Document:

<PAGE>

                                                                   Exhibit 10.21
                                                                   -------------

                          LOAN MODIFICATION AGREEMENT

         This LOAN MODIFICATION AGREEMENT is entered into as of September 28,
1999, by and between SILICON VALLEY BANK, a California-chartered bank with its
principal place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and with
a loan production office located at Wellesley Office Park, 40 William Street,
Suite 350, Wellesley, MA 02481, doing business under the name "Silicon Valley
East" ("Bank"), and MATRIXONE, INC., a Delaware corporation with its principal
place of business at Two Executive Drive, Chelmsford, MA 01824 ("Borrower").

                                   RECITALS

         Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrower's continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:

                                   AGREEMENT

         1.  DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness
             ------------------------------------
which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement dated as of December
29, 1998 between Borrower and Bank providing for an extension of credit up to a
maximum of SEVEN MILLION AND NO/100THS DOLLARS ($7,000,000) for working capital
and equipment finance purposes (the "Loan Agreement").

         Hereinafter, all indebtedness owing by Borrower to Bank shall be
referred to as the "Indebtedness."

         2.  DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured
             -------------------------
pursuant to the Loan Agreement. Hereinafter, the Loan Agreement, together with
all other documents securing payment of the Indebtedness, shall be referred to
as the "Existing Loan Documents."

         3.  DESCRIPTION OF CHANGES IN TERMS.
             -------------------------------

         3.1 Modifications to Definitions. Section 1.1 of the Loan Agreement is
             ----------------------------
hereby amended by substituting the following definitions for those set forth
therein for the same terms, and in the case of new definitions, by adding those
new definitions to that Section 1.1:

             "Credit Extension" means each Advance, Equipment Advance, FX
             Forward Contract or any other extension of credit by Bank for the
             benefit of Borrower hereunder.

             "FX Forward Contract" is defined in Section 2.1.3.

             "FX Reserve" is defined in Section 2.1.3.
<PAGE>

                                      -2-

         3.2      Modifications to Revolving Advance Provisions. Section
                  ---------------------------------------------
2.1.1(a) of the Loan Agreement is hereby replaced in its entirety with the
following:

                  (a) Subject to and upon the terms and conditions of this
                  Agreement, Bank agrees to make Advances to Borrower in an
                  aggregate outstanding amount, not to exceed (i) the Committed
                  Revolving Line or the Borrowing Base, whichever is less, minus
                  (ii) the principal amount of outstanding Equipment Advances,
                  minus (iii) the FX Reserve. Subject to the terms and
                  conditions of this Agreement, amounts borrowed pursuant to
                  this Section 2.1.1 may be repaid and reborrowed at any time
                  during the term of this Agreement.

         3.3      Addition of International Services.  Section 2.1.3 is hereby
                  ----------------------------------
added to the Loan Agreement as follows:

                  2.1.3 Foreign Exchange Sublimit. If there is availability
                        -------------------------
                  under the Committed Revolving Line and the Borrowing Base,
                  then Borrower may enter in foreign exchange forward contracts
                  with the Bank under which Borrower commits to purchase from or
                  sell to Bank a set amount of foreign currency more than one
                  business day after the contract date (the "FX Forward
                  Contract"). Bank will subtract 10% of each outstanding FX
                  Forward Contract from the foreign exchange sublimit which is a
                  maximum of $500,000 (the "FX Reserve"). The total FX Forward
                  Contracts at any one time may not exceed 10 times the amount
                  of the FX Reserve. Bank may terminate the FX Forward Contracts
                  if an Event of Default occurs.

         3.4      Modifications to Overadvance Provisions.  Section 2.2 of the
                  ---------------------------------------
Loan Agreement is hereby replaced in its entirety with the following:

                  2.2 Overadvances. If, at any time or for any reason, the
                      ------------
                  amount of Obligations owed by Borrower to Bank pursuant to
                  Section 2.1.1, 2.1.2 and 2.1.3 of this Agreement is greater
                  than the lesser of (i) the Committed Revolving Line or (ii)
                  the Borrowing Base, Borrower shall immediately pay to Bank, in
                  cash, the amount of such excess.

         3.5      Modifications to Borrowing Base Certificate. Exhibit C of the
                  -------------------------------------------
Loan Agreement is hereby replaced in its entirety with Exhibit C to this
Agreement.

