Registration Rights Agreement - Apple Computer Inc. and Microsoft Corp.




                            REGISTRATION RIGHTS AGREEMENT

                             DATED AS OF AUGUST 11, 1997

                                       BETWEEN

                                 APPLE COMPUTER, INC.

                                         AND

                                MICROSOFT CORPORATION



                                  TABLE OF CONTENTS



                                                                                PAGE
                                                                                ----
                                                                           
1.        Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . .1

2.        Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . .2

3.        Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

4.        Indemnification and Contribution . . . . . . . . . . . . . . . . . . . . .7

5.        Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

6.        Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7.        Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . 10

8.        Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 10

9.        Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

10.       Termination of Company Obligation. . . . . . . . . . . . . . . . . . . . 11

11.       No Transfer or Assignment of Registration Rights . . . . . . . . . . . . 11

                                    i




                            REGISTRATION RIGHTS AGREEMENT

          This REGISTRATION RIGHTS AGREEMENT (this 'AGREEMENT') is entered 
into as of this 11th day of August, 1997, between Apple Computer, Inc., a 
California corporation (the 'COMPANY'), and Microsoft Corporation, a 
Washington corporation (the 'PURCHASER').

          WHEREAS, the Purchaser intends to purchase shares of Preferred 
Stock, no par value, of the Company pursuant to the terms and conditions of a 
Preferred Stock Purchase Agreement dated as of August 5, 1997 (the 'PURCHASE 
AGREEMENT'); and

          WHEREAS, the Purchase Agreement requires that the Company enter 
into this Agreement with the Purchaser;

          NOW, THEREFORE, in consideration of the foregoing, the parties to 
this Agreement hereby agree as follows:

          1.   DEMAND REGISTRATION.  If, (i) at any time after August 11, 
2000, or (ii) prior to August 11, 2000 in the event of a CHANGE OF CONTROL or 
INSOLVENCY PROCEEDINGS as those terms are defined in the Purchase Agreement, 
the Purchaser shall request the Company in writing to register under the 
Securities Act of 1933, as amended (the 'SECURITIES ACT'), any shares of the 
Common Stock, no par value, of the Company (the 'COMMON STOCK') issuable upon 
conversion of the Series A Non-Voting Convertible Preferred Stock, no par 
value (the 'PREFERRED STOCK') and, if required by the Securities and Exchange 
Commission (the 'SEC'), the shares of Preferred Stock owned by the Purchaser 
(the shares of Common Stock and, if applicable, Preferred Stock subject to 
such request being herein referred to as the 'SUBJECT STOCK'), the Company 
shall use its reasonable best efforts to cause the shares of Subject Stock 
specified in such request to be registered as soon as reasonably practicable 
so as to permit the sale thereof, and in connection therewith shall prepare 
and file a Form S-3 registration statement or such other form as is then 
available (or any successor form of registration statement to such Form S-3 
or other available registration statement) with the SEC under the Securities 
Act to effect such registration; PROVIDED, HOWEVER, that each such request 
shall (i) specify the number of shares of Subject Stock intended to be 
offered and sold, (ii) express the present intention of the Purchaser to 
offer or cause the offering of such shares of Subject Stock for distribution, 
(iii) describe the nature or method of the proposed offer and sale thereof, 
and (iv) contain the undertaking of the Purchaser to provide all such 
information and materials and take all such action as may be required in 
order to permit the Company to comply with all applicable requirements of the 
SEC and to obtain any desired acceleration of the effective date of such 
registration statement. The Purchaser shall not be entitled to request more 
than one demand registration statement under this Agreement in any 12-month 
period, and the Purchaser shall not be entitled to more than a total of two 
requests for demand registration statements pursuant to this Agreement.  The 
Company agrees not to grant to any other person registration rights pursuant 
to which such person would have the right to register shares of Common Stock 
on a registration statement filed by the Company pursuant to the exercise of 
Purchaser's rights under this Agreement. 




