Employment Agreement - MatrixOne Inc. and Mark F. O'Connell
[MATRIX LOGO APPEARS HERE]
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 1st day of November, 2000, by and
between Mark F. O'Connell (the "Executive"), and MatrixOne, Inc., with a
principal place of business in Chelmsford, Massachusetts (the "Company").
WHEREAS, the Company believes it to be to its advantage to ensure that the
Executive continues to render services to the Company as hereinafter provided;
and
WHEREAS, the Executive's senior managerial position requires that he be
trusted with extensive confidential information and trade secrets of the Company
and that he develop a thorough and comprehensive knowledge of all details of the
Company's business, including, but not limited to, information relating to
research, development, inventions, manufacturing, purchasing, accounting,
engineering, marketing, distribution and licensing of the Company's products and
services;
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. Employment. The Company hereby agrees to continue the employment of
the Executive, and the Executive hereby agrees to continue to serve the Company,
on the terms and conditions set forth herein.
2. Position and Responsibilities. During the term of this Agreement, the
Executive agrees to serve as President and Chief Executive Officer of the
Company. The Executive shall at all times report to, and his activities shall
at all times be subject to the direction and control of, the Board of Directors
of the Company, and the Executive shall exercise such powers and comply with and
perform, faithfully and to the best of his ability, such directions and duties
in relation to the business and affairs of the Company as may from time to time
be vested in or requested of him by the Board of Directors. The Executive
agrees to devote substantially all of his business time, attention and services
to the diligent, faithful and competent discharge of such duties for the
successful operation of the Company's business. If Executive shall be elected
to other offices of the Company or any of its affiliates, he shall serve in such
positions without further compensation than provided for in this Agreement.
Executive agrees that he shall not carry on outside work of any nature
(including, without limitation, consulting work or directorships) without the
Company's prior written consent, except that Executive may carry on civic or
charitable activities, or manage his personal investments, provided that such
activities do not interfere with the performance of his responsibilities
hereunder.
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3. Compensation: Salary, Bonuses and Other Benefits. During the term of
this Agreement, the Company shall pay the Executive the following compensation:
(A) Salary. In consideration of the services to be rendered by the
Executive to the Company, the Company will pay to the Executive a salary at
the rate of $300,000 per annum. These salary payments will be made in equal
installments not less frequently than bi-weekly. Executive's base salary may
be adjusted by the Company's Board of Directors (or Compensation Committee
thereof) in its sole discretion from time to time during the term of this
Agreement; provided, however, that under no circumstance shall such base
salary be less than $300,000 per annum.
(B) Fringe Benefits. The Executive will be entitled to participate on the
same general basis and subject to the same rules and regulations as other
Company executive employees in the Company's standard benefit and welfare
plans, policies and programs, as such benefits, plans, policies and/or
programs may be modified or amended from time to time.
(C) Vacation. Executive shall be entitled to vacation time as determined
by the Company from time to time for its senior executives, but not less than
four weeks per year. The Executive may not accumulate or carry over from one
calendar year to another any unused, accrued vacation time.
(D) Performance Based Bonus. During the Executive's employment, Executive
shall be eligible to receive a bonus of up to (i) $220,000 based on
Executive's performance from the date of this Agreement until the first
fiscal year end to occur following the date of this Agreement and (ii)
$220,000 per annum based on Executive's performance for each successive 12-
month period thereafter ("Year End"), provided the Executive continues to be
employed by the Company on such Year End. Executive's bonus ceiling during
the current fiscal year or any subsequent fiscal year may be adjusted by the
Company's Board of Directors (or Compensation Committee thereof) in its sole
discretion from time to time during the term of this Agreement. The method
of computing such bonus and any adjustment thereof shall be in writing and
signed by a member of the Compensation Committee of the Board of Directors.
The amount of bonus payments payable to the Executive under this Section and
the satisfaction of the goals and objectives set forth in Exhibit A or in the
amendment thereto shall be determined promptly and reasonably by the Board of
Directors of the Company and, if earned, such bonus payment shall be paid
within 120 days of each Year End.
(E) Business Expenses. The Company shall pay or reimburse the Executive
for all reasonable business expenses incurred or paid by the Executive in the
performance of his duties and responsibilities hereunder, subject to (i) any
reasonable expense policy set by the Company as may be modified from time to
time, and (ii) such reasonable substantiation and documentation requirements
as may be specified by the Company from time to time.
