Document:

CERTIFICATE OF THE DESIGNATIONS, POWERS,
                             PREFERENCES AND RIGHTS
                                     OF THE
                SERIES A REDEEMABLE PARTICIPATING PREFERRED STOCK
                           ($.01 par value per share)

                                       of
                             EVERLAST WORLDWIDE INC.
                        (f/k/a Active Apparel Group, Inc.)
                             a Delaware Corporation

                                   ----------

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                                   ----------

            EVERLAST  WORLDWIDE INC.  (f/k/a  Active  Apparel  Group,  Inc.),  a
corporation  organized  and existing  under the General  Corporation  Law of the
State of Delaware (the "Corporation"),

            DOES HEREBY CERTIFY:

            FIRST:  That,  pursuant  to  authority  conferred  upon the Board of
Directors of the Corporation  (the "Board") by the Certificate of  Incorporation
of said  Corporation,  and  pursuant  to the  provisions  of Section  151 of the
Delaware General Corporation Law, there hereby is created,  out of the 1,000,000
shares of Preferred Stock of the Corporation authorized in Article FOURTH of the
Certificate of Incorporation (the "Preferred  Stock"), a series of the Preferred
Stock  consisting of 45,000 shares,  $.01 par value per share,  to be designated
"Series  A  Preferred  Stock,"  and to that end the Board  adopted a  resolution
providing  for  the  designations,  powers,  preferences  and  rights,  and  the
qualifications,  limitations  and  restrictions  of,  the  Series  A  Redeemable
Participating Preferred Stock, which resolution is as follows:

                        RESOLVED,  that  the  Certificate  of the  Designations,
            Powers, Preferences and Rights of the Series A Convertible Preferred
            Stock ("Certificate of Designation") be and is hereby authorized and
            approved,  which  Certificate of Designation shall be filed with the
            Delaware Secretary of State in the form as follows:

            1.   Dividends.
                 ----------

                        Commencing  on the  date of  issuance  of the  Series  A
            Preferred Stock, dividends shall accrue to the holders of the Series
            A  Preferred  Stock as  provided  in this  Section 1. The  aggregate
            dividends  for any  fiscal  year to be  divided  pro rata  among all
            holders of

                                       -1-
<PAGE>

            outstanding  Series A Preferred Stock as of the start of such fiscal
            year (or as of the  date of  issuance  for the  fiscal  year  ending
            December 31, 2000) (the  "Dividend  Period") shall be the product of
            (i)  two-thirds  (2/3)  multiplied by (ii) the Net After Tax Profits
            (as  defined  in  Section  10  hereof)   multiplied   by  (iii)  the
            Outstanding  Redeemable Percentage (as defined in Section 10 hereof)
            (the "Preferred Dividends"). The dividends payable for a fiscal year
            shall be due on  March 15 of the  succeeding  fiscal  year,  or such
            later date that the Corporation's  audited financial statements have
            been  completed  and the  Corporation  shall have  received a signed
            opinion from its  independent  auditors in respect of such financial
            statements,  but in no event  shall the  payment  be made later than
            March 31 of the succeeding fiscal year to the extent the Corporation
            has funds legally available;  provided,  however,  that the dividend
            payments  payable for the fiscal year ending December 31, 2000 shall
            be due on March 15, 2002, or such later date that the  Corporation's
            audited  financial  statements  for fiscal year ending  December 31,
            2001 have been completed and the  Corporation  has received a signed
            opinion  from its  independent  auditors,  but in no event shall the
            payment  be  made  later  than  March  31,  2002 to the  extent  the
            Corporation has funds legally available. If the Corporation fails to
            pay the  dividends  to any holder of Series A Preferred  Stock,  the
            Corporation  shall be subject  to the  provisions  of  Section  4(b)
            hereof.

