This excerpt taken from the AAPL 10-Q filed May 4, 2005.
Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of:
(3) promissory note;
(4) other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised (which may include Shares that would otherwise be issued pursuant to the Option);
(5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;
(6) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participants participation in any Company-sponsored deferred compensation program or arrangement;
(7) any combination of the foregoing methods of payment; or
(8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.