Exhibit 10.6


 


ADOBE SYSTEMS INCORPORATED


 


1996 OUTSIDE DIRECTORS STOCK OPTION PLAN


(as amended through March 28, 2006)


 


1.                                       Establishment, Purpose and
Term of Plan.


 


1.1                                 Establishment. The Adobe Systems Incorporated Restricted
Stock Option Plan was initially established effective March 27, 1987 and
amended from time to time thereafter (the “Initial Plan”).
The Initial Plan was amended and restated in its entirety as the Adobe Systems
Incorporated 1996 Outside Directors Stock Option Plan (the “Plan”) effective as of the date of its approval by the
stockholders of the Company, April 5, 1995 (the “Effective
Date”).


 


1.2                                 Purpose. The purpose of the Plan is to advance the
interests of the Participating Company Group and its stockholders by providing
an incentive to attract and retain highly qualified persons to serve as Outside
Directors of the Company and by creating additional incentive for Outside
Directors to promote the growth and profitability of the Participating Company
Group.


 


1.3                                 Term of Plan. The Plan shall continue in effect until
the earlier of its termination by the Board or the date on which all of the
shares of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.


 


2.                                       Definitions and
Construction.


 


2.1                                 Definitions. Whenever used herein, the following terms
shall have their respective meanings set forth below:


 


(a)                                  “Board” means
the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan, “Board” also means such
Committee(s).


 


(b)                                 “Code” means the
Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.


 


(c)                                  “Committee”
means a committee of the Board duly appointed to administer the Plan and having
such powers as shall be specified by the Board. Unless the powers of the
Committee have been specifically limited, the Committee shall have all of the
powers of the Board granted herein, including, without limitation, the power to
amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.


 


(d)                                 “Company” means
Adobe Systems Incorporated, a Delaware corporation, or any successor
corporation thereto.


 


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(e)                                  “Consultant”
means any person, including an advisor, engaged by a Participating Company to
render services other than as an Employee or a Director.


 


(f)                                    “Director” means
a member of the Board or the board of directors of any other Participating
Company.


 


(g)                                 “Employee” means
any person treated as an employee (including an officer or a Director who is
also treated as an employee) in the records of a Participating Company;
provided, however, that neither service as a Director nor payment of a director’s
fee shall be sufficient to constitute employment for purposes of the Plan.


 


(h)                                 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.


 


(i)                                     “Fair Market Value”
means, as of any date, if there is then a public market for the Stock, the
closing price of the Stock (or the mean of the closing bid and asked prices of
the Stock if the Stock is so reported instead) as reported on the National
Association of Securities Dealers Automated Quotation (“Nasdaq”)
System, the Nasdaq National Market System or such other national or regional
securities exchange or market system constituting the primary market for the
Stock. If the relevant date does not fall on a day on which the Stock is
trading on Nasdaq, the Nasdaq National Market System or other national or
regional securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which the Stock was
so traded prior to the relevant date. If there is then no public market for the
Stock, the Fair Market Value on any relevant date shall be as determined by the
Board without regard to any restriction other than a restriction which, by its
terms, will never lapse.


 


(j)                                     “Option” means a
right to purchase Stock (subject to adjustment as provided in Section 4.2)
pursuant to the terms and conditions of the Plan.


 


(k)                                  “Optionee” means
a person who has been granted one or more Options.


 


(l)                                     “Option Agreement”
means a written agreement between the Company and an Optionee setting forth the
terms, conditions and restrictions of the Option granted to the Optionee.


 


(m)                               “Outside Director”
means a Director of the Company who is not an officer of the Company, an
Employee, or a Consultant.


 


(n)                                 “Parent Corporation”
means any present or future “parent corporation” of the Company, as defined in Section 424(e) of
the Code.


 


(o)                                 “Participating Company”
means the Company or any Parent Corporation or Subsidiary Corporation.


 


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(p)                                 “Participating Company
Group” means, at any point in time, all corporations collectively
which are then Participating Companies.


 


(q)                                 “Rule 16b-3”
means Rule 16b-3 as promulgated under the Exchange Act, as amended from
time to time, or any successor rule or regulation.


 


(r)                                    “Service” means
the Optionee’s service as a Director.


 


(s)                                  “Stock” means
the common stock of the Company, as adjusted from time to time in accordance
with Section 4.2.


 


(t)                                    “Subsidiary Corporation”
means any present or future “subsidiary corporation” of the Company, as defined
in Section 424(f) of the Code.


 


2.2                                 Construction. Captions and titles contained herein are
for convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
use of the term “or” shall not be exclusive.


