Executive Agreement between the Company and Catherine Kniker dated September 23, 2021
Exhibit 10.6
EXECUTIVE AGREEMENT
This Executive Agreement (“Agreement”) dated as of September 23, 2021 is by and between PTC Inc., a Massachusetts corporation (the “Company”), and Catherine Kniker (the “Executive”).
WHEREAS, the Executive is the Executive Vice President, Chief Strategy Officer; and
WHEREAS, the Company wishes to make the following arrangements with the Executive concerning certain payments and benefits to be provided to the Executive if the Executive’s employment with the Company is terminated without Cause or if certain other events specified herein occur;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Definitions.
For the purposes of this Agreement:
(a) “Board” means the Company’s board of directors.
(b) “Code” means the U.S. Internal Revenue Code of 1986, as amended.
(c) “Cause” means
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 the Executive’s action or omission was in the best interests of the Company.
(d) “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);
(e) “Change in Control Termination” means any of the following terminations of the Executive’s
employment:
(f) “Disability” means such physical or mental incapacity as to make the Executive unable to perform
the essential functions of the Executive’s 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 the Executive’s 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.
(g) “Equity Award” means any stock option, stock appreciation right, restricted stock unit, restricted
stock or other equity award issued under any Stock Plan, but excludes any Target Annual Incentive Bonus that may be payable in the form of equity.
(h) “Good Reason” means the occurrence, without the Executive’s consent and without Cause, of any
of the following events after or in connection with a Change in Control (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) “Stock Plan” means any stock option or equity compensation plan of the Company in effect at any
time, including without limitation the 2000 Equity Incentive Plan.
(j) “Target Annual Incentive Bonus” means an Annual Incentive Bonus (stated as a cash amount even
if it may be payable in the form of equity) payable under a Corporate Incentive Plan of the Company for achievement of performance measure(s) at the Target Level. “Corporate Incentive Plan” means any incentive program of the Company in effect at the respective time to the extent it provides for compensation upon achievement of one or more performance measures with a performance period of one year or less and service-based vesting with a vesting term of less than fifteen (15) months (“Annual Incentive Bonus”). “Target Level” means the level at which 100% of a Target Annual Incentive Bonus becomes payable. Any upside bonus or other amounts that may be earned for achievement of performance measures beyond the Target Level under the Corporate Incentive Plan and any discretionary or other bonus are not considered part of the Target Annual Incentive Bonus. “Bonus Equity” means any Equity Award granted to the Executive under the Corporate Incentive Plan that may be earned upon achievement of one or more performance measures.
2. Termination of Employment without Cause.
If the Company terminates the Executive’s employment without Cause, other than a termination constituting a Change in Control Termination or a termination due to the Executive’s Disability, the Executive shall be entitled to the following:
3. Change in Control.
(a) Equity Awards. Effective upon a Change in Control that occurs during the Executive’s
employment, and except as provided in any Equity Award documentation that explicitly or implicitly excludes such Equity Award from the effects of this Section 3, the following shall occur:
The foregoing notwithstanding, this Section 3(a) shall not apply to any Bonus Equity held by the Executive, which shall be treated as provided in Section 3(b)(ii).
(b) Annual Incentive Bonus. Effective upon (x) a Change in Control that occurs during the
Executive’s employment or (y) a Change in Control Termination under Section 1(e)(iii):
exercisable or distributable, as the case may be, and the portion not so vested shall thereupon automatically be cancelled and forfeited to the Company.
(c) Change in Control Termination Benefits.
(i) Equity Awards. Effective upon a Change in Control Termination, the following shall
occur:
(ii) Make-Up Payment. Effective upon a Change in Control Termination under
Section 1(e)(iii), the Company shall pay the Executive in a lump sum the amount equal to the sum of:
The Company shall pay this lump sum payment within forty-five (45) days following the Executive’s termination date.
