Employment Agreement - Apple Computer Inc. and Gilbert F. Amelio
Summary of Principal Terms of Employment
The following sets forth the principal terms of the employment
agreement between Apple Computer, Inc. (the "Company") and Gilbert F.
Amelio (the "Executive"). The Company and the Executive will negotiate a
definitive written agreement in accordance with the terms set forth below:
TERM: 5 years, commencing as soon as practicable after the date
hereof (the "Effective Date").
TITLE: Chairman and Chief Executive Officer.
BASE
SALARY: $990,000 per annum.
SIGNING
BONUS: $200,000 payable reasonably promptly following the Effective
Date.
LOAN: Reasonably promptly following the Effective Date, subject to
delivery of a promissory note and other loan documentation,
the Company or one of its subsidiaries will lend Executive
$5,000,000 (the "Loan"). 20% of the original principal amount
of the Loan will be due and payable on each anniversary of the
Effective Date. The Loan will bear interest (compounded
semiannually and payable annually). Any unpaid principal and
interest on the Loan will be due and payable on the date of
the Executive's termination or resignation of employment.
ANNUAL
BONUS: Executive will be eligible to earn an annual bonus for each
whole or partial fiscal year of the Company during the term.
The annual bonus will consist of the sum of the "Component A
Bonus" and the "Component B Bonus."
The bonus target for the Component A Bonus for each 12-month
fiscal year will equal 1 times Executive's annual rate of base
salary. The bonus target for partial fiscal years in the term
will be prorated to take into account the number of days in
the fiscal year occurring during the term. The amount of the
Component A Bonus for each fiscal year may range from 50% to
300% of target based upon performance (it being understood
that amounts in excess of 200% will be based on extraordinary
performance)[; provided, however, that the minimum Component A
Bonus for the first fiscal year of the term shall be 50% of
the target for that year].
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The Component B Bonus for each fiscal year ending during the
term shall be $1 million (it being understood that the
aggregate amount of Component B Bonuses paid during the term
may not exceed $5 million).
The annual bonus for each fiscal year will be paid within 120
days following the end of the applicable year.
OPTION
GRANT: Subject to shareholder approval, the Company will grant the
Executive an option covering one million shares of common
stock. The per share exercise price will be the fair market
value of a share of stock on the day prior to the date the
option is granted by the Compensation Committee. The option
will vest as follows:
- 20% of the option will vest and become exercisable on the
Initial Vesting Date.
- 20% of the option will vest and become exercisable on each
of the second through fifth anniversaries of the Effective
Date.
Vesting of the option on the vesting dates described above
will occur only if the Executive is employed with the Company
on the applicable vesting date and shareholder approval of the
option grant is obtained. The option will be subject to the
standard terms of the Company's Stock Option Plan, and will be
forfeited if not approved by the Company's stockholders at the
first meeting thereof to occur after the Effective Date.
The "Initial Vesting Date" shall mean (A) if a change in
control of the Company does not occur on or prior to the first
anniversary of the Effective Date, the later of (i) the first
anniversary of the Effective Date and (ii) the date of
stockholder approval of the option grant and performance share
arrangement, and (B) if a change in control of the Company
occurs on or prior to the first anniversary of the Effective
Date, the earlier to occur of (i) the expiration of the
Election Window (as defined below) and (ii) 18 months after
the Effective Date, but in no event will vesting occur prior
to the later to occur of the first anniversary of the
Effective Date and the date of shareholder approval of the
equity arrangements.
PERFORMANCE
STOCK: Subject to shareholder approval, the Executive will be
afforded an opportunity to earn a specified target amount of
shares of stock for each fiscal year of the term based upon
the achievement of performance objectives established in good
faith for each year by the Compensation Committee and approved
by the Board of Directors. The target amount for each 12-
month fiscal year will be 200,000 shares. The target amount
for partial fiscal years will be prorated to take into account
the number of days in the fiscal year occurring during the
term. No more than 1,000,000 performance shares may be earned
during the term.
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The performance shares for the first fiscal year will be
awarded to the Executive if the performance goals established
for that year have been achieved and the Executive's
employment with the Company has continued past the Initial
Vesting Date. The performance shares for each subsequent
fiscal year will be awarded at the start of the year (or on
the Initial Vesting Date, if later), but will be forfeited at
the end of the year if the performance goals applicable to
that fiscal year are not achieved. [In the manner determined
by the Compensation Committee, the Executive will be eligible
to earn fewer performance shares for a fiscal year than the
target amount specified if performance does not meet the goal
established by the Compensation Committee for the applicable
fiscal year.]
