Severance



EX-10.1 2 a08-5550_1ex10d1.htm EX-10.1

Exhibit 10.1

 

FIRST AMENDMENT TO RETENTION AGREEMENT

 

The Retention Agreement between Adobe Systems Incorporated, a Delaware Corporation (the “Company”), and Shantanu Narayen, dated January 12, 1998 (the “Agreement”), is hereby amended, effective as of February 11, 2008, as follows:

 

1.     Subsection 3(a) entitled Cash Severance Payment is replaced in its entirety with the following:

 

(a)(i)      Payment of Wages and Accrued Vacation.  In the event of your Involuntary Termination, the Company shall pay to 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 have accrued as of the Date of Termination.

 

(a)(ii)       Payment of Cash Severance.  Subject to execution of a release of claims as described below, you will receive the following cash benefits:

 

(1)           The Company shall pay to you a pro rata portion (based on the number of days served in the applicable bonus period) of your target bonus for the year in which such Involuntary Termination occurs, calculated on the assumption that all performance targets have been or will be achieved at target levels, plus the full amount of any bonus that you earned for the year prior to the year in which the Involuntary Termination occurs based on actual Company and individual performance, to the extent such bonus has not been paid prior to the Date of Termination.  Except as otherwise provided in Sections 3(f) and 4 below, these cash payments will be made in a lump sum on the day following the Release Effective Date.

 

(2)           In addition, the Company shall pay to you an amount (the “Severance Payment”) equal to the product of (A) the sum of your Reference Salary and Reference Bonus, multiplied by (B) 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 (B) being hereinafter referred to as the “Severance Multiple”).  This Severance Payment shall be in lieu of any other cash severance payments which you are entitled to receive under any other notice or severance pay and/or retention plan or arrangement sponsored by the Company and its subsidiaries.  Except as otherwise provided in Sections 3(f) and 4 below, these Severance Payments will be made in a lump sum on the day following the Release Effective Date.

 


 

2.     Subsection 3(b) entitled Vesting and Exercise of Equity Awards and Restricted Units is replaced in its entirety with the following:

 

(b)  Vesting and Exercise of Equity Awards.  Subject to your execution of a release of claims as described in Subsection (h) below, and notwithstanding anything to the contrary contained in an applicable Equity Award agreement, in the event of a Change in Control, all Equity Awards held by you shall vest in full and, as applicable, shall become fully exercisable, as of the Change in Control Date, except as otherwise provided in Sections 3(f) and 4 below.  Notwithstanding anything in this Plan to the contrary, in no event shall the vesting and exercisability provisions applicable to you under the terms of an Equity Award be less favorable to you than the terms and provisions of such awards in effect on the Change in Control Date.”

 

3.     Subsection 3(c) entitled Benefits Continuation is replaced in its entirety with the following:

 

(c)  Benefits Continuation.  In the event of your Involuntary Termination during the Term, and subject to your execution of a release of claims in the form prescribed by the Company as further described below, and subject to your and/or your eligible dependents’ election of continued medical insurance coverage in accordance with the applicable provisions of federal law (commonly referred to as “COBRA”), the Company shall pay your COBRA premiums for the duration of such COBRA coverage, or for the period of years equal to your Severance Multiple, whichever is less.  If your medical coverage immediately prior to your Date of Termination included one or more of your dependents, the Company-paid COBRA premiums shall include the premiums necessary for such dependents as have elected COBRA coverage.  Notwithstanding the foregoing and notwithstanding the provisions of Section 3(e), in the event that you become covered under another employer’s group health plan (other than a plan which imposes a pre-existing condition exclusion unless the pre-existing condition exclusion does not apply) or otherwise cease to be eligible for COBRA during the period provided in this Section 3(c), the Company shall immediately cease payment of any COBRA premiums hereunder.”

 

4.     Section 3 is amended and restated to add the following new Subsections (f), (g) and (h):

 

(f)  Application of Section 409A.  Notwithstanding any other provision of this Agreement, to the extent that (i) one or more of the payments or benefits received or to be received by you pursuant to this Agreement would constitute deferred compensation subject to the requirements of Section 409A of the Code, and (ii) you are a “specified employee” within the meaning of Code Section 409A, then such payment or benefit or portion thereof will be delayed until the earliest date following your “separation from service” with the Company within the meaning of Code Section 409A on which the Company can provide such payment or benefit to you without your incurrence of any additional tax or interest pursuant to Code Section 409A, with all remaining payments or benefits due thereafter occurring in accordance with the original schedule.  In addition, this Agreement and the payments to be made hereunder are intended to comply in all respects with the applicable provisions of Code Section 409A.

 

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(g)  Vesting of Performance Awards.  Subject to your execution of a release of claims as described in Subsection (h) below, and notwithstanding anything to the contrary contained in an applicable Performance Award agreement, and except as otherwise provided in this Section 3(g) and Section 4 below, with respect to all Performance Awards in the event of a Change in Control the Actual Award credited to you under the Performance Share Plan shall vest in full as of the Change in Control Date.

 

Notwithstanding anything in this Agreement to the contrary, in no event shall the vesting and exercisability provisions applicable to you under the terms of a Performance Award be less favorable to you than the terms and provisions of such awards in effect on the Change in Control Date.

 

(h)  Release of Claims.  As a condition to the receipt of the severance payments and benefits described in this Section 3, you must execute and allow to become effective a release of claims in a form  substantially identical with the form attached hereto as Exhibit A, subject only to making the minimum modifications (if any) that are required to reflect changes in the applicable law between February 5, 2008, and the date when the release is executed, with such execution occurring not prior to the Date of Termination and not later than 45 days after your receipt thereof.  The date on which such release becomes effective is the “Release Effective Date”.  No benefits under Section 3 will be paid to you prior to the Release Effective Date.  The form of release shall not cause you to waive or release any claims or rights you may have to be indemnified by the Company under applicable law, the Company’s Certificate of Incorporation or Bylaws, or the terms of any then-effective indemnification agreement or obligation.”

