Exhibit 10.A.55

 

APPLE COMPUTER, INC.

 

PERFORMANCE BONUS PLAN

 

1.               Purposes of the Plan. The Plan is intended to increase
shareholder value and the success of the Company by motivating key executives
(1) to perform to the best of their abilities, and (2) to achieve the Company’s
objectives. The Plan’s goals are to be achieved by providing such executives
with incentive awards based on the achievement of goals relating to the
performance of the Company or upon the achievement of objectively determinable
individual performance goals. The Plan is intended to permit the payment of
bonuses that may qualify as performance-based compensation under Code
section 162(m).

 

2.               Definitions.

 

(a)   “Annual Revenue” means the Company’s or a business unit’s net sales for
the Fiscal Year, determined in accordance with generally accepted accounting
principles.

 

(b)   “Award” means, with respect to each Participant, the award determined
pursuant to Section 8(a) below for a Performance Period. Each Award is
determined by a Payout Formula for a Performance Period, subject to the
Committee’s authority under Section 8(a) to eliminate or reduce the Award
otherwise payable.

 

(c)   “Base Salary” means as to any Performance Period, the Participant’s
annualized salary rate on the last day of the Performance Period. Such Base
Salary shall be before both (a) deductions for taxes or benefits, and
(b) deferrals of compensation pursuant to Company-sponsored plans.

 

(d)   “Board” means the Board of Directors of the Company.

 

(e)   “Cash Position” means the Company’s level of cash and cash equivalents.

 

(f)    “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)   “Committee” means the Compensation Committee of the Board, or a
sub-committee of the Compensation Committee, which shall, with respect to
payments hereunder intended to qualify as performance-based compensation under
Code Section 162(m), consist solely of two or more members of the Board who are
not employees of the Company and who otherwise qualify as “outside directors”
within the meaning of Section 162(m).

 

(h)   “Company” means Apple Computer, Inc. or any of its subsidiaries (as such
term is defined in Code Section 424(f)).

 

(i)    “Determination Date” means the latest possible date that will not
jeopardize a Target Award or Award’s qualification as Performance-Based
Compensation.

 

(j)    “Earnings Per Share” means as to any Fiscal Year, the Company’s or a
business unit’s Net Income, divided by a weighted average number of common
shares outstanding and dilutive common equivalent shares deemed outstanding,
determined in accordance with generally accepted accounting principles.

 

(k)   “Fiscal Year” means a fiscal year of the Company.

 

(l)    “Individual Performance Objective” means any individual Company
business-related objective that is objectively determinable within the meaning
of Code Section 162(m) and the Treasury Regulations promulgated thereunder.
Individual Performance Objectives shall include, but not be limited to,
improvement in customer satisfaction, opening of additional retail stores, and
similar

 

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objectively determinable performance objectives related to the Participant’s job
responsibilities with the Company.

 

(m)  “Maximum Award” means as to any Participant for any Performance Period,
$5 million.

 

(n)   “Net Income” means as to any Fiscal Year, the income after taxes of the
Company for the Fiscal Year determined in accordance with generally accepted
accounting principles.

 

(o)   “Operating Cash Flow” means the Company’s or a business unit’s sum of Net
Income plus depreciation and amortization less capital expenditures plus changes
in working capital comprised of accounts receivable, inventories, other current
assets, trade accounts payable, accrued expenses, product warranty, advance
payments from customers and long-term accrued expenses, determined in accordance
with generally accepted accounting principles.

 

(p)   “Operating Income” means the Company’s or a business unit’s income from
operations determined in accordance with generally accepted accounting
principles.

 

(q)   “Participant” means an eligible executive or key employee of the Company
participating in the Plan for a Performance Period.

 

(r)    “Payout Formula” means as to any Performance Period, the formula or
payout matrix established by the Committee pursuant to Section 7 in order to
determine the Awards (if any) to be paid to Participants. The formula or matrix
may differ from Participant to Participant.

 

(s)   “Performance-Based Compensation” means compensation that is intended to
qualify as “performance-based compensation” within the meaning of
Section 162(m).