 


3.                                       Administration.


 


3.1                                 Administration by the
Board. The
Plan shall be administered by the Board, including any duly appointed Committee
of the Board. All questions of interpretation of the Plan or of any Option
shall be determined by the Board, and such determinations shall be final and
binding upon all persons having an interest in the Plan or such Option. Any
officer of a Participating Company shall have the authority to act on behalf of
the Company with respect to any matter, right, obligation, determination or
election which is the responsibility of or which is allocated to the Company
herein, provided the officer has apparent authority with respect to such
matter, right, obligation, determination or election.


 


3.2                                 Limitations on Authority
of the Board. Except
as otherwise provided herein, the Board shall have no authority, discretion, or
power to select the Outside Directors who will receive Options, to set the
exercise price of the Options, to determine the number of shares of Stock to be
subject to an Option or the time at which an Option shall be granted, to establish
the duration of an Option, or to alter any other terms or conditions specified
in the Plan, except in the sense of administering the Plan subject to the
provisions of the Plan.


 


4.                                       Shares Subject to Plan.


 


4.1                                 Maximum Number of Shares
Issuable. Subject
to adjustment as provided in Section 4.2, the maximum aggregate number of
shares of Stock that may be issued under the Plan shall be three million
two hundred fifty thousand (3,250,000) and shall consist of authorized but
unissued shares or reacquired shares of Stock or any combination thereof. If an
outstanding Option for any reason expires or is terminated or canceled or
shares of Stock acquired, subject to repurchase, upon the exercise of an


 


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Option are repurchased by the Company, the shares of Stock allocable to
the unexercised portion of such Option, or such repurchased shares of Stock,
shall again be available for issuance under the Plan.


 


4.2                                 Adjustments for Changes in
Capital Structure. In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number and class of shares subject to the Plan, and to any outstanding
Options, and in the exercise price of any outstanding Options. For any changes
in capital structure made after April 12, 2001, no adjustments shall be
made in the number and class of shares subject to the “Initial Option” or “Annual
Option” (as defined in Section 6.1). If a majority of the shares which are
of the same class as the shares that are subject to outstanding Options
are exchanged for, converted into, or otherwise become (whether or not pursuant
to a Transfer of Control as defined in Section 8.1) shares of another
corporation (the “New Shares”),
the Board may unilaterally amend the outstanding Options to provide that
such Options are exercisable for New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its sole discretion. Notwithstanding the foregoing,
any fractional share resulting from an adjustment pursuant to this Section 4.2
shall be rounded down to the nearest whole number, and in no event may the
exercise price of any Option be decreased to an amount less than the par value,
if any, of the stock subject to the Option.


 


5.                                       Eligibility and Type of
Options.


 


5.1                                 Persons Eligible for
Options. An
Option shall be granted only to a person who, at the time of grant, is an
Outside Director.


 


5.2                                 Options Authorized. Options shall be nonstatutory stock
options; that is, options which are not treated as incentive stock options
within the meaning of Section 422(b) of the Code.


 


6.                                       Terms and Conditions of
Options. Options
shall be evidenced by Option Agreements specifying the number of shares of
Stock covered thereby, in such form as the Board shall from time to time
establish. Option Agreements may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:


 


6.1                                 Automatic Grant of Options.
Subject to
execution by an Outside Director of the appropriate Option Agreement, Options
shall be granted automatically and without further action of the Board, as
follows:


 


(a)                                  Initial Option. Prior to December 1, 2003, each person who is first elected or
appointed as an Outside Director after the Effective Date shall be granted an
Option to purchase sixty thousand (60,000) shares of Stock on the date of such
initial election or appointment. Commencing on December 1,
2003, each person who is


 


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first elected or appointed as an Outside Director after the Effective
Date shall be granted an Option to purchase fifty thousand (50,000) shares of
Stock on the date of such initial election or appointment (Each, an “Initial Option”). Notwithstanding anything herein to the contrary,
a Director of the Company who previously did not qualify as an Outside Director
shall not receive an Initial Option in the event that such Director
subsequently becomes an Outside Director.


 


(b)                                 Annual Option. Prior to December 1, 2003, each Outside Director (including any
Director of the Company who previously did not qualify as an Outside Director
but who subsequently becomes an Outside Director) shall be granted, on the day
immediately following the day of each annual meeting of the stockholders of the
Company (an “Annual Meeting”) following which
such person remains an Outside Director, an Option to purchase forty thousand
(40,000) shares of stock. Commencing on December 1,
2003, each Outside Director (including any Director of the Company
who previously did not qualify as an Outside Director but who subsequently
becomes an Outside Director) shall be granted, on the day immediately following
the day of an Annual Meeting following which such person remains an Outside
Director, an Option to purchase twenty-five thousand (25,000) shares of Stock
(Each, an “Annual Option”). Notwithstanding
the foregoing, an Outside Director who received an Initial Option subsequent to
the preceding year’s Annual Meeting shall not receive an Annual Option with
respect to the current year’s Annual Meeting.


