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 that is not a Performance Goal established pursuant to Section 9.3
of the Plan.


 


(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 Program.  The
Company is not obligated to give uniform treatment (e.g., number of shares subject to 


 


 


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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]