Apple (AAPL)

SECTION 2. DEFINITIONS.

(a) “Applicable Laws” means all applicable laws, rules, regulations and requirements relating to the administration of stock plans, including, but not limited to, all applicable U.S. federal and state laws, the rules and regulations of any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws, rules, regulations or requirements of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan or where Participants reside or provide services, as such laws, rules, regulations and requirements shall be in place from time to time.

(b) “Award” means an Option, SAR, Stock Grant, Restricted Stock Unit or Cash Bonus Award.

(c) “Award Agreement” means any Stock Option Agreement, SAR Agreement, Stock Grant Agreement, Restricted Stock Unit Agreement or any written document that evidences a Cash Bonus Award granted under the Plan. Award Agreements shall consist of either (1) a written award agreement in a form approved by the Committee and executed by the Company by an officer duly authorized to act on its behalf, or (2) an electronic notice of award grant in a form approved by the Committee and recorded by the Company (or its designee) in an electronic recordkeeping system used for the purpose of tracking award grants under the Plan generally, as the Committee may provide and, in each case and if required by the Committee, executed or otherwise electronically accepted by the recipient of the Award in such form and manner as the Committee may require. The Committee may authorize any officer of the Company (other than the particular Award recipient) to execute any or all Award Agreements on behalf of the Company.

(d) “Board” means the Board of Directors of the Company, as constituted from time to time.

(e) “Cash Bonus Award” means an Award granted pursuant to Section 10(b) of the Plan.

(f) “Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and as permitted by Applicable Laws, a program approved by the Committee in which payment of the aggregate Exercise Price and/or satisfaction of any applicable tax withholding obligations may be made all or in part by delivery (on a form

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prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares subject to an Option and to deliver all or part of the sale proceeds to the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.

(h) “Committee” has the meaning given to such term in Section 3.

(i) “Common Stock” means the Company’s common stock.

(j) “Company” means Apple Inc., a California corporation.

(k) “Consultant” means an individual who provides bona fide services to the Company, a Parent or a Subsidiary, other than as an Employee or Director.

(l) “Covered Employees” means those persons who the Committee determines are subject to the limitations of Code Section 162(m).

(m) “Director” means a member of the Board.

(n) “Disability” means that the Participant is classified as disabled under the long-term disability policy of the Company or, if no such policy applies, the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; provided, however, that with respect to an Option intended to qualify as an ISO, “Disability” shall mean a “permanent and total disability” within the meaning of Section 22(e)(3) of the Code.

(o) “Employee” means any individual who is a common-law employee of the Company, a Parent or a Subsidiary (including any Director that is also an Employee).

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(q) “Exercise Price” means, in the case of an Option, the amount for which a Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value at the time such SAR is exercised in determining the amount payable upon exercise of such SAR.

(r) “Fair Market Value” means, unless otherwise determined or provided by the Committee in the circumstances, the last price (in regular trading) for a share of Common Stock as furnished by the National Association of Securities Dealers, Inc. (the “NASD”) through the NASDAQ Global Market Reporting System (the “Global Market”) for the date in question or, if no sales of Common Stock were reported by the NASD on the Global Market on that date, the last price (in regular trading) for a share of Common Stock as furnished by the NASD through the Global Market for the next preceding day on which sales of Common Stock were reported by the NASD. The Committee may, however, provide with respect to one or more Awards that the Fair Market Value shall equal the last price for a share of Common Stock as furnished by the NASD through the Global Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share of Common Stock as furnished by the NASD through the Global Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no longer actively traded on the Global Market as of the applicable date, the Fair Market Value of the Common Stock shall be the value as reasonably determined by the Committee for purposes of the Award in the circumstances. The Committee also may adopt a different methodology for determining Fair Market Value with respect to one or more Awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular Award(s) (for example, and without limitation, the Committee may provide that Fair Market Value for purposes of one or more Awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date).

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(s) “Fiscal Year” means the Company’s fiscal year.

(t) “Grant Date” means the date on which the Committee makes the determination to grant an Award or such later date as the Committee may specify in making such determination.

(u) “Incentive Stock Option” or “ISO” means an incentive stock option described in Code Section 422.

(v) “Non-Employee Director” means a member of the Board who is not an Employee.

(w) “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.

(x) “Option” means an ISO or NSO granted under the Plan entitling the Participant to purchase Shares.

(y) “Parent” means any corporation or other entity that beneficially owns directly or indirectly a majority of the Company’s outstanding voting stock or voting power. An entity that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

(z) “Participant” means an Employee or Consultant who has been selected by the Committee to receive an Award under the Plan or any individual, estate or other entity that holds an Award.

