Exhibit 10.36
3COM CORPORATION
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement (the "Agreement") is made and entered
into by and between [NAME] (the "Executive") and 3Com Corporation (together with
its subsidiaries and affiliates, "3Com" or the "Company"), effective as of
[DATE]. 3Com and the Executive shall each individually be referred to herein as
a "Party" and together as the "Parties."
RECITALS
A. It is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of control. The
Board of Directors of the Company (the "Board") recognizes that such
consideration can be a distraction to the Executive and can cause the Executive
to consider alternative employment opportunities. The Board has determined that
it is in the best interests of the Company and its stockholders to assure that
the Company will have the continued dedication and objectivity of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The Board believes that it is in the best interests of the Company and
its stockholders to provide the Executive with an incentive to continue his/her
employment and to motivate the Executive to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.
C. The Board believes that it is imperative to provide the Executive with
severance benefits upon the termination of the Executive's employment under the
circumstances set forth herein within three (3) months prior to or within twelve
(12) months following a Change of Control, which provides the Executive with
enhanced financial security and provides incentive and encouragement to the
Executive to remain with the Company notwithstanding the possibility of a Change
of Control.
D. Certain capitalized terms used in this Agreement are defined in Section
5 below.
The Parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that all
obligations of the Parties hereto with respect to this Agreement have been
satisfied.
2. At-Will Employment. The Company and the Executive acknowledge 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 that specified in Section 3(a) of this
Agreement, then the Executive shall not be entitled to receive severance or
other benefits under this Agreement and shall only be eligible to receive those
severance or other benefits (if any) as may then be established under the
Company's then existing and applicable severance and/or benefit plans or
pursuant to other written agreements with the Company.
MRA 2007
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3. Change of Control Severance Benefits.
(a) Involuntary Termination other than for Cause, death or Disability
or Voluntary Termination for Good Reason Within Three (3) Months Prior to or
Within Twelve (12) Months Following a Change of Control. The Executive shall be
entitled to receive the severance benefits provided below if, within three (3)
months prior to or within twelve (12) months following a Change of Control (as
defined herein), the Executive's employment is terminated (i) involuntarily by
the Company other than for Cause, death or Disability (as such capitalized terms
are defined herein) or (ii) by the Executive pursuant to a Voluntary Termination
for Good Reason (as defined herein). The Executive's receipt of the severance
benefits provided below shall be conditioned upon the Executive's execution of
and compliance with an agreement (the "Release Agreement") which shall include,
without limitation, (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 Executive's 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 Executive's 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. The
severance benefits for which the Executive is eligible include the following:
(i) Severance Payments. One hundred percent (100%) of the
Executive's Annual Compensation, subject to all legally required taxes and
withholdings, paid through the Company's regular payroll practices and
continuing for twelve (12) months 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;
(ii) Pro-Rated Bonus Payment. 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; provided, however, that if a qualifying termination of employment
occurs and the Termination Date is within three (3) months prior to a Change of
Control, the numerator shall be the number of calendar days from the beginning
of the applicable bonus period to the effective date of the Change of Control.
The pro-rated bonus referenced herein shall be paid 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.
(iii) 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
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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) two (2) years from the
Executive's last date of employment, 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; provided, however, that the
Company-paid portion of Executive's premium shall not be changed to be
proportionately less than the Company-paid portion of then-current employees. To
be eligible for continuation of coverage under the Health Care Plans, the
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.
(iv) 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) two (2) years from the Termination Date, or
(ii) the date upon which the Executive becomes eligible for coverage under
another employer's life insurance plan.
(v) Equity Compensation Accelerated Vesting. One hundred percent
(100%) of the unvested portion of any stock option, restricted stock or other
Company equity compensation issued by the Company to the Executive shall
automatically be accelerated in full so as to become completely vested;
provided, however, that if a qualifying termination of employment occurs and the
Termination Date is within three (3) months prior to a Change of Control, such
acceleration shall become effective upon the effective date of the Change of
Control; and
(vi) Extension of Stock Option and Stock Appreciation Right
Post-Termination Exercisability. The post-termination exercise period of any
outstanding Company stock options and stock appreciation rights held by the
Executive shall be extended to the lesser of (A) one hundred and sixty-five
(165) calendar days from the Executive's Termination Date, or (B) the original
term of the award.