(F) All payments in this Section 2 shall be subject to all applicable
federal, state and local withholding, payroll and other taxes.
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4. The Executive shall be eligible to receive stock options from time to
time under the Company's existing and future Stock Plans at levels as determined
by the Board of Directors (or Compensation Committee thereof). He is also
eligible to participate in the Company's Employee Stock Purchase Plan.
5. Annual Performance Review. Beginning on the date one year from the
date of this Agreement and on or about each anniversary of each date thereafter
while this Agreement may be in effect, the Board of Directors and the Executive
shall in good faith review the performance by and compensation to the Executive
for the prior year and propose performance goals for the Executive for the then
forthcoming year. Any future agreements regarding salary, bonus, equity
participation, fringe benefits or other material benefits and terms of this
Agreement shall be subject to approval by the Board of Directors (or
Compensation Committee thereof) and agreed to by the Executive.
6. Term. Subject to the earlier termination as hereafter provided in
Section 7, the term of this Agreement shall commence on the date first above
written and shall continue until the date two years from the date first above
written; provided, however, the Executive's employment under this Agreement
shall be automatically renewed from year to year thereafter for successive one-
year terms unless 90 days prior to the expiration of the initial term or any
renewal term, either party shall in its or his sole discretion give written
notice of non-renewal to the other. If this notice of non-renewal is given, the
Agreement will expire.
7. Termination. The Executive's employment under this Agreement may be
terminated as follows:
(A) By Expiration of the Agreement. If the Company notifies the Employee
that it will not renew the Agreement as set forth in Section 6 hereof, the
provisions of Section 7(E) relating to severance payments between the
Executive and the Company shall apply. If the Executive notifies the Company
that Executive will not renew the Agreement as set forth in Section 6 hereof,
the Executive shall be entitled to no severance or other termination benefits
after the expiration date of the Agreement.
(B) By the Executive Without Good Reason: The Executive may terminate his
employment without Good Reason (as defined below) at any time upon at least
ninety days' advance written notice to the Company. In the event of
termination by the Executive without Good Reason, the Executive shall be
entitled to no severance or other termination benefits after the expiration
of the ninety day period referred to above.
(C) By the Executive with Good Reason: If the Executive terminates
employment with the Company for Good Reason (as defined below), the Executive
will be entitled to the same severance to which he would have been entitled
had the Company terminated Executive without Cause under Section 7(E) hereof.
For purposes of this Agreement, termination by the Executive for "Good
Reason" shall mean the termination of employment by the Executive (i) as a
result of a material breach of this Agreement by the Company; (ii) a
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material reduction in the responsibility or authority of the Executive for
the operations of the Company as it exists on the date hereof; or (iii)
failure of the Company to pay the Executive's salary or bonus, if any, in the
time and manner contemplated by this Agreement if any; provided, however,
that an event described in this sentence shall not constitute Good Reason
unless it is communicated by the Executive to the Company in writing within
30 days of the event.
(D) 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
Board of Directors of the Company shall constitute a termination "for cause"
under this Section 7(D) if such termination is for one or more of the
following causes:
(i) the failure or refusal of the Executive to render services to the
Company in accordance with his obligations under this Agreement or a
determination by the Board of the Directors of the Company that the
Executive has inadequately performed the duties of his employment;
(ii) disloyalty, gross negligence, dishonesty, breach of fiduciary duty
or breach of the terms of this Agreement or the other agreements executed
in connection herewith;
(iii) the commission by the Executive of an act of fraud, theft,
misappropriation, embezzlement or deliberate disregard of the rules or
policies of the Company or the rules of the Securities and Exchange
Commission or the commission by the Executive of any other action which
injures the Company;
(iv) acts of moral turpitude by the Executive which materially
adversely affect the Executive's ability to perform his or her duties
hereunder and represent the Company;
(v) the commission by the Employee of a felony or other crime
involving moral turpitude, or pleading nolo contendere to, or being
convicted of, any crime or other violation of law;
(vii) the breach of any agreement or obligations under any agreement
entered into between the Executive and the Company.
