Privileged and Confidential Draft January 6, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
America Online, Inc.
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
00002364Jl
(CUSIP Number of Class of Securities)
Edward B. Stead
Vice President, General Counsel and Secretary
Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
408-996-1010
(Name, Address and Telephone Number of Person Authorized
to Receive Notice and Communications)
January 9, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Statement because of
Rule 13d-1(b)(3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with this Statement: [ ] (A
fee is not required only if the reporting person: (1) has a previous
statement on filed reporting beneficial ownership of more than five percent
of a class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of less than
five percent of such class. See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
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CUSIP No. 00002364Jl
1. Name of Reporting Persons
S.S. or I.R.S. Identification No. of Above Persons:
Apple Computer, Inc. 94-2404110
2. Check the Appropriate Box if a Member of a Group:
(a) [ ]
(b) [ ]
3. SEC Use Only:
4. Source of Funds:
00
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)
[ ]
6. Citizenship or Place of Organization]:
California, USA
7. Sole Voting Power: 1,000,000
Number of Shares
Beneficially Owned 8. Shared Voting Power: 0
by Each Reporting
Person with 9. Sole Dispositive Power: 1,000,000
10. Shared Dispositive Power: 0
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,000,000
12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares:
[ ]
13. Percent of Class Represented by Amount in Row 9.:
6.08%
14. Type of Reporting Person:
CO
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The following items are amendments to the information included in the
Schedule 13D (the "Original Schedule 13D") dated February 8, 1994 filed by
Apple Computer, Inc. with respect to the Common Stock of America Online,
Inc. Certain capitalized terms used below and not defined have the
meanings given them in the Original Schedule 13D.
Item 2. Identity and Background.
The revised list of names, business address, principal occupations and
citizenship of the directors and executive officers of Apple are set forth
on Schedule A hereto and are incorporated herein by reference
Item 4. Purpose of Transaction.
Apple is contemplating entering into a set of agreements with an
affiliate of an investment bank, currently anticipated to be Goldman Sachs
International ("Bank"), pursuant to which Apple would hedge certain
investment risks associated with its rights under the Warrant.
In contemplation of such a possible transaction, Apple is negotiating
entering into certain Transaction Documentation described in Item 6 below.
The Transaction Documents would provide for a variety of possible
transactions.
Apple is presently considering entering into a matched set of put and
call hedge transactions, anticipated to be settled in cash, pursuant to
which Apple would purchase a put option and sell a call option based on the
price performance of the Company's stock. Neither the call option nor the
put option would obligate either party to purchase or sell Shares.
Apple has not made any final determination of the advisability of
entering into any transaction of the sort described in this Item 4, and
there can be no assurance that any such transaction, if entered into, will
be entered into on the terms described in this Item 4. Apple's decision on
whether or not to enter into any such transaction will depend on a variety
of factors, including without limitation the market price of the Common
Stock, the financial terms of any put option or call option which it may
negotiate, other potential investment opportunities or uses for Apple's
cash, and business considerations relating to Apple's goals in the on-line
services industry.
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Apple continuously re-evaluates its intentions regarding its
beneficial interest in the Shares. Apple may exercise the Warrant at any
time after it becomes exercisable, and in addition acquire additional
shares of Common Stock. Apple may retain or dispose of some or all of any
shares of Common Stock which it acquires (either pursuant to the Warrant or
otherwise). Apple's decision on whether or not to exercise the Warrant, or
acquire, retain or dispose of shares of Common Stock will depend on a
variety of factors, including without limitation the market price of the
Common Stock, the amount, if any which it may receive as a result of the
contemplated transaction, other potential investment opportunities or uses
for Apple's cash, and business considerations relating to Apple's goals in
the on-line services industry.
Apart from the above, Apple has no current plans for any of the
actions required to be disclosed in this Item 4.
Item 5. Interest in Securities of the Issuer.
On November 25, 1994, the Company effected a 2-for-1 stock split, as a
result of which Apple's Warrant to relating to 500,000 pre-split shares was
adjusted pursuant to its terms to entitle Apple to acquire 1,000,000 post-
split shares upon exercise. No transaction was effected by Apple in
connection with such stock split.
Item 6. Contracts, Arrangements, Understanding or
Relationships With Respect to the Issuer.
