EXHIBIT
10.3


 


ADOBE SYSTEMS INCORPORATED


 


1994 PERFORMANCE AND RESTRICTED STOCK PLAN


 


STOCK GRANT AGREEMENT


 


 


                THIS AGREEMENT is made and
entered into as of the     _____________  by and between Adobe Systems Incorporated
(the “Company”) and        XXXXXXXXX          (the “Participant”).


 


                The Company desires to issue and
Participant desires to acquire stock of the Company as herein described,
pursuant to the Company’s 1994 Performance and Restricted Stock Plan (the
“Plan”), on the terms and conditions set forth in this Agreement.  Capitalized terms in the Agreement shall
have the meaning set forth in paragraph 3 hereto.


 


                IT IS AGREED between the parties
as follows:


 


                1.             Issuance of Shares.  On the effective date of this Agreement as set forth above, the
Participant will acquire and the Company will issue, subject to the provisions
hereof XXX shares of its
common stock in consideration for the Participant’s service with the Company.


 


                2.             Vesting and Unvested Share Reacquisition Right.


 


                                (a)           Vesting.


 


                                                (i)            The method of determining Vested
Shares and Unvested Shares shall be as set forth on Exhibit A
hereto.  Notwithstanding the foregoing,
in the event a Full Acceleration of Vesting Event occurs, any Unvested Shares
shall become Vested Shares immediately before the Full Acceleration of Vesting
Event or at such earlier time as the Board may determine.  If a Partial Acceleration of Vesting Event
occurs the number of Vested Shares shall be determined as if the Participant’s
Termination occurred one (1) year after the Participant’s actual Termination.


 


                                                (ii)           Notwithstanding anything contained
herein to the contrary, all Unvested Shares shall become Vested Shares
immediately before the death or Total Disability of the Participant, if such
death or Total Disability occurs while the Participant is employed by a
Participating Company.


 


                                                (iii)          In the event that the acceleration of
the vesting of the Unvested Shares pursuant to paragraph 2(a)(i) or (ii) will
result in a “parachute payment” as defined in section 280G of the Code
notwithstanding paragraph 2(a)(i) or (ii), the extent to which vesting will be
accelerated in connection with a Vesting Acceleration Event, death or Total
Disability shall not exceed the amount of vesting which produces the greatest
after-tax benefit to the Participant as determined by the Company in a fair and
equitable manner.


 


                                (b)           Unvested Share Reacquisition Right.  In the event the Participant’s employment
with the Participating Company Group is terminated for any reason, with or
without Cause, or if the Participant or the Participant’s legal representative
attempts to sell, exchange, transfer (including, without limitation, any
transfer to a nominee or agent of the Participant), pledge or otherwise dispose
of (other than pursuant to a Change of Control Event described in paragraph
3(d)(iii) or an Option Exercise described in paragraph 2(d)) any shares of
Stock which are Unvested Shares, the Control Company shall automatically
reacquire the Unvested Shares and the Participant shall not be entitled to any
payment therefor.  The Control Company
shall have the right to 


 


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assign the
Unvested Share Reacquisition Right at any time prior to the time such right is
no longer contingent, to one or more persons as may be selected by the Company.


 


                                (c)           Continuation of Unvested Share
Reacquisition Right following a Change of Control Event.  In the event of a Change of Control Event,
the Unvested Share Reacquisition Right shall continue in full force and effect,
subject to the provisions of paragraph 2(a)(i); provided, however that
“employment with the Participating Company Group” for purposes of this
Agreement shall include all service with any corporation which was a
Participating Company at the time the services were rendered, whether or not
the corporation was included within such term both before and after the event
constituting the Change of Control Event.


 


                                (d)           Option Exercise.  Notwithstanding anything contained herein to
the contrary, the Participant may transfer to the Company while the Stock
remains subject to the Unvested Share Reacquisition Right any or all of the
Stock as payment of the exercise price in connection with an Option Exercise,
provided that (i) such payment is made in accordance with the terms of the
related option agreement and the plan pursuant to which the option was granted
and (ii) a number of the shares issued on such Option Exercise which are equal
to the number of whole shares of Stock transferred to the Company for such payment
will remain subject to the Unvested Share Reacquisition Right.


 


                3.             Definitions. 
As used in this Agreement, the following terms shall have the meanings
indicated unless the context requires a different meaning.