         4.       FACILITY FEE. Borrower shall pay to Bank any out-of-pocket
                  ------------
expenses incurred by the Bank through the date hereof, including reasonable
attorneys' fees and expenses, and after the date hereof, all Bank Expenses,
including reasonable attorneys' fees and expenses, as and when they become due.

<PAGE>

                                      -3-

         5. CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank to
            ----------------------------------------
make further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:

                  (a)  this Loan Modification Agreement duly executed by
Borrower;

                  (b)  payment of the fees and Bank Expenses then due specified
in Section 4 hereof; and

                  (c)  such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.

         6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
            ------------------
wherever necessary to reflect the changes described in this Loan Modification
Agreement.

         7. NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it
            -----------------------
has no defenses against any of the obligations to pay any amounts under the
indebtedness.

         8. CONTINUING VALIDITY. Borrower understands and agrees that (i) in
            -------------------
modifying the Existing Loan Documents, Bank is relying upon Borrower's
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Loan Modification
Agreement (including the effects of Section 6 hereof), the Existing Loan
Documents remain unchanged and in full force and effect, (iii) Bank's agreement
to modify the Existing Loan Documents pursuant to this Loan Modification
Agreement shall in no way obligate Bank to make any future modifications to the
Existing Loan Documents, (iv) it is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Existing Loan Documents,
unless a party is expressly released by Bank in writing. (v) no maker, endorser
or guarantor will be released by virtue of this Loan Modification Agreement, and
(vi) the terms of this Section 8 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.

         9. CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER. The laws of the
            ------------------------------------------
Commonwealth of Massachusetts shall apply to this Agreement. BORROWER ACCEPTS
FOR ITSELF AND CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT: PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA, BORROWER AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL

<PAGE>

                                      -4-

INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

         10. EFFECTIVENESS. This Agreement shall become effective only when it
             -------------
shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.

"Borrower"                                       "Bank"

MATRIXONE, INC.                                  SILICON VALLEY BANK, doing
                                                 business as SILICON VALLEY EAST

By: /s/ Mark O'Connell,                          By: /s/ Pamela A. Braren
   ---------------------------------                ---------------------------
     Mark O'Connell, President & CEO                 Pamela A. Braren

                                                 SILICON VALLEY BANK

                                                 By: /s/ Michelle D. Giannini
                                                    ---------------------------

                                                 Title:________________________
                                                       (Signed in Santa Clara
                                                         County, California)

                                EXHIBIT C FOLLOWS

<PAGE>

                                      -5-

                                   EXHIBIT C
                                   ---------
                          BORROWING BASE CERTIFICATE
                          --------------------------

Borrower:    MatrixOne, Inc.                       Bank:   Silicon Valley Bank
             Two Executive Drive                           3003 Tasman Drive
             Chelmsford, MA 01824                          Santa Clara, CA 95054

Commitment Amount:           7,000,000

<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE
<S>             <C>                                                          <C>                     <C>              <C>
                1.   Accounts Receivable Book Value as of _____________                                               $_________
                2.   Additions (please explain on reverse)                                                            $_________
                3.   TOTAL ACCOUNTS RECEIVABLE                                                                        $_________

ACCOUNTS RECEIVABLE DEDUCTIONS
                4.  Amounts over 90 days                                                             $_________
                5.  Balance of 50% over 90 day accounts                                              $_________
                6.  Concentration Limits                                                             $_________
                7.  Ineligible Foreign Accounts                                                      $_________
                8.  Governmental Accounts                                    $_________
                9.  Contra Accounts                                          $_________
                10. Promotion or Demo Accounts                                                       $_________
                11. Intercompany/Employee Accounts                                                   $_________
                12. Other (please explain on reverse)                        $_________
                13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                                              $_________
                14. Eligible Accounts (#3 - #13)                                                                      $_________
                15. LOAN VALUE OF ACCOUNTS (80% OF #14)                                                               $_________
BALANCES
                16. Maximum Loan Amount                                                              $7,000,000
                17. Total Funds Available (Lesser of #16 or #15)                                                      $_________
                18. Present balance owing on Line of Credit                                                           $_________
                19. Outstanding under Sublimits (FX - $500,000)                                      $_________
                20. RESERVE POSITIVE (#17 minus #18 and #19)                                                          $_________
</TABLE>

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement dated as of December 29, 1998, as may be amended from time to
time, between the undersigned and Silicon Valley Bank.