 

5.     Section 4 entitled Limitation on Payments is replaced in its entirety with the following:

 

In the event that it is determined by the Accounting Firm that any amount payable to you under this Plan, 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 notwithstanding the other provisions of this Plan, the amounts payable will not exceed the amount which produces the greatest after-tax benefit to you.  For purposes of the foregoing, the greatest after-tax benefit will be determined within thirty (30) days of the occurrence of the event giving rise to such payment to you.  The Company shall request a determination in writing by the Accounting Firm of whether the full amount of the payments to you, or a lesser amount, will result in the greatest after-tax benefit to you.  As soon as practicable thereafter, the Accounting Firm shall determine and report to the Company and you the amount of such payments and benefits which would produce the greatest after-tax benefit to you.  For the purposes of

 

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such determination, the Accounting Firm may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and you shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the Accounting Firm may reasonably charge in connection with its services contemplated by this Section.  If a reduced amount of the payments will give rise to the greatest after tax benefit, the reduction in the payments and benefits shall occur in the following order unless you elects in writing a different order prior to the last day of the year preceding the date on which the event that triggers the payment occurs: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards (including Performance Awards) other than stock options; (iii) cancellation of accelerated vesting of stock options; and (iv) reduction of other benefits paid to you.  In the event that acceleration of compensation from your equity awards (including Performance Awards) is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant unless you elect in writing a different order for cancellation prior to the last day of the year preceding the date on which the event that triggers the payment occurs.”

 

6.     Section 5 entitled Legal Fees and Expenses is replaced in its entirety with the following:

 

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 bona fide claim, action or proceeding (a) arising out of your termination of employment during the Term, (b) contesting, disputing or enforcing any right, benefits or obligations under this Agreement or (c) 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 and its subsidiaries 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.  It is intended that each installment of payments under this Section 5 is a separate “payment” for purposes of Section 409A.  For the avoidance of doubt, it is intended that the payments under this Section 5 satisfy, to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulation 1.409A-1(b)(11).”

 

7.  The following definitions shall be amended and restated in their entirety in Section 7 entitled Definitions:

 

Accounting Firm” shall mean KPMG LLP or, if such firm is unable or unwilling to perform the calculations required under this agreement, such other national accounting firm as shall be designated by agreement between you and the Company.

 

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 “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.

 

 “Equity Awards” shall mean options, stock appreciation rights, stock purchase rights, restricted stock, stock bonuses and other awards which consist of, or relate to, equity securities of the Company, other than Performance Awards, in each case which have been granted to you under the Equity Plans.  For purposes of this Plan, Equity Awards shall also include any shares of common stock or other securities issued pursuant to the terms of an Equity Award.

 

Equity Plans” shall mean the Adobe Systems Incorporated 1994 Stock Option Plan, the Adobe Systems Incorporated 1994 Amended Performance and Restricted Stock Plan, the Adobe Systems Incorporated 1999 Nonstatutory Stock Option Plan, the Adobe Systems Incorporated 2003 Equity Incentive Plan, the Adobe Systems Incorporated 2005 Special Purpose Equity Incentive Plan, and any other equity-based incentive plan or arrangement adopted or assumed by the Company, and any future equity-based incentive plan or arrangement adopted or assumed by the Company, but shall not include the Adobe Systems Incorporated 1997 Employee Stock Purchase Plan or any other plan intended to be qualified under Section 423 of the Code.

 

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8.     The following definitions shall be added to Section 7 entitled Definitions:

 

 “Actual Awardshall have the meaning in the applicable Performance Share Program.

 

Certification Dateshall have the meaning set forth in the applicable Performance Share Program.

 

Performance Awards” shall have the meaning set forth in the applicable Equity Plan, and shall include awards of performance-based restricted stock, performance-based restricted stock units and performance-based cash awards.

 

Performance Period” shall have the meaning set forth in the applicable Performance Share Program and underlying Equity Plan.

 

Performance Share Program” shall mean the specific terms of Performance Awards adopted from time to time by the Company with respect to a specified Performance Period.

 

9.     Except to the extent specifically amended by this First Amendment, the provisions of the Agreement dated January 12, 1998, shall remain in full force and effect.

 

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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment on the date as set forth below.

 

 

 

ADOBE SYSTEMS INCORPORATED

 

 

 

 

 

By:

/s/ Karen Cottle

 

 

 

Karen Cottle

 

 

Senior Vice President and General Counsel

 

 

 

February 12, 2008

 

 

Agreed to:

 

 

/s/ Shantanu Narayen

 

Shantanu Narayen

 

 

February 12, 2008

 

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Exhibit A

 

Form of General Release Agreement

 

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FORM OF GENERAL RELEASE AGREEMENT

 

In consideration of the severance and other benefits which are to be provided me by Adobe Systems Incorporated (“Adobe”), pursuant to my Retention Agreement with Adobe dated January 12, 1998 as amended effective February 11, 2008 (“the Agreement”), I agree to the following release (the “Release”).

