PARAMETRIC TECHNOLOGY CORPORATION
1997 INCENTIVE STOCK OPTION PLAN
(As adopted at the November 14, 1996 Board of Directors Meeting.
Subject to stockholder approval at the 1997 Annual Meeting of Stockholders.)
1. PURPOSE
The purpose of the Parametric Technology Corporation 1997 Incentive
Stock Option Plan (the "Plan") is to attract and retain key employees and
consultants of the Company and its Affiliates, to provide an incentive for
them to achieve long-range performance goals, and to enable them to
participate in the long-term growth of the Company.
2. DEFINITIONS
"Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor law.
"Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan or
a specified portion thereof. If a Committee is authorized to grant Options to
a Reporting Person or a "covered employee" within the meaning of Section
162(m) of the Code, each member shall be a "Non- Employee Director" or the
equivalent within the meaning of Rule 16b-3 under the Exchange Act or an
"outside director" or the equivalent within the meaning of Section 162(m) of
the Code, respectively.
"Common Stock" or "Stock" means the Common Stock, $.01 par value, of
the Company.
"Company" means Parametric Technology Corporation.
"Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due
or exercise rights of the Participant in the event of the Participant's death.
In the absence of an effective designation by a Participant, "Designated
Beneficiary" means the Participant's estate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the
Committee in good faith or in the manner established by the Committee from
time to time.
"Incentive Stock Option" - See Section 6(a).
"Nonstatutory Stock Option" - See Section 6(a).
"Option" - Unless the context otherwise requires, an Incentive
Stock Option or a Nonstatutory Stock Option.
"Participant" means a person selected by the Committee to receive an
Option under the Plan.
"Reporting Person" means a person subject to Section 16 of the
Exchange Act.
3. ADMINISTRATION
The Plan shall be administered by the Committee, provided that the Board
may in any instance perform any of the functions of the Committee. The
Committee shall have authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it
shall from time to time consider advisable, and to interpret the provisions of
the Plan. The Committee's decisions shall be final and binding. To the
extent permitted by applicable law, the Committee may delegate to one or more
executive officers of the Company the power to grant Options to Participants
who are not Reporting Persons or covered employees and all determinations
under the Plan with respect thereto, provided that the Committee shall fix the
maximum amount of such Options for all such Participants and a maximum for any
one Participant.
4. ELIGIBILITY
All employees and, in the case of Nonstatutory Stock Options, consultants
of the Company or any Affiliate, capable of contributing significantly to the
successful performance of the Company, other than a person who has irrevocably
elected not to be eligible, are eligible to be Participants in the Plan.
Incentive Stock Options may be granted only to persons eligible to receive
such Options under the Code.
5. STOCK AVAILABLE FOR OPTIONS
(a) AMOUNT. Subject to adjustment under subsection (b), Options may be
granted under the Plan for up to 6,000,000 shares of Common Stock. If any
Option expires or is terminated unexercised or is forfeited or settled in a
manner that results in fewer shares outstanding than were granted, the shares
subject to such Option, to the extent of such expiration, termination,
forfeiture or decrease, shall again be available for grant under the Plan.
Common Stock issued through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares available for
grant under the Plan. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
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(b) ADJUSTMENT. In the event of any stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, exchange of shares, or other transaction affecting the
Common Stock, then (subject in the case of Incentive Stock Options to any
limitation required under the Code) (i) the number and kind of shares in
respect of which Options may be granted under the Plan, (ii) the number and
kind of shares subject to outstanding Options, and (iii) the exercise price
with respect to any of the foregoing shall be proportionately adjusted to the
extent required equitably to preserve the benefits available hereunder,
provided that the number of shares subject to any Option shall always be a
whole number, and if considered appropriate, the Committee may make provision
for a cash payment with respect to an outstanding Option.
(c) LIMIT ON INDIVIDUAL GRANTS. The maximum number of shares of Common
Stock subject to Options that may be granted to any Participant in the
aggregate in any calendar year shall not exceed 1,000,000 shares, subject to
adjustment under subsection (b) above.
