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This excerpt taken from the AAPL 10-Q filed May 4, 2005. Stock Withholding to Satisfy Withholding Tax Obligations. When a Participant incurs tax liability in connection with the
exercise, vesting or payout, as applicable, of an Award, which tax liability is
subject to tax withholding under applicable tax laws, and the Participant is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Participant may satisfy the withholding tax obligation by
electing to have the Company withhold from the Shares to be issued upon
exercise of the Option, SAR or Stock Purchase Right or the Shares to be issued
upon payout or vesting of the other Award, if any, that number of Shares having
a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined (the “Tax Date”).
All elections by a Participant to have Shares withheld for this purpose shall be made in writing in a form acceptable to the Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date; and
(b) all elections shall be subject to the consent or disapproval of the Administrator.
In the event the election to have Shares subject to an Option, SAR or Stock Purchase Right withheld is made by a Participant and the Tax Date is deferred under Section 83 of the Code because no election is filed under Section 83(b) of the Code, the Participant shall receive the full number of Shares with respect to which the Option, SAR or Stock Purchase Right is exercised but such Participant shall be unconditionally obligated to tender back to the Company the proper number of Shares on the Tax Date.
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