Exhibit 10.3


 


ADOBE SYSTEMS INCORPORATED


NONSTATUTORY STOCK OPTION AGREEMENT


(STANDARD)


 


THIS NONSTATUTORY
STOCK OPTION AGREEMENT (the “Option
Agreement”) is made and entered into as of the Date of
Option Grant by and between Adobe Systems Incorporated and


 


(the “Participant”).  The Company has granted to the Participant
pursuant to the Adobe Systems Incorporated 2005 Equity Incentive Assumption
Plan (the “Plan”)
an option to purchase certain shares of Stock (the “Option”),
upon the terms and conditions set forth in this Option Agreement, but subject
in any event to the Superseding Agreement, if any, described below.


 


1.                                       DEFINITIONS AND CONSTRUCTION.


 


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


 


(a)                                  “Date of Option Grant”
means


 


(b)                                 “Number of Option Shares”
means                            shares
of Stock, as adjusted from time to time pursuant to Section 10.


 


(c)                                  “Exercise Price”
means $                           per
share of Stock, as adjusted from time to time pursuant to Section 10.


 


(d)                                 “Initial Vesting Date”
means the date occurring one (1) year after the Date of Option Grant.


 


(e)                                  “Vested Shares”
means, on any relevant date, that portion (disregarding any fractional share)
of the Number of Option Shares determined by multiplying the Number of Option
Shares by the “Vested
Percentage” determined as of such date as follows:


 


	
   

  	
   

  	
  Vested Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Prior
  to Initial Vesting Date

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On
  Initial Vesting Date, provided the Participant’s Service has not terminated
  prior to such date

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Plus:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  each of the next 12 full months of the Participant’s continuous Service from
  the Initial Vesting Date

  	
   

  	
  2.08

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Plus:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  each of the next 12 full months of the Participant’s continuous Service from
  the Initial Vesting Date until the Vested Percentage equals 100%

  	
   

  	
  4.17

  	
  %

  



 


(f)                                    “Affiliate”
means (i) an entity, other than a Parent Corporation, that directly, or
indirectly through one or more intermediary entities, controls the Company or (ii) an
entity, other than a Subsidiary Corporation, that is controlled by the Company
directly, or indirectly through one or more intermediary entities.  For this purpose, the term “control”
(including the term “controlled by”) means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
the relevant entity, whether through the ownership of voting securities, by
contract or otherwise; or shall have such other meaning assigned such term for
the purposes of registration in the United States (“U.S.”) on Form S-8
under the Securities Act.


 


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


 


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


 


(i)                                     “Committee” means the Executive Compensation
Committee or other committee of the Board duly appointed to administer the Plan
and having such powers as shall be specified by the Board.  If no committee of the Board has been
appointed to administer the Plan, the Board shall exercise all of the powers of
the Committee granted herein, and, in any event, the Board may in its
discretion exercise any or all of such powers.


 


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


 


(k)                                  “Disability” means the permanent and total disability
of the Participant within the meaning of Section 22(e)(3) of the Code.


 


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


 


(m)                               “Exchange Act” means the U.S. Securities Exchange Act
of 1934, as amended.


 


(n)                                 “Fair Market Value” means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:


 


(i)                                     If,
on such date, the Stock is listed on a national or regional securities exchange
or market system, the Fair Market Value of a share of Stock shall be the
closing price of a share of Stock (or the mean of the closing bid and asked
prices of a share of Stock if the Stock is so quoted instead) as quoted on the
Nasdaq National Market, the Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported on www.Nasdaq.com
or such other source as the Company deems reliable.  If the relevant date does not fall on a day
on which the Stock has traded on such 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, or such other appropriate
day as shall be determined by the Committee, in its discretion.


 


If, on such date,
the Stock is not listed on a national or regional securities exchange or market
system, the Fair Market Value of a share of Stock shall be as determined by the
Committee in good faith without regard to any restriction other than a
restriction which, by its terms, will never lapse.


 


(o)                                 “Officer” means any person
designated by the Board as an officer of the Company.


 


(p)                                 “Option Expiration Date”
means the date seven (7) years after the Date of Option Grant.


 


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


 


(r)                                    “Participating Company” means the
Company or any Parent Corporation, Subsidiary Corporation or Affiliate.


 


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


 


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(t)                                    “Securities Act” means the U.S. Securities Act of 1933,
as amended.


