Exhibit 10.1

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GENSYM CORPORATION

52 SECOND AVENUE

BURLINGTON, MA 01803

August 3, 2006

VIA HAND DELIVERY

Lowell Hawkinson

18 Lamoine Street

Belmont, MA 02478

Dear Lowell:

On August 2, 2006, Gensym Corporation (the “Company”) received your letter of
resignation from all positions you hold for or on behalf of the Company. The
Board of Directors for the Company (the “Board”) accepted your resignation on
August 3, 2006. To assist you during this transition, and in consideration for
your execution and non-revocation of this agreement and the performance of your
obligations set forth below, the Company will provide you with the severance
benefits described in the “Description of Severance Benefits” attached as
Attachment A if you timely sign and return this letter agreement by August 25,
2006 and it becomes binding upon you. By signing and returning this letter
agreement, you will be agreeing to the terms and conditions set forth in the
numbered paragraphs below, including the release of claims set forth in
paragraph 3. You are advised to consult with an attorney before signing this
letter agreement and you may take up to twenty-one (21) days to do so. If you
sign this letter agreement, you may change your mind and revoke your agreement
during the seven (7) day period after you have signed it by notifying Jennifer
Healey in writing. If you do not so revoke, this letter agreement will become a
binding agreement between you and the Company upon the expiration of the seven
(7) day period.

If you choose not to sign and return this letter agreement by August 25, 2006,
or if you timely revoke your acceptance in writing, you shall not receive any
severance benefits from the Company. You will, however, receive payment in the
next regularly scheduled Company payroll for any accrued and unpaid wages and
any unused paid time off accrued through your Resignation Date, as defined
below. Also, even if you decide not to sign this letter agreement, you may elect
to continue receiving group health insurance pursuant to the federal “COBRA”
law, 29 U.S.C. § 1161 et seq. All premium costs shall be paid by you on a
monthly basis for as long as, and to the extent that, you remain eligible for
COBRA continuation. You should consult the COBRA materials to be provided by the
Company for details regarding these benefits. All other Company-provided
benefits will cease upon your Resignation Date as defined below.

If, after reviewing this letter agreement, you find the terms and conditions are
satisfactory to you, you should sign and return this letter agreement to
Jennifer Healey by August 25, 2006.

 

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The following numbered paragraphs set forth the terms and conditions that will
apply if you timely sign and return this letter agreement and do not revoke it
in writing within the seven (7) day period:

1. Resignation Date - Your effective date of resignation from the Company was
August 2, 2006 (the “Resignation Date”). As of the close of business on the
Resignation Date, all salary payments from the Company ceased and any benefits
you had under Company-provided benefit plans, programs, or practices will
terminate, except as required by federal or state law, or as otherwise described
herein.

2. Description of Severance Benefits – The severance benefits which will be
provided to you if you timely sign, return and do not revoke this letter
agreement are described in the “Description of Severance Benefits” attached as
Attachment A.

