Document:

Exhibit

Exhibit 10.18

APPLE INC. 
2014 EMPLOYEE STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
PERFORMANCE AWARD

NOTICE OF GRANT
		
	Name:
	(the “Participant”)

Employee ID:    
Grant Number:    
Target No. of Units  
Subject to Award:            

		
	Award Date:
	(the “Award Date”)    

		
	Vesting Schedule:
	 

Performance Period:    
This restricted stock unit award (the “Award”) is granted under and governed by the terms and conditions of the Apple Inc. 2014 Employee Stock Plan and the Terms and Conditions of Restricted Stock Unit Award - Performance Award (including Exhibit A thereto), which are incorporated herein by reference.
You do not have to accept the Award.  If you wish to decline your Award, you should promptly notify Apple Inc.’s Stock Plan Group of your decision at stock@apple.com.  If you do not provide such notification within thirty (30) days after the Award Date, you will be deemed to have accepted your Award on the terms and conditions set forth herein.

APPLE INC. 
2014 EMPLOYEE STOCK PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARD
PERFORMANCE AWARD

1.General.  These Terms and Conditions of Restricted Stock Unit Award - Performance Award (these “Terms”) apply to a particular restricted stock unit award (the “Award”) granted by Apple Inc., a California corporation (the “Company”), and are incorporated by reference in the Notice of Grant (the “Grant Notice”) corresponding to that particular grant.  The recipient of the Award identified in the Grant Notice is referred to as the “Participant.”  The effective date of grant of the Award as set forth in the Grant Notice is referred to as the “Award Date.”  The Award was granted under and is subject to the provisions of the Apple Inc. 2014 Employee Stock Plan (the “Plan”).  Capitalized terms are defined in the Plan if not defined herein.  The Award has been granted to the Participant in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Participant.  The Grant Notice and these Terms (including Exhibit A hereto, incorporated herein by this reference) are collectively referred to as the “Award Agreement” applicable to the Award.
2.    Stock Units.  As used herein, the term “Stock Unit” shall mean a non-voting unit of measurement which is deemed for bookkeeping purposes to be equivalent to one outstanding share of the Company’s Common Stock (“Share”) solely for purposes of the Plan and this Award Agreement.  The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Participant if such Stock Units vest pursuant to this Award Agreement.  The Stock Units shall not be treated as property or as a trust fund of any kind.
3.    Vesting.  Subject to Sections 4 and 8 below, the Award shall vest and become nonforfeitable as set forth in the Grant Notice and Exhibit A hereto.  (The vesting date set forth in the Grant Notice is referred to herein as a “Vesting Date”).
4.    Continuance of Employment.  Except as provided in this Section 4 and in Section 8 below, vesting of the Award requires continued active employment or service through the Vesting Date as a condition to the vesting of the Award and the rights and benefits under this Award Agreement.  Employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Participant to any proportionate vesting of the Award.  For purposes of this Award Agreement, active service shall include (a) the duration of an approved leave of absence (other than a personal leave of absence) and (b) the first thirty (30) days of an approved personal leave of absence, in each case as approved by the Company, in its sole discretion.  The vesting of the Award shall be tolled beginning on the thirty-first (31st) day of a personal leave of absence.
Nothing contained in this Award Agreement or the Plan constitutes an employment or service commitment by the Company, affects the Participant’s status as an employee at will who is subject to termination with or without cause, confers upon the Participant any right to remain employed by or in service to the Company or any Subsidiary, interferes in any way with the right of the Company or any Subsidiary at any time to terminate such employment or services, or affects the right of the Company or any Subsidiary to increase or decrease the Participant’s other compensation or benefits.  Nothing in this Section 4, however, is intended to adversely affect any independent contractual right of the Participant without his or her consent thereto. 