Apple is considering entering into a new Schedule (the "Draft Schedule
2") to an International Swap Dealers Association Master Agreement dated
February 6, 1992 between Apple and Bank (the "Master Agreement", together
with the Draft Schedule 2, the "Transaction Documentation") to set forth
the framework of possible terms of a transaction or transactions. The
description of the Draft Schedule 2 set forth in this Item 6 is qualified
in its entirety by reference to Exhibit 3, which contains the text of the
contemplated Draft Schedule 2.
Apple has not made any final determination of the advisability of
entering into the Draft Schedule 2 described in this Item 6, and there can
be no assurance that any such agreement, if entered into, will be entered
into on the same terms as the Draft Schedule 2 described in this Item 6.
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Item 7. Material to be Filed as Exhibits.
Exhibit 4 -- Draft Schedule 2 to International Swap Dealers
Association Form Master Agreement dated as of February 6, 1992 between
Apple Computer, Inc. and Goldman Sachs International (assignee of Goldman
Sachs Capital Markets, L.P.)
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
APPLE COMPUTER, INC.
By: /s/ David A. Rogan
Name: Assistant Treasurer
Date: January 6, 1995
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SCHEDULE A
Executive Officers and Directors of Apple Computer, Inc.
(each person is a citizen of the United States except as indicated)
Present Principal Occupation
and Address (and Citizenship
Name and Position with Apple if not United States Citizen)
A.C. Markkula, Jr. Chairman of the Board
Chairman of the Board Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
Michael H. Spindler President and
President, Chief Executive Officer
Chief Executive Officer Apple Computer, Inc.
and Director 1 Infinite Loop
Cupertino, California 95014
Citizen of Germany
Dr. Gilbert F. Amelio President and Chief
Director Executive Officer
National Semiconductor, Inc..
1090 Kifer Road
Sunnyvale, California 94086
Peter O. Crisp General Partner,
Director Venrock Associates
30 Rockefeller Plaza
New York, New York 10112
Citizen of the United States
Bernard Goldstein Partner
Director Broadview Associates
1 Bridge Plaza
Fort Lee, New Jersey 07024
Joseph A. Graziano Executive Vice President and
Executive Vice President, Chief Financial Officer
Chief Financial Officer Apple Computer, Inc.
and Director 1 Infinite Loop
Cupertino, California 95014
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Executive Officers and Directors of Apple Computer, Inc.
(cont.)
Present Principal Occupation
and Address (and Citizenship
Name and Position with Apple if not United States Citizen)
B. Jurgen Hintz President du Directoire and
Director Chief Executive Officer
Carnaud MetalBox
153 Rue de Courcelles
75817 Paris Cedex
France
Katherine M. Hudson President and Chief
Director Executive Officer
W.H. Brady Co.
727 W. Glendale Ave.
Milwaukee, WI 53209
Delano E. Lewis President and Chief
Director Executive Officer
National Public Radio
635 Massachusetts Avenue, N.W.
Washington, DC 20001
Ian W. Diery Executive Vice President
Executive Vice President and General Manager,
and General Manager, Personal Computer Division
Personal Computer Division Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
Citizen of Australia
James J. Buckley President, Apple USA
Senior Vice President Apple Computer, Inc.
and President, Apple USA 1 Infinite Loop
Cupertino, California 95014
Daniel L. Eilers President and
Senior Vice President Chief Executive Officer
Claris Corporation
5201 Patrick Henry Drive
Santa Clara, California 95052
Citizen of the United States
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Executive Officers and Directors of Apple Computer, Inc.
(cont.)
Present Principal Occupation
and Address (and Citizenship
Name and Position with Apple if not United States Citizen)
G. Frederick Forsyth Senior Vice President,
Senior Vice President, Worldwide Operations
Worldwide Operations Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
David C. Nagel Senior Vice President
Senior Vice President and General Manager,
and General Manager, AppleSoft
AppleSoft Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
Kevin J. Sullivan Senior Vice President,
Senior Vice President, Human Resources
Human Resources Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
John Floisand Senior Vice President and
Senior Vice President and President, Apple Pacific
President, Apple Pacific Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
Citizen of Great Britain
Robert Lauridsen Vice President,
Vice President, Corporate Development
Corporate Development Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
Jeanne Seeley Vice President, Finance
Vice President, Finance and Corporate Controller
and Corporate Controller Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
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Executive Officers and Directors of Apple Computer, Inc.
(cont.)