(aa) “Performance Goals” means one or more objective measurable performance goals established by the Committee with respect to a Performance Period based upon one or more of the following criteria: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) total shareholder return; (xiv) price/earnings ratio; (xv) debt or debt-to-equity; (xvi) accounts receivable; (xvii) writeoffs; (xviii) cash; (xix) assets; (xx) liquidity; (xxi) operations; (xxii) intellectual property (e.g., patents); (xxiii) product development; (xxiv) manufacturing, production or inventory; (xxv) mergers and acquisitions or divestitures; and/or (xxvi) individual performance objective. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time and/or against other companies or financial metrics), (c) on a per share and/or share per capita basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company and /or (e) on a pre-tax or after tax basis. Awards issued to persons who are not Covered Employees may take into account any other factors deemed appropriate by the Committee.

(bb) “Performance Period” means any period not exceeding 60 months as determined by the Committee, in its sole discretion. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods.

(cc) “Plan” means this Apple Inc. 2003 Employee Stock Plan as it may be amended from time to time.

(dd) “Re-Price” means that the Company has lowered or reduced the Exercise Price of outstanding Options and/or outstanding SARs for any Participant(s) whether through amendment, cancellation or replacement grants, or any other means.

(ee) “Restricted Stock Unit” means a bookkeeping entry representing the equivalent of one Share awarded under the Plan and represents an unfunded and unsecured obligation of the Company.

(ff) “Restricted Stock Unit Agreement” means the agreement described in Section 9 evidencing a Restricted Stock Unit Award.

(gg) “SAR Agreement” means the agreement described in Section 7 evidencing a Stock Appreciation Right.

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(hh) “SEC” means the Securities and Exchange Commission.

(ii) “Section 16 Persons” means those officers, directors or other persons who are subject to Section 16 of the Exchange Act.

(jj) “Securities Act” means the Securities Act of 1933, as amended.

(kk) “Share” means one share of Common Stock.

(ll) “Stock Appreciation Right” or “SAR” means a stock appreciation right awarded under the Plan.

(mm) “Stock Grant” means Shares awarded under the Plan pursuant to Section 8.

(nn) “Stock Grant Agreement” means the agreement described in Section 8 evidencing a Stock Grant.

(oo) “Stock Option Agreement” means the agreement described in Section 6 evidencing an Option.

(pp) “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. An entity that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

(qq) “10-Percent Stockholder” means an individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or of its parent corporation or subsidiary corporation (as defined in Sections 424(e) and (f) of the Code). In determining stock ownership, the attribution rules of Code Section 424(d) shall be applied.

(rr) “Termination of Service” means (i) in the case of an Employee, a cessation of the employee-employer relationship between the Employee and the Company and its Subsidiaries for any reason, including but not by way of limitation, a termination by resignation, discharge, death, disability, or retirement, but excluding any such termination where there is a simultaneous reemployment by the Company or a Subsidiary and excluding any bona fide and Company (or Subsidiary) approved leave of absence; and (ii) in the case of a Consultant, a cessation of the service relationship (as determined by the Committee in its sole discretion) between the Consultant and the Company and its Subsidiaries for any reason, including but not by way of limitation, a termination by resignation, discharge, death or disability, but excluding any such termination where there is a simultaneous re-engagement of the Consultant by the Company or a Subsidiary. For purposes of the Plan and any Award, if an entity ceases to be a Subsidiary of the Company, a Termination of Service shall be deemed to have occurred with respect to each Employee and Consultant in respect of such Subsidiary who does not continue as an Employee or Consultant in respect of the Company or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in status.

Definitions

Whenever capitalized in this Purchase Agreement:

“Apple” means Apple Computer, Inc., a California Corporation, with offices at 1 Infinite Loop, Cupertino, CA  95014.

“Authorized Purchaser” means Apple, any of its wholly-owned subsidiaries, and any of its contract manufacturers, original equipment manufacturers or other third parties authorized by Apple to purchase MPUs for use in Apple-branded products or subassemblies for Apple-branded products.