(b) Voluntary Resignation; Termination For Cause. If the Executive's
employment terminates by reason of the Executive's voluntary resignation (and is
not a Voluntary Termination for Good Reason), or if the Executive is terminated
for Cause, then the Executive shall not be entitled to receive severance or
other benefits under this Agreement and shall only be eligible to receive those
severance or other benefits (if any) as may then be established under the
Company's then existing severance and/or benefits plans or pursuant to other
written agreements with the Company.
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(c) Disability; Death. If the Executive's employment with the Company
terminates as a result of the Executive's Disability, or if Executive's
employment is terminated due to the death of the Executive, then the Executive
shall not be entitled to receive severance or other benefits under this
Agreement and shall only be eligible to receive those severance or other
benefits (if any) as may then be established under the Company's then existing
and applicable severance and/or benefit plans or pursuant to other written
agreements with the Company.
(d) Termination Apart from Change of Control. In the event the
Executive's employment is terminated for any reason, either prior to three (3)
months before the occurrence of a Change of Control or after the twelve (12)
month period following a Change of Control, then the Executive shall not be
entitled to receive severance or other benefits under this Agreement and shall
only be eligible to receive those severance or other benefits (if any) as may
then be established under the Company's then existing and applicable severance
and/or benefit plans or pursuant to other written agreements with the Company.
4. Golden Parachute Excise Taxes
(a) Parachute Payments of Less than 3.59 x Base Amount. In the event
that the benefits provided for in this Agreement or otherwise payable to the
Employee (i) constitute "parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) would be
subject to the excise tax imposed by Section 4999 of the Code, and (iii) the
aggregate value of such parachute payments, as determined in accordance with
Section 280G of the Code and the proposed Treasury Regulations thereunder (or
the final Treasury Regulations, if they have then been adopted) is less than the
product obtained by multiplying 3.59 by the Employee's "base amount" within the
meaning of Code Section 280G(b)(3), then such benefits shall be reduced to the
extent necessary (but only to that extent) so that no portion of such benefits
will be subject to excise tax under Section 4999 of the Code.
(b) Parachute Payments Equal to or Greater than 3.59 x Base Amount. In
the event that the benefits provided for in this Agreement or otherwise payable
to the Employee (i) constitute "parachute payments" within the meaning of
Section 280G of the Code, (ii) would be subject to the excise tax imposed by
Section 4999 of the Code, and (iii) the aggregate value of such parachute
payments, as determined in accordance with Section 280G of the Code and the
proposed Treasury Regulations thereunder (or the final Treasury Regulations, if
they have then been adopted) is equal to or greater than the product obtained by
multiplying 3.59 by the Employee's "base amount" within the meaning of Code
Section 280G(b)(3), then the Employee shall receive (i) a payment from the
Company sufficient to pay such excise tax, plus (ii) an additional payment from
the Company sufficient to pay the excise tax and federal and state income and
employment taxes arising from the payments made by the Company to the Employee
pursuant to this sentence.
(c) 280G Determinations. Unless the Company and the Employee otherwise
agree in writing, the determination of the Employee's excise tax liability and
the amount required to be paid or reduced under this Section 4 shall be made in
writing by the Company's independent auditors who are primarily used by the
Company immediately prior to the Change of Control (the "Accountants"). For
purposes of making the calculations required by this
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Section 4, 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. The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 4. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.
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 hereunder 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 Annual Compensation paid through the
Company's regular payroll practices over the six (6) month period immediately
following the expiration of six (6) months and one (1) day after the Termination
Date.
6. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Annual Compensation. "Annual Compensation" shall mean an amount
equal to the sum of (i) the Executive's annualized base salary as in effect
immediately preceding the Change of Control and (ii) the Executive's Target
Bonus.
(b) Cause. "Cause" shall mean (i) an act of theft, embezzlement or
intentional dishonesty by the Executive in connection with his/her employment;
(ii) the Executive being convicted of a felony, (iii) a willful act by the
Executive which constitutes gross misconduct and which is injurious to the
Company, or (iv) following delivery to the Executive of a written demand for
performance from the Company which describes the basis for the Company's
reasonable belief that the Executive has not substantially performed his/her
duties, continued violations by the Executive of the Executive's obligations to
the Company which are demonstrably willful and deliberate on the Executive's
part.