In the event of a termination "for cause" pursuant to the provisions of
clauses (i) through (vii) above, inclusive, the Executive shall be entitled
to no severance or other termination benefits.
(E) At the Election of the Company for Reasons Other than for Cause. The
Company may, immediately and unilaterally, terminate the Executive's
employment hereunder at any
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time during the term of this Agreement without cause. In the event the
Company exercises its right to terminate the Executive under this Section
7(E), and subject to the Executive executing a comprehensive release
agreement in a form and scope acceptable to the Company, the Company agrees
to pay the Executive a severance or termination payment of (i) twelve months'
salary at the Executive's then current base rate in 26 equal bi-weekly
payments, and (ii) if the Executive is eligible for, and chooses to elect
health insurance continuation in accordance with the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA"), the Company will pay the premium
payments of the Executive under COBRA for a period of twelve months, or, if
earlier, until the Executive commences employment with a new employer. Such
severance payments shall be payable in conformity with the Company's
customary practices for executive compensation as such practices may be
modified from time to time and shall be subject to all applicable federal,
state and local withholding, payroll and other taxes. Except as expressly set
forth in Section 7(E), Executive acknowledges that the Company shall not have
any further obligations to the Executive in the event of Executive's
termination under Section 7(E), except such further obligations as may be
imposed by law.
(F) Termination Because of Acquisition of the Company. (i) If the
Executive's employment with the Company is terminated because of a
consolidation, merger, reorganization, or sale of all, or substantially all,
of the assets or capital stock of the Company or other business combination
in which the Company is not the surviving entity (a "Change of Control") at
any time within twelve months after a Change of Control, and the Executive is
not offered employment by the acquiring corporation in a comparable position
(which need not be the role of Chief Executive Officer), at a comparable
salary, or is terminated other than "for cause" (as defined in Section 7(D)
hereof) at any time within twelve months after a Change of Control, then the
Company or the acquiring corporation, as the case may be, shall be obligated
to pay the Executive the severance payment and benefits as set forth in
Section 7(E)(i) and (ii), for an 18-month period (rather than the 12-months
specified in 7(E) (such severance benefits referred to herein as the
"Termination Payment"). If the Executive is offered employment by the
acquiring corporation in a comparable position, and at a comparable salary,
neither the Company nor the acquiring corporation shall be obligated to
provide the severance benefits described in Section 7(E) (i) and (ii).
Anything contained in this Section 7(E) to the contrary notwithstanding, the
Executive shall not be entitled to any severance or other termination benefit
if the Executive has either (i) terminated such employment voluntarily, or
(ii) has been terminated by the Company or any acquiring corporation "for
cause" pursuant to Section 7(D).
(ii) If, in connection with a Change of Control, (a) the Termination
Payment, or (b) any payment or benefit received or to be received by the
Executive pursuant to any other plan, arrangement or agreement (such payments or
benefits together with the Termination Payment, the "Total Payments") would
constitute (in whole or in part) an "excess parachute payment" within the
meaning of Section 280G(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), then the amount of the Termination Payment shall be reduced, before any
other reduction of the Total Payments, if any, until the "aggregate present
value" (as that term is defined in section 280G(d)(4) of the Code) of the Total
Payments is such that no part
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of the Total Payments constitutes an "excess parachute payment" within the
meaning of Section 280G(b) of the Code; provided, however, that if the
"aggregate present value" of the Total Payments would exceed the tax that, but
for this sentence, would be imposed on the Executive under Section 4999 of the
Code in connection with the Change of Control, then the Termination Payment
shall not be reduced. For purposes of the preceding sentence, the "aggregate
present value" of the Total Payments shall be calculated on an after-tax basis
(other than taxes imposed by Section 4999 of the Code) and shall be based on
economic principles rather than the principles set forth under Section 280G of
the Code and the regulations promulgated thereunder. All determinations required
to be made under this Section 7(F) (ii) shall be made by the Company.
(iii) If the Company proposes to engage in an acquisition intended to be
accounted for as a pooling-of-interests, and in the event that the provisions of
Section 7(F)(i) or other provisions hereof are determined by the Company's or
the acquiring company's independent public accountants to cause such acquisition
to fail to be accounted for as a pooling-of-interests, then such provision shall
be amended or rescinded by the Board of Directors of the Company, acting
unilaterally, to be consistent with pooling-of-interests accounting treatment
for such acquisition.