 


(u)                                 “Service” means the Participant’s employment with
the Participating Company Group.  The
Participant’s Service shall be deemed to have terminated if the Participant
ceases to render Service to the Participating Company Group as an
Employee.  However, the Participant’s
Service shall not be deemed to have terminated merely because of a change in
the Participating Company for which the Participant renders Service, provided
that there is no interruption or termination of the Participant’s Service.  Furthermore, the Participant’s Service with
the Participating Company Group shall not be deemed to have terminated if the
Participant takes any bona fide leave of absence approved by the Company of
ninety (90) days or less.  In the event
of a leave in excess of ninety (90) days, the Participant’s Service shall be
deemed to terminate on the ninety-first (91st) day of the leave unless the
Participant’s right to return to Service with the Participating Company Group
is guaranteed by statute or contract. 
Notwithstanding the foregoing, unless otherwise designated by the
Company or required by law, a leave of absence shall not be treated as Service
for purposes of determining vesting under the Participant’s Option
Agreement.  The Participant’s Service
shall be deemed to have terminated either upon an actual termination of Service
or upon the corporation for which the Participant performs Service ceasing to
be a Participating Company.  Subject to
the foregoing, the Company, in its discretion, shall determine whether the
Participant’s Service has terminated and the effective date of such
termination.


 


(v)                                 “Stock” means the common stock of the Company, as
adjusted from time to time in accordance with Section 10.


 


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


 


(x)                                   “Superseding Agreement” means
the Adobe Systems Incorporated Executive Severance Plan in the Event of a
Change in Control or any successor plan or agreement in which the Participant
is a participant or to which the Participant is a party (in each such instance,
the “Severance Plan”), or any agreement to which the Participant is a party
which, by its existence alone, prevents the Participant from being eligible to
participate in the Severance Plan.  The
terms and conditions of any such Superseding Agreement shall, notwithstanding
any provision of this Option Agreement to the contrary, supersede any inconsistent
term or condition set forth in this Option Agreement to the extent intended by
such Superseding Agreement.


 


1.2                                 Construction.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. 
Except when otherwise indicated by the context, the singular shall
include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be
exclusive, unless the context clearly requires otherwise.


 


2.                                       TAX STATUS OF OPTION.


 


This Option is
intended to be a nonstatutory stock option and shall not be treated as an
incentive stock option within the meaning of Section 422(b) of the
Code.


 


3.                                       ADMINISTRATION.


 


All questions of
interpretation concerning this Option Agreement shall be determined by the
Committee.  All determinations by the
Committee shall be final and binding upon all persons having an interest in the
Option.  Any Officer shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, 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, or election.


 


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4.                                       EXERCISE OF THE OPTION.


 


4.1                                 Right to Exercise.  Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Vesting Date and prior to
the termination of the Option (as provided in Section 7) in an amount not
to exceed the number of Vested Shares less the number of shares previously
acquired upon exercise of the Option.  In
no event shall the Option be exercisable for more shares than the Number of
Option Shares.


 


4.2                                 Method of Exercise.  Exercise of the Option shall be by means of
electronic notice in a form authorized by the Company, which shall be digitally
signed or authenticated by the Participant in such manner as required by the
notice and transmitted to the Equity Compensation Department of the Company or
other authorized representative of the Company (including a third-party
administrator designated by the Company). 
In the event that the Participant is not authorized or is unable to
provide electronic notice of exercise, the Option shall be exercised by written
notice to the Company, which shall be signed by the Participant and delivered
in person, by certified or registered mail, return receipt requested, by
confirmed facsimile transmission, or by such other means as the Company may
permit, to the Equity Compensation Department of the Company, or other
authorized representative of the Company (including a third-party administrator
designated by the Company).  Each such
notice, whether electronic or written, must state the Participant’s election to
exercise the Option, the number of whole shares of Stock for which the Option
is being exercised and such other representations and agreements as to the
Participant’s investment intent with respect to such shares as may be required
pursuant to the provisions of this Option Agreement.  Further, each such notice must be received by
the Company prior to the termination of the Option as set forth in Section 7
and must be accompanied by full payment of the aggregate Exercise Price for the
number of shares of Stock being purchased. 
The Option shall be deemed to be exercised upon receipt by the Company
of such electronic or written notice and the aggregate Exercise Price.


