EXHIBIT 10.1

Agreement

This Agreement is entered into as of this 18th day of May, 2000, between
Parametric Technology Corporation, a Massachusetts corporation (the "Company"),
and James P. Baum ("Baum").

WHEREAS, Baum is the Executive Vice President, General Manager - Windchill; and

WHEREAS, to provide incentive for Baum to maintain employment with the Company,
the Company desires to make the following arrangements with Baum concerning his
termination of employment.

NOW, THEREFORE, the Company and Baum hereby agree as follows:

1. Termination Notice. The Company agrees that it may not terminate the
employment of Baum unless (i) such termination is for Cause (as defined below)
or (ii) the Company has delivered to Baum a written notice of such termination
(the "Termination Notice") at least six months in advance of the termination
date. The duties of Baum during the period from the date of delivery of a
Termination Notice until the termination of his employment shall be as
determined by the Board of Directors or the Chief Executive Officer.

2. Salary. During the period from the date of delivery of the Termination Notice
(the "Notice Date") until the earlier of (i) the date six months after the
Notice Date or (ii) the date Baum commences employment with another company or
organization, the Company shall pay to Baum a salary that is equal, on an
annualized basis, to the highest annual salary (excluding any bonuses) in effect
with respect to Baum during the six-month period immediately preceding the
Termination Notice.

3. Stock Options. Effective upon a Change in Control (as defined below) of the
Company, all stock options granted to Baum and then outstanding under any Stock
Option Plan (as defined below) of the Company shall become exercisable in full,
notwithstanding any vesting schedule or other provisions to the contrary in the
agreements evidencing such options; and the Company and Baum hereby agree that
such option agreements are hereby and will be deemed amended to give effect to
this provision.

4. Definitions.

(a) A termination by the Company of Baum's employment for "Cause" shall mean
termination (i) for Baum's willful and continued failure to substantially
perform his duties to the Company (other than any such failure resulting from
Baum's incapacity due to physical or mental illness), provided that (a) the
Company has delivered a written demand for substantial performance to Baum
specifically identifying the manner in which the Company believes that Baum has
not substantially performed his duties, and (b) Baum has not cured such failure
within 30 days after such demand, (ii) for willful conduct by Baum which is
demonstrably and materially injurious to the Company, or (iii) for Baum's
willful violation of any material provision of any confidentiality,
nondisclosure, assignment of invention, noncompetition or similar agreement
entered into by Baum in connection with his employment by the Company. For
purposes of this paragraph, no act or failure to act on Baum's part shall be
deemed "willful" unless done or omitted to be done by Baum not in good faith and
without reasonable belief that his action or omission was in the best interests
of the Company.

(b) A "Change in Control" of the Company shall mean 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 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, 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 stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger
or consolidation which 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 the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (B) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as defined above) acquires more than 20% of the combined voting power
of the Company's then outstanding securities; or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company.

(c) A "Stock Option Plan" of the Company shall mean any stock option or equity
compensation plan of the Company in effect at any time, including without
limitation the 1987 Incentive Stock Option Plan, the 1997 Incentive Stock Option
Plan 1997, the 1997 Non-statutory Stock Option Plan and the 2000 Equity
Incentive Plan.

5. Term. This Agreement shall continue in effect until February 28, 2003, unless
extended by the mutual written consent of the Company and Baum.

6. Successors.

(a) This Agreement is personal to Baum and without the prior written consent of
the Company shall not be assignable by Baum otherwise than by will or the laws
of descent and distribution.

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

(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as defined above and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement.

7. Miscellaneous.

(a) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without reference to principles of
conflict of laws.

(b) 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.

(c) 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, in each
case addressed as follows:

If to the Company:

Parametric Technology Corporation
128 Technology Drive
Waltham, MA 02453
Attention: Senior Vice President --General Counsel

If to Baum:

James P. Baum
95 Hager Lane
Boxborough MA, 01719

or 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 such
overnight courier service, or three days following mailing by registered or
certified mail.

 

     EXECUTED as of the date first written above.  
            PARAMETRIC TECHNOLOGY CORPORATION           By:  /s/ C. Richard
Harrison    

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    C. Richard Harrison     President and Chief Executive Officer          
 
   
/s/ James P. Baum 
   

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James P. Baum