Present Principal Occupation
and Address (and Citizenship
Name and Position with Apple if not United States Citizen)
Edward B. Stead Vice President,
Vice President, General Counsel
General Counsel and Secretary
and Secretary Apple Computer, Inc.
1 Infinite Loop
Cupertino, California 95014
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EXHIBIT INDEX
Document
Draft Schedule 2 to International Swap Dealers Association Form Master
Agreement dated as of February 6, 1992 between Apple Computer, Inc. and
Goldman Sachs International (assignee of Goldman Sachs Capital Markets,
L.P.)
Page
12
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Draft 1/6/95
SCHEDULE 2 dated as of January 6, 1995
to the
MASTER AGREEMENT
dated as of February 6, 1992
between
APPLE COMPUTER, INC., GOLDMAN SACHS
a corporation organized INTERNATIONAL
and existing under the and a company formed under
laws of the State of the laws of England
California
("Party A") ("Party B")
The terms and conditions below shall govern all Transactions in
Options (as hereinafter defined) between Party A and the Party B relating
the common stock of America Online, Inc. ("AMER"). References in the
introductory paragraph of the Master Agreement to the Schedule are deemed
to include this Schedule 2.
1. Definitions. Capitalized terms not otherwise defined herein or in the
Master Agreement shall have the meanings set forth below. In the event a
term is defined herein and is otherwise defined in the Master Agreement,
the definition herein shall control with respect to any Transaction
involving Options contemplated by this Schedule 2.
(a) American Option: An Option which may be exercised on any Business Day
prior to the Expiration Date between the hours of 9:00 A.M. and 11:00 A.M.
New York time, and on the Expiration Date between the hours of 9:00 A.M.
and 4:30 P.M., New York time.
(b) Business Day: Any day that the NASDAQ National Market System
("NASDAQ") and Federal Reserve Member Banks in New York, NY are open for
business.
(c) Confirmation: The written evidence of an Option delivered by Party B
to Party A, containing the specific terms with respect thereto,
substantially in the form of Exhibit A attached hereto. Each Confirmation,
together with this Agreement, shall constitute the written agreement
between Party A and Party B with respect to such Option.
(d) Contracts: The "Trading Unit" of an Option, consisting initially of
100 shares of the Option Security, subject to adjustment as provided in
Section 2.
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(e) European Option: An Option which may be exercised only on the
Expiration Date between the hours of 9:00 A.M. and 4:30 P.M. New York time.
(f) Exercise Price: The price per share, as set forth in a Confirmation,
at which an Option Security may be purchased or sold or otherwise settled
upon exercise of the related Option.
(g) Expiration Date: For an Option means 4:30 P.M., New York time, on the
date identified as the Expiration Date in the related Confirmation, at
which time, if an Option has not been exercised, the rights granted to the
Holder thereunder expire and the Option is deemed terminated. If an
Expiration Date is not a Business Day, then the next succeeding Business
Day shall be deemed to be the Expiration Date for such Option.
(h) Calculation Agent: Goldman, Sachs & Co.
(i) Holder: The Holder of an Option is the party to the Option who has
the right to determine whether or not the Option will be exercised and who
is designated as such on the Confirmation or is the assignee or successor
of such person.
(j) Market Disruption Event: In relation to any day and to an Option, the
occurrence during the half hour period immediately prior to the time at
which valuation will take place of the material suspension or material
limitation of trading in (i) Option Securities on the primary market or
(ii) options or futures on Option Securities on the primary market or on
any other exchange on which such options or futures are traded. For the
purposes of this definition, (X) a limitation on the hours and number of
days of trading will not constitute a Market Disruption Event if it results
from an announced change in the regular business hours of the primary
market or other relevant exchange and (Y) a limitation on trading imposed
during the course of a day by reason of movements in price otherwise
exceeding levels permitted by the primary market or other relevant stock
exchange may, if the Calculation Agent so determines, constitute a Market
Disruption Event.
(k) Market Price: The closing sale price (or, if no closing sale price is
reported, the average of the bid and asked prices) reported on NASDAQ or,
if the Options Security is listed and traded on another stock exchange, on
such other stock exchange which is the principal trading market for the
Option Security based on the previous four weeks average daily trading
volume (as of the date of this Agreement, the closing price on NASDAQ is
determined as of 4:00 P.M. New York time).
