Apple 2004 Annual Report Download - page 117

(2)
This table does not include 81,642 outstanding options assumed in connection with mergers and acquisitions of the companies which
originally established those plans. These assumed options have a weighted average exercise price of $4.39 per share. No additional
options may be granted under those assumed plans.
Arrangements with Named Executive Officers
Change In Control Arrangements—Stock Options, Restricted Stock, and Restricted Stock Units
In the event of a "change in control" of the Company, all outstanding options under the Company's stock option plans, except the Director Plan,
will, unless otherwise determined by the plan administrator, become exercisable in full, and will be cashed out at an amount equal to the
difference between the applicable "change in control price" and the exercise price. The Director Plan provides that upon a "change in control" of
the Company, all unvested options held by non-employee directors will automatically become fully vested and exercisable and will be cashed
out at an amount equal to the difference between the applicable "change in control price" and the exercise price of the options. A "change in
control" under these plans is generally defined as (i) the acquisition by any person of 50% or more of the combined voting power of the
Company's outstanding securities or (ii) the occurrence of a transaction requiring shareholder approval and involving the sale of all or
substantially all of the assets of the Company or the merger of the Company with or into another corporation.
In addition, options, restricted stock grants, and restricted stock units granted to the Named Executive Officers generally provide that in the event
there is a "change in control," as defined in the Company's stock option plans, and if in connection with or following such "change in control,"
their employment is terminated without "Cause" or if they should resign for "Good Reason," those options, restricted stock, and restricted stock
units outstanding that are not yet vested as of the date of such "change in control" shall become fully vested. Further, restricted stock and
restricted stock units granted to the Named Executive Officers also provide that, in the event the Company terminates the Officer without cause
at any time, the restricted stock units and restricted stock will vest in full. Generally, "Cause" is defined to include a felony conviction, willful
disclosure of confidential information or willful and continued failure to perform his or her employment duties. "Good Reason" includes
resignation of employment as a result of a substantial diminution in position or duties, or an adverse change in title or reduction in annual base
salary.
Item 13. Certain Relationships and Related Transactions
In connection with a relocation assistance package, the Company loaned Mr. Johnson (Senior Vice President, Retail) $1,500,000 for the
purchase of his principal residence. The loan was secured by a deed of trust and was due and payable in May 2004. The largest amount of the
indebtedness outstanding on this loan during fiscal year 2004 was $750,000. Mr. Johnson repaid the Company $750,000 during the fiscal year
and the loan has been repaid in full.
In March 2002, the Company entered into a Reimbursement Agreement with its Chief Executive Officer, Mr. Steven P. Jobs, for the
reimbursement of expenses incurred by Mr. Jobs in the operation of his private plane when used for Apple business. The Reimbursement
Agreement is effective for expenses incurred by Mr. Jobs for Apple business purposes since he took delivery of the plane in May 2001. During
2004, the Company recognized a total of $483,000 in expenses pursuant to this reimbursement agreement related to expenses incurred by
Mr. Jobs during 2004.
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