EXHIBIT 4.3
ADOBE SYSTEMS INCORPORATED
1994 STOCK OPTION PLAN
1. PURPOSE. The Adobe Systems Incorporated 1994 Stock Option Plan (the
"PLAN") is established to attract, retain and reward persons providing
services to Adobe Systems Incorporated and any successor corporation thereto
(collectively referred to as the "COMPANY"), and any present or future parent
and/or subsidiary corporations of such corporation (all of whom along with
the Company being individually referred to as a "PARTICIPATING COMPANY" and
collectively referred to as the "PARTICIPATING COMPANY GROUP"), and to
motivate such persons to contribute to the growth and profits of the
Participating Company Group in the future. For purposes of the Plan, a
parent corporation and a subsidiary corporation shall be as defined in
sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended
(the "CODE").
An option granted under the Plan (an "OPTION") may be either an
incentive stock option as defined in section 422 of the Code (an "INCENTIVE
STOCK OPTION") or a nonqualified stock option.
2. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "BOARD") and/or by a duly appointed committee
of the Board having such powers as shall be specified by the Board. Any
subsequent references herein to the Board shall also mean the committee if
such committee has been appointed and, unless the powers of the committee
have been specifically limited, the committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to
terminate or amend the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law. With respect to the participation
in the Plan of employees who are also officers or directors of the Company
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), the Plan shall be administered by the Board or by a duly
appointed committee of the Board in compliance with the requirement, if any,
of Rule 16b-3, as promulgated under the Exchange Act, as amended from time to
time, or any successor rule or regulation ("RULE 16B-3"). Any officer of a
Participating Company 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.
In addition to any other powers set forth in the Plan and subject to the
provisions of the Plan, the Board shall have the full and final authority, in
its sole discretion:
1
(a) to determine the persons to whom (an "OPTIONEE"), and the time or
times at which, Options shall be granted and the number of shares to be
represented by each Option;
(b) to designate the Options being granted as Incentive Stock Options
or nonqualified stock options;
(c) to determine the fair market value of the common stock of the
Company;
(d) to determine the terms and conditions of each Option granted (which
need not be identical), including, without limitation, the exercise price of
the Option, the method of payment for shares purchased upon exercise of the
Option, the method for satisfaction of any tax withholding obligation arising
in connection with the Option, including by the withholding or delivery of
shares of stock, the timing and terms of exercisability and vesting of the
Option, the time of expiration of the Option, the effect of the Optionee's
termination of employment or service, and all other terms and conditions of
the Option not inconsistent with the terms of the Plan;
(e) to approve one or more forms of stock option agreement for use
under the Plan;
(f) to modify or amend any Option, or to waive any restrictions or
conditions applicable to any Option or the exercise thereof;
(g) to accelerate, continue, extend or defer the exercisability and/or
vesting of any Option, including with respect to the period following an
Optionee's termination of employment or service with the Participating
Company Group;
(h) to delegate to the Chief Financial Officer the authority to grant
Options without further approval of the Board to any person eligible pursuant
to paragraph 3 below, other than a person who, at the time of the grant, is a
person subject to Section 16 under the Exchange Act; provided, however, that
(i) the Chief Financial Officer shall not grant Options to any one person for
more than 20,000 shares, (ii) the exercise price per share of each such
Option shall be equal to the closing sale price per share of the Company's
common stock on the date of grant as quoted on the Nasdaq National Market or
such other national securities exchange or market system constituting the
primary market for the common stock of the Company (or if the stock has not
traded on such date, on the last day preceding the date of grant on which the
stock was so traded), and (iii) each such Option shall be subject to the
terms and conditions of the appropriate standard form of stock option
agreement approved by the Board pursuant to paragraph 7 below and shall
conform to the provisions of the Plan and any guidelines established by the
Board;
(i) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option;
2
(j) to prescribe, amend or rescind rules, regulations and policies
relating to the Plan;
(k) to construe and interpret the Plan and any stock option agreement
used under the Plan and to define the terms employed herein and therein; and
(l) to make all other determinations and take such other action with
respect to the Plan and any Option granted hereunder as the Board may deem
advisable, to the extent permitted by applicable law.
All decisions, determinations and interpretations of the Board shall be
final and binding upon all persons having an interest in the Plan and/or any
Option.
