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Exhibit 10.11
MEMORANDUM OF AGREEMENT
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TO: Stephen R. Levy
FROM: George H. Conrades
SUBJECT: Early Retirement Arrangement
DATE: September 28, 1995
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Consistent with our recent discussions, we understand that you would like to
effect early retirement from Bolt Beranek and Newman Inc. and its subsidiaries
(Bolt Beranek and Newman Inc. and its subsidiaries are collectively referred to
herein as "BBN"), but at the same time continue to serve as a director of Bolt
Beranek and Newman Inc. and of BBN HARK Systems Corporation, BBN Planet
Corporation, and BBN Domain Corporation.
The arrangements that you have requested in connection with your retirement are
acceptable to BBN, and this Memorandum of Agreement is intended to set forth the
understanding reached between you and BBN concerning your retirement as an
officer and employee. Both this Agreement and your retirement would be effective
as of the date of the upcoming Annual Meeting on November 6, 1995.
Through these arrangements, we would like to recognize the many valuable
contributions and dedicated service you have provided to BBN for the past 29
years.
1. Termination of Employment Status
Effective as of November 6, 1995, you hereby: (i) resign as Chairman of the
Board of Bolt Beranek and Newman Inc. and all other offices and positions (other
than as director of Bolt Beranek and Newman Inc., BBN HARK Systems Corporation,
BBN Planet Corporation, and BBN Domain Corporation) held with BBN, and (ii)
retire as an employee of BBN.
2. Retirement Payments
For the ten-year period commencing November 6, 1995, Bolt Beranek and Newman
Inc. will pay to you (or to your estate in the event of your death during the
period), but subject to the conditions stated in Section 6 below, as deferred
compensation, an amount equal to $200,000 annually for the first five years of
the period, and $100,000 annually for years six through ten in the period. Each
annual payment shall be made on a quarterly basis, with 1/4 of the annual
payment being payable on the first business day following each of January 1,
April 1, July 1, and October 1 in a calendar
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year, with payments beginning on January 2, 1996. Bolt Beranek and Newman Inc.
shall deduct from such payments any withholding taxes and other amounts which it
is from time to time required to deduct under applicable law.
3. Consulting Services
For the period during which Bolt Beranek and Newman Inc. is making payments to
you as provided under Section 2 above, but without further payments by BBN or
other consideration to you, you agree to make yourself available to me and to
other members of senior management of BBN to provide, upon request but
consistent with your availability in light of your other responsibilities and
commitments, your advice and counsel on business matters. Your advice shall only
be requested during regular business hours, and you shall not be required to
provide such services for more than a total of 15 days in any calendar year. BBN
shall reimburse you for all reasonable business expenses actually incurred by
you in the performance of such requested consulting, consistent with the BBN's
policies as from time to time in effect. As required in connection with your
consulting services, you will be provided with office space at Bolt Beranek and
Newman Inc. and with office support and electronic mail capabilities.
4. Vesting and Exercisability of Stock Options/Termination of Employment
Reference is made to a certain Stock Option Certificate between you and Bolt
Beranek and Newman Inc., namely the Stock Option Certificate dated June 13, 1995
under the 1986 Stock Incentive Plan for 25,000 shares (the "Stock Options").
The Stock Options (together with options for 48,000 shares remaining under a
certain Stock Option Certificate dated October 24, 1991) are the only
outstanding Bolt Beranek and Newman Inc. stock options you currently hold. The
Stock Options are unvested, are at an exercise price of $18.125 per share, and
run (subject to certain exceptions) for an option period ending on the earlier
of 60 days following termination of your employment or June 13, 2002.
With the approval of the Compensation and Stock Option Committee, which approval
was received today at a Committee meeting, the Stock Options will become fully
vested and exercisable on November 3, 1995, to remain exercisable by you (or by
your executor) through the period 60 days following November 6, 1995.
All terms and conditions of the Stock Options, as well as the terms and
conditions of the other outstanding options held by you, shall remain in full
force and effect, and shall apply, except as specifically modified herein.
