Exhibit 10.1

 

ADOBE SYSTEMS INCORPORATED

2003 EQUITY INCENTIVE PLAN

 

[           ] PERFORMANCE SHARE PROGRAM

 

ADOPTED: [                              ]

 

1.                                      Purpose.  The Adobe Systems Incorporated
[       ] Performance Share Program (the “Program”), established under the Adobe
Systems Incorporated 2003 Equity Incentive Plan (the “Plan”), is intended to
provide equity incentive compensation to individuals who make a significant
contribution to the performance of Adobe Systems Incorporated (the “Company”). 
Program objectives are to:  (i) focus key Employees on achieving specific
performance targets, (ii) reinforce a team orientation, (iii) provide
significant award potential for achieving outstanding performance, and
(iv) enhance the ability of the Company to attract and retain highly talented
and competent individuals.

 

2.                                      Definitions.

 

Defined terms not explicitly defined in this Program but defined in the Plan
shall have the same definitions as in the Plan.

 

(a)                                  “Actual Award” means the number of shares
of Stock credited to a Designated Participant under the Program during a
Performance Period based on achievement of applicable Performance Goals and
Other Performance Goals.

 

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

 

(c)                                  “Certification Date” means the date on
which the Committee certifies whether the Performance Goals have been met under
the Performance Award Formula and whether any reductions in the Maximum Awards
should be made on account of the degree of achievement of the Other Performance
Goals.

 

(d)                                  “Committee” means a committee of one or
more members of the Board appointed by the Board pursuant to the Plan; provided,
however, that for purposes of administering the Plan with respect to Designated
Participants who are or may be deemed “covered employees” (as defined for
purposes of Section 162(m) of the Code), the “Committee” shall be composed of
two or more members of the Board, each of whom is an “outside director” for
purposes of Section 162(m) of the Code.

 

(e)                                  “Disability” means, with respect to a
Designated Participant, the inability of such Designated Participant to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, as
provided in Section 22(e)(3) and 409A(a)(2)(c)(i) of the Code.

 

(f)                                    “Designated Participant” means a key
Employee of the Company or any other Participating Company who is designated by
the Committee in writing to participate in the Program.

 

(g)                                 “Maximum Award” means the maximum number of
shares of Stock that may be credited to a Designated Participant under the
Program in respect of a specified Performance Period if the applicable
Performance Goals are achieved at the levels set by the Committee during the
applicable

 

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Performance Period and the Designated Participant continues to render Service to
the Company or any other Participating Company during the entire Performance
Period.

 

(h)                                 “Other Performance Goal” means a Performance
Goal established by the Committee pursuant to Section 9.3 of the Plan that is
used to determine any reduction in the Maximum Award.

 

(i)                                    “Performance Period” means the period of
time selected by the Committee over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a Designated
Participant’s right to an Actual Award.  At the discretion of the Committee, a
Performance Period may be divided into shorter periods (for example, fiscal
years of the Company) over which the attainment of one or more Performance Goals
will be measured.

 

3.                                      How Awards Are Earned Under the Program.

 

(a)                                  General Program Description.  The Program
provides the opportunity for certain key Employees to earn shares of Stock based
on the performance of the Company.  In general, the Committee will select
certain key Employees to participate in the Program at the beginning of a
Performance Period.  Upon selection to participate in the Program, each such
Designated Participant will be granted a Maximum Award equal to the number of
shares of Stock that will be represented by an Actual Award to such Designated
Participant if (i) specified levels of applicable Performance Goals are achieved
during the Performance Period, (ii) the Committee does not reduce the Maximum
Award on account of the degree of achievement of applicable Other Performance
Goals, and (iii) the Designated Participant continues to render Service to the
Company or any other Participating Company during the entire Performance Period
and any subsequent additional vesting period.  If the Committee does reduce the
Maximum Award on account of the degree of achievement of applicable Other
Performance Goals, the Designated Participant will be awarded a portion (or
none) of the shares of Stock subject to the Maximum Award; provided, however,
that (i) if the specified level of Performance Goals is not achieved during the
Performance Period, the Designated Participant will not receive any shares of
Stock, and (ii) the maximum number of shares of Stock that a Designated
Participant may receive as an Actual Award will in no event exceed the Maximum
Award.  The methodology for the operation of the Program in terms of
establishing the Maximum Award based on the levels of achievement of the
Performance Goals and the determination of whether the Maximum Award, or some
portion of it, will become payable to a Designated Participant as an Actual
Award in respect of a Performance Period is set forth in the attached
Exhibit A.  As required by Section 5.4(b)(iii) of the Plan and in accordance
with Section 162(m) of the Code, in no event may a Maximum Award be granted to a
Designated Participant such that the number of shares of Stock that could be
earned by such Designated Participant as an Actual Award would exceed two
hundred thousand (200,000) shares of Stock for each full fiscal year of the
Company contained in the Performance Period for such Actual Award.

 

(b)                                  Designated Participants.  Each key Employee
of the Company or any other Participating Company who is designated by the
Committee in writing for participation in the Program for a particular
Performance Period shall be eligible for a Maximum Award with respect to such
Performance Period.  The Committee may designate a key Employee who commences
Service after the beginning of a particular Performance Period as eligible to
receive a prorated Maximum Award for such Performance Period.  The determination
as to whether an individual is a Designated Participant shall be made by the
Committee, in its sole discretion, and such determination shall be binding and
conclusive on all persons.

