Exhibit 10.1

EXECUTIVE AGREEMENT

This Executive Agreement dated as of May 7, 2010 is by and between Parametric
Technology Corporation, a Massachusetts corporation (the “Company”), and C.
Richard Harrison (the “Executive”).

 

1. Definitions.

For the purposes of this Agreement:

(a) “Cause” means:

(i) the Executive’s willful and continued failure to substantially perform his
duties to the Company (other than any such failure resulting from the Employee’s
incapacity due to physical or mental illness), provided that the Company has
delivered a written demand for performance to the Executive specifically
identifying the manner in which the Company believes that the Executive has not
substantially performed his duties and the Executive does not cure such failure
within thirty (30) days after such demand;

(ii) willful conduct by the Executive which is demonstrably and materially
injurious to the Company;

(iii) the Executive’s conviction of, or pleading of guilty or nolo contendere
to, a felony;

(iv) the Executive’s entry in his personal capacity into a consent decree
relating to the business of the Company with any government body; or

(v) the Executive’s willful material violation of any material provision of his
Non-Disclosure, Non-Competition and Invention Agreement with the Company;
provided that, if such violation is able to be cured, the Executive has not,
within thirty (30) days after written demand by the Company, cured such
violation.

For purposes of this definition, no act or failure to act on the Executive’s
part shall be deemed “willful” unless done or omitted to be done by the
Executive not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.

(b) “Change in Control” means the occurrence of any of the following events:

(i) any “person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned directly or indirectly by
the stockholders of the Company in substantially the same proportion as their
ownership of stock in the Company) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding securities (other than
as a result of acquisitions of such securities from the Company);

(ii) individuals who, as of the date hereof, constitute the board of directors
of the Company (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the board of directors, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company) shall be, for purposes of this
Agreement, considered to be a member of the Incumbent Board;

(iii) the consummation of a merger, share exchange or consolidation of the
Company or any subsidiary of the Company with any other entity (each a “Business
Combination”), other than (x) a Business Combination that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of another

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entity) beneficial ownership, directly or indirectly, of a majority of the
combined voting power of the Company or the surviving entity (including any
person that, as a result of such transaction, owns all or substantially all of
the Company’s assets either directly or through one or more subsidiaries)
outstanding immediately after such Business Combination or (y) a merger, share
exchange or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no “person” (as defined above) is or
becomes the beneficial owner of fifty percent (50%) or more of the combined
voting power of the Company’s then outstanding securities; or

(iv) the stockholders of the Company approve (x) a plan of complete liquidation
of the Company; or (y) an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets but excluding a sale or
spin-off of a product line, business unit or line of business of the Company if
the remaining business is significant as determined by the Company’s board of
directors in its sole discretion.

(c) “Code” means the U.S. Internal Revenue Code of 1986, as amended.

(d) “Disability” means such physical or mental incapacity as to make the
Executive unable to perform the essential functions of his employment duties for
a period of at least sixty (60) consecutive days with or without reasonable
accommodation. If any question shall arise as to whether during any period the
Executive is so disabled as to be unable to perform the essential functions of
his employment duties with or without reasonable accommodation, the Executive
may, and at the request of the Company shall, submit to the Company a
certification in reasonable detail by a physician selected by the Company to
whom the Executive or the Executive’s guardian has no reasonable objection as to
whether the Executive is so disabled or how long such disability is expected to
continue, and such certification shall for the purposes of this Agreement be
conclusive of the issue. The Executive shall cooperate with any reasonable
request of the physician in connection with such certification. If such question
shall arise and the Executive shall fail to submit such certification, the
Company’s determination of such issue shall be binding on the Executive.

(e) “Good Reason” means the occurrence, without the Executive’s consent and
without Cause, of any of the following events (provided that the Executive shall
have given the Company written notice describing such event within ninety
(90) days of its initial existence and the matter shall not have been fully
remedied by the Company within thirty (30) days after receipt of such notice):

(i) the Executive’s ceasing to be a member of the Company’s board of directors
by reason of the failure of the Company to re-nominate the Executive for
election or failure of the Executive to be elected by the stockholders of the
Company;

(ii) any breach by the Company of its material obligations under this Agreement;
or

(iii) any requirement that the Executive relocate to a primary work site that
would increase the Executive’s one-way commute distance by more than fifty
(50) miles from the Executive’s then principal residence.