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5.    Dividend and Voting Rights.
(a)        Limitations on Rights Associated with Stock Units.  The Participant shall have no rights as a shareholder of the Company, no dividend rights (except as expressly provided in Section 5(b) with respect to Dividend Equivalent Rights) and no voting rights, with respect to the Stock Units or any Shares underlying or issuable in respect of such Stock Units until such Shares are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate or book entry evidencing such Shares.
(b)        Dividend Equivalent Rights Distributions.  As of any date that the Company pays an ordinary cash dividend on its Common Stock, the Company shall credit the Participant with a dollar amount equal to (i) the per share cash dividend paid by the Company on its Common Stock on such date, multiplied by (ii) the total target number of Stock Units (with such total number adjusted pursuant to Section 11 of the Plan) subject to the Award that are outstanding immediately prior to the record date for that dividend (a “Dividend Equivalent Right”).  Any Dividend Equivalent Rights credited pursuant to the foregoing provisions of this Section 5(b) shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate, including the obligation to satisfy the Tax-Related Items; provided, however, that the amount of any vested Dividend Equivalent Rights shall be paid in cash.  For purposes of clarity, the percentage of the Dividend Equivalent Rights that are paid will correspond to the percentage of the total target number of Stock Units that vest on the Vesting Date, after giving effect to Exhibit A.  No crediting of Dividend Equivalent Rights shall be made pursuant to this Section 5(b) with respect to any Stock Units which, immediately prior to the record date for that dividend, have either been paid pursuant to Section 7 or terminated pursuant to Section 8 or Exhibit A. 
6.    Restrictions on Transfer.  Except as provided in Section 4(c) of the Plan, the Award, the Dividend Equivalent Rights and any interest therein or amount or Shares payable in respect thereof shall not be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily.
7.    Timing and Manner of Payment of Stock Units.  On or as soon as administratively practical following the vesting event pursuant to Section 3 or Section 8 (and in all events not later than two and one-half (2 1⁄2) months after such vesting event), the Company shall deliver to the Participant a number of Shares (either by delivering one or more certificates for such Shares or by entering such Shares in book entry form, as determined by the Company in its discretion) equal to the number of Stock Units subject to the Award that vest on the Vesting Date, less Tax-Related Items (as defined in Section 11 below), unless such Stock Units terminate prior to the Vesting Date pursuant to Section 8.  The Company’s obligation to deliver Shares or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Participant or other person entitled under the Plan to receive any Shares with respect to the vested Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 13(c) of the Plan.  The Participant shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to Section 8.
8.    Effect of Termination of Service. Except as provided in Section 4 or this Section 8, the Participant’s Stock Units (as well as the related Dividend Equivalent Rights) shall terminate to the extent such Stock Units have not become vested prior to the Participant’s Termination of Service, meaning the first date the Participant is no longer employed by or providing services to the Company or one of its Subsidiaries (the “Severance Date”), regardless of the reason for the Participant’s Termination of Service, whether with or without cause, voluntarily or involuntarily or whether the Participant was employed or provided services for a portion of the vesting period prior to a Vesting Date.  In the event the Participant’s Severance Date is the result of the Participant’s Termination of Service due to the Participant’s death or Disability, and the Severance Date occurs prior to the Vesting Date, on the Vesting Date the Award shall vest with respect to a number of Stock Units determined by multiplying (i) the Stock Units as well as the related Dividend Equivalent Rights subject to the Award that would have otherwise vested pursuant to the Award on such Vesting Date but for the Termination of Service and to the extent the applicable performance-based vesting requirement 

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is satisfied, by (ii) the Severance Fraction (determined as set forth below).  Any Stock Units (as well as the related Dividend Equivalent Rights) that are unvested on the Severance Date and that are not eligible to vest on the Vesting Date following the Severance Date pursuant to the preceding sentence shall terminate as of the Severance Date, and any Stock Units that remain outstanding and unvested after giving effect to the preceding sentence shall terminate as of the Vesting Date.  The “Severance Fraction” means a fraction, the numerator of which shall be determined by subtracting the number of days remaining in the Performance Period on the Severance Date from the total number of days in the Performance Period, and the denominator of which shall be the total number of days in the Performance Period.  If any unvested Stock Units are terminated pursuant to this Award Agreement, such Stock Units (as well as the related Dividend Equivalent Rights) shall automatically terminate and be cancelled as of the applicable Severance Date (or, to the extent the applicable performance-based vesting conditions are not satisfied, the Vesting Date, as provided in Exhibit A) without payment of any consideration by the Company and without any other action by the Participant, or the Participant’s beneficiary or personal representative, as the case may be.
9.    Recoupment.  Notwithstanding any other provision herein, the Award and any Shares or other amount or property that may be issued, delivered or paid in respect of the Award, as well as any consideration that may be received in respect of a sale or other disposition of any such Shares or property, shall be subject to any recoupment, “clawback” or similar provisions of applicable law.  In addition, the Company may require the Participant to deliver or otherwise repay to the Company the Award and any Shares or other amount or property that may be issued, delivered or paid in respect of the Award, as well as any consideration that may be received in respect of a sale or other disposition of any such Shares or property, if the Company reasonably determines that one or more of the following has occurred:
		
	(a)
	during the period of the Participant’s employment or service with the Company or any of its Subsidiaries (the “Employment Period”), the Participant has committed a felony (under the laws of the United States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction);

		
	(b)
	during the Employment Period or at any time thereafter, the Participant has committed or engaged in a breach of confidentiality, or an unauthorized disclosure or use of inside information, customer lists, trade secrets or other confidential information of the Company or any of its Subsidiaries;

		
	(c)
	during the Employment Period or at any time thereafter, the Participant has committed or engaged in an act of theft, embezzlement or fraud, or materially breached any agreement to which the Participant is a party with the Company or any of its Subsidiaries.

