Sample Business Contracts


Employment Agreement - MatrixOne Inc. and James F. Morgan

Employment Forms

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                                MATRIXONE, INC.

                             EMPLOYMENT AGREEMENT


     This Agreement is executed as of this 14th day of April, 1998, by and
between James F. Morgan (the "Executive") and MatrixOne, Inc., a Delaware
corporation with a principal place of business at Two Executive Drive,
Chelmsford, MA 01824 (the "Company").

     WHEREAS, the Company acknowledges the value and importance of past
contributions and future service on the part of the Executive, and believes it
to be to in the best interests of the Company and its stockholders to enter into
this Agreement and to provide for Executive's continued service to the Company
as hereinafter provided;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the mutual
covenants and obligations herein contained, the parties hereto agree as follows:

     1.   Position and Responsibilities.  From the date first set forth above
          -----------------------------
through January 2, 2000 (the "Employment Term"), the Executive agrees to
continue to serve the Company as set forth herein:

          (A)  Initial Employment Period. From the date first set forth above
               -------------------------
     through June 30, 1998 (the "Initial Employment Period"), the Executive
     agrees to serve and the Company agrees to retain the Executive as Corporate
     Adviser of the Company. During the Initial Employment Period, the Executive
     shall report directly to the Chief Executive Officer ("CEO"), and agrees to
     devote one hundred percent (100%) of his business time, attention and
     services to the Company's business.

          (B)  Part-Time Employment Period. From July 1, 1998 through January 2,
               ---------------------------
     2000 (the "Part-Time Employment Period"), the Executive agrees to serve,
     and the Company agrees to retain the Executive, as Corporate Adviser of the
                                                        -----------------
     Company. During the Part-Time Employment Period, the Executive shall
     perform such duties and undertake such projects as the CEO of the Company
     may instruct and agrees to devote such amount of his professional time,
     attention and services to the Company's business as the CEO may reasonably
     request. It is expressly understood and agreed to that, because of the
     distance between the Executive's home and the office headquarters of the
     Company, during the Part-Time Employment Period the Executive shall perform
     substantially all of his employment responsibilities off-site from the
     Company's principal offices, and he may do so during the Initial Employment
     Period to the extent authorized by the CEO. In addition, business
     activities that the Executive wishes to engage in on his own time can be
     undertaken at Executive's discretion during the Part-Time Employment
     Period, subject to the restrictions
<PAGE>

                                      -2-


     of the Employee Secrecy, Non-Competition and Invention Agreement executed
     by the Executive as of October 2, 1996 (the "Employee Secrecy Agreement").

     2.   Compensation: Salary, Bonuses and Other Benefits.  During the term of
          ------------------------------------------------
this Agreement, the Company shall pay the Executive the following compensation,
including the following salary, bonus and other fringe benefits:

          (A)  Salary. In consideration of the services to be rendered
               ------
     hereunder, the Company will pay to the Executive a monthly salary of
     $13,750 during the Initial Employment Period and a monthly salary of $6,000
     during the Part-Time Employment Period. The Executive's salary shall be
     payable in conformity with the Company's customary practices for executive
     compensation as such practices shall be established or modified from time
     to time. Salary payments shall be subject to all applicable federal and
     state withholding, payroll and other taxes, and may be increased from time
     to time in conformity with the Company's customary practices for employee
     compensation as such practices shall be established from time to time.

          (B)  Sale of the Adra Systems, Inc. Subsidiary Bonus. The Company
               -----------------------------------------------
     shall pay the Executive a bonus equal to one percent (1%) of the Net Cash
     Proceeds (as such term is defined in Article Fourth, Paragraph E, Section
     11 of the Company's charter) from a sale of the Adra Systems, Inc.
     subsidiary if such sale is closed on or before December 31, 1998. If such
     sale is closed after December 31, 1998 but before July 1, 1999, the Company
     shall pay the Executive a bonus equal to one-half of one percent (.5%) of
     the Net Cash Proceeds from such sale. All such bonus payments shall be
     subject to all applicable federal, state and local withholding, payroll and
     other taxes as required by law, and shall be paid by the Company within
     thirty (30) days following the closing date of such sale.

          (C)  Fringe Benefits. The Executive will be entitled to be reimbursed
               ---------------
     for all of his reasonable business-related travel expenses. The Executive
     will also be entitled to participate on the same basis with all other
     management employees in the Company's standard benefits package generally
     available for all other officers and employees of the Company, with respect
     to group health, disability and life insurance programs. The Executive
     acknowledges, however, that the benefits (including without limitation
     health care, life insurance, Section 401(k) Plan, and all other benefits of
     any kind) available to him during the Part-Time Employment Period may
     differ from those available during the Initial Employment Period by virtue
     of his part-time employment status.