 

2. Services to be Performed by the Executive.

(a) Position and Services. Effective October 1, 2010 (the “Commencement Date”),
the Executive shall cease serving as Chief Executive Officer of the Company and
shall become the Company’s Executive Chairman, an executive officer of the
Company. As of the Commencement Date, the Executive will perform certain
employment duties, reporting to the President and Chief Executive Officer. The
Executive’s employment duties will include enhancing relationships with the
Company’s key customers, partners and investors and other activities focused on
improving the business climate for the Company around the world, and such other
duties consistent with his position as may be reasonably assigned to him by the
Company’s Chief Executive Officer (“Employment Duties”).

(b) Obligations. During the Term (as defined in Section 2(c)), the Executive
will be available on a part-time time basis for consultation and the performance
of the Employment Duties as requested by the Chief Executive Officer. The
Executive will use good faith efforts to discharge his obligations under this
Agreement to the best of his ability and in accordance with the Company’s Code
of Business Conduct and Ethics. During the

 

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Term, the Executive agrees not to actively engage in any other employment,
occupation, or consulting activity for any direct or indirect remuneration
without the prior approval of the Company’s Chief Executive Officer (which
approval will not be unreasonably withheld); provided, however, that the
Executive may, without the approval of the Chief Executive Officer, serve in any
capacity with any civic, educational, or charitable organization, provided such
services do not interfere with the Executive’s obligations to the Company.

(c) Term. The Executive’s employment shall continue in effect until 11:59 p.m.
on November 30, 2012 unless earlier terminated in accordance with Section 4
hereof (the period from the Commencement Date until the earlier of such date and
the date of termination of the Executive’s employment being the “Term”). Except
as otherwise expressly set forth in this Agreement, upon the termination of the
Executive’s employment, the respective rights and obligations of the parties
hereunder shall survive to the extent necessary to carry out the intentions of
the parties as embodied herein.

 

3. Compensation & Benefits.

(a) Salary. During the Term, for the period from October 1, 2010 through
September 30, 2011, the Company will pay the Executive an annual salary of
$500,000 and for the period from October 1, 2011 through November 30, 2012, the
Company will pay the executive an aggregate salary of $500,000, such salary to
be paid periodically in accordance with the Company’s normal payroll practices.

(b) Benefits. As a part time employee, during the Term, the Executive shall be
entitled to participate on the same terms as employees generally in the
Company’s employee benefit plans, such as the Company’s 401(k) plan and PTO
policy, to the extent he is eligible under the applicable plans. In lieu of
other benefits for which the Executive ceases to be eligible upon commencing
part-time employment status, which may include but not be limited to health,
dental, vision, life and long term disability insurance, the Executive will be
paid a one time, lump sum payment of $110,000 within 30 days following the
Commencement Date. If permitted by the terms of the respective plan or by law,
the Executive shall have the option to continue discontinued benefits, at his
expense, under COBRA or the applicable policy conversion options.

(c) Equity. Effective as of October 1, 2010, the Executive will be granted
restricted stock units with a value equal to approximately $3,000,000. The
actual number of restricted stock units to be granted shall be based on the
closing price of the Company’s common stock on October 1, 2010. The restricted
stock units will be granted under the Company’s 2000 Equity Incentive Plan and
shall vest in two substantially equal installments on each of September 30, 2011
and September 30, 2012 if this Agreement is then in effect.

 

4. Termination.

If, before the Commencement Date, the Executive’s employment with the Company is
terminated for any reason, or a Change In Control occurs, this Agreement shall
thereupon automatically terminate. During the Term, the Executive’s employment
may be terminated by the Executive or the Company as follows and with the
respective effects set forth in Section 5.

(a) By the Executive. During the Term, the Executive’s employment may be
terminated by the Executive at any time upon not less than thirty (30) days’
written notice to the Company for convenience or for Good Reason.

(b) By the Company. During the Term, the Executive’s employment may be
terminated at any time by the Company for convenience, for Cause or because of
the Executive’s Disability.

(c) Upon a Change in Control. During the Term, the Executive’s employment will
automatically terminate upon a Change in Control.

 

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5. Effect of Certain Termination Events.

The provisions of this Section 5 shall apply to termination of the Executive’s
employment during the Term in the respective circumstances set forth below.