For purposes of the foregoing, the Participant expressly and explicitly authorizes the Company to issue instructions, on the Participant’s behalf, to any brokerage firm and/or third party administrator engaged by the Company to hold the Participant’s Shares and other amounts acquired under the Plan to re-convey, transfer or otherwise return such Shares and/or other amounts to the Company. This Section 9 is not the Company’s exclusive remedy with respect to such matters.

10.    Adjustments Upon Specified Events.  Upon the occurrence of certain events relating to the Company’s stock contemplated by Section 11 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Committee shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award.  No such adjustment shall be made with respect to any ordinary cash dividend for which Dividend Equivalent Rights are credited pursuant to Section 5(b).  
11.    Responsibility for Taxes.  The Participant acknowledges that, regardless of any action the Company and/or the Participant’s employer (the “Employer”) take with respect to any or all income tax (including U.S. federal, state and local tax and/or non-U.S. tax), social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable 

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to the Participant or deemed by the Company or the Employer to be an appropriate charge to the Participant even if technically due by the Company or the Employer (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.  The Participant further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant of the Stock Units, the vesting of the Stock Units, the delivery of Shares, the subsequent sale of any Shares acquired at vesting and the receipt of any dividends and/or Dividend Equivalent Rights; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Participant is or becomes subject to tax in more than one jurisdiction, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
Prior to the relevant taxable or tax withholding event, as applicable, the Participant shall pay or make arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items.  In this regard, the Participant authorizes the Company and/or the Employer, or their respective agents, at their discretion and pursuant to such procedures as they may specify from time to time, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following: 
(a)    withholding from any wages or other cash compensation payable to the Participant by the Company and/or the Employer;

(b)    withholding otherwise deliverable Shares and/or from otherwise payable Dividend Equivalent Rights to be issued or paid upon vesting/settlement of the Award;
(c)     arranging for the sale of Shares otherwise deliverable to the Participant (on the Participant’s behalf and at the Participant’s direction pursuant to this authorization), including selling Shares as part of a block trade with other Participants in the Plan; or 
(d)    withholding from the proceeds of the sale of Shares acquired upon vesting/settlement of the Award.
Notwithstanding the foregoing, if the Participant is an officer of the Company who is subject to Section 16 of the Exchange Act, then the Company must satisfy any withholding obligations arising upon the occurrence of a taxable or tax withholding event, as applicable, by withholding Shares otherwise deliverable or an amount otherwise payable upon settlement of Dividend Equivalent Rights pursuant to method (b), unless the Board or the Committee determines in its discretion to satisfy the obligation for Tax-Related Items by one or a combination of methods (a), (b), (c), and (d) above.
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in the Participant's jurisdictions(s).  If the maximum rate is used, any over-withheld amount may be refunded to the Participant in cash by the Company or Employer (with no entitlement to the equivalent in Common Stock) or if not refunded, the Participant may seek a refund from the local tax authorities.  If the obligation for Tax-Related Items is satisfied by withholding a number of Shares as described herein, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.  The Participant shall pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver to the Participant any Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.

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12.    Electronic Delivery and Acceptance.  The Company may, in its sole discretion, deliver any documents related to the Award by electronic means or request the Participant’s consent to participate in the Plan by electronic means.  The Participant hereby consents to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or a third party vendor designated by the Company.
13.    Data Privacy.  The Participant acknowledges and consents to the collection, use, processing and transfer of personal data as described in this Section 13.  The Company, its related entities, and the Employer hold certain personal information about the Participant, including the Participant’s name, home address and telephone number, email address, date of birth, social security number or other employee identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Stock Units or any other entitlement to Shares or equivalent benefits awarded, canceled, purchased, vested, unvested or outstanding in the Participant’s favor, for the purpose of managing and administering the Plan (“Data”).  The Company and its related entities may transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of the Participant’s participation in the Plan, and the Company and its related entities may each further transfer Data to any third parties assisting the Company or any such related entity in the implementation, administration and management of the Plan.  The Participant acknowledges that the transferors and transferees of such Data may be located anywhere in the world and hereby authorizes each of them to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of Shares on the Participant’s behalf to a broker or to other third party with whom the Participant may elect to deposit any Shares acquired under the Plan (whether pursuant to the Award or otherwise).
14.    Notices.  Any notice to be given under the terms of this Award Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary, and to the Participant at the Participant’s last address reflected on the Company’s records, or at such other address as either party may hereafter designate in writing to the other.  Any such notice shall be given only when received, but if the Participant is no longer an employee of the Company, shall be deemed to have been duly given by the Company when enclosed in a properly sealed envelope addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government.
15.    Plan.  The Award and all rights of the Participant under this Award Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference.  The Participant agrees to be bound by the terms of the Plan and this Award Agreement.  The Participant acknowledges having read and understood the Plan, the Prospectus for the Plan, and this Award Agreement.  Unless otherwise expressly provided in other sections of this Award Agreement, provisions of the Plan that confer discretionary authority on the Board or the Committee do not (and shall not be deemed to) create any rights in the Participant unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Committee so conferred by appropriate action of the Board or the Committee under the Plan after the date hereof.
16.    Entire Agreement.  This Award Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.  The Plan and this Award Agreement may be amended pursuant to Section 15 of the Plan.  Such amendment must be in writing and signed by the Company.  The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Participant hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