     3.   Stock Options. The Executive, together with the Company, is a party to
          -------------
a certain Incentive Stock Option Agreement, dated September 30, 1996 (the
"Incentive Stock Option Agreement") for the grant of an option to purchase
250,000 shares (the "Options") of Common Stock of the Company at the price of
$2.00 per share under the 1996 Stock Plan of the Company. Individual members of
the Board of Directors of the Company have expressed their willingness to
consider, at the conclusion of the Employment Period, certain modifications to
the Options as follows:
<PAGE>

                                      -3-

     (A)  upon the conclusion of the Employment Period, all Options not yet
     exercisable would immediately become exercisable; and

     (B)  sixty (60) days following the last day of the Employment Period, any
     Options that had not yet been exercised by the Executive would be converted
     from incentive stock options to non-qualified stock options, exercisable
     until September 30, 2006.

     Any such arrangements or future modifications would be subject to taxation,
accounting, legal and other equitable concerns.  In particular, if at the time
of such amendment the change(s) effected by such action would constitute a re-
grant of the Options for financial reporting purposes, the exercise price of
such Options would be set at the fair market value at the time of grant, such
that the Company would not incur a compensation-related charge to its income
statement.  In addition, the foregoing is a statement of intent only, and does
not reflect any type of commitment on the part of the Company, the individual
directors of the Company, or the Board of Directors.  The foregoing expression
of intent shall under no circumstances be deemed to be an amendment or
modification of the Options or of the terms and conditions of the Incentive
Stock Option Agreement as of this time.

     4.   Term. The term of this Agreement shall commence on the date first
          ----
above written and shall terminate on the earliest to occur of (i) January 2,
2000, (ii) the death or physical incapacity of the Executive, (iii) the
occurrence of any of the circumstances described in Section 5 hereof, or (iv) a
Change of Control, as defined herein, of the Company. For the purposes of this
Agreement, the Executive shall be deemed to have suffered physical incapacity if
the Executive is unable to perform his duties hereunder for any 90 work days out
of any 365-day period. For purposes of this section, physical incapacity shall
be defined as such term is defined under the Company's standard disability
insurance policy in effect from time to time for management employees of the
Company.

     For purposes of this Agreement, a Change of Control shall be deemed to have
taken place if: (A) a change occurs in 50% of the presently existing members of
the Board (the "Incumbent Board"), except as approved by the Incumbent Board;
(B) any reorganization, merger or sale of all or substantially all of the assets
(other than a sale of the Adra Systems, Inc. subsidiary) of the Corporation
unless the Corporation's stockholders control (directly or indirectly) 60% or
more of the resulting entity and at least 50% of the resulting Board of
Directors is comprised of members of the Incumbent Board; or (C) a complete
liquidation or dissolution approved by the stockholders of the Corporation.

     5.   Termination. The Executive's term of employment under this Agreement
          -----------
may be terminated pursuant to clause (iii) of the first sentence of Section 4 as
follows:

          (A)  At the Executive's Option:  The Executive may terminate his
               -------------------------
     employment, with or without cause, at any time upon at least thirty (30)
     days' advance written notice to the Company. In the event of termination at
     the Executive's option, the Executive shall be entitled to no severance,
     salary continuation, or other termination benefits after the expiration of
     the thirty-day period referred to above.
<PAGE>

                                      -4-

          (B)  At the election of the Company for Cause.  The Company may,
               ----------------------------------------
     immediately and unilaterally, terminate the Executive's employment
     hereunder "for cause" at any time during the term of this Agreement without
     any prior written notice to the Executive. Termination of the Executive's
     employment by the Company shall constitute a termination "for cause" under
     this Section 5(B) if such termination is for one or more of the following
     causes, as found by the Board of Directors of the Company by a resolution
     duly adopted by a majority of its members, excluding the Executive:

            (i)   the willful engaging by the Executive in misconduct which is
     materially injurious to the Corporation, monetarily or otherwise;

            (ii)  disloyalty, gross negligence, dishonesty, breach of fiduciary
     duty or breach of the terms of this Agreement;

            (iii) the commission by the Executive of an act of fraud,
     embezzlement or willful disregard of the rules or policies of the
     Corporation; or the commission by the Executive of any other action with
     the intent to injure materially the Corporation;

            (iv)  the conviction by the Executive of a felony; or

            (v)   the willful commission of an act which constitutes unfair
     competition with the Corporation or which induces any customer of the
     Corporation to breach a contract with the Corporation.

