PARAMETRIC TECHNOLOGY CORPORATION
1996 DIRECTOR STOCK OPTION PLAN
(Subject to stockholder adoption at the 1996 Annual meeting of Stockholders.)
1. PURPOSE.
This 1996 Director Stock Option Plan (the "Plan") governs options to
purchase Common Stock, $.01 par value per share (the "Common Stock"), of
Parametric Technology Corporation (the "Company") granted by the Company to
members of the Board of Directors of the Company who are not also officers or
employees of the Company. The purpose of the Plan is to attract and retain
qualified persons to serve as Directors of the Company and to encourage
ownership of the Common Stock of the Company by such Directors.
2. ADMINISTRATION.
Grants of stock options under the Plan shall be automatic as provided in
Section 8. However, all questions of interpretation of the Plan or of any
options granted hereunder shall be determined by the Board of Directors of the
Company (the "Board"). Any and all powers of the Board under the Plan may be
exercised by a committee consisting of one or more Directors appointed by the
Board.
3. ELIGIBILITY.
Members of the Board who are not also officers or employees of the Company
shall be eligible to participate in the Plan.
4. SHARES SUBJECT TO THE PLAN.
Options may be granted under the Plan in respect of a maximum of 90,000
shares of Common Stock, subject to adjustment as provided in Section 5 below.
Shares to be issued upon the exercise of options granted under the Plan may be
either authorized but unissued shares or shares held by the Company in its
treasury. Whenever options under the Plan lapse or terminate or otherwise become
unexercisable, the shares of Common Stock which were available for such options
shall again be available for the grant of options under the Plan. The Company
shall at all times while the Plan is in force reserve such number of shares of
Common Stock as will be sufficient to satisfy the requirements of the Plan.
5. ADJUSTMENT OF NUMBER OF OPTION SHARES.
In the event of a stock dividend, split-up, combination or reclassification
of shares, recapitalization or other similar capital change relating to the
Company's Common Stock, the maximum aggregate number and kind of shares or
securities of the Company as to which options may be granted under this Plan and
as to which options then outstanding shall be exercisable, and
the option price of such options shall be appropriately adjusted so that the
proportionate number of shares or other securities as to which options may be
granted and the proportionate interest of holders of outstanding options shall
be maintained as before the occurrence of such event.
In the event of any reorganization, consolidation or merger to which the
Company is a party and in which the Company does not survive, or upon the
dissolution or liquidation of the Company, all outstanding options shall
terminate; provided, however, that (i) in the event of the liquidation or
-------- -------
dissolution of the Company, or in the event of any such reorganization,
consolidation or merger in which the Company does not survive and with respect
to which the resulting or surviving corporation does not assume such outstanding
option or issue a substitute option therefor, such option shall be exercisable
in full, without regard to any installment restrictions on exercise imposed
pursuant to this Plan or any Option Agreement, during such period preceding the
effective date of such liquidation, dissolution, reorganization, consolidation
or merger (unless such option is terminated earlier by its terms) as may be
specified by the Board; and (ii) in the event of any such reorganization,
consolidation or merger, the Board may, in its good faith discretion, arrange to
have the resulting or surviving corporation assume such outstanding option or
issue a substitute option therefor.
No fraction of a share shall be purchasable or deliverable upon exercise of
an option, but, in the event any adjustment hereunder of the number of shares
covered by the option shall cause such number to include a fraction of a share,
such fraction shall be adjusted to the nearest smaller whole number of shares.
6. NON-STATUTORY STOCK OPTIONS.
All options granted under the Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").
7. FORM OF OPTION AGREEMENTS.
Options shall be granted hereunder pursuant to the terms of Option
Agreements which shall be substantially in the form of the attached Exhibit A or
---------
in such other form as the Board may from time to time determine.
8. GRANT OF OPTIONS AND OPTION TERMS.
Automatic Grant of Options. Options to purchase Common Stock shall
automatically be granted as follows:
(i) Immediately following his or her election, each non-employee
director of the Company newly elected to the Board of Directors shall
automatically be granted options to purchase 10,000 shares of Common Stock;
and
(ii) Immediately following the annual meeting of stockholders each
year, each non-employee director of the Company continuing in office after
such meeting shall automatically be granted options to purchase 2,500
shares of Common Stock.
2
No options shall be granted hereunder after ten years from the date on which
this Plan was initially approved and adopted by the Board.
