EXHIBIT 10.44
ADOBE SYSTEMS INCORPORATED
[GOLD VERSION A]
________ ___, 1997
[Name]
[Address]
RETENTION AGREEMENT
Dear _______:
Adobe Systems Incorporated, a Delaware corporation (the "COMPANY"),
considers it essential to the best interests of its stockholders to take
reasonable steps to retain key management personnel. Further, the Board of
Directors of the Company (the "BOARD") recognizes that the uncertainty and
questions which might arise among management in the context of a change in
control of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined, therefore, that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in control
of the Company.
In order to induce you to remain in the employ of the Company, the
Company has determined to enter into this letter agreement (this "AGREEMENT")
which addresses the terms and conditions of your employment in the event of a
change in control of the Company. Capitalized words which are not otherwise
defined herein shall have the meanings assigned to such words in Section 7 of
this Agreement.
1. TERM OF EMPLOYMENT UNDER THE AGREEMENT. The term of your
employment under this Agreement shall commence on the Change in Control Date and
shall continue until the second anniversary of the Change in Control Date (the
"TERM").
2. EMPLOYMENT DURING THE TERM. During the Term, the following
terms and conditions shall apply to your employment with the Company:
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(a) TITLES; REPORTING AND DUTIES. Your position, titles, nature
and status of responsibilities and reporting obligations shall be no less
favorable to you than those that you enjoyed immediately prior to the Change in
Control Date.
(b) SALARY AND BONUS. Your base salary and annual bonus
opportunity may not be reduced, and your base salary shall be periodically
reviewed and increased in the manner commensurate with increases awarded to
other similarly situated executives of the Company.
(c) INCENTIVE COMPENSATION. You shall be eligible to participate
in each long-term incentive plan or arrangement established by the Company for
its executive employees at your level of seniority (excluding the Investment
Partnership, except to the extent you hold Restricted Units) in accordance with
the terms and provisions of such plan or arrangement and at a level consistent
with the Company's practices applicable to you prior to the Change in Control
Date.
(d) BENEFITS. You shall be eligible to participate in all
pension, welfare and fringe benefit plans and arrangements that the Company
provides to its executive employees in accordance with the terms of such plans
and arrangements, which shall be no less favorable to you, in the aggregate,
than the terms and provisions available to other executive employees of the
Company.
(e) LOCATION. You will continue to be employed at a business
location in the same metropolitan area in which you were employed prior to the
Change in Control Date and the amount of time that you are required to travel
for business purposes will not be increased in any significant respect from the
amount of business travel required of you prior to the Change in Control Date.
3. INVOLUNTARY TERMINATION DURING THE TERM.
(a) CASH SEVERANCE PAYMENT. In the event of your Involuntary
Termination during the Term, the Company shall pay you within five (5) days of
the date of such Involuntary Termination the full amount of any earned but
unpaid base salary through the Date of Termination at the rate in effect at the
time of the Notice of Termination, plus a cash payment (calculated on the basis
of your Reference Salary) for all unused vacation time which you may have
accrued as of the Date of Termination. The Company shall also pay you within
five (5) days of the Date of Termination a pro rata portion of the annual bonus
for the year in which your Involuntary Termination occurs, calculated on the
basis of your target bonus for that year and on the assumption that all
performance targets have been or will be achieved. In addition, the Company
shall pay you in a cash lump sum, within eight (8) days following the date of
your execution of the release described in the last sentence of this Section
3(a) (or on
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the Date of Termination, if later), an amount (the "SEVERANCE PAYMENT") equal
to the product of (i) the sum of your Reference Salary and your Reference
Bonus, multiplied by (ii) two (2) plus one twelfth (1/12th) for each of your
completed years of service with the Company (not in excess of twelve (12))
(the number determined in accordance with the clause (ii) being hereinafter
referred to as the "SEVERANCE MULTIPLE"). The Severance Payment shall be in
lieu of any other cash severance payments which you are entitled to receive
under any other severance pay plan or arrangement sponsored by the Company
and its subsidiaries.
(b) VESTING AND EXERCISE OF EQUITY AWARDS AND RESTRICTED UNITS.
Notwithstanding anything to the contrary contained in an applicable Equity Award
or Restricted Unit agreement, all Equity Awards granted to you under the Equity
Plans (except performance share unit awards, which shall continue to be governed
by their current terms) shall vest in full and become exercisable, and all
Restricted Units granted to you under the Investment Partnership shall vest in
full, upon your Involuntary Termination during the Term. Anything in this
Agreement to the contrary notwithstanding, in no event shall the vesting and
exercisability provisions applicable to you under the terms of your Equity
Awards or Restricted Units be less favorable to you than the terms and
provisions of such awards in effect on the date hereof.
(c) BENEFITS CONTINUATION. In the event of your Involuntary
Termination during the Term, you and your eligible dependents shall continue to
be eligible to participate during the Benefit Continuation Period (as
hereinafter defined) in the medical, dental, health, life and other fringe
benefit plans and arrangements applicable to you immediately prior to your
Involuntary Termination on the same terms and conditions (including the level of
your contributions) in effect for you and your dependents immediately prior to
such Involuntary Termination. For purposes of the previous sentence, "BENEFIT
CONTINUATION PERIOD" means the period beginning on the Date of Termination and
continuing for a number of years (and fractions of years) equal to the Severance
Multiple.
(d) DATE AND NOTICE OF TERMINATION. Any termination of your
employment by the Company or by you during the Term shall be communicated by a
notice of termination to the other party hereto (the "NOTICE OF TERMINATION").
The Notice of Termination shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. The date of your termination of employment
with the Company and its subsidiaries (the "DATE OF TERMINATION") shall be
determined as follows: (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), (ii) if your employment is terminated by the Company in an
Involuntary Termination, five (5) days after the date the Notice of Termination
is received by you and (iii) if your employment is terminated by the Company for
Cause, the
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later of the date specified in the Notice of Termination or ten (10) days
following the date such notice is received by you. If the basis of your
Involuntary Termination is your resignation for Good Reason, the Date of
Termination shall be ten (10) days after the date your Notice of Termination
is received by the Company. The Date of Termination for a resignation of
employment other than for Good Reason shall be the date set forth in the
applicable notice, which shall be no earlier than ten (10) days after the
date such notice is received by the Company.
(e) NO MITIGATION OR OFFSET. You shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by you as
the result of employment by another employer or by pension benefits paid by the
Company or another employer after the Date of Termination or otherwise.