COMMENTS:

                                  ----------------------------------------------
                                                 BANK USE ONLY
                                   Rec'd By:_____________________________
                                   Date:_________________________________
                                   Reviewed By:__________________________
                                   Compliance Status:  Yes/No

                                   ---------------------------------------------
________________________

By:_____________________<PAGE>

                                                                   Exhibit 10.22
                                                                   -------------

                           LOAN MODIFICATION AGREEMENT

         This LOAN MODIFICATION AGREEMENT is entered into as of December
28,1999, by and between SILICON VALLEY BANK, a California-chartered bank with
its principal place of business at 3003 Tasman Drive, Santa Clara, CA 95054 and
with a loan production office located at Wellesley Office Park, 40 William
Street, Suite 350, Wellesley, MA 02481, doing business under the name "Silicon
Valley East" ("Bank"), and MATRIXONE, INC., a Delaware corporation with its
principal place of business at Two Executive Drive, Chelmsford, MA 01824
("Borrower").

                                    RECITALS

         Borrower has borrowed money from Bank pursuant to certain Existing Loan
Documents, as defined below. In consideration of certain financial
accommodations from Bank, and Borrowers continuing obligations under the
Existing Loan Documents, Borrower and Bank agree as follows:

                                    AGREEMENT

         1.   DESCRIPTION OF EXISTING INDEBTEDNESS. Among other indebtedness
              ------------------------------------
which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant
to, among other documents, a Loan and Security Agreement dated as of December
29, 1998 between Borrower and Bank providing for an extension of credit up to a
maximum of SEVEN MILLION AND NO/100THS DOLLARS ($7,000,000) for working capital
and equipment finance purposes, as amended by a Loan Modification Agreement
dated as of September 28, 1999 (the "Loan Agreement").

         Hereinafter, all indebtedness owing by Borrower to Bank shall be
referred to as the "Indebtedness."

         2.   DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is
              -------------------------
secured pursuant to the Loan Agreement. Hereinafter, the Loan Agreement,
together with all other documents securing payment of the Indebtedness, shall be
referred to as the "Existing Loan Documents."

         3.   DESCRIPTION OF CHANGES IN TERMS.
              -------------------------------

         3.1  Modifications to Definitions. Section 1.1 of the Loan Agreement is
              ----------------------------
hereby amended by substituting the following definitions for those set forth
therein for the same terms, and in the case of new definitions, by adding those
new definitions to that Section 1.1:

         "Revolving Maturity Date" means December 28, 2000.

         "Eligible Accounts" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's representations
and warranties to Bank set forth in
<PAGE>

                                      -2-

Section 5.4. Unless otherwise agreed to by Bank in writing, Eligible Accounts
shall not include the following:

         (a)   Accounts that the account debtor has failed to pay within 180
         days of invoice date;

         (b)   Accounts with respect to an account debtor, fifty percent (50%)
         of whose Accounts the account debtor has failed to pay within 180 days
         of invoice date, except as approved in writing by Bank;

         (c)   Accounts which are more than sixty (60) days past the original
         due date;

         (d)   Accounts with respect to an account debtor, including Affiliates,
         whose total obligations to Borrower exceed twenty-five percent (25%) of
         all Accounts, to the extent such obligations exceed the aforementioned
         percentage, except as approved in writing by Bank and except for
         Accounts covered by insurance complying with Section 6.6(b);

         (e)   Accounts with respect to which the account debtor does not have
         its principal place of business in the United States or Canada;

         (f)   Accounts with respect to which the account debtor is a federal,
         state, or local governmental entity or any department, agency, or
         instrumentality thereof;

         (g)   Accounts with respect to which Borrower is liable to the account
         debtor, but only to the extent of any amounts owing to the account
         debtor (sometimes referred to as 'contra' accounts, e.g. accounts
         payable, customer deposits, credit accounts etc.);

         (h)   Accounts generated by demonstration or promotional equipment, or
         with respect to which goods are placed on consignment, guaranteed sale,
         sale or return, sale on approval, bill and hold, or other terms by
         reason of which the payment by the account debtor may be conditional;