 


                                (a)           Acceleration of Vesting Event.  An “Acceleration of Vesting Event” shall
mean a Change of Control Event as defined in paragraph 3(d) occurring after the
Grant Date followed by a Termination as defined in paragraph 3(t).  A “Full Acceleration of Vesting Event” shall
mean an Acceleration of Vesting Event where a majority of the Continuing
Outside Directors do not approve the Change of Control Event.  For purposes of the foregoing, the failure
of the Continuing Outside Directors to approve or disapprove the transaction
will be construed as nonapproval.  A
“Partial Acceleration of Vesting Event” shall mean an Acceleration of Vesting
Event other than a Full Acceleration of Vesting Event.


 


                                (b)           Board.  The “Board” shall mean the Board of
Directors of the Control Company.


 


                                (c)           Cause.  “Cause” shall mean willful and gross
misconduct on the part of the Participant or the commission by the Participant
of one or more acts which constitute an indictable crime under United States
federal, state or local law, provided that such misconduct or act(s) is (are)
materially and demonstrably detrimental to the Participating Company Group
taken as a whole as determined in good faith by a written resolution duly
adopted by the affirmative vote of not less than a majority of all of the
Outside Directors at a meeting of such Outside Directors (whether or not such
meeting constitutes a meeting of the Board) after reasonable notice to the
Participant and opportunity for the Participant and his counsel to be heard.


 


                                (d)           Change of Control Event.  “Change of Control Event” shall mean any one
of the following:


 


                                                (i)            Continuing Outside Directors no
longer constitute at least a majority of the Outside Directors;


 


                                                (ii)           any person or group of persons (as
defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with
its affiliates, become the beneficial owner, directly or indirectly, of 20%


 


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of the Control
Company’s then outstanding Common Stock or 20% or more of the voting power of
the Control Company’s then outstanding securities entitled generally to vote
for the election of the Board;


 


                                                (iii)          the approval by the Control Company’s
shareholders of the merger or consolidation of the Participating Company Group
with any other corporation, the sale of substantially all of the assets of the
Control Company or the liquidation or dissolution of the Control Company,
unless, in the case of a merger or consolidation, the Continuing Outside
Directors in office immediately prior to such merger or consolidation will
constitute at least a majority of the Outside Directors of the surviving
corporation of such merger or consolidation and any parent (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such
corporation; or


 


                                                (iv)          at least a majority of the Continuing
Outside Directors in office immediately prior to any other action proposed to
be taken by the Control Company’s shareholders or by the Board determines that
such proposed action, if taken, would constitute a change of control of the
Participating Company Group and such action is taken.


 


                                (e)           Code.  “Code” shall mean the Internal Revenue Code
of 1986, as amended.


 


                                (f)            Company.  The “Company” shall mean Adobe Systems
Incorporated.


 


                                (g)           Continuing Outside Director.  “Continuing Outside Director” shall mean any
individual who is an Outside Director on the date hereof, or who is a Director
on the date hereof and becomes an Outside Director but only after such person
becomes an Outside Director, or who becomes an Outside Director unless a
majority of the Continuing Outside Directors designate (before such person
becomes an Outside Director) that such person is not a Continuing Outside
Director.  In the event there are no
Outside Directors, the Directors who have been Directors for at least one (1)
year shall be deemed to be Continuing Outside Directors for the purposes of
this Agreement but only until an Outside Director assumes office.


 


                                (h)           Control Company.  The “Control Company” shall mean the
corporation, the stock of which is held by the Participant pursuant to the
terms of this Agreement.


 


                                (i)            Director.  “Director” shall mean a member of the Board
of Directors of the Control Company.


 


                                (j)            Good Reason.  “Good Reason” shall mean:


 


                                                (i)            any failure by the Participating
Company Group to pay, or any reduction by the Participating Company Group of,
the Participant’s base annual salary or bonus compensation in effect
immediately prior to the date of the Change of Control Event or any failure by
the Participating Company Group to grant an increase in the Participant’s base
annual salary each year consistent with any increase in the applicable annual
cost of living index, unless no increases in base salary are being given to
other employees of the Participating Company Group;


 


                                                (ii)           any failure by the Participating
Company Group (A) to continue to provide the Participant with the opportunity
to participate, on terms no less favorable than those in effect immediately
prior to the date of the Change of Control Event, in any benefit plans and
programs, including, but not limited to, the Participating Company Group’s
life, disability, health, dental, and retirement plans in which the Participant
was participating immediately prior to the date of the Change of Control Event,
or their equivalent, or (B) to provide the 


 


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Participant with
all other fringe benefits (or their equivalent) from time to time in effect for
the benefit of any executive, management or administrative group which
customarily includes a person holding the employment position with the
Participating Company Group then held by the Participant; or


 


                                                (iii)          without the Participant’s express
written consent, the relocation of the principal place of the Participant’s
employment to a location that is more than 50 miles further from the
Participant’s principal residence than such principal place of employment
immediately prior to the date of the Change of Control Event, or the imposition
of travel requirements on the Participant not substantially consistent with
such travel requirements existing immediately prior to the date of the Change
of Control Event.