4. LIMITATION ON PAYMENTS. In the event that it is determined
by the Accounting Firm that any amount payable to you under this Agreement,
alone or when aggregated with any other amount payable or benefit provided to
you pursuant to any other plan or arrangement of the Company, would constitute
an "excess parachute payment" within the meaning of Section 280G of the Code,
then the aggregate present value of all such payments and benefits shall be
reduced to the amount, expressed as a present value, which, as determined by the
Accounting Firm, maximizes the aggregate present value of the payments without
causing any payment to be nondeductible by the Company under Section 280G of the
Code.
5. LEGAL FEES AND EXPENSES. The Company shall pay or reimburse
you for all costs and expenses (including, without limitation, court costs and
reasonable legal fees and expenses which reflect common practice with respect to
the matters involved) incurred by you as a result of any claim, action or
proceeding (i) arising out of your termination of employment during the Term,
(ii) contesting, disputing or enforcing any right, benefits or obligations under
this Agreement or (iii) arising out of or challenging the validity, advisability
or enforceability of this Agreement or any provision thereof. The payments or
reimbursements provided for herein shall be paid by the Company promptly (but in
no event more than five (5) business days) following receipt of a written
request for payment or reimbursement, as the case may be.
6. SUCCESSORS; BINDING AGREEMENT.
(a) ASSUMPTION BY SUCCESSOR. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would be
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required to perform it if no such succession had taken place; PROVIDED,
HOWEVER, that no such assumption shall relieve the Company of its obligations
hereunder. As used in this Agreement, the "Company" shall mean the Company
as hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law or otherwise.
(b) ENFORCEABILITY; BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of you (and your personal representatives
and heirs) and the Company and any organization which succeeds to substantially
all of the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of the
Company or otherwise, including, without limitation, as a result of a Change in
Control or by operation of law. This Agreement shall inure to the benefit of
and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. DEFINITIONS. For purposes of this Agreement, the following
capitalized words shall have the meanings set forth below:
"ACCOUNTING FIRM" shall mean KPMG Peat Marwick LLP or, if such firm
is unable or unwilling to perform such calculations, such other national
accounting firm as shall be designated by agreement between you and the Company.
"CAUSE" shall mean a termination of your employment during the Term
which is a result of (i) your felony conviction, (ii) your willful disclosure of
material trade secrets or other material confidential information related to the
business of the Company and its subsidiaries or (iii) your willful and continued
failure substantially to perform your same duties with the Company as in
existence prior to the Change in Control (other than any such failure resulting
from your incapacity due to physical or mental illness or any actual or
anticipated failure resulting from a resignation by you for Good Reason) after a
written demand for substantial performance is delivered to you by the Board,
which demand identifies the specific actions which the Board believes constitute
willful and continued failure substantially to perform your duties, and which
performance is not substantially corrected by you within ten (10) days of
receipt of such demand. For purposes of the previous sentence, no act or
failure to act on your part shall be deemed "willful" unless done, or omitted to
be done, by you with willful malfeasance or gross negligence and without
reasonable belief that your action or omission was not materially adverse to the
best interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
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not less than three-fourths (3/4ths) of the entire membership of the Board at
a meeting of the Board called and held for such purpose (after reasonable
notice to you and an opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith opinion of the Board
you were guilty of conduct set forth above in clause (i), (ii) or (iii) of
the first sentence of this section and specifying the particulars thereof in
detail.
"CHANGE IN CONTROL" shall mean a change in control of the Company
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; PROVIDED,
HOWEVER, that, anything in this Agreement to the contrary notwithstanding, a
Change in Control shall be deemed to have occurred if:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act, is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at
the beginning of such period constituted the Board and any new directors,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three-fourths (3/4ths) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "INCUMBENT DIRECTORS"), cease for any reason to
constitute a majority thereof;
(iii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company or a subsidiary of the Company
(a "TRANSACTION"), in each case with respect to which the stockholders of
the Company immediately prior to such Transaction do not, immediately after
the Transaction, own securities representing more than 50% of the combined
voting power of the Company, a parent of the Company or other corporation
resulting from such Transaction (counting, for this purpose, only those
securities held by the Company's stockholders immediately after the
Transaction that were received in exchange for, or represent their
continuing ownership of, securities of the Company held by them immediately
prior to the Transaction);
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(iv) all or substantially all of the assets of the Company are
sold, liquidated or distributed; or
(v) there is a "change in control" or a "change in the effective
control" of the Company within the meaning of Section 280G of the Code and
the Regulations.
"CHANGE IN CONTROL DATE" shall mean the date on which the Change in
Control occurs. Notwithstanding the first sentence of this definition, if your
employment with the Company terminates prior to the Change in Control Date and
it is reasonably demonstrated that your termination of employment (i) was at the
request of the third party who has taken steps reasonably calculated to effect
the Change in Control or (ii) otherwise arose in connection with or in
anticipation of the Change in Control, then "Change in Control Date" shall mean
the date immediately prior to the date of your termination of employment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor provisions thereto.
"COMMON STOCK" shall mean the common stock of the Company.
"DISABILITY" shall mean (i) your incapacity due to physical or
mental illness which causes you to be absent from the full-time performance of
your duties with the Company for six (6) consecutive months and (ii) your
failure to return to full-time performance of your duties for the Company within
thirty (30) days after written Notice of Termination due to Disability is given
to you. Any question as to the existence of your Disability upon which you and
the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, such
selection shall be made by any adult member of your immediate family), and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement.
"EQUITY AWARDS" shall mean options, restricted stock, bonus stock or
other grants or awards which consist of, or relate to, equity securities of the
Company and which have been granted to you under the Equity Plans. For purposes
of this Agreement, Equity Awards shall also include any securities acquired upon
the exercise of an option, warrant or similar right that constitutes an Equity
Award.
"EQUITY PLANS" shall mean the Adobe Systems Incorporated 1994 Stock
Option Plan, the Adobe Systems Incorporated 1994 Performance and Restricted
Stock Plan and any other equity-based incentive plan or arrangement adopted by
the Company, but shall not include the Adobe Systems Incorporated 1997 Employee
Stock Purchase Plan.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any successor provisions thereto.