Equitable adjustment will be made to the share targets in the
event of a Change in Control. All rights with respect to the
award of performance shares will be terminated and any
outstanding performance shares will be forfeited if the
performance share arrangement is not approved by the Company's
stockholders at the first meeting thereof to occur after the
Effective Date.
EFFECT OF
TERMINATION
OF
EMPLOYMENT: Following a Change in Control
a. Right to Resign in Election Window. If a Change in
Control of the Company occurs on or prior to the first
anniversary of the Effective Date, the Executive shall
have the right to resign within the 30-day window period
beginning six months following the date of the Change in
Control (the "Election Window"). In the event of such a
resignation, the Executive will receive an "all in" cash
lump sum payment of $10 million, less the aggregate amount
of all Component B Bonuses previously paid to the
Executive. The Executive will forfeit the option, all
rights to performance shares and any outstanding
performance shares and the right to any additional future
payments from the Company.
b. Termination by the Company. If following a Change in
Control, the Company terminates his employment other than
for Cause prior to the end of the Election Window, the
Executive will receive an "all in" cash lump sum payment
of $10 million, less the aggregate amount of all Component
B Bonuses previously paid to the Executive. The Executive
will forfeit the option, all rights to performance shares,
any outstanding performance shares and the right to any
additional future payments from the Company.
132
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No Change in Control During the First Year.
a. Prior to the Initial Vesting Date. If the Executive
resigns for Good Reason or is terminated without Cause
prior to the Initial Vesting Date, he will receive an "all
in" cash lump sum payment of $10 million, less the
aggregate amount of all Component B Bonuses previously
paid to the Executive. The Executive will forfeit the
option, all rights to performance shares, any outstanding
performance shares and the right to any additional future
payments from the Company.
b. After the Initial Vesting Date. If the Executive resigns
for Good Reason or is terminated without Cause on or after
the Initial Vesting Date, he will be entitled to the
following:
- a lump sum severance payment equal to the salary
and annual target bonus that would have been
payable to him for the remaining term of
employment, less the aggregate amount of all
Component B Bonuses previously paid to the
Executive.
- he will retain all performance shares that have
vested prior to the date of such termination of
employment and he will be eligible to vest in the
performance shares that would have vested at the
end of the fiscal year in which the termination of
employment occurs if the Company meets the
applicable performance objectives for that fiscal
year. All other rights to performance shares or
outstanding performance shares will be forfeited.
- he will retain the options that have vested prior
to the date of such termination of employment.
Vested options will remain exercisable for 90 days
following termination of employment. Any remaining
portion of the option will be forfeited.
The definitions of Good Reason and Cause will be
negotiated in good faith (it being understood that Good
Reason will not
include a change in title, duties or responsibilities
following a Change in Control that occurs on or prior to
the first anniversary of the Effective Date).
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Setoff.
In the event the Executive's employment ends for any
reason, the full amount of the outstanding principal and
interest of the Loan shall become due and payable, and the
Company will have the right to apply any and all amounts
payable to the Executive (including any severance or
termination payments described above) to the payment of
the full amount of the then outstanding principal and
interest on the Loan. Any remaining amount of outstanding
principal and interest that is not paid in the manner
contemplated by the previous sentence will be payable by
the Executive within 5 days of the date of termination or
resignation.
EXCISE TAX: Severance payments will be grossed up to take into account the
golden parachute excise tax.
STOCKHOLDER
APPROVAL: The Company will use reasonable efforts to obtain stockholder
approval of the option and the performance share arrangement.
As noted above, the option and performance share arrangement
will be void ab initio and of no further force and effect if
such stockholder approval is not obtained. [In the event such
stockholder approval is not obtained, the Company and the
Executive agree to negotiate in good faith an alternative long-
term performance arrangement to submit to the stockholders for
approval.]
AIRPLANE
LEASE: The Company agrees to lease for business reasons the
Executive's airplane on terms to be negotiated.
OTHER
TERMS: The definitive employment agreement will contain other
reasonable and customary provisions.