 


4.3                                 Payment of Exercise Price.


 


(a)                                  Forms of Consideration Authorized.  Except as otherwise provided below, payment
of the aggregate Exercise Price for the number of shares of Stock for which the
Option is being exercised shall be made (i) in cash, by check or by cash
equivalent or (ii) by means of a Cashless Exercise, as defined in Section 4.3(b).


 


(b)                                 Cashless Exercise.  A “Cashless Exercise”
means the delivery of a properly executed notice of exercise together with
irrevocable instructions to a broker in a form acceptable to the Company
providing for the assignment to the Company 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 pursuant to a program or procedure approved by the Company
(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). 
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
such program or procedure, including with respect to the Participant
notwithstanding that such program or procedures may be available to others.


 


4.4                                 Tax Withholding.  Regardless of any action taken by the
Participating Company Group with respect to any or all income tax, social insurance,
payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”),
the Participant acknowledges that the ultimate liability for all Tax-Related
Items legally due by the Participant is and remains the Participant’s
responsibility and that the Participating Company Group (i) makes no
representations or undertakings regarding the treatment of any Tax-Related
Items in connection with any aspect of the Option, including the grant, vesting
or exercise of the Option, the subsequent sale of shares acquired pursuant to
such exercise, or the receipt of any dividends and (ii) does not commit to
structure the terms of the grant or any other aspect of the Option to reduce or
eliminate the Participant’s liability for Tax-Related Items.  At the time of exercise of the Option, the
Participant shall pay or make adequate arrangements satisfactory to the
Participating Company Group to satisfy all withholding obligations of the
Participating Company Group.  In this
regard, at the time the Option is exercised, in whole or in part, or at any
time thereafter as requested by the Company, the Participant hereby authorizes
withholding of all applicable Tax-Related Items from payroll and any other
amounts payable to the Participant, and otherwise agrees to make adequate
provision for withholding of all applicable Tax Related Items by the
Participating Company Group, if any, which arise in connection with the
Option.  Alternatively, or in addition,
if permissible under applicable law, the Participating Company Group may (i) sell
or arrange for the sale of shares acquired by the Participant to meet the
withholding obligation of Tax-Related 


 


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Items and/or (ii) withhold in shares, provided
that only the amount of shares necessary to satisfy the minimum withholding
amount are withheld.  Finally, the
Participant shall pay to the Participating Company Group any amount of the
Tax-Related Items that the Participating Company Group may be required to
withhold as a result of the Participant’s participation in the Plan that cannot
be satisfied by the means previously described. 
The Company shall have no obligation to process the exercise of the
Option or to deliver shares of Stock until the obligations in connection with
the Tax-Related Items as described in this section have been satisfied by
the Participant.


 


4.5                                 Beneficial Ownership of Shares; Certificate Registration.  The
Participant hereby authorizes the Company, in its sole discretion, to deposit
for the benefit of the Participant with any broker with which the Participant
has an account relationship of which the Company has notice any or all shares
acquired by the Participant pursuant to the exercise of the Option.  Except as provided by the preceding sentence,
a certificate for the shares as to which the Option is exercised shall be
registered in the name of the Participant, or, if applicable, in the names of
the heirs of the Participant.


 


4.6                                 Restrictions on Grant of the Option and Issuance of Shares.  The
grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities.  The Option may not be exercised if the
issuance of shares of Stock upon exercise would constitute a violation of any
applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed.  In
addition, the Option may not be exercised unless (i) a registration
statement under the Securities Act shall at the time of exercise of the Option
be in effect with respect to the shares issuable upon exercise of the Option or
(ii) in the opinion of legal counsel to the Company, the shares issuable
upon exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities
Act.  THE PARTICIPANT IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE
SATISFIED.  ACCORDINGLY, THE PARTICIPANT MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS
VESTED.  The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company’s legal counsel to be necessary to the lawful issuance
and sale of any shares subject to the Option shall relieve the Company of any
liability in respect of the failure to issue or sell such shares as to which
such requisite authority shall not have been obtained.  As a condition to the exercise of the Option,
the Company may require the Participant to satisfy any qualifications that may
be necessary or appropriate, to evidence compliance with any applicable law or regulation
and to make any representation or warranty with respect thereto as may be
requested by the Company.


 


4.7                                 Fractional Shares.  The Company shall not be required to issue
fractional shares upon the exercise of the Option.


