Resignation Agreement - Adobe Systems Inc. and David B. Pratt
[ADOBE SYSTEMS INCORPORATED LETTERHEAD]
October 9, 1997
Mr. David B. Pratt
12324 Melody Lane
Los Altos Hills, California 94022
RESIGNATION AGREEMENT
Dear Mr. Pratt:
This will reflect our mutual agreement concerning your resignation from
your position as an officer of Adobe Systems Incorporated (the "COMPANY") and
of each of the subsidiaries of the Company (collectively, the "COMPANIES")
and the Company's retention of you as an employee following such resignation,
in accordance with the terms and conditions set forth below. Your acceptance
of and agreement with the provisions of this letter (hereinafter, the
"RESIGNATION AGREEMENT") will be signified by applying your signature to the
end of this letter by a date no later than 21 days after the letter date.
1. YOUR RESIGNATION AS AN OFFICER. By signing this Resignation
Agreement, you hereby agree that your resignation from all positions you hold
as an officer of the Companies shall become effective as of November 30, 1997
(the "RESIGNATION DATE").
2. TRANSITIONAL EMPLOYMENT ARRANGEMENT. You further agree that as of
the Resignation Date and continuing through January 15, 1998 (the "SEVERANCE
DATE") you shall remain employed by the Company and you shall devote
substantially all of your business time, attention and abilities to the
business of the Company (including its subsidiaries or affiliates, when so
required) and faithfully serve the Company and use your best efforts to
promote and develop the interests of the Company.
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During the period beginning on the Resignation Date and ending on the
Severance Date (hereinafter, the "TRANSITIONAL PERIOD"), your
responsibilities and duties as an employee of the Company will be to provide
advice to the President and Co- Chairman of the Board of Directors of the
Company regarding all matters relating to the transitional management
activities associated with the Pathfinder project.
3. TERMINATION OF EMPLOYMENT. On the Severance Date, you will cease
to be employed in any capacity by the Company.
4. PAYMENTS AND BENEFITS IN CONNECTION WITH YOUR RESIGNATION AND
TRANSITIONAL EMPLOYMENT. In connection with your resignation and
transitional employment, subject to Section 8, the Company agrees to provide
you with the compensation and benefits described below.
(a) SALARY CONTINUATION PAYMENTS. In consideration of your
agreement to continue your employment with the Company during the
Transitional Period, the Company shall continue to pay you your base salary,
at the annual rate currently in effect as of the Resignation Date, payable in
accordance with the Company's normal payroll procedures.
(b) BENEFIT CONTINUATION DURING THE TRANSITIONAL PERIOD. During
the Transitional Period, you shall continue to participate in all Company
welfare benefit plans, including, without limitation, health, medical and
disability insurance plans, in which you participate as of the Resignation
Date (the "Welfare Benefit Plans"), in accordance with the terms and
conditions applicable to you which are currently in effect as of such date.
(c) BENEFIT CONTINUATION AFTER THE SEVERANCE DATE. For a period
of two years and nine months following the Severance Date, you and your
eligible dependents shall continue to participate in the Welfare Benefit
Plans on the same terms (including contribution levels) as are in effect on
the Resignation Date. Your participation in the Welfare Benefit Plans will
terminate at the time you become eligible to receive benefits under the
welfare benefit plans of a subsequent employer. You hereby acknowledge and
agree that you have an affirmative obligation to notify the Company of any
subsequent employment that offers you such welfare benefits.
(d) BONUS. As soon as practicable following the Severance Date,
the Company will pay you your bonus for fiscal year ending 1997, subject to
the terms and conditions of the bonus plan and arrangements applicable to
you. You will not
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however, receive a bonus for any portion of fiscal year ending 1998.
(e) SPECIAL SEVERANCE PAYMENT. As soon as practicable following
the Severance Date, the Company will make a one-time lump sum cash severance
payment (the "Severance Payment") to you of $1,496,000, representing (i) two
and nine-twelfths multiplied by (ii) the sum of your annual salary and target
bonus which are currently in effect. If within six monthe of the Severance
Date, you breach any of the provisions of Section 8 below, you shall either
(i) forfeit 30% of the Severance Payment as described this Section 4(e) (the
"Forfeited Amount") if you have not received such Severance Payment at the
time of the breach or (ii) if you have received the Severance Payment at the
time of such breach, you shall immediately incur the binding and enforceable
obligation to the Company to repay the Forfeited Amount within thirty days
from the date the Company provides you written notice of such breach.
5. OPTIONS. All stock option awards of the Adobe Stock Option Plan of
1984 and the Adobe Stock Option Plan of 1994, granted to you under the
Company's stock option plans, will vest and become exercisable as of the
Severance Date. The exercisable options will remain exercisable for a period
of 90 days from the Severance Date, after which all options will be canceled
and become void.
