Amendment

 

 

Severance

 

Severance Amendment #1

 

Severance Amendment #2

 

 

EMPLOYMENT AGREEMENT - ROBERT Y.L. MAO

 

EXHIBIT 10.1

3COM CORPORATION

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is by and between 3Com Corporation (the “Company) and Robert Y.L. Mao (“Executive”) and is as of April 29, 2008.

     1. Duties and Scope of Employment.

          (a) Positions and Duties. As of April 30, 2008 (the “Effective Date”), Executive will serve as the Company’s Chief Executive Officer, reporting directly to the Board of Directors (the “Board”) of the Company. As of the Effective Date, Executive will render such business and professional services in the performance of his duties, consistent with Executive’s position within the Company, as will reasonably be assigned to him by the Board. Executive’s principal place of employment shall be Beijing, China with regular travel to Hangzhou, China and Marlborough, Massachusetts. The period Executive is employed by the Company under this Agreement is referred to herein as the “Employment Term.”

          (b) Board Membership. At each annual meeting of the Company’s stockholders during the Employment Term, the Company will nominate Executive to serve as a member of the Board. Executive’s continued service as a member of the Board will be subject to any required stockholder approval. Upon the termination of Executive’s employment for any reason, unless otherwise requested by the Board, Executive will be deemed to have resigned from the Board (and all other positions held at the Company and its affiliates) voluntarily, without any further action by Executive, as of the end of Executive’s employment and Executive, at the Board’s request, will execute any documents necessary to reflect his resignation.

          (c) Obligations. During the Employment Term, Executive will devote Executive’s full business efforts and time to the Company and will use good faith efforts to discharge Executive’s obligations under this Agreement to the best of Executive’s ability and in accordance with the Company’s conflict of interests policies and code of conduct. For the duration of the Employment Term, Executive agrees not to actively engage in any other employment, occupation, or consulting activity, including membership of boards of directors or advisors, for any direct or indirect remuneration without the prior approval of the Board (which approval will not be unreasonably withheld); provided, however, that Executive may (i) serve on the board of directors of, or continue to hold an interest in, the companies previously disclosed and submitted to the Company in writing on or prior to the Effective Date and (ii) without the approval of the Board, serve in any capacity with any civic, educational, or charitable organization, provided such services do not interfere with Executive’s obligations to Company.

               (i) Executive hereby represents and warrants to the Company that Executive is not party to any contract, understanding, agreement or policy, written or otherwise, that would be breached by Executive’s entering into, or performing services under, this Agreement. Executive further represents that as of the date of this Agreement there are no threatened, pending, or actual claims against Executive of which he is aware as a result of his

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employment with his current employer (or any other previous employer) or his membership on any boards of directors.

          (d) Other Entities. Executive agrees to serve and may be appointed, without additional compensation, as an officer and director for each of the Company’s subsidiaries, partnerships, joint ventures, limited liability companies and other affiliates, including entities in which the Company has a significant investment as determined by the Company. As used in this Agreement, the term “affiliates” will include any entity controlled by, controlling, or under common control of the Company.

     2. At-Will Employment. Executive and the Company agree that Executive’s employment with Company constitutes “at-will” employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without Cause or Good Reason (as each such term is defined in Section 10 below), at the option either of the Company or Executive. However, as described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive’s termination of employment.

     3. Compensation.

          (a) Base Salary. As of the Effective Date, the Company will pay Executive an annual salary of $650,000.00 as compensation for his services (such annual salary, as is then effective, to be referred to herein as “Base Salary”). The Base Salary will be paid periodically in accordance with the Company’s normal payroll practices and be subject to the usual, required withholdings.

          (b) Annual Incentive. Executive will be eligible to receive annual cash incentives payable for the achievement of performance goals established by the Board or by the Compensation Committee of the Board (the “Committee”). During the Employment Term, Executive’s target annual incentive will be not less than 100% of Base Salary (“Target Annual Incentive”), with a maximum potential opportunity of 200% of Base Salary, subject to the terms of the bonus plan approved by the Committee except that the terms of the Agreement shall control to the extent that this Agreement provides for more favorable terms with respect to the annual incentive as it applies to Executive. The actual earned annual cash incentive, if any, payable to Executive for any performance period will depend upon the extent to which the applicable performance goal(s) specified by the Committee are achieved or exceeded and will be adjusted for under- or over-performance. Any incentive earned during the fiscal year 2008 will be pro-rated based on the Effective Date (calculated by multiplying any incentive earned by Executive by a fraction with a numerator equal to the number of days between the Effective Date and the close of the second half fiscal year and a denominator equal to 182). For fiscal year 2009, Executive’s actual earned annual cash incentive shall be guaranteed to equal no less than 100% of Base Salary, provided Executive remains employed by the Company (but this sentence is not intended to limit the benefits to which Executive may be entitled under Section 8).

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          (c) Equity.

               (i) Executive will be granted nonstatutory stock options to purchase two million (2,000,000) shares of Company common stock (the “Stock Option Grant”), two hundred fifty thousand (250,000) of which are deemed to be in connection with Executive’s “initial service” as that term is used in the Company’s 2003 Stock Plan, as amended (the “2003 Plan”). The exercise price will be at a per share exercise price equal to the closing price per share of Company common stock on Nasdaq Global Select Market (“Nasdaq”) on the grant date, which shall be the first Tuesday in the month immediately succeeding the month in which Executive commences employment with the Company. The Stock Option Grant will be granted under and subject to the terms and conditions of the 2003 Plan, Company’s 2003 Stock Plan, as amended (the “2003 Plan”), and the Company’s form of stock option agreement, except that the terms of this Agreement control to the extent that this Agreement provides for more favorable terms. The Stock Option Grant will be scheduled to vest at a rate of 25% on each anniversary of the grant over four (4) years assuming Executive’s continued employment with the Company on each scheduled vesting date, and will have the maximum term permitted in the 2003 Plan.

               (ii) Executive will be granted one million and five hundred thousand (1,500,000) shares of restricted stock (the “Restricted Stock Grant”) on the first Tuesday in the month immediately succeeding the month in which Executive commences employment with the Company. The Restricted Stock Grant will be granted under and subject to the terms and conditions of the 2003 Plan and the Company’s form of restricted stock agreement, except that the terms of this Agreement control to the extent that this Agreement provides for more favorable terms. The Restricted Stock Grant will be scheduled to vest in three equal installments on each anniversary date of the grant over three (3) years assuming Executive’s continued employment with the Company on each scheduled vesting date.

               (iii) Executive will also be eligible to receive additional grants of equity and other incentive awards during his employment with the Company.

