Exhibit 10.2

 

[Letterhead]

 

February 1, 2005

 

Mr. Gary Hall

71 Town Farm Road

Salem, NH 03079

 

Dear Gary:

 

I am very pleased to offer you the opportunity to work as an employee at-will of
MatrixOne as Senior Vice President & Chief Financial Officer reporting to me.
Your starting salary for this exempt position will be $8,076.92 bi-weekly (26
pay periods), which is equivalent to $210,000 per year. Your start date will be
January 26, 2005. You will be working from our Westford office.

 

In addition to your base salary, you will be eligible to participate in the
MatrixOne Executive Incentive Compensation Plan that is valued at approximately
$70,000.00 on an annual basis beginning January 26, 2005. Annual incentive
compensation is awarded for the achievement of company and individual
objectives. The full details covering this Plan will be outlined for you shortly
after the start of your employment. Eligibility to participate in this Plan will
begin at the start of the new fiscal year in July, 2004.

 

You will also be granted an option to purchase 150,000 shares of stock in
addition to the above compensation. Please note that the option grant is subject
to the approval of the Board of Directors and is governed by the terms and
conditions of the Company’s Amended and Restated 1999 Stock Plan and a stock
option agreement between you and the Company. The options will vest quarterly
and will be 100% vested at the completion of a four-year period.

 

As you know, MatrixOne, Inc. offers a comprehensive insurance program designed
to provide protection for its employees and their families. The package includes
Basic Life, Accidental Death and Dismemberment, Medical, Dental, Vision, Short
and Long Term Disability. In addition, the Company also provides a 401(K)
Retirement Savings Plan and a Stock Purchase Plan, and paid vacation. You will
be eligible to accrue up to four (4) weeks paid vacation per full calendar year,
which shall accrue on a monthly basis.

 

Eligibility for Severance Following an Acquisition. In addition, in the event
that your employment with the Company is terminated by you for Good Reason or by
the Company or its successor without Cause at any time within 12 months after
(x) the sale of the Company by merger in which the shareholders of the Company
in their capacity as such no longer own a majority of the outstanding equity
securities of the Company (or its successor); or (y) any sale of all or
substantially all of the assets or capital stock of the Company (other than in a
spin-off or similar transaction) or (z) any other acquisition of the business of
the Company, as determined by the Company’s Board of Directors (an
“Acquisition”), then the Company or the acquiring corporation, as the case may
be, subject to your executing a comprehensive release agreement in a form and
scope acceptable to the Company, shall be obligated to pay you as follows: (i)
12 months’ salary at your then current base rate in 26 equal bi-weekly payments;
(ii) the greater of (a) your then current annual target bonus or incentive
payment or (b) the most recent annual bonus or incentive payment earned by you
or paid to you by the Company; (iii) if you are eligible for, and choose to
elect health insurance continuation in accordance with COBRA, the Company will
pay your premium payments under COBRA for a period of 12 months or, if earlier,
until you commence employment with a new employer; and (iv) payment, for a
period of 12 months after your termination of employment, of the premiums for
life insurance, supplemental life insurance and long-term disability insurance
for your benefit, under policies to be determined by the Company as permitted by
the applicable plans under which you were covered as of your termination date
(the payments and benefits described in clauses (i), (ii), (iii) and (iv) above
are collectively referred to herein as the “Termination Payments”). The
Termination Payments shall be subject to all applicable federal, state and local
withholding, payroll and other taxes, subject to the terms herein. If you are
eligible to receive the Termination Payments set forth herein, you will not be
eligible to receive any severance payments or benefits provided under any other
agreement between you and the Company, if any,

--------------------------------------------------------------------------------

Letter to Gary Hall

January 26, 2005

Page 2

 

or under any Company policy or program. Furthermore and for the sake of clarity,
you shall not be eligible to receive the Termination Payments described in his
paragraph in the event that (1) our employment is terminated by you or the
Company for any reason on or before an Acquisition, (2) your employment is
terminated by you of the Company for any reason at any time following the twelve
month anniversary of an Acquisition, or (3) during the twelve month period
immediately following an Acquisition, your resign from employment without Good
Reason or are terminated by the Company for Cause.. Any obligation of the
Company to provide Termination Payments is expressly conditioned upon your
continued full performance of the obligations under the terms of the Non-Compete
Agreement (as defined below).