          2.   OBLIGATIONS OF THE COMPANY.

               (a)  Whenever the Company is required by the provisions of 
this Agreement to use its reasonable best efforts to effect the registration 
of any Common Stock under the Securities Act, the Company shall (i) prepare 
and, as soon as reasonably possible, file with the SEC a registration 
statement with respect to the shares of Subject Stock, and shall use its 
reasonable best efforts to cause such registration statement to become 
effective and to remain effective until the earlier of the sale of the shares 
of Subject Stock so registered or 90 days subsequent to the effective date of 
such registration; (ii) prepare and file with the SEC such amendments and 
supplements to such registration statement and the prospectus used in 
connection therewith as may be reasonably necessary to make and to keep such 
registration statement effective and to comply with the provisions of the 
Securities Act with respect to the sale or other disposition of all 
securities proposed to be registered pursuant to such registration statement 
until the earlier of the sale of the shares of Subject Stock so registered or 
90 days subsequent to the effective date of such registration statement;  and 
(iii) take all such other action either necessary or desirable to permit the 
shares of Subject Stock held by the Purchaser to be registered and disposed 
of in accordance with the method of disposition described herein. 

               (b)  Notwithstanding the foregoing, if the Company shall 
furnish to the Purchaser a certificate signed by its Chairman, Chief 
Executive Officer or Chief Financial Officer stating that (i) filing a 
registration statement or maintaining effectiveness of a current registration 
statement would have a material adverse effect on the Company or its 
stockholders in relation to any material financing, acquisition or other 
corporate transaction, and the Company has determined in good faith that such 
disclosure is not in the best interests of the Company and its shareholders, 
or (ii) the Company has determined in good faith that the filing or 
maintaining effectiveness of a current registration statement would require 
disclosure of material information the Company has a valid business purpose 
of retaining as confidential, the Company shall be entitled to postpone 
filing or suspend the use by the Purchaser of the registration statement, as 
the case may be, for a reasonable period of time, but not in excess of an 
aggregate of 90 calendar days in any 360 day period.  If the Company 
furnishes a notice under this paragraph, the Company shall extend the period 
during which such registration statement shall be maintained effective as 
provided in Section 2(a) hereof by the number of days during the period from 
and including the date of the giving of notice under this paragraph to the 
date when sales under the registration statement may recommence.

               (c)  In connection with any registration statement, the 
following provisions shall apply:

                    (1)  The Company shall furnish to the Purchaser, prior to 
the filing thereof with the SEC, a copy of any registration statement, and 
each amendment thereof and each amendment or supplement, if any, to the 
prospectus included therein and shall use its reasonable best efforts to 
reflect in  each such document, when so filed with the SEC, such comments as 
the  Purchaser and its counsel reasonably may propose. 

                                    2



                    (2)  The Company shall take such action as may be 
necessary so that (i) any registration statement and any amendment thereto 
and any prospectus forming part thereof and any amendment or supplement 
thereto  (and each report or other document incorporated therein by 
reference) complies in all material respects with the Securities Act and the 
Securities Exchange Act of 1934, as amended (the 'EXCHANGE ACT') and the 
respective rules and regulations thereunder, (ii) any registration statement 
and any amendment thereto does not, when  it becomes effective, contain an 
untrue statement of a material fact or omit to state a material fact required 
to be stated therein or necessary to make the statements therein not 
misleading and (iii) any prospectus forming part of any registration 
statement, and any amendment or supplement  to such prospectus, does not 
include an untrue statement of a material fact or omit to state a material 
fact necessary in order to make the statements therein, in the light of the 
circumstances under which they were made, not misleading.

                    (3)  (A)  The Company shall advise the Purchaser and, if 
requested by the Purchaser, confirm such advice in writing:

                            (i)  when a registration statement and any 
amendment thereto has been filed with the SEC and when the registration 
statement or any post-effective amendment thereto has become effective; and

                            (ii)   of any request by the SEC for amendments 
or supplements to the registration statement or the prospectus included 
therein or for additional information.

                         (B)  The Company shall advise the Purchaser and, if 
requested by Purchaser, confirm such advice in writing of:

                            (i)   the issuance by the SEC of any stop order 
suspending effectiveness of the registration statement or the initiation of 
any proceedings for that purpose;

                            (ii)   the receipt by the Company of any 
notification with respect to the suspension of the qualification of the 
securities included therein for sale in any jurisdiction or the initiation of 
any proceeding for such purpose; and

                            (iii)   the happening of any event that requires 
the making of any changes in the registration statement or the prospectus so 
that, as of such date, the registration statement and the prospectus do not 
contain an untrue statement of a material fact and do not omit to state a 
material fact required to be stated therein or necessary to make the 
statements therein (in the case of the prospectus, in the light of the 
circumstances under which they were made) not misleading (which advice shall 
be accompanied by an instruction to suspend the use of the prospectus 
relating to the Subject Stock until the requisite changes have been made).