(iii) Salary, Annual Incentive Bonus and Benefits. Effective upon a Change in Control
Termination, the Executive shall be entitled to the following:
sufficient for the Executive to purchase equivalent benefits, such amount to be paid quarterly in advance; provided, further, however, that to the extent the Executive becomes eligible to receive medical, dental, vision and/or basic life insurance benefits under a plan provided by another employer, the Executive’s entitlement to participate in the corresponding Benefit Plans or to receive such corresponding alternate payments shall cease as of the date the Executive is eligible to participate in such other plan, and the Executive shall promptly notify the Company of the Executive’s eligibility under such plan.
(iv) No Duplication. Payments and benefits under this Section 3(c) shall be in lieu and
without duplication of any amounts or benefits under Section 2, and the Executive shall be entitled to any such payments and benefits for no more than one year even if both such sections apply. If, in the event of a Change in Control Termination under Section 1(e)(iii), the Executive becomes entitled to payments under this Section 3(c) after the Executive has begun to receive payments under Section 2, the Executive shall be entitled to a make-up payment to ensure that the Executive receives the higher amount payable hereunder, with such make-up payment being made within forty-five (45) days following the Change in Control Termination.
(d) Deemed Amendment of Equity Awards. The Company and the Executive hereby agree that the
agreements evidencing any (i) Equity Awards to the Executive are hereby and will be deemed amended to give effect to the provisions of Sections 3 and 4 of this Agreement, and (ii) Bonus Equity are hereby and will be deemed amended to give effect to the provisions of Section 3(b)(ii) of this Agreement.
Effective upon a termination of the Executive’s employment due to Executive’s death or by the Company due to the Executive’s Disability, except as provided in any Equity Award documentation that explicitly or implicitly excludes such Equity Award from the effects of this section, all performance measures applicable to any Equity Awards held by the Executive shall be deemed to have been met at the Target Level and all Equity Awards held by the Executive shall immediately become vested, unrestricted and exercisable or distributable at the Target Level; provided that this Section 4 shall not apply to any Bonus Equity.
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 (in connection with a Change in Control Termination or otherwise), 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 the Executive’s 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.
(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 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 (for the purposes of this Section 6(b), each, a “Payment” and collectively, the “Payments”) from the Company to or for the benefit of the Executive (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 the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), such Payments shall be either:
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.
(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 the Executive’s 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 the Executive’s election within ten (10) days of the Executive’s 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 determinations and calculations required by this Section 6(b),
the Accountants:
The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 6(b). 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. Term.
Unless the Executive’s employment is earlier terminated, this Agreement shall continue in effect until 11:59 p.m. on September 30, 2022 and shall automatically renew thereafter on an annual basis for additional twelvemonth terms unless either party provides written notice to the other party of non-renewal at least ninety (90) days prior to the expiration of the then current term. If a Change in Control occurs while this Agreement is in effect, the term of this Agreement shall automatically be extended to the second anniversary of the Change in Control. Upon the termination of this Agreement, the respective rights and obligations of the parties shall survive to the extent necessary to carry out the intentions of the parties as embodied herein.
8. Successors and Assigns.
9. No Duty to Mitigate.
In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as contemplated by Sections 2(b) and 3(c)(iii)(B)hereof, any benefits payable to the Executive hereunder shall not be subject to reduction for any compensation received from other employment.
10. 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 Sections 2, 3 or 4 (with respect to Disability) hereof shall be contingent upon:
(a) execution by the Executive within forty-five (45) days of the termination of a general release in
substantially the form of Appendix A hereto (such applicable form depending on my age at the time of termination, 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 the Executive’s Non-Disclosure, Non-Competition and Invention Agreement with the Company.
11. Miscellaneous.
PTC Inc.
121 Seaport Boulevard Boston, MA 02210
Attention: General Counsel
Notice shall be addressed 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.
PTC INC.
| [EXECUTIVE NAME]
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By: | /s/Jim Heppelmann | /s/ Catherine Kniker | |
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| [Name] | Catherine Kniker |
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| [Title] President & CEO, PTC |
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