         (i)   Accounts with respect to which the account debtor is an
         Affiliate, officer, employee, or agent of Borrower;

         (j)   Accounts with respect to which the account debtor disputes
         liability or makes any claim with respect thereto as to which Bank
         believes, in its sole discretion, that there may be a basis for dispute
         (but only to the extent of the amount subject to such dispute or
         claim), or is subject to any Insolvency Proceeding, or becomes
         insolvent, or goes out of business; and

         (k)   Accounts the collection of which Bank reasonably determines, in
         accordance with its standard commercial practices, to be doubtful.
<PAGE>

                                      -3-

         Subsection (d) of the definition of Permitted Liens is hereby replaced
         in its entirety with the following:

         (d)   Liens on Equipment leased by Borrower or any Subsidiary pursuant
         to an operating or capital lease in the ordinary course of business
         (including proceeds thereof and accessions thereto) incurred solely for
         the purpose of financing the lease of such Equipment (including Liens
         pursuant to leases permitted pursuant to Section 7.1 and Liens arising
         from UCC financing statements regarding leases permitted by this
         Agreement);

         3.2   Modifications to Revolving Advance Provisions. Section 2.1.1(a)
               ---------------------------------------------
of the Loan Agreement is hereby replaced in its entirety with the following:

         (a)   Subject to and upon the terms and conditions of this Agreement,
         Bank agrees to make Advances to Borrower in an aggregate outstanding
         amount not to exceed (i) the Committed Revolving Line or the Borrowing
         Base, whichever is less, minus (ii) any amounts reserved for cash
         management services as agreed between Bank and Borrower from time to
         time, minus (iii) the FX Reserve as agreed between Bank and Borrower
         from time to time. Subject to the terms and conditions of this
         Agreement, amounts borrowed pursuant to this Section 2.1.1 may be
         repaid and reborrowed at any time during the term of this Agreement.

         3.3   Modification to Financial Reporting Provisions. Section 6.3 of
               ----------------------------------------------
the Loan Agreement is hereby replaced in its entirety with the following:

         6.3   Financial Statements, Reports, Certificates. (i) Borrower shall
               -------------------------------------------
deliver to Bank:

         (a)   as soon as available, but in any event within thirty (30) days
         after the end of each month when Credit Extensions are outstanding, a
         company prepared consolidated balance sheet and income statement
         covering Borrowers consolidated operations during such period, in a
         form and certified by an officer of Borrower reasonably acceptable to
         Bank;

         (b)   as soon as available, but in any event within ninety (90) days
         after the end of Borrowees fiscal year, audited consolidated financial
         statements of Borrower prepared in accordance with GAAP, consistently
         applied, together with an unqualified opinion on such financial
         statements of an independent certified public accounting firm
         reasonably acceptable to Bank;

         (c)   within five (5) days of filing, copies of all statements, reports
         and notices sent or made available generally by Borrower to its
         security holders or to any holders of Subordinated Debt and all reports
         on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange
         Commission;

         (d)   promptly upon receipt of notice thereof, a report of any legal
         actions pending or threatened against Borrower or any Subsidiary that
         could reasonably be likely to result in damages or costs to Borrower or
         any Subsidiary of One Hundred Fifty Thousand Dollars
<PAGE>

                                      -4-

         ($150,000) or more;

         (e)   such budgets, sales projections, operating plans or other
         financial information as Bank may reasonably request from time to time.

         (f)   (i) prior to any Credit Extensions at a time when no Credit
         Extensions are outstanding, and (ii) within thirty (30) days after the
         last day of each month in which any Credit Extensions are outstanding,
         a Borrowing Base Certificate signed by a Responsible Officer in
         substantially the form of Exhibit C hereto, together with aged listings
         of accounts receivable.

         (g)   prior to any Credit Extensions at a time when no Credit
         Extensions are outstanding, and (ii) within thirty (30) days after the
         last day of each month in which any Credit Extensions are outstanding,
         a Compliance Certificate signed by a Responsible Officer in
         substantially the form of Exhibit D hereto.
                                   ---------

         (ii)  Bank shall have a right from time to time hereafter, upon
         reasonable prior notice, to audit Borrower's Accounts at Borrower's
         expense, provided that such audits will be conducted no more often than
         once every twelve (12) months unless an Event of Default has occurred
         and is continuing.