3. ELIGIBILITY AND OPTION LIMITATIONS.
(a) PERSONS ELIGIBLE FOR OPTIONS. Options may be granted only to
employees (including officers and directors who are also employees) of the
Participating Company Group or to individuals who are rendering services as
consultants, advisors, or other independent contractors to the Participating
Company Group. For purposes of the foregoing sentence, "employees" shall
include prospective employees to whom Options are granted in connection with
written offers of employment with the Participating Company Group and
"consultants" or "advisors" shall include prospective consultants or advisors
to whom Options are granted in connection with written consulting or advising
offers with the Participating Company Group. The Board shall, in its sole
discretion, determine which persons shall be granted Options. An individual
who is rendering services as a consultant, advisor, or other independent
contractor or who is a prospective employee, consultant or advisor may only
be granted a nonqualified stock option. Eligible persons may be granted more
than one (1) Option.
(b) SECTION 162(m) GRANT LIMIT. Subject to adjustment as provided in
paragraph 9 below, at any such time as the Company is a "publicly held
corporation" within the meaning of Section 162(m) of the Code and any
applicable regulations thereunder, no employee shall be granted one or more
Options within any period of twelve consecutive months which in the aggregate
are for the purchase of more than one million two hundred thousand
(1,200,000) shares (the "SECTION 162(m) GRANT LIMIT"). An Option which is
canceled in the same fiscal year of the Company in which it was granted shall
continue to be counted against the Section 162(m) Grant Limit for such period.
4. SHARES SUBJECT TO OPTION. Options shall be for the purchase of
authorized but unissued or reacquired shares of the common stock of the
Company (the "STOCK"), subject to adjustment as provided in paragraph 9
below. Subject to the limitations described in this paragraph 4, the maximum
number of shares of Stock which may be issued under the Plan shall be
twenty-nine million two hundred
3
thousand (29,200,000) shares (the "SHARE RESERVE"). Notwithstanding any
provision herein to the contrary, the Share Reserve determined at any time
shall be reduced by (a) the number of shares of Stock issued pursuant to the
exercise of options granted under the Adobe Systems Incorporated 1984 Stock
option Plan (the "1984 PLAN") and (b) the number of shares of Stock then
subject to outstanding options granted under the 1984 Plan. In the event
that any outstanding Option for any reason expires or is terminated or
canceled and/or shares of Stock subject to repurchase are repurchased by the
Company, the shares allocable to the unexercised portion of such Option, or
such repurchased shares, may again be subject to an Option grant.
5. TIME FOR GRANTING OPTIONS. All Options shall be granted, if at all,
prior to December 17, 2003, the tenth anniversary of the date on which the
Plan was initially adopted by the Board.
6. TERMS, CONDITIONS AND FORM OF OPTIONS. Options granted pursuant to
the Plan shall be evidenced by written agreements specifying the number of
shares of Stock covered thereby, in such form as the Board shall from time to
time establish, which agreements may incorporate all or any of the terms of
the Plan by reference and shall comply with and be subject to the following
terms and conditions:
(a) EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (i)
the exercise price per share for an Option shall be not less than the fair
market value, as determined by the Board, of a share of Stock on the date of
the granting of the Option and (ii) no Incentive Stock Option granted to an
Optionee who at the time the Option is granted owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of section 422(b)(6) of
the Code (a "TEN PERCENT OWNER OPTIONEE") shall have an exercise price per
share less than one hundred ten percent (110%) of the fair market value, as
determined by the Board, of a share of Stock on the date of the granting of
the Option. Notwithstanding the foregoing, an Option (whether an Incentive
Stock Option or a nonqualified stock option) may be granted with an exercise
price lower than the minimum exercise price set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a
manner qualifying with the provisions of section 424(a) of the Code.
(b) EXERCISE PERIOD OF OPTIONS. The Board shall have the power to
set the time or times within which each Option shall be exercisable or the
event or events upon the occurrence of which all or a portion of each Option
shall be exercisable and the term of each Option; provided, however, that (i)
no Option shall be exercisable after the expiration of eight (8) years after
the date such Option is granted and (ii) no Incentive Stock Option granted to
a Ten Percent Owner Optionee shall be exercisable after the expiration of
five (5) years after the date such Option is granted.
