Apple 2005 Annual Report Download - page 126

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concurrently with the grant of the Option or at any time thereafter during the term of the Option. The following provisions apply to SARs that
are granted in connection with Options:
(i)
The SAR shall entitle the Participant to exercise the SAR by surrendering to the Company unexercised a
portion of the related Option. The Participant shall receive in exchange from the Company an amount equal to the excess of (x) the Fair
Market Value on the date of exercise of the SAR of the Common Stock covered by the surrendered portion of the related Option over (y) the
exercise price of the Common Stock covered by the surrendered portion of the related Option. Notwithstanding the foregoing, the
Administrator may place limits on the amount that may be paid upon exercise of a SAR; provided, however, that such limit shall not restrict the
exercisability of the related Option;
(ii)
When a SAR is exercised, the related Option, to the extent surrendered, shall no longer be exercisable;
(iii)
A SAR shall be exercisable only when and to the extent that the related Option is exercisable and shall
expire no later than the date on which the related Option expires; and
(iv)
A SAR may only be exercised at a time when the Fair Market Value of the Common Stock covered by the
related Option exceeds the exercise price of the Common Stock covered by the related Option.
(b)
Independent SARs . At the sole discretion of the Administrator, SARs may be granted without related Options.
The following provisions apply to SARs that are not granted in connection with Options:
(i)
The SAR shall entitle the Participant, by exercising the SAR, to receive from the Company an amount
equal to the excess of (x) the Fair Market Value of the Common Stock covered by exercised portion of the SAR, as of the date of such exercise,
over (y) the Fair Market Value of the Common Stock covered by the exercised portion of the SAR, as of the date on which the SAR was
granted; provided, however, that the Administrator may place limits on the amount that may be paid upon exercise of a SAR; and
(ii)
SARs shall be exercisable, in whole or in part, at such times as the Administrator shall specify in the
Participant’s Award Agreement;
(iii)
The term of each SAR shall be seven (7) years from the date of grant or such shorter term as may be
provided in the Award Agreement.
(c)
Form of Payment . The Company’s obligation arising upon the exercise of a SAR may be paid in Common Stock
or in cash, or in any combination of Common Stock and cash, as the Administrator, in its sole discretion, may determine. Shares issued upon
the exercise of a SAR shall be valued at their Fair Market Value as of the date of exercise.
(d)
Rule 16b-3 . SARs granted hereunder shall contain such additional restrictions as may be required to be contained
in the Plan or Award Agreement in order for the SAR to qualify for the maximum exemption provided by Rule 16b-3.
10