Exhibit 10.2
ADOBE SYSTEMS
INCORPORATED
EXECUTIVE SEVERANCE
PLAN
IN THE EVENT OF A CHANGE OF
CONTROL
Adobe Systems Incorporated, a
Delaware corporation (the “Company”) has adopted this
Executive Severance Plan (the “Plan”), effective as of
December 12, 2006, for the benefit of certain key employees of the
Participating Company Group.
The Company considers it essential
to the best interests of its stockholders to take reasonable steps
to retain its key management personnel. Further, the Board of
Directors of the Company (the “Board”) recognizes that
the uncertainty and questions which might arise among management in
the context of a Change of Control of the Company could result in
the departure or distraction of management personnel to the
detriment of the Company and its stockholders.
The Board has determined, therefore,
that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of its members of management
of the Company to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from any
possible Change of Control of the Company.
The Company hereby adopts this
Executive Severance Plan In the Event of a Change of Control for
the benefit of its employees who are eligible as provided in the
Plan.
Section 1.
Definitions
.
1.1
“ Accounting Firm
” shall mean KPMG LLP or, if such firm is unable or unwilling
to perform the calculations required under this Plan, such other
national accounting firm as shall be designated by agreement
between the Participant to whom Section 4.1 applies and the
Company.
1.2
“ Base Salary ”
means the Participant’s annual base salary as in effect
during the last regularly scheduled payroll period immediately
preceding such Participant’s Date of Termination. Base
Salary does not include any bonuses, commissions, fringe benefits,
overtime, car allowances, other irregular payments or any other
compensation except base salary.
1.3
“ Cause ” shall
mean (a) with respect to Group I Participants (i) felony
conviction; or (ii) willful disclosure of material trade secrets or
other material confidential information related to the business of
a Participating Company; or (iii) willful and continued failure
substantially to perform the same duties as in effect prior to the
Change of Control for the Participating Company (other than any
such failure resulting from physical or mental incapacity or any
actual or anticipated failure resulting from a resignation for Good
Reason) after a written demand for substantial performance is
delivered by the Chief Executive Officer or the President of the
Company, which demand identifies the specific actions which the
Chief Executive Officer or the President of the Company believes
constitute willful and continued failure substantially to perform
duties, and which performance is not substantially corrected within
ten (10) days of receipt of such demand. For purposes of the
previous sentence, no act or failure to act shall be deemed
“willful” unless done, or omitted to be done, with
willful malfeasance or gross negligence and without reasonable
belief that action or omission was not materially adverse
to
the best interest of the
Participating Company Group; and (b) with respect to Group II
Participants (i) theft, dishonesty or falsification of any
employment or Participating Company Group records, (ii) improper
disclosure of a Participating Company’s confidential or
proprietary information, (iii) any intentional act by such
Participant which has a material detrimental effect on the
Participating Company Group’s reputation or business, (iv)
failure to perform any reasonably assigned duties, which failure is
not cured with in thirty (30) days following written notice of such
failure from the Participating Company, (v) gross misconduct or
(vi) felony conviction.
1.4
“ Change of Control
” shall mean a Change of Control of the Company of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act,
whether or not the Company is then subject to such reporting
requirement; provided, however, that anything in this Plan to the
contrary notwithstanding, a Change of Control shall be deemed to
have occurred if:
(a)
any individual, partnership, firm,
corporation, association, trust, unincorporated organization or
other entity or person, or any syndicate or group deemed to be a
person under Section 14(d)(2) of the Exchange Act, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more
of the combined voting power of the Company’s then
outstanding securities entitled to vote in the election of
directors of the Company;
(b)
during any period of two (2)
consecutive years (not including any period prior to the Effective
Date), individuals who at the beginning of such period constituted
the Board and any new directors, whose election by the Board or
nomination for election by the Company’s stockholders was
approved by a vote of at least three-fourths (3/4ths) of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for
election was previously so approved (the “ Incumbent
Directors ”), cease for any reason to constitute a
majority thereof;
(c)
there occurs a reorganization,
merger, consolidation or other corporate transaction involving the
Company (a “ Transaction ”), in each case
with respect to which the stockholders of the Company immediately
prior to such Transaction do not, immediately after the
Transaction, own securities representing more than 50% of the
combined voting power of the Company, a parent of the Company or
other corporation resulting from such Transaction (counting, for
this purpose, only those securities held by the Company’s
stockholders immediately after the Transaction that were received
in exchange for, or represent their continuing ownership of,
securities of the Company held by them immediately prior to the
Transaction);
(d)
all or substantially all of the
assets of the Company are sold, liquidated or distributed;
or
(e)
there is a “Change of
Control” or a “change in the effective control”
of the Company within the meaning of Section 280G of the Code and
the Regulations.