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17.    Limitation on the Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided.  This Award Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust.  Neither the Plan nor any underlying program, in and of itself, has any assets.  The Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.  
18.    Section Headings.  The section headings of this Award Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.
19.    Governing Law.  This Award Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California without regard to conflict of law principles thereunder.
20.    Choice of Venue.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant or this Award Agreement, the parties hereby submit to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in the courts of Santa Clara County, California, or the federal courts for the Northern District of California, and no other courts, where this grant is made and/or to be performed.
21.    Construction.  It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code.  This Award Agreement shall be construed and interpreted consistent with that intent.
22.    Severability. The provisions of this Award Agreement are severable and if any one of more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. 
23.    Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Participant’s participation in the Plan, on the Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
* * * * *

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PERFORMANCE AWARD

EXHIBIT A

PERFORMANCE VESTING REQUIREMENTS

The Stock Units (and related Dividend Equivalent Rights) subject to the Award that will vest on the Vesting Date will be determined based on the Company’s relative total shareholder return (“TSR”) Percentile for the Performance Period.
The percentage of the Stock Units (and related Dividend Equivalent Rights) that vest on the Vesting Date will be determined as follows:
		
	•
	If the Company’s TSR Percentile for the Performance Period is at the [     ] ([     ]) percentile or greater, [     ] ([     ]%) of the target Stock Units will vest on the Vesting Date.

		
	•
	If the Company’s TSR Percentile for the Performance Period is at the [     ] ([     ]) percentile, [     ] ([     ]%) of the target Stock Units will vest on the Vesting Date.

		
	•
	If the Company’s TSR Percentile for the Performance Period is at the [     ] ([     ]) percentile, [     ] ([     ]%) of the target Stock Units will vest on the Vesting Date.

		
	•
	If the Company’s TSR Percentile for the Performance Period is below the [     ]    ([     ]) percentile, [     ] ([     ]%) of the Stock Units will vest on the Vesting Date.

For TSR Percentile performance for the Performance Period between the levels indicated above, the portion of the Stock Units that will vest on the Vesting Date will be determined on a straight-line basis (i.e., linearly interpolated) between the two nearest vesting percentages indicated above.
Notwithstanding the foregoing, if the Company’s TSR for the Performance Period is negative, in no event shall more than one hundred percent (100%) of the target Stock Units vest.
The number of Stock Units that vest on the Vesting Date will be rounded to the nearest whole unit, and the balance of the Stock Units will not vest and will terminate on that Vesting Date.
For purposes of the Award, the following definitions will apply:
		
	•
	“TSR Percentile” means the percentile ranking of the Company’s TSR among the TSRs for the Comparison Group members for the Performance Period.  In determining the Company’s TSR Percentile for the Performance Period, in the event that the Company’s TSR for the Performance Period is equal to the TSR(s) of one or more other Comparison Group members for that same period, the Company’s TSR Percentile ranking will be determined by ranking the Company’s TSR for that period as being greater than such other Comparison Group members.