6. PERFORMANCE UNITS. You will earn performance units for the Adobe
Long Term Incentive Plan period 1995 through 1997 in accordance with the
terms of the plan. You will earn a pro rata share of the performance units
for the periods 1996 through 1998 and 1997 through 1999 as follows:
(i) on December 24, 1997, you will receive 4,600 vested
performance units for the period 1996 through 1998 according to the
terms of the plan,
(ii) on December 24, 1997 you will receive 6,667 vested
performance units for the period 1997 through 1999 according to the
terms of the plan.
7. PARTNERSHIP UNITS. On the Severance Date 7,500 of your partnership
units in Adobe Incentive Partners, L.P. shall vest for the 12-month period
ending December 31, 1997. No partnership units will vest for the partial
month January 1998 during which your employment with the Company will
terminate.
8. PROTECTING THE INTERESTS OF THE COMPANY.
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(a) RESTRICTIVE COVENANTS. You acknowledge and agree that
following the Severance Date, you shall continue to remain subject to and
bound to comply with the Employee Inventions and Proprietary Rights
Assignment Agreement between you and the Company dated May 16, 1988.
(b) COOPERATION IN LITIGATION. In consideration of the payments
hereunder, you agree to reasonably cooperate with and assist the Company and
its counsel, following the Severance Date, (i) in the preparation and
assertion of any claim or defense in connection with any action, suit or
proceeding brought by or against any of the Companies and (ii) in any
investigations (including internal investigations) and audits of the
Companies' current and past conduct and business and accounting practices,
provided that you possess relevant knowledge and/or expertise in the matter.
Subject to documentation and itemization to the Company's reasonable
satisfaction, the Company agrees to pay all travel expenses, attorneys' fees
and other out-of-pocket expenses, actually, necessarily and reasonably
incurred by you in connection with the activities described in the preceding
sentence.
(c) NO SOLICITATION. You agree that for a period of 24 months
after the Severance Date, you shall not, either directly or indirectly,
solicit or encourage any employee of the Companies to terminate his or her
employment with the Companies.
(d) PRESS RELEASES. During the Transitional Period, you and the
Company shall agree upon the form of any statements to that are released to
the press with respect to the subject matter of this Resignation Agreement
and you agree not to make any remarks or comments concerning your termination
of employment with the Company that are inconsistent with any such press
releases.
(e) CONFIDENTIALITY OF THE RESIGNATION AGREEMENT. Subject to any
legal requirements to divulge such information, you and the Company mutually
agree to keep the contents and terms of this Resignation Agreement
confidential for a period of six months following the Severance Date.
(f) PUBLIC COMMENT. You agree to refrain from making now or at
any time in the future any derogatory or disparaging comment concerning any
of the Companies or any current or former directors, officers or employees of
any of the Companies to the press, any employees of any of the Companies or
any individual or entity with whom you or any of the Companies has a business
relationship. The Company agrees to refrain from
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making now or at any time in the future any derogatory or disparaging comment
concerning you to the press or to any person with whom you or any of the
Companies has a business relationship.
(g) INJUNCTIVE RELIEF. Without intending to limit the remedies
available to the Company, you acknowledge that a breach of any of the
covenants contained in this Section 8 may result in material irreparable
injury to the Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that,
in the event of such a breach or threat thereof, the Company shall be
entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining you from engaging in activities prohibited
by this Section 8, or such other relief as may be required to specifically
enforce any of the covenants in this Section 8.
9. RELEASE.
(a) In recognition of the consideration cited above, you hereby
release and discharge on behalf of each of the Releasing Parties (as defined
below) each of the Released Parties (as defined below) from any and all
claims, actions and causes of action that the Releasing Parties may have or
in the future may possess with respect to the Released Parties, including,
but not limited to, any claims arising under Title VII of the Civil Rights
Act of 1964 as amended, the Rehabilitation Act of 1973 as amended, the
Americans with Disabilities Act of 1990 as amended, the Civil Rights Act of
1866 as amended, the Civil Rights Act of 1991 as amended, the Employee
Retirement Income Security Act of 1974 as amended, the Older Workers Benefit
Protection Act as amended, the Family Medical Leave Act of 1993 as amended,
or any other federal or state or local law, whether such claim arises under
statute or common law and whether or not you are presently aware of the
existence of such claim, damage, action or cause of action, suit or demand.
You also forever release, discharge and waive any right the Releasing Parties
may have to recover in any proceeding brought by any federal, state or local
agency against the Released Parties to enforce any laws. You agree that the
value received as described in this Resignation Agreement shall be in full
satisfaction of any and all claims, actions or causes of action for payment
or other benefits of any kind that the Releasing Parties may have against the
Released Parties. "RELEASING PARTIES" means you, your family members, your
estate, your beneficiaries, your heirs and your assigns and the estate,
beneficiaries, heirs and assigns of each of the foregoing. "RELEASED PARTIES"
means the Companies and their present, former and future shareholders,
directors, officers, employees, agents, attorneys, heirs and assigns.