(a) By the Executive for Convenience or by the Company for Nonperformance. If
the Executive terminates his employment for convenience or if the Company
terminates the Executive’s employment for Cause solely pursuant to
Section 1(a)(i):

(i) to the extent not then vested, the restricted stock units granted pursuant
to Section 3(c) and any other shares of restricted stock, restricted stock
units, stock options, stock appreciation rights or other equity awards granted
to the Executive by the Company during the Term, including any extension
thereof, shall thereupon be terminated and forfeited without compensation;

(ii) if and for so long as the Executive remains a member of the Company’s board
of directors, all shares of restricted stock, restricted stock units, stock
options, stock appreciation rights and other equity awards granted to the
Executive by the Company before the Commencement Date shall continue to vest as
though the Executive remained employed by the Company;

(iii) if the Executive remains a member of the Company’s board of directors, the
period during which the Executive may exercise any stock options then currently
vested shall be extended until the earliest of (x) the expiration of the term of
the applicable option, (y) the expiration of the post-termination exercise
period for the applicable option (for which purpose, termination of board
service shall be substituted for termination of employment) and (z) February 28,
2013;

(iv) upon the later of the termination of the Executive’s employment and the
termination of his membership on the Company’s board of directors, all remaining
unvested shares of restricted stock, restricted stock units, stock options,
stock appreciation rights and other equity awards granted to the Executive by
the Company shall be terminated and forfeited without compensation; and

(v) no further salary or other amounts, other than accrued and unpaid amounts,
shall be payable to the Executive.

(b) By the Company for Cause. If the Company terminates the Executive’s
employment for Cause, other than solely pursuant to Section 1(a)(i):

(i) all unvested shares of restricted stock, restricted stock units, stock
options, stock appreciation rights and other equity awards granted to the
Executive by the Company shall thereupon be terminated and forfeited without
compensation as of the termination date and

(ii) no further salary or other amounts, other than accrued and unpaid amounts,
shall be payable to the Executive.

(c) Death or Disability. Effective upon termination of the Executive’s
employment due to his death or by the Company due to his Disability:

(i) all restrictions applicable to restricted stock issued by the Company and
held by the Executive shall immediately lapse and

(ii) all outstanding stock options, stock appreciation rights, restricted stock
units and other equity awards issued by the Company shall immediately become
vested and exercisable in full.

 

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(d) Other Terminations. If during the Term the Executive’s employment is
terminated (x) by the Executive for Good Reason, (y) by the Company for
convenience or (z) upon a Change in Control, the following shall occur,
effective upon such termination:

(i) Effect on Outstanding Equity. With respect to all equity awards issued by
the Company and held by the Executive, whether issued during the Term or prior
thereto:

(A) all restrictions applicable to restricted stock issued by the Company and
held by the Executive, other than any restriction the lapse of which is based
upon achievement of performance goals, shall immediately lapse;

(B) all vesting conditions applicable to all stock options, stock appreciation
rights, restricted stock units, and other equity awards granted to the Executive
by the Company, other than any vesting conditions based upon achievement of
performance goals, shall thereupon be deemed satisfied and, except to the extent
of any such performance-based conditions, such awards shall become exercisable
or distributable in full; and

(C) each outstanding stock option granted to the Executive by the Company shall,
to the extent vested after giving effect to clause (B), remain exercisable
following the termination of the Executive’s employment until the close of
business on the earlier of (1) the end of the original maximum term of such
option and (2) November 30, 2012.

(ii) Payment of Contract Amounts. The Executive shall be entitled to a lump sum
payment in an amount equal to the amounts payable under Sections 3(a) and 3(b)
less all amounts paid pursuant to those subsections during the Term to the date
of such termination, payable within forty-five (45) days after the termination
date.

 

6. Taxes.

(a) Withholding. All payments to be made to the Executive under this Agreement
will be subject to any required withholding of federal, state and local income
and employment taxes. In addition, the Company may withhold from any payments
hereunder any amounts attributable to withholding taxes applicable to the
vesting of or lapse of restrictions on any restricted stock or restricted stock
units held by the Executive or the exercise of any nonqualified stock options
held by the Executive, including, in its discretion withholding from any shares
deliverable to the Executive such number of shares as the Company determines is
necessary to satisfy such tax obligations, valued at their fair market value
(determined pursuant to the respective Company equity compensation plan) as of
the date of such vesting or lapse of restrictions.

(b) Limitations on Payments.