     4. Employee Benefits.

          (a) Generally. Executive will be eligible to participate in accordance with the terms of all Company employee benefit plans, policies and arrangements that are applicable to other executive officers of the Company, as such plans, policies and arrangements may exist from time to time.

          (b) Vacation. Executive will be entitled to receive paid annual vacation in accordance with Company policy for other senior executive officers. In no event will Executive receive less than four (4) weeks of paid vacation time annually, it being understood that Executive will be entitled to receive four (4) consecutive weeks of paid vacation during the first six (6) month period following the Effective Date.

          (c) Life Insurance. Upon the Effective Date and throughout the duration of Executive’s employment with the Company, the Company will purchase and maintain a $10,000,000.00 term life insurance policy for the benefit of Executive or his estate. Executive will assist the Company in procuring such insurance by submitting to typical examinations and

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by completing such applications and other instruments as may be required by the insurance carriers to which application is made for any such insurance. Notwithstanding the preceding, in no event will the Company be required to pay more than $30,000.00 for any annual premium for the policy. The Company’s obligation to maintain this policy will terminate immediately upon Executive’s voluntary termination of employment without Good Reason or his termination for Cause. In the event of a termination without Cause, a resignation for Good Reason, or a termination following a Change of Control, the Company will keep the policy in effect for a period equal to the earlier of one (1) year after such termination, or the date on which Executive becomes eligible for coverage under another employer’s life insurance plan.

     5. Expenses. The Company will reimburse Executive for reasonable travel, entertainment and other expenses incurred by Executive in the furtherance of the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time. Executive will be provided access to a car and driver for his daily transit in connection with his employment with the Company.

     6. Term and Termination of Employment. In the event Executive’s employment with the Company terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to the effective date of termination; (b) unpaid, but earned and accrued annual incentive for any completed fiscal year as of his termination of employment; (c) pay for accrued but unused vacation; (d) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive; (e) unreimbursed business expenses required to be reimbursed to Executive; and (f) rights to indemnification Executive may have under the Company’s Articles of Incorporation, Bylaws, the Agreement, or separate indemnification agreement, as applicable. In addition, if the termination is by the Company without Cause or Executive resigns for Good Reason, Executive will be entitled to amounts and benefits specified in Section 8.

     7. Survival of Covenants.

          (a) Non-solicitation and Non-competition. Executive agrees that during the Employment Term and for twelve (12) months thereafter, Executive will not (i) solicit any employee of the Company (other than Executive’s personal assistant) for employment other than at the Company or one of its subsidiaries or affiliates, or (ii) directly or indirectly engage in, have any ownership interest in or participate in any entity that as of the date of termination, competes with the Company in any substantial business of the Company. Executive’s passive ownership of not more than 1% of any publicly traded company and/or 5% ownership of any privately held company will not constitute a breach of this Section 7(a).

          (b) Nondisparagement. During the Employment Term and for twelve (12) months thereafter, Executive will not knowingly and materially disparage, criticize, or otherwise make any derogatory statements regarding the Company, and the members of the Board or the Chief Executive staff will not knowing and materially disparage, criticize, or otherwise make any derogatory statements regarding Executive, other than in connection with internal discussions regarding the performance or management of the Company or the Executive. Notwithstanding the foregoing, nothing contained in this Agreement will be deemed to restrict Executive, the Company or any of the Company’s current or former officers and/or directors from providing

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information to any governmental or regulatory agency (or in any way limit the content of any such information) to the extent they are required to provide such information pursuant to applicable law or regulation.

          (c) Confidentiality. During the Employment Term and thereafter, Executive will continue to comply with the terms of the Company’s restrictive covenant agreement appended hereto as Exhibit A (the “Restrictive Covenant Agreement”).

     8. Severance.

          (a) Termination Without Cause or Resignation for Good Reason other than in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or if Executive resigns for Good Reason, and such termination is not in Connection with a Change of Control, then, subject to Section 8(d), Executive will receive: (i) continued payment of the aggregate of executive’s Base Salary plus the Target Annual Incentive for the year in which the termination occurs (less applicable tax withholdings) for twelve (12) months, such amounts to be paid out bi-weekly in accordance with the Company’s normal payroll policies; (ii) twelve (12) months accelerated vesting with respect to Executive’s then outstanding, unvested equity awards, other than performance-based awards, (iii) extension of the exercise period for all Executive’s outstanding stock options to the earlier of 165 calendar days from the date of termination or the expiration date of the stock options; (v) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (x) eighteen (18) months, payable when such premiums are due (provided Executive validly elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) or (y) the date upon which Executive and Executive’s eligible dependents become covered under similar plans; and (vi) life insurance as set forth in Section 4(c). In addition, (x) if such termination or resignation is after April 29, 2009, then Executive’s then outstanding equity from the Stock Option Grant and the Restricted Stock Grant hereunder shall be accelerated in full, and (y) if such termination is after December 31, 2009, then Executive’s then outstanding equity from the Stock Option Grant and the Restricted Stock Grant hereunder as well as Executive’s outstanding equity from any grants made in calendar year 2009 shall be accelerated in full.

          (b) Termination Without Cause or Resignation for Good Reason in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason, and the termination is in Connection with a Change of Control, then, subject to Section 8(d), Executive will receive: (i) continued payment of two (2) year’s Base Salary, less applicable tax withholdings, in accordance with the Company’s normal payroll policies; (ii) two (2) payments each equal to 100% of Executive’s Target Annual Incentive for the year in which the termination occurs, less applicable tax withholdings, paid in two equal annual installments in accordance with the Company’s normal schedule for the payment of annual cash incentives; (iii) full vesting with respect to Executive’s then outstanding unvested equity awards other than performance-based awards; (iv) extension of the exercise period for all Executive’s outstanding stock options to the earlier of 165 calendar days from the date of termination or the expiration date of the stock options; and (v) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (x) eighteen (18) months,

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payable when such premiums are due (provided Executive validly elects to continue coverage under COBRA), or (y) the date upon which Executive and Executive’s eligible dependents become covered under similar plans; and (vi) life insurance as set forth in Section 4(c).

          (c) Voluntary Termination Without Good Reason or Termination for Cause. If Executive’s employment is terminated voluntarily, including due to death or Disability, without Good Reason or is terminated for Cause by the Company, then, except as provided in Section 6, (i) all further vesting of Executive’s outstanding equity awards will terminate immediately; and (ii) all payments of compensation by the Company to Executive hereunder will terminate immediately

          (d) Separation Agreement and Release of Claims. The receipt of any severance or other benefits pursuant to this Section 8 will be subject to Executive signing and not revoking a separation agreement and release of claims appended hereto as Exhibit B. For this purpose, the separation agreement and release of claims must be signed by Executive and returned to the Company within the period specified in the agreement and in no event later than two and one-half (21/2) months following the end of the calendar year in which Executive’s termination of employment occurs. No severance or other benefits will be paid or provided until the separation agreement and release agreement becomes effective and non-revocable.