		
	•
	“Comparison Group” means the Company and each other company included in the Standard & Poor’s 500 index on the first day of the Performance Period and, except as provided below, the common stock (or similar equity security) of which continues to be listed or traded on a national securities exchange through the last trading day of the Performance Period.  In the event a member of the Comparison Group files for bankruptcy or liquidates due to an insolvency, such company shall continue to be treated as a Comparison Group member, and such company’s Ending Price will be treated as $0 if the common stock (or similar equity security) of such company is no longer listed or traded on a national securities 

A-1

exchange on the last trading day of the Performance Period.  In the event of a formation of a new parent company by a Comparison Group member, substantially all of the assets and liabilities of which consist immediately after the transaction of the equity interests in the original Comparison Group member or the assets and liabilities of such Comparison Group member immediately prior to the transaction, such new parent company shall be substituted for the Comparison Group member to the extent (and for such period of time) as its common stock (or similar equity securities) are listed or traded on a national securities exchange but the common stock (or similar equity securities) of the original Comparison Group member are not.  In the event of a merger or other business combination of two Comparison Group members (including, without limitation, the acquisition of one Comparison Group member, or all or substantially all of its assets, by another Comparison Group member), the surviving, resulting or successor entity, as the case may be, shall continue to be treated as a member of the Comparison Group, provided that the common stock (or similar equity security) of such entity is listed or traded on a national securities exchange through the last trading day of the Performance Period.  With respect to the preceding two sentences, the applicable stock prices shall be equitably and proportionately adjusted to the extent (if any) necessary to preserve the intended incentives of the awards and mitigate the impact of the transaction.
		
	•
	“TSR” shall be determined with respect to the Company and any other Comparison Group member by dividing: (a) the sum of (i) the difference obtained by subtracting the applicable Beginning Price from the applicable Ending Price plus (ii) all dividends and other distributions during the Performance Period by (b) the applicable Beginning Price.  Any non-cash distributions shall be valued at fair market value.  For the purpose of determining TSR, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the date of distribution.

		
	•
	“Beginning Price” means, with respect to the Company and any other Comparison Group member, the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the twenty (20) consecutive trading days beginning with the first trading day of the Performance Period.  For the purpose of determining Beginning Price, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the date of distribution.

		
	•
	“Ending Price” means, with respect to the Company and any other Comparison Group member, the average of the closing market prices of such company’s common stock on the principal exchange on which such stock is traded for the twenty (20) consecutive trading days ending on the last trading day of the Performance Period.  For the purpose of determining Ending Price, the value of dividends and other distributions shall be determined by treating them as reinvested in additional shares of stock at the closing market price on the date of distribution.

With respect to the computation of TSR, Beginning Price, and Ending Price, there shall also be an equitable and proportionate adjustment to the extent (if any) necessary to preserve the intended incentives of the awards and mitigate the impact of any stock split, stock dividend or reverse stock split occurring during the Performance Period (or during the applicable 20-day period in determining Beginning Price or Ending Price, as the case may be).
In the event of any ambiguity or discrepancy, the determination of the Committee shall be final and binding.
* * * * *

A-2Exhibit

November 22, 2017

Aimée Lapic
aimee.lapic@gmail.com

Re:    Employment Offer

Dear Aimée:

On behalf of Pandora Media, Inc. (the “Company”), we are pleased to offer you the position of Chief Marketing Officer. This letter agreement sets forth the terms and conditions of your employment with the Company (“Agreement”) if you accept and commence such employment.  Please understand that this offer, if not accepted, will expire on November 24, 2017.  In addition, as this is an executive officer position for the Company, your appointment has been approved by the Board of Directors or its Compensation Committee.

1.    Responsibilities; Duties. You are expected to begin work on December 13, 2017 (the “Start Date”) contingent on successful completion of your background check.  You are required to faithfully and conscientiously perform your assigned duties and to diligently observe all your obligations to the Company.  You agree to devote your full business time and efforts, energy and skill to your employment at the Company, and you agree to apply all your skill and experience to the performance of your duties and advancing the Company’s interests.  During your employment with the Company, you may not perform services as an employee, independent contractor, or consultant of any other competitive organization and you will not assist any other person or organization in competing with the Company or in preparing to engage in competition with the business or proposed business of the Company, including any of its subsidiaries. Any other outside business relationships you engage in should be made known to the Company’s General Counsel and CEO in writing.  You shall comply with, and be bound by, the Company’s operating policies, procedures, and practices from time to time in effect during your employment.   
2.    Compensation.  In consideration for rendering services to the Company during the term of your employment and fulfilling your obligations under this Agreement, you will be eligible to receive the benefits set forth in this Agreement.  
a.    Base Salary.  In this exempt full-time position, you will earn an annual base salary of $450,000 (prorated for any partial pay period that occurs during the term of your employment), subject to applicable tax withholdings.  Your salary will be payable pursuant to the Company’s regular payroll policy.

b.    Business Expenses.  The Company shall, upon submission and approval of written statements and bills in accordance with the then regular procedures of the Company, pay or reimburse you for any and all necessary, customary and usual expenses incurred by you while traveling for, or on behalf of, the Company, and any and all other necessary, customary or usual expenses (including entertainment) incurred by you for or on behalf of the Company in the normal course of business, as determined to be appropriate by the Company.  It is your responsibility to review and comply with the Company’s business expense reimbursement policies.

