This Consulting Agreement, dated as of November 19, 2009 (“Agreement”), is by and between Parametric Technology Corporation, a Massachusetts corporation having its principal business address at 140 Kendrick Street, Needham, Massachusetts 02494 (“PTC”), and Michael E. Porter, having a business address at Harvard Business School, Soldier’s Field Road, Ludcke House, Boston, MA 02163 (“Consultant”).
SERVICES TO BE PERFORMED BY CONSULTANT
1.1 Services. Consultant is engaged to provide the following consulting services (the “Services”) to PTC:
(a) Strategic Consulting Services . Consultant shall engage in not fewer than four strategic consulting sessions with PTC executives per year (and at least one per quarter), which sessions shall include review of such documents as may be provided to Consultant by the executive(s) and discussion of the strategic issues desired to be addressed by such executive(s). Consultant shall provide his perspective and advice with respect to corporate strategy, market positioning and marketing for PTC and its products and services and assist PTC in developing approaches and materials to support the same, including the preparation of “white papers” and strategy statements. Such sessions shall be held at such times as may be mutually agreed between the Consultant and the executive(s).
(b) Speaking and Management Seminar Events . Consultant will speak at, participate in, and assist in the development of management seminars sponsored by PTC as mutually agreed from time to time.
1.2 Oversight. PTC and Consultant will mutually determine the methods and means Consultant will use to perform the services to be carried out for PTC.
COMPENSATION AND EXPENSES
2.1 Compensation; Expenses.
(a) Strategic Consulting Services . For the strategic consulting Services described in Section 1.1(a) above, PTC shall issue to Consultant a one-time grant of PTC’s common stock, $.01 par value per share, as an award of restricted stock under PTC’s 2000 Equity Incentive Plan in an amount equal to approximately $200,000 on date of grant (based on the closing price of PTC’s common stock on such date, the “Shares”), the restrictions on half of which Shares shall lapse on the one year anniversary of the grant date and the restrictions on the remaining half of which Shares shall lapse on the two year anniversary of the grant date or as otherwise set forth in the form of Restricted Stock Agreement attached hereto as Appendix A .
(b) Executive Management Seminars and Events .
(i) Events other than PTC Corporate Visitor Center Events . For each event in which the Consultant participates from time to time after the date of this Agreement other than those contemplated by Section 2.1(b)(ii) below, PTC shall pay Consultant a fee of $30,000.
For each event in which the Consultant participates on behalf of PTC in connection with a trip or an event previously established by the Consultant (a “Consultant Planned Event”), PTC shall pay all reasonable, incremental out-of-pocket expenses
incurred by the Consultant in connection with such PTC event, such expenses to be only the expenses associated with the PTC event incremental to those of the Consultant Planned Event.
For each PTC-initiated event in which the Consultant participates on behalf of PTC (other than a Consultant Planned Event), PTC shall pay all reasonable, out-of-pocket expenses incurred by the Consultant in connection with such PTC event.
Consultant shall be reimbursed for expenses incurred by Consultant in connection with this Agreement only as provided in this Section 2.1(b)(i). All requests for reimbursement shall be in writing and accompanied by such written documentation as may be reasonably requested by PTC to support the amount and validity of such expense.
(ii) PTC Corporate Visitor Center Events . For each event in which the Consultant participates from time to time after the date of this Agreement at PTC’s Boston-area Corporate Visitor Center, PTC shall pay Consultant a fee of $15,000.
2.2 Compensation Limit . In no event shall the aggregate amount of fees to be paid to Consultant under Section 2.1(b) of this Agreement, exclusive of any expense reimbursements, exceed $200,000.
2.3 Taxes; No Withholding . Consultant shall have sole responsibility for payment of all federal, state and local taxes or contributions imposed or required under unemployment insurance, social security and income tax laws and for filing all required tax forms with respect to any amounts paid by PTC to Consultant hereunder.
2.4 No Warranty . PTC makes no representation, warranty or covenant with respect to the performance of PTC’s common stock or the Shares. Consultant understands, acknowledges and agrees that the Shares, which constitute the only compensation payable hereunder for strategic consulting Services as described in Section 1.1(a), may not increase in value, may decrease in value and may be worth less than $200,000 on the date the restrictions on the Shares lapse.