(G) Benefits if Agreement Terminated Due to Disability. Executive's
employment will terminate if Executive dies or suffers physical incapacity or
mental incompetence. In the event Executive's employment shall terminate due
to the physical incapacity or mental incompetence of the Executive, the
Company shall pay the Executive an amount equal to (i) twelve months salary
at the then current base rate, less (ii) any amounts recovered by the
Executive under any health and disability insurance programs available
through the Company. Executive will not be entitled to any other payments
after the date of death or disability other than those set forth in this
Section 7(G). For the purposes of this Agreement, the Executive shall be
deemed to have suffered physical incapacity or mental incompetence if the
Executive is unable to perform the essential functions of his job with
reasonable accommodation. Any accommodation will not be deemed reasonable if
it imposes an undue hardship on the Company. The provisions of this Section
7(G) shall survive the termination of this Agreement by reason of the
physical incapacity or mental incompetence of the Executive.
8. Survival of Certain Provisions. Provisions of this Agreement shall
survive any termination of employment of this Agreement if so provided herein or
if necessary or desirable to fully accomplish the purposes of such provision.
Without limiting the foregoing, the obligations of the Executive under Sections
8, 11 and 14 hereof and the Employee Noncompetition, Nondisclosure, and
Inventions Agreement of even date herewith by and between Executive and the
Company expressly survive any termination of employment or termination of this
Agreement. The obligation of the Company to make payments to or on behalf of
the Executive under Section 7(E) hereof is expressly conditioned upon
Executive's continued full performance of the obligations under the terms of
Section 8 and the Noncompetition, Nondisclosure, and Inventions Agreement
executed herewith between Executive and the Company.
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9. Noncompetition, Nondisclosure and Inventions Agreement. In connection
with his continued employment by the Company pursuant to the terms of this
Agreement, the Executive shall execute, prior to the execution hereof by the
Company, the Noncompetition, Nondisclosure, and Inventions Agreement attached
hereto as Exhibit B.
10. Consent and Waiver by Third Parties. The Executive hereby represents
and warrants that he has obtained all waivers and/or consents from third parties
which are necessary to enable him to enjoy employment with the Company on the
terms and conditions set forth herein and to execute and perform this Agreement
without being in conflict with any other agreement, obligation or understanding
with any such third party. The Executive further represents that he is not
bound by any agreement or any other existing or previous business relationship
which conflicts with, or may conflict with, the performance of his obligations
hereunder or prevent the full performance of his duties and obligations
hereunder.
11. 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, without giving
effect to the principles of choice of law or conflicts of laws thereof.
12. Severability. In case any one or more of the provisions contained in
this Agreement or the other agreements executed in connection with the
transactions contemplated hereby 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 or such
other agreements, but this Agreement or such other agreements, as the case may
be, shall be construed and reformed to the maximum extent permitted by law.
13. 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 13. 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. No modification or waiver by the Company shall be
effective without the consent of at least a majority of the members of the Board
of Directors [(excluding the Executive)] then in office at the time of such
modification or waiver.
14. 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.
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15. Entire Agreement. This Agreement and the Noncompetition,
Nonsolicitation, Nondisclosure and Inventions Agreement executed herewith
constitutes the entire understanding of the parties relating to the subject
matter hereof and 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, pension, post-retirement benefits, severance or other
remuneration.
16. Notices. All notices hereunder shall be in writing and shall be
delivered in person or mailed by certified or registered mail, return receipt
requested, addressed as follows:
If to the Company, to: MatrixOne, Inc.
2 Executive Drive
Chelmsford, Massachusetts 01845
Attention: Vice President/Human Resources
With a copy to: Gordon H. Hayes, Jr. Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
If to the Executive, at the Executive's address set forth on the
signature page hereto.
18. 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.
19. 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Executive
Agreement as of the date first above written as an instrument under seal.
MATRIXONE, INC.: EXECUTIVE:
/s/ Jane E. Seitz Mark O'Connell
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Print Name
By: Jane E. Seitz /s/ Mark O'Connell
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Title: Vice President Signature
Human Resources
44 Wayside Road
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Street Address
Westboro, MA 01587
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City State Zip Code