 

For purposes of the your eligibility for severance following an Acquisition,
“Cause” shall mean any one or more of the following: (i) your failure or refusal
to render services to the Company in accordance with your obligations or a
determination by the Board of the Directors of the Company that you have
inadequately performed your employment duties; (ii) your disloyalty, gross
negligence, dishonesty or breach of fiduciary duty; (iii) your commission 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 your commission of any other action which injures the Company;
(iv) any act of moral turpitude by you which materially adversely affects your
ability to perform your duties and represent the Company; (v) your commission 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; or (vi) your
breach of the terms of the Employee Secrecy, Invention and Non-Compete Agreement
that you signed with the Company (the “Non-Compete Agreement”) or of any
obligations under any other agreement entered into between you and the Company.

 

For purposes of your eligibility for severance following an Acquisition, “Good
Reason” shall mean your termination of employment as a result of (i) a material
breach of the Letter Agreement by the Company; (ii) a material reduction in your
responsibility or authority for the operations of the Company as it exists on
the date of this letter; or (iii) the failure of the Company to pay your salary
or bonus, if any, in the time and manner contemplated by the Letter Agreement;
provided, however, that an event described in this sentence shall not constitute
Good Reason unless it is communicated by you to the Company in writing within 30
days of the even and has not been cured by the Company within 30 days of its
receipt of written notice by you. Any references to the “Company” in this or the
preceding paragraph shall include any surviving or successor entity following an
Acquisition.

 

If, in connection with an Acquisition, (a) the Termination Payments, or (b) any
payment or benefit received or to be received by you pursuant to any other plan,
arrangement or agreement (such payments or benefits together with the
Termination Payments, 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 Payments 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 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 Total Payments as so
reduced plus the tax that, but for this sentence, would be imposed on you under
Section 4999 of the Code in connection with the Acquisition, then the
Termination Payments 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 paragraph shall be
made by the Company.

 

This Offer Letter, together with the Non-Compete Agreement and any written
agreements between you and the Company concerning stock or stock options
collectively are referred to herein as the “Letter

--------------------------------------------------------------------------------

Letter to Gary Hall

January 26, 2005

Page 3

 

Agreement.” The Letter Agreement sets forth the sole understanding between you
and the Company with respect to the subject matter hereof and thereof, and
supersedes any prior negotiations, understandings or agreements, written or
oral, by or between you and the Company regarding such subject matter,
including, but not limited to, the employment arrangements between you and the
Company dated March 2002 regarding certain severance benefits.

 

As a condition of this offer, you will be required to read and acknowledge the
enclosed Employee Secrecy, Invention and Non-Compete Agreement (the “Non-Compete
Agreement”). By signing this document you agree that your employment shall not
cause you to use, distribute or in any other way disclose confidential or
proprietary information or material from your employer or any third party.

 

As noted above, your employment with the Company shall be on an “at-will” basis,
which means that, except as provided above with respect to your eligibility for
severance following an Acquisition, the Company may modify the terms of your
employment at any time and either you or the Company may terminate the
employment relationship at any time and for any or no reason.

 

Gary, it is a pleasure to welcome you officially to the MatrixOne senior
management team. If in agreement with this offer, please sign the original and
return it with the Employee Secrecy/Non-Compete Agreement and the Application
for Employment to my assistant, Gayle Crosby. Or, if you wish, simply fax signed
your offer letter to our confidential fax at (978) 589-5701. Please do not
hesitate to contact me if you have any questions regarding this offer.

 

Sincerely,

/s/ Mark F. O’Connell

--------------------------------------------------------------------------------

Mark F. O’Connell President & Chief Executive Officer

 

Enclosures

 

Offer accepted by:  

/s/ Gary D. Hall

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

Date: February 1, 2005  

 

--------------------------------------------------------------------------------