or otherwise disposing of your
Short-Term Awards on or prior to the Transaction Date in order to avoid
Short-Swing Profit Liability, (b) a Short-Term Award cannot
be repurchased, exchanged or cashed-out by the Company (or other person) on
or prior to the Transaction Date without a risk of Short-
Swing Profit Liability to you, or (c) you are required to delay the
exercise, sale, tender, or other disposition of your Short-Term
Awards in order to avoid Short-Swing Profit Liability and such delay
results in your receiving consideration for your Short-Term
Awards (valued at the date such consideration is received) which is of
lesser value than the consideration you would have received
(valued as of the date of the Equity Plan Change in Control) for such
awards had such delay not occurred. The foregoing provisions
shall apply to your Equity Awards notwithstanding your Involuntary
Termination of employment with the Company on or after the
Change in Control Date but prior to the Equity Plan Change in Control.
The provisions of this Section 5(c) shall not apply if (A) prior
to the Equity Plan Change in Control, the Company provides you at its
expense with an opinion from a nationally recognized firm of
attorneys stating that the exercise, tender, sale or other disposition of
your Short-Term Awards as part of, or prior to, the transaction
resulting in the Equity Plan Change in Control will not subject you to
Short-Swing Profit Liability and (B) following your receipt of
38
such opinion there is sufficient time for you to exercise, tender, sell or
otherwise dispose of your Short-Term Awards on or prior to the
Equity Plan Change in Control without impairing the value thereof.
(d) General. Anything in this Agreement to the contrary
notwithstanding, in no event shall the vesting and
exercisability provisions applicable to you under the terms of your Equity
Awards be less favorable to you then the terms and
provisions of such awards in effect on the date hereof.
6. Legal Fees and Expenses. The Company shall pay or
reimburse you on an after-tax basis for all costs and
expenses (including, without limitation, court costs and reasonable legal
fees and expenses which reflect common practice with
respect to the matters involved) incurred by you as a result of any claim,
action or proceeding (i) arising out of your termination of
employment during the Term, (ii) contesting, disputing or enforcing any
right, benefits or obligations under this Agreement or (iii)
arising out of or challenging the validity, advisability or enforceability
of this Agreement or any provision thereof; provided, however,
that the amount of the payments and reimbursements under this Section 6
shall not exceed $2 million.
7. Successors; Binding Agreement.
(a) Assumption by Successor. The Company will require
any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business or assets of the Company expressly to assume
and to agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it
if no such succession had taken place; provided, however, that no such
assumption shall relieve the Company of its obligations
hereunder. As used in this Agreement, the "Company" shall mean the Company
as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law or otherwise.
(b) Enforceability; Beneficiaries. This Agreement
shall be binding upon and inure to the benefit of you (and
your personal representatives and heirs) and the Company and any
organization which succeeds to substantially all of the business or
assets of the Company, whether by means of merger, consolidation,
acquisition of all or substantially all of the assets of the Company
or otherwise, including, without limitation, as a result of a Change in
Control or by operation of law. This Agreement shall inure to
the benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee
or other designee or, if there is no such designee, to your estate.
8. Definitions. For purposes of this Agreement, the
following capitalized words shall have the meanings set
forth below:
"Accounting Firm" shall mean Ernst & Young or, if such firm
is unable or unwilling to perform such calculations,
such other national accounting firm as shall be designated by agreement
between you and the Company. To the extent reasonably
practicable, one such accounting firm shall be designated to perform the
calculations in respect of the Combined Arrangements.
"Administrator" shall mean the "Administrator" as defined
in the applicable Equity Plan or, if no such term is
defined in the Equity Plan, the Board.
"Cause" shall mean a termination of your employment during
the Term which is a result of (i) your felony
conviction, (ii) your willful disclosure of material trade secrets or other
material confidential information related to the business of the
Company and its subsidiaries or (iii) your willful and continued failure
substantially to perform your duties with the Company (other
than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure resulting
from a resignation by you for Good Reason) after a written demand for
substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board believes
that you have not substantially performed your duties,
and which performance is not substantially corrected by you within 10 days
of receipt of such demand. For purposes of the previous
sentence, no act or failure to act on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith
and without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-fourths (3/4ths) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable
notice to you and an opportunity for you, together with your
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth above
in clause (i), (ii) or (iii) of the first sentence of this section and
specifying the particulars thereof in detail.