 


                                                (iv)          Notwithstanding the foregoing, Good
Reason shall not be deemed to exist under paragraph 3(j)(i) or 3(j)(ii) if the
compensation and benefits available to the Participant considered as a whole is
reasonably equivalent to the compensation and benefits previously available to
the Participant considered as a whole.


 


                                (k)           Grant Date.  The “Grant Date” shall be the effective date
of this Agreement, as first above written.


 


                                (l)            Normal Retirement Date.  “Normal Retirement Date” shall mean the date
upon which the Participant attains age 65.


 


                                (m)          Option Exercise.  “Option Exercise” shall mean an exercise of
an option granted to the Participant by a Participating Company.


 


                                (n)           Outside Director.  “Outside Director” shall mean a Director who
is not an employee of the Participating Company Group.


 


                                (o)           Participant.  “Participant” shall mean the person
receiving the Stock pursuant to this Agreement, as first above written.


 


                                (p)           Participating Company.  “Participating Company” shall mean (i) the
Company and (ii) any present or future parent and/or subsidiary corporation of
the Company while such corporation is a parent or subsidiary of the
Company.  For purposes of this
Agreement, a parent corporation and a subsidiary corporation shall be as
defined in sections 425(e) and 425(f) of the Code.


 


                                (q)           Participating Company Group.  “Participating Company Group” shall mean at
any point in time all corporations collectively which are then a Participating
Company.


 


                                (r)            Plan.  The “Plan” shall mean the Adobe Systems
Incorporated 1989 Restricted Stock Plan.


 


                                (s)           Stock.  “Stock” shall mean shares of stock that are
subject to this Agreement.


 


                                (t)            Termination.  “Termination” shall mean a termination of
the Participant’s employment with the Participating Company Group following the
occurrence of any Change of Control Event, if such termination is by the
Participating Company Group without Cause or by the Participant for Good
Reason; provided, however, that “Termination” shall not include
any termination of the employment of the Participant (i) by the Participating
Company Group as a result of the Total Disability of the Participant or (ii) as
a result of the death of the Participant or the retirement of the Participant
on or after his Normal Retirement Date.


 


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                                (u)           Total Disability.  “Total Disability” shall mean, as applied to
the Participant, that (i) because of sickness or injury the Participant is not
able to perform the major duties of the Participant’s occupation, (ii) such
total incapacity shall have continued for a period of six consecutive months
and (iii) such total incapacity will, in the opinion of a qualified physician,
be permanent and continuous during the remainder of the Participant’s
life.  (“Occupation” shall mean a
Participant’s regular occupation or profession at the time he became disabled.)


 


                                (v)           Unvested Share Reacquisition Right.  “Unvested Share Reacquisition Right” shall
mean the Company’s right to reacquire the Unvested Shares without any payment
to the Participant therefor as described in paragraph 2(b).


 


                                (w)          Unvested Shares.  “Unvested Shares” shall be the total number
of shares of Stock in excess of the Vested Shares.


 


                                (x)            Vested Shares.  “Vested Shares” shall be the shares of Stock
as set forth on Exhibit A hereto.


 


                4.             Administration. 
All questions of interpretation concerning this Agreement shall be
determined by the Board and/or by a duly appointed committee of the Board
having such powers as shall be specified by the Board.  Any subsequent reference herein to the Board
shall also mean the committee if such committee has been appointed.  All determinations by the Board shall be
final and binding upon all persons having an interest in this Agreement.


 


                5.             Legends. 
The Participating Company Group may at any time place legends
referencing the Unvested Share Reacquisition Right set forth in paragraph 2
(“Vesting and Unvested Share Reacquisition Right”) and any applicable federal
and/or state securities restrictions on all certificates representing shares of
Stock subject to the provisions of this Agreement.  The Participant shall, at the request of the Participating
Company Group, promptly present to the Participating Company Group any and all
certificates representing shares of Stock acquired under this Agreement in the
possession of the Participant in order to effectuate the provisions of this paragraph.  Unless otherwise specified by the
Participating Company Group, legends placed on such certificates may include
but shall not be limited to the following:


 


                “THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET FORTH IN AN AGREEMENT BETWEEN
THIS CORPORATION AND THE REGISTERED HOLDER, OR HIS PREDECESSOR IN INTEREST, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”


 


                6.             Escrow.


 


                                (a)           Establishment of Escrow.  To insure that Stock subject to the Unvested
Share Reacquisition Right will be available for reacquisition, the Company may
require the Participant to deposit the certificates evidencing the Stock with
an escrow agent designated by the Company under the terms and conditions of an
escrow agreement approved by the Company. 
If the Company does not require such deposit as a condition of this
Agreement, the Company reserves the right at any time to require the
Participant to so deposit the certificates in escrow.  The Company shall bear the expenses of the escrow.


