Apple 1996 Annual Report Download - page 44

Common Stock
Shareholder Rights Plan
In May 1989, the Company adopted a shareholder rights plan and distributed a dividend of one right to purchase one share of common stock (a
"Right") for each outstanding share of common stock of the Company. The Rights become exercisable in certain limited circumstances
involving a potential business combination transaction of the Company and are initially exercisable at a price of $200 per share. Following
certain other events after the Rights have become exercisable, each Right entitles its holder to purchase for $200 an amount of common stock
of the Company, or, in certain circumstances, securities of the acquiror, having a then- current market value of two times the exercise price of
the Right. The Rights are redeemable and may be amended at the Company's option before they become exercisable. Until a Right is exercised,
the holder of a Right, as such, has no rights as a shareholder of the Company. The Rights expire on April 19, 1999.
Stock Option Plans
The Company has in effect a 1990 Stock Option Plan (the "1990 Plan"). The 1981 Stock Option Plan terminated in October 1990 and the 1987
Executive Long Term Stock Option Plan (the "1987 Plan") terminated in July 1995. Options granted before those plan termination dates remain
outstanding in accordance with their terms. Options may be granted under the 1990 Plan to employees, including officers and directors who are
employees, at not less than the fair market value on the date of grant. These options generally become exercisable over a period of three years,
based on continued employment, and generally expire ten years after the grant date. The 1990 Plan permits the granting of incentive stock
options, nonstatutory stock options, and stock appreciation rights.
In December 1996, the Board of Directors adopted an amendment to the 1990 Plan to increase the number of shares reserved for issuance by 1
million, subject to shareholder approval at the Company's Annual Meeting of Shareholders scheduled for February 1997. In July 1995, the
Board of Directors adopted an amendment to the 1990 Plan to increase the number of shares reserved for issuance by 8.6 million. In December
1995, the Board of Directors adopted a new amendment to reduce this increase to 4.2 million shares. This new amendment was approved by
the Company's shareholders in January 1996. Also in July 1995, the Board of Directors resolved to terminate the 1987 Plan and transfer all
unused shares remaining under the 1987 Plan to the 1990 Plan. This resolution was approved by the Company's shareholders in January 1996.
In March 1996, the Board of Directors approved the issuance of options to purchase 1 million shares of common stock to the Chief Executive
Officer of the Company, subject to shareholder approval at the Company's Annual Meeting of Shareholders scheduled for February 1997.
These options will have an exercise price of $26.25 per share and will become exercisable over five years. As the issuance of these options is
pending shareholder approval, they are not included as outstanding in the table below.
On May 14, 1996, the Board of Directors adopted a resolution allowing employees up to and including the level of Vice President to exchange
1.25 options at their existing option price for 1.0 new options having an exercise price of $26.375 per share, the fair market value of the
Company's common stock at May 29, 1996. Options received under this program are subject to one year of additional vesting such that the new
vesting date for each vesting portion will be the later of May 29, 1997, and the original vesting date plus one year. Approximately 2.9 million
options were exchanged under this program.
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