"Change in Control" shall mean a change in control of the
Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, whether or not the
Company is then subject to such reporting requirement; provided, however,
that, anything in this Agreement to the contrary
39
notwithstanding, a Change in Control shall be deemed to have occurred if:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity
or person, or any syndicate or group deemed to be a person under Section
14(d)(2) of the Exchange Act, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then
outstanding securities entitled to vote in the election of directors of the
Company;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement) individuals who at the beginning of such period constituted the
Board and any new directors, whose election by
the Board or nomination for election by the Company's stockholders was
approved by a vote of at least three-fourths (3/4ths)
of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination
for election was previously so approved (the "Incumbent Directors"), cease
for any reason to constitute a majority thereof;
(iii) There occurs a reorganization, merger, consolidation or
other corporate transaction involving the Company
(a "Transaction"), in each case, with respect to which the stockholders of
the Company immediately prior to such Transaction
do not, immediately after the Transaction, own more than 50 percent of the
combined voting power of the Company or other
corporation resulting from such Transaction;
(iv) all or substantially all of the assets of the Company are
sold, liquidated or distributed; or
(v) there is a "change in control" of the Company within the
meaning of Section 280G of the Code and the
Regulations.
"Change in Control Date" shall mean the earliest of (i) the
date on which the Change in Control occurs, (ii) the date
on which the Company executes an agreement, the consummation of which would
result in the occurrence of a Change in Control, (iii)
the date the Board approves a transaction or series of transactions, the
consummation of which would result in a Change in Control
and (iv) the date the Company fails to satisfy its obligations to have this
agreement assumed by any successor to the Company in
accordance with Section 7(a) of this Agreement. If the Change in Control
Date occurs as a result of an agreement described in clause
(ii) of the previous sentence or as a result of the approval of the Board
described in clause (iii) of the previous sentence and the
Change in Control to which such agreement or approval relates (the
"Contemplated Change in Control") subsequently does not occur,
then the Term shall expire on the sixtieth day (the "Reset Date") following
the date the Board certifies by resolution duly adopted by
three-fourths (3/4ths) of the Incumbent Directors then in office that the
Contemplated Change in Control is not reasonably likely to
occur; provided, however, that this sentence shall not apply if (A) an
Involuntary Termination of your employment with the Company
has occurred on and after the Change in Control Date and on or prior to the
Reset Date or (B) the Contemplated Change in Control
subsequently occurs within three months of the Reset Date. Following the
Reset Date, the provisions of this Agreement shall remain
in effect and a new Term shall commence upon the occurrence of a subsequent
Change in Control Date. Notwithstanding the first
sentence of this section, if your employment with the Company terminates
prior to the Change in Control Date and it is reasonably
demonstrated that your termination of employment (i) was at the request of
the third party who has taken steps reasonably calculated
to effect the Change in Control or (ii) otherwise arose in connection with
or in anticipation of the Change in Control, then Change in
Control Date shall mean the date immediately prior to the date of your
termination of employment.
"Change in Control Price" shall mean the "Change in Control
Price" as defined in the applicable Equity Plan and
determined by the Administrator as of the date of the Equity Plan Change in
Control, whether or not the Administrator is required
under the terms of the applicable Equity Plan to determine such price as of
such date.
"Combined Arrangements" shall mean this Agreement, the
Retention Agreements entered into as of the date first set
forth above between the Company and certain of its executive officers, any
Retention Agreement entered into after the date hereof
which is specifically designated by the terms thereof as one of the
Combined Arrangements and the Supplement to the Severance Plan.
"Combined Payments" shall mean the aggregate cash amount of
(i) severance payments made to you under Section
3(a) of this Agreement or to any other employee or former employee under
the corresponding provisions of the applicable Combined
Arrangement, (ii) severance payments made under Sections 2(e) and 2(f) of
the Supplement or the corresponding provisions of the
applicable Combined Arrangement, (iii) Gross-Up Payments made to you under
Section 6 of this Agreement or to any other employee
or former employee under the corresponding provisions of the applicable
Combined Arrangement, (iv) fees and expenses which are
paid or reimbursed to you under Section 6 of this Agreement or to any other
employee or former employee under the corresponding
provisions of the applicable Combined Arrangement, (v) payments made to you
under Section 5 of this Agreement or to any other
employee or former employee under the corresponding provisions of the
applicable Combined Arrangement and (vi) costs incurred by
the Company in respect of any employee or former employee under
Section 2(d) of the Supplement or the corresponding provisions of
the applicable Combined Arrangement.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor provisions thereto.
"Common Stock" shall mean the common stock of the Company.
"Disability" shall mean (i) your incapacity due to physical
or mental illness which causes you to be absent from the
full-time performance of your duties with the Company for six (6)
consecutive months, and (ii) your failure to return to full-time
performance of your duties for the Company within thirty (30) days after
written Notice of Termination due to Disability is given to
you. Any question as to the existence of your Disability upon which you
and the Company cannot agree shall be determined by a
qualified independent physician selected by you (or, if you are unable to
make such selection, such selection shall be made by any
adult member of your immediate family), and approved by the Company. The
determination of such physician made in writing to the
Company and to you shall be final and conclusive for all purposes of this
Agreement.