                    (4)  The Company shall use its reasonable best efforts to 
prevent the issuance, and if issued to obtain the withdrawal, of any order 
suspending the effectiveness of the registration statement relating to the 
Subject Stock at the earliest possible time. 

                                    3



                    (5)  The Company shall furnish to Purchaser with respect 
to the registration statement relating to the Subject Stock, without charge, 
at least one copy of such registration statement and any post-effective 
amendment thereto, including financial statements and schedules, and all 
reports, other documents and exhibits  (including those incorporated by 
reference).     

                    (6)  The Company shall furnish to the Purchaser such 
number of copies of any prospectus (including any preliminary prospectus and 
any amended or supplemented prospectus) relating to the Subject Stock, in 
conformity with the requirements of the Securities Act, as the Purchaser may 
reasonably request in order to effect the offering and sale of the shares of 
Subject Stock to be offered and sold, but only while the Company shall be 
required under the provisions hereof to cause the registration statement to 
remain current, and the Company consents (except during the continuance of 
any event described in Sections 2(b) or 2(c)(3)(B)(iii)) to the use of the 
Prospectus or any amendment or supplement thereto by the Purchaser in 
connection with the offering and sale of the Subject Stock covered  by the 
Prospectus or any amendment or supplement thereto.     

                    (7)  Prior to any offering of Subject Stock pursuant to 
any registration statement, the Company shall use its reasonable best efforts 
to register or qualify the shares of Subject Stock covered by such 
registration statement under the securities or blue sky laws of such states 
as the Purchaser shall reasonably request, maintain any such registration or 
qualification current until the earlier of the sale of the shares of Subject 
Stock so registered or 90 days subsequent to the effective date of the 
registration statement, and do any and all other acts and things either 
reasonably necessary or advisable to enable the Purchaser to consummate the 
public sale or other disposition of the shares of Subject Stock in 
jurisdictions where the Purchaser desires to effect such sales or other 
disposition; provided, however, that the Company shall not be required to 
take any action that would subject it to the general jurisdiction of the 
courts of any jurisdiction in which it is not so subject or to qualify as a 
foreign corporation in any jurisdiction where the Company is not so 
qualified. 

                    (8)  In connection with any offering of shares of Subject 
Stock registered pursuant to this Agreement, the Company shall (x) furnish 
the Purchaser, at the Company's expense, on a timely basis with certificates 
free of any restrictive legends representing ownership of the shares of 
Subject Stock being sold in such denominations and registered in such names 
as the Purchaser shall request and (y) instruct the transfer agent and 
registrar of the Subject Stock to release any stop transfer orders with 
respect to the shares of Subject Stock being sold.

                    (9)  Upon the occurrence of any event contemplated by 
paragraph 2(c)(3)(B)(iii) above, the Company shall promptly prepare a 
post-effective amendment to any registration statement or an amendment or 
supplement to the related prospectus or file any other required document so 
that, as thereafter delivered to purchasers of the Subject Stock included  
therein, the prospectus will not include an untrue statement of a material 
fact or omit to state any material fact necessary to make the statements  
therein, in the light of the circumstances under which 

                                    4



they were made, not  misleading.  If the Company notifies Purchaser of the 
occurrence of any event contemplated by Sections 2(b) or 2(c)(3)(B)(iii) 
above, Purchaser shall suspend the use of the prospectus until the requisite 
changes to the prospectus have been made.

                    (10)  The Company shall make generally available to its 
security holders or otherwise provide in accordance with Section 11(a) of the 
Securities Act as soon as practicable after the effective date of the 
applicable registration statement an earnings statement satisfying the 
provisions of Section 11(a) of the Securities Act.   

                    (11)  The Company shall, if requested, promptly include 
or incorporate in a prospectus supplement or post-effective amendment to a 
registration statement, such information as the managing underwriters 
administering an underwritten offering of the Subject Stock registered 
thereunder reasonably request to be included therein and to which the Company 
does not reasonably object and shall make all required filings of such 
prospectus supplement or post-effective amendment as soon as practicable 
after they are notified of the matters to be included or incorporated in such 
prospectus supplement or post-effective amendment.     