 


5.                                       NONTRANSFERABILITY OF THE OPTION.


 


The Option may be exercised during the lifetime
of the Participant only by the Participant or the Participant’s guardian or
legal representative and may not be assigned or transferred in any manner
except by will or by the laws of descent and distribution.  Following the death of the Participant, the
Option, to the extent provided in Section 8, may be exercised by the
Participant’s legal representative or by any person empowered to do so under
the deceased Participant’s will or under the then applicable laws of descent
and distribution.


 


6.                                       NATURE OF OPTION.


 


In accepting the Option, the Participant
acknowledges that:


 


6.1                                 the
Plan is established voluntarily by the Company; it is discretionary in nature
and it may be modified, amended, suspended or terminated by the Company at any
time, unless otherwise provided in the Plan and this Option Agreement;


 


6.2                                 the
grant of the Option is voluntary and occasional and does not create any
contractual or other right to receive future grants of Options, or benefits in
lieu of Options, even if Options have been granted repeatedly in the past;


 


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6.3                                 all
decisions with respect to future Option grants, if any, will be at the sole
discretion of the Company;


 


6.4                                 the
Participant’s participation in the Plan shall not create a right to further
employment with the Participating Company Group and shall not interfere with
any ability of the Participating Company Group to terminate the Participant’s
employment relationship at any time with or without cause;


 


6.5                                 the
Participant is voluntarily participating in the Plan;


 


6.6                                 the
Option is not part of normal or expected compensation or salary for any
purpose, including, but not limited to, calculating any severance, resignation,
termination, redundancy, end-of-service payments, bonuses, long-service awards,
pension or retirement benefits or similar payments;


 


6.7                                 the
future value of the underlying shares is unknown and cannot be predicted with
certainty;


 


6.8                                 if
the underlying shares do not increase in value, the Option will have no value;


 


6.9                                 if
the Participant exercises the Option and obtains shares, the value of those
shares acquired upon exercise may increase or decrease in value, even below the
Option price; and


 


6.10                           no
claim or entitlement to compensation or damages arises from termination of the
Option or diminution in value of the Option or shares purchased through
exercise of the Option resulting from termination of the Participant’s Service
with the Participating Company Group (for any reason whether or not in breach
of applicable labor laws) and the Participant irrevocably releases the
Participating Company Group from any such claim that may arise.  If, notwithstanding the foregoing, any such
claim is found by a court of competent jurisdiction to have arisen then, by
signing this Option Agreement, you shall be deemed irrevocably to have waived
your entitlement to pursue such a claim.


 


7.                                       TERMINATION OF THE OPTION.


 


The Option shall
terminate and may no longer be exercised after the first to occur of (a) the
Option Expiration Date, (b) the last date for exercising the Option
following termination of the Participant’s Service as described in Section 8,
or (c) a Change in Control to the extent provided in Section 9.


 


8.                                       EFFECT OF TERMINATION OF SERVICE.


 


8.1                                 Option Exercisability.


 


(a)                                  Normal Retirement.  If
the Participant’s Service terminates at or after the normal retirement age
sixty-five (65) years (“Normal
Retirement”),
then (i) the Option, to the extent unexercised and exercisable on the date
on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of twelve (12) months after the
date on which the Participant’s Service terminated, but in any event no later
than the Option Expiration Date, and (ii) solely for the purpose of
computing the Vested Percentage, the Participant will be given credit for an
additional twelve (12) months of continuous Service; provided, however, that in
no event shall the Vested Percentage exceed 100%.


 


(b)                                 Early Retirement.  If
the Participant’s Service terminates by reason of the early retirement of the
Participant pursuant to an early retirement program established by the
Participating Company to which the Participant renders Service (“Early Retirement”),
then (i) the Option, to the extent unexercised and exercisable on the date
on which the Participant’s Service terminated, may be exercised by the
Participant at any time prior to the expiration of three (3) months (or
such longer period as shall be established pursuant to such early retirement
program) after the date on which the Participant’s Service terminated, but in
any event no later than the Option Expiration Date, and (ii) solely for
the purpose of computing the Vested Percentage, the Participant will be given
credit for such additional months of continuous Service, if any, as shall be
established pursuant to the early retirement program; provided, however, that
in no event shall the Vested Percentage exceed 100%.