6. STOCK OPTIONS
(a) GRANT OF OPTIONS. Subject to the provisions of the Plan, the Committee
may grant Options to purchase shares of Common Stock (i) complying with the
requirements of Section 422 of the Code or any successor provision and any
regulations thereunder ("Incentive Stock Options") and (ii) not intended to
comply with such requirements ("Nonstatutory Stock Options"). The Committee
shall determine the number of shares subject to each Option and the exercise
price therefor, which shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of grant. No Incentive Stock Option may be
granted hereunder more than ten years after the effective date of the Plan.
(b) TERMS AND CONDITIONS. Each Option shall have a term no longer than ten
years from the date of grant and shall be exercisable at the time(s) and
subject to the terms and conditions set forth in the respective form of option
certificate included in Appendix I hereto or as the Committee may otherwise
specify in the applicable grant or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(c) PAYMENT. No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the exercise price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to the
extent permitted by the Committee at or after the grant of the Option, by
delivery of a note or shares of Common Stock owned by the Participant or by
retaining shares otherwise issuable pursuant to the Option, in each case
valued at their Fair Market Value on the date of delivery or retention, or
such other lawful consideration, including a payment commitment of a financial
or brokerage institution, as the Committee may determine.
7. TERMINATION OF EMPLOYMENT OR ENGAGEMENT
If the Optionholder's status as an employee or consultant of (a) the
Company, (b) an Affiliate, or (c) a corporation (or parent or subsidiary
corporation of such corporation) issuing or assuming a stock option in a
transaction to which section 424(a) of the Code applies, is
3
terminated for any reason (voluntary or involuntary) and the period of
exercisability for a particular Option following such termination has not been
specified by the Board, each such Option then held by that Participant shall
expire to the extent not previously exercised ten (10) calendar days after such
Participant's employment or engagement is terminated, except that -
------ ----
(a) If the Participant is on military, sick leave or other bona fide
---- ----
leave of absence (such as temporary employment by the federal government), his
or her employment or engagement with the Company will be treated as continuing
intact if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the Participant's right to reemployment or the survival of
his or her service arrangement with the Company is guaranteed either by
statute or by contract; otherwise, the Participant's employment or engagement
will be deemed to have terminated on the 91st day of such leave.
(b) If the Participant's employment is terminated by reason of his or
her retirement from the Company at normal retirement age, each Option then
held by the Participant, to the extent exercisable at retirement, may be
exercised by the Participant at any time within three (3) months after such
retirement unless terminated earlier by its terms.
(c) If the Participant's employment or engagement is terminated by
reason of his or her death, each Option then held by the Participant, to the
extent exercisable at the date of death, may be exercised at any time within
one year after that date (unless terminated earlier by its terms) by the
person(s) to whom the Participant's option rights pass by will or by the
applicable laws of descent and distribution.
(d) If the Participant's employment or engagement is terminated by
reason of his or her becoming permanently and totally disabled, each Option then
held by the Participant, to the extent exercisable upon the occurrence of
permanent and total disability, may be exercised by the Participant at any time
within one (1) year after such occurrence unless terminated earlier by its
terms. For purposes hereof, an individual shall be deemed to be "permanently
and totally disabled" if he or she is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than twelve (12) months.
Any determination of permanent and total disability shall be made in good faith
by the Company on the basis of a report signed by a qualified physician.
8. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) LIMITATIONS ON TRANSFERABILITY. Options shall not be transferable by
the recipient other than by will or the laws of descent and distribution and
are exercisable during such person's lifetime only by such person or by such
person's guardian or legal representative; provided that the Committee may in
its discretion waive such restriction in any case.
(b) DOCUMENTATION. Each Option under the Plan shall be evidenced by a
written stock option certificate delivered to the Participant specifying the
terms and conditions thereof and containing such other terms and conditions
not inconsistent with the provisions of the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable tax and regulatory laws and accounting principles.
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(c) COMMITTEE DISCRETION. Options may be granted alone, in addition to or
in relation to any other Option. The terms of each Option need not be
identical, and the Committee need not treat Participants uniformly. Except as
otherwise provided by the Plan or a particular Option, any determination with
respect to an Option may be made by the Committee at the time of grant or at
any time thereafter.