                    (12)  If requested, the Company shall enter into an 
underwriting agreement with a nationally recognized investment banking firm 
or firms containing representations, warranties, indemnities and agreements 
then customarily included by an issuer in underwriting agreements with 
respect to secondary underwritten distributions, and in connection therewith, 
if an underwriting agreement is entered into, cause the same to contain 
indemnification provisions and procedures substantially identical to those 
set forth in Section 4 (or such other provisions and procedures acceptable to 
the managing underwriters, if any) with respect to all parties to be 
indemnified pursuant to Section 4.     

                    (13)  In the event Purchaser proposes to conduct an 
underwritten public offering, then the Company shall:  (i) make reasonably 
available for inspection by Purchaser and its counsel, any underwriter 
participating in the distribution pursuant to such registration statement, 
and any attorney, accountant or other agent retained by Purchaser or any such 
underwriter, all relevant financial and other records, pertinent corporate 
documents and properties of the Company and its subsidiaries, as is customary 
for similar due diligence examinations; PROVIDED, HOWEVER, that any 
information so provided that is designated in writing by the Company, in good 
faith, as confidential at the time of delivery of such information shall be 
kept confidential by Purchaser, such underwriter, or any such, attorney, 
accountant or agent, unless such disclosure is made in connection with a 
court proceeding or required by law, or such information becomes available to 
the public generally or through a third party without an accompanying 
obligation of confidentiality; (ii) obtain opinions of counsel to the Company 
and updates thereof (which counsel and opinions (in form, scope and 
substance) shall be reasonably satisfactory to the managing underwriters) 
addressed to Purchaser and the underwriters, if any, covering such matters as 
are customarily covered in opinions requested in underwritten offerings and 
such other matters as may be reasonably requested by Purchaser and 
underwriters (it being agreed that the matters to be covered by such opinion 
or written statement by such counsel delivered in connection with such 
opinions shall include in customary form, without limitation, as of the date 
of the opinion and as of the effective date of the registration statement or 

                                    5



most recent post-effective amendment thereto, as the case may be, the absence 
from such registration statement and the prospectus included therein, as then 
amended or supplemented, including the documents incorporated by reference 
therein, of an untrue statement of a material fact or the omission to state 
therein a material fact required to be stated therein or necessary to make 
the statements therein, in the light of the circumstances under which they 
were made, not misleading; (iii) obtain 'cold comfort' letters and updates 
thereof from the independent public accountants of the Company (and, if 
necessary, any other independent public accountants of any subsidiary of the 
Company or of any business acquired by the Company for which financial 
statements and financial data are, or are required to be, included in the 
registration statement), addressed to the underwriters in customary form and 
covering matters of the type customarily covered in 'cold comfort' letters in 
connection with primary underwritten offerings; (iv) deliver such documents 
and certificates as may be reasonably requested by Purchaser and the managing 
underwriters, and with any customary conditions contained in the underwriting 
agreement or other agreement entered into by the Company.  The foregoing 
actions set forth in clauses (ii), (iii) and (iv) of  this Section 2(c)(13) 
shall be performed at each closing under any underwritten offering to the 
extent required thereunder, but, in any event, need not be performed by the 
Company more than twice. 

                    (14)  The Company will use its best efforts to cause the 
Subject Stock to be admitted for quotation on the Nasdaq National Market or 
other stock exchange or trading system on which the Common Stock primarily 
trades on or prior to the effective date of any registration statement 
hereunder. 

               (d)  With a view to making available the benefits of certain 
rules and regulations of the SEC which may at any time permit the sale of the 
Subject Stock to the public without registration, the Company agrees to:

               (e)  Make and keep public information available, as those 
terms are understood and defined in Rule 144 (or any successor provision) 
under the Securities Act, at all times; 

               (f)  During the term of this Agreement, to furnish to the 
Purchaser upon request (i) a written statement by the Company as to its 
compliance with the reporting requirements of Rule 144, (ii) a copy of the 
most recent annual or quarterly report of the Company, and (iii) such other 
reports and documents of the Company as the Purchaser may reasonably request 
in availing itself of any rule or regulation of the SEC allowing the 
Purchaser to sell any such securities without registration.