2
1.5
“ Change of Control
Date ” shall mean the date on which the Change of Control
occurs. Notwithstanding the first sentence of this
definition, if a Participant’s employment with the
Participating Company Group terminates prior to the Change of
Control Date and it is reasonably demonstrated that such
termination (a) was at the request of the third party who has taken
steps reasonably calculated to effect the Change of Control or (b)
otherwise arose in connection with or in anticipation of the Change
of Control, then “Change of Control Date” shall mean
the date immediately prior to the date of such Participant’s
termination of employment.
1.6
“ Code ” shall
mean the Internal Revenue Code of 1986, as amended, and any
successor provisions thereto.
1.7
“ Committee ”
means the Executive Severance Plan Administrative Committee
responsible for administering the Plan as provided in Section
5.
1.8
“ Common Stock ”
shall mean the common stock of the Company.
1.9
“ Company ” means
Adobe Systems Incorporated, a Delaware Corporation, and, except in
determining under Section 1.4 hereof whether or not any Change of
Control has occurred, shall include any successor to its business
and/or assets.
1.10
“ Date of Termination
” means the date of a Participant’s termination of
employment with the Participating Company Group as determined in
accordance with Section 3.6.
1.11
“ Disability ”
shall mean a Participant’s (a) incapacity due to physical or
mental illness which causes such Participant’s absence from
the full-time performance of his or her duties with the
Participating Company Group for six (6) consecutive months and (b)
such Participant’s failure to return to full-time performance
of his or her duties for the Participating Company Group within
thirty (30) days after written Notice of Termination due to
Disability is given to a Participant. Any question as to the
existence of Disability upon which a Participant and the
Participating Company Group cannot agree shall be determined by a
qualified independent physician selected by the Participant (or, if
such Participant is not able to select a physician, such selection
shall be made by any adult member of the Participant’s
immediate family), and approved by the Participating Company
Group. The determination of such physician made in writing to
the Participating Company Group shall be final and conclusive for
all purposes of this Plan.
1.12
“ Effective Date
” means December 12, 2001.
1.13
“ Equity Awards ”
shall mean options, restricted stock, bonus stock or other grants
or awards which consist of, or relate to, equity securities of the
Company and which have been granted to Participant’s under
the Equity Plans. For purposes of this Plan, Equity Awards
shall also include any securities acquired upon the exercise of an
option, warrant or similar right that constitutes an Equity
Award.
1.14
“ Equity Plans ”
shall mean the Adobe Systems Incorporated 1994 Stock Option Plan,
the Adobe Systems Incorporated 1994 Amended Performance and
Restricted Stock Plan, the Adobe Systems Incorporated 1999
Nonstatutory Stock Option Plan, the Adobe Systems
3
Incorporated 2003 Equity Incentive
Plan, the Adobe Systems Incorporated 2005 Special Purpose Equity
Incentive Plan, and any other equity-based incentive plan or
arrangement adopted or assumed by the Company, and any future
equity-based incentive plan or arrangement adopted or assumed by
the Company, but shall not include the Adobe Systems Incorporated
1997 Employee Stock Purchase Plan or any other plan intended to be
qualified under Section 423 of the Code.
1.15
“ ERISA ” means
the Employee Retirement Income Security Act of 1974, as
amended.
1.16
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended, and any
successor provisions thereto.