                        Preferred  Dividends  on shares  of  Series A  Preferred
            Stock shall be cumulative (whether or not there shall be net profits
            or net assets of the Corporation  legally  available for the payment
            of such dividends),  so that if at any time the Preferred  Dividends
            upon the Series A Preferred  Stock to the end of the last  completed
            Dividend  Period shall not have been paid and a sum  sufficient  for
            the payment thereof set apart,  the amount of the deficiency in such
            Preferred  Dividends shall be fully paid (but without interest),  or
            Preferred  Dividends in such amounts shall have been declared on the
            shares of the Series A Preferred  Stock and a sum sufficient for the
            payment  thereof shall have been set apart for such payment,  before
            any  dividend  shall be declared  or paid or any other  distribution
            ordered or made upon any class of stock  ranking as to  dividends or
            upon liquidation  junior to the Series A Preferred Stock (other than
            a dividend  payable in such junior stock) and before any sum or sums
            shall be set aside for or applied to the purchase or  redemption  of
            any  shares of any class of stock  ranking as to  dividends  or upon
            liquidation  junior to the Series A Preferred Stock (with respect to
            rights to dividends and on liquidation, the Series A Preferred Stock
            shall rank prior to the Common Stock (as hereinafter defined)),  the
            Preferred  Dividends must be paid. All Preferred  Dividends declared
            upon the Series A Preferred  Stock  shall be  declared  pro rata per
            share.  Holders of shares of Series A  Preferred  Stock shall not be
            entitled  to any  Preferred  Dividends,  whether  payable  in  cash,
            property or stock, in excess of the Preferred  Dividends at the rate
            set forth above. All payments due under this Section 1 to any holder
            of shares of Series A  Preferred  Stock shall be made to the nearest
            cent.

            2.  Redemptions.
                ------------

                        (a)  Mandatory  Redemption.  (i) So long as any Series A
            Preferred  Stock  remains  outstanding,  the  Corporation  shall  be
            required to redeem $5,000,000 aggregate Redemption

                                       -2-
<PAGE>

            Value of Series A Preferred  Stock  (5,000  shares) on December  31,
            2001 and every December 31st thereafter  (the "Mandatory  Redemption
            Date")  until  all  shares  of Series A  Preferred  Stock  have been
            redeemed.  For each share of Series A Preferred Stock which is to be
            redeemed  hereunder,  the  Corporation  shall be  obligated  on each
            Mandatory  Redemption  Date to deliver to the holder  thereof  (upon
            surrender by such holder at the  Corporation's  principal  office of
            the  certificate  representing  such  shares of  Series A  Preferred
            Stock) a check for the Redemption Value.

                        (ii) If the funds of the Corporation  legally  available
            for  redemption  of  shares  of  Series  A  Preferred  Stock  on any
            Mandatory  Redemption  Date are  insufficient  to  redeem  the total
            number of shares of Series A Preferred  Stock to be redeemed on such
            date pursuant to Section 2(a)(i),  the Corporation  shall be subject
            to the provisions of Section 4(a) hereof.  The Corporation shall use
            all funds that are legally  available for such  redemption to redeem
            the greatest  number of share of Series A Preferred  Stock possible,
            pro rata  among  the  holders  of  outstanding  shares  of  Series A
            Preferred Stock. At any time thereafter when additional funds of the
            Corporation  are legally  available for the  redemption of shares of
            Series A  Preferred  Stock,  such funds  shall be used to redeem the
            balance of the shares of Series A Preferred Stock as aforesaid which
            the  Corporation  had become  obligated  to redeem on any  Mandatory
            Redemption Date but which it has not redeemed.

                        (b) Optional  Redemptions.  The Corporation  may, at the
            end of any  quarter,  redeem all of the shares of Series A Preferred
            Stock then outstanding. The Corporation may also redeem a portion of
            the shares of Series A Preferred  Stock then  outstanding at the end
            of  each  fiscal  year.  Upon  any  such  optional  redemption,  the
            Corporation  shall  pay a  price  per  share  equal  to  105% of the
            Redemption Value;  provided,  in the event of a partial  redemption,
            the Corporation  shall only pay 105% of the Redemption  Value of the
            shares so redeemed  that year once the Company has  redeemed  shares
            having an aggregate Redemption Value of $5,000,000.

                        (c) Redemption  Upon a Change of Control.  Upon a Change
            of Control within three (3) years of the date hereof (as hereinafter
            defined),  the Corporation shall be required to redeem all shares of
            Series A Preferred  Stock that are  outstanding  on that date of the
            Change of Control.  For purposes of this  Section  2(c), a Change of
            Control  shall  mean the  acquisition  by a person  (other  than Ben
            Nadorf or George  Horowitz) of greater than 50% of the fully diluted
            shares (inclusive of options,  warrants and other similar rights) of
            common stock, par value $.002 per share, of the Corporation,  or the
            sale by the Corporation of all or substantially all of its assets.