(d) DIVIDENDS AND CASH OPTIONS. In the discretion of the Committee, any
Option under the Plan may provide the Participant with (i) dividends or
dividend equivalents payable (in cash or in the form of Options under the
Plan) currently or deferred with or without interest, and (ii) cash payments
in lieu of or in addition to an Option.
(e) CHANGE IN CONTROL. In order to preserve a Participant's rights under
an Option in the event of a change in control (as defined by the Committee) of
the Company, the Committee in its discretion may, at the time an Option is
granted or at any time thereafter, take one or more of the following actions:
(i) provide for the acceleration of any time period relating to the exercise
of the Option, (ii) provide for payment to the Participant of cash or other
property with a Fair Market Value equal to the value that would have been
received upon the exercise of the Option had the Option been exercised upon
the change in control, (iii) adjust the terms of the Option in a manner
determined by the Committee to reflect the change in control, (iv) cause the
Option to be assumed, or new rights substituted therefor, by another entity,
or (v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.
(f) LOANS. The Committee may authorize the making of loans or cash
payments to Participants in connection with the grant or exercise of any
Option under the Plan, which loans may be secured by any security, including
Common Stock, underlying such Option (provided that the loan shall not exceed
the Fair Market Value of the security subject to such Option), and which may
be forgiven upon such terms and conditions as the Committee may establish at
the time of such loan or at any time thereafter.
(g) WITHHOLDING TAXES. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may,
to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to the Participant. In the Committee's
discretion, the Participant may pay any taxes due with respect to an Option in
whole or in part in shares of Common Stock, including shares retained from the
Option creating the tax obligation, valued at their Fair Market Value on the
date of retention or delivery.
(h) FOREIGN NATIONALS. Options may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable laws.
(i) AMENDMENT OF OPTION. The Committee may amend, modify or terminate any
outstanding Option in any respect, including converting an Incentive Stock
Option to a
5
Nonstatutory Stock Option, provided that the Participant's consent to such
action shall be required unless the Committee determines that the action,
taking into account any related action, would not materially and adversely
affect the Participant. The Committee shall not, without further approval of
the stockholders of the Company, authorize the amendment of any outstanding
option to reduce the option price. Furthermore, no option shall be canceled
and replaced with options having a lower option price or base price without
approval of the stockholders of the Company.
9. MISCELLANEOUS
(a) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Option. Each employee of the Company or any of its Affiliates is
an employee-at-will (that is to say that either the Participant or the Company
or any Affiliate may terminate the employment relationship at any time for any
reason or no reason at all) unless, and only to the extent, provided in a
written employment agreement for a specified term executed by the chief
executive officer of the Company or his duly authorized designee or the
authorized signatory of any Affiliate. Neither the adoption, maintenance, nor
operation of the Plan nor any Option hereunder shall confer upon any employee
of the Company or of any Affiliate any right with respect to the continuance
of his/her employment by the Company or any such Affiliate nor shall they
interfere with the right of the Company (or Affiliate) to terminate any
employee at any time or otherwise change the terms of employment, including,
without limitation, the right to promote, demote or otherwise re-assign any
employee from one position to another within the Company or any Affiliate.
(b) EFFECT OF GRANT. Participant shall not earn any Options granted
hereunder until such time as all the conditions put forth herein which are
required to be met in order to exercise the Option have been fully satisfied.
(c) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Option, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof.
(d) EFFECTIVE DATE. Subject to the approval of the stockholders of the
Company, the Plan shall be effective on the date of its approval by the Board.
(e) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, subject to any stockholder approval that
the Board determines to be necessary or advisable.
(f) GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Massachusetts.
(g) COMPLETE AGREEMENT The Plan constitutes the complete understanding of
the parties regarding the subject matter hereof and supersedes all prior
contemporaneous agreements of the parties, whether written or oral. This Plan
may be amended, altered, or modified only by a writing, specifying such
amendment, alteration or modification, signed by both parties.