(l) Option: The right, but not the obligation, of the Holder (purchaser)
thereof to purchase from the Writer (seller)(in the case of a "Call
Option") or to sell to its Writer (in the case of a "Put Option") the
number of Contracts set forth in the applicable Confirmation. An Option
written by Party A will be referred to as a Short Option, and an Option
written by the Party B will be referred to as a Long Option.
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(m) Option Security: Common stock par value $.01 per share of AMER.
(n) Premium: The purchase price of an Option specified in the
Confirmation.
(o) Securities Act: The Securities Act of 1933, as amended.
(p) Settlement Value: The amount in U.S. dollars by which the Exercise
Price exceeds the Market Price (in the case of a Put Option) or the Market
Price exceeds the Exercise Price (in the case of a Call Option) in either
case multiplied by the number of shares of the Option Security covered by
an exercise notice given pursuant to Section 5 below. If the Confirmation
states a specified averaging period, then the Settlement Value will be
determined by the average of the Market Prices on the number of Trading
Days specified in the averaging period. Unless otherwise specified in the
Confirmation, the averaging period will begin on the Expiration Date and
will end on the last Trading Day of the averaging period.
(q) Trading Day: A day (other than a day on which a Market Disruption
Event is occurring) on which the Option Security is trading on NASDAQ or,
if not traded on NASDAQ, on the principal market on which the Option
Security is traded.
(r) Warrant: The common stock warrant dated as of December 3, 1992
granted by AMER to Party A.
(s) Writer: The Writer of an Option is the party to the Option which does
not have the right to determine whether or not the Option will be exercised
(but instead has the obligation to perform the transaction at the request
of the Holder), and who is designated as such on the Confirmation or who is
the successor or assignee of such person.
2. Execution of Option Transactions. Each Option entered into pursuant
to this Agreement shall constitute a binding contract when all of the terms
have been agreed by the parties and the parties have each signed a
Confirmation, substantially in the form of Exhibit A attached hereto with
all blank spaces completed. The Confirmation shall be prepared and signed
by the Calculation Agent as agent for Party B and sent immediately to Party
A by fax and by mail to the number and at the address specified on the
signature page hereof (or to such other number or address as may be
designated by written notice to the sender). Party A will immediately upon
receipt of the faxed Confirmation review it and manually countersign and
return it to the Calculation Agent by fax and by mail to the number and at
the address specified on the signature page hereof (or to such other number
or address as may be designated by written notice to the sender). If Party
A in good faith believes that the Confirmation does not reflect the terms
of the transaction, Party A will inform the Calculation Agent immediately
upon receipt of the faxed Confirmation and the parties will in good faith
attempt to resolve any inaccuracies and to verbally confirm the correct
terms, the Calculation Agent shall thereupon correct, reissue and refax and
mail the Confirmation for countersignature by Party A.
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3. Special Conditions and Adjustments.
(a) Subsequent to the date on which an Option is originally traded,
and for so long as the Option is outstanding, if there is declared a stock
dividend, stock distribution, stock split or reverse split, rights
offering, cash dividend, distribution, reorganization, recapitalization or
reclassification, tender offer or similar event in respect of any Option
Security, then the number of outstanding Option Contracts, the Trading
Units and/or the Exercise Price of such Option shall be adjusted, effective
on the "ex-date" of the Option Security in its primary market, in the
manner described in subclauses (i) through (vi) below. The number of
shares of an Option Security in an adjusted Trading Unit shall be rounded
down to eliminate any fractional share. Unless the parties otherwise agree
in writing, no adjustment shall be made for cash distributions made out of
"earnings and profits", as defined in the Internal Revenue Code ("EPS
Distributions"), except for Special Cash Dividends pursuant to subclause
(iv) below.
(i) In the case of a stock dividend, stock distribution or stock split
whereby one or more whole numbers of shares are issued in respect of each
outstanding share of the Option Security, the number of Option Contracts
which cover such Option Security, and which are outstanding prior to such
event, shall be increased by the same number as the additional shares
issued, and the Exercise Price per share in effect immediately prior to
such event shall be proportionately reduced.
(ii) In the case of a stock dividend, stock distribution or stock
split whereby other than a whole number of shares is issued in respect of
each outstanding share of the Option Security, the number of shares covered
by each Option immediately prior to such event shall be increased, and,
conversely, in the case of a reverse stock split or combination of shares,
the number of shares covered by each Option Contract immediately prior to
such event shall be decreased. In the event the number of shares is
increased or decreased in accordance with this subclause (ii) , the
Exercise Price in effect immediately prior to such event shall be decreased
or increased accordingly in inverse proportion. No adjustment in the
number of Options outstanding shall be made on account of the happening of
any of the events for which adjustments are provided in this subclause.