                        (d) Notice of  Redemption.  The  Corporation  shall mail
            written notice of any proposed  optional  redemption of any Series A
            Preferred  Stock to each record holder  thereof not more than 30 nor
            less than ten days  prior to the date on which  such  redemption  is
            intended to be made.

                                      -3-
<PAGE>

                        (e) Replacement  Certificates for Unredeemed  Shares. If
            fewer than the total  number of shares of Series A  Preferred  Stock
            represented  by any  certificate  are  redeemed,  a new  certificate
            representing  the number of unredeemed  shares of Series A Preferred
            Stock  shall be issued to the holder  thereof  without  cost to such
            holder  within  three  business  days  of the  applicable  Mandatory
            Redemption Date.

                        (f)  Determination of the Number of Each Holder's Shares
            to be Redeemed.  The number of shares of Series A Preferred Stock to
            be redeemed from each holder thereof in redemptions  hereunder shall
            be the aggregate number of the shares of Series A Preferred Stock to
            be redeemed  times a fraction,  the  numerator of which shall be the
            aggregate  number of such shares of Series A Preferred Stock held by
            such  holder and the  denominator  of which  shall be the  aggregate
            number of the shares of Series A Preferred  Stock  outstanding as of
            January 1 of the year of such redemption.

                        (g) Redeemed or Otherwise Acquired Shares. Any shares of
            Series A Preferred Stock that are redeemed or otherwise  acquired by
            the  Corporation  shall be  canceled  and  retired  and shall not be
            reissued, sold or transferred. Immediately following such redemption
            or  acquisition,  the rights of the  holders  of Series A  Preferred
            Stock  in  respect  of the  shares  redeemed  provided  for in  this
            Certificate of Designation shall cease.

            3.  Priority Over Dividends and Redemptions.
                ---------------------------------------

                        So  long  as  any  Series  A  Preferred   Stock  remains
            outstanding,  without the prior written  consent of the holders of a
            majority of the outstanding  shares of Series A Preferred Stock, the
            Corporation shall not redeem, purchase or otherwise acquire directly
            or  indirectly  any  Junior  Securities,  nor shall the  Corporation
            directly  or  indirectly  pay or declare  any  dividend  or make any
            distribution upon any Junior Securities other than dividends payable
            in shares of Common  Stock  issued  upon the  outstanding  shares of
            Common  Stock;  provided,  however,  that the  Corporation  shall be
            allowed to repurchase  Junior  Securities  held by employees  (other
            than executive officers) upon the employees' termination.

            4.  Failure to Redeem.
                -----------------

                        If  the   Corporation   fails  to  make  any   mandatory
            redemption payment within 30 days after a Mandatory Redemption Date,
            the Corporation  shall deliver an assignment (the  "Assignment")  of
            all licenses and  trademarks  listed on Schedule  2.10 of the Merger
            Agreement (the  "Everlast  Licenses and  Trademarks")  to the former
            shareholders of Everlast who were parties to the Merger Agreement as
            Shareholders  (as defined  therein).  Such  Assignment  shall become
            effective 60 days following its delivery,  and the holders of Series
            A Preferred Stock shall receive voting rights as provided in Section
            6(c) hereof,  unless the Corporation pays such outstanding mandatory
            redemption payment prior to such date (in which case, the Assignment
            shall  be  canceled  and have no legal  effect).  If the  Assignment
            becomes  effective,  the  Corporation  shall  become a  licensee  of
            Everlast  subject to the same

                                       -4-
<PAGE>

            terms and conditions set forth in two Licensee Agreements dated July
            1992 and January 1, 1999 between  Everlast and the Corporation  (the
            "Everlast  License  Agreements").  The terms of the Everlast License
            Agreements  shall  be  deemed  to have  continuously  run  and  been
            automatically  renewed  from the date the  Corporation  acquired the
            Everlast  Licenses and Trademarks from Everlast through the date the
            Assignment becomes effective.