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APPENDIX I
No. __________ _________ Shares
PARAMETRIC TECHNOLOGY CORPORATION
1997 INCENTIVE STOCK OPTION PLAN
Incentive Stock Option Certificate
Parametric Technology Corporation (the "Company"), a Massachusetts
corporation, hereby grants to the person named below an option to purchase
shares of Common Stock, $0.01 par value, of the Company (the "Option") under
and subject to the Company's 1997 Incentive Stock Option Plan (the "Plan")
exercisable on the following terms and conditions set forth below and those
attached hereto and in the Plan:
Name of Optionholder: ____________________________
Address: ____________________________
____________________________
Social Security No. ____________________________
Number of Shares: __________________
Option Price: __________________
Date of Grant:
__________________
Exercisability Schedule: After , 19 , as to ______ shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares.
Expiration Date: __________________
This Option is intended to be treated as an Incentive Stock Option under
section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
By acceptance of this Option, the Optionholder agrees to the terms and
conditions set forth below and those attached hereto and in the Plan.
OPTIONHOLDER PARAMETRIC TECHNOLOGY CORPORATION
By: By:
------------------------- ----------------------------
7
PARAMETRIC TECHNOLOGY CORPORATION 1997 INCENTIVE STOCK OPTION PLAN
INCENTIVE STOCK OPTION TERMS AND CONDITIONS
1. Plan Incorporated by Reference. This Option is issued pursuant to
------------------------------
the terms of the Plan and may be amended as provided in the Plan. Capitalized
terms used and not otherwise defined in this certificate have the meanings
given to them in the Plan. This certificate does not set forth all of the
terms and conditions of the Plan, which are incorporated herein by reference.
The Committee administers the Plan and its determinations regarding the
operation of the Plan are final and binding. Copies of the Plan may be
obtained upon written request without charge from the Corporate Counsel of the
Company.
2. Option Price. The price to be paid for each share of Common Stock
------------
issued upon exercise of the whole or any part of this Option is the Option
Price set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any time
-----------------------
and from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only
for the purchase of whole shares. This Option may not be exercised as to any
shares after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder shall
------------------
deliver written notice of exercise to the Company specifying the number of
shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at
their Fair Market Value on the date of delivery or a payment commitment of a
financial or brokerage institution, as the Committee may approve. Promptly
following such notice, the Company will deliver to the Optionholder a
certificate representing the number of shares with respect to which the Option
is being exercised.
5. No Right To Employment. No person shall have any claim or right to be
----------------------
granted an Option. Each employee of the Company or any of its Affiliates is
an employee-at-will (that is to say that either the Participant or the Company
or any Affiliate may terminate the employment relationship at any time for any
reason or no reason at all) unless, and only to the extent, provided in a
written employment agreement for a specified term executed by the chief
executive officer of the Company or his duly authorized designee or the
authorized signatory of any Affiliate. Neither the adoption, maintenance, nor
operation of the Plan nor any Option hereunder shall confer upon any employee
of the Company or of any Affiliate any right with respect to the continuance
of his/her employment by the Company or any such Affiliate nor shall they
interfere with the right
8
of the Company (or Affiliate) to terminate any employee at any time or
otherwise change the terms of employment, including, without limitation, the
right to promote, demote or otherwise re-assign any employee from one position
to another within the Company or any Affiliate.
6. Effect of Grant. Participant shall not earn any Options granted
----------------
hereunder until such time as all the conditions put forth herein and in the
Plan which are required to be met in order to exercise the Option have been
fully satisfied.
7. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
------------------------------
of corporate transactions affecting the Company's outstanding Common Stock,
the Committee shall equitably adjust the number and kind of shares subject to
this Option and the exercise price hereunder or make provision for a cash
payment. If such transaction involves a consolidation or merger of the
Company with another entity, the sale or exchange of all or substantially all
of the assets of the Company or a reorganization or liquidation of the
Company, then in lieu of the foregoing, the Committee may upon written notice
to the Optionholder provide that this Option shall terminate on a date not
less than 20 days after the date of such notice unless theretofore exercised.
In connection with such notice, the Committee may in its discretion accelerate
or waive any deferred exercise period.
8. Option Not Transferable. This Option is not transferable by the
-----------------------
Optionholder otherwise than by will or the laws of descent and distribution,
and is exercisable, during the Optionholder's lifetime, only by the
Optionholder. The naming of a Designated Beneficiary does not constitute a
transfer.