 

(t)    “Performance Goals” means the goal(s) (or combined goal(s)) determined by
the Committee (in its discretion) to be applicable to a Participant with respect
to an Award. As determined by the Committee, the Performance Goals applicable to
an Award may provide for a targeted level or levels of achievement using one or
more of the following measures: (a) Annual Revenue, (b) Cash Position,
(c) Earnings Per Share, (d) Net Income, (e) Operating Cash Flow, (f) Operating
Income, (g) Return on Assets, (h) Return on Equity, (i) Return on Sales,
(j) Total Stockholder Return, and (k) Individual Performance Objectives. The
Performance Goals may differ from Participant to Participant and from Award to
Award. The Committee shall appropriately adjust any evaluation of performance
under a Performance Goal to exclude (i) any extraordinary non-recurring items as
described in Accounting Principles Board Opinion No. 30 and/or in management’s
discussion and analysis of financial conditions and results of operations
appearing in the Company’s annual report to shareholders for the applicable
year, or (ii) the effect of any changes in accounting principles affecting the
Company’s or a business units’ reported results.

 

(u)   “Performance Period” means any Fiscal Year or such other period longer
than a Fiscal Year but not in excess of three Fiscal Years, as determined by the
Committee in its sole discretion.

 

(v)   “Plan” means this Performance Bonus Plan.

 

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

 

(x)    “Return on Assets” means the percentage equal to the Company’s or a
business unit’s Operating Income before incentive compensation, divided by
average net Company or business unit, as applicable, assets, determined in
accordance with generally accepted accounting principles.

 

(y)   “Return on Equity” means the percentage equal to the Company’s Net Income
divided by average shareholder’s equity, determined in accordance with generally
accepted accounting principles.

 

(z)    “Return on Sales” means the percentage equal to the Company’s or a
business unit’s Operating Income before incentive compensation, divided by the
Company’s or the business unit’s, as applicable, revenue, determined in
accordance with generally accepted accounting principles.

 

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(aa) “Section 162(m)” means Section 162(m) of the Code, or any successor to
Section 162(m), as that Section may be interpreted from time to time by the
Internal Revenue Service, whether by regulation, notice or otherwise.

 

(bb) “Target Award” means the target award payable under the Plan to a
Participant for the Performance Period, expressed as a percentage of his or her
Base Salary or a specific dollar amount, as determined by the Committee in
accordance with Section 6.

 

(cc) “Total Stockholder Return” means the total return (change in share price
plus reinvestment of any dividends) of a share of the Company’s common stock.

 

3.               Plan Administration.

 

(a)   The Committee shall be responsible for the general administration and
interpretation of the Plan and for carrying out its provisions. Subject to the
requirements for qualifying compensation as Performance-Based Compensation, the
Committee may delegate specific administrative tasks to Company employees or
others as appropriate for proper administration of the Plan. Subject to the
limitations on Committee discretion imposed under Section 162(m), the Committee
shall have such powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following powers and duties, but
subject to the terms of the Plan:

 

(i)    discretionary authority to construe and interpret the terms of the Plan,
and to determine eligibility, Awards and the amount, manner and time of payment
of any Awards hereunder;

 

(ii)   to prescribe forms and procedures for purposes of Plan participation and
distribution of Awards; and

 

(iii)  to adopt rules, regulations and bylaws and to take such actions as it
deems necessary or desirable for the proper administration of the Plan.

 

(b)   Any rule or decision by the Committee that is not inconsistent with the
provisions of the Plan shall be conclusive and binding on all persons, and shall
be given the maximum deference permitted by law.

 

4.               Eligibility. The employees eligible to participate in the Plan
for a given Performance Period shall be executive officers and other key
employees of the Company who are designated by the Committee in its sole
discretion. No person shall be automatically entitled to participate in the
Plan.

 

5.               Performance Goal Determination. The Committee, in its sole
discretion, shall establish the Performance Goals for each Participant for the
Performance Period. Such Performance Goals shall be set forth in writing prior
to the Determination Date.

 

6.               Target Award Determination. The Committee, in its sole
discretion, shall establish a Target Award for each Participant. Each
Participant’s Target Award shall be determined by the Committee in its sole
discretion, and each Target Award shall be set forth in writing prior to the
Determination Date.

 

7.               Determination of Payout Formula or Formulae. On or prior to the
Determination Date, the Committee, in its sole discretion, shall establish a
Payout Formula or Formulae for purposes of determining the Award (if any)
payable to each Participant. Each Payout Formula shall (a) be set forth in
writing prior to the Determination Date, (b) be based on a comparison of actual
performance to the Performance Goals, (c) provide for the payment of a
Participant’s Target Award if the Performance Goals for the Performance Period
are achieved, and (d) provide for an Award greater than or less than the
Participant’s Target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Goals. Notwithstanding the
preceding, in no event shall a Participant’s Award for any Performance Period
exceed the Maximum Award.