     For purposes of this paragraph, no act, or failure to act, on the
     Executive's part shall be considered "willful" unless done, or omitted to
     be done, by him not in good faith and without reasonable belief that his
     action or omission was in the best interest of the Corporation.

          In the event of a termination "for cause" pursuant to the provisions
     of clauses (i) through (v) above, inclusive, the Executive shall be
     entitled to no salary continuation, bonuses, severance or other termination
     benefits of any kind except as required by law.

     6.   Employee Secrecy, Non-Competition and Invention Agreement. Executive
          ---------------------------------------------------------
acknowledges that he is subject to the terms and conditions of the Employee
Secrecy Agreement.  A material breach of the terms and conditions of the
Employee Secrecy Agreement shall be deemed a material breach of this Agreement.

     7.   Governing Law. This Agreement, the employment relationship
          -------------
contemplated herein and any claim arising from such relationship, whether or not
arising under this Agreement, shall be governed by and construed in accordance
with the internal laws of the Commonwealth of Massachusetts and this Agreement
shall be deemed to be performable in Massachusetts.
<PAGE>

                                      -5-

     8.   Severability.  In case any one or more of the provisions contained in
          ------------
this Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed and reformed to the maximum extent permitted by law.

     9.   Waivers and Modifications.  This Agreement may be modified, and the
          -------------------------
rights, remedies and obligations contained in any provision hereof may be
waived, only in accordance with this Section 9.  No waiver by either party of
any breach by the other or any provision hereof shall be deemed to be a waiver
of any later or other breach thereof or as a waiver of any other provision of
this Agreement.  This Agreement sets forth all of the terms of the
understandings between the parties with reference to the subject matter set
forth herein and may not be waived, changed, discharged or terminated orally or
by any course of dealing between the parties, but only by an instrument in
writing signed by the party against whom any waiver, change, discharge or
termination is sought.

     10.  Assignment. The Executive acknowledges that the services to be
          ----------
rendered by him hereunder are unique and personal in nature. Accordingly, the
Executive may not assign any of his rights or delegate any of his duties or
obligations under this Agreement. The rights and obligations of the Company
under this Agreement shall inure to the benefit of, and shall be binding upon,
the successors and assigns of the Company.

     11.  Notices.  All notices hereunder shall be in writing and shall be
          -------
delivered in person or by overnight delivery service or mailed by certified or
registered mail, return receipt requested, addressed as follows:

     If to the Company, to:  MatrixOne, Inc.
                             Two Executive Drive
                             Chelmsford, MA 01824
                             Attention: Mark O'Connell

     If to the Executive, at the Executive's address set forth on the signature
page hereto.

     12.  Counterparts.  This Agreement may be executed in two or more
          ------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

     13.  Section Headings.  The descriptive section headings herein have been
          ----------------
inserted for convenience only and shall not be deemed to define, limit, or
otherwise affect the construction of any provision hereof.

     14.  Entire Agreement. This Agreement constitutes the entire understanding
          ----------------
of the parties relating to the subject matter hereof and, with the exception of
the Employee Secrecy Agreement and the Incentive Stock Option Agreement,
supersedes and cancels all agreements, written or oral, made prior to the date
hereof between the Executive and the Company relating to employment, salary,
bonus, or other compensation of any description, equity participation,
<PAGE>

                                      -6-

pension, post-retirement benefits, severance or other remuneration, including
without limitation the Executive Severance Agreement, dated as of November 5,
1996, executed between the Company and the Executive (collectively, the
"Superseded Agreements"). Executive waives any rights or claims he may have or
which may have arisen under any and all of the Superseded Agreements.


                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>

                                      -7-

     IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written as an instrument under seal.

MATRIXONE, INC.:                        EXECUTIVE:

/s/ Mark F. O'Connell                   /s/ James F. Morgan
-----------------------                 -------------------------------
                                        James F. Morgan


By:  Mark F. O'Connell                  James F. Morgan
     ------------------                 -------------------------------
                                        Signature
Title:  CEO
        ---------------
                                        20 Elmwood Road
                                        -------------------------------
                                        Street Address

                                        Marblehead, MA 01945
                                        -------------------------------
                                        City        State     Zip Code

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