9. Termination of Employment or Engagement. If the Optionholder's status
----------------------------------------
as an employee or consultant of (a) the Company, (b) an Affiliate, or (c) a
corporation (or parent or subsidiary corporation of such corporation) issuing
or assuming a stock option in a transaction to which section 424(a) of the
Code applies, is terminated for any reason (voluntary or involuntary) and the
period of exercisability for a particular Option following such termination
has not been specified by the Board, each such Option then held by that
Participant shall expire to the extent not previously exercised ten (10)
calendar days after such Participant's employment or engagement is terminated,
except that -
------ ----
(a) If the Participant is on military, sick leave or other bona fide
---- ----
leave of absence (such as temporary employment by the federal government), his
or her employment or engagement with the Company will be treated as continuing
intact if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the Participant's right to reemployment or the survival of
his or her service arrangement with the Company is guaranteed either by
statute or by contract; otherwise, the Participant's employment or engagement
will be deemed to have terminated on the 91st day of such leave.
9
(b) If the Participant's employment is terminated by reason of his or her
retirement from the Company at normal retirement age, each Option then held by
the Participant, to the extent exercisable at retirement, may be exercised by
the Participant at any time within three (3) months after such retirement
unless terminated earlier by its terms.
(c) If the Participant's employment or engagement is terminated by reason
of his or her death, each Option then held by the Participant, to the extent
exercisable at the date of death, may be exercised at any time within one year
after that date (unless terminated earlier by its terms) by the person(s) to
whom the Participant's option rights pass by will or by the applicable laws of
descent and distribution.
(d) If the Participant's employment or engagement is terminated by reason
of his or her becoming permanently and totally disabled, each Option then held
by the Participant, to the extent exercisable upon the occurrence of permanent
and total disability, may be exercised by the Participant at any time within
one (1) year after such occurrence unless terminated earlier by its terms.
For purposes hereof, an individual shall be deemed to be "permanently and
totally disabled" if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve (12) months.
Any determination of permanent and total disability shall be made in good
faith by the Company on the basis of a report signed by a qualified physician.
10. Compliance with Securities Laws. It shall be a condition to the
-------------------------------
Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issuance upon the exercise of this Option shall have been duly
listed, upon official notice of issuance, upon any national securities
exchange or automated quotation system on which the Company's Common Stock may
then be listed or quoted, (b) that either (i) a registration statement under
the Securities Act of 1933 with respect to the shares shall be in effect, or
(ii) in the opinion of counsel for the Company, the proposed purchase shall be
exempt from registration under that Act and the Optionholder shall have made
such undertakings and agreements with the Company as the Company may
reasonably require, and (c) that such other steps, if any, as counsel for the
Company shall consider necessary to comply with any law applicable to the
issue of such shares by the Company shall have been taken by the Company or
the Optionholder, or both. The certificates representing the shares purchased
under this Option may contain such legends as counsel for the Company shall
consider necessary to comply with any applicable law.
11. Payment of Taxes. The Optionholder shall pay to the Company, or make
----------------
provision satisfactory to the Company for payment of, any taxes required by
law to be withheld with respect to the exercise of this Option. The Committee
may, in its discretion, require any other Federal or state taxes imposed on
the sale of the shares to be paid by the Optionholder. In the Committee's
discretion, such tax obligations may be paid
10
in whole or in part in shares of Common Stock, including shares retained from
the exercise of this Option, valued at their Fair Market Value on the date of
delivery. The Company and its Affiliates may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the Optionholder.
12. Notice of Sale of Shares Required. The Optionholder agrees to notify
---------------------------------
the Company in writing within 30 days of the disposition of any shares
purchased upon exercise of this Option if such disposition occurs within two
years of the date of the grant of this Option or within one year after such
purchase.