1.17
“ Good Reason ”
shall mean a Participant’s resignation of employment during
the Term as a result of any of the following:
(a)
A meaningful and detrimental
alteration in such Participant’s position, titles, or the
nature or status of responsibilities (including reporting
responsibilities) from those in effect immediately prior to the
Change of Control Date;
(b)
A reduction by the Participating
Company Group in such Participant’s Base Salary as in effect
immediately prior to the Change of Control Date or as the same may
be increased from time to time thereafter; a failure by the
Participating Company Group to increase such Participant’s
salary at a rate commensurate with that of other similarly situated
key executives of the Participating Company Group; or a reduction
in the target incentive opportunity percentage used to determine
such Participant’s Target Bonus below the percentage in
effect immediately prior to the Change of Control Date;
(c)
The relocation of the office of the
Participating Company where such Participant is primarily employed
immediately prior to the Change of Control Date (the “
COC Location ”) to a location which is more
than fifty (50) miles away from the COC Location or the
Participating Company’s requiring such Participant to be
based more than fifty (50) miles away from the COC Location (except
for required travel on the Participating Company’s business
to an extent substantially consistent with the Participant’s
customary business travel obligations in the ordinary course of
business prior to the Change of Control Date);
(d)
The failure by the Participating
Company Group to continue in effect any compensation plan in which
such Participant participated prior to the Change of Control Date
or made available to such Participant after the Change of Control
Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan in connection with the Change of Control, or the failure by
the Participating Company Group to continue such
Participant’s participation therein on at least as favorable
a basis, both in terms of the amount of benefits provided and the
level of participation relative to other participants, as existed
on the Change of Control Date;
(e)
The failure by the Participating
Company Group to continue to provide such Participant with benefits
at least as favorable in the aggregate to those enjoyed by such
Participant under the Participating Company Group’s
retirement, savings, life insurance, medical, health and accident,
disability, and fringe benefit plans and programs in which
such
4
Participant was participating in
immediately prior to the Change of Control Date; or the failure by
the Participating Company Group to provide such Participant with
the number of paid vacation days to which he or she was entitled on
the basis of years of service with the Participating Company Group
in accordance with the Participating Company Group’s normal
vacation policy in effect immediately prior to the Change of
Control;
(f)
The failure by the Participating
Company Group to pay or provide to such Participant with any
material item of compensation or benefits promptly when
due;
(g)
The failure of the Participating
Company Group to obtain an agreement from any successor to assume
and agree to perform the obligations of this Plan, as contemplated
in Section 9.1 hereof or, if the business for which such
Participant’s services are principally performed is sold at
any time after a Change of Control, the failure of the
Participating Company Group to obtain such an agreement from the
purchaser of such business;
(h)
A material breach by the
Participating Company Group of the provisions of this
Plan;
provided ,
however , that an event described above in clause (a), (b),
(d), (e), (f) or (h) shall not constitute Good Reason unless it is
communicated by such Participant to the Company in writing and is
not corrected by the Company in a manner which is reasonably
satisfactory to such Participant (including full retroactive
correction with respect to any monetary matter) within 10 days of
the Company’s receipt of such written notice.
1.18
“ Group I Participant
” shall mean each senior management employee of a
Participating Company who (i) is on the U.S. payroll, (ii) is not a
party to any other retention and/or severance agreement with the
Participating Company Group that is not otherwise waived in
accordance with Section 3.9, and (iii) on the Change of Control
Date, is classified as a Vice President (or any more senior role)
of a Participating Company.
1.19
“ Group II Participant
” shall mean each senior management-level employee of a
Participating Company who (i) is on the U.S. payroll, (ii) is not a
party to any other retention and/or severance agreement with the
Participating Company Group that is not otherwise waived in
accordance with Section 3.9, and (iii) who on the Change of Control
Date, is classified as a Director, Senior Director, or such other
position, which is determined by the Company prior to the Change of
Control as equivalent thereto.
1.20
“ Involuntary
Termination ” shall mean (i) a Participant’s
involuntary termination of employment with the Participating
Company Group during the Term other than for death, Disability or
Cause or (ii) a Participant’s resignation of employment
with the Participating Company Group during the Term for Good
Reason.
1.21
“ Notice of Termination
” means the notice specified in Section 3.6.
1.22
“ Participating Company
Group ” means the Company and any present or future
United States parent and/or United States direct or indirect
subsidiary corporations of the Company that have been designated by
the Board as a “Participating Company” for purposes of
this Plan (all of which along with the Company being individually
referred to as a “Participating
5
Company” and collectively
referred to as the “Participating Company
Group”). For purposes of this Plan, a parent or
subsidiary corporation shall be defined in Sections 424(e) and
424(f) of the Code and shall include entities related to the
Company by similar ownership levels that are not
corporations.
1.23
“ Participant ”
shall mean each Group I Participant and each Group II
Participant.
1.24
“ Plan ” means
this Adobe Systems Incorporated Executive Severance Plan In the
Event of a Change of Control.
1.25
“ Plan Year ”
means the calendar year and the last day of such year is December
31.
1.26
“ Reference Bonus
” shall mean the greater of (a) the Target Bonus applicable
to a Participant for the year in which such Participant’s
Involuntary Termination occurs or (b) the highest Target Bonus
applicable to such Participant in any of the three years ending
prior to the Change of Control Date.
1.27
“ Reference Salary
” shall mean the greater of (a) the annual rate of a
Participant’s Base Salary from the Part
