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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