 

1.     On behalf of myself, my heirs, executors, administrators, successors, and assigns, I hereby fully and forever release and discharge Adobe, and each of its current, former and future parents, subsidiaries, affiliated companies, related entities, employee benefit plans, and its fiduciaries, predecessors, successors, officers, directors, shareholders, agents, employees and assigns (collectively, the “Company”) from any and all claims, causes of action, and liabilities up through the date of my execution of the Release which arise from or relate to my employment with the Company and the termination of such employment.  All such claims (including related attorneys’ fees and costs) are barred without regard to whether those claims are based on any alleged breach of a duty arising in statute, contract, or tort.  This expressly includes waiver and release of any rights and claims relating to my employment with the Company and the termination of such employment which arise under any and all laws, rules, regulations, and ordinances including, but not limited to: Title VII of the Civil Rights Act of 1964; the Older Workers Benefit Protection Act; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor Standards Act; the National Labor Relations Act; the Employee Retirement Income Security Act of 1974, as amended (“ERISA”); the Workers Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act; the Equal Pay Act of 1963; and any similar law of any other state or governmental entity.  California law shall apply in interpreting this Release. Accordingly, I further waive any rights under Section 1542 of the Civil Code of the State of California or any similar state statute.  Section 1542 states: “A general release does not extend to claims which the creditor does not know or suspect to exist in his/her favor at the time of executing the release, which, if known to him/her, must have materially affected his/her settlement with the debtor.”

 

2.     This Release does not extend to, and has no effect upon, any benefits that have accrued, and to which I have become vested or otherwise entitled, whether in connection with my employment with the Company or the termination of that employment, under the Agreement, any employee benefit plan within the meaning of ERISA sponsored by the Company or under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).  In addition, this Release does not extend to and has no effect upon any of my rights that may not be waived or released as a matter of law, including any rights that I have or may have to indemnification by the Company under any then-effective indemnification agreement or obligation, applicable law or the Company’s Certificate of Incorporation or Bylaws with respect to acts or omissions that occurred during the term of my employment with Adobe.

 

3.     I have been advised to consult with an attorney of my choice prior to executing the Release.  I understand that nothing in this Release shall prohibit me from exercising legal rights that are, as a matter of law, not subject to waiver such as: (a) my rights under applicable workers’ compensation laws; (b) my right, if any, to seek unemployment benefits; (c) my right to file a charge with the Equal Opportunity Commission (EEOC) challenging the validity of my

 

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waiver of claims under the ADEA;  (d) my right to be indemnified by Adobe under applicable law, Adobe’s Certificate of Incorporation or Bylaws, or the terms of any then-effective indemnification agreement or obligation; and (e) any indemnity or other rights of mine that cannot be waived as a matter of law.

 

4.     I understand and agree that Adobe will not provide me with the severance and other benefits under the Agreement unless I timely execute the Release.  I acknowledge that that I have previously received or will receive, regardless of the execution of the Release, all wages owed to me, including any accrued but unused vacation pay, less applicable withholdings and deductions, earned through my termination date.

 

5.     As part of my existing and continuing obligations to Adobe, I have returned to Adobe all Company documents (and all copies thereof) and other Company property that I have had in my possession at any time, including but not limited to Company files, notes, drawings, records, business plans and forecasts, financial information, specification, computer-recorded information, tangible property (including, but not limited to, computers, laptops, pagers, etc.), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof).  I understand that, even if I did not sign the Release, I would still be bound by any and all confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) signed by me in connection with my employment with the Company (“Employee Agreements”), pursuant to the terms of such agreement(s).

 

6.     I represent and warrant that I am the sole owner of all the claims released herein and that I have not assigned or transferred any such claims to any other person or entity.

 

7.     I understand and agree that the Release shall not be construed at any time as an admission of liability or wrongdoing by the Company or myself.

 

8.     Any controversy or any claim arising out of or relating to the interpretation, enforceability or breach of this Release shall be settled in accordance with the provisions set forth in the Agreement.

 

9.     I agree that I have had at least [twenty-one (21)/forty-five (45) calendar days as required] in which to consider whether to execute this Release, no one hurried me into executing the Release during that period, and no one coerced me into executing the Release. I understand that I may revoke the Release at any time during the seven-day period after I sign it, by email notice of revocation to [                ]. I further understand that Adobe’s obligations under the Release shall not become effective or enforceable until the eighth (8th) calendar day after the date I sign the Release (the “Effective Date”), provided that I have (a) timely delivered the Release to Adobe prior to the Effective Date, and (b) not revoked the Release prior to the Effective Date.  I understand that the severance benefits under Agreement under will become available to me in accordance with Internal Revenue Code Section 409A.

 

10.   In executing the Release, I acknowledge that I have not relied upon any statement made by the Company or any of its representatives or employees, with regard to the Release unless the representation is specifically included herein.  Furthermore, the Release contains our entire understanding regarding eligibility for and the payment of severance benefits and

 

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supersedes any or all prior representations and agreements regarding the subject matter of the Release.  However, the Release does not modify, amend or supersede the Employee Agreements.  Once effective and enforceable, this Release can only be changed by another written agreement signed by me and an authorized representative of Adobe.

 

11.   Should any provision of the Release be determined by an arbitrator or court of competent jurisdiction to be wholly or partially invalid or unenforceable, the legality, validity and enforceability of the remaining parts, terms, or provisions are intended to remain in full force and effect.  I acknowledge that I have obtained sufficient information to intelligently exercise my own judgment regarding the terms of the Release before executing the Release.

 

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EMPLOYEE’S ACCEPTANCE OF RELEASE

 

BEFORE SIGNING MY NAME TO THE RELEASE, I STATE THE FOLLOWING:  I HAVE READ THE RELEASE, I UNDERSTAND IT AND I KNOW THAT I AM GIVING UP IMPORTANT RIGHTS. I HAVE OBTAINED SUFFICIENT INFORMATION TO INTELLIGENTLY EXERCISE MY OWN JUDGMENT. I HAVE BEEN ADVISED THAT I SHOULD CONSULT WITH AN ATTORNEY BEFORE SIGNING IT, AND I HAVE SIGNED THE RELEASE KNOWINGLY AND VOLUNTARILY.

 

 

 

Executed this                        day of                       , 20    .