(iii) In case a tender or exchange offer made by AMER or any
subsidiary of AMER for all or any portion of the Option Securities shall
expire and such tender or exchange offer shall involve the payment by AMER
or such subsidiary of consideration per share of Option Security having a
fair market value (as determined in good faith by the Calculation Agent) at
the last time (the "Expiration Time") tenders or exchange offer (as it
shall have been amended) that exceeds 10% of the Market Price per share of
Option Security on the Trading Day next succeeding the Expiration Time, the
Exercise Price shall be reduced so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to
the effectiveness of the Exercise Price reduction contemplated by this
subparagraph (iii) by a fraction of which the numerator shall be the number
of shares of Option Securities outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the Market Price per
share of Option Security on the Trading Day next succeeding the Expiration
Time and the denominator shall be the sum of (x) the fair market value of
the aggregate consideration (determined as aforesaid) payable to
stockholders based on the acceptance (up to any maximum specified in the
terms of the tender or exchange offer) of all shares validly tendered or
exchanged and not withdrawn as of the Expiration Time (the shares seemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Option Securities
outstanding (less any Purchased Shares) at the Expiration Time and the
Market Price per share of the Option Security on the Trading Day next
succeeding the Expiration Time, such reduction to become effective
immediately prior to the opening of business on the day following the
Expiration Time.
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(iv) The Exercise Price of an outstanding Option will be reduced
on the "ex-dividend" date by the amount of Special Cash Dividends declared
on an Option Security or the fair market value (as determined by the
Calculation Agent in good faith) or an Extraordinary Distribution. A
"Special Cash Dividend" is (x) a cash dividend which is payable by the
issuer of the Option Security on a date other than the normal quarterly
cash dividend payment date or (y) such portion of a cash dividend which is
payable on the normal quarterly dividend payment date that exceeds by 10
percent or more the previous quarterly dividend. An "Extraordinary
Distribution" is a dividend or distribution on the Option Securities of
evidences of indebtedness or assets (including securities, but excluding
any dividend or distribution covered by clause (i)).
(v) In case of any consolidation of AMER with, or merger of AMER
into, any other person, any merger of another person into AMER (other than
a merger which does not result in any reclassification, conversion,
exchange or cancellation of outstanding Option Securities) or any sale or
transfer of all or substantially all of the assets of AMER, the Holder of
each Option then outstanding shall have the right thereafter to convert
such Option only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of Option Securities into which such Option might have
been converted immediately prior to such consolidation, merger, sale or
transfer, assuming such holder of Option Securities (i) is not a person
with which AMER consolidated or into which AMER merged or which merged into
AMER or to which such sale or transfer was made, as the case may be
("constituent Person"), or an affiliate of a constituent Person and (ii)
failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such consolidation,
merger, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation,
merger, sale or transfer is not the same for each Option Security held
immediately prior to such consolidation, merger, sale or transfer by others
than a constituent Person or an affiliate thereof and in respect of which
rights of election shall not have been exercised ("non-electing share"),
then, for the purpose of this clause (v) the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale or
transfer by each non-electing share shall be deemed to be the kind and
amount so receivable per share by a plurality of the non-electing shares).
(vi) In the case of any distribution made with respect to shares of an
Option Security, other than cash distributions, EPS Distributions, Special
Cash Dividends, Extraordinary Distributions and other distributions for
which adjustments are provided in subclauses (i) through (v) of this
Section, an adjustment will be based upon such adjustment as the Options
Clearing Corporation determines with respect to exchange-traded options on
the Option Security unless the Calculation Agent and Party A mutually agree
that the adjustment for exchange-traded options does not reflect the
economic intentions of the parties. In such case the Calculation Agent and
Party A shall in good faith seek to determine whether an adjustment of the
Option is appropriate in the interest of fairness. Whenever an adjustment
is so determined to be appropriate, and unless Party A and Calculation
Agent agree otherwise, either (x) the Exercise Price in effect immediately
prior to such event shall be adjusted to reflect the value per share of the
distributed property, in which event the Trading Units shall not be
adjusted, or (y) the Trading Units in effect immediately prior to such
event shall be adjusted to include the property distributed, in which event
the Exercise Price shall not be adjusted. Party A and the Calculation
Agent shall determine whether a given event for which adjustment is
provided under this subclause shall result in an adjustment under part (x)
or part (y) of the preceding sentence, and, with respect to adjustments
under part (x), Party A and the Calculation Agent shall determine the value
of the distributed property.
