3COM CORPORATION
STAND ALONE STOCK OPTION AGREEMENT
3Com Corporation
has granted Ronald A. Sege (the “Participant”), an
Option to purchase certain Shares in accordance with the
Participant’s Employment Agreement dated April 29, 2008
(“ Employment Agreement ”), subject to the
following terms and conditions as set forth in this Award
Agreement. The “Effective Date” of this Award Agreement
shall be May 6, 2008.
1.
Definitions . As used herein, the following
definitions shall apply:
(a) “
Administrator ” means the Board or any of its
Committees as shall be administering the Award.
(b) “
Applicable Laws ” means the requirements relating to
the administration of stock option plans under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock
exchange or quotation system on which the Common Stock is listed or
quoted and any other applicable laws.
(c) “
Award ” means, individually or collectively, the grant
of an Option under the Award Agreement.
(d) “
Award Agreement ” means this stand alone stock option
agreement between the Company and the Participant evidencing the
terms and conditions of this Award.
(e) “
Board ” means the Board of Directors of 3Com
Corporation.
(i) The
Participant’s willful and continued failure to perform the
duties and responsibilities of his position after there has been
delivered to the Participant a written demand for performance from
the Board which describes in reasonable detail the basis for the
Board’s belief that the Participant has not substantially
performed his duties and provides the Participant 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 the Participant 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 the Participant;
(iii) The
Participant’s conviction of, or plea of nolo contendere to, a
felony;
(iv) A
breach of any fiduciary duty owed to the Company by the
Participant;
(v) The
Participant being found individually 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 the Participant admits or
denies liability);
(vi) The
Participant (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, the Participant’s
failure to waive attorney-client privilege relating to
communications with the Participant’s own attorney in
connection with an Investigation will not constitute
“Cause”; or
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(vii) The
Participant’s disqualification or bar by any U.S.
governmental or self-regulatory authority from serving in the
capacity contemplated by the Employment Agreement or the
Participant’s loss of any U.S. governmental or
self-regulatory license that is reasonably necessary for the
Participant to perform his responsibilities to the Company under
the Employment Agreement, if (A) the disqualification, bar or
loss continues for more than thirty (30) days, and
(B) during that period the Company uses its good faith efforts
to cause the disqualification or bar to be lifted or the license
replaced. While any disqualification, bar or loss continues during
the Participant’s employment, the Participant will serve in
the capacity contemplated by the Employment Agreement to whatever
extent legally permissible and, if the Participant’s
employment is not permissible, the Participant will be placed on
leave (which will be paid to the extent legally
permissible).
(g) “
Change in Control ” means the occurrence of any of the
following events:
(i) Any
Person becoming the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more
of the total voting power represented by the Company’s then
outstanding voting securities; or
(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 the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company’s assets; or
(iii) 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 fifty
percent (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; or
(iv) A
change in the composition of the Board within any twelve
(12) month period during the Term (as defined in the
Employment Agreement) and pursuant to a plan in which the proponent
proposes alternative directors to the Board, as a result of which
fewer than a majority are Incumbent Directors. “ Incumbent
Directors ” shall mean directors who either (A) are
directors of the Company as of the date of the Employment
Agreement, 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) of this Section 1(g) or in connection with an actual or
threatened proxy contest relating to the election of directors of
the Company.
(h) “
Code ” means the U.S. Internal Revenue Code of 1986,
as amended.
(i) “
Committee ” means a committee, which may consist of
one or more persons whom may or may not be Board members, as is
consistent with the Applicable Laws, appointed by the
Board.
(j) “
Common Stock ” means the common stock of the
Company.
(k) “
Company ” shall mean 3Com Corporation and any
successor corporation thereto.
(l) “
Consultant ” means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary as an independent
contractor to render services to such entity.
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(m) “
Date of Option Grant ” shall mean the “Date of
Grant” as set forth in the Notice of Grant.
(n) “
Director ” means a member 3Com’s Board of
Directors.
(o) “
Disability ” means the Participant’s inability
to substantially perform his duties under the Employment 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 months.
(p) “
Employee ” means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of
the Company. A Service Provider shall not cease to be an Employee
in the case of (i) any leave of absence approved by the
Company or any leave for which a return to employment is guaranteed
under Applicable Laws, or (ii) transfers between locations of
the Company or between the Company, its Parent, any Subsidiary, or
any successor. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.
(q) “
Exchange Act ” means the Securities Exchange Act of
1934, as amended.
(r) “
Exercise Price ” shall mean the “Option Price
per Share” as set forth in the Notice of Grant.