"GOOD REASON" shall mean a resignation of your employment during the
Term as a result of any of the following:
(i) A meaningful and detrimental alteration in your position,
your titles, or the nature or status of your responsibilities (including
your reporting responsibilities) from those in effect immediately prior to
the Change in Control Date. For purposes of this clause (i), a meaningful
and detrimental alteration shall exist if, on or after the Change in
Control Date, without limitation, any of the following occurs: (A) at any
time you do not hold the position of the [INSERT TITLE/DUTIES] of the
Company (or the surviving entity resulting from the merger or consolidation
(through one or more related transactions) of the Company with another
entity (the "SURVIVING ENTITY")); (B) at any time you do not hold the
position of the [INSERT TITLE/DUTIES] of any entity that beneficially owns
a majority of the voting stock of the Company (or the Surviving Entity) or
that has the power to elect a majority of the Board (or the board of
directors of the Surviving Entity) (the "CONTROLLING ENTITY"); (C) at any
time you do not report directly to the [chief executive officer] of the
Company (or the Surviving Entity) and to the [chief executive officer] of
any Controlling Entity; (D) at any time you do not have regular direct
access to the [chief executive officer] of the Company (or the Surviving
Entity) and to the [chief executive officer] of any Controlling Entity or
(E) any similar adverse change on or after the Change in Control Date in
your title, position or reporting responsibilities;
(ii) A reduction by the Company in your annual base salary as in
effect immediately prior to the Change in Control Date or as the same may
be increased from time to time thereafter; a failure by the Company to
increase your salary at a rate commensurate with that of other key
executives of the Company; or a reduction in the target incentive
opportunity percentage used to determine your Target Annual Bonus below the
percentage in effect for you prior to the Change in Control Date;
(iii) The relocation of the office of the Company where you are
employed immediately prior to the Change in Control Date (the "CIC
LOCATION") to a location which is more than thirty five (35) miles away
from the CIC Location or the Company's requiring you to be based more than
thirty five (35) miles away from the CIC Location (except for required
travel on the Company's business to an extent substantially consistent with
your customary business travel obligations in the ordinary course of
business prior to the Change in Control Date);
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(iv) The failure by the Company to continue in effect any
compensation plan in which you participated prior to the Change in Control
Date or made available to you after the Change in Control Date, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan in connection with the Change
in Control, or the failure by the Company to continue your participation
therein on at least as favorable a basis, both in terms of the amount of
benefits provided and the level of your participation relative to other
participants, as existed on the Change in Control Date;
(v) The failure by the Company to continue to provide you with
benefits at least as favorable in the aggregate to those enjoyed by you
under the Company's pension, savings, life insurance, medical, health and
accident, disability, and fringe benefit plans and programs in which you
were participating immediately prior to the Change in Control Date; or the
failure by the Company to provide you with the number of paid vacation days
to which you are entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in effect
immediately prior to the Change in Control;
(vi) The failure by the Company to pay or provide you any material
item of compensation or benefits promptly when due;
(vii) The failure of the Company to obtain an agreement reasonably
satisfactory to you from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6(a) hereof or, if the business for
which your services are principally performed is sold at any time after a
Change in Control, the failure of the Company to obtain such an agreement
from the purchaser of such business;
(viii) Any termination of your employment which is not effected
pursuant to the terms of this Agreement; or
(ix) A material breach by the Company of the provisions of this
Agreement;
PROVIDED, HOWEVER, that an event described above in clause (i), (ii), (iv), (v),
(vi) or (ix) shall not constitute Good Reason unless it is communicated by you
to the Company in writing and is not corrected by the Company in a manner which
is reasonably satisfactory to you (including full retroactive correction with
respect to any monetary matter) within 10 days of the Company's receipt of such
written notice from you.
"INVESTMENT PARTNERSHIP" shall mean Adobe Incentive Partners, L.P.
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"INVOLUNTARY TERMINATION" shall mean (i) your termination of
employment by the Company and its subsidiaries during the Term other than for
Cause, (ii) your resignation of employment with the Company and its subsidiaries
during the Term for Good Reason or (iii) the termination of your employment by
reason of Disability.
"REFERENCE BONUS" shall mean the greater of (i) the Target Annual
Bonus applicable to you for the year in which your Involuntary Termination
occurs and (ii) the highest Target Annual Bonus applicable to you in any of the
three years ending prior to the Change in Control Date.
"REFERENCE SALARY" shall mean the greater of (i) the annual rate of
your base salary from the Company and its subsidiaries in effect immediately
prior to the date of your Involuntary Termination and (ii) the annual rate of
your base salary from the Company in effect at any point during the three-year
period ending on the Change in Control Date.
"REGULATIONS" shall mean the proposed, temporary and final
regulations under Section 280G of the Code or any successor provision thereto.
"RESTRICTED UNITS" shall mean restricted Class B Units of limited
partnership interests in the Investment Partnership granted pursuant to a
Restricted Units Agreement.
"TARGET ANNUAL BONUS" shall mean an amount equal to your base salary
times your target incentive opportunity percentage under the Company's MBO Bonus
and Profit Sharing Plans (or any successor plans, if any, then in effect).
8. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Board of Directors, Adobe Systems Incorporated, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇, with a copy to the General Counsel of the Company, or
to you at the address set forth on the first page of this Agreement or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. MISCELLANEOUS.
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(a) AMENDMENTS, WAIVERS, ETC. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect to
the subject matter hereof, including, without limitation, the prior Severance
and Change of Control Agreement between you and the Company; PROVIDED, HOWEVER,
that, except as expressly set forth herein, this Agreement shall not supersede
the terms of Equity Awards or Restricted Units previously granted to you.
(b) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(c) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall
be construed as giving you any right to be retained in the employ of the Company
or shall affect the terms and conditions of your employment with the Company
prior to the commencement of the Term hereof.
(e) WITHHOLDING. Amounts paid to you hereunder shall be subject
to all applicable federal, state and local withholding taxes.
(f) SOURCE OF PAYMENTS. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
(g) HEADINGS. The headings contained in this Agreement are
intended solely for convenience of reference and shall not affect the rights of
the parties to this Agreement.
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(h) AMENDMENT. This Agreement may not be amended, modified or
terminated except pursuant to a written instrument executed by both parties
hereto.
(i) GOVERNING LAW. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
California applicable to contracts entered into and performed in such State.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
ADOBE SYSTEMS INCORPORATED
By:
---------------------------------
Name:
Title:
Agreed to as of this day of , 1997
--- -------
--------------------------------
[NAME]
[GOLD VERSION B]
________ ___, 1997
[Name]
[Address]
RETENTION AGREEMENT
Dear _______:
Adobe Systems Incorporated, a Delaware corporation (the "COMPANY"),
considers it essential to the best interests of its stockholders to take
reasonable steps to retain key management personnel. Further, the Board of
Directors of the Company (the "BOARD") recognizes that the uncertainty and
questions which might arise among management in the context of a change in
control of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined, therefore, that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in control
of the Company.