(b) No adjustment of the Exercise Price shall be required unless such
adjustment would require an increase or decrease in such price of at least
one U.S. cent: provided that any adjustment which by reason of this Sub-
paragraph (b) is not required to be made shall be carried forward and taken
into account (as if such adjustment had been made at the time when it would
have been made but for the provisions of this Sub-paragraph (b)) in any
subsequent adjustment. All calculations under this Sub-paragraph shall be
made to the nearest U.S. cent with five tenths or more of a U.S. cent to be
considered (rounded up) a full cent.
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4. Special Termination Event. It is the parties' intent that if AMER
becomes subject to a third party tender offer followed by a merger or any
other action of the issuer the result of which is to entitle Holders of the
Option Security to receive cash or other property such that AMER common
stock ceases to exist (other than as provided in Section 3 above), and such
right comes into effect at any time any Option purchased or sold by Party A
is outstanding, each Option will terminate and be unwound at fair market
values based on the unexpired term of each Option. If such tender offer is
for cash only, then the settlement price for each Option will be based
upon a determination by the Calculation Agent using the Black-Scholes
option valuation model set forth on Exhibit B (or any other mutually
acceptable means), using the cash tender price as the prevailing stock
price, prevailing dividend yield (if any), prevailing interest rates, and
an assumed volatility of 45% per annum. In the event that the tender offer
is for a combination of cash and other property, the parties (with the
Calculation Agent acting for Party B) shall negotiate in good faith the
respective fair market values of the outstanding Options, using to the
extent possible the aforesaid Black-Scholes option valuation model. Party B
shall pay the Long Option settlement price to Party A, and Party A shall
pay the Short Option settlement price to Party B.
5. Exercise Procedure; Automatic Exercise.
(a) An Option may be exercised by the Holder thereof by giving notice of
exercise either orally or in writing to the person specified for such
purpose in the Confirmation. The Calculation Agent will confirm exercise
in writing within one Business Day. An Option may be exercised only in
whole and not in part unless the "In part" box has been checked with
respect to item 8 of the Confirmation.
(b) If the Holder has not given notice of exercise or notice of intent not
to exercise to the Writer by 4:30 P.M., New York time, on the Expiration
Date, the Option shall be deemed to have been exercised by the Holder if
such Option is in-the-money based upon the Market Price on the Expiration
Date. An Option is "in the money" on the Expiration Date if the Settlement
Value of the unexercised portion of such Option is based on an amount equal
to or greater than twenty-five cents ($.25) per share. The Writer shall
attempt to notify the Holder of such automatic exercise as soon as
practicable but in any case by the close of business in New York on the
Business Day following the Expiration Date. Failure or inability to give
such notice will not affect the validity of the exercise.
6. Settlement upon Exercise.
(a) Unless "Cash Settlement" is specified in the related
Confirmation, within five Business Days following exercise of an Option (or
such other period as agreed to by Party A and Party B) payment for the
Option Securities shall be made at the Exercise Price per share therefor in
clearing house funds against delivery of such Option Securities. Option
Securities will be delivered in good transferable form as is customary for
that type of Option Security. Whenever an Option Security is transferable
or deliverable by wire transfer or book entry at a depository or clearing
house at which both parties or their clearing agents are members, such
method will be used to effect transfer or delivery. Physical delivery
shall only be made if book entry delivery cannot be effected.
(b) If "Cash Settlement" is specified in the related Confirmation, an
Option shall be settled by a payment in New York Clearing House funds of an
amount equal to the Settlement Value on the fifth Business Day following
the date of exercise or, if the Settlement Value is determined over an
averaging period, then on the fifth Business Day following the last day of
the averaging period.
(c) If "Cash Settlement at Company's Election" is specified in a
related Confirmation, then, unless Party A has notified Party B to the
contrary at least three Business Days before the Expiration Date (or such
other period as may be specified in the related Confirmation), the Option
will settle by physical delivery of the Option Securities pursuant to
Section 6(a) above. Such notice may be given orally or in writing. Oral
notice shall be confirmed in writing within one Business Day.