         3.4   Modifications to Financial Covenants. Sections 6.8, 6.9 and 6.10
               ------------------------------------
of the Loan Agreement are hereby replaced in their entirety with the following:

               6.8   Adjusted Quick Ratio. Borrower shall maintain a ratio of
                     --------------------
               Quick Assets to Current Liabilities (exclusive of deferred
               revenues), (i) as of the last day of each calendar quarter, of at
               least 1.50 to 1.0, and (ii) intraquarterly, as of the last day of
               each calendar month, of at least 1.25 to 1.0.

               6.9   Profitability. Borrower will not suffer a net loss (as
                     -------------
               defined by GAAP, but excluding stock-based compensation charges
               as required by rules and regulations of the Securities and
               Exchange Commission) greater than (a) $800,000 for the quarter
               ended September 30, 1999, (b) $2,200,000 for the quarter ended
               December 31, 1999, (c) $3,500,000 for the quarter ended March 31,
               2000 and (d) $2,000,000 for the quarter ended June 30, 2000 and
               for each quarter thereafter.

               6.10  Liquidity.  INTENTIONALLY OMITTED
                     ---------

         3.5   Modifications to Negative Covenants. Sections 7.2 and 7.3 of the
               -----------------------------------
Loan Agreement are hereby replaced in their entirety with the following:

               7.2   Changes in Business, Ownership, or Management, Business
                     -------------------------------------------------------
               Locations. Engage in any business, or permit any of its
               ---------
               Subsidiaries to engage in any business, other than the businesses
               currently engaged in by Borrower and any business substantially
               similar or related thereto (or incidental thereto), or suffer a
               material
<PAGE>

                                      -5-

               change in Borrower's ownership (other than changes resulting from
               or connected to equity financing events, including public
               offerings of securities) or any three (3) of the persons holding
               the positions of CEO, CFO, VP-Marketing, VP-Engineering and VP-
               Customer Support as of the Closing Date cease to be employees of
               Borrower and replacements reasonably satisfactory to Bank are not
               made within ninety (90) days from the date such employees cease
               to be employees. Borrower will not, without at least thirty (30)
               days prior written notification to Bank, relocate its chief
               executive office or add any new offices or business locations;
               provided that Borrower need not give Bank such notice with
               respect to sales offices with equipment having a value, either
               per office or in the aggregate, that is immaterial, and from
               which no invoices are billed or collected.

               7.3   Mergers or Acquisitions. Merge or consolidate, or permit
                     -----------------------
               any of its Subsidiaries to merge or consolidate, with or into any
               other business organization, or acquire, or permit any of its
               Subsidiaries to acquire, all or substantially all of the capital
               stock or property of another Person, other than a transaction or
               series of transactions in which the stockholders of Borrower
               immediately prior to the transaction or series of transactions,
               as the case may be, continue to hold a majority of the voting
               capital stock of the resulting company, provided that an Event of
               Default has not occurred and is continuing prior to such
               transaction or series of transactions or would not exist after
               giving effect to such transaction or series of transactions.

         3.6   Modifications to Borrowing Base Certificate and Compliance
               ----------------------------------------------------------
Certificate. Exhibits C and D of the Loan Agreement are hereby replaced in their
-----------
entirety with Exhibits C and D to this Agreement.

         4.    WAIVER OF COMPLIANCE. Bank hereby waives Borrowers compliance
               --------------------
with the Tangible Net Worth covenant set forth in Section 6.9 of the Loan
Agreement for the period ending March 31, 1999.

         5.    FACILITY FEE. Borrower shall pay to Bank a facility fee of
               ------------
$17,500 plus any out-of pocket expenses incurred by the Bank through the date
hereof, including reasonable attorneys' fees and expenses, and after the date
hereof, all Bank Expenses, including reasonable attorneys' fees and expenses, as
and when they become due.

         6.    CONDITIONS PRECEDENT TO FURTHER ADVANCES. The obligation of Bank
               ----------------------------------------
to make further advances to Borrower under this line is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, the following:

               (a)   this Loan Modification Agreement duly executed by Borrower;

               (b)   payment of the fees and Bank Expenses then due specified in
Section 5 hereof, and
<PAGE>

                                      -6-

               (c)   such other documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate.