                        The Corporation  shall not be relieved of its obligation
            to redeem the Series A  Preferred  Stock if the  Assignment  becomes
            effective;  provided,  however,  that the  royalties  earned in each
            fiscal year by the former shareholders of Everlast from the Everlast
            License Agreements shall reduce, on a  dollar-for-dollar  basis, any
            mandatory redemption and dividend payments for such fiscal year. The
            former  shareholders  of  Everlast  shall use their best  efforts to
            exploit the use and  generate  the most  revenues  from the Everlast
            Licenses and Trademarks after the Assignment becomes effective.  The
            Corporation  shall not be  allowed  to pay any  accrued  and  unpaid
            dividends  or  redeem  any  Junior  Securities  until  it  pays  all
            outstanding mandatory redemption payments.

            5.  Rights on Liquidation, Merger, Sale, Etc.
                -----------------------------------------

                        In  the   event   of  any   voluntary   or   involuntary
            liquidation,  dissolution or winding up of the Corporation  (each, a
            "Liquidation"),   the  assets  of  the  Corporation   available  for
            distribution to its stockholders,  whether from capital,  surplus or
            earnings, shall be distributed in the following order of priority:

                        (a)         Each  holder  of  Series A  Preferred  Stock
                                    shall be  entitled  to be paid,  before  any
                                    distribution  or  payment  is made  upon any
                                    Junior  Securities,  an amount in cash equal
                                    to the  aggregate  Redemption  Value  of all
                                    shares of Series A  Preferred  Stock held by
                                    such  holder  (plus all  accrued  and unpaid
                                    dividends  thereon),   and  the  holders  of
                                    Series  A  Preferred   Stock  shall  not  be
                                    entitled  to any further  payment.  Not less
                                    than ten (10) days prior to the payment date
                                    stated therein,  the Corporation  shall mail
                                    written  notice of any such  Liquidation  to
                                    each  record  holder of  Series A  Preferred
                                    Stock,  setting forth in  reasonable  detail
                                    the  amount  of  proceeds  to be  paid  with
                                    respect to each share of Series A  Preferred
                                    Stock in connection  with such  Liquidation.
                                    Neither the  consolidation  or merger of the
                                    Corporation into or with any other entity or
                                    entities  (whether or not the Corporation is
                                    the  surviving  entity),  nor  the  sale  or
                                    transfer  by the  Corporation  of all or any
                                    part of its assets, nor the reduction of the
                                    capital  stock  of the  Corporation  nor any
                                    other    form   of    recapitalization    or
                                    reorganization   affecting  the  Corporation
                                    shall be deemed to be a  Liquidation  of the
                                    Corporation   within  the  meaning  of  this
                                    Section 5.

                        (b)         After  distribution of the amounts set forth
                                    in Section 5(a) hereof, the remaining assets
                                    of    the    Corporation    available    for
                                    distribution, if any, to the

                                       -5-
<PAGE>

                                    stockholders  of the  Corporation  shall  be
                                    distributed   to  the   holders   of  Junior
                                    Securities.

            6.  Voting and Conversion Rights.
                ----------------------------

                        (a)  Voting  Rights.  So long as any  share of  Series A
            Preferred  Stock  remain  outstanding,  in  addition  to the  rights
            specified in Section 4(b)  hereof,  except as otherwise  required by
            law: (i) the holders of shares of Series A Preferred  Stock shall be
            entitled  to vote on and to  approve as a  separate  class  (with no
            other  stockholders  voting) all matters that  adversely  impact the
            rights,  value,  ranking or  preferences  of the Series A  Preferred
            Stock; and (ii) the holders of Series A Preferred Stock, voting as a
            separate  class  (with  no  other  stockholders  voting),  shall  be
            entitled to elect two directors to the Board.