“Blanket Purchase Order” means a blanket order for MPUs to be delivered within the period specified on the blanket order.  Apple and its Authorized Purchasers will place individual Purchase Orders under the Blanket Purchase Order and units will be shipped against those individual Purchase Orders.  The individual Purchase Orders must be for equivalent amounts and types of MPUs and must be for identical Delivery Dates as the corresponding Blanket Purchase Order.  The individual Purchase Orders must be placed no later than 4 weeks after the Blanket Purchase Order and if they aren’t, Freescale will notify Apple in writing and Apple will remedy the situation within 5 business days.  Freescale’s failure to so notify Apple will not be a breach of this Agreement. No units will ship against and Apple will have no liability for cancellation or other charges under a Blanket Purchase Order.  Apple or the Authorized Purchaser (as the case may be) will have liability for cancellation or other charges under the individual Purchase Orders as set forth in Attachment 4.

“Delivery Date” for a particular Purchase Order has the meaning set forth in Attachment 4.

 “Freescale” means Freescale Semiconductor, Inc., a Delaware corporation, with offices at 7700 West Parmer Lane, Austin, Texas.

“MPUs” means those Freescale microprocessors code-named [**] and [**] and listed in Attachment 2, whose specifications and part numbers are specific to Apple, and any other microprocessors the parties may mutually agree to add to this Purchase Agreement after the effective date.

“Purchase Agreement” means this Purchase Agreement between Apple and Freescale, including any attachments, schedules or other documents referenced herein.

“Purchase Order” means written orders for MPUs placed by Apple or an Authorized Purchaser.

“WIP” means the MPU units specifically described in Attachment 3.

[**]  Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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Definitions

Whenever capitalized in this Purchase
Agreement:

“Apple”
means Apple Computer, Inc., a California Corporation, with offices at 1
Infinite Loop, Cupertino, CA  95014.

“Authorized Purchaser” means Apple, any of its
wholly-owned subsidiaries, and any of its contract manufacturers, original
equipment manufacturers or other third parties authorized by Apple to purchase
MPUs for use in Apple-branded products or subassemblies for Apple-branded
products.

“Blanket Purchase Order” means a blanket order
for MPUs to be delivered within the period specified on the blanket order.  Apple and its Authorized Purchasers will
place individual Purchase Orders under the Blanket Purchase Order and units will
be shipped against those individual Purchase Orders.  The individual Purchase Orders must be for
equivalent amounts and types of MPUs and must be for identical Delivery Dates
as the corresponding Blanket Purchase Order. 
The individual Purchase Orders must be placed no later than 4 weeks
after the Blanket Purchase Order and if they aren’t, Freescale will notify
Apple in writing and Apple will remedy the situation within 5 business
days.  Freescale’s failure to so notify
Apple will not be a breach of this Agreement. No units will ship against and
Apple will have no liability for cancellation or other charges under a Blanket
Purchase Order.  Apple or the Authorized
Purchaser (as the case may be) will have liability for cancellation or other
charges under the individual Purchase Orders as set forth in Attachment 4.

“Delivery Date” for
a particular Purchase Order has the meaning set forth in Attachment 4.

 “Freescale” means Freescale Semiconductor, Inc., a
Delaware corporation, with offices at 7700 West Parmer Lane, Austin, Texas.

“MPUs” means those Freescale
microprocessors code-named [**]
and [**] and listed in Attachment 2, whose
specifications and part numbers are specific to Apple, and any other
microprocessors the parties may mutually agree to add to this Purchase Agreement
after the effective date.

“Purchase Agreement” means this Purchase
Agreement between Apple and Freescale, including any attachments, schedules or
other documents referenced herein.

“Purchase Order” means written orders for
MPUs placed by Apple or an Authorized Purchaser.

“WIP” means the MPU units
specifically described in Attachment 3.

[**]  Certain
information on this page has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to the omitted portions.

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Whenever used in this Exhibit or in Exhibit 4, the following terms will mean:

1.1                                 [**]

1.2                                 [**]

1.3                                 [**]

1.4                                 [**]

1.5                                 [**]

1.6                                 [**]

1.7                                 [**]

1.8                                 “Performance Milestone” means the date by which IBM must make available a Product meeting the requirements specified in Exhibit 4, including: [**].

1.9                                 [**]

1.10                           [**]

1.11                           [**]

1.12                           [**]

1.13                           [**]

1.14                           [**]

1.15                           [**]

2.                                      

Whenever used in this Exhibit or in Exhibit 4, the
following terms will mean:

1.1                                 [**]

1.2                                 [**]

1.3                                 [**]

1.4                                 [**]

1.5                                 [**]

1.6                                 [**]

1.7                                 [**]

1.8                                 “Performance Milestone” means the date by
which IBM must make available a Product meeting the requirements
specified in Exhibit 4, including: [**].

1.9                                 [**]

1.10                           [**]

1.11                           [**]

1.12                           [**]

1.13                           [**]

1.14                           [**]

1.15                           [**]

2.