          3.   EXPENSES.  The Company shall pay all fees and expenses 
incurred in connection with the performance of its obligations under Sections 
1 and 2 hereof, including, without limitation, all SEC and blue sky 
registration and filing fees, printing expenses, transfer agents' and 
registrars' fees, and the reasonable fees and disbursements of the Company's 
outside counsel and independent accountants incurred in connection with the 
preparation, filing and amendment of any registration statement authorized by 
this Agreement (but excluding underwriters' and brokers' discounts and 
commissions). 

                                    6



          4.   INDEMNIFICATION AND CONTRIBUTION.

               (a)  INDEMNIFICATION BY THE COMPANY.  In the case of any 
offering registered pursuant to this Agreement, the Company agrees to 
indemnify and hold the Purchaser, each underwriter (if any) of shares of 
Subject Stock under such registration statements and each person who controls 
any of the foregoing within the meaning of Section 15 of the Securities Act 
harmless against any and all losses, claims, damages or liabilities to which 
they or any of them may become subject under the Securities Act or any other 
statute or common law or otherwise, and to reimburse them, from time to time 
upon request, for any legal or other expenses incurred by them in connection 
with investigating any claims and defending any actions, insofar as any such 
losses, claims, damages, liabilities or actions shall arise out of or shall 
be based upon (i) any untrue statement or alleged untrue statement of a 
material fact contained in the registration statement (or any amendment 
thereto) relating to the sale of such shares of Subject Stock, including all 
documents incorporated therein by reference, or the omission or alleged 
omission to state therein a material fact required to be stated therein or 
necessary to make the statements therein not misleading, or (ii) any untrue 
statement or alleged untrue statement of a material fact contained in any 
preliminary prospectus (as amended or supplemented if the Company shall have 
filed with the SEC any amendment thereof or supplement thereto), if used 
prior to the effective date of such registration statement or contained in 
the prospectus (as amended or supplemented if the Company shall have filed 
with the SEC any amendment thereof or supplement thereto), if used within the 
period during which the Company shall be required to keep the registration 
statement to which such prospectus relates current pursuant to the terms of 
this Agreement, or the omission or alleged omission to state therein (if so 
used) a material fact necessary in order to make the statements therein, in 
the light of the circumstances under which they were made, not misleading; 
PROVIDED, HOWEVER, that the indemnification agreement contained in this 
Section 4(a) shall not apply to such losses, claims, damages, liabilities or 
actions which shall arise from the sale of shares of Subject Stock to any 
person if such losses, claims, damages, liabilities or actions shall arise 
out of or shall be based upon any such untrue statement or alleged untrue 
statement, or any such omission or alleged omission, if such statement or 
omission shall have been (x) made in reliance upon and in conformity with 
information furnished in writing to the Company by the Purchaser or any such 
underwriter specifically for use in connection with the preparation of the 
registration statement or any preliminary prospectus or prospectus contained 
in the registration statement or any such amendment thereof or supplement 
thereto, or (y) made in any preliminary prospectus, and the prospectus 
contained in the registration statement as declared effective or in the form 
filed by the Company with the SEC pursuant to Rule 424 under the Securities 
Act shall have corrected such statement or omission and a copy of such 
prospectus shall not have been sent or given to such person at or prior to 
the confirmation of such sale to him.

               (b)  INDEMNIFICATION BY THE PURCHASER.  In the case of each 
offering registered pursuant to this Agreement, the Purchaser agrees, in the 
same manner and to the same extent as set forth in Section 4(a) of this 
Agreement to indemnify and hold harmless the Company and each person, if any, 
who controls the Company within the meaning of Section 15 of the Securities 
Act, its directors and those officers of the Company who shall have signed 
any such registration statement 

                                    7



with respect to any statement in or omission from such registration statement 
or any preliminary prospectus (as amended or as supplemented, if amended or 
supplemented as aforesaid) or prospectus contained in such registration 
statement (as amended or as supplemented, if amended or supplemented as 
aforesaid), if such statement or omission shall have been made in reliance 
upon and in conformity with information furnished in writing to the Company 
by the Purchaser specifically for use in connection with the preparation of 
such registration statement or any preliminary prospectus or prospectus 
contained in such registration statement or any such amendment thereof or 
supplement thereto.