4
(c) PAYMENT OF EXERCISE PRICE. Payment of the exercise price for
the number of shares of Stock being purchased pursuant to any Option shall be
made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company
of shares of the Company's stock owned by the Optionee having a value, as
determined by the Board (but without regard to any restrictions on
transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (iii) by the assignment of the proceeds of a sale of
some or all of the shares being acquired upon the exercise of the Option
(including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), (iv) by the Optionee's recourse
promissory note, (v) by the withholding of shares being acquired upon
exercise of the Option having a value, as determined by the Board (but
without regard to any restrictions on transferability applicable to such
stock by reason of federal or state securities laws or agreements with an
underwriter for the Company), not less than the exercise price, (vi) by such
other consideration and method of payment as the Board, in its sole
discretion, may allow, or (vii) by any combination thereof.
The Board may at any time or from time to time, by adoption of or by
amendment to any of the standard forms of stock option agreement described in
paragraph 7 below, or by other means, grant Options which do not permit all
of the foregoing forms of consideration to be used in payment of the exercise
price and/or which otherwise restrict one (1) or more forms of consideration.
Notwithstanding the foregoing, an Option may not be exercised by tender to
the Company of shares of the Company's stock to the extent such tender of
stock would constitute a violation of the provisions of any law, regulation
and/or agreement restricting the redemption of the Company's stock.
Furthermore, no promissory note shall be permitted if an exercise using a
promissory note would be a violation of any law. Any permitted promissory
note shall be due and payable not more than five (5) years after the Option
is granted, and interest shall be payable at least annually and be at least
equal to the minimum interest rate necessary to avoid imputed interest
pursuant to all applicable sections of the Code. The Board shall have the
authority to permit or require the Optionee to secure any promissory note
used to exercise an Option with the shares of Stock acquired on exercise of
the Option and/or with other collateral acceptable to the Company.
(x) Unless otherwise provided by the Board, an Option may not be
exercised by tender to the Company of shares of the Company's stock pursuant
to clause (ii) of this paragraph 6(c) unless such shares of the Company's
stock either have been owned by the Optionee for more than six (6) months or
were not acquired, directly or indirectly, from the Company.
(y) Unless otherwise provided by the Board, in the event the
Company at any time is subject to the regulations promulgated by the Board of
Governors of the Federal Reserve System or any other governmental entity
affecting the extension of credit in connection with the Company's
securities, any promissory
5
note shall comply with such applicable regulations, and the Optionee shall
pay the unpaid principal and accrued interest, if any, to the extent
necessary to comply with such applicable regulations.
(z) The Company reserves, at any and all times, the right, in the
Company's sole and absolute discretion, to establish, decline to approve
and/or terminate any program and/or procedures for the exercise of Options by
means of (A) an assignment of the proceeds of a sale of some or all of the
shares of Stock to be acquired upon such exercise pursuant to clause (iii) of
this paragraph 6(c) or (B) the withholding of shares of Stock to be acquired
upon such exercise pursuant to clause (v) of this paragraph 6(c).
(d) FAIR MARKET VALUE LIMITATION. To the extent that the aggregate
fair market value (determined at the time the Option is granted) of stock
with respect to which Incentive Stock Options are exercisable by an Optionee
for the first time during any calendar year (under all stock option plans of
the Company, including the Plan) exceeds One Hundred Thousand Dollars
($100,000), such options shall be treated as nonqualified stock options.
This paragraph shall be applied by taking Incentive Stock Options into
account in the order in which they were granted.
7. STANDARD FORMS OF STOCK OPTION AGREEMENT.
(a) INCENTIVE STOCK OPTIONS. Unless otherwise provided for by the
Board at the time an Option is granted, an Option designated as an "Incentive
Stock Option" shall comply with and be subject to the terms and conditions
set forth in the forms of incentive stock option agreement attached hereto as
EXHIBIT A (New Employee) and EXHIBIT B (Existing Employee), as appropriate,
and incorporated herein by reference.
(b) NONQUALIFIED STOCK OPTIONS. Unless otherwise provided for by
the Board at the time an Option is granted, an Option designated as a
"Nonqualified Stock Option" shall comply with and be subject to the terms and
conditions set forth in the forms of nonqualified stock option agreement
attached hereto as EXHIBIT C (New Employee) and EXHIBIT D (Existing
Employee), as appropriate, and incorporated herein by reference.
(c) STANDARD TERM FOR OPTIONS. Unless otherwise provided for by the
Board in the grant of an Option, any Option granted hereunder shall be
exercisable for a term of eight (8) years.