3. Release - In consideration of the payment of the severance benefits, which
you acknowledge you would not otherwise be entitled to receive, you hereby
fully, forever, irrevocably and unconditionally release, remise and discharge
the Company, its officers, directors, corporate affiliates, subsidiaries, parent
companies, agents and employees (each in their individual and corporate
capacities) (hereinafter, the “Released Parties”) from any and all claims,
charges, complaints, demands, actions, causes of action, suits, rights, debts,
sums of money, costs, accounts, reckonings, covenants, contracts (including any
rights you may have under the Severance Benefits Agreement, dated January 25,
2006 between you and the Company), agreements, promises, doings, omissions,
damages, executions, obligations, liabilities, and expenses (including
attorneys’ fees and costs), of every kind and nature that you ever had or now
have against the Released Parties, up to the date you sign this letter
agreement, including, but not limited to, any and all claims arising out of or
relating to your employment with and/or separation from the Company, including,
but not limited to, all employment discrimination claims under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With
Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Age Discrimination in
Employment Act, 29 U.S.C. § 621 et seq., and the Massachusetts Fair Employment
Practices Act, M.G.L. c.151B, § 1 et seq., all as amended, all claims arising
out of the Sabanes-Oxley Act, 18 U.S.C. § 1514A, the Fair Credit Reporting Act,
15 U.S.C. § 1681 et seq., the Family and Medical Leave Act, 29 U.S.C. § 2601 et
seq., the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.
§ 1001 et seq., the Massachusetts Civil Rights Act, M.G.L. c.12, §§ 11H and 11I,
the Massachusetts Equal Rights Act, M.G.L. c.93, § 102 and M.G.L. c.214, § 1C,
the Massachusetts Labor and Industries Act, M.G.L. c.149, § 1 et seq., the
Massachusetts Privacy Act, M.G.L. c.214, § 1B and the Massachusetts Maternity
Leave Act, M.G.L. c.149, § 105(d), all as amended, all common law claims
including, but not limited to, actions in defamation, intentional infliction of
emotional distress, misrepresentation, fraud, wrongful discharge and breach of
contract, all claims to any non-vested ownership interest in the Company,
contractual or otherwise, including, but not limited to, claims to stock or
stock options, and any claim or damage arising out of your employment with
and/or separation from the Company (including a claim for retaliation) under any
common law theory or any federal, state or local statute or ordinance not
expressly referenced above; provided, however, that nothing in this letter
agreement prevents you from filing, cooperating with, or participating in any
proceeding before the Equal Employment Opportunity Commission or a state fair
employment practices agency (except that you acknowledge that you may not be
able to recover any monetary benefits in connection with any such claim, charge
or proceeding). Notwithstanding the foregoing, the release set forth in this
Section 3 shall not apply to: (a) any claim to enforce this letter agreement or
for the breach of this letter agreement; (b) any claim for vested benefits under
any Employee Retirement Income Security Act (ERISA) plan or any employee welfare
benefit plan; (c) any claims for indemnification and defense pursuant to any
Company policy (including, but not limited to, its by-laws) or any

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insurance policy it may hold (including, but not limited to any Directors’ and
Officers’ insurance policy); (d) any claim for Workers’ Compensation benefits;
or (e) any counterclaim against any individual (but not the Company) who files
any claim against you.

4. Non-Disclosure and Non-Competition and Non-Solicitation - You acknowledge and
reaffirm your obligation to keep confidential all non-public information
concerning the Company which you acquired during the course of your employment
with the Company, as stated more fully in the Employee Noncompetition,
Nondisclosure and Developments Agreement you executed at the inception of your
employment which remains in full force and effect. You further acknowledge and
reaffirm your noncompetition and other obligations contained therein.

5. Return of Company Property - You confirm that you have returned to the
Company all keys, files, records (and copies thereof), equipment (including, but
not limited to, computer hardware, software and printers, wireless handheld
devices, cellular phones, pagers, etc.), Company identification, Company
vehicles and any other Company-owned property in your possession or control and
have left intact all electronic Company documents, including but not limited to
those which you developed or help develop during your employment. You further
confirm that you have cancelled all accounts for your benefit, if any, in the
Company’s name, including but not limited to, credit cards, telephone charge
cards, cellular phone and/or pager accounts and computer accounts. However, you
will be permitted to retain copies of your personnel documents and documents
relating to your employment benefits.

6. Business Expenses and Compensation - You acknowledge that you have been
reimbursed by the Company for all business expenses incurred in conjunction with
the performance of your employment and that no other reimbursements are owed to
you. You further acknowledge that you have received payment in full for all
services rendered in conjunction with your employment by the Company and that no
other compensation is owed to you.