Adopted 11/14/96
11
No._________ _________ Shares
PARAMETRIC TECHNOLOGY CORPORATION
1997 INCENTIVE STOCK OPTION PLAN
Nonstatutory Stock Option Certificate
Parametric Technology Corporation (the "Company"), a Massachusetts
corporation, hereby grants to the person named below an option to purchase
shares of Common Stock, $0.01 par value, of the Company (the "Option") under
and subject to the Company's 1997 Incentive Stock Option Plan (the "Plan")
exercisable on the following terms and conditions set forth below and those
attached hereto and in the Plan:
Name of Optionholder: ____________________________
Address: ____________________________
____________________________
Social Security No. ____________________________
Number of Shares: __________________
Option Price: __________________
Date of Grant:
__________________
Exercisability Schedule: After , 19 , as to ______ shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares,
after , 19 , as to ______ additional shares.
Expiration Date: __________________
This Option shall not be treated as an Incentive Stock Option under
section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
By acceptance of this Option, the Optionholder agrees to the terms and
conditions set forth below and those attached hereto and in the Plan.
OPTIONHOLDER PARAMETRIC TECHNOLOGY CORPORATION
By: By:
--------------------------- ----------------------------
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PARAMETRIC TECHNOLOGY CORPORATION 1997 INCENTIVE STOCK OPTION PLAN
NONSTATUTORY STOCK OPTION TERMS AND CONDITIONS
1. Plan Incorporated by Reference. This Option is issued pursuant
------------------------------
to the terms of the Plan and may be amended as provided in the Plan.
Capitalized terms used and not otherwise defined in this certificate have the
meanings given to them in the Plan. This certificate does not set forth all
of the terms and conditions of the Plan, which are incorporated herein by
reference. The Committee administers the Plan and its determinations
regarding the operation of the Plan are final and binding. Copies of the Plan
may be obtained upon written request without charge from the Corporate Counsel
of the Company.
2. Option Price. The price to be paid for each share of Common
------------
Stock issued upon exercise of the whole or any part of this Option is the
Option Price set forth on the face of this certificate.
3. Exercisability Schedule. This Option may be exercised at any
-----------------------
time and from time to time for the number of shares and in accordance with the
exercisability schedule set forth on the face of this certificate, but only
for the purchase of whole shares. This Option may not be exercised as to any
shares after the Expiration Date.
4. Method of Exercise. To exercise this Option, the Optionholder
------------------
shall deliver written notice of exercise to the Company specifying the number
of shares with respect to which the Option is being exercised accompanied by
payment of the Option Price for such shares in cash, by certified check or in
such other form, including shares of Common Stock of the Company valued at
their Fair Market Value on the date of delivery or a payment commitment of a
financial or brokerage institution, as the Committee may approve. Promptly
following such notice, the Company will deliver to the Optionholder a
certificate representing the number of shares with respect to which the Option
is being exercised.
5. No Right To Employment. No person shall have any claim or right to be
----------------------
granted an Option. Each employee of the Company or any of its Affiliates is
an employee-at-will (that is to say that either the Participant or the Company
or any Affiliate may terminate the employment relationship at any time for any
reason or no reason at all) unless, and only to the extent, provided in a
written employment agreement for a specified term executed by the chief
executive officer of the Company or his duly authorized designee or the
authorized signatory of any Affiliate. Neither the adoption, maintenance, nor
operation of the Plan nor any Option hereunder shall confer upon any employee
of the Company or of any Affiliate any right with respect to the continuance
of his/her employment by the Company or any such Affiliate nor shall they
interfere with the right of the Company (or Affiliate) to terminate any
employee at any time or otherwise change the terms of employment, including,
without limitation, the right to promote, demote
13
or otherwise re-assign any employee from one position to another within the
Company or any Affiliate.
6. Effect of Grant. Participant shall not earn any Options granted
----------------
hereunder until such time as all the conditions put forth herein and in the
Plan which are required to be met in order to exercise the Option have been
fully satisfied.
7. Recapitalization, Mergers, Etc. As provided in the Plan, in the event
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of corporate transactions affecting the Company's outstanding Common Stock,
the number and kind of shares subject to this Option and the exercise price
hereunder shall be equitably adjusted. If such transaction involves a
consolidation or merger of the Company with another entity, the sale or
exchange of all or substantially all of the assets of the Company or a
reorganization or liquidation of the Company, then in lieu of the foregoing,
the Committee may upon written notice to the Optionholder provide that this
Option shall terminate on a date not less than 20 days after the date of such
notice unless theretofore exercised. In connection with such notice, the
Committee may in its discretion accelerate or waive any deferred exercise
period.