                        (b) Approval by Holders of Series A Preferred Stock. The
            Corporation  shall not,  so long as any shares of Series A Preferred
            Stock remain  outstanding,  without the prior written consent of Ben
            Nadorf  acting on behalf of the holders of Series A Preferred  Stock
            (but if Ben  Nadorf  is  Unavailable,  David  Shechet,  but if David
            Shechet  is  Unavailable,  holders  of at  least a  majority  of the
            outstanding shares of Series A Preferred Stock):

                        (i)         in any manner authorize, create or issue (A)
                                    any  class  or  series  of   capital   stock
                                    ranking, in any respect, including,  without
                                    limitation,  as  to  payment  of  dividends,
                                    distribution   of  assets  or   redemptions,
                                    senior  or  pari   passu  to  the  Series  A
                                    Preferred  Stock,  or  which  in any  manner
                                    adversely affects the rights and preferences
                                    of the holders of Series A Preferred  Stock;
                                    or (B) any  shares of any class or series of
                                    any  bonds,   debentures,   notes  or  other
                                    obligations convertible into or exchangeable
                                    for, or having  optional rights to purchase,
                                    any series of capital stock ranking,  either
                                    as to payment of dividends,  distribution of
                                    assets or redemption, senior to the Series A
                                    Preferred Stock or which  adversely  affects
                                    the rights or  preferences of the holders of
                                    Series A Preferred Stock;

                        (ii)        alter or change  the  designations,  powers,
                                    preferences     or     rights,     or    the
                                    qualifications,  limitations or restrictions
                                    of the Series A Preferred  Stock in a manner
                                    adverse to the holders thereof;

                        (iii)       reclassify the shares of Common Stock or any
                                    other  shares  or any  class  or  series  of
                                    capital stock  hereafter  created  junior to
                                    the Series A Preferred  Stock into shares of
                                    any  class or series  of  capital  stock (A)
                                    ranking,  either as to payment of dividends,
                                    distribution of assets or redemptions, prior
                                    to or on parity  with the Series A Preferred
                                    Stock,  or (B) which  adversely  affects the
                                    rights of the  holders of Series A Preferred
                                    Stock;

                                       -6-
<PAGE>

                        (iv)        amend  any  provision  of the  Corporation's
                                    Certificate of Incorporation or by-laws in a
                                    manner  adverse to the holders of the Series
                                    A Preferred Stock;

                        (v)         issue  any  additional  shares  of  Series A
                                    Preferred  Stock in addition to those shares
                                    when  the  Series  A  Preferred  Stock  were
                                    initially issued;

                        (vi)        incur debt in excess of $100,000, other than
                                    in  the   ordinary   course   of   business;
                                    provided,  however, that the Corporation may
                                    incur  such debt in excess  of  $100,000  in
                                    order to redeem outstanding shares of Series
                                    A Preferred Stock or to pay dividends;

                        (vii)       enter   into  any  new   transactions   with
                                    officers and directors or  stockholders  who
                                    beneficially  own more than five  percent of
                                    the  outstanding  shares of Common  Stock of
                                    the Corporation;

                        (viii)      purchase or acquire, directly or indirectly,
                                    in one or a series of related  transactions,
                                    other  than  in  the   ordinary   course  of
                                    business,    any   capital    asset   which,
                                    individually,  requires  the  payment  of at
                                    least $100,000;

                        (ix)        lease any capital asset requiring payment of
                                    at least $100,000 per annum;

                        (x)         hire an employee with a per annum salary of,
                                    or grant any such  employee a bonus or stock
                                    option valued at, $100,000 or more;

                        (xi)        hire any  consultants or  professionals  who
                                    were   not   previously   employed   by  the
                                    Corporation which is reasonably  anticipated
                                    to result in fees of over $100,000; and

                        (xii)       amend the employment  agreement effective as
                                    of January 1, 2000,  between the Corporation
                                    and George Q Horowitz.

                        (c) Approval by Directors  Nominated by Holders Series A
            Preferred  Stock.  The Board of Directors of the  Corporation  shall
            not,  so long as any  shares  of  Series A  Preferred  Stock  remain
            outstanding,  without the consent of both the  director  nominees of
            the  holders of Series A  Preferred  Stock,  increase  the salary of
            George Q Horowitz on an annual  basis,  greater  than the either (i)
            10% or (ii) twice the Cost of Living  Allowance (as defined herein),
            which ever is less. The Cost of Living  Allowance  shall be equal to
            the  percentage  by which the  Consumers  Price Index for Urban Wage
            Borrowers and Clerical  Workers:  New York, N.Y. - Northeastern  New
            Jersey  (1982-84  equals  100),  as published by the Bureau of Labor
            Statistics  of the United  States  Department  of Labor,  shall have
            increased  over the preceding

                                       -7-
<PAGE>

            year. If publication  of the Consumer  Price Index is  discontinued,
            the parties hereto shall accept comparable statistics on the cost of
            living for the New York,  N.Y.  -  Northeastern  New Jersey  area as
            computed  and  published  by an agency of the United  States or by a
            responsible  financial periodical of recognized authority then to be
            selected by the parties.