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

c.    Performance Bonus.  You will be eligible to participate in the Corporate Incentive Plan (CIP) with a target bonus of 50% of your base salary, beginning in calendar year 2018. The actual bonus amount paid will be determined in the sole and absolute discretion of the Company’s Compensation Committee. Any bonus eligibility for future years will be subject to the terms and conditions of any bonus or incentive compensation plan that the Company adopts at a later time.  Nothing hereunder shall be construed or interpreted as a guarantee for you to receive any bonuses or incentive compensation.
d.    Retention Bonus. To the extent that you commence employment on the Start Date, you will be eligible to receive a one-time retention bonus in the gross amount of $100,000 subject to applicable tax withholdings. $50,000 of this bonus shall be paid no later than 30 days following your Start Date at the Company. The remaining $50,000 shall be paid no later than 30 days following your 6 month anniversary date. This retention bonus is offered as an incentive for you to stay with the Company. Therefore, if you voluntarily terminate your employment with the Company without “Good Reason” (as defined below) within 12 months of your Start Date or if you are terminated by the Company for “Cause” (as defined below) within 12 months of your Start Date, you shall be required to pay back the Company the amount of the retention bonus you received from the Company (pro-rated based on the remaining number of months between your Start Date and your one-year anniversary). By accepting this offer, you expressly agree that the Company is authorized to deduct and offset repayment of this retention bonus against any sums which are then due to you from the Company at the time of your termination, to the extent permitted by applicable laws.  Notwithstanding the foregoing, any then unpaid portion of your retention bonus shall be paid to you within thirty (30) days of the earliest of (i) a Change of Control (as defined in the Pandora Media, Inc. 2011 Equity Incentive Plan (the “Equity Plan”), (ii) the Company’s termination of your employment without Cause or (iii) your resignation of employment with the Company for Good Reason, and in such event no portion of the retention bonus shall be subject to any repayment obligation by you.  
For purposes of this Offer Letter, “Cause” shall mean (i) a willful failure or a refusal to comply in any material respect with the reasonable policies, standards or regulations of Company, provided that, the Company provides you with a fifteen (15) day cure period to remedy such failure or refusal; (ii) unprofessional, unethical or fraudulent conduct or conduct that materially discredits Company or is materially detrimental to the reputation, character or standing of Company; (iii) dishonest conduct or a deliberate attempt to do an injury to Company; (iv) your material breach of this Agreement or any breach of confidentiality or proprietary information agreements with the Company, including, without limitation, theft of Company’s proprietary information; (v) an unlawful or criminal act which reflects badly, or would, if known, reflect badly on the Company in the reasonable judgment of the Compensation Committee of the Board of Directors; or (vi) repeated absence from work without an approved leave, resulting in a job abandonment.  
For purposes of this Offer Letter, “Good Reason” shall mean your resignation from employment after the occurrence of one of the following events without your consent: (A) a reduction of your base salary which is not part of a broad cost-cutting effort; (B) the Company’s failure to fully cure within thirty (30) days any material breach by the Company of this Agreement which you have notified the Company in writing; or (C) a relocation of your principal place of employment by more than fifty (50) miles; provided that in any event, you must notify the Company of the event 