          (e) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings that Executive may receive from any other source reduce any such payment.

     9. Excise Tax Gross-Up. In the event that the benefits provided for in this Agreement constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject to the excise tax imposed by Section 4999 of the Code, then Executive will receive (i) a payment from the Company sufficient to pay such excise tax, and (ii) an additional payment from the Company sufficient to pay the federal and state income and employment taxes and additional excise taxes arising from the payments made to Executive by the Company pursuant to this sentence. However, the Company may elect not to make payments under the preceding sentence to the extent it reasonably determines that (a) the “parachute payments” arise from the acceleration of options with exercise prices exceeding the price at which the underlying shares could be sold on the date of the Change in Control and (b) any payments under the preceding sentence would not significantly benefit Executive. Unless Executive and the Company agree otherwise in writing, the determination of Executive’s excise tax liability, if any, and the amount, if any, required to be paid under this Section 9 will be made in writing by a certified public accounting firm selected by the Company and reasonably acceptable to Executive (the “Accountants”). For purposes of making the calculations required by this Section 9, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. Executive and the Company agree to furnish such information and documents as the Accountants may reasonably request in order to make a determination under this Section 9. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 9. Any payment to Executive under this Section 9 shall be made

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within thirty (30) days following receipt by the Company of the report of the Accountants setting forth such determination.

     10. Definitions.

          (a) Cause. For purposes of this Agreement, “Cause” will mean:

               (i) Executive’s willful and continued failure to perform the duties and responsibilities of his position after there has been delivered to Executive a written demand for performance from the Board which describes in reasonable detail the basis for the Board’s belief that Executive has not substantially performed his duties and provides Executive the opportunity to present to the Board his good faith reasons for not so performing and, if the Board does not agree with such reasons, with thirty (30) days to take corrective action;

               (ii) Any act of personal dishonesty taken by Executive in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in the substantial personal enrichment of Executive;

               (iii) Executive’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business;

               (iv) A breach of any fiduciary duty owed to the Company by Executive that has a material detrimental effect on the Company’s business or reputation;

               (v) Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not Executive admits or denies liability); or

               (vi) Executive (A) obstructing or impeding; (B) endeavoring to influence, obstruct or impede, or (C) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an “Investigation”). However, Executive’s failure to waive attorney-client privilege relating to communications with Executive’s own attorney in connection with an Investigation will not constitute “Cause”.

          (b) Change of Control. For purposes of this Agreement, “Change of Control” will mean the occurrence of any of the following events:

               (i) The consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;

               (ii) The approval by the stockholders of the Company, or if stockholder approval is not required, approval by the Board, of a plan of complete liquidation of

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the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets;

               (iii) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; or

               (iv) A change in the composition of the Board within any twelve (12) month period during the Term and pursuant to a plan in which the proponent proposes alternative directors to the Board, and as a result of which fewer than a majority are Incumbent Directors. “Incumbent Directors” will mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii), or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

          (c) Disability. For purposes of this Agreement, “Disability” will mean Executive’s inability to substantially perform his duties under this Agreement as a result of incapacity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to last for a period of twelve (12) months.

          (d) Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of any of the following, without Executive’s express written consent, provided however, that Executive must provide the Company notice of Good Reason within sixty (60) days of Executive’s actual knowledge of the initial existence of one of the following conditions, upon which notice Company shall then have thirty (30) days in which to remedy the condition, under which circumstances such Good Reason shall no longer exist.

               (i) A significant reduction of Executive’s authority, duties, position or responsibilities, relative to Executive authority, duties, position or responsibility in effect immediately prior to such reduction;

               (ii) A substantial reduction by the Company of the facilities and perquisites (including office space and location) available to Executive immediately prior to such reduction.

               (iii) A reduction in Executive’s Base Salary or annual cash incentive as in effect immediately prior to such reduction other than pursuant to a reduction that also is applied to substantially all other executive officers of the Company and which reduction reduces the Base Salary and/or annual cash incentive by a percentage reduction that is no greater 15%;

               (iv) A material reduction in the kind or level of employee benefits to which Executive is entitled immediately prior to such reduction with the result that Executive’s overall benefits package is significantly reduced other than pursuant to a reduction that is also applied to substantially all other executive officers of the Company that reduces the level of employee benefits by a percentage reduction that is no greater that 15%.

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               (v) The relocation of Executive to a facility or location more then fifty (50) miles from Beijing, China; or

               (vi) The failure of the Company to obtain the assumption of the Agreement by a successor and an agreement that Executive will retain the same role and responsibilities in the merged or surviving parent company as he had prior to the merger under Section 1 of this Agreement or, if more favorable, the same role and responsibilities that Executive had immediately prior to the merger.

          (e) In Connection with a Change of Control. For purposes of this Agreement, a termination of Executive’s employment with the Company is “in Connection with a Change of Control” if Executive’s employment is terminated within three (3) months prior or twelve (12) months following a Change of Control.

     11. Indemnification. Subject to applicable law, Executive will be provided indemnification to the maximum extent permitted by the Company’s Articles of Incorporation or Bylaws, including, if applicable, any directors and officers insurance policies, with such indemnification to be on terms determined by the Board or any of its committees, but on terms no less favorable than provided to any other Company executive officer or director and subject to the terms of any separate written indemnification agreement.

     12. Confidential Information. Executive will execute the Restrictive Covenant Agreement attached hereto as Exhibit A.

     13. Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death, and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation, or other business entity which at any time, whether by purchase, merger, or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance, or other disposition of Executive’s right to compensation or other benefits will be null and void.

     14. Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (a) on the date of delivery if delivered personally; (b) one (1) day after being sent overnight by a well-established commercial overnight service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

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If to the Company:

Attn: Chief Legal and Administrative Officer
3Com Corporation
350
Campus Drive
Marlborough, MA 01752-3064

If to Executive:

at the last residential address known by the Company

With a copy to:

Attn: Linda E. Rappaport, Esq.
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022

     15. Severability. If any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provision.

     16. Arbitration.

          (a) Except as provided below, any dispute arising out of or relating to this Agreement or the breach, termination or validity hereof shall be finally settled by binding arbitration conducted expeditiously in accordance with the J.A.M.S./Endispute Streamlined Arbitration Rules and Procedures (the “J.A.M.S. Rules”). The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§1-16, and judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration shall be Boston, Massachusetts.