                        (d)  Default  on  Redemption.  In  the  event  that  the
            Corporation   defaults  on  its  obligation  to  pay  any  mandatory
            redemption payment, the holders of Series A Preferred Stock shall be
            entitled to vote  together  with and in the same manner and with the
            same  effect  as all  other  classes  and  series  of  stock  of the
            Corporation  on all  actions  to be taken by the  holders  of Common
            Stock of the  Corporation  but only  through  the date on which  the
            Corporation  pays the  holders  of  Series  A  Preferred  Stock  the
            mandatory  redemption  payment  that it failed to pay  timely.  Each
            holder of shares of Series A  Preferred  Stock  shall be entitled to
            cast such  number  of votes in  respect  of such  shares of Series A
            Preferred Stock as shall equal (rounded to the nearest whole number)
            the quotient of (i) the aggregate  Redemption Value of the shares of
            Series A  Preferred  Stock held by such  holder  divided by (ii) the
            Fair Market Value of one share of Common Stock of the Corporation.

                        For purposes of this Section  6(d),  "Fair Market Value"
            of the  Common  Stock  means (i) if shares of the  Common  Stock are
            listed or admitted  for trading on a national  securities  exchange,
            the  average of the bid and ask prices at the close of each  trading
            day of a share of Common  Stock on the Nasdaq  Small Cap Market,  or
            the  Corporation's   then  principal  trading  market,  for  the  10
            consecutive  trading days ending on the second business day prior to
            the  applicable  Mandatory  Redemption  Date  or  (ii)  if  no  such
            quotations  are available for such 10-day  period,  as determined in
            good faith by the Board.

                        (e) Conversion  Rights.  No holder of shares of Series A
            Preferred  Stock  shall  possess  the right to convert the shares of
            Series A Preferred  Stock into any capital stock of the  Corporation
            (whether  now  or  hereafter   authorized)   or  securities  of  the
            Corporation  convertible into or carrying a right to subscribe to or
            acquire shares of capital stock of the Corporation.

            7.  No Pre-emptive Rights.
                ---------------------

                        No  holder of shares  of the  Series A  Preferred  Stock
            shall possess any preemptive  rights to subscribe for or acquire any
            unissued shares of capital stock of the Corporation  (whether now or
            hereafter  authorized) or securities of the Corporation  convertible
            into or  carrying  a right to  subscribe  to or  acquire  shares  of
            capital stock of the Corporation.

                                       -8-
<PAGE>

            8.  Transferability; Registration of Transfer.
                -----------------------------------------
                        The  shares  of  Series  A  Preferred   Stock  shall  be
            transferable,   subject  to  the  prior  written   approval  of  the
            Corporation  (and compliance  with all applicable  federal and state
            securities laws), which approval shall not be unreasonably withheld.
            The stock certificates representing the shares of Series A Preferred
            Stock shall be imprinted with legends in substantially the following
            forms:

                        "TRANSFER  OF  THE   SECURITIES   REPRESENTED   BY  THIS
                        CERTIFICATE  REQUIRES THE PRIOR  WRITTEN  CONSENT OF THE
                        CORPORATION."