 

No Employee shall have any right to be a Designated Participant in the Program,
to continue as a Designated Participant, or to be granted a Maximum Award or
Actual Award under the

 

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Program.  The Company is not obligated to give uniform treatment (e.g., number
of shares subject to Maximum Awards) to Employees or Designated Participants
under the Program.  Participation in the Program as to a particular Performance
Period does not convey any right to participate in the Program as to any other
Performance Period.

 

(c)                                  Performance Goals and Other Performance
Goals.  The Performance Goals for a particular Performance Period and Other
Performance Goals, if applicable, and their relative weights, will be determined
by the Committee, in its sole discretion. The Committee also may establish, in
its sole discretion, Performance Goals and Other Performance Goals for annual,
quarterly or other periods within the applicable Performance Period.  The
Performance Goals and Other Performance Goals for a Performance Period or for
shorter periods within a Performance Period are not required to be identical to
the Performance Goals and Other Performance Goals for any other Performance
Period or shorter period within a Performance Period.  The Committee may
establish Performance Goals and Other Performance Goals for the Company that
differ from those established for one or more other Participating Companies and
may establish different Performance Goals and Other Performance Goals for each
Designated Participant or for groups of Designated Participants.

 

4.                                      Other Program Provisions.

 

(a)                                  Distribution of Actual Awards.  Assessment
of actual performance, determination of Actual Awards and the distribution of
shares of Stock in respect of Actual Awards will be subject to (i) certification
by the Committee that the applicable Performance Goals and other terms of the
Program have been met, (ii) the Committee’s determination as to the appropriate
reductions, if any, in the amounts of the Maximum Awards in arriving at the
amounts of the Actual Awards, based on the levels of achievement of applicable
Other Performance Goals, and (iii) the completion of any subsequent additional
vesting period.  Unless an Actual Award provides otherwise, shares of Stock that
are credited to a Designated Participant as an Actual Award will be distributed
to the Designated Participant (or the Designated Participant’s heirs in the case
of death) within thirty (30) days following the applicable vesting date. 
Notwithstanding the foregoing, if the Company has provided a Designated
Participant with a plan or program by which to defer distribution of such shares
of Stock and the Designated Participant has made an effective election to defer
such distribution under such plan or program, such shares will be distributed to
the Designated Participant (or the Designated Participant’s heirs in the case of
death) in accordance with such election.  The Company shall withhold shares of
Stock otherwise deliverable to the Designated Participant in satisfaction of any
federal, state or local tax withholding obligation relating to the delivery of
Stock under the Actual Award, but the Company shall not withhold a number of
shares with a fair market value in excess of the applicable tax withholdings
determined by application of the minimum required statutory rates.

 

(b)                                  Employment and Termination.  In order to
receive shares of Stock in respect of an Actual Award under the Program, a
Designated Participant must continue to render Service to the Company or any
other Participating Company during the entire Performance Period, and for any
subsequent additional vesting period, except as otherwise provided under the
terms of the applicable award agreement.

 

(c)                                  No Employment or Service Rights.  Nothing
in the Program or any instrument executed or Award granted pursuant to the
Program shall (i) confer upon any Employee or Designated Participant any right
to continue to be retained in the employ or service of the Company or any other
Participating Company, (ii) change the at-will employment relationship between
the Company or any other Participating Company and an Employee or Designated
Participant, or (iii) interfere with the right of the Company or any other
Participating Company to discharge any Employee, Designated Participant or other
person at any time, with or without cause, and with or without advance notice.

 

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A.                                    Program Administration.  The Committee
shall be responsible for all decisions and recommendations regarding Program
administration and retains final authority regarding all aspects of Program
administration, the resolution of any disputes, and application of the Program
in any respect to a Designated Participant.  All determinations and
interpretations made by the Committee in good faith shall not be subject to
review by any person and shall be final, binding and conclusive on all persons. 
The Committee may, without notice, amend, suspend or terminate the Program;
provided, however, that no such action may adversely affect any then outstanding
Award unless (i) expressly provided by the Committee and (ii) with the consent
of the Participant, unless such action is necessary to comply with any
applicable law, regulation or rule.

 

B.                                    Stockholder Rights.  No Designated
Participant shall be deemed to be the holder of, or to have any of the rights of
a holder with respect to, any shares of Stock subject to a Maximum Award
(including, without limitation, the right to receive dividends) unless and until
such Designated Participant has received an Actual Award under the Program, has
vested in the shares subject to the Actual Award and has received delivery of
such shares; provided, however, that a plan or program by which receipt of
shares of Stock in respect of an Actual Award may be deferred may provide for
the crediting of dividend equivalent rights.

 

(d)                                  Validity.  If any provision of the Program
is held invalid, void, or unenforceable, the same will not affect, in any
respect whatsoever, the validity of any other provision of the Program.

 

(e)                                  Governing Plan Document.  The Program is
subject to all the provisions of the Plan and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted by the Committee, the Board or the Company pursuant
to the Plan.  In the event of any conflict between the provisions of this
Program and those of the Plan, the provisions of the Plan shall control.

 

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EXHIBIT A

[               ] PERFORMANCE SHARE PROGRAM

AWARD CALCULATION METHODOLOGY

 

[To Be Approved Annually]

 

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