          (b) The parties covenant and agree that the arbitration shall commence within 60 days of the date on which a written demand for arbitration is filed by either party hereto. The parties (or their legal representatives) will promptly confer to select a single arbitrator mutually acceptable to both parties. The arbitrator must be a licensed attorney, primarily engaged as a practicing lawyer in the field of employment law and related litigation for at least ten (10) years, or primarily engaged in the practice of arbitrating or mediating executive employment law disputes for at least ten (10) years, and must not have any existing or prior relationship with the Company or any of its subsidiaries or affiliates, on the one hand, or Executive, on the other hand. If the parties are unable to agree upon an arbitrator, one will be selected, meeting the above criteria, in accordance with the J.A.M.S. Rules. In connection with the arbitration proceeding, the arbitrator shall have the power to order the production of documents by each party and any third-party witnesses. In addition, each party may take up to three (3) depositions as of right, and the arbitrator may in his or her discretion allow additional depositions upon good cause shown by the moving party. However, the arbitrator shall not have the power to order the answering of

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interrogatories or the response to requests for admission. In connection with any arbitration, each party shall provide to the other, no later than seven (7) business days before the date of the arbitration, the identity of all persons that may testify at the arbitration and a copy of all documents that may be introduced at the arbitration or considered or used by a party’s witness or expert. The arbitrator’s decision and award shall be made and delivered within six (6) months of the selection of the arbitrator. The arbitrator’s decision shall set forth a reasoned basis for any award of damages or finding of liability. The arbitrator shall not have power to award damages in excess of actual compensatory damages and shall not multiply actual damages or award punitive damages or any other damages that are specifically excluded under this Agreement, and each party hereby irrevocably waives any claim to such damages.

          (c) The parties covenant and agree that they will participate in the arbitration in good faith. This Section 16 applies equally to requests for temporary, preliminary or permanent injunctive relief, except that in the case of temporary or preliminary injunctive relief any party may proceed in court without prior arbitration for the limited purpose of avoiding immediate and irreparable harm.

          (d) Each of the parties hereto (i) hereby irrevocably submits to the jurisdiction of any United States District Court of competent jurisdiction for the purpose of enforcing the award or decision in any such proceeding, (ii) hereby waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution (except as protected by applicable law), that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or the subject matter hereof may not be enforced in or by such court, and hereby waives and agrees not to seek any review by any court of any other jurisdiction which may be called upon to grant an enforcement of the judgment of any such court. Each of the parties hereto hereby consents to service of process by registered mail at the address to which notices are to be given. Each of the parties hereto agrees that its or his submission to jurisdiction and its or his consent to service of process by mail is made for the express benefit of the other party hereto. Final judgment against either party hereto in any such action, suit or proceeding may be enforced in other jurisdictions by suit, action or proceeding on the judgment, or in any other manner provided by or pursuant to the laws of such other jurisdiction.

     17. Tax Equalization, Legal and Tax Expenses and Home Leave. The Company shall indemnify and reimburse Executive for tax equalization purposes as set forth on Exhibit C. The Company will also reimburse Executive up to $15,000 for reasonable legal and tax advice expenses in connection with the negotiation, preparation and execution of this Agreement. The Company will also reimburse Executive for reasonable tax preparation expenses up to an annual cap of $10,000. Executive shall be entitled to receive reimbursement, annually, for the cost of one round-trip business class airline ticket on Executive’s reasonable choice of airline, for Executive, his spouse and one additional family member, for home leave purposes. Payments with respect to any reimbursement pursuant to this Section 17 will made on or before the last day of the calendar year following the year in which the relevant expense is incurred.

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     18. Integration. This Agreement, together with the Restrictive Covenant Agreement and the forms of equity award grant that describe Executive’s outstanding equity awards, represents the entire agreement and understanding between the parties as to the subject matter herein and supersedes all prior or contemporaneous agreements or plans whether written or oral, including but not limited to the Company’s Section 16 Officer Severance Plan. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in a writing and signed by duly authorized representatives of the parties hereto. In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understanding that is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement, including the standard Restrictive Covenant Agreement to be signed upon Executive’s hire, the bonus plan referred to in Section 3 and the 2003 Plan and corresponding agreement to be signed by Executive in conjunction with the terms in this Agreement will prevail.

     19. Waiver of Breach. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

     20. Survival. The Restrictive Covenant Agreement and Sections 6 through 13, 15, 16, 17 through 25 will survive the termination of this Agreement.

     21. Headings. All captions and Section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

     22. Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

     23. Governing Law. This Agreement will be governed by the laws of the Commonwealth of Massachusetts without regard to its conflict of laws provisions.

     24. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

     25. (a) Six-Month Delay. Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A of the Code and the final regulations and any guidance promulgated thereunder (“Section 409A”) at the time of Executive’s termination of employment (other than due to death), then the severance benefits payable to Executive under this Agreement, if any, and any other severance payments or separation benefits payments that may be considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) otherwise due to Executive on or within the six (6) month period following Executive’s termination of employment will accrue during such six (6) month period and will become payable in a lump sum payment (less applicable withholding taxes) on the date six (6) months and one (1) day following the date of Executive’s termination of employment. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding

Mao

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anything herein to the contrary, if Executive dies following his or her termination of employment but prior to the six (6) month anniversary of his or her date of termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum (less applicable withholding taxes) to Executive’s estate within sixty (60) days after the date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.

          (b) Amendments to this Agreement to Comply with Section 409A. The provisions of this Agreement are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A and the Company, after such consultation with Executive, will reform this Agreement or any provision hereof to maintain to the maximum extent practicable the original intent of the provisions violating the provisions of Section 409A.

     26. Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by a duly authorized officer, as of the day and year written below.

COMPANY:

3COM CORPORATION

 

 

 

/s/ Neal D. Goldman

 

Date: April 29, 2008

 

 

 

By:

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Robert Y. L. Mao

 

Date: April 29, 2008

 

 

 

 

 

 

Robert Y.L. Mao

 

 

SIGNATURE PAGE TO CEO EMPLOYMENT AGREEMENT

Mao

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EX-10.8 4 b749263cexv10w8.htm EX-10.8 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT - MAO

Exhibit 10.8

3COM CORPORATION

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

     This AMENDMENT is made and entered into pursuant to the EMPLOYMENT AGREEMENT of April 29, 2008 (the “Agreement”) by and between 3Com Corporation (the “Company”) and Robert Y.L. Mao (“Executive”).