               (c)  NOTICE OF CLAIMS.  Each party indemnified under Section 
4(a) or Section 4(b) of this Agreement shall, promptly after receipt of 
notice of the commencement of any action against such indemnified party in 
respect of which indemnity may be sought, notify the indemnifying party in 
writing of the commencement thereof, enclosing a copy of all papers served on 
such indemnified party.  The omission of any indemnified party so to notify 
an indemnifying party of any such action shall not relieve the indemnifying 
party from any liability in respect of such action which it may have to such 
indemnified party on account of the indemnity agreement contained in Section 
4(a) or Section 4(b) of this Agreement, unless the indemnifying party was 
prejudiced by such omission, and in no event shall relieve the indemnifying 
party from any other liability which it may have to such indemnified party.  
In case any such action shall be brought against any indemnified party and it 
shall notify an indemnifying party of the commencement thereof, the 
indemnifying party shall be entitled to participate therein and, to the 
extent that it may wish, jointly with any other indemnifying party similarly 
notified, to assume the defense thereof, with counsel satisfactory to such 
indemnified party; PROVIDED, that if any indemnified party or parties 
reasonably determine that there may be legal defenses available to such 
indemnified party that are different from or in addition to those available 
to such indemnifying party or that representation of such indemnifying party 
and any indemnified party by the same counsel would present a conflict of 
interest, then such indemnifying party shall not be entitled to assume such 
defense.  If an indemnifying party is not entitled to assume the defense of 
such action as a result of the proviso to the preceding sentence, counsel for 
such indemnifying party shall be entitled to conduct the defense of such 
indemnifying party and counsel for the indemnified party shall be entitled to 
conduct the defense of such indemnified party or parties.  If an indemnifying 
party assumes the defense of an action in accordance with and as permitted by 
the provisions of this paragraph, such indemnifying party shall not be liable 
to such indemnified party under Section 4(a) or Section 4(b) of this 
Agreement for any legal or other expenses subsequently incurred by such 
indemnified party in connection with the defense thereof other than 
reasonable costs of investigation.  In no event shall the indemnifying party 
be liable for the fees and expenses of more than one counsel (in addition to 
local counsel) separate from its own counsel for all indemnified parties in 
connection with any one action or separate but similar or related actions in 
the same jurisdiction arising out of the same general allegations or 
circumstances.  

               (d)  In order to provide for just and equitable contribution 
in circumstances in which the indemnity provided for in this Section 4 is for 
any reason held to be unavailable to the indemnified parties although 
applicable in accordance with its terms, the Company and Purchaser shall 
contribute to the aggregate losses, liabilities, claims, damages and expenses 
of the nature 

                                    8



contemplated by said indemnity incurred by the Company and Purchaser, as 
incurred; PROVIDED that no person guilty of fraudulent misrepresentation 
(within the meaning of Section 11(f) of the Securities Act) shall be entitled 
to contribution from any person that was not guilty of such fraudulent 
misrepresentation.  As between the Company, on the one hand, and Purchaser, 
on the other hand, such parties shall contribute to such aggregate losses, 
liabilities, claims, damages and expenses of the nature contemplated by such 
indemnity agreement in such proportion as shall be appropriate to reflect the 
relative fault of the Company, on the one hand, and the Purchaser, on the 
other hand, with respect to the statements or omissions which resulted in 
such loss, liability, claim, damage or expense, or action in respect thereof, 
as well as any other relevant equitable considerations.  The relative fault 
of the Company, on the one hand, and of the Purchaser, on the other hand, 
shall be determined by reference to, among other things, whether the untrue 
or alleged untrue statement of a material fact or the omission or alleged 
omission to state a material fact relates to information supplied by the 
Company, on the one hand, or by or on behalf of the Purchaser, on the other 
hand, and the parties' relative intent, knowledge, access to information and 
opportunity to correct or prevent such statement or omission.  The Company 
and the Purchaser agree, that it would not be just and equitable if 
contribution pursuant to this Section 4 were to be determined by pro rata 
allocation or by any other method of allocation that does not take into 
account the relevant equitable considerations.  For purposes of this Section 
4(d), each person who controls the Company or the Purchaser within the 
meaning of Section 15 of the Securities Act shall have the same rights to 
contribution as Purchaser or the Company, as the case may be. No party shall 
be liable for contribution with respect to any action, suit, proceeding or 
claim settled without its written consent. 

               (e)  The Company may require, as a condition to entering into 
any underwriting agreement with respect to the registration of Subject Stock, 
that the Company shall have received an undertaking reasonably satisfactory 
to it from each underwriter named in any such underwriting agreement, 
severally and not jointly, to comply with the provisions of paragraphs (a) 
through (d) of this Section 4.

