EXHIBIT 10.A.45
Apple Computer, Inc.
1 Infinite Loop
Cupertino, CA 95014
May 1, 1997
Fred Anderson
1 Infinite Loop
Cupertino, CA 95014
Retention Agreement
Dear Fred:
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 second
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 similarly situated 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.
34
(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.
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
on the Date of Termination, if later), an amount (the "Severance
Payment") equal to the sum of (i) three times your Reference Salary
and (ii) three times 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 second 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
35
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;
M equals the sum of the highest marginal rates (to 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) 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 necessaryor 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
36
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) cooperatewith 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 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
37
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 or Gross-Up Payment bears to the aggregate amount of all
such payments. Nothingin 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 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) 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 than the terms and
provisions of such awards in effect on the date hereof.
38
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 yourdevisee, 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 KPMG Peat Marwick LLP
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.
39
"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 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% 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
40
(v) there is a "change in control" or a "change in the
effective 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 definition, 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.
41
"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, your titles, or the nature or status of your responsibilities
(including your reporting responsibilities) from those in effect
immediately prior to the Change in Control Date. For purposes of
this clause (i), a meaningful and detrimental alteration shall exist
if, on or after the Change in Control Date, without limitation, any
of the following occurs: (A) at any time you do not hold the
position of the senior most financial officer of the Company (or
the surviving entity resulting from the merger or consolidation
(through one or more related transactions) of the Company with
another entity (the "Surviving Entity")); (B) at any time you do
not hold the position of the senior most financial officer of any
entity that beneficially owns a majority of the voting stock of the
Company (or the Surviving Entity) or that has the power to elect a
majority of the Board (or the board of directors of the Surviving
Entity) (the "Controlling Entity"); (C) at any time you do not
report directly to the chief executive officer of the Company (or the
Surviving Entity) and to the chief executive officer of any
Controlling Entity; (D) at any time you do not have regular direct
access to the chief executive officer of the Company (or the
Surviving Entity) and to the chief executive officer of any
Controlling Entity or (E) any similar adverse change on or after
the Change in Control Date in your title, position or reporting
responsibilities;
42
(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 prior
to 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 "CIC Location") to a location which is more than fifty (50)
miles away from the CIC Location or the Company's requiring
you to be based more than fifty (50) miles away from the CIC
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 in which you were participating
immediately prior to the Change in 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 or, if the business for which your services are principally
performed is sold at any time after a Change in Control, the failure
of the Company to obtain such an agreement from the purchaser of
such business;
(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 (i), (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.
43
"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 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
regulations under Section 280G of the Code or any successor provision
thereto.
"Severance Plan" means the Apple Computer, Inc. Executive
Severance Plan, as amended.
"Stock Option Plan" shall mean the Apple Computer, Inc.
1990 Stock Option Plan, as amended, and any successor plan thereto.
44
"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
including, without limitation, the prior Retention Agreement between you and
the Company; provided, however, that, except as expressly set forth herein,
this Agreementshall 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
45
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.
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: /S/ Gilbert F. Amelio
Name: Gilbert F. Amelio
Title: Chief Executive Officer
Agreed to as of this 20th day of May, 1997
/s/ Fred Anderson
Fred Anderson
46