Date of Grant. The "Date of Grant" for options granted under this Plan
shall be (i) the date of the respective director's election, for each grant
pursuant to clause (i) of the preceding paragraph and (ii) the date of the
respective annual meeting of stockholders, for each grant pursuant to clause
(ii) of the preceding paragraph.
Option Price. The option price for each option granted under this Plan
shall be the current fair market value of a share of Common Stock of the
Company, which, for this purpose, shall be the last sale price for the Company's
Common Stock as reported on the Nasdaq National Market, or the principal
exchange on which the Common Stock is then traded, as the case may be, for the
Date of Grant.
Term of Option. The term of each option granted under the Plan shall be ten
years from the Date of Grant.
Period of Exercise. Options granted under the Plan shall become exercisable
in four equal installments on each of the first, second, third and fourth
anniversaries of the Date of Grant if and only if the option holder is a member
of the Board at the opening of business on that anniversary date. Directors
holding exercisable options under the Plan who cease to serve as members of the
Board of the Company for any reason other than death may, for a period of seven
months following the date of cessation of service, exercise the rights they had
under such options at the time they ceased being a Director. Any rights that
have not yet become exercisable shall terminate upon cessation of membership on
the Board. Upon the death of a Director, those entitled to do so under the
Director's will or the laws of descent and distribution shall have the right, at
any time within twelve months after the date of death, to exercise in whole or
in part any rights which were available to the Director at the time of his
death. The rights of the option holder may be exercised by the holder's guardian
or legal representative in the case of disability and by the beneficiary
designated by the holder in writing delivered to the Company or, if none has
been designated, by the holder's estate or his or her transferee on death in
accordance with this Plan, in the case of death. Options granted under the Plan
shall terminate, and no rights thereunder may be exercised, after the expiration
of the applicable exercise period. Notwithstanding the foregoing provisions, no
rights under any options may be exercised after the expiration of ten years from
their Date of Grant.
Method of Exercise and Payment. Each exercise of an option hereunder may be
effected only by giving written notice, in the manner provided in Section 12
hereof, of intent to exercise the option, specifying the number of shares as to
which the option is being exercised, and accompanied by full payment of the
option price for the number of shares then being acquired. Such payment shall be
made in cash, by certified or bank check payable to the order of the Company,
credit to the Company's account at a financial or brokerage institution on the
date of exercise or a payment commitment of such an institution acceptable to
the Company, or if the option so provides, (i) in shares of Common Stock having
an aggregate Fair Market Value, at the time of such payment, equal to the total
option price for the number of shares of Common Stock
3
for which payment is then being made, or (ii) partly in cash or by certified or
bank check payable to the order of the Company and the balance in shares of
Common Stock having an aggregate Fair Market Value, at the time of such payment,
equal to the difference between the total option price for the number of shares
of Common Stock for which payment is then being made and the amount of the
payment in cash or by certified or bank check. For purposes hereof, the "Fair
Market Value" of the Common Stock shall be the last sale price of the Common
Stock as reported on the Nasdaq National Market for the business day immediately
preceding the option exercise date.
Receipt by the Company of such notice and payment shall, for purposes of
this Plan, constitute exercise of the option or a part thereof. Within twenty
(20) days thereafter, the Company shall deliver or cause to be delivered to the
optionee a certificate or certificates for the number of shares of Common Stock
then being purchased by the optionee. Such shares shall be fully paid and non-
assessable. If any law or applicable regulation of the Securities and Exchange
Commission or other public regulatory authority (including, but not limited to,
a stock exchange) shall require the Company or the optionee (i) to register or
qualify, under the Securities Act of 1933, as amended (the "Securities Act"),
any similar federal statute then in force or any state law regulating the sale
of securities, any shares of Common Stock covered by an option with respect to
which notice of intent to exercise shall have been delivered to the Company or
(ii) to take any other action in connection with such shares before issuance
thereof may be effected, then the delivery of the certificate or certificates
for such shares shall be postponed until completion of the necessary action,
which the Company shall take in good faith and without delay. All such action
shall be taken by the Company at its own expense.
To the extent determined necessary by counsel to the Company to comply with
any applicable law, the Company may require an individual exercising an option
to represent that his purchase of shares of Common Stock pursuant to such
exercise is for his own account, for investment and without a view to resale or
distribution, and that he will not sell or otherwise dispose of any such shares
except pursuant to (i) an effective registration statement covering such
transaction filed with the Securities and Exchange Commission and in compliance
with all of the applicable provisions of the Securities Act, and the rules and
regulations thereunder, or (ii) an opinion of Company counsel that such
registration is not required.