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(d) If "Cash Settlement Unless Otherwise Notified" is specified in a
Confirmation relating to an Option, then, unless Party A has notified the
Calculation Agent to the contrary at least three Business Days before the
Expiration Date (or such other period as may be specified in the related
Confirmation) the Option will settle by Cash Settlement pursuant to Section
6(b) above. Party B understands that Party A may, in its discretion, but
subject to Section 8(a)(i), use in settlement of any Options entered into
under this Agreement Option Securities which Party A acquires pursuant to
the Warrant, but (either because such shares may be subject to the right of
first refusal or otherwise) Party A wishes to retain the ability to use
such shares in settlement of the Options or to cash settle the Options and
make such decision near the end of the Option term.
7. No Default. Each obligation of a party in respect of each Option to
make a payment or deliver Option Securities is subject to the condition
precedent that no Event of Default or event that, with the lapse of time or
the giving of notice or both, would become an Event of Default by the other
party, has occurred and is continuing.
8. Additional Representations. Each of the following representations and
warranties are in addition to representations and warranties made by Party
A and Party B, respectively, in the Master Agreement, and each Party agrees
that all of such representations and warranties, unless amended or modified
by agreement in writing are true and correct as of the date of this
Schedule 2 and as of the date each Option Transaction is entered into as
contemplated herein.
(a) Party A represents and warrants to Party B:
(i) Option Securities delivered by Party A upon the exercise of any Option
will be duly authorized, fully paid and non-assessable securities free of
any restrictions on transfer and will not be subject to any lien, pledge
security interest or encumbrance whatsoever.
(ii) Party A is not an "affiliate" of AMER as such term is defined in Rule
144 under the Securities Act;
(iii) Party A does not have any special access to, and does not possess,
any non-public material financial or other information relating to AMER,
nor does Party A have any ability or right to perform any investigation as
to the business or financial condition of AMER;
(iv) Party A acquired the Warrant in a private transaction on December 3,
1992, full consideration for the Warrant was paid on such date, such
Warrant is in force and effect, and Party A has not exercised such Warrant;
and
(v) Party A is not entering into this Agreement, nor will it enter into
(as written) any Call Option or (as Holder) any Put Option, (X) in
anticipation of a sale of the Warrant prior to December 3, 1995, or (Y) in
anticipation of a sale of the underlying AMER stock issuable upon exercise
of the Warrant prior to three years following such exercise, or (Z) with
the present intention of exercising the Warrant within six months after the
purchase of a Put Option or the sale of a Call Option by Party A.
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(vi) Party A may be treated as a market counterparty or non-private
customer as defined in SFA rules, and hereby consents to such treatment.
(b) Party B represents and warrants to Party A:
(i) Party B is not an "affiliate" of AMER as such term is defined in Rule
144 under the Securities Act;
` (ii) Party B does not have any special access to, and does not posses,
any non-public material financial or other information relating to AMER,
nor does Party B have any ability or right to perform any investigation as
to the business or financial condition of AMER; and
(iii) Party B acknowledges that Party A has not participated in the
preparation of any disclosure documents relating to the offer and sale of
YESNotes based on the value of AMER stock issued by an Affiliate of Party B
and that Party A is not liable to Party B or any Affiliate of Party B for
any material misstatements or omissions contained in such disclosure
documents, provided, however that the foregoing is without prejudice to any
of Party B's rights in respect of Party A's representations and warranties
herein.
9. Payments on Early Termination.
(a) A Party's Loss shall not include any incidental or
consequential damages.
10. Miscellaneous.
(a) Neither this Agreement nor any Option may be assigned or
transferred by either party hereto without the consent of the other party,
except for an assignment and delegation of all of a party's rights and
obligations hereunder in whatever form such party determines may be
appropriate to a partnership, corporation, trust or other organization in
whatever form that succeeds to all or substantially all of such party's
assets and business and that assumes such obligations by contract,
operation of law or otherwise. Upon any such delegation and assumption of
obligations, the assigning party shall be relieved of and fully discharged
from all obligations hereunder, whether such obligations arose before or
after such delegation and assumption.
(b) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, United States
of America without giving effect to conflicts of law principles.