"ELTSOP" shall mean the Apple Computer, Inc. 1987 Executive
Long Term Stock Option Plan, as amended, and
any successor plan thereto.
"Equity Awards" shall mean options, restricted stock, bonus
stock or other grants or awards which consist of, or
relate to, equity securities of the Company and which have been granted to
you under the Equity Plans. For purposes of this
Agreement, Equity Awards shall also include any securities acquired upon
the exercise of an option, warrant or similar right that
constitutes an Equity Award.
"Equity Plan Change in Control" shall mean a change in
control of the Company as defined in the applicable Equity
Plan.
"Equity Plans" shall mean the Stock Option Plan, the ELTSOP,
and any other equity-based incentive plan or
arrangement adopted by the Company.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and any successor provisions thereto.
"Good Reason" shall mean a resignation of your employment
during the Term as a result of any of the following:
(i) A meaningful and detrimental alteration in your position, or
the nature or status of your responsibilities
(including those as a director of the Company) from those in effect
immediately prior to the Change in Control Date or a
meaningful and detrimental change in your reporting responsibilities or
titles as in effect immediately prior to the Change in
Control Date;
(ii) A reduction by the Company in your annual base salary as in
effect immediately prior to the Change in
Control Date or as the same may be increased from time to time thereafter;
a failure by the Company to increase your salary
at a rate commensurate with that of other key executives of the Company; or
a reduction in your target annual bonus
(expressed as a percentage of base salary) below the target in effect for
you on the Change in Control Date;
(iii) The relocation of the office of the Company where you are
employed immediately prior to the Change in
Control Date (the "Location") to a location which, in your good faith
assessment, is in an area not generally considered
conducive to maintaining the offices of a company such as the Company
because of hazardous or undesirable conditions
including, without limitation, a high crime rate or inadequate facilities,
or to a location which is more than fifty (50) miles
away from the Location or the Company's requiring you to be based more than
fifty (50) miles away from the Location
(except for required travel on the Company's business to an extent
substantially consistent with your customary business
travel obligations in the ordinary course of business prior to the
Change in Control Date);
(iv) The failure by the Company to continue in effect any
compensation plan in which you participated prior to
the Change in Control Date or made available to you after the Change in
Control Date, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan in connection with the
Change in Control, or the failure by the Company to continue your
participation therein on at least as favorable a basis, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed on the
Change in Control Date;
(v) The failure by the Company to continue to provide you with
benefits at least as favorable in the aggregate
to those enjoyed by you under the Company's pension, savings, life
insurance, medical, health and accident, disability, and
fringe benefit plans and programs (including, without limitation, programs,
if any, relating to use of a car, secretary, office
space, telephones, expense reimbursement and club dues) in which you were
participating immediately prior to the Change in
41
Control Date; or the failure by the Company to provide you with the number
of paid vacation days to which you are entitled
on the basis of years of service with the Company in accordance with the
Company's normal vacation policy in effect
immediately prior to the Change in Control;
(vi) The failure of the Company to obtain an agreement
reasonably satisfactory to you from any successor to
assume and agree to perform this Agreement, as contemplated in Section 7(a)
hereof;
(vii) Any termination of your employment which is not effected
pursuant to the terms of this Agreement; or
(viii) A material breach by the Company of the provisions of this
Agreement;
provided, however, that an event described above in clause (ii), (iv), (v)
or (viii) shall not constitute Good Reason unless it is
communicated by you to the Company in writing and is not corrected by the
Company in a manner which is reasonably satisfactory to
you (including full retroactive correction with respect to any monetary
matter) within 10 days of the Company's receipt of such written
notice from you.
"Involuntary Termination" shall mean (i) your termination
of employment by the Company and its subsidiaries
during the Term other than for Cause or Disability or (ii) your resignation
of employment with the Company and its subsidiaries
during the Term for Good Reason.
"Limit" shall mean the dollar amount determined in
accordance with the formula [A x B x C], where
A equals 0.02;
B equals the number of issued and outstanding shares of Common Stock
of the Company immediately prior
to the Change in Control Date; and
C equals the greater of (i) (A) if the Common Stock is listed on any
established stock exchange or national market system (including, without
limitation, the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the highest
closing sale price (or closing bid price, if no sales are reported) of a
share of Common Stock, or (B) if the Common Stock is
regularly quoted on the NASDAQ System (but not on a national market system)
or quoted by a recognized securities dealer but selling prices are not
reported, the highest mean between the high and low asked prices
for the Common Stock, in each case, on any day during the ninety-day period
ending on the Change in Control Date, and (ii) the highest price paid or
offered, as determined by the Accounting Firm, in any bona
fide transaction or bona fide offer related to the Change in Control.