Non-transferability. Options granted under the Plan shall not be
transferable by the holder thereof otherwise than by will or the laws of descent
and distribution or by such other means as may be permitted by Rule 16b-3 (or
any successor provision) under the Securities Exchange Act of 1934, as amended
("Rule 16b-3").
9. LIMITATION OF RIGHTS.
No Right to Continue as a Director. Neither the Plan, nor the granting of
an option or any other action taken pursuant to the Plan, shall constitute an
agreement or understanding, express or implied, that the Company will retain an
optionee as a Director for any period of time or at any particular rate of
compensation.
4
No Stockholders' Rights for Options. Directors shall have no rights as
stockholders with respect to the shares covered by their options until the date
they exercise such options and pay the option price to the Company, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such option is exercised and paid for.
10. STOCKHOLDER APPROVAL.
The Plan is subject to approval by the stockholders of the Company by the
affirmative vote of a majority of the shares of Common Stock present or
represented and entitled to vote at a meeting of the Company's stockholders. In
the event such approval is not obtained, all options granted under this Plan
shall be void and without effect.
11. AMENDMENT OR TERMINATION.
The Board may amend or terminate this Plan at any time, provided that, to
the extent required to qualify the Plan for the exemption under Rule 16b-3, no
amendment may be made to change the eligibility or selection of Directors to
receive options, the timing of grants, or the number of shares of Common Stock
subject to the Plan or any option granted thereunder, other than as permitted by
such Rule, and this Plan shall not be amended more than once every six months,
other than to comport with changes in the Code or the Employee Retirement Income
Security Act of 1974, as amended or the rules and regulations promulgated
thereunder.
12. NOTICES.
Any communication or notice required or permitted to be given under this
Plan shall be in writing and mailed by registered or certified mail or delivered
in hand, if to the Company, to its Corporate Counsel at Parametric Technology
Corporation, 128 Technology Drive, Waltham, Massachusetts 02154 and, if to an
optionee, to such address as the optionee shall last have furnished to the
Company.
13. GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts.
As adopted by the Board of Directors
on November 17, 1995
As approved by the Stockholders on
February 8, 1996
5
EXHIBIT A
---------
1996 DSO - _______ ________ Shares
PARAMETRIC TECHNOLOGY CORPORATION
1996 Director Stock Option Plan
Non-statutory Stock Option Agreement
_______________ __, 199_
Parametric Technology Corporation (the "Company"), a Massachusetts
corporation, hereby grants to the person named below an option to purchase
shares of Common Stock, $.01 par value per share of the Company (the "Option")
under and subject to the Company's 1996 Director Stock Option Plan (the "Plan")
exercisable only on the following terms and conditions and those set forth on
the reverse side of this Agreement:
Name of Optionee:
Address:
Social Security No.
Option Price:
Date of Grant:
Exercisability Schedule:
at any time on or after the first anniversary of the date hereof, as to
_________ shares,
at any time on or after the second anniversary of the date hereof, as to
_________ additional shares,
at any time on or after the third anniversary of the date hereof, as to
_________ additional shares,
at any time on or after the fourth anniversary of the date hereof, as to
_________ additional shares,
provided that this Optionee is a member of the Board of Directors of the Company
(the "Board") at the opening of business on the date described above and
provided that this Option may not be exercised as to any shares after the
expiration of ten years from the date hereof.
By signing this Stock Option Agreement and returning on signed copy of to
the Company, the Optionee accepts the Option described herein on the terms and
conditions set forth herein or in the plan.
PARAMETRIC TECHNOLOGY Accepted and agreed to:
CORPORATION
By: ____________________ _______________________
Title: Optionee
TERMS AND CONDITIONS
Parametric Technology Corporation
1996 Director Stock Option Plan
1. This Option may be exercised from time to time in accordance with the
exercisability Schedule for up to the aggregate number of shares specified
herein, but in no event for the purchase of other than full shares; provided,
however, that this Option may not be exercised as to any shares after the
expiration of ten years from the date hereof. Written notice of exercise shall
be delivered to the Company specifying the number of shares with respect to
which the Option is being exercised. Not later than twenty days after the date
of the delivery of such notice the Company will deliver to the Optionee a
certificate for the number of shares with respect to which the Option is being
exercised against payment therefor in cash or by check, credit to the Company's
account at a financial or brokerage institution on the date of exercise or a
payment commitment of such an institution acceptable to the Company or by shares
of the Company's Common Stock, valued at their fair market value as of the date
of exercise as determined as provided in the Plan, or in any combination of
cash, check and shares of Common Stock. Shares of Common Stock surrendered in
payment of the option price shall have been held by the person exercising the
option for at least six months unless otherwise permitted by the Board.