 


(c)                                  Right to Decline Option. Notwithstanding the foregoing, any person
may elect not to receive an Option by delivering written notice of such
election to the Board no later than the day prior to the date such Option would
otherwise be granted. A person so declining an Option shall receive no payment
or other consideration in lieu of such declined Option. A person who has
declined an Option may revoke such election by delivering written notice
of such revocation to the Board no later than the day prior to the date such
Option would be granted pursuant to Section 6.1(a) or (b), as the
case may be.


 


6.2                                 Discretion to Vary Option
Size. Notwithstanding
any provision of the Plan to the contrary, the Board may, in its sole discretion,
increase or decrease the number of shares of Stock that would otherwise be
subject to one or more Initial Options or Annual Options to be granted pursuant
to Section 6.1 if, at the time of such exercise of discretion, (a) the
“disinterested administration” provisions contained in paragraph (c)(2)(i) of
Rule 16b-3 are no longer applicable to any employee benefit plan
maintained by a Participating Company and (b) the exercise of such
discretion would not otherwise preclude any transaction in an equity security
of the Company by an officer or Director of a Participating Company from being
exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3.


 


6.3                                 Exercise Price. The exercise price per share of Stock
subject to an Option shall be the Fair Market Value of a share of Stock on the
date the Option is granted.


 


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6.4                                 Exercise Period. Each Option shall terminate and cease to
be exercisable on the date ten (10) years after the date of grant of the
Option unless earlier terminated pursuant to the terms of the Plan or the
Option Agreement.


 


6.5                                 Right to Exercise Options. Except as otherwise provided in the
Plan or in the Option Agreement and provided that the Optionee’s Service has
been continuous from the date of Option grant until the relevant date set forth
below, each Option, whether an Initial Option or an Annual Option, shall become
vested and exercisable cumulatively for shares of Stock subject to the Option
(the “Option Shares”) as follows:


 


(a)                                  For Options granted on or prior to March 28,
2006:


 


(i)                                     25% of the Option Shares shall vest and
first become exercisable on the day immediately preceding the day of the first
Annual Meeting following the date of Option grant.


 


(ii)                                  25% of the Option Shares shall vest and
first become exercisable on the day immediately preceding the day of the second
Annual Meeting following the date of Option grant.


 


(iii)                               50% of the Option Shares shall vest and first become
exercisable on the day immediately preceding the day of the third Annual
Meeting following the date of Option grant.


 


(b)                                 For Options granted subsequent to March 28,
2006:


 


(i)                                     25% of the Option Shares shall vest and
first become exercisable on the day immediately preceding the day of the first
Annual Meeting following the date of Option grant.


 


(ii)                                  25% of the Option Shares shall vest and
first become exercisable on the day immediately preceding the day of the second
Annual Meeting following the date of Option grant.


 


(iii)                               25% of the Option Shares shall vest and first become
exercisable on the day immediately preceding the day of the third Annual
Meeting following the date of Option grant.


 


(iv)                              25% of the Option Shares shall vest and
first become exercisable on the day immediately preceding the day of the fourth
Annual Meeting following the date of Option grant.


 


6.6                                 Payment of Exercise Price.


 


(a)                                  Forms of Consideration Authorized.
Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being


 


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purchased pursuant to any Option shall be made (i) in cash, by
check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value not less than the
exercise price, (iii) by the assignment of the proceeds of a sale or loan
with respect to some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the
Board of Governors of the Federal Reserve System) (a “Cashless
Exercise”), or (iv) by any combination thereof.


 


(b)                                 Tender of Stock. Notwithstanding the foregoing, an Option may not
be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company’s stock. Unless
otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly
or indirectly, from the Company.


 


(c)                                  Cashless Exercise. The Company reserves, at any and all times,
the right, in the Company’s sole and absolute discretion, to establish, decline
to approve or terminate any program or procedures for the exercise of Options
by means of a Cashless Exercise.


 


6.7                                 Tax Withholding. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise
of an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Option or the shares
acquired upon exercise thereof. Alternatively or in addition, in its sole
discretion, the Company shall have the right to require the Optionee to make
adequate provision for any such tax withholding obligations of the
Participating Company Group arising in connection with the Option or the shares
acquired upon exercise thereof. The Company shall have no obligation to deliver
shares of Stock until the Participating Company Group’s tax withholding
obligations have been satisfied.