                        "THIS  SECURITY  HAS  NOT  BEEN  REGISTERED   UNDER  THE
                        SECURITIES ACT OF 1933, AS AMENDED,  OR APPLICABLE STATE
                        SECURITIES  LAWS,  AND  MAY  NOT  BE  SOLD,  PLEDGED  OR
                        OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE  REGISTRATION
                        STATEMENT  UNDER SUCH ACT OR  PURSUANT  TO AN  EXEMPTION
                        FROM  THE  REGISTRATION  REQUIREMENTS  OF  SUCH  ACT AND
                        APPLICABLE  STATE  SECURITIES  LAWS,   SUPPORTED  BY  AN
                        OPINION  OF  COUNSEL,  REASONABLY  SATISFACTORY  TO  THE
                        COMPANY AND ITS COUNSEL,  THAT SUCH  REGISTRATION IS NOT
                        REQUIRED.   ADDITIONALLY,  AS  PART  OF  THE  TERMS  AND
                        CONDITIONS  OF THE  ISSUANCE OF THIS  CERTIFICATE,  THIS
                        SECURITY  CANNOT BE  TRANSFERRED  WITHIN ONE YEAR OF THE
                        DATE HEREOF."

                        The  Corporation  shall keep at its  principal  office a
            register for the registration of Series A Preferred Stock.  Upon the
            surrender of any certificate  representing  Series A Preferred Stock
            at such place,  the Corporation  shall, at the request of the record
            holder  of  such   certificate,   execute   and   deliver   (at  the
            Corporation's expense) a new certificate or certificates in exchange
            therefor  representing  in the  aggregate  the  number  of shares of
            Series A Preferred Stock represented by the surrendered certificate.
            Each such new certificate shall be registered in such name and shall
            represent  such number of shares of Series A  Preferred  Stock as is
            requested by the holder of the surrendered  certificate and shall be
            substantially identical in form to the surrendered certificate,  and
            dividends shall accrue on the Series A Preferred  Stock  represented
            by such new certificate  from the date such  certificate  issued and
            the surrendered certificate is canceled. All transfer taxes, if any,
            payable as a result of such transfer  shall be paid by the holder of
            the   surrendered   certificate   at  the  time  of  delivering  the
            certificate  for  transfer  or  promptly  upon  receipt of a written
            request  of the  Corporation  for  payment.  No  transfer  shall  be
            recorded in the register until all transfer taxes, if any, have been
            paid.

                                       -9-
<PAGE>

            9.  Replacement.
                -----------

                        Upon receipt of evidence reasonably  satisfactory to the
            Corporation  (an  affidavit  of  the  registered   holder  shall  be
            satisfactory) of the ownership and the loss,  theft,  destruction or
            mutilation  of  any  certificate   evidencing  shares  of  Series  A
            Preferred  Stock,  and in  the  case  of any  such  loss,  theft  or
            destruction,  upon receipt of indemnity  reasonably  satisfactory to
            the  Corporation  (provided  that  if  the  holder  is  a  financial
            institution or other institutional  investor or investment fund, its
            own  agreement  shall be  satisfactory)  or, in the case of any such
            mutilation upon surrender of such certificate, the Corporation shall
            (at its expense)  execute and deliver in lieu of such  certificate a
            new  certificate of like kind  representing  the number of shares of
            such class represented by such lost, stolen,  destroyed or mutilated
            certificate  and dated the date of such lost,  stolen,  destroyed or
            mutilated  certificate,  and dividends  shall accrue on the Series A
            Preferred Stock  represented by such new  certificate  from the date
            such  certificate  is issued and such  lost,  stolen,  destroyed  or
            mutilated certificate is canceled.

            10.  Definitions.
                 -----------

                        "Common  Stock" means the  Corporation's  common  stock,
            $.002 par  value,  and any other  capital  stock of any class of the
            Corporation hereafter authorized which is not limited to a fixed sum
            or percentage of par or stated value in respect to the rights of the
            holders  thereof to participate in dividends or in the  distribution
            of assets  upon any  liquidation,  dissolution  or winding up of the
            Corporation.

                        "Disability"  means  that due to  illness,  accident  or
            other physical or mental  incapacity,  the Board of the Directors of
            the Corporation  has in good faith  determined that an individual is
            unable to render the decision required of him under this Certificate
            of Designation.

                        "Junior  Securities"  means any  capital  stock or other
            equity  securities  of the  Corporation,  except  for the  Series  A
            Preferred  Stock  and any  shares  of any  other  class or series of
            Preferred   Stock   authorized   pursuant  to  the   Certificate  of
            Incorporation  which rank senior to or on a parity with the Series A
            Preferred   Stock  with   respect  to  the  payment  of   dividends,
            redemptions or  distributions  upon liquidation or otherwise (as the
            case may be).