 


                                (b)           Delivery of Shares to Participant.  As soon as practicable after the expiration
of the Unvested Share Reacquisition Right, the escrow agent shall deliver to
the Participant the shares no longer subject to such restrictions.


 


                7.             Transfers in Violation of Agreement.  The Control Company shall not be required
(a) to transfer on its books any shares of the 


 


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Stock which shall
have been sold or transferred in violation of any of the provisions set forth
in this Agreement, or (b) to treat as owner of such shares or to accord
the right to vote as such owner or to pay dividends to any transferee to whom
any such shares shall have been so transferred.


 


                8.             Effect of Change in Company’s Capital Structure.  Appropriate adjustments shall be made in the
number and class of shares of Stock in the event of a stock dividend, stock
split, reverse stock split, combination, reclassification or like change in the
capital structure of the Control Company. 
If, from time to time, there is any stock dividend, stock split or other
change in the character or amount of any of the outstanding stock of the
Control Company including, without limitation, a conversion into cash or
securities of another corporation, then in such event any and all new
substituted or additional cash or securities to which Participant is entitled
by reason of Participant’s ownership of the Stock shall be immediately subject
to the Unvested Share Reacquisition Right with the same force and effect as the
Stock subject to the Unvested Share Reacquisition Right immediately before such
event.


 


                9.             Rights as a Shareholder or Employee.  The Participant shall have no rights as a
shareholder with respect to the Stock until the date of the issuance of a
certificate or certificates for the Stock. 
No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date such stock certificate or
certificates are issued, except as provided in paragraph 8 (“Effect of Change
in Company’s Capital Structure”). 
Nothing in this Agreement shall confer upon the Participant any right to
continue in the employ of a Participating Company or interfere in any way with
any right of the Participating Company to terminate the Participant’s
employment at any time.


 


                10.           Withholding.


 


                                (a)           Withholding Requirement.  At the time that this Agreement is executed,
or at any time thereafter as requested by the Company, Participant shall make
adequate provision for federal and state tax withholding obligations of the
Company, if any, which arise in connection with the acquisition of shares of
Stock under the Plan, including, without limitation, obligations arising upon
(i) the transfer, in whole or in part, of any shares of Stock, (ii) the lapse
of any restriction with respect to any shares of Stock acquired hereby, or
(iii) the filing of an election to recognize a tax liability.


 


                                (b)           Election to Withhold Shares.  The federal and state taxes required to be
withheld or collected from the Participant in connection with the acquisition
of shares of Stock under the Plan, including, without limitation, upon the
lapse of any restriction with respect to any shares of Stock acquired under the
Plan or upon the filing of an election to recognize a tax liability (such
applicable event upon which the amount of tax to be withheld is determined
being referred to herein as the “Tax Date”), may be satisfied, in whole or in
part, by the withholding of a sufficient number of shares of Stock which, valued
at fair market value on the Tax Date, would be equal to the total withholding
obligation of the Participant; provided, however, that no person who is subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), may elect to satisfy the withholding of federal and state taxes in
connection with the acquisition of shares of Stock under the Plan by the
withholding of shares of Stock unless such election complies with any
conditions or restrictions imposed by the Board, including conditions or
restrictions to ensure compliance with the requirements of Rule 16b-3(e) as
promulgated pursuant to the Exchange Act, and is made either (i) at 


 


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least six (6)
months prior to the applicable Tax Date or (ii) during any of the periods
beginning on the third (3rd) business day following the date on which the
Company issues a news release containing the operating results of a fiscal
quarter or fiscal year and ending on the twelfth (12th) business day following
such date.  The Board shall adopt rules
governing the election to withhold shares of Stock described in this paragraph
10(b), which may include, without limitation, rules requiring that any such election
shall be made on or before the Tax Date, shall be irrevocable, shall be subject
to the disapproval of the Board and shall be deemed made upon receipt of notice
thereof by the Chief Financial Officer of the Company, delivered in person or
by certified or registered mail, return receipt requested.  In addition, if the Participant is a person
subject to Section 16 of the Exchange Act, such election shall state the number
of shares to be withheld or specify a formula pursuant to which such number may
be determined and may not be made within six (6) months of the grant of the
Stock award (except in the event of the death or disability of the
Participant).