 


7.                                       Standard Form of
Option Agreement.


 


7.1                                 Initial Option. Unless otherwise provided for by the
Board at the time an Initial Option is granted, each Initial Option shall
comply with and be subject to the terms and conditions set forth in the form of
Nonstatutory Stock Option Agreement for Outside Directors (Initial Option)
adopted by the Board concurrently with its adoption of the Plan and as amended
from time to time.


 


7.2                                 Annual Option. Unless otherwise provided for by the
Board at the time an Annual Option is granted, each Annual Option shall comply
with and be subject to the terms and conditions set forth in the form of
Nonstatutory Stock Option Agreement for Outside Directors (Annual Option)
adopted by the Board concurrently with its adoption of the Plan and as amended
from time to time.


 


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7.3                                 Authority to Vary Terms. Subject to the limitations set forth in Section 3.2,
the Board shall have the authority from time to time to vary the terms of any
of the standard forms of Option Agreement described in this Section 7
either in connection with the grant or amendment of an individual Option or in
connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of Option Agreement are not inconsistent
with the terms of the Plan. Such authority shall include, but not by way of
limitation, the authority to grant Options which are immediately exercisable
subject to the Company’s right to repurchase any unvested shares of Stock
acquired by the Optionee upon the exercise of an Option in the event such Optionee’s
Service is terminated for any reason.


 


8.                                       Transfer of Control.


 


8.1                                 Definition. A “Transfer of Control”
shall be deemed to have occurred in the event any of the following occurs with
respect to the Company:


 


(a)                                  the direct or indirect sale or exchange
by the stockholders of the Company of all or substantially all of the stock of
the Company where the stockholders of the Company before such sale or exchange
do not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company;


 


(b)                                 a merger or consolidation in which the
stockholders of the Company before such merger or consolidation do not retain,
directly or indirectly at least a majority of the beneficial interest in the
voting stock of the Company;


 


(c)                                  the sale, exchange, or transfer of all or
substantially all of the assets of the Company (other than a sale, exchange, or
transfer to one or more corporations where the stockholders of the Company
before such sale, exchange or transfer retain, directly or indirectly, at least
a majority of the beneficial interest in the voting stock of the corporations
to which the assets were transferred); or


 


(d)                                 a liquidation or dissolution of the
Company.


 


8.2                                 Effect of Transfer of
Control on Options. In the event of a Transfer of Control, any unexercisable or unvested
portion of the outstanding Options shall be immediately exercisable and vested
in full as of the date thirty (30) days prior to the date of the Transfer of
Control. The exercise or vesting of any Option that was permissible solely by
reason of this Section 8.2 shall be conditioned upon the consummation of
the Transfer of Control. In addition, the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof, as the case may be
(the “Acquiring Corporation”), may either
assume the Company’s rights and obligations under outstanding Options or
substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation’s stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Transfer


 


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of Control nor exercised as of the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control.


 


9.                                       Beneficiary
Designation. Subject to local laws and
procedures, each Outside Director may file with the Company a written
designation of a beneficiary who is to receive any benefit under the Plan to
which the Outside Director is entitled in the event of such Outside Director’s
death before he or she receives any or all of such benefit. Each designation
will revoke all prior designations by the same Outside Director, shall be in a form prescribed
by the Company, and will be effective only when filed by the Outside Director
in writing with the Company during the Outside Director’s lifetime. If a
married Outside Director designates a beneficiary other than the Outside
Director’s spouse, the effectiveness of such designation may be subject to
the consent of the Outside Director’s spouse. If an Outside Director dies
without an effective designation of a beneficiary who is living at the time of
the Outside Director’s death, the Company will pay any remaining unpaid
benefits to the Outside Director’s legal representative.


 


10.                                 Nontransferability of
Options. During
the lifetime of the Optionee, an Option shall be exercisable only by the
Optionee or the Optionee’s guardian or legal representative. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.


 


11.                                 Termination or Amendment
of Plan. The
Board may terminate or amend the Plan at any time. However, subject to
changes in the law or other legal requirements that would permit otherwise,
without the approval of the Company’s stockholders, there shall be (a) no
increase in the total number of shares of Stock that may be issued under
the Plan (except by operation of the provisions of Section 4.2), and (b) no
expansion in the class of persons eligible to receive Options. Furthermore,
to the extent required by Rule 16b-3, provisions of the Plan addressing
eligibility to participate in the Plan and the amount, price and timing of
Options shall not be amended more than once every six (6) months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules hereunder. In any event, no
termination or amendment of the Plan may adversely affect any then
outstanding Option, or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is necessary to comply with
any applicable law or government regulation.


 


12.                                 Continuation of Initial
Plan as to Outstanding Options. Any
other provision of the Plan to the contrary notwithstanding, the terms of the
Initial Plan shall remain in effect and apply to all Options granted pursuant
to the Initial Plan.


 


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