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(b) In further recognition of the consideration cited above, you
hereby release and forever discharge on behalf of each of the Releasing
Parties each of the Released Parties from any and all claims, actions and
causes of action that you may have as of the date you sign and deliver to the
Company this Resignation Agreement arising under the federal Age
Discrimination in Employment Act of 1967, as amended, and the applicable
rules and regulations promulgated thereunder ("ADEA") which may be based in
whole or in part on age discrimination.
(c) You acknowledge that you have read Section 1542 of the Civil
Code of the State of California, which states:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
You waive any rights that you have or may have under Section 1542 of the
Civil Code to the full extent that you may lawfully waive such rights with
respect to this general release of all claims.
10. TERMINATION OF PRIOR AGREEMENTS AND UNDERSTANDINGS. With the
exception of the terms and conditions outlined in the Amended and Restated
Partnership Agreement of the Adobe Incentive Partners, L.P. and the
Restricted Units Agreement and the vesting of your partnership units outlined
herein, This Resignation Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all
prior negotiations and agreements, whether written or oral. This Resignation
Agreement may not be modified or amended except by a document signed by you
and an authorized officer of the Company.
11. ARBITRATION. Any controversy or claim arising out of or relating
to this Resignation Agreement, including, but not limited to, any claim
relating to the validity, interpretation, enforceability or breach of this
Resignation Agreement, which is not settled by agreement between you and the
Company (collectively, the "PARTIES") shall be settled by arbitration in San
Jose, California, before a panel of three arbitrators, one to be selected by
the Company, one by you and the other by the two persons so selected, all in
accordance with the rules of the American Arbitration Association then in
effect; PROVIDED, HOWEVER, that the Company shall nevertheless be entitled to
seek relief under Section 8 above in accordance with Section 8(g) thereof.
In consideration of the Parties' agreement
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to submit to arbitration disputes with regard to this Resignation Agreement
and with regard to any alleged tort, contract or other claim arising out of
the employment relationship, and in consideration of the anticipated
expedition and minimization of expense of this arbitration remedy, each Party
agrees that the arbitration provisions of this Resignation Agreement shall
provide it with the exclusive remedy, except as provided in the preceding
sentence, and each Party expressly waives any right it might have to seek
redress in any other form except as provided herein. The Parties further
agree that the arbitrators acting hereunder shall be empowered to assess no
remedy other than payment of compensatory damages or an order (including
temporary, preliminary or permanent injunctive relief) enforcing the
provisions of Section 8 above. Any decision or order of the majority of
arbitrators shall be binding upon the Parties hereto and judgment thereon may
be entered in the Santa Clara County Superior Court or any other court having
jurisdiction. The prevailing party shall be entitled to recover from the
losing party its attorneys' fees and costs incurred in any lawsuit or other
action brought to enforce any right arising out of this Resignation Agreement.
12. ACKNOWLEDGMENT. By signing this Resignation Agreement, you hereby
acknowledge and confirm the following:
(a) You were advised by the Company in connection with your
resignation to consult with an attorney of your choice prior to signing this
Resignation Agreement and to have such attorney explain to you the terms of
this Resignation Agreement including, without limitation, the terms relating
to your release of claims arising out of ADEA.
(b) You were given not less than 21 days to consider the terms of
this Resignation Agreement and to consult with an attorney of your choosing
with respect thereto, and that for a period of seven days following your
acceptance hereof, you have the option to revoke such acceptance in
accordance with the terms set forth below.
13. REVOCATION. You shall have the right to revoke this Resignation
Agreement during the seven-day period (the "REVOCATION PERIOD ") commencing
immediately following the date you sign and deliver this Resignation
Agreement to the Company. The Revocation Period shall expire at 5:00 p.m.
(California time) on the last day of the Revocation Period; PROVIDED,
HOWEVER, that if such seventh day is not a business day, the Revocation
Period shall extend to 5:00 p.m. on the next succeeding business day. In the
event of any such
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revocation by you, all obligations of any of the Companies under this
Resignation Agreement shall terminate and be of no further force and effect
as of the date of such revocation. No such revocation by you shall be
effective unless it is in writing and signed by you and received by the
Company prior to the expiration of the Revocation Period
Your signature on the line below constitutes your agreement with each
provision contained herein.
Very truly yours,
Adobe Systems Incorporated
By: Charles M. Geschke
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Title: President
I UNDERSTAND AND AGREE WITH THE ABOVE:
/s/ David B. Pratt
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David B. Pratt
Dated: October 13, 1997
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