 

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8.               Determination of Awards; Award Payment.

 

(a)   Determination and Certification. After the end of each Performance Period,
the Committee shall certify in writing (which may be by approval of the minutes
in which the certification was made) the extent to which the Performance Goals
applicable to each Participant for the Performance Period were achieved or
exceeded. The Award for each Participant shall be determined by applying the
Payout Formula to the level of actual performance that has been certified by the
Committee. Notwithstanding any contrary provision of the Plan, the Committee, in
its sole discretion, may eliminate or reduce the Award payable to any
Participant below that which otherwise would be payable under the Payout
Formula.

 

(b)   Right to Receive Payment. Each Award under the Plan shall be paid solely
from the general assets of the Company. Nothing in this Plan shall be construed
to create a trust or to establish or evidence any Participant’s claim of any
right to payment of an Award other than as an unsecured general creditor with
respect to any payment to which he or she may be entitled.

 

(c)   Form of Distributions. The Company shall distribute all Awards to the
Participant in cash.

 

(d)   Timing of Distributions. Subject to Section 8(e) below, the Company shall
distribute amounts payable to Participants as soon as is practicable following
the determination and written certification of the Award for a Performance
Period, but in no event later than 90 days after the end of the applicable
Performance Period.

 

(e)   Deferral. The Committee may defer payment of Awards, or any portion
thereof, to Covered Employees as the Committee, in its discretion, determines to
be necessary or desirable to preserve the deductibility of such amounts under
Section 162(m). In addition, the Committee, in its sole discretion, may permit a
Participant to defer receipt of the payment of cash that would otherwise be
delivered to a Participant under the Plan. Any such deferral elections shall be
subject to such rules and procedures as shall be determined by the Committee in
its sole discretion.

 

9.               Term of Plan. The Plan shall first apply to the Company’s 2005
Plan Year. The Plan shall terminate with respect to the 2005 Plan Year and all
subsequent Plan Years unless it is approved at the 2005 annual meeting of the
Company’s shareholders. Once approved by the Company’s shareholders, the Plan
shall continue until terminated under Section 10 of the Plan.

 

10.         Amendment and Termination of the Plan. The Committee may amend,
modify, suspend or terminate the Plan, in whole or in part, at any time,
including the adoption of amendments deemed necessary or desirable to correct
any defect or to supply omitted data or to reconcile any inconsistency in the
Plan or in any Award granted hereunder; provided, however, that no amendment,
alteration, suspension or discontinuation shall be made which would (i) impair
any payments to Participants made prior to such amendment, modification,
suspension or termination, unless the Committee has made a determination that
such amendment or modification is in the best interests of all persons to whom
Awards have theretofore been granted; provided further, however, that in no
event may such an amendment or modification result in an increase in the amount
of compensation payable pursuant to such Award or (ii) cause compensation that
is, or may become, payable hereunder to fail to qualify as Performance-Based
Compensation. To the extent necessary or advisable under applicable law,
including Section 162(m), Plan amendments shall be subject to shareholder
approval. At no time before the actual distribution of funds to Participants
under the Plan shall any Participant accrue any vested interest or right
whatsoever under the Plan except as otherwise stated in this Plan.

 

11.         Withholding. Distributions pursuant to this Plan shall be subject to
all applicable federal and state tax and withholding requirements.

 

12.         At-Will Employment. No statement in this Plan should be construed to
grant any employee an employment contract of fixed duration or any other
contractual rights, nor should this Plan be

 

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interpreted as creating an implied or an expressed contract of employment or any
other contractual rights between the Company and its employees. The employment
relationship between the Company and its employees is terminable at-will. This
means that an employee or the Company may terminate the employment relationship
at any time and for any reason or no reason.

 

13.         Successors. All obligations of the Company under the Plan, with
respect to awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business or assets of the Company.

 

14.         Indemnification. Each person who is or shall have been a member of
the Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from (a) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any award, and (b) from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid
by him or her in satisfaction of any judgment in any such claim, action, suit,
or proceeding against him or her, provided he or she shall give the Company an
opportunity, at its own expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under
any power that the Company may have to indemnify them or hold them harmless.

 

15.         Nonassignment. The rights of a Participant under this Plan shall not
be assignable or transferable by the Participant except by will or the laws of
intestacy.

 

16.         Governing Law. The Plan shall be governed by the laws of the State
of California.

 

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