 


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(c)                                  Disability.  If the Participant’s Service terminates
because of the Disability of the Participant, then (i) the Option, to the
extent unexercised and exercisable on the date on which the Participant’s
Service terminated, may be exercised by the Participant (or the Participant’s
guardian or legal representative) at any time prior to the expiration of twelve
(12) months after the date on which the Participant’s Service terminated, but
in any event no later than the Option Expiration Date, and (ii) solely for
the purpose of computing the Vested Percentage, the Participant will be given
credit for an additional twelve (12) months of continuous Service; provided,
however, that in no event shall the Vested Percentage exceed 100%.


 


(d)                                 Death.  If the Participant’s Service terminates
because of the death of the Participant, then (i) the Option, to the
extent unexercised and exercisable on the date on which the Participant’s
Service terminated, may be exercised by the Participant’s legal representative
or other person who acquired the right to exercise the Option by reason of the
Participant’s death at any time prior to the expiration of twelve (12) months
after the date on which the Participant’s Service terminated, but in any event
no later than the Option Expiration Date, and (ii) solely for the purpose
of computing the Vested Percentage, the Participant will be given credit for an
additional twelve (12) months of continuous Service; provided, however, that in
no event shall the Vested Percentage exceed 100%.  The Participant’s Service shall be deemed to
have terminated on account of death if the Participant dies within three (3) months
after the Participant’s termination of Service.


 


(e)                                  Termination After Change in Control. 
If the Participant’s Service ceases as a result of Termination After
Change in Control (as defined below), then (i) the Option, to the extent
unexercised and exercisable on the date on which the Participant’s Service
terminated, may be exercised by the Participant (or the Participant’s guardian
or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any
event no later than the Option Expiration Date, and (ii) solely for the
purpose of computing the Vested Percentage, the Participant will be given
credit for an additional twelve (12) months of continuous Service; provided,
however, that in no event shall the Vested Percentage exceed 100%.


 


(f)                                    Other Termination of Service.  If the Participant’s Service terminates for
any reason, except Normal Retirement, Early Retirement, Disability, death or
Termination After Change in Control, the Option, to the extent unexercised and
exercisable by the Participant on the date on which the Participant’s Service
terminated, may be exercised by the Participant at any time prior to the
expiration of three (3) months (or such other longer period of time as
determined by the Committee, in its discretion) after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date.


 


8.2                                 Extension if Exercise Prevented by Law.  Notwithstanding the foregoing, if the
exercise of the Option within the applicable time periods set forth in Section 8.1
is prevented by the provisions of Section 4.6, the Option shall remain
exercisable until three (3) months after the date the Participant is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.


 


8.3                                 Extension if Participant Subject to Section 16(b). 
Notwithstanding the foregoing, if a sale within the applicable time
periods set forth in Section 8.1 of shares acquired upon the exercise of
the Option would subject the Participant to suit under Section 16(b) of
the Exchange Act, the Option shall remain exercisable until the earliest to
occur of (i) the tenth (10th) day following the date on which a sale of
such shares by the Participant would no longer be subject to such suit, (ii) the
one hundred and ninetieth (190th) day after the Participant’s termination of
Service, or (iii) the Option Expiration Date.


 


8.4                                 Termination for Cause. 
Notwithstanding any other provision of this Option Agreement, if the
Participant’s Service is terminated for Cause (as defined below), the Option
shall terminate and cease to be exercisable on the effective date of such
termination of Service.


 


8.5                                 Certain Definitions.


 


(a)                                  “Termination After Change
in Control” shall mean either of the following events
occurring within twelve (12) months after a Change in Control:


 


(i)                                     termination
by the Participating Company Group of the Participant’s Service for any reason
other than for Cause (as defined below); or


 


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(ii)                                  the
Participant’s resignation for Good Reason (as defined below) from all
capacities in which the Participant is then rendering Service within a
reasonable period of time following the event constituting Good Reason.


 


(iii)                               Notwithstanding any
provision herein to the contrary, Termination After Change in Control shall not
include any termination of the Participant’s Service which (1) is for
Cause (as defined below); (2) is a result of the Participant’s Normal
Retirement, Early Retirement, death or Disability; (3) is a result of the
Participant’s voluntary termination of Service other than for Good Reason; or (4) occurs
prior to the effectiveness of a Change in Control.


 


(b)                                 “Cause”
shall mean any of the following: (i) the Participant’s conviction of a
felony; (ii) the Participant’s material act of fraud, dishonesty or other
malfeasance; or (iii) the Participant’s willful, improper disclosure of a
Participating Company’s confidential or proprietary information.