You agree to and do hereby waive any rights you may have under Section 6(m) of
the Bolt Beranek and Newman Inc. 1986 Stock Incentive Plan to stock options
provided for non-employee directors, such waiver to be effective for the
succeeding
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twelve months from November 6, 1995. You also agree to and do hereby waive any
rights you may have for such twelve months period under similar provisions of
the option plans of BBN subsidiaries, providing for options for non-employee
directors of the respective subsidiaries.
You also hold 50,000 unvested stock options in BBN HARK Systems Corporation
pursuant to a Stock Option Certificate dated January 20, 1995; 50,000 unvested
stock options in BBN Planet Corporation pursuant to a Stock Option Certificate
dated January 25, 1995; and 50,000 stock options in BBN Domain Corporation
pursuant to a Stock Option Certificate dated December 30, 1993 (of which 12,500
are currently vested, but are not yet exercisable). In that you are not
resigning from the Boards of BBN HARK, BBN Planet, and BBN Domain, such options
will continue pursuant to their terms and the terms of the respective
subsidiary's option plans until such time as you no longer provide services to
the respective company, at which time any then-unvested options would terminate
pursuant to their terms.
5. Waiver of Claims:
In consideration of the agreements, covenants, and conditions contained herein:
(a) You hereby forever release and discharge BBN, its or their past, present, or
future divisions, subsidiaries, owners, shareholders, officers, directors,
employees, agents, successors, and assigns, and all others connected with any of
them (referred to collectively herein as the "Company"), both individually and
in their official capacities, from any and all suits, claims, debts, agreements,
damages, attorney's fees, expenses, liabilities, actions, and any and all claims
in law or in equity which you (including your heirs, representatives, and
assigns) have had, now have, or might now have under any federal, state, or
common law, or any agreements or otherwise, whether now known or unknown, which
you ever had, now have, or might now have against the Company, including without
limitation those arising directly or indirectly out of your employment with
and/or separation from BBN; provided however, that nothing herein shall
constitute a waiver of any of your rights or relieve BBN of any of its or their
obligations pursuant to this Agreement or pursuant to indemnification and
exculpation rights provided to you pursuant to the articles of organization or
by-laws of BBN or any of them or the Directors and Officers liability insurance
policy referred to in Section 8 below. You acknowledge that the foregoing
release includes, without limitation, a waiver of all rights and claims arising
under any and all state and federal employment laws, regulations, or other
requirements prohibiting employment discrimination, including, but not limited
to, claims for age discrimination under the Age Discrimination in Employment Act
of 1967, 29 U.S.C. Sec. 621 et seq., or other similar laws, except that you are
not releasing or waiving any rights or claims for age discrimination or
employment discrimination which may arise after the date this Agreement is
signed. You promise and agree that neither you nor any of your heirs,
representatives, or assigns will ever assert in any forum any cause of action,
right, or
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claim as to which this release of claims may lawfully be applied.
(b) You hereby acknowledge that you have been afforded the opportunity to study
and consider this Agreement in full for a period of at least twenty-one days and
have been encouraged by BBN to consult with an attorney of your own choosing;
that you fully understand the terms and contents of this Agreement, have
executed this Agreement freely and voluntarily, without duress, coercion, or
undue influence; and that you were advised and understand that you may revoke
this Agreement within seven days of its execution and that this Agreement does
not become effective or enforceable until expiration of the seven day revocation
period.
(c) You agree that payment by Bolt Beranek and Newman Inc. in accordance with
the terms of this Agreement shall constitute payment in full of any and all sums
that are now or might hereafter have become owing to you for services performed
during your employment with BBN.
6. Non-Competition Restrictions
During the period from November 6, 1995 through November 1, 2005, (the
"Non-competition period"), you shall not, without first obtaining BBN's prior
written consent, be employed by, consult with, provide services or assistance
to, own any interest in or engage in any business, activity, or enterprise
(whether as a shareholder, employee, officer, director, partner, joint venturer,
or otherwise and whether individually or with others), or be connected in any
manner with the management, operation, ownership or control of any business or
venture that is in direct and material competition with any business that is
conducted by BBN or any of them (as those businesses are described in the Form
10-K (or any replacement form) applicable to BBN), both now and in the future
and regardless of place, provided, however, that if you should become so
associated or engaged in a business or venture prior to such business being so
described as a business being conducted by BBN, continued association or
engagement by you therein would not be deemed a violation of this provision.