(i) If it is determined that any payment, benefit or distribution provided for
in this Agreement or otherwise (each, a “Payment” and collectively, the
“Payments”) from the Company to or for the benefit of the Executive to which the
Executive first becomes entitled as a result of an event occurring on or after
October 1, 2010 (x) constitutes a “parachute payment” within the meaning of
Section 280G of the Code and (y) but for this subsection (b), would be subject
to excise tax imposed by Section 4999 of the Code (the “Excise Tax”), such
Payments shall be either

(A) delivered in full, or

(B) delivered to such lesser extent that would result in no portion of the
Payments being subject to the Excise Tax,

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the Excise Tax, results in the receipt by the
Executive on an after tax basis, of the greatest amount of Payments,
notwithstanding that all or some portion of the Payments may be taxable under
Section 4999 of the Code. Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 6(b)(i) shall be made in
writing in good faith by an independent accounting firm selected by the Company,
whose determinations shall be binding upon the Company and the Executive (the
“Accountants”), in good faith consultation with the Executive.

 

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(ii) In the event a reduction in the Payments is required hereunder, the Company
shall promptly give the Executive notice to that effect and the Executive may
then determine, in his sole discretion, which and how much of the Payments shall
be eliminated or reduced (as long as, after such election, none of the Payments
are subject to the Excise Tax), and shall advise the Company in writing of his
election within ten (10) days of his receipt of the Company’s notice. If no such
election is made by the Executive within such period, the Company may determine
which and how much of the Payments shall be eliminated or reduced (as long as,
after such determination, none of the Payments are subject to the Excise Tax)
and shall notify the Executive promptly of such determination.

(iii) For purposes of making the calculations required by this Section 6(b), the
Accountants may make reasonable assumptions and approximations concerning the
application taxes and may rely on reasonable good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Executive shall furnish to the Accountants such information and
documents as the Accountants may reasonable request in order to make a
determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 6(b).

(iv) If the Payments are reduced to avoid the Excise Tax pursuant to
Section 6(b)(i) hereof and notwithstanding such reduction, the IRS determines
that the Executive is liable for the Excise Tax as a result of the receipt of
Payments from the Company, then the Executive shall be obligated to pay to the
Company (the “Repayment Obligation”) an amount of money equal to the “Repayment
Amount.” The Repayment Amount shall be the smallest such amount, if any, as
shall be required to be paid to the Company so that the Executive’s net proceeds
with respect to the Payments (after taking into account the payment of the
Excise Tax imposed on such benefits) shall be maximized. Notwithstanding the
foregoing, the Repayment Amount shall be zero if a Repayment Amount of more than
zero would not eliminate the Excise Tax in accordance with the principles of
Section 6(b)(i). If the Excise Tax is not eliminated through the performance of
the Repayment Obligation, the Executive shall pay the Excise Tax. The Repayment
Obligation shall be discharged within 30 days of either (A) the Executive’s
entering into a binding agreement with the IRS as to the amount of Excise Tax
liability, or (B) a final determination by the IRS or a court decision requiring
the Executive to pay the Excise Tax from which no appeal is available or is
timely taken.

 

7. Certain Payments to Specified Employees.

Notwithstanding anything to the contrary in this Agreement, if the Executive is
a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) at
the time of the Executive’s separation from service with the Company, no payment
or benefit payable or provided to the Executive pursuant to this Agreement that
constitutes an item of deferred compensation under Code Section 409A and becomes
payable by reason of the Executive’s termination of employment with the Company
will be paid or provided to the Executive prior to the earlier of (i) the
expiration of the six (6) month period following the date of the Executive’s
“separation from service” (as such term is defined by Code Section 409A and the
regulations promulgated thereunder), or (ii) the date of the Executive’s death,
but only to the extent such delayed commencement is otherwise required in order
to avoid a prohibited distribution under Code Section 409A(a)(2). The payments
and benefits to which the Executive would otherwise be entitled during the first
six (6) months following his separation from service shall be accumulated and
paid or provided, as applicable, in a lump sum, on the date that is six
(6) months and one day following the Executive’s separation from service (or if
such date does not fall on a business day of the Company, the next following
business day) and any remaining payments or benefits will be paid in accordance
with the normal payment dates specified for them herein.

 

8. Successors and Assigns.

(a) This Agreement is personal to the Executive and is not assignable by the
Executive, other than by will or the laws of descent and distribution, without
the prior written consent of the Company.

(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and acquirers and assigns.

 

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9. Conditions to Payment of Severance.