     WHEREAS, the Company desires to amend the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW, THEREFORE, it is hereby agreed that the Agreement is amended in the following respects, effective as of January 1, 2009, or such earlier date as required to comply with Code Section 409A and guidance issued thereunder.

     1. A new sentence is added at the end of Section 3(b) to read as follows:

     “Annual cash incentives shall be paid in a lump sum as soon as practicable following the determination that specified goals have been met. In no event shall payment be made later than March 15th of the year following the year in which the incentive was earned or, if later, the 15th day of the third month following the end of the Company’s taxable year following the year in which the incentive was earned.”

     2. Paragraph (a) of Section 8 is revised in its entirety to read as follows:

     “(a) Termination Without Cause or Resignation for Good Reason other than in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or if Executive resigns for Good Reason, and such termination is not in Connection with a Change of Control, then, subject to Section 8(d), Executive will receive:

     (i) the aggregate of twelve (12) months of Executive’s Base Salary plus the Target Annual Incentive for the year in which the termination occurs (less applicable tax withholdings), with payment to occur as follows:

     On the first day following the six (6) month anniversary of Executive’s termination of employment (as determined pursuant to Treasury Regulation Section 1.409A-1(h)), Executive shall receive a lump sum equal to the aggregate amount Executive would have received through such date had payments commenced upon termination of employment in bi-weekly installments in accordance with the Company’s normall payroll policies. Thereafter, the amount remaining shall be paid in bi-weekly installments in accordance with the Company’s normal payroll policies.

 

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     (ii) with respect to Executive’s then outstanding, unvested equity awards, other than performance-based awards, twelve (12) months accelerated vesting, with payment to occur as follows:

     (a) Awards Exempt from Code Section 409A:

(1) Stock Options: stock options may be exercised pursuant to paragraph (iii), with underlying shares to be delivered to Executive as soon as administratively practicable following Executive’s exercise of such options.

(2) Restricted stock: all restrictions placed upon the shares of stock shall lapse upon Executive’s termination of employment.

(3) Restricted stock units: shares underlying those restricted stock units that are exempt from Code Section 409A shall be transferred to Executive as soon as administratively practicable, but in no event later than the sixtieth (60th) day following Executive’s termination of employment.

     (b) Restricted Stock Units Subject to Code Section 409A: Shares underlying those restricted stock units that are subject to Code Section 409A shall be transferred to Executive on the first market day following the six (6) month anniversary of Executive’s termination of employment.

     (iii) extension of the exercise period for all Executive’s outstanding stock options to the earlier of 165 calendar days from the date of termination or the expiration date of the stock options;

     (iv) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (x) eighteen (18) months, payable when such premiums are due (provided Executive validly elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act (‘COBRA’) or (y) the date upon which Executive and Executive’s eligible dependents become covered under similar plans; and

     (v) life insurance as set forth in Section 4(c).

     In addition, subject to Sections 8(d), (x) if such termination or resignation is after April 29, 2009, then Executive’s then outstanding equity from the Stock Option Grant and the Restricted Stock Grant hereunder shall be accelerated, with the Restricted Stock Grant payable in full on the first day following the six (6) month anniversary of Executive’s termination, and (y) if such termination is after

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December 31, 2009, then Executive’s then outstanding equity from the Stock Option Grant and the Restricted Stock Grant hereunder as well as Executive’s outstanding equity from any grants made in calendar year 2009 shall be accelerated. Payment of such equity awards shall be made in full (a) as soon as practicable following Executive’s termination if an award is exempt from Code Section 409A, or (b) on the first day following the six (6) month anniversary of Executive’s termination if an award is subject to Code Section 409A.”

     3. Paragraph (b) of Section 8 is revised in its entirety to read as follows:

     “(b) Termination Without Cause or Resignation for Good Reason in Connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or by Executive for Good Reason, and such termination is in Connection with a Change of Control, then, subject to Section 8(d), Executive will receive:

     (i) twenty-four (24) months of Executive’s Base Salary, less applicable tax withholdings, with payment to occur as follows:

     On the first day following the six (6) month anniversary of Executive’s termination of employment (as determined pursuant to Treasury Regulation Section 1.409A-1(h)), Executive shall receive a lump sum equal to the aggregate amount Executive would have received through such date had payments commenced upon termination of employment in bi-weekly installments in accordance with the Company’s normall payroll policies. Thereafter, the amount remaining shall be paid in bi-weekly installments in accordance with the Company’s normal payroll policies.

     (ii) two (2) payments each equal to 100% of Executive’s Target Annual Incentive for the year in which the termination occurs, less applicable tax withholdings, payable in the Company’s first and third (or vice-versa depending upon Executive’s termination date) fiscal quarter in accordance with the Company’s normal annual incentive payment schedule following Executive’s termination of employment, provided that to the extent that any such payment would occur within six (6) months following Executive’s termination, such payment shall be delayed until the first day following the six (6) month anniversary of Executive’s termination;

     (iii) full vesting with respect to Executive’s then outstanding unvested equity awards (other than performance-based awards), with payment to occur as follows:

     (a) Awards Exempt from Code Section 409A:

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(1) Stock Options: stock options may be exercised pursuant to paragraph (iv), with underlying shares to be delivered to Executive as soon as administratively practicable following Executive’s exercise of such options.

(2) Restricted stock: all restrictions placed upon the shares of stock shall lapse upon Executive’s termination of employment.

(3) Restricted stock units: shares underlying those restricted stock units that are exempt from Code Section 409A shall be transferred to Executive as soon as administratively practicable, but in no event later than the sixtieth (60th) day following Executive’s termination of employment.

     (b) Restricted Stock Units Subject to Code Section 409A: Shares underlying those restricted stock units that are subject to Code Section 409A shall be transferred to Executive on the first market day following the six (6) month anniversary of Executive’s termination of employment.

     (iv) extension of the exercise period for all Executive’s outstanding stock options to the earlier of 165 calendar days from the date of termination or the expiration date of the stock options;

     (v) reimbursement for premiums paid for continued health benefits for Executive (and any eligible dependents) under the Company’s health plans until the earlier of (x) eighteen (18) months, payable when such premiums are due (provided Executive validly elects to continue coverage under COBRA or (y) the date upon which Executive and Executive’s eligible dependents become covered under similar plans; and

     (vi) life insurance as set forth in Section 4(c).”