 


                11.           Compliance with Securities Laws.  Notwithstanding the foregoing, inability of
the Company to obtain from any regulatory body having jurisdiction authority
deemed by the Company’s counsel to be necessary to the lawful issuance of the
Stock hereunder shall relieve the Company of any liability in respect of the
non-issuance of the Stock as to which such requisite authority shall not have been
obtained.


 


                12.           Shareholder Approval.  Any shares which are granted prior to approval of the Plan, or
any amendment thereto, by the Company’s shareholders as provided by Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended, shall be
contingent upon such shareholder approval and the Participant shall have no
right to sell or transfer the Stock prior to such approval.  In the event such shareholder approval is
not obtained within one (1) year of the Grant Date, the issuance of the Stock
shall be null and void and the certificates representing the Stock shall be
returned to the Company for cancellation.


 


                13.           Further Instruments.  The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.


 


                14.           Notice.  Any
notice required or permitted hereunder shall be given in writing and shall be
deemed effectively given upon personal delivery or upon telegraphic delivery,
or upon delivery by certified mail, addressed to the other party hereto at his
address shown below his signature or at such other address as such party may
designate by ten days advance written notice to all other parties hereto.


 


                15.           Successors and Assigns.  This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to the restrictions on transfer herein set
forth, be binding upon Participant, his heirs, executors, administrators,
successors and assigns.


 


                16.           Certificate Registration.  The certificate or certificates for the Stock acquired pursuant
to this Agreement shall be registered in the name of the Participant.


 


                17.           Integrated Agreement.  This Agreement constitutes the entire understanding and agreement
of the Participant and the Company with respect to the subject matter contained
herein, and there are no agreements, understandings, restrictions,
representations or warranties among the Participant and the Company other than
those as set forth or provided for herein.


 


                18.           Applicable Law. 
This Agreement shall be governed by the laws of the State of California
as such laws are applied to agreements 


 


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between California
residents entered into and to be performed entirely within California.


 


                19.           Receipt of Prospectus.  By execution of this Agreement, the Participant acknowledges
receipt of a prospectus for the Plan from the Company in the form most recently
registered with the Securities and Exchange Commission.


 


                IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the day and year first above written.


 


	
  ADOBE SYSTEMS
  INCORPORATED

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President, Chief Financial Officer

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Print)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Murray J. Demo

  	
   

  	
   

  	
   

  
	
   

  	
  (Print)

  	
   

  	
   

  	
   

  
	
   

  	
  345 Park Avenue

  	
   

  	
   

  	
   

  
	
   

  	
  San Jose, CA
  95110

  	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  	
   

  	
  (Address)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							



 


 


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Exhibit A


 


Determination of Vesting


 


Grant Award


 


 


                This Exhibit A is an Exhibit to
a Stock Grant Agreement between XXXXXXXX
and Adobe Systems Incorporated dated XXXXXXXXX
covering XXX shares.


 


 


                The “Initial Vesting Date” shall
be XXXXXXXXXXXXX.


 


                Prior to the Initial Vesting
Date, no shares of Stock shall be Vested Shares, and all such shares shall be
Unvested Shares.


 


                On and after the Initial Vesting
Date, one-third (1/3) of the shares of Stock issued to the Participant shall be
Vested Shares, provided the Participant is continuously employed by the
Participating Company Group from the date the Board grants the Stock under the
Plan until and on the Initial Vesting Date, and the balance of such shares
shall be Unvested Shares.


 


                On and after the first
anniversary of the Initial Vesting Date (one (1) year after the Initial Vesting
Date), two-thirds (2/3) of the shares of Stock issued to the Participant shall
be Vested Shares, provided the Participant is continuously employed by the
Participating Company Group from the date the Board grants the Stock under the
Plan until and on such first anniversary, and the balance of such shares shall
be Unvested Shares.


 


                On and after the second
anniversary of the Initial Vesting Date (two (2) years after the Initial
Vesting Date), all of the shares of Stock issued to the Participant shall be
Vested Shares, provided the Participant is continuously employed by the
Participating Company Group from the date the Board grants the Stock under the
Plan until and on such second anniversary.


 


 


 


	
  Initialed:

  	
  The Participant

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The Company

  	
   

  	
   

  



 


 


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