Exhibit 10.28
SEVERANCE BENEFITS AGREEMENT
This Severance Benefits Agreement (the "Agreement") is made and entered
into by and between Xxxxx Xxxxxxxx (the "Executive") and 3Com Corporation
("3Com" or the "Company"), effective as of the date of the Executive's signature
below (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
President, TippingPoint Division and is eligible to receive severance benefits
pursuant to the Company's Above Grade Severance Plan (as amended, the "Plan");
and
WHEREAS, the Executive's Severance Benefit Agreement dated February 3, 2006
is scheduled to terminate by its express terms on February 2, 2007; and
WHEREAS, the Company seeks to renew and reconfirm 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 the current Plan provisions or any amendments to the Plan after
the Effective Date, the terms of eligibility and the severance benefits for
which the Executive is eligible shall not be less than those 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, without limitation: (i)
a release of claims against the Company, its affiliates and representatives,
(ii) a non-solicitation provision prohibiting the Executive's solicitation or
hire 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:
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X. Xxxxxxxxx Amounts.
1. 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 payroll practices for twelve (12) months, provided
that the Executive has executed and has not revoked the Release Agreement and
the Executive continues to comply with all terms and conditions of the Release
Agreement during the twelve (12) month period; and
2. 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
and 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 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, 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 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.
1. 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.
2. Extension of the exercise period for vested stock options
issued to the Executive to the earlier of: (i) one hundred and sixty-five (165)
calendar days from the Termination Date; or (ii) the original term of the stock
option grant.
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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 and awards are subject to the terms and conditions of the
applicable plan document(s).
5. Voluntary Resignation. Notwithstanding the conditions set forth in
Section 3 above, the Company shall provide the Executive with the severance
benefits set forth in Sections 5(A) through 5(C) below if the Executive
voluntary resigns from employment with the Company for any reason with an
effective date between August 1, 2007 and August 31, 2007, upon written notice
received by the Company's President and Chief Executive Officer within a
reasonable period prior to the Executive's Termination Date, and the Executive
signs and does not revoke the Release Agreement (amended pursuant to Section
5(D) below). The resignation period referenced above may be changed to the
period between November 1, 2007 and November 30, 2007 at the Company's
discretion upon written notice issued to the Executive on or before July 2,
2007.
X. Xxxxxxxxx Payment. A severance payment in the gross amount of: (1)
six (6) months of the Executive's annualized base salary as of the Termination
Date and (2) one-half (1/2) of the Executive's annualized target bonus as of the
Termination Date. The payment shall be subject to all applicable taxes and
withholdings, paid through the Company's regular payroll practices for six
months, provided that the Executive has executed and has not revoked the Release
Agreement and the Executive continues to comply with all terms and conditions of
the Release Agreement during the six (6) month period beginning after the
effective date of the Executive's Release Agreement.
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 pay the full premiums for the Executive's elected coverage under
the Health Care Plans until the earlier of: (i) six (6) months 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). 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 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 six (6) month 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. Equity Compensation.
1. Six (6) months of accelerated vesting of outstanding stock
options, restricted stock, and restricted stock units issued to the Executive by
the Company that are subject to
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time-based vesting. The accelerated vesting provided for herein will be
effective as of the Termination Date.
2. Accelerated vesting of 12.5% of each grant or award of stock
options, restricted stock, and restricted stock units issued to the Executive by
the Company that are not subject to time-based vesting (other than cliff
vesting), such as PAVRS.
D. Release Agreement Amendment. If the conditions set forth above are
satisfied and the Executive is eligible for severance benefits under this
Section 5, the Release Agreement shall be amended to provide that the
non-competition and non-solicitation periods shall be reduced to six (6) months
from the Termination Date. The non-competition and non-solicitation provisions
of the Release Agreement shall supersede Section 7
(Non-Competition/Non-Solicitation) of the Restrictive Covenant and
Non-Competition Agreement that the Executive signed for the benefit of the
Company effective February 21, 2005 (the "Restrictive Covenant Agreement");
provided, however, that the Restrictive Covenant Agreement shall be otherwise
unmodified and shall remain in full force and effect.
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 Sections 5(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). In the event that the Executive is eligible for severance
benefits under Section 4 above and this Section 5, the Executive shall receive
only the severance benefits under Section 4 above.
6. 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 supplemental taxes or any penalties based on the payments provided
under Sections 4(A) or 5(A) above within the first six (6) months following the
Termination Date, the Company will modify the payment schedule to provide that
the payment(s) will begin (or occur, as applicable) on the first regularly
scheduled payroll date following the expiration of six (6) months and one (1)
day after the Termination Date.
7. 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,
except to the extent limited 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 Sections 3 and 5 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's Management Retention Agreement effective
November 2, 2005 (the "MRA") shall remain in full force and effect.
8. Entire Agreement/Integration. 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 the
Executive's eligibility to receive severance benefits from the Company and
supersedes all prior arrangements and understandings regarding such benefits,
including, without limitation, the Executive's Severance Benefits Agreements
dated February 3, 2006 and April 16, 2006, respectively; provided, however, that
the terms
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and conditions of the Plan and the MRA shall remain in full force and effect. If
the Executive is eligible for any benefits under the MRA, he will not be
eligible for any benefits under this Agreement.
9. Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the federal Executive
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
state and federal courts of Massachusetts, sitting in Boston, Massachusetts, as
the exclusive venue for settling any disputes arising hereunder.
10. 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 Chief Administrative and
Legal Officer and all notices issued hereunder on behalf of the Company shall be
issued by the Company's President and Chief Executive Officer or Chief
Administrative and Legal Officer.
11. 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, 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 XXXXX XXXXXXXX
/s/ Xxxx X. Xxxxxxx /s/ Xxxxx Xxxxxxxx
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Xxxx X. Xxxxxxx
Chief Administrative and Legal
Officer
3/13/07 2/28/07
DATE DATE
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