 

 

 

 

 

 

Shantanu Narayen

 

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Exhibit 10.2

ADOBE SYSTEMS INCORPORATED

EXECUTIVE SEVERANCE PLAN

IN THE EVENT OF A CHANGE OF CONTROL

Adobe Systems Incorporated, a Delaware corporation (the “Company”) has adopted this Executive Severance Plan (the “Plan”), effective as of December 12, 2006, for the benefit of certain key employees of the Participating Company Group.

The Company considers it essential to the best interests of its stockholders to take reasonable steps to retain its 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 of 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 its members of management of the Company to their assigned duties without distraction in the face of potentially disturbing circumstances arising from any possible Change of Control of the Company.

The Company hereby adopts this Executive Severance Plan In the Event of a Change of Control for the benefit of its employees who are eligible as provided in the Plan.

Section 1.               Definitions.

1.1           “Accounting Firm” shall mean KPMG LLP or, if such firm is unable or unwilling to perform the calculations required under this Plan, such other national accounting firm as shall be designated by agreement between the Participant to whom Section 4.1 applies and the Company.

1.2           “Base Salary” means the Participant’s annual base salary as in effect during the last regularly scheduled payroll period immediately preceding such Participant’s Date of Termination.  Base Salary does not include any bonuses, commissions, fringe benefits, overtime, car allowances, other irregular payments or any other compensation except base salary.

1.3           “Cause” shall mean (a) with respect to Group I Participants (i) felony conviction; or (ii) willful disclosure of material trade secrets or other material confidential information related to the business of a Participating Company; or (iii) willful and continued failure substantially to perform the same duties as in effect prior to the Change of Control for the Participating Company (other than any such failure resulting from physical or mental incapacity or any actual or anticipated failure resulting from a resignation for Good Reason) after a written demand for substantial performance is delivered by the Chief Executive Officer or the President of the Company, which demand identifies the specific actions which the Chief Executive Officer or the President of the Company believes constitute willful and continued failure substantially to perform duties, and which performance is not substantially corrected within ten (10) days of receipt of such demand.  For purposes of the previous sentence, no act or failure to act shall be deemed “willful” unless done, or omitted to be done, with willful malfeasance or gross negligence and without reasonable belief that action or omission was not materially adverse to

 


the best interest of the Participating Company Group; and (b) with respect to Group II Participants (i) theft, dishonesty or falsification of any employment or Participating Company Group records, (ii) improper disclosure of a Participating Company’s confidential or proprietary information, (iii) any intentional act by such Participant which has a material detrimental effect on the Participating Company Group’s reputation or business, (iv) failure to perform any reasonably assigned duties, which failure is not cured with in thirty (30) days following written notice of such failure from the Participating Company, (v) gross misconduct or (vi) felony conviction.

1.4           “Change of Control” shall mean a Change of 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 Plan to the contrary notwithstanding, a Change of Control shall be deemed to have occurred if:

(a)           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;

(b)           during any period of two (2) consecutive years (not including any period prior to the Effective Date), 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;

(c)           there occurs a reorganization, merger, consolidation or other corporate transaction involving 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);

(d)           all or substantially all of the assets of the Company are sold, liquidated or distributed; or

(e)           there is a “Change of Control” or a “change in the effective control” of the Company within the meaning of Section 280G of the Code and the Regulations.

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1.5           “Change of Control Date” shall mean the date on which the Change of Control occurs.  Notwithstanding the first sentence of this definition, if a Participant’s employment with the Participating Company Group terminates prior to the Change of Control Date and it is reasonably demonstrated that such termination (a) was at the request of the third party who has taken steps reasonably calculated to effect the Change of Control or (b) otherwise arose in connection with or in anticipation of the Change of Control, then “Change of Control Date” shall mean the date immediately prior to the date of such Participant’s termination of employment.

1.6           “Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor provisions thereto.

1.7           “Committee” means the Executive Severance Plan Administrative Committee responsible for administering the Plan as provided in Section 5.

1.8           “Common Stock” shall mean the common stock of the Company.

1.9           “Company” means Adobe Systems Incorporated, a Delaware Corporation, and, except in determining under Section 1.4 hereof whether or not any Change of Control has occurred, shall include any successor to its business and/or assets.

1.10         “Date of Termination” means the date of a Participant’s termination of employment with the Participating Company Group as determined in accordance with Section 3.6.

1.11         “Disability” shall mean a Participant’s (a) incapacity due to physical or mental illness which causes such Participant’s absence from the full-time performance of his or her duties with the Participating Company Group for six (6) consecutive months and (b) such Participant’s failure to return to full-time performance of his or her duties for the Participating Company Group within thirty (30) days after written Notice of Termination due to Disability is given to a Participant.  Any question as to the existence of Disability upon which a Participant and the Participating Company Group cannot agree shall be determined by a qualified independent physician selected by the Participant (or, if such Participant is not able to select a physician, such selection shall be made by any adult member of the Participant’s immediate family), and approved by the Participating Company Group.  The determination of such physician made in writing to the Participating Company Group shall be final and conclusive for all purposes of this Plan.

1.12         “Effective Date” means December 12, 2001.

1.13         “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 Participant’s under the Equity Plans.  For purposes of this Plan, Equity Awards shall also include any securities acquired upon the exercise of an option, warrant or similar right that constitutes an Equity Award.

1.14         “Equity Plans” shall mean the Adobe Systems Incorporated 1994 Stock Option Plan, the Adobe Systems Incorporated 1994 Amended Performance and Restricted Stock Plan, the Adobe Systems Incorporated 1999 Nonstatutory Stock Option Plan, the Adobe Systems

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Incorporated 2003 Equity Incentive Plan, the Adobe Systems Incorporated 2005 Special Purpose Equity Incentive Plan, and any other equity-based incentive plan or arrangement adopted or assumed by the Company, and any future equity-based incentive plan or arrangement adopted or assumed by the Company, but shall not include the Adobe Systems Incorporated 1997 Employee Stock Purchase Plan or any other plan intended to be qualified under Section 423 of the Code.