"Payment" means (i) any amount due or paid to you under this
Agreement, (ii) any amount that is due or paid to you
under any plan, program or arrangement of the Company and its subsidiaries
(including, without limitation, the Equity Plans), and (iii)
any amount or benefit that is due or payable to you under this Agreement or
under any plan, program or arrangement of the Company
and its subsidiaries not otherwise covered under clause (i) or (ii) hereof
which must reasonably be taken into account under Section
280G of the Code and the Regulations in determining the amount of the
"parachute payments" received by you, including, without
limitation, any amounts which must be taken into account under the Code and
Regulations as a result of (A) the acceleration of the
vesting of any option, restricted stock or other equity award granted under
the Equity Plans or otherwise, (B) the acceleration of the
time at which any payment or benefit is receivable by you or (C) any
contingent severance or other amounts that are payable to you.
"Reference Bonus" shall mean the greater of (i) the target
annual bonus applicable to you for the year in which your
Involuntary Termination occurs and (ii) the highest target annual bonus
applicable to you in any of the three years ending prior to the
Change in Control Date.
"Reference Salary" shall mean the greater of (i) the annual
rate of your base salary from the Company and its
subsidiaries in effect immediately prior to the date of your Involuntary
Termination and (ii) the annual rate of your base salary from
the Company in effect at any point during the three-year period ending on
the Change in Control Date.
"Regulations" shall mean the proposed, temporary and final
regulations under Section 280G of the Code or any
successor provision thereto.
"Severance Plan" means the Apple Computer, Inc. Executive
Severance Plan, as amended.
"Short-Term Awards" shall mean Equity Awards which have
been granted to you within the six-month period
42
ending on the date of a Equity Plan Change in Control. For purposes of
this Agreement, Short-Term Awards shall also include any
securities acquired upon the exercise of an Equity Award that constitutes a
Short-Term Award.
"Stock Option Plan" shall mean the Apple Computer, Inc.
1990 Stock Option Plan, as amended, and any successor
plan thereto.
"Supplement" means the amendment to the Severance Plan
adopted as of the date of this Agreement and any future
amendment thereto.
"Taxes" shall mean the federal, state and local income
taxes to which you are subject at the time of determination,
calculated on the basis of the highest marginal rates then in effect,
plus any additional payroll or withholding taxes to which you are
then subject.
"Transaction Date" shall mean the date described in clause
(i) of the definition of Change in Control Date.
9. Notice. For the purpose of this Agreement, notices
and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, addressed to the Board of
Directors, Apple Computer, Inc., 1 Infinite Loop, M/S: 381,
Cupertino, CA 95014, with a copy to the General Counsel of the Company, or
to you at the address set forth on the first page of this
Agreement or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
10. Miscellaneous.
(a) Amendments, Waivers, Etc. No provision of this
Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing. No
waiver by either party hereto at any time of any breach by
the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall
be deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which
are not expressly set forth in this Agreement and this Agreement shall
supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with
respect to the subject matter hereof; provided, however, that,
except as expressly set forth herein, this Agreement shall not supersede
the terms of Equity Awards previously granted to you.
(b) Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity
or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
(c) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same
instrument.
(d) No Contract of Employment. Nothing in this Agreement shall
be construed as giving you any right to be
retained in the employ of the Company or shall affect the terms and
conditions of your employment with the Company prior to the
commencement of the Term hereof.
(e) Withholding. Amounts paid to you hereunder shall be
subject to all applicable federal, state and local
withholding taxes.
(f) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to
a plan which provides otherwise, shall be paid in cash from the general
funds of the Company, and no special or separate fund shall be
established, and no other segregation of assets made, to assure payment.
You will have no right, title or interest whatsoever in or to
any investments which the Company may make to aid it in meeting its
obligations hereunder. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be
no greater than the right of an unsecured creditor of the
Company.
(g) Headings. The headings contained in this Agreement are
intended solely for convenience of reference and
shall not affect the rights of the parties to this Agreement.
(h) Governing Law. The validity, interpretation, construction,
and performance of this Agreement shall be
governed by the laws of the State of California applicable to contracts
entered into and performed in such State.
* * * *
43
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the
enclosed copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
APPLE COMPUTER, INC.
By______________________
Name:
Title:
Agreed to as of this day of , 1995.
____________________________
Michael H. Spindler
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