Notwithstanding any other provision of this Agreement, the Executive’s
entitlement to receive any of the payments and other benefits contemplated by
Section 5 hereof shall be contingent upon:

(a) execution by the Executive prior to the forty-fifth (45th ) day following
the termination of his employment of a release in substantially the form of
Appendix A hereto (the “Release”), which has not subsequently been revoked, and
the Executive hereby acknowledges and agrees that the Company’s entering into
this Agreement and agreement to make such payments are and shall be good and
sufficient consideration for such Release; and

(b) the Executive’s continued compliance with the material terms of this
Agreement, as applicable, and those of his Non-Disclosure, Non-Competition and
Invention Agreement with the Company.

 

10. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, except any such
laws that would render such choice of law ineffective.

(b) Compliance with Section 409A. This Agreement is intended, to the extent
applicable, to constitute good faith compliance with the requirements of
Section 409A of the Code. The Company and the Executive agree that they shall
cooperate in good faith to amend any provision hereof to the extent required to
maintain compliance with the provisions of Section 409A of the Code as they may
be modified hereafter (including by subsequent regulations or other guidance of
the Internal Revenue Service).

(c) Amendment. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

(d) Effect on Earlier Agreements. This Agreement constitutes the entire
understanding and agreement between the parties hereto with regard to the
compensation payable to the Executive in the circumstances described herein,
superseding all prior understandings and agreements, whether oral or written
relating to the subject matter of this Agreement. If a Change In Control or
termination of the Executive’s employment occurs prior to the Commencement Date,
any obligations of the Company to the Executive shall be as set forth in the
Amended and Restated Executive Agreement dated as of June 26, 2008 by and
between the Company and the Executive (the “Prior Agreement”). As of the
Commencement Date, this Agreement shall supersede the Prior Agreement, which
shall thereupon be terminated and of no further force and effect. For the
purposes of clarity, with respect to a Change In Control or termination of the
Executive’s employment on or after the date hereof and before the Commencement
Date, payments and benefits under the Prior Agreement shall be exclusive and no
payments or benefits shall be provided under this Agreement, and with respect to
a Change in Control or termination of the Executive’s Employment occurring on or
after the Commencement Date, payments and benefits shall be available only under
this Agreement. The agreements evidencing any equity awards granted by the
Company to the Executive are hereby and will be deemed amended to give effect to
the provisions of Section 5 of this Agreement.

The Executive acknowledges and agrees that the change in his position from Chief
Executive Officer to Executive Chairman, the related changes in compensation
provided for in this Agreement and the naming of another person as Chief
Executive Officer of the Company effective as of October 1, 2010 shall not
constitute “Good Reason” or other grounds for resignation by the Executive under
the Prior Agreement and that the Executive shall have no right to receive
compensation or any other benefits under the Prior Agreement by reason of such
events.

(e) Partial Invalidity. If any provision in this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions will nevertheless continue in full force without being impaired or
invalidated in any way.

(f) Expenses. The Company agrees to pay as incurred and within 20 days after
submission of supporting documentation, to the full extent permitted by law, all
legal fees and expenses the Executive may reasonably incur as a result of any
contest by the Company, the Executive or others of the validity or
enforceability

 

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of, or liability under, any provision of this Agreement (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement) with respect to which the Executive is successful on the merits,
plus, in each case, interest on any delayed payment at the applicable Federal
rate provided for in Section 7872(f)(2)(A) of the Code. The Company’s payment of
any eligible expenses must be made no later than December 31 of the year after
the year in which the expense was incurred.

(g) Notices. All notices and other communications hereunder shall be in writing
and shall be delivered by hand delivery, by a reputable overnight courier
service, or by registered or certified mail, return receipt requested, postage
prepaid. Notice to the Executive shall be addressed to him at the last address
contained in the Company’s records and notice to the Company shall be addressed
to:

Parametric Technology Corporation

140 Kendrick Street

Needham, MA 02494

Attention: General Counsel

Notice shall be provided to such other address as either party shall have
furnished to the other in writing in accordance herewith. Any notice or
communication shall be deemed to be delivered upon the date of hand delivery,
one day following delivery to an overnight courier service, or three days
following mailing by registered or certified mail.

EXECUTED as of the date first written above.

 

PARAMETRIC TECHNOLOGY CORPORATION     C. RICHARD HARRISON By:  

/s/James E. Heppelmann

   

/s/ C. Richard Harrison

  James E. Heppelmann       President and Chief Operating Officer    

 

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