 


(c)                                  “Good Reason”
shall mean any one or more of the following:


 


(i)                                     without
the Participant’s express written consent, the assignment to the Participant of
any duties, or any limitation of the Participant’s responsibilities,
substantially inconsistent with the Participant’s positions, duties,
responsibilities and status with the Participating Company Group immediately
prior to the date of the Change in Control;


 


(ii)                                  without
the Participant’s express written consent, the relocation by more than 35 miles
of the principal place of the Participant’s Service immediately prior to the
date of the Change in Control, or the imposition of travel requirements
substantially more demanding of the Participant than such travel requirements
existing immediately prior to the date of the Change in Control;


 


(iii)                               any failure by the Participating
Company Group to pay, or any material reduction by the Participating Company
Group of, (1) the Participant’s base salary in effect immediately prior to
the date of the Change in Control (unless reductions comparable in amount, or
percentage, and duration are concurrently made for all other employees of the
Participating Company Group with responsibilities, organizational level and
title comparable to the Participant’s), or (2) the Participant’s bonus
compensation, if any, in effect immediately prior to the date of the Change in
Control (subject to applicable performance requirements with respect to the
actual amount of bonus compensation earned by the Participant); or


 


(iv)                              any
failure by the Participating Company Group to (1) continue to provide the
Participant with the opportunity to participate, on terms no less favorable
than those in effect for the benefit of any employee or service provider group
which customarily includes a person holding the employment or service provider
position or a comparable position with the Participating Company Group then
held by the Participant, in any benefit or compensation plans and programs,
including, but not limited to, the Participating Company Group’s life,
disability, health, dental, medical, savings, profit sharing, stock purchase
and retirement plans, if any, in which the Participant was participating
immediately prior to the date of the Change in Control, or their equivalent, or
(2) provide the Participant with all other fringe benefits (or their
equivalent) from time to time in effect for the benefit of any employee or
service provider group which customarily includes a person holding the
employment or service provider position or a comparable position with the
Participating Company Group then held by the Participant.


 


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9.                                       CHANGE IN CONTROL.


 


9.1                                 Definitions.


 


(a)                                  An
“Ownership Change Event”
shall be deemed to have occurred if any of the following occurs with respect to
the Company: (i) the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the voting stock of
the Company; (ii) a merger or consolidation in which the Company is a
party; (iii) 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 subsidiaries of the Company); or (iv) a liquidation or dissolution of
the Company.


 


(b)                                 A
“Change in Control” shall mean an Ownership Change Event or series of related
Ownership Change Events (collectively, a “Transaction”)
in which the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power
of the outstanding voting securities of the Company or, in the case of an
Ownership Change Event described in Section 9.1(a)(iii), the entity to
which the assets of the Company were transferred.


 


9.2                                 Effect of Change in Control on Option.  In the event of a Change in Control, the
surviving, continuing, successor, or purchasing entity or parent thereof, as
the case may be (the “Acquiror”), may, without the consent of Participant, either assume
the Company’s rights and obligations under outstanding the Option or substitute
for the Option a substantially equivalent option for the Acquiror’s stock.  In the event the Acquiror elects not to
assume or substitute for the Option in connection with a Change in Control, the
Committee shall provide that any unexercised and/or unvested portions of the
Option shall be immediately exercisable and vested in full as of the date
thirty (30) days prior to the date of the Change in Control.  Any exercise of the Option that was
permissible solely by reason of this Section 9.2 shall be conditioned upon
the consummation of the Change in Control. 
The Option shall terminate and cease to be outstanding effective as of
the time of consummation of the Change in Control to the extent that the Option
is neither assumed by the Acquiror in connection with the Change in Control nor
exercised as of the time of consummation of the Change in Control.


 


10.                                 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.