In order to induce you to remain in the employ of the Company, the
Company has determined to enter into this letter agreement (this "AGREEMENT")
which addresses the terms and conditions of your employment in the event of a
change in control of the Company. Capitalized words which are not otherwise
defined herein shall have the meanings assigned to such words in Section 7 of
this Agreement.
1. TERM OF EMPLOYMENT UNDER THE AGREEMENT. The term of your
employment under this Agreement shall commence on the Change in Control Date and
shall continue until the second anniversary of the Change in Control Date (the
"TERM").
2. EMPLOYMENT DURING THE TERM. During the Term, the following
terms and conditions shall apply to your employment with the Company:
(a) TITLES; REPORTING AND DUTIES. Your position, titles, nature
and status of responsibilities and reporting obligations shall be no less
favorable to you than those that you
enjoyed immediately prior to the Change in Control Date.
(b) SALARY AND BONUS. Your base salary and annual bonus
opportunity may not be reduced, and your base salary shall be periodically
reviewed and increased in the manner commensurate with increases awarded to
other similarly situated executives of the Company.
(c) INCENTIVE COMPENSATION. You shall be eligible to participate
in each long-term incentive plan or arrangement established by the Company for
its executive employees at your level of seniority (excluding the Investment
Partnership, except to the extent you hold Restricted Units) in accordance with
the terms and provisions of such plan or arrangement and at a level consistent
with the Company's practices applicable to you prior to the Change in Control
Date.
(d) BENEFITS. You shall be eligible to participate in all
pension, welfare and fringe benefit plans and arrangements that the Company
provides to its executive employees in accordance with the terms of such plans
and arrangements, which shall be no less favorable to you, in the aggregate,
than the terms and provisions available to other executive employees of the
Company.
(e) LOCATION. You will continue to be employed at a business
location in the same metropolitan area in which you were employed prior to the
Change in Control Date and the amount of time that you are required to travel
for business purposes will not be increased in any significant respect from the
amount of business travel required of you prior to the Change in Control Date.
3. INVOLUNTARY TERMINATION DURING THE TERM.
(a) CASH SEVERANCE PAYMENT. In the event of your Involuntary
Termination during the Term, the Company shall pay you within five (5) days of
the date of such Involuntary Termination the full amount of any earned but
unpaid base salary through the Date of Termination at the rate in effect at the
time of the Notice of Termination, plus a cash payment (calculated on the basis
of your Reference Salary) for all unused vacation time which you may have
accrued as of the Date of Termination. The Company shall also pay you within
five (5) days of the Date of Termination a pro rata portion of the annual bonus
for the year in which your Involuntary Termination occurs, calculated on the
basis of your target bonus for that year and on the assumption that all
performance targets have been or will be achieved. In addition, the Company
shall pay you in a cash lump sum, within eight (8) days following the date of
your execution of the release described in the last sentence of this Section
3(a) (or on the Date of Termination, if later), an amount (the "SEVERANCE
PAYMENT") equal to the product of (i) the sum of your Reference Salary and your
Reference Bonus, multiplied by (ii) two (2) plus one twelfth (1/12th) for each
of your completed years of service with the Company (not in excess of twelve
(12)) (the number determined in accordance with the clause (ii) being
hereinafter referred to as the "SEVERANCE MULTIPLE"). The Severance Payment
shall be in lieu of any other cash severance payments which you are entitled to
receive under any other severance pay plan or arrangement sponsored by the
Company and its subsidiaries.
(b) VESTING AND EXERCISE OF EQUITY AWARDS AND RESTRICTED UNITS.
Notwithstanding anything to the contrary contained in an applicable Equity Award
or Restricted Unit agreement, all Equity Awards granted to you under the Equity
Plans (except performance share unit awards, which shall continue to be governed
by their current terms) shall vest in full and become exercisable, and all
Restricted Units granted to you under the Investment Partnership shall vest in
full, upon your Involuntary Termination during the Term. Anything in this
Agreement to the contrary notwithstanding, in no event shall the vesting and
exercisability provisions applicable to you under the terms of your Equity
Awards or Restricted Units be less favorable to you than the terms and
provisions of such awards in effect on the date hereof.
(c) BENEFITS CONTINUATION. In the event of your Involuntary
Termination during the Term, you and your eligible dependents shall continue to
be eligible to participate during the Benefit Continuation Period (as
hereinafter defined) in the medical, dental, health, life and other fringe
benefit plans and arrangements applicable to you immediately prior to your
Involuntary Termination on the same terms and conditions (including the level of
your contributions) in effect for you and your dependents immediately prior to
such Involuntary Termination. For purposes of the previous sentence, "BENEFIT
CONTINUATION PERIOD" means the period beginning on the Date of Termination and
continuing for a number of years (and fractions of years) equal to the Severance
Multiple.
(d) DATE AND NOTICE OF TERMINATION. Any termination of your
employment by the Company or by you during the Term shall be communicated by a
notice of termination to the other party hereto (the "NOTICE OF TERMINATION").
The Notice of Termination shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. The date of your termination of employment
with the Company and its subsidiaries (the "DATE OF TERMINATION") shall be
determined as follows: (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), (ii) if your employment is terminated by the Company in an
Involuntary Termination, five (5) days after the date the Notice of Termination
is received by you and (iii) if your employment is terminated by the Company for
Cause, the later of the date specified in the Notice of Termination or ten (10)
days following the date such notice is received by you. If the basis of your
Involuntary Termination is your resignation for Good Reason, the Date of
Termination shall be ten (10) days after the date your Notice of Termination is
received by the Company. The Date of Termination for a resignation of
employment other than for Good Reason shall be the date set forth in the
applicable notice, which shall be no earlier than ten (10) days after the date
such notice is received by the
Company.
(e) NO MITIGATION OR OFFSET. You shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by you as
the result of employment by another employer or by pension benefits paid by the
Company or another employer after the Date of Termination or otherwise.
4. LIMITATION ON PAYMENTS. In the event that it is determined
by the Accounting Firm that any amount payable to you under this Agreement,
alone or when aggregated with any other amount payable or benefit provided to
you pursuant to any other plan or arrangement of the Company, would constitute
an "excess parachute payment" within the meaning of Section 280G of the Code,
then the aggregate present value of all such payments and benefits shall be
reduced to the amount, expressed as a present value, which, as determined by the
Accounting Firm, maximizes the aggregate present value of the payments without
causing any payment to be nondeductible by the Company under Section 280G of the
Code.