Notwithstanding the foregoing, you may invest in securities of an issuer engaged
in such business which are listed on a recognized securities exchange, or
actively traded over-the-counter, so long as at the time you make such an
investment in any such issues, your investments in all such issues are in
amounts not significant as compared to your total investments and your
investment in such issues is not significant to the aggregate of the outstanding
securities of that issuer of the same class or issue.
You further agree that during the Non-competition period you will not directly
or indirectly solicit the employment of, or hire, any individual who is a
then-current employee of BBN (or was an employee within 6 months prior to such
date), or engage in similar activities intended to cause any BBN personnel (or
any consultant
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to BBN) to discontinue his, her, or its relationship with BBN.
You agree that immediately prior to any knowing violation by you of the
foregoing non-competition or non-solicitation provisions, you will notify BBN of
such prospective violation ("Prospective Violation Notice"). If, absent such
notification from you, BBN believes you are in violation of the foregoing
non-competition or non-solicitation provisions, BBN will notify you of such
alleged violation (detailing the alleged violation) and you will have 30 days
from receipt of the notice to remedy the breach alleged (whether by ceasing to
engage in the activities complained of, divesting any ownership interest
complained of, convincing BBN that no breach has occurred (and you and BBN agree
that you and the Chief Executive Officer of BBN will make a good faith effort to
resolve the alleged violation within such 30 days), or otherwise). In the event
of a Prospective Violation Notice or an otherwise unremedied violation by you
(subject to your right to contest that a violation by you did not occur), you
will immediately resign from any directorship positions you then hold with BBN
or any of them and, in addition to BBN's entitlement to such resignations, BBN's
sole remedy under this Agreement for such violation of the non-competition or
non-solicitation provisions hereof shall be BBN's right to terminate payment of,
and to be relieved of its obligation to pay, any payments under Section 2 above
remaining unpaid as of the time of violation or, if more than 30 days has
elapsed from the first actual knowledge by BBN of the alleged violation (other
than pursuant to a Prospective Violation Notice) to the time of BBN's notice to
you, then remaining unpaid as of the time of BBN's notice to you. For purposes
of the preceding sentence, "actual knowledge of BBN" shall mean actual knowledge
of an executive officer or of the Board of Bolt Beranek and Newman Inc.
7. Confidentiality Agreement
You acknowledge that in the course of your employment with BBN, you have had
access to confidential and proprietary information about BBN, its or their
operations, future plans, current or prospective technologies, and other
matters, disclosure and/or use of which information to a competitor or in
competition with BBN would cause BBN to suffer serious and potentially
irremediable loss.
You agree to hold in confidence and not to use or disclose to any person or
entity not first approved in writing by BBN any Proprietary Information (as
herein defined). Proprietary Information shall mean all ideas, knowledge, or
information, which is not public knowledge, of any nature whatsoever concerning
BBN's business, operations, future plans, current or prospective technologies,
contracts, clients, and personnel information. Proprietary Information also
includes any and all information that BBN receives or has received belonging to
customers or others who do business with BBN under an understanding, express or
implied, that it would not be disclosed.
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You further agree that, since a violation by you at any time of the foregoing
confidentiality provisions would cause BBN to suffer severe and irreparable
loss, without limiting other remedies, those provisions shall be specifically
enforceable against you in any court in Massachusetts.
You further agree that the terms of a certain agreement between you and Bolt
Beranek and Newman Inc. entitled "Patent Policy", dated as of December 1966,
shall continue to survive in full force and effect from and after the date
hereof.
8. Benefits
From and after November 6, 1995, you will no longer be working at BBN as an
employee. As you are aware, as a result your benefits will be modified in
accordance with BBN personnel policy, the terms of BBN's benefit plans, and any
applicable laws and regulations.