 


In the event of
any change in the Stock through merger, consolidation, reorganization,
reincorporation, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares or similar change in the capital structure of the
Company, or in the event of payment of a dividend or distribution to the
stockholders of the Company in a form other than Stock (excepting normal cash
dividends) that has a material effect on the Fair Market Value of shares of
Stock, appropriate adjustments shall be made in the number, Exercise Price and
class of shares subject to the Option. 
If a majority of the shares which are of the same class as the shares
that are subject to the Option are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event) shares of another
corporation (the “New Shares”),
the Committee may unilaterally amend the Option to provide that the Option is
exercisable for New Shares.  In the event
of any such amendment, the Number of Option Shares and the Exercise Price shall
be adjusted in a fair and equitable manner, as determined by the Committee, in
its discretion.  Notwithstanding the
foregoing, any fractional share resulting from an adjustment pursuant to this Section 10
shall be rounded down to the nearest whole number, and in no event may the
Exercise Price be decreased to an amount less than the par value, if any, of
the stock subject to the Option. The adjustments determined by the Committee
pursuant to this Section 10 shall be final, binding and conclusive.


 


11.                                 RIGHTS AS A STOCKHOLDER OR EMPLOYEE.


 


The Participant
shall have no rights as a stockholder with respect to any shares covered by the
Option until the date of the issuance of the shares for which the Option has
been exercised (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 10.  The Participant understands and acknowledges
that, except as otherwise provided in a separate, written employment agreement
between a Participating Company and the Participant, the Participant’s
employment is “at will” and is for no specified term.  Nothing in this Option 


 


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Agreement shall confer
upon the Participant any right to continue in the Service of a Participating
Company or interfere in any way with any right of the Participating Company
Group to terminate the Participant’s Service as an Employee at any time.


 


12.                                 MISCELLANEOUS PROVISIONS.


 


12.1                           Designation of Beneficiary.  Subject to local laws and procedures, the
Participant may file with the Company a written designation of a beneficiary
who, in the event of the death of the Participant, shall thereafter be entitled
to exercise the Option to the extent that it remains exercisable in accordance
with this Option Agreement.  Each
designation will revoke all prior designations by the Participant, shall be in
a form prescribed by the Company, and shall be effective only when filed by the
Participant in writing with the Company during the Participant’s lifetime.  If the Participant is married and designates
a beneficiary other than the Participant’s spouse, the effectiveness of such
designation may be subject to the consent of the Participant’s spouse.  If the Participant dies without an effective
designation of a beneficiary who is living at the time of the Participant’s
death, the Option may be exercised by the Participant’s legal representative to
the extent that it remains exercisable in accordance with this Option
Agreement.  If the designated beneficiary
survives the Participant but dies before exercising the Option to the full
extent that it remains exercisable in accordance with this Option Agreement,
then the Option shall be exercisable by the legal representative of such
deceased designated beneficiary to the extent that it remains exercisable in
accordance with this Option Agreement. 
The determination of the Company as to which person, if any, qualifies
as a designated beneficiary shall be final, conclusive and binding on all
persons.


 


12.2                           Binding Effect.  This
Option Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
assigns.


 


12.3                           Termination or Amendment. 
The Committee may terminate or amend the Plan or the Option at any time;
provided, however, that except as provided in Section 9.2 in connection
with a Change in Control, no such termination or amendment may adversely affect
the Option or any unexercised portion hereof without the consent of the
Participant unless such termination or amendment is necessary to comply with
any applicable law or government regulation. 
No amendment or addition to this Option Agreement shall be effective
unless in writing.


 


12.4                           Delivery of Documents and Notices.  Any document relating to participating in the
Plan and/or notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given (except to the extent that this Option
Agreement provides for effectiveness only upon actual receipt of such notice)
upon personal delivery, electronic delivery, or upon deposit in the U.S. Post
Office or foreign postal service, by registered or certified mail, with postage
and fees prepaid, addressed to the other party at the e-mail address, if any,
provided for the Participant by a Participating Company or at the address shown
below that party’s signature to this Option Agreement or at such other address
as such party may designate in writing from time to time to the other party.


 


(a)                                  Description of Electronic Delivery.  The Plan documents, which may include but do
not necessarily include: the Plan Prospectus, this Option Agreement and U.S.
financial reports of the Company, may be delivered to the Participant
electronically.  In addition, the
Participant may deliver electronically the notice called for by Section 4.2
(the “Notice of Exercise”) to the Company or to such third party involved in
administering the Plan as the Company may designate from time to time.  Such means of delivery may include but do not
necessarily include the delivery of a link to a Company intranet or the
internet site of a third party involved in administering the Plan, the delivery
of the document via e-mail or such other delivery determined at the Committee’s
discretion.