         7.    CONSISTENT CHANGES. The Existing Loan Documents are hereby
               ------------------
amended wherever necessary to reflect the changes described in this Loan
Modification Agreement.

         8.    NO DEFENSES OF BORROWER. Borrower agrees that as of this date, it
               -----------------------
has no defenses against any of the obligations to pay any amounts under the
Indebtedness.

         9.    CONTINUING VALIDITY. Borrower understands and agrees that (i) in
               -------------------
modifying the Existing Loan Documents, Bank is relying upon Borrowers
representations, warranties and agreements, as set forth in the Existing Loan
Documents, (ii) except as expressly modified pursuant to this Loan Modification
Agreement (including the effects of Section 7 hereof), the Existing Loan
Documents remain unchanged and in full force and effect, (iii) Bank's agreement
to modify the Existing Loan Documents pursuant to this Loan Modification
Agreement shall in no way obligate Bank to make any future modifications to the
Existing Loan Documents, (iv) it is the intention of Bank and Borrower to retain
as liable parties all makers and endorsers of the Existing Loan Documents,
unless a party is expressly released by Bank in writing, (v) no maker, endorser
or guarantor will be released by virtue of this Loan Modification Agreement, and
(vi) the terms of this Section 9 apply not only to this Loan Modification
Agreement but also to all subsequent loan modification agreements, if any.

         10.   CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER. The laws of the
               ------------------------------------------
Commonwealth of Massachusetts shall apply to this Agreement. BORROWER ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT, OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT IF FOR ANY REASON BANK CANNOT AVAIL ITSELF OF
THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS, BORROWER ACCEPTS JURISDICTION
OF THE COURTS AND VENUE IN SANTA CLARA COUNTY, CALIFORNIA. BORROWER AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

         11.   EFFECTIVENESS. This Agreement shall become effective only when it
               -------------
shall have been executed by Borrower and Bank (provided, however, in no event
shall this Agreement become effective until signed by an officer of Bank in
California).
<PAGE>

                                      -7-

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date first set forth above.

"Borrower"                                   "Bank"

MATRIXONE, INC.                              SILICON VALLEY BANK, doing business
                                             as SILICON VALLEY EAST

By: /s/ Moe Castonguay                       By: /s/ Jonathan Gray
    ----------------------                       ---------------------
    Moe Castonguay, CFO                          Jonathan Gray, SVP

                                             SILICON VALLEY BANK

                                             By: /s/ Maggie Garcia
                                                 ----------------------
                                                 Maggie Garcia

                                             Title: Loan Documentation Officer
                                                    --------------------------
                                             (Signed in Santa Clara County,
                                              California)

                            EXHIBITS C and D FOLLOW
<PAGE>

                                      -8-

                                   EXHIBIT C
                                   ---------
                           BORROWING BASE CERTIFICATE
                           --------------------------

Borrower:     MatrixOne, Inc.                Bank:     Silicon Valley Bank
              Two Executive Drive                      3003 Tasman Drive
              Chelmsford, MA  01824                    Santa Clara, CA  95054

Commitment Amount:  $7,000,000

<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE
<S>                                                               <C>            <C>           <C>
     1.    Accounts Receivable Book Value as of _____________                                  $ ___________
     2.    Additions (please explain on reverse)                                               $ ___________
     3.    TOTAL ACCOUNTS RECEIVABLE                                                           $ ___________

ACCOUNTS RECEIVABLE DEDUCTIONS
     4.    Amounts over 180 days from invoice date                               $ __________
     5.    Balance of 50% over 180 day accounts from invoice date                $ __________
     6.    Amounts over 60 days pas due                                          $ __________
     7.    Concentration Limits                                                  $ __________
     8.    Foreign Accounts                                                      $ __________
     9.    Governmental Accounts                                  $ ___________
     10.   Contra Accounts                                        $ ___________
     11.   Promotion or Demo Accounts                                            $ __________
     12.   Intercompany/Employee Accounts                                        $ __________
     13.   Other (please explain on reverse)                      $ ___________
     14.   TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                                $ ___________
     15.   Eligible Accounts (#3 - #14)                                                        $ ___________
     16.   LOAN VALUE OF ACCOUNTS (80% of #15)                                                 $ ___________

BALANCES
     17.   Maximum Loan Amount                                                   $7,000,000
     18.   Total Funds Available (Lesser of #17 or #16)                                        $ ___________
     19.   Present balance owing on Line of Credit                                             $ ___________
     20.   Outstanding under Sublimits (FX, CMS)                                 $ __________
     21.   RESERVE POSITIVE (#18 MINUS #19 AND #20)                                            $ ___________
</TABLE>

The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Loan and
Security Agreement dated as of December 29, 1998, as may be amended from time to
time, between the undersigned and Silicon Valley Bank.