1.15         “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.16         “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and any successor provisions thereto.

1.17         “Good Reason” shall mean a Participant’s resignation of employment during the Term as a result of any of the following:

(a)           A meaningful and detrimental alteration in such Participant’s position, titles, or the nature or status of responsibilities (including reporting responsibilities) from those in effect immediately prior to the Change of Control Date;

(b)           A reduction by the Participating Company Group in such Participant’s Base Salary as in effect immediately prior to the Change of Control Date or as the same may be increased from time to time thereafter; a failure by the Participating Company Group to increase such Participant’s salary at a rate commensurate with that of other similarly situated key executives of the Participating Company Group; or a reduction in the target incentive opportunity percentage used to determine such Participant’s Target Bonus below the percentage in effect immediately prior to the Change of Control Date;

(c)           The relocation of the office of the Participating Company where such Participant is primarily employed immediately prior to the Change of Control Date (the “COC Location”) to a location which is more than fifty (50) miles away from the COC Location or the Participating Company’s requiring such Participant to be based more than fifty (50) miles away from the COC Location (except for required travel on the Participating Company’s business to an extent substantially consistent with the Participant’s customary business travel obligations in the ordinary course of business prior to the Change of Control Date);

(d)           The failure by the Participating Company Group to continue in effect any compensation plan in which such Participant participated prior to the Change of Control Date or made available to such Participant after the Change of 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 of Control, or the failure by the Participating Company Group to continue such Participant’s participation therein on at least as favorable a basis, both in terms of the amount of benefits provided and the level of participation relative to other participants, as existed on the Change of Control Date;

(e)           The failure by the Participating Company Group to continue to provide such Participant with benefits at least as favorable in the aggregate to those enjoyed by such Participant under the Participating Company Group’s retirement, savings, life insurance, medical, health and accident, disability, and fringe benefit plans and programs in which such

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Participant was participating in immediately prior to the Change of Control Date; or the failure by the Participating Company Group to provide such Participant with the number of paid vacation days to which he or she was entitled on the basis of years of service with the Participating Company Group in accordance with the Participating Company Group’s normal vacation policy in effect immediately prior to the Change of Control;

(f)            The failure by the Participating Company Group to pay or provide to such Participant with any material item of compensation or benefits promptly when due;

(g)           The failure of the Participating Company Group to obtain an agreement from any successor to assume and agree to perform the obligations of this Plan, as contemplated in Section 9.1 hereof or, if the business for which such Participant’s services are principally performed is sold at any time after a Change of Control, the failure of the Participating Company Group to obtain such an agreement from the purchaser of such business;

(h)           A material breach by the Participating Company Group of the provisions of this Plan;

 provided, however, that an event described above in clause (a), (b), (d), (e), (f) or (h) shall not constitute Good Reason unless it is communicated by such Participant to the Company in writing and is not corrected by the Company in a manner which is reasonably satisfactory to such Participant (including full retroactive correction with respect to any monetary matter) within 10 days of the Company’s receipt of such written notice.

1.18         “Group I Participant” shall mean each senior management employee of a Participating Company who (i) is on the U.S. payroll, (ii) is not a party to any other retention and/or severance agreement with the Participating Company Group that is not otherwise waived in accordance with Section 3.9, and (iii) on the Change of Control Date, is classified as a Vice President (or any more senior role) of a Participating Company.

1.19         “Group II Participant” shall mean each senior management-level employee of a Participating Company who (i) is on the U.S. payroll, (ii) is not a party to any other retention and/or severance agreement with the Participating Company Group that is not otherwise waived in accordance with Section 3.9, and (iii) who on the Change of Control Date, is classified as a Director, Senior Director, or such other position, which is determined by the Company prior to the Change of Control as equivalent thereto.

1.20         “Involuntary Termination” shall mean (i) a Participant’s involuntary termination of employment with the Participating Company Group during the Term other than for death, Disability or Cause or (ii) a Participant’s resignation of employment with the Participating Company Group during the Term for Good Reason.

1.21         “Notice of Termination” means the notice specified in Section 3.6.

1.22         “Participating Company Group” means the Company and any present or future United States parent and/or United States direct or indirect subsidiary corporations of the Company that have been designated by the Board as a “Participating Company” for purposes of this Plan (all of which along with the Company being individually referred to as a “Participating

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Company” and collectively referred to as the “Participating Company Group”).  For purposes of this Plan, a parent or subsidiary corporation shall be defined in Sections 424(e) and 424(f) of the Code and shall include entities related to the Company by similar ownership levels that are not corporations.

1.23         “Participant” shall mean each Group I Participant and each Group II Participant.

1.24         “Plan” means this Adobe Systems Incorporated Executive Severance Plan In the Event of a Change of Control.

1.25         “Plan Year” means the calendar year and the last day of such year is December 31.

1.26         “Reference Bonus” shall mean the greater of (a) the Target Bonus applicable to a Participant for the year in which such Participant’s Involuntary Termination occurs or (b) the highest Target Bonus applicable to such Participant in any of the three years ending prior to the Change of Control Date.

1.27         “Reference Salary” shall mean the greater of (a) the annual rate of a Participant’s Base Salary from the Participating Company Group in effect immediately prior to the date of such Participant’s Involuntary Termination or (b) the annual rate of a Participant’s Base Salary from the Participating Company Group in effect at any point during the three-year period ending on the Change of Control Date.

1.28         “Regulations” shall mean the proposed, temporary and final regulations under Section 280G of the Code or any successor provision thereto.

1.29         “Severance Benefits” means those benefits provided to a Participant under this Plan on account of a Change of Control, as determined in accordance with Section 3.2, 3.3 and 3.4 after the execution of a release of claims as required by Section 10.