5. LEGAL FEES AND EXPENSES. The Company shall pay or reimburse
you for all costs and expenses (including, without limitation, court costs and
reasonable legal fees and expenses which reflect common practice with respect to
the matters involved) incurred by you as a result of any claim, action or
proceeding (i) arising out of your termination of employment during the Term,
(ii) contesting, disputing or enforcing any right, benefits or obligations under
this Agreement or (iii) arising out of or challenging the validity, advisability
or enforceability of this Agreement or any provision thereof. The payments or
reimbursements provided for herein shall be paid by the Company promptly (but in
no event more than five (5) business days) following receipt of a written
request for payment or reimbursement, as the case may be.
6. SUCCESSORS; BINDING AGREEMENT.
(a) ASSUMPTION BY SUCCESSOR. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place; PROVIDED, HOWEVER, that no such assumption
shall relieve the Company of its obligations hereunder. As used in this
Agreement, the "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
(b) ENFORCEABILITY; BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of you (and your personal representatives
and heirs) and the Company and
any organization which succeeds to substantially all of the business or
assets of the Company, whether by means of merger, consolidation, acquisition
of all or substantially all of the assets of the Company or otherwise,
including, without limitation, as a result of a Change in Control or by
operation of law. This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
you should die while any amount would still be payable to you hereunder if
you had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to your
estate.
7. DEFINITIONS. For purposes of this Agreement, the following
capitalized words shall have the meanings set forth below:
"ACCOUNTING FIRM" shall mean KPMG Peat Marwick LLP or, if such firm
is unable or unwilling to perform such calculations, such other national
accounting firm as shall be designated by agreement between you and the Company.
"CAUSE" shall mean a termination of your employment during the Term
which is a result of (i) your felony conviction, (ii) your willful disclosure of
material trade secrets or other material confidential information related to the
business of the Company and its subsidiaries or (iii) your willful and continued
failure substantially to perform your same duties with the Company as in
existence prior to the Change in Control (other than any such failure resulting
from your incapacity due to physical or mental illness or any actual or
anticipated failure resulting from a resignation by you for Good Reason) after a
written demand for substantial performance is delivered to you by the Board,
which demand identifies the specific actions which the Board believes constitute
willful and continued failure substantially to perform your duties, and which
performance is not substantially corrected by you within ten (10) days of
receipt of such demand. For purposes of the previous sentence, no act or
failure to act on your part shall be deemed "willful" unless done, or omitted to
be done, by you with willful malfeasance or gross negligence and without
reasonable belief that your action or omission was not materially adverse to the
best interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-fourths (3/4ths) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
to you and an opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the Board you were
guilty of conduct set forth above in clause (i), (ii) or (iii) of the first
sentence of this section and specifying the particulars thereof in detail.
"CHANGE IN CONTROL" shall mean a change in control of the Company
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; PROVIDED,
HOWEVER, that, anything in this Agreement to the contrary
notwithstanding, a Change in Control shall be deemed to have occurred if:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act, is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at
the beginning of such period constituted the Board and any new directors,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three-fourths (3/4ths) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "INCUMBENT DIRECTORS"), cease for any reason to
constitute a majority thereof;
(iii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company or a subsidiary of the Company
(a "TRANSACTION"), in each case with respect to which the stockholders of
the Company immediately prior to such Transaction do not, immediately after
the Transaction, own securities representing more than 50% of the combined
voting power of the Company, a parent of the Company or other corporation
resulting from such Transaction (counting, for this purpose, only those
securities held by the Company's stockholders immediately after the
Transaction that were received in exchange for, or represent their
continuing ownership of, securities of the Company held by them immediately
prior to the Transaction);
(iv) all or substantially all of the assets of the Company are
sold, liquidated or distributed; or
(v) there is a "change in control" or a "change in the effective
control" of the Company within the meaning of Section 280G of the Code and
the Regulations.
"CHANGE IN CONTROL DATE" shall mean the date on which the Change in
Control occurs. Notwithstanding the first sentence of this definition, if your
employment with the Company terminates prior to the Change in Control Date and
it is reasonably demonstrated that your termination of employment (i) was at the
request of the third party who has taken steps reasonably calculated to effect
the Change in Control or (ii) otherwise arose in connection with or in
anticipation of the Change in Control, then "Change in Control Date" shall mean
the date immediately prior to the date of your termination of employment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor provisions thereto.
"COMMON STOCK" shall mean the common stock of the Company.
"DISABILITY" shall mean (i) your incapacity due to physical or
mental illness which causes you to be absent from the full-time performance of
your duties with the Company for six (6) consecutive months and (ii) your
failure to return to full-time performance of your duties for the Company within
thirty (30) days after written Notice of Termination due to Disability is given
to you. Any question as to the existence of your Disability upon which you and
the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, such
selection shall be made by any adult member of your immediate family), and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement.
"EQUITY AWARDS" shall mean options, restricted stock, bonus stock or
other grants or awards which consist of, or relate to, equity securities of the
Company and which have been granted to you under the Equity Plans. For purposes
of this Agreement, Equity Awards shall also include any securities acquired upon
the exercise of an option, warrant or similar right that constitutes an Equity
Award.
"EQUITY PLANS" shall mean the Adobe Systems Incorporated 1994 Stock
Option Plan, the Adobe Systems Incorporated 1994 Performance and Restricted
Stock Plan and any other equity-based incentive plan or arrangement adopted by
the Company, but shall not include the Adobe Systems Incorporated 1997 Employee
Stock Purchase Plan.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any successor provisions thereto.
"GOOD REASON" shall mean a resignation of your employment during the
Term as a result of any of the following:
(i) A meaningful and detrimental alteration in your position,
your titles, or the nature or status of your responsibilities (including
your reporting responsibilities) from those in effect immediately prior to
the Change in Control Date.