 


(b)                                 Consent to Electronic Delivery.  The Participant acknowledges that the
Participant has read Section 12.4 of this Option Agreement and consents to
the electronic delivery of the Plan documents and the delivery of the Notice of
Exercise, as described in Section 12.4(a) of this Option
Agreement.  The Participant acknowledges
that he or she may receive from the Company a paper copy of any documents
delivered electronically at no cost if the Participant contacts the Company by
telephone, through a postal service or electronic mail at equity@adobe.com.  The Participant further acknowledges that the
Participant will be provided with a paper copy of any documents delivered
electronically if electronic delivery fails; similarly, the Participant
understands that the Participant must provide the Company or any designated
third party with a paper copy of any documents delivered electronically if
electronic delivery fails.  Also, the
Participant understands that the


 


10





















 


Participant’s consent may be revoked or changed,
including any change in the electronic mail address to which documents are
delivered (if Participant has provided an electronic mail address), at any time
by notifying the Company of such revised or revoked consent by telephone,
postal service or electronic mail at equity@adobe.com.  Finally, the Participant understands that he
or she is not required to consent to electronic delivery.


 


12.5                           Data Privacy Consent.  The Participant hereby
explicitly and unambiguously consents to the collection, use and transfer, in
electronic or other form, of the Participant’s personal data as described in
this document by and among the members of the Participating Company Group for
the exclusive purpose of implementing, administering and managing the
Participant’s participation in the Plan.


 


The Participant
understands that the Company and the Participating Company Group hold certain
personal information about the Participant, including, but not limited to, the
Participant’s name, home address and telephone number, date of birth, social
insurance number or other identification number, salary, nationality, job
title, any shares of Stock or directorships held in the Company, details of all
Options or any other entitlement to shares of Stock awarded, canceled,
exercised, vested, unvested or outstanding in the Participant’s favor, for the
purpose of implementing, administering and managing the Plan (“Data”).  The Participant understands that Data may be
transferred to any third parties assisting in the implementation,
administration and management of the Plan, that these recipients may be located
in the Participant’s country or elsewhere, and that the recipient’s country may
have different data privacy laws and protections than the Participant’s
country.  The Participant understands
that he or she may request a list with the names and addresses of any potential
recipients of the Data by contacting the Participant’s local human resources
representative.  The Participant
authorizes the recipients to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the purposes of implementing,
administering and managing the Participant’s participation in the Plan,
including any requisite transfer of such Data as may be required to a broker or
other third party with whom the Participant may elect to deposit any shares of
Stock acquired upon exercise of the Option. 
The Participant understands that Data will be held only as long as is
necessary to implement, administer and manage the Participant’s participation
in the Plan.  The Participant understands
that he or she may, at any time, view Data, request additional information
about the storage and processing of Data, require any necessary amendments to
Data or refuse or withdraw the consents herein, in any case without cost, by
contacting in writing the Participant’s local human resources
representative.  The Participant
understands, however, that refusing or withdrawing the Participant’s consent
may affect the Participant’s ability to participate in the Plan.  For more information on the consequences of
the Participant’s refusal to consent or withdrawal of consent, the Participant
understands that he or she may contact the Participant’s local human resources
representative.


 


12.6                           Integrated Agreement. 
This Option Agreement, together with the Superseding Agreement, if any,
constitutes the entire understanding and agreement of the Participant and the
Participating Company Group with respect to the subject matter contained herein
and supersedes any prior agreements, understandings, restrictions,
representations, or warranties among the Participant and the Participating
Company Group with respect to such subject matter other than those as set forth
or provided for herein.  To the extent
contemplated herein, the provisions of this Option Agreement shall survive any
exercise of the Option and shall remain in full force and effect.


 


12.7                           Applicable Law.  This
Option Agreement shall be governed by the laws of the State of California as
such laws are applied to agreements between California residents entered into
and to be performed entirely within the State of California.


 


11





















 


12.8                           Counterparts.  This
Option Agreement may be executed in counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.


 


	
   

  	
  ADOBE
  SYSTEMS INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Murray J. Demo

  
	
   

  	
  Title:

  	
  Executive Vice
  President, Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  345 Park Avenue

  
	
   

  	
   

  	
  San Jose, CA 95110-2704

  
					



 


 


The Participant represents
that the Participant is familiar with the terms and provisions of this Option
Agreement and hereby accepts the Option subject to all of the terms and
provisions thereof.  The Participant
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under this Option
Agreement.


 


	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  



 


12