(c) This Agreement and each Option entered into hereunder shall
be subject to all laws, rules and regulations applicable thereto,
including, but not by way of limitation, the provisions of the Securities
Act, and the Securities Exchange Act of 1934, as amended and all rules and
regulations, promulgated or to be promulgated thereunder. Party A and
Party B each acknowledge that the Options acquired by it from the other
party hereunder will not be registered under the Securities Act and will be
sold by the issuer of the Option in reliance upon the exemption for private
placements pursuant to Section 4(2) of the Securities Act.
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(d) Each Option is being entered into by the parties hereto acting as
principal for their respective own account. Subject to the termination of
any Option by expiration or full performance upon exercise, no failure on
the part of either party to exercise, and no delay in exercising, any
contractual right prior to termination of any such Option as aforesaid will
operate as a waiver thereof, nor will any single or partial exercise by
either party of any right preclude any other or future exercise thereof or
the exercise of any other right. No modification or waiver of any
provision hereof nor any consent to any departure by either party therefrom
shall in any event be effective unless the same shall be in writing, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
11. Arbitration.
(a) Arbitration is final and binding on Party A and Party B
(b) Party A and Party B are waiving their right to seek remedies in court,
including the right to a jury trial.
(c) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(d) The arbitrator's award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(e) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Any controversy between or among Party B or any of its partners or
employees, on the one hand, and Party A, on the other hand, arising out of
or relating to this Agreement or any Option entered into hereunder, shall
be settled by arbitration, in accordance with the then current rules of, at
Party A's election, the Securities Arbitration Rules of the American
Arbitration Association or the Board of Arbitration of the National
Association of Securities Dealers, Inc., New York Stock Exchange. If Party
A does not make such election by registered mail addressed to Party B
within ten (10) Business Days after receipt of notification from Party B
requesting such election, then Party A irrevocably authorizes Party B to
make such election on behalf of Party A. Notwithstanding the foregoing,
any arbitration hereunder shall be before at least three arbitrators and
the award of the arbitrators, or a majority of them, shall be final, and
judgment upon the award rendered may be entered in any court, state or
Federal, having jurisdiction.
Neither party shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement
against any person who has initiated in court a putative class action; who
is a member of a putative class who has not opted out of the class with
respect to any claims encompassed by the putative class action until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii)the customer is excluded from the class by the
court.
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Such forbearance to enforce an agreement to arbitrate shall not constitute
a waiver of any rights under this agreement except to the extent stated
herein.
By signing below, Party A acknowledges receipt of a copy of this
Options Agreement. A predispute arbitration clause is contained in Section
11 hereof.
GOLDMAN SACHS INTERNATIONAL
By:________________________
Name:
Title:
APPLE COMPUTER, INC.
By:
Name:
Title:
issue/onlin5.mst
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EQUITY OPTION CONTRACT
Trade Date
To: Apple Computer, Inc.
One Infinite Loop 36TR
Cupertino, CA 95014
Attention: Assistant Treasurer
Gentlemen:
This confirmation of trade is furnished to you in connection with the
purchase by or sale to Goldman Sachs International ("Party B") by or to you
("Party A") as indicated below, of the Option described below and is a
Transaction subject to the terms and conditions of the Master Agreement
including the Schedules thereto.
1. Transaction: Party A bought sold (check one)
2. Option Security: America Online, Inc. Common Stock
3. No. of Contracts: _____ (100 shares per contact)
4. Expiration Date: ____________, 19___
5. Exercise Price: $__________ per share
6. Premium: $__________ per share, net. Total: $_______
Due and payable on ___________
7. Type of Option:___ Put ___ Call (check one)
___ American ___ European (check one)
8. Exercisable: ___ In whole only ___ In part (check one)
9. Exercise Notice: By telephone to Writer's representative named
below at Writer's telephone number indicated
below. Confirm in writing by fax to Writer's
number, at Writer's address below.
10. Special terms: Cash Settlement Unless Otherwise Notified.
Averaging period: ____ trading days.
Please sign and return the attached copy of this Agreement.
Very truly yours,
GOLDMAN, SACHS & CO as agent for Goldman
Sachs International.
Phone: 212-902-8652
Fax: 212-902-9602
Accepted and Agreed on this Address: 85 Broad Street
___ day of ____, 19 New York, N.Y. 10004
APPLE COMPUTER, INC. Exercise Notice to: Daniel O'Rourke
By:
Name:
Title:
Phone:_______________ Fax _________________
Exercise Notice to______________________
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