7. Mutual Non-Disparagement – To the extent permitted by law, you understand and
agree that as a condition for payment to you of the consideration herein
described, you shall not make any false, disparaging or derogatory statements to
any industry group, financial institution, stockholder, current or former
consultant, client or customer of the Company regarding the Company or any of
its directors, officers, employees, agents or representatives or about the
Company’s business affairs and financial condition. The Company agrees that, to
the extent permitted by law, it will not, and it will instruct the current Board
and officers not to, make any false, disparaging or derogatory statements to any
industry group, financial institution or current or former consultant,
stockholder, client or customer of the Company regarding you. Provided, however,
nothing in this paragraph shall prevent you or the current Board and officers
from making truthful statements to the Securities and Exchange Commission,
stockholders, any governmental entity or the media.

8. Continued Assistance - You agree that after the Resignation Date you will
cooperate with reasonable requests by the Company in connection with its own or
any third-party’s investigation related to accounting and revenue recognition
issues. Your cooperation shall include, but shall not be limited to, at the
Company’s reasonable request, being interviewed, providing documents in your
possession and/or reviewing documents relevant to the investigation. In
addition, you agree to assist with any reasonable requests by the Company in
connection with defending against and/or prosecuting any litigation or
threatened litigation or government

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proceeding or investigation, and in performing any other tasks as reasonably
requested by the Company. The Company will reimburse you for all reasonable
out-of-pocket lodging and travel expenses incurred by you in connection with
your cooperation and assistance under this Section 8. The Company agrees that
such cooperation shall be at mutually agreeable times and places and shall, if
reasonably possible, be by telephone, electronic mail, fax and letter, rather
than in person. The Company further agrees that such cooperation will not
interfere with any future employment you may secure.

9. References - All calls from prospective employers will be referred to the
Company’s Human Resources Department and the only information the Human
Resources Department will provide to prospective employers is your starting and
ending dates of employment and your last position as Chief Executive Officer.

10. Amendment - This letter agreement shall be binding upon the parties and may
not be modified in any manner, except by an instrument in writing of concurrent
or subsequent date signed by duly authorized representatives of the parties
hereto. This letter agreement is binding upon and shall inure to the benefit of
the parties and their respective agents, assigns, heirs, executors, successors
and administrators.

11. Waiver of Rights - No delay or omission by the Company in exercising any
right under this letter agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.

12. Validity - Should any provision of this letter agreement be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this letter agreement.

13. Nature of Agreement - You understand and agree that this letter agreement is
a severance agreement and does not constitute an admission of liability or
wrongdoing on the part of the Company.

14. Section 409A. No payments that may be made pursuant to this letter agreement
that constitute “nonqualified deferred compensation” within the meaning of
Section 409A of the Internal Revenue Code and the guidance issued thereunder
(“Section 409A”) may be accelerated or deferred by the Company or by you.
Notwithstanding anything else to the contrary in this letter agreement, to the
extent that any of the payments that may be made hereunder constitute
“nonqualified deferred compensation”, within the meaning of Section 409A and you
are a “specified employee” upon your resignation (as defined under
Section 409A), any such payment shall be delayed following your Resignation Date
if, absent such delay, such payment would otherwise be subject to penalty under
Section 409A. In any event, the Company makes no representation or warranty and
shall have no liability to you or to any other person if any provisions of this
letter agreement are determined to constitute “nonqualified deferred
compensation” subject to Section 409A but do not satisfy the requirements of
that section.

15. Acknowledgments - You acknowledge that you have been given at least
twenty-one (21) days to consider this letter agreement, including Attachment A,
and that the Company advised

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you to consult with an attorney of your own choosing prior to signing this
letter agreement. You understand that you may revoke this letter agreement for a
period of seven (7) days after you sign this letter agreement by notifying
Jennifer Healey in writing, and the letter agreement shall not be effective or
enforceable until the expiration of this seven (7) day revocation period. You
understand and agree that by entering into this letter agreement, you are
waiving any and all rights or claims you might have under the Age Discrimination
in Employment Act, as amendment by the Older Workers Benefits Protection Act,
and that you have received consideration beyond that to which you were
previously entitled.