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

constituting Good Reason within 90 days and give the Company 30 days to cure (to the extent capable of cure), and then you resign within 30 days thereafter.
These definitions of “Cause” or “Good Reason” only apply to this Section 2(d) of this Offer Letter, and not to any other agreements between you and the Company.  
3.    Employee Benefits.  You will be eligible to participate in any employee benefit plans or programs maintained, or established, by the Company including, but not limited to, paid time off, group health benefits, life insurance, dental plan, and other benefits made available generally to employees, subject to eligibility requirements and the applicable terms and conditions of the plan or program in question and the determination of any committee administering such plan or program.  To the extent approved by the Board of Directors or its Compensation Committee from time to time, you will be eligible for any severance or change in control policy of the Company that is then applicable to similarly situated U.S. employees. You will be asked to sign an Indemnification Agreement with the Company and be subject to the terms and conditions thereof.  You will be an “Eligible Officer” under the Company’s Executive Severance and Change in Control Policy (“Severance Policy”) and be subject to the terms and conditions thereof.  A copy of the Severance Policy (which may be amended from time to time at the discretion of the Board of Directors, or its delegate) is attached for your reference. 
4.    Equity Grant.  In connection with the commencement of your employment, the Company will recommend that the Board of Directors or its Compensation Committee grant you the following equity grants subject to the terms of the Company’s equity plan:
a.   Restricted Stock Units (the “RSUs”) In connection with the commencement of your employment, the Company will grant you an equity award (the “Award”) with an intended value of approximately $2,500,000. Assuming you commence your employment on the Start Date, the value of the Award will be converted to a number of Restricted Stock Units (“RSUs”) prior to the grant date, using a conversion method that takes the 30-day average stock price prior to your Start Date (with the day immediately prior to your Start Date being the 30th and final day in that average) to convert the value to a number of RSUs.  Twenty-five percent (25%) of the RSUs granted as part of the Award will vest starting with the first standard quarterly Company vesting date that is approximately one year after the grant date and continuing quarterly for three years thereafter.  Further, assuming you commence your employment on the Start Date, the vesting commencement date for the RSUs will be November 15, 2017, and the vesting date for the first 25% of the RSUs will be November 15, 2018.
b.Performance-based Equity Award. In addition to the RSUs specified above, you will also be eligible to receive, and the Company will recommend to the Compensation Committee that the Company grant you, a performance-based equity award with a maximum value of $500,000 (“Performance Award”) in Q1 2018.  The terms of this Performance Award will be consistent with the terms of similar awards granted to similarly situated executive officers of the Company, as approved at the discretion of the Compensation Committee, provided that you remain actively employed as an executive of the Company through the date of the grant and you properly and timely execute any required grant agreements relating to the Performance Award.  

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

c.Vesting of both the RSUs and Performance Award (described above) will, of course, depend on your continued employment with the Company on the applicable vesting dates. The share units will be subject to the terms of the Company’s equity incentive plan and the Restricted Stock Unit Agreement and applicable Performance Award agreements between you and the Company. You understand that issuing the equity share units described in this Agreement is expressly contingent on approval by the Board of Directors or its Compensation Committee and receipt of fully executed Restricted Stock Unit Agreement and Performance Award agreement and any related documents as may be requested by the Company.
5.    At-Will Employment.  Your employment with the Company will be on an “at will” basis, meaning that either you or the Company may terminate your employment at any time without notice and for any reason or no reason, without further obligation or liability. Further, your continued employment as well as your participation in any benefit programs does not assure you of continuing employment with the Company.  The Company also reserves the right to modify or amend the terms of your employment, compensation and benefit plans at any time for any reason. This policy of at-will employment is the entire agreement as to the duration of your employment and may only be modified in an express written agreement signed by the Chief Executive Officer of the Company.
6.    Pre-employment Conditions.
a.    Confidentiality Agreement.  Your acceptance of this offer and commencement of employment with the Company is contingent upon the execution, and delivery to an officer of the Company, of the Company’s Confidential Information and Invention Assignment Agreement, a copy of which is enclosed as Attachment A for your review and execution (the “Confidentiality Agreement”), prior to or on your Start Date.  
b.    Right to Work.  For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States.  Such documentation must be provided to us no later than your Start Date, or our employment relationship with you may be terminated.  
c.    Verification of Information.  This offer of employment is also contingent upon the successful verification of the information you provided to the Company during your application process, as well as a background check performed by the Company to confirm your suitability for employment.  By accepting this offer of employment, you warrant that all information provided by you is true and correct to the best of your knowledge, and you expressly release all parties from any and all liability for damages that may result from obtaining, furnishing, collecting or verifying such information, as well as from the use of or disclosure of such information by the Company or its agents.  You have a right to review copies of any public records obtained by the Company in conducting this verification process unless you check the box below.
/s/ AL       I hereby waive my right to receive any public records as described above.
7.    No Conflicting Obligations. You understand and agree that by accepting this offer of employment, you represent to the Company that performance of your duties to the Company and the terms of this Agreement and the Confidentiality Agreement will not breach any other agreement (written 

