February 26, 1996 Mr. George M. Scalise 26055 Newbridge Road Los Altos Hills, California 94022 Employment Agreement Dear George: The following sets forth our agreement regarding the terms and provisions of your employment as an officer and employee of Apple Computer, Inc. (the 'Company'). Capitalized words which are not otherwise defined herein shall have the meanings assigned to such words in Section 5 of this Agreement. 1. Commencement of Employment. Your employment under this Agreement shall commence on March 1, 1996 (the 'Effective Date'). 2. Position. You shall be employed as Executive Vice President and Chief Administrative Officer, reporting to me, in my position as Chief Executive Officer and Chairman of the Board, and your duties and responsibilities to the Company shall be consistent in all respects with such position. You shall devote substantially all of your business time, attention, skills and efforts exclusively to the business and affairs of the Company, other than de minimis amounts of time devoted by you to the management of your personal finances or to engaging in charitable or community services. Your principal place of employment shall be the executive offices of the Company in Cupertino, California, although you understand and agree that you will be required to travel from time to time for business purposes. 3. Compensation. (a) Base Salary. As compensation to you for all services rendered to the Company and its subsidiaries, the Company will pay you a base salary at the rate of not less than Four Hundred Twenty Thousand Dollars ($420,000) per annum as of the Effective Date. Your base salary will be paid to you in accordance with the Company's regular payroll practices applicable to its executive employees. (b) Bonus. You shall be eligible to participate in the annual Senior Executive Bonus Plan (domestic) sponsored by the Company or any successor plan thereto. Such bonus program shall 38 afford you the opportunity to earn an annual bonus for each fiscal year of the Company during your employment. During the Company's Fiscal Year 1996 only, your target bonus shall be Three Hundred Fifteen Thousand Dollars ($315,000), prorated based on that portion of FY96 during which you are employed by the Company, commencing on the Effective Date. The amount of your annual bonus thereafter shall be an amount equal to seventy-five percent (75%) of your base salary which shall be reviewed annually by the Company. Each annual bonus shall be paid to you in accordance with the payment provisions of the bonus plan then in effect. (c) Hiring Bonus. Subject to other provisions of this Agreement, the Company shall pay you a Hiring Bonus in the amount of Six Hundred Thirty Thousand Dollars ($630,000). Fifty percent (50%) of this Hiring Bonus, in the amount of Three Hundred Fifteen Thousand Dollars ($315,000), shall be paid to you within thirty (30) days of the Effective Date of this Agreement. The balance of your Hiring Bonus, in the amount of Three Hundred Fifteen Thousand Dollars ($315,000), shall be paid to you within five (5) days after the first anniversary of the Effective Date. (d) Long-Term Incentive Compensation. In consideration of this Agreement, we will recommend to the Company's Board of Directors an initial stock option grant of two hundred forty thousand (240,000) shares of Apple Computer, Inc. common stock. 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 Long-Term Incentive Plan or Arrangement. The Company shall revise and restate as appropriate its Long-Term Incentive Plans and Arrangements in order to attract and retain the best qualified executives and officers. You will receive a reasonable amount of incentives under the Company's revised and restated Long-Term Incentive Plans and Arrangements. (e) Benefits. You shall be eligible to participate in all employee 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. 4. Termination. (a) Termination for Cause. If your employment is terminated by the Company for Cause, the Company shall pay you the full amount of the accrued but unpaid base salary you have earned through the date of your termination, plus a cash payment (calculated on the basis of your base salary then in effect) for all unused accrued vacation. In addition, you shall be entitled to benefits under the employee plans and arrangements described in Section 3(e) above in accordance with terms and provisions of such plans and arrangements. 39 (b) Termination Other than for Cause. During the five (5) year period following the Effective Date only, if your employment is terminated by the Company for reasons other than for Cause, the Company shall pay you the full amount of the accrued but unpaid base salary you have earned through the date of your termination, plus a cash payment (calculated on the basis of your base salary then in effect) for all unused accrued vacation. In addition, the Company shall pay you a lump sum amount depending on the date of your employment termination as follows: Termination Date Amount During 1-year period 100% of annual base salary following Effective Date ($420,000) 100% of target bonus ($315,000) 50% of hiring bonus ($315,000) Following first anniversay 100% of annual base salary of Effective Date 100% of target annual bonus There shall be no other payments or benefits on termination. 5. Definitions. For purposes of this Agreement, the following capitalized words shall have the meanings set forth below: 'Cause' shall mean a termination of your employment 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). 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. 'Long-Term Incentive Plan and/or Arrangement' shall mean the Apple Computer, Inc. 1990 Stock Option Plan, as amended, and any successor plan thereto. 6. 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 mail, registered, return receipt requested, postage prepaid, addressed to the Apple Computer, Inc., 1 Infinite Loop, MS 75-8A, Cupertino, California 95014, Attn.: Gilbert F. Amelio, 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. 40 7. 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, except as expressly set forth herein, this Agreement shall not supersede the terms of any stock options previously granted to you under the Long-Term Incentive Plans and Arrangements. (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) Withholding. Amounts paid to you hereunder shall be subject to all applicable federal, state and local withholding taxes. (e) 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. (f) 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. (g) 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. 41 * * * * 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/ G. F. Amelio__ Gilbert F. Amelio Agreed to as of this 26th day of February, 1996. __/s/ George M. Scalise____ George M. Scalise 42
Employment Agreement - Apple Computer Inc. and George M. Scalise
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