8. AUTHORITY TO VARY TERMS. The Board shall have the authority from time
to time to vary the terms of any of the standard forms of Stock Option
Agreement described in paragraph 7 above either in connection with the grant
of an individual Option or in connection with the authorization of a new
standard form or forms; provided, however, that the terms and conditions of
such revised or amended standard form or forms of stock option agreement
shall be in accordance with the
6
terms of the Plan. Such authority shall include, but not by way of
limitation, the authority to grant Options which are immediately exercisable
subject to the Company's right to repurchase any unvested shares of Stock
acquired by an Optionee on exercise of an Option in the event such Optionee's
employment with the Participating Company Group is terminated for any reason,
with or without cause.
9. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, in the Section 162(m)
Grant Limit set forth in paragraph 3(b), and in the exercise price per share
of any outstanding Options. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not pursuant
to a Transfer of Control, as defined in paragraph 10) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the
outstanding Options to provide that such Options are exercisable for New
Shares. In the event of any such amendment, the number of shares subject to,
and the exercise price per share of, the outstanding Options shall be
adjusted in a fair and equitable manner as determined by the Board, in its
sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this paragraph 9 shall be rounded up
or down to the nearest whole number, as determined by the Board, and in no
event may the exercise price of any Option be decreased to an amount less
than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Board pursuant to this paragraph shall be
final, binding and conclusive.
10. TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to have
occurred in the event any of the following occurs with respect to the Company:
(a) the direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such sale or exchange;
(b) a merger or consolidation in which the Company is not the
surviving corporation;
(c) a merger or consolidation in which the Company is the surviving
corporation where the shareholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at least a majority of
the beneficial interest in the voting stock of the Company after such merger
or consolidation;
(d) 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
(1) or more subsidiary corporations (as defined in paragraph 1 above) of the
Company); or
7
(e) A liquidation or dissolution of the Company.
In the event of a Transfer of Control, the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as the
case may be (the "ACQUIRING CORPORATION"), shall either assume the Company's
rights and obligations under outstanding Options or substitute for
outstanding Options substantially equivalent options for the Acquiring
Corporation's stock. In the event the Acquiring Corporation elects not to
assume or substitute for such outstanding Options in connection with the
Transfer of Control, the Board shall provide that any unexercisable and/or
unvested portion of the outstanding Options shall be immediately exercisable
and vested in full as of the date thirty (30) days prior to the date of the
Transfer of Control. The exercise and/or vesting of any Option that was
permissible solely by reason of this paragraph 10 shall be conditioned upon
the consummation of the Transfer of Control. Any Options which are neither
assumed or substituted for by the Acquiring Corporation in connection with
the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date
of the Transfer of Control.
11. PROVISION OF INFORMATION. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally
made available to the Company's common shareholders.
12. TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution. Notwithstanding the foregoing, a nonqualified
stock option shall be assignable or transferable to the extent permitted by
the Board and set forth in the stock option agreement evidencing such Option.
13. TERMINATION OR AMENDMENT OF PLAN AND OPTIONS. The Board, including
any duly appointed committee of the Board, may terminate or amend the Plan
and/or any Option at any time. However, subject to changes in applicable
law, regulations or rules that would permit otherwise, without the approval
of the Company's shareholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except
by operation of the provisions of paragraphs 4 and 9 above) and (b) no change
in the class of persons eligible to receive Incentive Stock Options. In any
event, no termination or amendment of the Plan may adversely affect any then
outstanding Option or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is required to enable an
Option designated as an Incentive Stock Option to qualify as an Incentive
Stock Option or is necessary to comply with any applicable law, regulation or
rule.
8
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the Adobe Systems Incorporated 1994 Stock
Option Plan as duly adopted by the Board of Directors of the Company and
amended through December 18, 1996.
/s/ COLLEEN M. POULIOT
------------------------------------
Secretary
9
PLAN HISTORY
December 17, 1993 Board adopts Plan with initial reserve of
20,000,000 shares (the aggregate reserve under
1984 Plan), reduced at any time by (i) shares
issued under 1984 Plan, (ii) options outstanding
under 1984 Plan, and (iii) shares available for
grant under 1984 Plan (zero after 1984 Plan
termination date of 10/16/94).
April 13, 1994 Shareholders approve Plan.
January 11, 1996 Board amends Plan to increase reserve by 3,600,000
shares.
April 10, 1996 Shareholders approve reserve increase of 3,600,000
shares.
December 18, 1996 Board amends Plan to increase reserve by 5,600,000
shares and to reduce the maximum term of any
option to 8 years.
April 9, 1997 Shareholders approve reserve increase of 5,600,000
shares.
10