1.30         “Severance Multiple” shall mean (a) with respect to Group I Participants, the sum of (i) two (2) plus (ii) one twelfth (1/12th) for each completed year of service with the Participating Company Group (not in excess of twelve (12) years), and (b) with respect to Group II Participants, the sum of (i) one (1) plus (ii) one twelfth (1/12th) for each completed year of service with the Participating Company Group (not in excess of six (6) years).

1.31         “Target Bonus” shall mean an amount equal to (i) a Participant’s Base Salary multiplied by such Participant’s target incentive opportunity percentage under the Participating Company’s Annual Incentive Plan and Profit Sharing Plan (or any successor plans then in effect), and (ii)  target commissions.

1.32         “Term” shall mean the period of a Participant’s employment that commences on the Change of Control Date and shall continue until the second anniversary of the Change of Control Date.

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Section 2.               Employment During the Term.  During the Term, the following terms and conditions shall apply to a Participant’s employment with the Participating Company Group:

2.1           Titles; Reporting and Duties.  A Participant’s position, title, nature and status of responsibilities and reporting obligations shall be no less favorable than those that such Participant enjoyed immediately prior to the Change of Control Date.

2.2           Base Salary and Bonus.  A Participant’s Base Salary and annual bonus opportunity may not be reduced, and such Participant’s Base Salary shall be periodically reviewed and increased in the manner commensurate with increases awarded to other similarly situated employees of the Participating Company Group.

2.3           Incentive Compensation.  A Participant shall be eligible to participate in each long-term incentive plan or arrangement established by the Participating Company Group for its employees at such Participant’s level of seniority in accordance with the terms and provisions of such plan or arrangement and at a level consistent with the Participating Company Group’s practices applicable to each Participant prior to the Change of Control Date.

2.4           Benefits.  A Participant shall be eligible to participate in all retirement, welfare and fringe benefit plans and arrangements that the Participating Company Group provides to its employees in accordance with the terms of such plans and arrangements, which shall be no less favorable to such Participant, in the aggregate, than the terms and provisions available to other similarly situated employees of the Participating Company Group.

2.5           Location.  A Participant shall continue to be employed at a business location in the metropolitan area in which such Participant was employed prior to the Change of Control Date and the amount of time that such Participant is required to travel for business purposes will not be increased in any significant respect from the amount of business travel required of such Participant prior to the Change of Control Date.

Section 3.               Severance Benefits.  In the event of a Participant’s Involuntary Termination, the terminated Participant shall be entitled to the following:

3.1           Payment of Wages and Accrued Vacation.  The Company shall pay to such terminated Participant 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 such Participant’s Base Salary) for all unused vacation time which such Participant may have accrued as of the Date of Termination.

3.2           Payment of Cash Severance.  Subject to execution of a release of claims as described in Section 10 below, the terminated Participant will receive the following cash benefits:

(a)           The Company shall pay to such terminated Participant within five (5) days of the Date of Termination a pro rata portion of the Participant’s Target Bonus for the year in which such Involuntary Termination occurs, calculated on the assumption that all performance targets have been or will be achieved.

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(b)           In addition, the Company shall pay to such terminated Participant in a cash lump sum, within eight (8) days following the date such terminated Participant executes the release described in Section 10 (or on the Date of Termination, if later) an amount equal to the product of (a) the sum of such terminated Participant’s Reference Salary and Reference Bonus, multiplied by (b) such terminated Participant’s Severance Multiple.  This severance payment shall be in lieu of any other cash severance payments which such terminated Participant is entitled to receive under any other severance pay and/or retention plan or arrangement sponsored by any Participating Company.

3.3           Vesting and Exercise of Equity Awards.  Subject to execution of a release of claims as described in Section 10 below, and notwithstanding anything to the contrary contained in an applicable Equity Award, all Equity Awards granted to a terminated Participant 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, upon the Participant’s Involuntary Termination during the Term.  Notwithstanding anything in this Plan to the contrary, in no event shall the vesting and exercisability provisions applicable to a terminated Participant under the terms of an Equity Award be less favorable to such Participant than the terms and provisions of such awards in effect on the Change of Control Date.

3.4           Benefits Continuation.  Subject to execution of a release of claims as described in Section 10 below, and subject to the terminated Participant and/or his or her eligible dependents electing continued medical insurance coverage in accordance with the applicable provisions of federal law (commonly referred to as “COBRA”), the Company shall pay the terminated Participant’s COBRA premiums for the duration of such COBRA coverage, or for the period of years equal to the Participant’s Severance Multiple, whichever is less.  If the terminated Participant’s medical coverage immediately prior to the Date of Termination included the terminated Participant’s dependents, the Company paid COBRA premiums shall include the premiums necessary for such dependents as have elected COBRA coverage.  Notwithstanding the above, in the event the terminated Participant becomes covered under another employer’s group health plan (other than a plan which imposes a preexisting condition exclusion unless the preexisting condition exclusion does not apply) during the period provided in this Section 3.4, the Company shall cease payment of the COBRA premiums.

3.5           Other Benefit Plans.  A terminated Participant’s participation and rights in other benefit plans as may be provided by the Participating Company Group at the time of his/her Involuntary Termination shall be governed solely by the terms and conditions of such plans, if any.

3.6           Date and Notice of Termination.  Any termination of a Participant’s employment by a Participating Company or by such Participant 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 Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated.  The date of a Participant’s termination of employment with the Participating Company Group shall be determined as follows:  (i) if employment is terminated by the Participating Company Group in an Involuntary Termination, five (5) days after the date the Notice of Termination is provided by

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the Participating Company Group, (ii) if employment is terminated by the Participating Company Group 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 the Participant, and (iii) if the basis of a Participant’s Involuntary Termination is such Participant’s resignation for Good Reason, the Date of Termination shall be ten (10) days after the date such Participant’s Notice of Termination is received by the Company.