(ii) A reduction by the Company in your annual base salary as in
effect immediately prior to the Change in Control Date or as the same may
be increased from time to time thereafter; a failure by the Company to
increase your salary at a rate commensurate with that of other key
executives of the Company; or a reduction in the target incentive
opportunity percentage used to determine your Target Annual Bonus below the
percentage in effect for you prior to the Change in Control Date;
(iii) The relocation of the office of the Company where you are
employed immediately prior to the Change in Control Date (the "CIC
LOCATION") to a location which is more than thirty five (35) miles away
from the CIC Location or the Company's requiring you to be based more than
thirty five (35) miles away from the CIC Location (except for required
travel on the Company's business to an extent substantially consistent with
your customary business travel obligations in the ordinary course of
business prior to the Change in Control Date);
(iv) The failure by the Company to continue in effect any
compensation plan in which you participated prior to the Change in Control
Date or made available to you after the Change in Control Date, unless an
equitable arrangement (embodied in an ongoing substitute or alternative
plan) has been made with respect to such plan in connection with the Change
in Control, or the failure by the Company to continue your participation
therein on at least as favorable a basis, both in terms of the amount of
benefits provided and the level of your participation relative to other
participants, as existed on the Change in Control Date;
(v) The failure by the Company to continue to provide you with
benefits at least as favorable in the aggregate to those enjoyed by you
under the Company's pension, savings, life insurance, medical, health and
accident, disability, and fringe benefit plans and programs in which you
were participating immediately prior to the Change in Control Date; or the
failure by the Company to provide you with the number of paid vacation days
to which you are entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in effect
immediately prior to the Change in Control;
(vi) The failure by the Company to pay or provide you any material
item of compensation or benefits promptly when due;
(vii) The failure of the Company to obtain an agreement reasonably
satisfactory to you from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6(a) hereof or, if the business for
which your services are principally performed is sold at any time after a
Change in Control, the failure of the Company to obtain such an agreement
from the purchaser of such business;
(viii) Any termination of your employment which is not effected
pursuant to the terms of this Agreement; or
(ix) A material breach by the Company of the provisions of this
Agreement;
PROVIDED, HOWEVER, that an event described above in clause (i), (ii), (iv), (v),
(vi) or (ix) shall not constitute Good Reason unless it is communicated by you
to the Company in writing and is not corrected by the Company in a manner which
is reasonably satisfactory to you (including
full retroactive correction with respect to any monetary matter) within 10
days of the Company's receipt of such written notice from you.
"INVESTMENT PARTNERSHIP" shall mean Adobe Incentive Partners, L.P.
"INVOLUNTARY TERMINATION" shall mean (i) your termination of
employment by the Company and its subsidiaries during the Term other than for
Cause, (ii) your resignation of employment with the Company and its subsidiaries
during the Term for Good Reason or (iii) the termination of your employment by
reason of Disability.
"REFERENCE BONUS" shall mean the greater of (i) the Target Annual
Bonus applicable to you for the year in which your Involuntary Termination
occurs and (ii) the highest Target Annual Bonus applicable to you in any of the
three years ending prior to the Change in Control Date.
"REFERENCE SALARY" shall mean the greater of (i) the annual rate of
your base salary from the Company and its subsidiaries in effect immediately
prior to the date of your Involuntary Termination and (ii) the annual rate of
your base salary from the Company in effect at any point during the three-year
period ending on the Change in Control Date.
"REGULATIONS" shall mean the proposed, temporary and final
regulations under Section 280G of the Code or any successor provision thereto.
"RESTRICTED UNITS" shall mean restricted Class B Units of limited
partnership interests in the Investment Partnership granted pursuant to a
Restricted Units Agreement.
"TARGET ANNUAL BONUS" shall mean an amount equal to your base salary
times your target incentive opportunity percentage under the Company's MBO Bonus
and Profit Sharing Plans (or any successor plans, if any, then in effect).
8. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Board of Directors, Adobe Systems Incorporated, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇, with a copy to the General Counsel of the Company, or
to you at the address set forth on the first page of this Agreement or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. MISCELLANEOUS.
(a) AMENDMENTS, WAIVERS, ETC. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in
writing. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect
to the subject matter hereof, including, without limitation, the prior
Severance and Change of Control Agreement between you and the Company;
PROVIDED, HOWEVER, that, except as expressly set forth herein, this Agreement
shall not supersede the terms of Equity Awards or Restricted Units previously
granted to you.
(b) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(c) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall
be construed as giving you any right to be retained in the employ of the Company
or shall affect the terms and conditions of your employment with the Company
prior to the commencement of the Term hereof.
(e) WITHHOLDING. Amounts paid to you hereunder shall be subject
to all applicable federal, state and local withholding taxes.
(f) SOURCE OF PAYMENTS. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
(g) HEADINGS. The headings contained in this Agreement are
intended solely for convenience of reference and shall not affect the rights of
the parties to this Agreement.
(h) AMENDMENT. This Agreement may not be amended, modified or
terminated except pursuant to a written instrument executed by both parties
hereto.
(i) GOVERNING LAW. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
California
applicable to contracts entered into and performed in such State.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
ADOBE SYSTEMS INCORPORATED
By:
Name:
Title:
Agreed to as of this day of , 1997
--- -------
---------------------------------
[NAME]
ADOBE SYSTEMS INCORPORATED
[PLATINUM VERSION]
________ ___, 1997
[Name]
[Address]
RETENTION AGREEMENT
Dear _______:
Adobe Systems Incorporated, a Delaware corporation (the "COMPANY"),
considers it essential to the best interests of its stockholders to take
reasonable steps to retain key management personnel. Further, the Board of
Directors of the Company (the "BOARD") recognizes that the uncertainty and
questions which might arise among management in the context of a change in
control of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.
The Board has determined, therefore, that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company and its subsidiaries, including
yourself, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from any possible change in control
of the Company.
In order to induce you to remain in the employ of the Company, the
Company has determined to enter into this letter agreement (this "AGREEMENT")
which addresses the terms and conditions of your employment in the event of a
change in control of the Company. Capitalized words which are not otherwise
defined herein shall have the meanings assigned to such words in Section 7 of
this Agreement.
1. TERM OF EMPLOYMENT UNDER THE AGREEMENT. The term of your
employment under this Agreement shall commence on the Change in Control Date and
shall continue until the second anniversary of the Change in Control Date (the
"TERM").
2. EMPLOYMENT DURING THE TERM. During the Term, the following
terms and conditions shall apply to your employment with the Company:
2
(a) TITLES; REPORTING AND DUTIES. Your position, titles, nature
and status of responsibilities and reporting obligations shall be no less
favorable to you than those that you enjoyed immediately prior to the Change in
Control Date.
(b) SALARY AND BONUS. Your base salary and annual bonus
opportunity may not be reduced, and your base salary shall be periodically
reviewed and increased in the manner commensurate with increases awarded to
other similarly situated executives of the Company.
(c) INCENTIVE COMPENSATION. You shall be eligible to participate
in each long-term incentive plan or arrangement established by the Company for
its executive employees at your level of seniority in accordance with the terms
and provisions of such plan or arrangement and at a level consistent with the
Company's practices applicable to you prior to the Change in Control Date.
(d) BENEFITS. You shall be eligible to participate in all
pension, welfare and fringe benefit plans and arrangements that the Company
provides to its executive employees in accordance with the terms of such plans
and arrangements, which shall be no less favorable to you, in the aggregate,
than the terms and provisions available to other executive employees of the
Company.