COMMENTS:

                                          --------------------------------------
                                                     BANK USE ONLY

___________________________                Rec'd By:______________________
                                           Date:__________________________
                                           Reviewed By:___________________
                                           Compliance Status: Yes/No
                                          --------------------------------------
By: _______________________
          Authorized Signer

<PAGE>

                                      -9-

                                    EXHIBIT D
                                    ---------
                             COMPLIANCE CERTIFICATE
                             ----------------------

Borrower:      MatrixOne, Inc.              Bank:     Silicon Valley Bank
               Two Executive Drive                    3003 Tasman Drive
               Chelmsford, MA  01824                  Santa Clara, CA  95054

          The undersigned authorized officer of MatrixOne, INC. hereby certifies
that in accordance with the terms and conditions of the Loan and Security
Agreement dated as of December 29, 1998 between Borrower and Bank, as may be
amended from time to time (the "Agreement"), (i) Borrower is in complete
compliance for the period ending _________________ of all required conditions
and terms except as noted below and (ii) all representations and warranties of
Borrower stated in the Agreement are true, accurate and complete in all material
respects as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistent from one period to the next except as explained in an
accompanying letter or footnotes. The Officer further expressly acknowledges
Borrower may not request any borrowings at any time or date of determination
that Borrower is not in compliance with any of the terms of the Agreement, and
that such compliance is determined not just at the date this certificate is
delivered.

 Please indicate compliance status by circling Yes/No under "Complies" column

<TABLE>
<CAPTION>
          Reporting Covenant                                     Required                           Complies
          ------------------                                     --------                           --------
<S>                                             <C>                                           <C>          <C>
Interim financial statements                    Quarterly when not borrowing within 45 days   Yes          No
Interim financial statements & Compliance       Quarterly when borrowing within 30 days       Yes          No
Certificate
Annual financials (CPA Audited)                 FYE within 90 days                            Yes          No
A/R Agings & BBC                                Monthly when borrowing within 30 days         Yes          No
A/R Audit                                       Initial and Annual                            Yes          No
</TABLE>

<TABLE>
<CAPTION>
          Financial Covenants                        Required                Actual                 Complies
          -------------------                        --------                ------                 --------
<S>                                                 <C>                <C>                    <C>          <C>
Maintain on a Monthly Basis:
Minimum Adjusted Quick Ratio                          1.25:1.0                        :1.0    Yes          No
                                                                       ----------------
Maintain on a Quarterly Basis:
Minimum Adjusted Quick Ratio                          1.50:1.0                        :1.0    Yes          No
                                                                       ----------------
Profitability - Maximum net loss (as defined)
FQE 9/30/99                                          ($800,000)        $                      Yes          No
                                                                        -----------------
Profitability - Maximum net loss (as defined)
FQE 12/31/99                                        ($2,200,000)       $                      Yes          No
                                                                        -----------------
Profitability - Maximum net loss (as defined)
FQE 3/31/99                                         ($3,500,000)       $                      Yes          No
                                                                        -----------------
Profitability - Maximum net loss (as defined)
FQE 6/30/00 and each FQ thereafter                  ($2,000,000)       $                      Yes          No
                                                                        -----------------
</TABLE>

<TABLE>
<S>                                                                         <C>
Comments Regarding Exceptions: (on reverse)
                                                                            ------------------------------------
_____________________________________________                                           BANK USE ONLY
Signature                                                                     Received by:__________________
                                                                              Date:_________________________
_____________________________________________                                 Reviewed:_____________________
TITLE                                                                         Compliance Status:  Yes    No
                                                                            ------------------------------------
_____________________________________________
DATE
</TABLE>

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