                        "Mandatory  Redemption Date" as to any share of Series A
            Preferred  Stock  means the 31st of December of each year so long as
            any shares of Series A Preferred Stock remain outstanding  beginning
            with December 31, 2001.

                        "Merger  Agreement" refers to that certain Agreement and
            Plan of Merger dated August 21, 2000 by and among  Everlast  World's
            Boxing  Headquarters  Corp.,  Everlast  Holding Co.,  Active Apparel
            Group, Inc., Active Apparel New Corp, and the shareholders listed in
            Schedule I thereof.

                                      -10-
<PAGE>

                        "Net After Tax  Profits"  shall be the net income  after
            tax of AAGP after this Merger, computed in accordance with generally
            accepted accounting principles,  for any fiscal year ending December
            31, but (i) adding back, in their entirety without regard to any tax
            provisions,  the following accounts (x) the goodwill amortization as
            it relates to this Merger,  and (y) the compensation  related to the
            granting and the  exercise of stock  options  under AAGP's  employee
            option plans; and (ii)  multiplying by a fraction,  the numerator of
            which is the  number  of days in the  fiscal  year when any share of
            Series A Preferred  Stock is outstanding  and the denominator is the
            number  of days in the  whole  year;  provided,  however,  that  the
            denominator  for the fiscal year ending  December  31, 2000 shall be
            equal to the  number of days  between  the date of  issuance  of the
            shares of Series A Preferred  Stock and the earlier of the date when
            the  shares  of Series A  Preferred  Stock  are  fully  redeemed  or
            December 31, 2000.

                        "Outstanding  Redeemable  Percentage"  is the  aggregate
            Redemption   Value  of  the  shares  of  Series  A  Preferred  Stock
            outstanding  as  of  January  1st  of  the  fiscal  year  for  which
            redemption is being computed divided by $45,000,000.

                        "Person"   means  an  individual,   a   partnership,   a
            corporation,  a limited liability company,  an association,  a joint
            stock  company,   a  trust,  a  joint  venture,   an  unincorporated
            organization and a governmental entity or any department,  agency or
            political subdivision thereof.

                        "Redemption  Value" of any  share of Series A  Preferred
            Stock as of any particular date shall be equal to $1,000.00, subject
            to adjustment for any stock splits, dividends or recapitalization.

                        "Unavailable"  means  the  death  or  Disability  of the
            individual.

            11.  Amendment and Waiver.
                 --------------------

                        No amendment, modification or waiver shall be binding or
            effective  with respect to any provision of Sections 1 to 11 without
            the prior written  consent of the  Corporation and the holders of at
            least  a  majority  of  the  shares  of  Series  A  Preferred  Stock
            outstanding at the time such action is taken.

                 [The rest of this page is intentionally blank]

                                      -11-
<PAGE>

            IN WITNESS  WHEREOF,  Everlast  Worldwide Inc. (f/k/a Active Apparel
Group, Inc.) has caused this Certificate of Designation to be executed this 24th
day of October, 2000.

                                     ACTIVE APPAREL GROUP, INC.

                                     /s/ George Q Horowitz
                                     ------------------------------------------
                                     Name: George Q Horowitz
                                     Title: Chairman of the Board,
                                            Chief Executive Officer
                                            & President

Attest: /s/ Angelo Giusti
       ----------------------------------
            Name:  Angelo Giusti
            Title:  Secretary

                                      -12-<PAGE>

                                                                    EXHIBIT 10.1

                          [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.
<PAGE>

                                      -2-

     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.
<PAGE>

                                      -3-

     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
<PAGE>

                                      -4-

   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
<PAGE>

                                      -5-

   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
<PAGE>

                                      -6-

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.
<PAGE>

                                      -7-

     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.
<PAGE>

                                      -8-

     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.

          [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE>

                                      -9-

          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
-----------------                     ------------------------
                                      Print Name

By:  Jane E. Seitz                    /s/ Mark O'Connell
     -------------------              -------------------------
Title:  Vice President                Signature
        Human Resources
                                      44 Wayside Road
                                      -------------------------
                                      Street Address

                                      Westboro, MA     01587
                                      -------------------------
                                      City      State  Zip Code

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