     4. Revise Section 8(d) in its entirety to read as follows:

     “(d) Separation Agreement and Release of Claims. The receipt of any severance other other benefits pursuant to this Section 8 will be subject to Executive signing and not revoking a separation agreement and release of claims appended hereto as Exhibit B. For this purpose, Executive commits to signing and returning the separation agreement and release of claims to the Company no later than forty-five (45) days after the date of termination of Executive’s employment. Failure to return the separation agreement and release of claims by the forty-fifth (45th) day, or revoking the release of claims within the seven (7) day revocation period, will result in a forfeiture of severance pay.”

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     5. Add a new sentence at the end of Section 9 to read as follows:

     “In no event shall payment be made later than the end of the year following the year in which Executive remits the related taxes.”

     6. Revise the first sentence of Section 25(a) to read as follows:

     “Notwithstanding anything to the contrary in this Agreement, if Executive is a ‘specified employee’ within the meaning of Section 409A of the Code and the final regulations and any guidance promulgated thereunder (‘Section 409A’) (and as applied according to procedures of the Company) at the time of Executive’s termination of employment (other than due to death), then the severance benefits payable to Executive under this Agreement, if any, and any other severance payments or separation benefits payments that may be considered deferred compensation under Section 409A (together, the ‘Deferred Compensation Separation Benefits’) otherwise due to Executive on or within the six (6) month period following Executive’s termination of employment will accrue during such six (6) month period and will become payable in a lump sum payment (less applicable withholding taxes) on the date six (6) months and one (1) day following the date of Executive’s termination of employment.”

* * *

(signature page follows)

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     IN WITNESS WHEREOF, each of the parties has executed this First Amendment to the Agreement, in the case of the Company by a duly authorized officer, as of the day and year written below.

COMPANY:

3COM CORPORATION

 

 

 

 

 

 

By:

/s/ Neal D. Goldman

 

Neal D. Goldman

 

Date:      12/23/08 

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

/s/ Robert Y. L. Mao

 

Robert Y.L. Mao

 

Date:      12/16/08 

 

 

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EX-10 4 exsevagt4306.htm

Exhibit 10.3

 

SEVERANCE BENEFITS AGREEMENT

This Severance Benefits Agreement (the “Agreement”) is made and entered into by and between [NAME] (the “Executive”) and 3Com Corporation (“3Com” or the “Company”), effective as of [DATE] (the “Effective Date”). 3Com and the Executive shall each individually be referred to herein as a “Party” and together as the “Parties.”

 

WHEREAS, the Executive is currently employed by the Company as its [TITLE] and is eligible to receive severance benefits pursuant to the Company’s [PLAN NAME] (as amended, the “Plan”); and

WHEREAS, the Company seeks to confirm the Executive’s eligibility for severance benefits to ensure the continued dedication and objectivity of the Executive and to provide the Executive with additional financial security.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree to the terms and conditions set forth in this Agreement.

1.    Interpretation/Administration. The terms of this Agreement shall be governed by and administered pursuant to the provisions of the Plan. To the extent that there is any conflict between this Agreement and the terms of the Plan, the Plan provisions shall supersede and control; provided however that, notwithstanding any amendments to the Plan after the Effective Date, the severance benefits for which the Executive is eligible shall not be less than the severance benefits set forth in this Agreement.

2.    Term of Agreement. This Agreement shall be effective as of the Effective Date and shall terminate upon the Executive’s last date of employment with the Company (the “Termination Date”).

3.    Eligibility to Receive Severance Benefits. The Company shall provide the Executive with the severance benefits described in Section 4 below upon the Company’s involuntary termination of the Executive’s employment with 3Com without Cause or the Executive’s Voluntary Termination for Good Reason, as such terms are defined under the Plan, provided that the Executive signs and does not revoke an agreement (the “Release Agreement”) including, but not limited to, (i) a release of claims against the Company, its affiliates and representatives; (ii) a non-solicitation provision prohibiting the Executive’s solicitation of any Company employee, business opportunity, client, customer, account, distributor or vendor for a period of one (1) year following the Termination Date; (iii) a non-competition provision prohibiting the Executive from directly or indirectly engaging in, participating in or having a material ownership interest in a business in competition with the Company for a period of one (1) year following the Termination Date; and (iv) a non-disparagement provision. The form and language of the Release Agreement shall be determined by the Company in its sole discretion.

4.    Severance Benefits. If the conditions provided in Section 3 above are fully satisfied, the Executive will be entitled to receive the following severance benefits:

A.

Severance Amounts.

i.           One (1) year of the Executive’s annualized base salary as of the Termination Date, subject to all applicable taxes and withholdings, paid through the Company’s regular, bi-weekly payroll practices and continuing for twelve (12) months (twenty-four (24) Company payroll periods) following the effective date of the Executive’s Release Agreement, provided that the Executive continues to comply with all terms and conditions of the Release Agreement during the twelve (12) month period; and

ii.          A pro-rated amount of the Executive’s earned incentive bonus for the bonus period in which the Termination Date occurs, to be calculated by multiplying the earned bonus amount (based on the Company’s actual attainment of applicable performance metrics) by a fraction, the numerator of which shall be the number of calendar days from the beginning of the applicable bonus period to the Termination Date and the denominator of which shall be the number of calendar days within the applicable bonus period, payable through the Company’s regular bonus payment practices (but no earlier than the effective date of the Executive’s Release Agreement) and subject to all applicable taxes and withholdings.

B.               Health, Dental & Vision Benefits. Continuation of coverage under the Company’s health, dental, and vision insurance plans (“Health Care Plans”) pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) at the same level of coverage as was provided to and elected by the Executive as of the Termination Date. If the Executive timely and properly elects to continue coverage under the Company’s Health Care Plans in accordance with COBRA, the Company shall continue to pay the Company-paid portion of the premiums for the Executive’s elected coverage under the Health Care Plans until the earlier of: (i) one (1) year from the Termination Date, or (ii) the date upon which the Executive becomes eligible for coverage under another employer’s group health, dental, or vision insurance plan(s). The Executive will remain obligated to pay the unsubsidized portion of the applicable premium(s) in order to continue Company-sponsored coverage. The Company-paid portion of any premium(s) is subject to change at the Company’s discretion. To be eligible for continuation of coverage under the Health Care Plans, an Executive must be actively enrolled in the applicable Health Care Plan(s) as of the Termination Date. For purposes of Title X of COBRA, the date of the “qualifying event” for the Executive and his/her covered dependents shall be the Termination Date, and each month of Company-sponsored coverage continuation provided hereunder shall offset a month of coverage continuation otherwise due under COBRA. Upon the expiration of the one (1) year period, the Executive will be required to pay 102% of the premium to continue Company-sponsored coverage. Any continuation of Company-sponsored coverage shall be governed by COBRA and the terms and conditions of the applicable plan documents.