16. Voluntary Assent - You affirm that no other promises or agreements of any
kind have been made to or with you by any person or entity whatsoever to cause
you to sign this letter agreement, and that you fully understand the meaning and
intent of this letter agreement. You state and represent that you have had an
opportunity to fully discuss and review the terms of this letter agreement with
an attorney. You further state and represent that you have carefully read this
letter agreement, including Attachment A, understand the contents herein, freely
and voluntarily assent to all of the terms and conditions hereof, and sign your
name of your own free act.

17. Applicable Law - This letter agreement shall be interpreted and construed by
the laws of the Commonwealth of Massachusetts, without regard to conflict of
laws provisions. You hereby irrevocably submit to and acknowledge and recognize
the jurisdiction of the courts of the Commonwealth of Massachusetts, or if
appropriate, a federal court located in Massachusetts (which courts, for
purposes of this letter agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under
or in connection with this letter agreement or the subject matter hereof.

18. Entire Agreement -This letter agreement, including Attachment A, contains
and constitutes the entire understanding and agreement between the parties
hereto with respect to your severance benefits and the settlement of claims
against the Company and cancels all previous oral and written negotiations,
agreements, commitments, writings in connection therewith, including, without
limitation, the Severance Benefits Agreement, dated January 25, 2006, between
you and the Company. Nothing in this paragraph, however, shall modify, cancel or
supersede your obligations set forth in paragraph 4 herein.

If you have any questions about the matters covered in this letter, please
contact Jennifer Healey in the Human Resources department.

 

Very truly yours,

/s/ Robert Ashton

Robert Ashton, Interim Chief Executive Officer Gensym Corporation

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x I hereby agree to the terms and conditions set forth above and in Attachment
A. I have been given at least twenty-one (21) days to consider this letter
agreement (including Attachment A) and I have chosen to execute this on the date
below. I intend that this letter agreement will become a binding agreement
between me and the Company if I do not revoke my acceptance in seven (7) days.

 

/s/ Lowell Hawkinson

     

August 25, 2006

   Lowell Hawkinson       Date   

To be returned to Jennifer Healey in the Human Resources Department by
August 25, 2006.

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ATTACHMENT A

DESCRIPTION OF SEVERANCE BENEFITS

1. Severance Pay - The Company will provide you with six (6) months salary
continuation (the equivalent of $143,750), less all applicable state and federal
taxes (the “Severance Pay”). The Severance Pay will be paid in accordance with
the Company’s normal payroll practices, and will commence no earlier than the
eighth (8th) day after you timely execute, return and do not revoke this letter
agreement.

2. Stock Option Treatment - Solely for purposes of the stock option agreements
governing your outstanding stock option awards under the Company’s 1997 Stock
Incentive Plan and the Company’s 2000 Stock Incentive Plan, the Company will
waive any right to determine that you were discharged by the Company for “cause”
under and as defined in Section 3(e) of each of such stock option agreements. As
a result of this waiver, your options under these two plans will not terminate
immediately, but will terminate three (3) months after the Resignation Date. The
Company affirms that this waiver has been approved by the Company’s Board of
Directors. Furthermore, the Company acknowledges that, after your Resignation
Date, while you may have your own personal obligations under federal securities
laws, the Company policy will no longer prohibit your exercise of options that
have vested as of the Resignation Date. Any stock options held by you that were
unvested as of the Resignation Date terminated as of that date and are no longer
outstanding.

3. COBRA Continuation - Provided you are eligible and timely elect to continue
receiving group medical insurance pursuant to the federal “COBRA” law, 29 U.S.C.
§ 1161 et seq., for a period of eighteen (18) months, the Company will continue
to pay the same percentage towards your medical, dental and vision coverage as
it did while you were employed with the Company. Thereafter, you may elect to
continue receiving COBRA coverage and all premium costs shall be paid by you on
a monthly basis for as long as, and to the extent that, you remain eligible for
COBRA continuation. You should consult the COBRA materials to be provided by the
Company for details regarding these benefits.