Health Insurance
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Under the federal law known as COBRA, you may elect to continue your health
and/or dental coverage and that of your eligible dependents under BBN's group
plan for up to 18 months after a qualifying event (e.g. the date of termination
of your employment) by paying required premiums. You will be receiving future
information on health benefits, including COBRA. Please remember that, in
general, any change in BBN's health benefits during your period of COBRA
continuation which is applicable to BBN's employees will also be applicable to
you.
Life and Long Term Disability Insurance
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Sun Life Assurance currently allows individuals to convert to whole life
insurance without evidence of insurability at the time of termination of
employment. Similarly, UNUM permits individuals to convert Long Term Disability
coverage to a non-group plan without evidence of insurability upon termination
of employment. You will be offered both options, at your own expense, on
November 6, 1995 if the options are then being offered under the relevant
provisions of the then-existing policies.
Directors and Officers Indemnification
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Your coverage as a former officer under the current BBN Directors and Officers
liability insurance policy is not affected by your termination of employment
with BBN. So long as the policy covers past officers and directors, this
coverage will continue for you. Further, to the extent allowed by law, you shall
be entitled to indemnification and exculpation rights currently provided under
the articles of organization or by-laws of BBN or any of them to which you are
entitled. Since you anticipate continuing as a director of Bolt Beranek and
Newman Inc. and of operating subsidiaries of Bolt Beranek and Newman Inc.,
rights and coverage provided to the respective directors as a group will
continue to apply to you.
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BBN Retirement Trust.
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Your payments under Section 2 above will not be includable as Credited
Compensation under the Bolt Beranek and Newman Inc. Retirement Trust, and
accordingly you will be eligible for a Retirement Trust contribution only on the
regular compensation actually paid to you in fiscal 1996, subject to the
relevant provisions of the Retirement Trust Agreement. Following termination of
your employment with BBN, you will be entitled to a distribution from the
Retirement Trust in accordance with its terms. You will also be entitled to a
distribution of your balance, if any, in the Bolt Beranek and Newman Inc.
Deferred Compensation Plan in accordance with the terms of that plan.
Change of Control Arrangement
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You acknowledge that the change of control severance arrangement between you and
Bolt Beranek and Newman Inc. dated August 1, 1988 has terminated as a result of
your retirement from the employ of BBN.
9. Other
On November 6, 1995 you will have the option either to return any BBN equipment
you may have at your home, or to purchase it for its book value. At the same
time you will also have the option to purchase the office equipment and
furnishings currently in your office at 150 CambridgePark Drive for its book
value. After November 6, you will no longer be entitled to your computer account
on Labs-n, access to BBN dial-in lines, use of electronic mail, or access to the
Internet via BBN, in each case except as required in connection with your
performance of consulting services for BBN.
You acknowledge that you will have no accrued but unused vacation as of November
6, 1995.
It is hereby expressly agreed that the amounts, benefits, and obligations
described herein (including the BBN benefits referenced under Section 8 above)
constitute the whole and total amount owing or to be paid to you by BBN and
there are no further amounts, benefits, or obligations owing to you other than
those described herein.
If any part of this Agreement shall be held to be unenforceable by any court of
competent jurisdiction, the unenforceable provision shall be deemed amended to
the least extent possible in order to render it enforceable and the remainder
of the Agreement shall remain in full force and effect.
It is specifically understood by you that BBN will make public this Agreement
and its terms consist with or as required by law, including filing a statement
of the terms hereof with the U.S. Department of Labor, and disclosing the
Agreement and its terms in public filings under the Securities Exchange Act of
1934.
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This Agreement shall be governed by Massachusetts law, without regard to choice
of law principles.
You hereby acknowledge that this Agreement is your own free, voluntary, and
knowing act and deed. Please indicate your agreement and acceptance of the terms
of this Memorandum of Agreement by signing below.
BOLT BERANEK AND NEWMAN INC.
By: /s/ George H. Conrades
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George H. Conrades
Accepted and Agreed:
/s/ Stephen R. Levy
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Stephen R. Levy