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

or oral) to which you are a party (including without limitation, current or past employers) and that you have not, and will not during the term of your employment with the Company, enter into any oral or written agreement which may result in a conflict of interest or may otherwise be in conflict with any of the provisions of this Agreement, the Confidentiality Agreement or the Company’s policies.  You are not to bring with you to the Company, or use or disclose to any person associated with the Company, any confidential or proprietary information belonging to any former employer or other person or entity with respect to which you owe an obligation of confidentiality under any agreement or otherwise.  The Company does not need and will not use such information.  Also, we expect you to abide by any obligations to refrain from soliciting any person employed by or otherwise associated with any former employer and suggest that you refrain from having any contact with such persons until such time as any non-solicitation obligation expires.  To the extent that you are bound by any such obligations, you must inform the Company immediately prior to accepting this Agreement. 
8.    General Obligations.  As an employee, you will be expected to adhere to the Company’s standards of professionalism, loyalty, integrity, honesty, reliability and respect for all.  Please note that the Company is an equal opportunity employer.  The Company does not permit, and will not tolerate, the unlawful discrimination or harassment of any employees, applicants, consultants, or related third parties on the basis of sex, gender, gender identity, gender expression, sex stereotype, transgender, race, color, religion or religious creed, age, national origin or ancestry, marital status, military or protected veteran status, immigration status, mental or physical disability or medical condition, genetic information, sexual orientation, pregnancy, childbirth or related medical condition, or any other status protected by applicable law.  Any questions regarding this EEO statement should be directed to Human Resources.
9.    Termination Obligations.  
a.You agree that all property, including, without limitation, all equipment, proprietary information, documents, books, records, reports, notes, contracts, lists, computer disks (and other computer-generated files and data), and copies thereof, created on any medium and furnished to, obtained by, or prepared by you in the course of or incident to your employment, belongs to the Company and shall be returned to the Company promptly upon any termination of your employment, or sooner if so requested by the Company.  
b.Upon your termination of your employment with the Company for any reason, if applicable, you will resign in writing (or be deemed to have resigned) from all other offices and directorships then held with the Company or any affiliate of the Company, unless otherwise agreed with the Company.
c.Following the termination of your employment with the Company for any reason, you shall fully cooperate with the Company in all matters relating to the winding up of pending work on behalf of the Company and the orderly transfer of work to other employees of the Company.  You shall also cooperate in the defense of any action brought by any third party against the Company.  If necessary, the Company shall pay you for your time incurred to comply with this provision at a reasonable per diem or per hour rate as to be determined by the Company.
d.Following the termination of your employment with the Company for any reason, you agree that you will not at any time make any statements or comments (written or oral) to any third party or take any action disparaging the integrity or reputation of the Company or any of its subsidiaries, 

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

employees, officers, directors, stockholders or affiliates. You also agree that you will not do or say anything that could disrupt the good morale of the employees of any of the companies listed above or harm their respective businesses or reputations of the companies and persons listed above.
10.    Miscellaneous Terms.  

a.    Entire Agreement. This Agreement, together with its Attachment A (the Confidentiality Agreement), set forth the entire terms of your employment with the Company (other than the Equity Plan Documents) and supersede any prior representations or agreements, whether written or oral.  

b.    Governing Law. This Agreement will be governed by the laws of California, without regard to its conflict of laws provisions.  This Agreement may not be modified or amended except by a written agreement, signed by the CEO (or his authorized representative) of the Company.  

c.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same instrument.  

d.    Severability. Nothing contained in this Agreement shall be construed as requiring the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any present or future statute, law, ordinance or regulation contrary to which the parties have no legal right to contract, the latter shall prevail, but in such event, any provision of this Agreement thus affected shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law.  In the event that any part, article, paragraph or clause of this Agreement shall be held to be indefinite or invalid, the entire Agreement shall not fail on account thereof, and the balance of the Agreement shall continue in full force and effect.

e.Waiver.  Failure or delay of either party to insist upon compliance with any provision hereof will not operate as, and is not to be construed as, a waiver or amendment of such provision or the right of the aggrieved party to insist upon compliance with such provision or to take remedial steps to recover damages or other relief for noncompliance.  Any express waiver of any provision of this Agreement will not operate and is not to be construed as a waiver of any subsequent breach, whether occurring under similar or dissimilar circumstances.

f.Attorneys’ Fees.  The Company will pay directly or reimburse you for reasonable legal fees and costs incurred in connection with negotiating and reviewing this Offer Letter and any related documents or matters, with the Company’s reimbursement not to exceed five thousand ($5,000).

We are all delighted to be able to extend you this offer and look forward to working with you.  To indicate your acceptance of the Company’s offer, please sign and date this Agreement in the space provided below and return it to me, along with a signed and dated original copy of the Confidentiality Agreement, prior to the expiration date specified in the opening paragraph of this Agreement.   

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

Very truly yours,

PANDORA MEDIA, INC.

By:/s/ Roger Lynch    
Name:  Roger Lynch
Title:     Chief Executive Officer

ACCEPTED AND AGREED:

I have read this offer and agree to accept employment with Company under the terms set forth in this Agreement. 

Aimée Lapic

/s/ Aimée Lapic    
Signature

November 22, 2017    
Date
 

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

Attachment A

Confidential Information, Invention Assignment, and Arbitration Agreement

2100 FRANKLIN ST • 7TH FLOOR• OAKLAND, CA 94612  |  T 510.451.4100  |  F 510.451.4286  |  PANDORA.COM

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