(e) LOCATION. You will continue to be employed at a business
location in the same metropolitan area in which you were employed prior to the
Change in Control Date and the amount of time that you are required to travel
for business purposes will not be increased in any significant respect from the
amount of business travel required of you prior to the Change in Control Date.
3. INVOLUNTARY TERMINATION DURING THE TERM.
(a) CASH SEVERANCE PAYMENT. In the event of your Involuntary
Termination during the Term, the Company shall pay you within five (5) days of
the date of such Involuntary Termination the full amount of any earned but
unpaid base salary through the Date of Termination at the rate in effect at the
time of the Notice of Termination, plus a cash payment (calculated on the basis
of your Reference Salary) for all unused vacation time which you may have
accrued as of the Date of Termination. The Company shall also pay you within
five (5) days of the Date of Termination a pro rata portion of the annual bonus
for the year in which your Involuntary Termination occurs, calculated on the
basis of your target bonus for that year and on the assumption that all
performance targets have been or will be achieved. In addition, the Company
shall pay you in a cash lump sum, within eight (8) days following the date of
your execution of the release described in the last sentence of this Section
3(a) (or on the Date of Termination, if later), an amount (the "SEVERANCE
PAYMENT") equal to the product
3
of (i) the sum of your Reference Salary and your Reference Bonus, multiplied
by (ii) two (2) plus one twelfth (1/12th) for each of your completed years of
service with the Company (not in excess of twelve (12)) (the number
determined in accordance with this clause (ii) being hereinafter referred to
as the "SEVERANCE MULTIPLE"). The Severance Payment shall be in lieu of any
other cash severance payments which you are entitled to receive under any
other severance pay plan or arrangement sponsored by the Company and its
subsidiaries.
(b) VESTING AND EXERCISE OF EQUITY AWARDS AND RESTRICTED UNITS.
Notwithstanding anything to the contrary contained in an applicable Equity Award
or Restricted Unit agreement, all Equity Awards granted to you under the Equity
Plans (except performance share unit awards, which shall continue to be governed
by their current terms) shall vest in full and become exercisable, and all
Restricted Units granted to you under the Investment Partnership shall vest in
full, on the Change in Control Date. Anything in this Agreement to the contrary
notwithstanding, in no event shall the vesting and exercisability provisions
applicable to you under the terms of your Equity Awards or Restricted Units be
less favorable to you than the terms and provisions of such awards in effect on
the date hereof.
(c) BENEFITS CONTINUATION. In the event of your Involuntary
Termination during the Term, you and your eligible dependents shall continue to
be eligible to participate during the Benefit Continuation Period (as
hereinafter defined) in the medical, dental, health, life and other fringe
benefit plans and arrangements applicable to you immediately prior to your
Involuntary Termination on the same terms and conditions (including the level of
your contributions) in effect for you and your dependents immediately prior to
such Involuntary Termination. For purposes of the previous sentence, "BENEFIT
CONTINUATION PERIOD" means the period beginning on the Date of Termination and
continuing for a number of years (and fractions of years) equal to the Severance
Multiple.
(d) DATE AND NOTICE OF TERMINATION. Any termination of your
employment by the Company or by you during the Term shall be communicated by a
notice of termination to the other party hereto (the "NOTICE OF TERMINATION").
The Notice of Termination shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of your employment
under the provision so indicated. The date of your termination of employment
with the Company and its subsidiaries (the "DATE OF TERMINATION") shall be
determined as follows: (i) if your employment is terminated for Disability,
thirty (30) days after a Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such thirty
(30) day period), (ii) if your employment is terminated by the Company in an
Involuntary Termination, five (5) days after the date the Notice of Termination
is received by you and (iii) if your employment is terminated by the Company for
Cause, the later of the date specified in the Notice of Termination or ten (10)
days following the date such notice is received by you. The Date of Termination
for a resignation of employment shall be
4
the date set forth in the applicable notice, which shall be no earlier than
ten (10) days after the date such notice is received by the Company.
(e) NO MITIGATION OR OFFSET. You shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by you as
the result of employment by another employer or by pension benefits paid by the
Company or another employer after the Date of Termination or otherwise.
4. LIMITATION ON PAYMENTS. In the event that it is determined
by the Accounting Firm that any amount payable to you under this Agreement,
alone or when aggregated with any other amount payable or benefit provided to
you pursuant to any other plan or arrangement of the Company, would constitute
an "excess parachute payment" within the meaning of Section 280G of the Code,
then the aggregate present value of all such payments and benefits shall be
reduced to the amount, expressed as a present value, which, as determined by the
Accounting Firm, maximizes the aggregate present value of the payments without
causing any payment to be nondeductible by the Company under Section 280G of the
Code.
5. LEGAL FEES AND EXPENSES. The Company shall pay or reimburse
you for all costs and expenses (including, without limitation, court costs and
reasonable legal fees and expenses which reflect common practice with respect to
the matters involved) incurred by you as a result of any claim, action or
proceeding (i) arising out of your termination of employment during the Term,
(ii) contesting, disputing or enforcing any right, benefits or obligations under
this Agreement or (iii) arising out of or challenging the validity, advisability
or enforceability of this Agreement or any provision thereof. The payments or
reimbursements provided for herein shall be paid by the Company promptly (but in
no event more than five (5) business days) following receipt of a written
request for payment or reimbursement, as the case may be.
6. SUCCESSORS; BINDING AGREEMENT.
(a) ASSUMPTION BY SUCCESSOR. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place; PROVIDED, HOWEVER, that no such assumption
shall relieve the Company of its obligations hereunder. As used in this
Agreement, the "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law or otherwise.
5
(b) ENFORCEABILITY; BENEFICIARIES. This Agreement shall be
binding upon and inure to the benefit of you (and your personal representatives
and heirs) and the Company and any organization which succeeds to substantially
all of the business or assets of the Company, whether by means of merger,
consolidation, acquisition of all or substantially all of the assets of the
Company or otherwise, including, without limitation, as a result of a Change in
Control or by operation of law. This Agreement shall inure to the benefit of
and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or, if there is no such designee, to your estate.
7. DEFINITIONS. For purposes of this Agreement, the following
capitalized words shall have the meanings set forth below:
"ACCOUNTING FIRM" shall mean KPMG Peat Marwick LLP or, if such firm
is unable or unwilling to perform such calculations, such other national
accounting firm as shall be designated by agreement between you and the Company.