8. Option Not Transferable. This Option is not transferable by the
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Optionholder otherwise than by will or the laws of descent and distribution,
and is exercisable, during the Optionholder's lifetime, only by the
Optionholder. The naming of a Designated Beneficiary does not constitute a
transfer.
9. Termination of Employment or Engagement. If the Optionholder's status
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as an employee or consultant of (a) the Company, (b) an Affiliate, or (c) a
corporation (or parent or subsidiary corporation of such corporation) issuing
or assuming a stock option in a transaction to which section 424(a) of the
Code applies, is terminated for any reason (voluntary or involuntary) and the
period of exercisability for a particular Option following such termination
has not been specified by the Board, each such Option then held by that
Participant shall expire to the extent not previously exercised ten (10)
calendar days after such Participant's employment or engagement is terminated,
except that -
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(a) If the Participant is on military, sick leave or other bona fide
---- ----
leave of absence (such as temporary employment by the federal government), his
or her employment or engagement with the Company will be treated as continuing
intact if the period of such leave does not exceed ninety (90) days, or, if
longer, so long as the Participant's right to reemployment or the survival of
his or her service arrangement with the Company is guaranteed either by
statute or by contract; otherwise, the Participant's employment or engagement
will be deemed to have terminated on the 91st day of such leave.
(b) If the Participant's employment is terminated by reason of his or her
retirement from the Company at normal retirement age, each Option then held by
the Participant, to the extent exercisable at retirement, may be exercised by
the Participant at
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any time within three (3) months after such retirement unless terminated
earlier by its terms.
(c) If the Participant's employment or engagement is terminated by reason
of his or her death, each Option then held by the Participant, to the extent
exercisable at the date of death, may be exercised at any time within one year
after that date (unless terminated earlier by its terms) by the person(s) to
whom the Participant's option rights pass by will or by the applicable laws of
descent and distribution.
(d) If the Participant's employment or engagement is terminated by reason
of his or her becoming permanently and totally disabled, each Option then held
by the Participant, to the extent exercisable upon the occurrence of permanent
and total disability, may be exercised by the Participant at any time within
one (1) year after such occurrence unless terminated earlier by its terms.
For purposes hereof, an individual shall be deemed to be "permanently and
totally disabled" if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than twelve (12) months.
Any determination of permanent and total disability shall be made in good
faith by the Company on the basis of a report signed by a qualified physician.
10. Compliance with Securities Laws. It shall be a condition to the
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Optionholder's right to purchase shares of Common Stock hereunder that the
Company may, in its discretion, require (a) that the shares of Common Stock
reserved for issuance upon the exercise of this Option shall have been duly
listed, upon official notice of issuance, upon any national securities
exchange or automated quotation system on which the Company's Common Stock may
then be listed or quoted, (b) that either (i) a registration statement under
the Securities Act of 1933 with respect to the shares shall be in effect, or
(ii) in the opinion of counsel for the Company, the proposed purchase shall be
exempt from registration under that Act and the Optionholder shall have made
such undertakings and agreements with the Company as the Company may
reasonably require, and (c) that such other steps, if any, as counsel for the
Company shall consider necessary to comply with any law applicable to the
issue of such shares by the Company shall have been taken by the Company or
the Optionholder, or both. The certificates representing the shares purchased
under this Option may contain such legends as counsel for the Company shall
consider necessary to comply with any applicable law.
11. Payment of Taxes. The Optionholder shall pay to the Company, or make
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provision satisfactory to the Company for payment of, any taxes required by
law to be withheld with respect to the exercise of this Option. The Committee
may, in its discretion, require any other Federal or state taxes imposed on
the sale of the shares to be paid by the Optionholder. In the Committee's
discretion, such tax obligations may be paid in whole or in part in shares of
Common Stock, including shares retained from the exercise of this Option,
valued at their Fair Market Value on the date of delivery. The Company and
its Affiliates may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the Optionholder.
Adopted 11/14/96
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