Early Retirement Arrangement Dated 9/28/96

MEMORANDUM OF AGREEMENT - -----------------------


TO: Stephen R. Levy FROM: George H. Conrades SUBJECT: Early Retirement Arrangement DATE: September 28, 1995


- -------------------------------------------------------------------------------- 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, ...