C.   Life Insurance. Conversion of the Executive’s basic term life insurance in effect immediately prior to the Termination Date to continue coverage until the earlier of (i) one (1) year from the Termination Date, or (ii) the date upon which the Executive becomes eligible for coverage under another employer’s life insurance plan.

D.

Equity Compensation.

 

i.     Six (6) months of accelerated vesting of outstanding stock options, restricted stock, and restricted stock units issued to the Executive that are subject to time-based vesting. The accelerated vesting provided for herein will be effective as of the Termination Date.

 

ii.    Extension of the exercise period for vested stock options issued to the Executive to the earlier of: (a) one hundred and sixty-five (165) calendar days from the Termination Date; or (b) the original term of the stock option grant.

All other compensation (including, without limitation, salary, bonuses and commissions) and employee benefits (including, without limitation, short-term and long-term disability insurance, Paid Time Off accrual, and vesting of equity compensation) will cease on the Executive’s Termination Date. The payments provided for in Section 4(A) above will not be subject to 401(k) or Employee Stock Purchase Plan deductions. Except as provided herein, all equity compensation grants are subject to the terms and conditions of the applicable plan document(s).

5.         Internal Revenue Code Section 409A. Notwithstanding any other provisions of this Agreement, if the Company reasonably determines in its discretion that Section 409A of the Internal Revenue Code, as amended, will result in the imposition of additional taxes or penalties based on the payment of the benefits provided under Section 4(A) above to the Executive within the first six (6) months following the Termination Date, the Company will modify the payment schedule to provide that the payments will begin on the first regularly scheduled payroll date following the expiration of six (6) months and one (1) day after the Termination Date. If the payment schedule is modified pursuant to this Section 5, the Executive will receive the one (1) year of annualized salary paid through the Company’s regular payroll practices over the twelve (12) payroll periods immediately following the expiration of six (6) months and one (1) day after the Termination Date.

6.          At-Will Employment. The Company and the Executive hereby acknowledge and agree that this Agreement is not intended to be and shall not be considered a contract for a term of employment. The Parties further acknowledge and agree that the Executive’s employment with 3Com is and shall continue to be at-will, as defined under applicable law, and may be terminated by either Party at any time, for any reason or no reason, with or without notice. If the Executive’s employment terminates for any reason other than the conditions specified in Section 2 of this Agreement, then the Executive shall not be entitled to receive severance or other benefits under this Agreement or any severance and/or benefit plans sponsored by the Company; provided, however, that the Executive will remain eligible to receive benefits under the terms and conditions of the Management Retention Agreement between the Company and the Executive (the “Management Retention Agreement”).

7.    Entire Agreement/Integration. No agreements, representations or understandings (whether verbal or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either Party with respect to the subject matter hereof. This Agreement represents the entire understanding of the Parties hereto with respect to the Executive’s eligibility to receive severance benefits from the Company and supersedes all prior arrangements and understandings regarding such benefits; provided, however, that the Executive shall remain eligible to receive benefits under the Management Retention Agreement.

To the extent that Executive is eligible for or receives benefits under the Management Retention Agreement, he/she shall not be eligible to receive any severance benefits under this Agreement.

8.          Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the federal Employee Retirement Income Security Act of 1974 (“ERISA”). To the extent not governed by ERISA, the Agreement shall be interpreted under laws of the Commonwealth of Massachusetts. The Parties hereby agree and consent to the jurisdiction of the United States District Court for the District of Massachusetts, sitting in Boston, Massachusetts, as the exclusive venue for settling any disputes arising hereunder.

9.          Amendments. This Agreement may not be modified, amended, supplemented or superseded unless by means of a written document signed by the Executive and the Company’s President and Chief Executive Officer or General Counsel.

10.        Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, WHEREFORE, the Parties have read this Agreement, have carefully considered its provisions, have had an opportunity to discuss it with their attorneys, and attest that they are fully competent to execute this Agreement and that they fully understand and knowingly accept its terms and conditions in their entirety and without reservation.

3COM CORPORATION

 

R. SCOTT MURRAY

President and Chief Executive Officer

EXECUTIVE

 

 

 

[NAME]

[TITLE]

 

 

IMS_Last_Page

 

 

 

 

 

 

 

EX-10.10 6 b749263cexv10w10.htm EX-10.10 FORM OF FIRST AMENDMENT TO SEVERANCE BENEFITS AGREEMENT

Exhibit 10.10

3COM CORPORATION

FORM OF FIRST AMENDMENT TO SEVERANCE BENEFITS AGREEMENT

     This AMENDMENT is made and entered into pursuant to the SEVERANCE BENEFITS AGREEMENT of [                    ] (the “Agreement”) by and between 3Com Corporation (the “Company”) and [                    ] (“Executive”).

     WHEREAS, the Company desires to amend the Agreement to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

     NOW, THEREFORE, it is hereby agreed that the Agreement is amended in the following respects, effective as of January 1, 2009, or such earlier date as required to comply with Code Section 409A and guidance issued thereunder.

     1. The first “WHEREAS” clause is revised in its entirety to read as follows:

“WHEREAS, the Executive is currently employed by the Company as its [     ] and is eligible to receive severance benefits pursuant to the Company’s Section 16 Officer Severance Plan (as amended, the “Plan”); and”

     2. Section 2 is revised in its entirety to read as follows:

“2. Term of Agreement. This Agreement shall be effective as of the Effective Date and shall terminate on the Termination Date. “Termination Date” shall mean the Executive’s last date of employment with 3Com Corporation or, if later, the date on which the Executive incurs a separation from service with 3Com Corporation as defined in Treasury Regulation Section 1.409A-1(h).”

     3. A new sentence is added to the end of Section 3 of the Agreement to read as follows:

“If the Release Agreement has not been executed and/or the revocation period stated in the Release Agreement has not expired by the sixtieth (60th) day following the Termination Date, severance benefits shall be forfeited. The Release Agreement shall be furnished to the Executive in sufficient time to enable the Executive to comply with the preceding sentence, taking into account the period of time that the Executive must be given to consider the terms of the Release Agreement under any applicable law.”