3.7           No Mitigation or Offset.  A terminated Participant shall not be required to mitigate the amount of any payment provided for in this Plan by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Plan be reduced by any compensation earned by such a terminated Participant as the result of employment by another employer or by retirement benefits paid by the Participating Company Group or another employer after the Date of Termination or otherwise.

3.8           Withholding.  Amounts paid to a Participant hereunder shall be subject to all applicable federal, state and local withholding taxes.

3.9           Waiver of Any Other Participating Company Retention/Severance Agreement.  A terminated Participant may elect, in his or her sole discretion, to waive each and every prior retention and/or severance agreement entered into between a Participating Company and such terminated Participant in order to participate and receive the Severance Benefits provided under this Plan. Such waiver shall be in writing in such form as may reasonably be specified by the Committee and shall be filed with the Company in accordance with such rules and procedures as may be reasonably established by the Committee

3.10         Application of Section 409A.  Notwithstanding any other provision of this Plan, to the extent the Committee determines in good faith that (a) one or more of the payments or benefits received or to be received by a Participant pursuant to the Plan would constitute deferred compensation subject to the rules of Code Section 409A, and (b) that the Participant is a “specified employee” under Code Section 409A, then only to the extent required to avoid the Participant’s incurrence of any additional tax or interest under Section 409A of the Code, such payment or benefit will be delayed until the date which is six (6) months after the Participant’s “separation of service” within the meaning of Code Section 409A.

Section 4.               Limitation on Payment of Benefits.

4.1           Parachute Payments.  In the event that it is determined by the Accounting Firm that any amount payable to a Participant under this Plan, alone or when aggregated with any other amount payable or benefit provided to such Participant pursuant to any other plan or arrangement of the Participating Company Group, would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, then notwithstanding the other provisions of this Plan, the amounts payable will not exceed the amount which produces the greatest after-tax benefit to the Participant.  For purposes of the foregoing, the greatest after-tax benefit will be determined within thirty (30) days of the occurrence of such payment to the Participant, in the Participant’s sole and absolute discretion.  To aid the Participant in making the determination called for under this Section 4.1, the Company shall request a determination in writing by the Accounting Firm.  As soon as practicable thereafter, the Accounting Firm shall determine and report to the Company and the Participant the amount of such payments and

9

 


benefits which would produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the Accounting Firm may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request in order to make their required determination.  The Company shall bear all fees and expenses the Accounting Firm may reasonably charge in connection with its services contemplated by this Section.  Notwithstanding the time limit above, Participant shall have no less than ten (10) days following receipt of the Accounting Firm’s report to make the determination called for by this Section 4.1.

4.2           Non-Duplication of Benefits.  Notwithstanding any other provision in the Plan to the contrary, the benefits provided hereunder shall be in lieu of any other severance plan and/or retention agreement benefits provided by any Participating Company and the Severance Benefits and other benefits provided under this Plan shall be reduced by any severance paid or provided to a Participant by a Participating Company under any other plan or arrangement.

4.3           Indebtedness of Participant.  If a Participant is indebted to the Participating Company Group at his or her Date of Termination, the Company reserves the right to offset any benefits under this Plan by the amount of such indebtedness.

Section 5.               Plan Administration, Amendment and Termination.

5.1           Plan Administrative Committee.

(a)           Administration by the Committee.  The Plan shall be administered by the Committee.

(b)           Committee Members.  Except as otherwise provided in Section 5.1(c) below, the Committee shall be composed of those individuals at the Company who hold the titles of Vice President and General Counsel, and Vice President Human Resources, or titles functionally equivalent thereto, and another employee of the Company as shall be appointed by the Board.  The designation of an individual as holding such title or position shall constitute automatic appointment to the Committee and the resignation or other termination of employment or change to a different position by a Committee member shall constitute automatic resignation from the Committee.

(c)           Notwithstanding the foregoing, upon a Change of Control, a majority of the Committee Members shall be comprised of persons who were members of the Committee prior to the Change of Control or who are elected to serve as additional Adobe Members as provided below (the “Adobe Members”).  This shall be accomplished by retaining a majority of those persons who were Committee Members prior to the Change of Control, regardless of whether such members’ job titles have changed or they would otherwise be deemed to have automatically resigned their membership on the Committee.  In the event that a majority of the members of the Committee prior to the Change of Control are unwilling or unable to continue to serve as members of the Committee, the members of the Committee shall, by majority vote, elect sufficient additional Adobe Members, so that a majority of the Committee Members are Adobe Members.  Such additional Adobe Members shall be persons who were employed by the Company prior to the Change of Control.

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(d)           The Committee Members shall not receive compensation for their services on the Committee.  The Participating Company Group shall indemnify and hold harmless the Committee Members from and against all liabilities, claims, demands and costs, including reasonable attorneys’ fees and expenses of legal proceedings, incurred by the Committee which arise as a result of membership on the Committee.

5.2           Committee Powers and Responsibilities.  The Committee shall have all powers necessary to enable it properly to carry out its duties with respect to the complete control of the administration of the Plan.  Not in limitation, but in amplification of the foregoing, the Committee shall have the power and authority in its discretion to:

(a)           Construe the Plan to determine all questions that shall arise as to interpretations of the Plan’s provisions, including determination of which individuals are eligible for Severance Benefits, the amount of Severance Benefits to which any employee may be entitled, the determination of which type of Participant any individual is (i.e., Group I Participant or Group II Participant) and all other matters pertaining to the Plan;

(b)           Adopt amendments to the Plan document which are deemed necessary or desirable bring these documents into compliance with all applicable laws and regulations, including but not limited to Code Section 409A and the guidance thereunder; and

(c)           Establish procedures for determining who the Adobe Members of the Committee shall be after a Change of Control and/or for electing additional Adobe Members of the Committee pursuant to Section 5.1.  For purposes of this Section 5.2(c), only those persons who were members of the Committee prior to the Change of Control shall be authorized to vote.