INDEPENDENT CONTRACTOR STATUS
It is the intention of the parties that Consultant be an independent contractor and not an employee, agent, joint venturer, or partner of PTC. Nothing in this Agreement shall be interpreted or construed as creating or establishing the relationship of employer and employee between PTC and either Consultant or any employee or agent of Consultant. Consultant shall retain the right to perform work for others during the terms of this Agreement, provided such work does not otherwise violate the provisions of Article 4 of this Agreement. PTC shall retain the right to cause work of the same or a different kind to be performed by its own personnel or other contractors during the term of this Agreement.
CONFIDENTIALITY AND INTELLECTUAL PROPERTY RIGHTS
4.1 Confidentiality. Consultant shall maintain in strict confidence, and shall use and disclose only as authorized by PTC, all information of a competitively sensitive or proprietary nature that he receives in connection with the work performed for PTC hereunder. Consultant agrees that, by its nature, the services to be performed hereunder, and any information gathered or compiled in connection therewith, is of a competitively sensitive nature which must be maintained in the strictest of confidence. These restrictions
shall not be construed to apply to (1) information generally available to the public; (2) information released by PTC generally without restriction; (3) information independently developed or acquired by Consultant without reliance in any way on other protected information of PTC; or (4) information approved in advance in writing for the use and disclosure of Consultant without restriction. Notwithstanding the foregoing restrictions, Consultant may use and disclose any information (a) to the extent required by an order of any court or other governmental authority or (b) as necessary for him to protect his interest in this Agreement, but in each case only after PTC has been so notified in advance in writing and has had the opportunity, if possible, to obtain reasonable protection for such information in connection with such disclosure.
4.2 Ownership of Work Product. Consultant hereby assigns to the Company, for no additional consideration, all Consultant’s rights, including copyrights, in all deliverables and other works prepared by Consultant under this Agreement. Consultant shall, and shall cause his agents to, promptly sign and deliver any documents and take any actions that the Company reasonably requests to establish and perfect the rights assigned to the Company under this Section 4.2.
TERM AND TERMINATION
5.1 Term. This Agreement will remain in full force and effect until the earlier of (a) November 19, 2011 or (b) the date the Agreement is terminated in accordance with the provisions of Section 5.2 hereof.
5.2 Termination of Agreement.
(a) By Consultant . Consultant may terminate this Agreement at any time upon thirty (30) days’ advance written notice to PTC.
(b) By PTC without Cause . PTC may terminate this Agreement without Cause (as defined in Section 5.2(c) below) effective immediately at any time upon written notice to Consultant.
(c) By PTC for Cause . PTC may terminate this Agreement for Cause (as defined below), effective immediately upon written notice to Consultant that, in the good faith judgment of the Board, (1) an event constituting Cause has occurred, and (2) either Consultant had a reasonable opportunity to take remedial action but failed or refused to do so, or an opportunity to take remedial action would not have been meaningful or appropriate under the circumstances. “Cause” means (i) Consultant shall have willfully committed an act of dishonesty or breach of trust, or willfully acted in a manner which is inimical or injurious to the business or interest of PTC, (ii) Consultant shall have willfully violated or breached any of the provisions of this Agreement and such violation or breach resulted in demonstrable injury to PTC and was not remedied within thirty (30) days of receipt of written notice of such violation or breach, if remediable, (iii) Consultant’s act or omission to act has resulted in or was intended to result in gain to or personal enrichment of Consultant at PTC’s expense, or (iv) Consultant shall have been convicted of a felony or any crime involving larceny, embezzlement or moral turpitude.
5.3 Effect of Termination.
(a) Services . Upon termination of this Agreement, Consultant shall be relieved of performing the Services set forth in Section 1.1, except for such seminars under Section 1.1(b) as have been scheduled prior to the termination date.
(b) Shares . If this Agreement is terminated by Consultant pursuant to Section 5.2(a) or by PTC pursuant to Section 5.2(c), all Shares upon which the restrictions have not yet lapsed by the date of such termination shall be forfeited and returned to PTC in
accordance with the terms of the Restricted Stock Agreement. If this Agreement is terminated by PTC pursuant to Section 5.2(b), the restrictions on