               (f)  The obligations of the Company and Purchaser under this 
Section 4 shall survive the completion of any offering of Subject Stock in a 
registration statement.

          5.   NOTICES.  Any notice or other communication given under this 
Agreement shall be sufficient if in writing and sent by registered or 
certified mail, return receipt requested, postage prepaid, to a party at its 
address set forth below (or at such other address as shall be designated for 
such purpose by such party in a written notice to the other party hereto):

               (a)  if to the Company, to it at:
                    One Infinite Loop
                    Cupertino, CA 95014
                    Attention: Chief Financial Officer

with a copy addressed as set forth above but to the attention of the General
Counsel;

                                    9



                    with a copy to:

                    Larry W. Sonsini
                    Wilson Sonsini Goodrich & Rosati
                    Professional Corporation
                    650 Page Mill Road
                    Palo Alto, CA 94306

               (b)  if to the Purchaser, to it at:

                    Microsoft Corporation
                    One Microsoft Way
                    Building 8
                    North Office 2211
                    Redmond, WA 98052
                    Attn: Attention:  Chief Financial Officer

with a copy addressed as set forth above but to the attention of Senior Vice
President, Law and Corporate Affairs, with a copy to:.

                    Richard B. Dodd 
                    Preston Gates & Ellis LLP
                    5000 Columbia Center
                    701 Fifth Avenue
                    Seattle, WA 98104-7078

All such notices and communications shall be effective when received by the
addressee.

          6.   GOVERNING LAW.  This Agreement shall be governed in all 
respects by the internal laws of the State of California as applied to 
contracts entered into solely between residents of, and to be performed 
entirely within, such state, and without reference to principles of conflicts 
of laws or choice of laws.

          7.   ENTIRE AGREEMENT; AMENDMENTS.  This Agreement constitutes the 
full and entire understanding and agreement between the parties with regard 
to the subject matter hereof and supersedes all prior agreements and 
understandings among the parties relating to the subject matter hereof.  
Neither this Agreement nor any term hereof may be amended, waived, discharged 
or terminated other than by a written instrument signed by the party against 
whom enforcement of any such amendment, waiver, discharge or termination is 
sought.

          8.   SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon 
and shall inure to the benefit of the parties hereto and their respective 
successors and assigns.

                                    10




          9.   SEVERABILITY.  If any term, provision, covenant or restriction 
of this Agreement is held by a court of competent jurisdiction to be invalid, 
void or unenforceable, the remainder of the terms, provisions, covenants and 
restriction of this Agreement shall remain in full force and effect and shall 
in no way be affected, impaired or invalidated.

          10.  TERMINATION OF COMPANY OBLIGATION.  All registration rights 
provided hereunder shall terminate upon the earlier to occur of (a) the fifth 
anniversary of the date of this Agreement or (b)  such time as, in the 
written opinion of counsel to the Company, the Purchaser is able to sell all 
of its Common Stock without registration under the Securities Act or any 
successor provision thereto during any single three-month period.

          11.  NO TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS.  The 
registration rights set forth in this Agreement shall not be transferable or 
assignable by the Purchaser, except to (i) any person or group approved in 
writing by the Company or (ii) to a corporation of which the Purchaser owns 
not less than 50% of the voting power entitled to be cast in the election of 
directors; or (iii) any person to whom Purchaser has satisfied the 
requirements of Section 8.1 (Right of First Refusal) of the Purchase 
Agreement and the Company has waived or failed to exercise its purchase 
rights; provided, however, that each transferee agrees in writing to be 
subject to all the terms and conditions of this Agreement and the Purchase 
Agreement.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement 
to be executed by their respective authorized officers as of the date set 
forth above.

                                   APPLE COMPUTER, INC.


                                   By:  /s/ John B. Douglas, III
                                      ---------------------------------------

                                   Name:    John B. Douglas, III
                                        -------------------------------------

                                   Title:   Senior Vice President
                                         ------------------------------------



                                   MICROSOFT CORPORATION


                                   By:  /s/ Greg Maffei
                                      ---------------------------------------

                                   Name:    Greg Maffei
                                        -------------------------------------

                                   Title:   Chief Financial Officer
                                         ------------------------------------


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