5.3           Decisions of the Committee.  Decisions of the Committee made in good faith upon any matter within the scope of its authority shall be final, conclusive and binding upon all persons, including Participants and their legal representatives.  Any discretion granted to the Committee shall be exercised in accordance with such rules and policies as may be established by the Committee from time to time.

5.4           Plan Amendment.  The Plan may be amended by the Committee as provided by Section 5.2(b) and may also be amended by resolution of the Board of Directors of the Company (i) for the purposes specified in Section 5.2(b), (ii) to increase the amount and/or type of Severance Benefits provided by the Plan, and (iii) to extend the Plan termination date as provided in Section 5.5.  Except as otherwise provided in this Section 5.4 the Plan may not be amended prior to its termination, or, in the event the Plan is extended as provided in this section 5.4,  the date on which it would have terminated under Section 5.5 had it not been extended.

5.5           Plan Termination.  This Plan shall terminate automatically five (5) years from the Effective Date unless extended by the Company or unless a Change of Control shall have occurred prior thereto, in which case the Plan shall terminate following the later of the date which is at least twenty-four (24) months after the occurrence of a Change of Control or the payment of all Severance Benefits due under the Plan.

Section 6.               Claims for Benefits.  Any person who believes he or she is entitled to benefits under this Plan may submit a claim for benefits.  The claim must be in writing and should state

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the claimant’s reasons for claiming these benefits.  The claims should be sent to the Executive Severance Plan Administrative Committee of Adobe Systems Incorporated.  If the claim is denied, in whole or in part, written notice of the denial will be provided within ninety (90) days of initial receipt of the claim.  Such notice will include an explanation of the factors on which the denial is based and what, if any, additional information is needed to support the claim.  Further review of the claim may be obtained by filing a written request for review.  An individual whose claim for benefits is denied may file a request for review with the Committee within sixty (60) days.  After receiving a request for review, the Committee will render a final decision within sixty (60) days, unless circumstances require an extension of an additional sixty (60) days for the review.  In this case, the Committee will notify the claimant in writing of the need for an extension.  The Committee’s decision will be in writing, setting forth the specific reasons for the decision, as well as specific references to the Plan provisions upon which the decision is based.

Section 7.               Legal Fees and Expenses.  The Company shall pay or reimburse a Group I Participant 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 such Group I Participant as a result of any claim, action or proceeding (a) arising out of such Group I Participant’s termination of employment during the Term, (b) contesting, disputing or enforcing any right, benefits or obligations under this Plan or (c) arising out of or challenging the validity, advisability or enforceability of this Plan or any provision thereof.  The payments or reimbursements provided for herein shall be paid by the Participating Company Group 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.

Section 8.               Miscellaneous.

8.1           No Contract of Employment.  Nothing in this Plan shall be construed as giving any Participant any right to be retained in the employ of the Participating Company Group or shall affect the terms and conditions of a Participant’s employment with the Participating Company Group prior to the commencement of the Term.

8.2           ERISA Plan.  This Plan is intended to be (a) an employee welfare plan as defined in Section 3(1) of ERISA and (b) a “top-hat” plan maintained for the benefit of a select group of management or highly compensated employees of the Participating Company Group.

8.3           Source of Payments.  All payments provided under this Plan, other than payments made pursuant to any other Participating Company Group employee benefit plan which provides otherwise, shall be paid in cash from the general funds of the Participating Company Group, 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 Participating Company Group hereunder, such right shall be no greater than the right of an unsecured creditor of the Participating Company Group.

8.4           Notice.  For the purpose of this Plan, notices and all other communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when delivered or mailed by overnight courier or United States registered mail, return receipt requested, postage prepaid, addressed to the Executive Severance Plan Administrative Committee, Adobe Systems Incorporated, 345 Park Avenue, San Jose, California 95110-2704,

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with a copy to the General Counsel of the Company, or to a Participant at the address set forth in the Participating Company Group’s payroll records 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.

8.5           Nonalienation of Benefits.  No benefit under the Plan may be assigned, transferred, pledged as security for indebtedness or otherwise encumbered by any Participant or subject to any legal process for the payment of any claim against a Participant.

8.6           Validity.  The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which shall remain in full force and effect.

8.7           Headings.  The headings contained in this Plan are intended solely for convenience of reference and shall not affect the rights of the parties to this Plan.

8.8           Governing Law.  This Plan shall be governed by and construed in accordance with the laws of the State of California to the extent such laws are not preempted by ERISA.

Section 9.               Successors; Binding Agreement.

9.1           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 the obligations under this Plan 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 Section 9, the “Company” shall include the Company as defined in Section 1.9 and any successor to its business and/or assets which assumes and agrees to perform the obligations arising under this Plan by operation of law or otherwise.

9.2           Enforceability; Beneficiaries.  This Plan shall be binding upon and inure to the benefit of each Participant (and such Participant’s 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 of Control or by operation of law.  This Plan shall inure to the benefit of and be enforceable by each Participant’ personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If a Participant should die while any amount would still be payable hereunder if such Participant had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such Participant’s devisee, legatee or other designee or, if there is no such designee, to such Participant’s estate.

Section 10.             Release of Claims.  No Severance Benefits shall be paid to a Participant under this Plan unless and until the Participant shall, in consideration of the payment of such Severance Benefits, execute a release of claims in a form satisfactory to the Committee; provided, however,

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that such release shall not apply to any right a Participant may have to be indemnified by the Company.

 

 

Adobe Systems Incorporated

 

 

 

 

 

 

Dated: September 25, 2006

By:

/s/ Randy Furr

 

 

 

Randy Furr

 

 

Executive Vice President and

 

 

Chief Financial Officer

 

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