Apple 1997 Annual Report Download - page 142

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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(1) 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
(1)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