"CAUSE" shall mean a termination of your employment during the Term
which is a result of (i) your felony conviction, (ii) your willful disclosure of
material trade secrets or other material confidential information related to the
business of the Company and its subsidiaries or (iii) your willful and continued
failure substantially to perform your same duties with the Company as in
existence prior to the Change in Control (other than any such failure resulting
from your incapacity due to physical or mental illness) after a written demand
for substantial performance is delivered to you by the Board, which demand
identifies the specific actions which the Board believes constitute willful and
continued failure substantially to perform your duties, and which performance is
not substantially corrected by you within ten (10) days of receipt of such
demand. For purposes of the previous sentence, no act or failure to act on your
part shall be deemed "willful" unless done, or omitted to be done, by you with
willful malfeasance or gross negligence and without reasonable belief that your
action or omission was not materially adverse to the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths (3/4ths) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in clause (i), (ii) or (iii) of the first sentence of this
section and specifying the particulars thereof in detail.
6
"CHANGE IN CONTROL" shall mean a change in control of the Company
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; PROVIDED,
HOWEVER, that, anything in this Agreement to the contrary notwithstanding, a
Change in Control shall be deemed to have occurred if:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act, is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at
the beginning of such period constituted the Board and any new directors,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least three-fourths (3/4ths) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved (the "INCUMBENT DIRECTORS"), cease for any reason to
constitute a majority thereof;
(iii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company or a subsidiary of the Company
(a "TRANSACTION"), in each case with respect to which the stockholders of
the Company immediately prior to such Transaction do not, immediately after
the Transaction, own securities representing more than 50% of the combined
voting power of the Company, a parent of the Company or other corporation
resulting from such Transaction (counting, for this purpose, only those
securities held by the Company's stockholders immediately after the
Transaction that were received in exchange for, or represent their
continuing ownership of, securities of the Company held by them immediately
prior to the Transaction);
(iv) all or substantially all of the assets of the Company are
sold, liquidated or distributed; or
(v) there is a "change in control" or a "change in the effective
control" of the Company within the meaning of Section 280G of the Code and
the Regulations.
7
"CHANGE IN CONTROL DATE" shall mean the date on which the Change in
Control occurs. Notwithstanding the first sentence of this definition, if your
employment with the Company terminates prior to the Change in Control Date and
it is reasonably demonstrated that your termination of employment (i) was at the
request of the third party who has taken steps reasonably calculated to effect
the Change in Control or (ii) otherwise arose in connection with or in
anticipation of the Change in Control, then "Change in Control Date" shall mean
the date immediately prior to the date of your termination of employment.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor provisions thereto.
"COMMON STOCK" shall mean the common stock of the Company.
"DISABILITY" shall mean (i) your incapacity due to physical or
mental illness which causes you to be absent from the full-time performance of
your duties with the Company for six (6) consecutive months and (ii) your
failure to return to full-time performance of your duties for the Company within
thirty (30) days after written Notice of Termination due to Disability is given
to you. Any question as to the existence of your Disability upon which you and
the Company cannot agree shall be determined by a qualified independent
physician selected by you (or, if you are unable to make such selection, such
selection shall be made by any adult member of your immediate family), and
approved by the Company. The determination of such physician made in writing to
the Company and to you shall be final and conclusive for all purposes of this
Agreement.
"EQUITY AWARDS" shall mean options, restricted stock, bonus stock or
other grants or awards which consist of, or relate to, equity securities of the
Company and which have been granted to you under the Equity Plans. For purposes
of this Agreement, Equity Awards shall also include any securities acquired upon
the exercise of an option, warrant or similar right that constitutes an Equity
Award.
"EQUITY PLANS" shall mean the Adobe Systems Incorporated 1994 Stock
Option Plan, the Adobe Systems Incorporated 1994 Performance and Restricted
Stock Plan and any other equity-based incentive plan or arrangement adopted by
the Company, but shall not include the Adobe Systems Incorporated 1997 Employee
Stock Purchase Plan.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and any successor provisions thereto.
"INVESTMENT PARTNERSHIP" shall mean Adobe Incentive Partners, L.P.
8
"INVOLUNTARY TERMINATION" shall mean (i) your termination of
employment by the Company and its subsidiaries during the Term other than for
Cause, (ii) your resignation of employment with the Company and its subsidiaries
during the Term for any reason or no reason or (iii) the termination of your
employment by reason of Disability.
"REFERENCE BONUS" shall mean the greater of (i) the Target Annual
Bonus applicable to you for the year in which your Involuntary Termination
occurs and (ii) the highest Target Annual Bonus applicable to you in any of the
three years ending prior to the Change in Control Date.
"REFERENCE SALARY" shall mean the greater of (i) the annual rate of
your base salary from the Company and its subsidiaries in effect immediately
prior to the date of your Involuntary Termination and (ii) the annual rate of
your base salary from the Company in effect at any point during the three-year
period ending on the Change in Control Date.
"REGULATIONS" shall mean the proposed, temporary and final
regulations under Section 280G of the Code or any successor provision thereto.
"RESTRICTED UNITS" shall mean restricted Class B Units of limited
partnership interests in the Investment Partnership granted pursuant to a
Restricted Units Agreement.
"TARGET ANNUAL BONUS" shall mean an amount equal to your base salary
times your target incentive opportunity percentage under the Company's MBO Bonus
and Profit Sharing Plans (or any successor plans, if any, then in effect).
8. NOTICE. For the purpose of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the Board of Directors, Adobe Systems Incorporated, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇, with a copy to the General Counsel of the Company, or
to you at the address set forth on the first page of this Agreement or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
9. MISCELLANEOUS.
9
(a) AMENDMENTS, WAIVERS, ETC. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement and this
Agreement shall supersede all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, with respect to
the subject matter hereof, including, without limitation, the prior Severance
and Change of Control Agreement between you and the Company; PROVIDED, HOWEVER,
that, except as expressly set forth herein, this Agreement shall not supersede
the terms of Equity Awards or Restricted Units previously granted to you.
(b) VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
(c) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(d) NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall
be construed as giving you any right to be retained in the employ of the Company
or shall affect the terms and conditions of your employment with the Company
prior to the commencement of the Term hereof.
(e) WITHHOLDING. Amounts paid to you hereunder shall be subject
to all applicable federal, state and local withholding taxes.
(f) SOURCE OF PAYMENTS. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
(g) HEADINGS. The headings contained in this Agreement are
intended solely for convenience of reference and shall not affect the rights of
the parties to this Agreement.
10
(h) AMENDMENT. This Agreement may not be amended, modified or
terminated except pursuant to a written instrument executed by both parties
hereto.
(i) GOVERNING LAW. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
California applicable to contracts entered into and performed in such State.
If this letter sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
ADOBE SYSTEMS INCORPORATED
By:
---------------------------------
Name:
Title:
Agreed to as of this day of , 1997
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[NAME]