     4. The introductory sentence of Section 4 of the Agreement is revised in its entirety to read as follows:

Severance Benefits. Provided that the Executive has executed a valid Release Agreement and the applicable revocation period has expired by the sixtieth (60th) day following the Termination Date, Executive will be entitled to receive the following:”

 

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     5. Paragraph A of Section 4 is revised in its entirety to read as follows:

“A. Severance Amounts.

     i. One (1) year of the Executive’s annualized base salary as of the Termination Date, subject to all applicable taxes and withholdings, with payment commencing within sixty-five (65) days after the Executive’s Termination Date in substantially equal installments corresponding to the Company’s normal payroll practices and continuing for a period of twelve (12) months, provided that the Executive continues to comply with all terms and conditions of the Release Agreement during the twelve (12) month period. Each payment shall be considered a separate payment and not part of a series of installments for purposes of the short-term deferral rules under Treasury Regulation Section 1.409A-1(b)(4)(i) and the exemption for involuntary terminations under separation pay plans under Treasury Regulation Section 1.409A-1(b)(9)(iii). As a result, the following payments are exempt from the requirements of Code Section 409A:

     (a) payments that are made by the fifteenth (15th) day of the third month of the calendar year following the year of the Executive’s Termination Date, and

     (b) any additional payments that are made on or before the last day of the second (2nd) calendar year following the year of the Executive’s Termination Date and that do not exceed the lesser of two (2) times: (A) the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Company for the Executive’s taxable year that precedes the taxable year in which the Termination Date occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Executive’s employment had not terminated); or (B) the limit under Code Section 401(a)(17) then in effect.

     Notwithstanding the preceding provisions, to the extent that the payments to be made during the first six (6) month period following the Executive’s Termination Date exceed the amounts exempt from Code Section 409A under this paragraph, such payments shall be paid in a single lump sum on the first (1st) day following the six (6) month anniversary of the Executive’s Termination Date.

     ii. A pro-rated amount of the Executive’s earned incentive bonus for the bonus period in which the Termination Date occurs, to be calculated by multiplying the earned bonus amount (based on the Company’s actual attainment of applicable performance metrics) by a fraction, the numerator of which shall be the number of calendar days between the beginning of the applicable bonus period to the Termination Date and the denominator of which shall be the number of calendar days within the applicable bonus period, to be paid within sixty-five (65) days of the Termination Date (the payment of which is intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code) pursuant to the short-term deferral rules of Treasury Regulation 1.409A-1(b)(4)).

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     6. A new sentence is added immediately following the second sentence of Paragraph B of Section 4 of the Plan to read as follows:

“Such benefit is intended to be exempt from Code Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v)(B).”

     7. Subparagraph D-i of Section 4 is revised in its entirety to read as follows:

i. With respect to Executive’s then outstanding, unvested equity awards, other than performance-based awards, six (6) months accelerated vesting, with transfer of shares, payment of cash, or removal of restrictions on shares, whichever applicable, occurring as soon as practicable, but in no event later than the sixtieth (60th) day following the Termination Date. Notwithstanding the foregoing, if the Executive is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i) and as applied according to procedures of the Company) and the award is subject to Code Section 409A, transfer of shares shall occur on the first market day following the six (6) month anniversary of the Executive’s termination of employment.”

     8. Section 5 is revised in its entirety to read as follows:

“(a) Payment of Severance Benefits. Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A and as applied according to procedures of the Company at the time of Executive’s termination of employment (other than due to death), then the severance benefits payable to Executive under this Agreement, if any, and any other severance payments or separation benefits payments that may be considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) otherwise due to Executive on or within the six (6) month period following Executive’s termination of employment will accrue during such six (6) month period and will become payable in a lump sum payment (less applicable withholding taxes) on the date six (6) months and one (1) day following the date of Executive’s termination of employment. All subsequent payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following his or her termination of employment but prior to the six (6) month anniversary of his or her date of termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum (less applicable withholding taxes) to Executive’s estate as soon as administratively practicable after the date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment of severance benefits to Executive under this Agreement that is made by March 15 of the calendar year following Executive’s termination of employment and is intended to not constitute a “deferral of compensation” by virtue of the “short term deferral” rule of Treasury Regulations Section 1.409A-1(b)(4) shall constitute a “separate payment” for purposes of application of that rule.

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(b) Amendments to this Agreement with Respect to Section 409A. The severance payments and other benefits provided under this Agreement are intended to not constitute a “deferral of compensation” under Section 409A, to the extent possible, or, to the extent not so possible, to comply with the requirements of Sections 409A(a)(2), (3) and (4) of the Code so that none of the severance payments and benefits to be provided hereunder will be subject to the income inclusion, additional tax or interest provisions of Section 409A(a)(1), and any ambiguities herein will be interpreted in accordance with that intent. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or interest or income recognition prior to actual payment to Executive under Section 409A(a)(1).”

* * *

(signature page follows)

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     IN WITNESS WHEREOF, each of the parties has executed this First Amendment to the Agreement, in the case of the Company by a duly authorized Executive’s, as of the day and year written below.

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3COM CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EX-10.11 7 b749263cexv10w11.htm EX-10.11 FORM OF SECOND AGREEMENT TO SEVERANCE BENEFITS AGREEMENT

Exhibit 10.11

3COM CORPORATION

FORM OF SECOND AMENDMENT TO SEVERANCE BENEFITS
AGREEMENT

     This AMENDMENT is made and entered into pursuant to the SEVERANCE BENEFITS AGREEMENT by and between 3Com Corporation (the “Company”) and [                                        ] (“Executive”) effective as of [                    ] and the First Amendment thereto of [                    ] (“First Amendment” and collectively the “Agreement”). Unless otherwise indicated, capitalized terms herein shall have the definitions applied to said terms in the First Amendment.

     WHEREAS, the Company desires to further amend the Agreement to address a drafting error in the First Amendment concerning the payment of the pro-rated bonus to which the Executive may be eligible under the terms of the Agreement.

     NOW, THEREFORE, it is hereby agreed that the Agreement is further amended in the following respects, effective as of the date hereof:

     1. Subparagraph A(ii) of Section 4 is revised in its entirety to read as follows:

     “ii. A pro-rated amount of the Executive’s earned incentive bonus for the bonus period in which the Termination Date occurs, to be calculated by multiplying the earned bonus amount (based on the Company’s actual attainment of applicable performance metrics) by a fraction, the numerator of which shall be the number of calendar days between the beginning of the applicable bonus period to the Termination Date and the denominator of which shall be the number of calendar days within the applicable bonus period, to be paid within the first fiscal quarter following the end of the applicable bonus period but, in any event, by the later of (i) the date that is 2 1/2 months from the end of the Executive’s first taxable year in which the amount is no longer subject to a substantial risk of forfeiture, or (ii) the date that is 2 1/2 months from the end of the Company’s tax year in which the amount is no longer subject to a substantial risk of forfeiture.”

* * *

(signature page follows)

 

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     IN WITNESS WHEREOF, each of the parties has executed this Second Amendment to the Agreement, in the case of the Company by a duly authorized employee, as of the day and year written below.

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3COM CORPORATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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