(c) Change of Control. "Change of Control" means the occurrence of any
of the following events:
(i) Any Person becomes the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended), 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 consummation of the sale or disposition by the Company
of all or substantially all the Company's assets; or
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(iii) The consummation 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) at least 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.
(d) Disability. "Disability" shall mean that the Company, in its
discretion, has deemed the Executive's employment to have been voluntarily
terminated because of the Executive's absence from his/her responsibilities with
the Company on a full-time basis for 120 calendar days in any consecutive twelve
(12) month period as a result of the Executive's mental or physical illness or
injury.
(e) Person. "Person" shall have the same meaning accorded to such term
in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.
(f) Target Bonus. "Target Bonus" shall mean the Executive's target
bonus under the operative discretionary bonus plan (i.e., 3Bonus, Management
Incentive Plan, etc., which shall not include any other variable compensation
such as commission), assuming "on target" satisfaction of all objective or
subjective performance goals.
(g) Termination Date. "Termination Date" shall mean the Executive's
last date of employment with 3Com Corporation.
(h) Voluntary Termination for Good Reason. "Voluntary Termination for
Good Reason" shall mean the Executive's voluntarily resignation after the
occurrence of any of the following events without the Executive's consent: (i) a
material reduction of the Executive's material duties or title, relative to the
Executive's material duties or title as in effect immediately prior to such
reduction; (ii) a material reduction by the Company in the base salary of the
Executive as in effect immediately prior to such reduction, other than a
reduction generally applicable to other Executives; or (iii) the permanent
relocation of the Executive to a work location more than fifty (50) miles from
the Executive's then-present work location; provided, however, that no grounds
for Voluntary Termination for Good Reason shall exist hereunder unless the
Executive provides 3Com with thirty (30) days' advance written notice of his/her
resignation, specifying the purported grounds for the Voluntary Termination for
Good Reason, and provides the Company with the opportunity to cure the
above-referenced event(s) on which the resignation is based.
7. Successors.
(a) Company's Successors. Any successor to the Company (whether direct
or indirect and whether by purchase, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company's business and/or assets
shall assume the obligations under this Agreement and agree expressly to perform
the obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the absence of a
succession. For all purposes under this Agreement, the term "Company" shall
include any successor to the Company's business and/or assets which executes and
delivers the
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assumption agreement described in this Section 7(a) or which becomes bound by
the terms of this Agreement by operation of law.
(b) Executive's Successors. The terms of this Agreement and all rights
and obligations of the Executive hereunder shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
8. Notice
(a) General. Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or one day following mailing via Federal Express or similar
overnight courier service. In the case of the Executive, mailed notices shall be
addressed to him/her at his/her home address on file with the Company as of the
date of the notice. In the case of the Company, mailed notices shall be
addressed to its corporate headquarters, and all notices shall be directed to
the attention of its General Counsel.
(b) Notice of Termination. Any termination by the Company for Cause or
by the Executive pursuant to a Voluntary Termination for Good Reason shall be
communicated by a notice of termination to the other Party hereto given in
accordance with Section 8(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not less than thirty (30) days after the giving of such
notice). The failure by the Executive to include in the notice any fact or
circumstance which contributes to a showing of Voluntary Termination for Good
Reason shall not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his/her rights
hereunder.
9. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Executive shall not be required to
mitigate the value of any benefits contemplated by this Agreement, nor shall any
such benefits be reduced by any earnings or benefits that the Executive may
receive from any other source.
(b) Waiver. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Executive and by Company's President and Chief
Executive Officer or General Counsel. No waiver by either Party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other Party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
(whether oral 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
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the subject matter hereof and supersedes all prior arrangements and
understandings regarding same.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Massachusetts. The Parties hereby agree and consent to the jurisdiction of
the state and federal courts of the Commonwealth of Massachusetts as the
exclusive jurisdiction for settling any disputes arising hereunder.
(e) Severability. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) 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, each of the Parties has executed this Agreement, in the case
of the Company by its duly authorized officer.
3COM CORPORATION
By:
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XXXXX XXXXX
President & Chief Executive Officer
EXECUTIVE
By:
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[NAME]
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[TITLE]
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