2. The Optionee shall not be deemed, for any purpose, to have any rights
whatever in respect of shares to which the Option shall not have been exercised
and payment made as aforesaid. The Optionee shall not be deemed to have any
rights to continued service as director by virtue of the grant of this Option.
3. In the event of stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Common Stock, the maximum aggregate number and kind of shares of
securities of the Company subject to this Option and the exercise price of this
Option shall be appropriately adjusted by the Board (whose determination shall
be conclusive) so that the proportionate number of shares or other securities
subject to this Option and the proportionate interest of the Optionholder shall
be maintained as before the occurrence of such event.
4. In the event of any reorganization, consolidation or merger to which the
Company is a party and in which the Company does not survive, or upon the
dissolution or liquidation of the Company, this option, to the extent
outstanding and unexercised, shall terminate; provided, however, that (i) in the
event of the liquidation of dissolution of the Company, or in the event of any
such reorganization, consolidation or merger in which the Company does not
survive and with respect to which the resulting or surviving corporation does
not assume such outstanding option or issue a substitute option herefor, this
option shall be exercisable in full, without regard to any installment
restrictions on exercise imposed pursuant to the Plan or this Option Agreement,
during such period preceding the effective date of such liquidation,
dissolution, reorganization, consolidation or merger (unless this option is
terminated earlier by its terms) as may be specified by the Board; and (ii) in
the event of any such reorganization, consolidation or merger, the Board may, in
its good faith discretion, arrange to have the resulting or surviving
corporation assume this option, to the extent outstanding and unexercised, or
issue a substitute option therefor.
5. This Option is not transferable by the Optionee otherwise than by will
or the laws of descent and distribution or by such other means as may be
permitted by Rule 16b-3 (or any successor provision) under the Securities
Exchange Act of 1934, as amended. This Option is exercisable during the
Optionee's lifetime only by the Optionee, provided that this Option may be
exercised by the Optionholder's guardian or legal representative in the case of
disability and by the beneficiary designated by the Optionholder in writing
delivered to the Company, or, if none has been designated, by the Optionholder's
estate or his or her transferee on death in accordance with this Section, in the
case of death.
6. If the Optionee ceases to serve as a member of the Board for any reason
other than death, the Optionee may, for a period of seven months following such
cessation of service, exercise the rights which the Optionee had hereunder at
the time the Optionee ceased being a director. Upon the death of the Optionee,
those entitled to do so shall have the right, at any time within twelve months
after the date of death (subject to the prior expiration of the Option exercise
period), to exercise in whole or in part any rights which were available to the
Optionee at the time of the Optionee's death. This Option shall terminate after
the expiration of the applicable exercise period.
Notwithstanding the foregoing provisions of this Section 6, no rights under this
Option may be exercised after the expiration of ten years from the date hereof.
7. It shall be a condition to the Optionee'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 issue upon the exercise of this Option
shall have been duly listed, upon official notice of issuance, upon any national
securities exchange on which the Company's Common Stock may then be listed, (b)
that either (i) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be in effect, or (ii) in the opinion
of counsel for the Company the proposed purchase shall be exempt from
registration under said Act and the Optionee 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 deem necessary
to comply with any law, rule or regulation applicable to the issue of such
shares by the Company shall have been taken by the Company or the Optionee, or
both. The certificates representing the shares purchased under this Option may
contain such legends as counsel for the Company shall deem necessary to comply
with any applicable law, rule or regulation.
8. Any exercise of this Option is conditioned upon the payment, if the
Company so requests, by the Optionee or such other person who may be entitled to
exercise this Option in accordance with the terms hereof, of all state and
federal taxes imposed upon the exercise of this Option and the issue to the
Optionee of the shares covered hereby.
9. This Option shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended.
10. This Option is issued pursuant to the terms of the Plan. This
Certificate does not set forth all of the terms and conditions of the Plan,
which are incorporated herein by reference. Capitalized terms used and not
otherwise defined herein have the meanings given to them in the Plan. Copies of
the Plan may be obtained upon written request without charge from the Company.