(s) “
Good Reason ” means the occurrence of any of the
following, without the Participant’s express written consent;
provided however, that Participant must provide the Company notice
of Good Reason within 30 days of the initial existence of one
of the above conditions, upon which notice Company shall then have
30 days in which to remedy the condition, under which
circumstances Company shall not be required to pay any amounts
specified in Section 8 of the Employment Agreement:
(i) A
material diminution in Participant’s authority, duties or
responsibilities in effect immediately prior to such
reduction;
(ii) A
material diminution in Participant’s Base Salary or Target
Annual Incentive (as such terms are defined in the Employment
Agreement) 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%;
(iii) A
material diminution in the kind or level of employee benefits to
which Participant is entitled immediately prior to such reduction
with the result that Participant’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%;
(iv) The
relocation of Participant to a facility or location outside the
United States;
(v) The
failure of the Company to obtain the assumption of the Employment
Agreement by a successor and an agreement that Participant 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 the Employment Agreement or, if more favorable,
the same role and responsibilities that Participant had immediately
prior to the merger; or
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(vi) The
failure of the Company to appoint Participant as its Chief
Executive Officer by April 30, 2011, or the appointment of another
as Chief Executive Officer after the Effective Date (as such term
is defined in the Employment Agreement).
(t) “
In Connection with a Change of Control ” means within
three (3) months prior to or twelve (12) months following
a Change of Control.
(u) “
Initial Vesting Date ” shall be the date occurring one
(1) year after the Date of Option Grant.
(v) “
Nonstatutory Stock Option ” means any Option not
intended to qualify as an Incentive Stock Option within the meaning
of Section 422 of the Code and the regulations promulgated
thereunder.
(w) “
Notice of Grant ” shall mean the “NOTICE OF
GRANT OF STOCK OPTION”. The Notice of Grant is part of this
Award Agreement.
(x) “
Number of Option Shares ” shall mean the “Total
Number of Option Shares Granted” as set forth in the Notice
of Grant.
(y) “Intentionally
left blank.
(z) “
Officer ” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act
and the rules and regulations promulgated thereunder.
(aa) “
Option ” means this option to purchase Shares of
Common Stock granted pursuant to this Award Agreement.
(bb) “
Optioned Stock ” means the Common Stock subject to the
Option.
(cc) “
Option Termination Date ” shall mean the date
occurring seven (7) years after the Date of Option
Grant.
(dd) “
Parent ” means a “parent corporation,”
whether now or hereafter existing, as defined in Section 424(e) of
the Code.
(ee) “
Person ” shall have the meaning ascribed to such term
under Sections 13(d) and 14(d) of the Exchange Act.
(ff) “
Service Provider ” means an Employee, Director or
Consultant.
(gg) “
Share ” means a share of the Common Stock, as adjusted
in accordance with Section 10 of the Agreement.
(hh) “
Subsidiary ” means a “subsidiary
corporation”, whether now or hereafter existing, as defined
in Section 424(f) of the Code and also include partnerships,
limited liability companies and other entities that are at least
30% owned by the Company.
(ii) “
Vested Ratio ” means:
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Vested Ratio
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Prior to
Initial Vesting Date
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0
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On Initial
Vesting Date, for each full year of the Participant’s
remaining a Service Provider from the Date of Option Grant until
the Initial Vesting Date
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1/4
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For each
subsequent full year thereafter of the Participant’s
remaining a Service Provider from the Initial Vesting
Date
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1/4
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In no event
shall the Vested Ratio exceed 1/1.
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Notwithstanding
the foregoing, in the event that Participant’s employment is
terminated by the Company without Cause or if Participant resigns
for Good Reason, and such termination is not in Connection with a
Change of Control, then Participant will receive twelve
(12) months accelerated vesting with respect to
Participant’s then outstanding unvested portion of the Award,
provided that Participant signs the separation agreement and
release of claims as set forth in Section 8(d) of the Employment
Agreement and otherwise complies with such section.
Notwithstanding
the foregoing, in the event that Participant’s employment is
terminated by the Company without Cause or if Participant resigns
for Good Reason, and such termination is in Connection with a
Change of Control, then Participant will become fully vested in
Participant’s then outstanding unvested portion of the Award,
provided that Participant signs the separation agreement and
release of claims as set forth in Section 8(d) of the Employment
Agreement and otherwise complies with such section.
Notwithstanding
the foregoing, in the event that Participant resigns for Good
Reason due to (x) the failure of the Company to appoint
Par
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