3COM CORPORATION STAND ALONE RESTRICTED STOCK AGREEMENT
Exhibit 10.3
3Com Corporation has granted Xxx Xxxxx, (the “Participant”), Restricted Stock shares in
accordance with the Participant’s Offer of Employment letter dated May 9, 2007, (“Offer Letter”),
subject to the following terms and conditions as set forth in this Award Agreement. The “Effective
Date” of this Award Agreement shall be July 3, 2007.
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
restricted stock 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 the
applicable laws of the Commonwealth of Massachusetts.
(c) “Award” means, individually or collectively, the grant of Restricted Stock under
this Award Agreement and Notice of Grant of Restricted Stock.
(d) “Award Agreement” means this Stand Alone Restricted Stock 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.
(f) “Cause” means:
(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 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 the Participant that has a material
detrimental effect on the Company’s reputation or business;
(v) The Participant 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 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
-1-
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
(vii) The Participant’s disqualification or bar by any U.S. governmental or self-regulatory
authority from serving in the capacity contemplated by the Offer Letter 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 Offer Letter, 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 Offer Letter 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 becomes 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 consummation of the sale or disposition by the Company of all or substantially all
the Company’s assets; or
(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; or
(iv) A change in the composition of the Board occurring within a two-year period, as a result
of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
shall mean directors who either (A) are directors of the Company as of the date upon which this
Agreement was entered into, 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 transaction described in subsections (i), (ii), or (iii) above, or in
connection with an actual or threatened proxy contest relating to the election of directors to 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.
2
(m) “Date of Restricted Stock 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 absence from his 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 Participant’s mental or physical illness or injury.
(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) “Good Reason” means the occurrence of any of the following, without the
Participant’s express written consent:
(i) A material reduction of the Participant’s material duties or title, relative to the
Participant’s material duties or title as in effect immediately prior to such reduction position;
(ii) A material reduction by the Company in the base salary of the Participant as in effect
immediately prior to such reduction, other than a reduction generally applicable to other executive
officers of the Company; or
(iii) The permanent relocation of the Participant to a work location more than fifty (50)
miles from the Participant’s then-present work location.
(s) “In Connection with a Change of Control” means within three (3) months prior to or
twelve (12) months following a Change of Control.
(t) “Initial Vesting Date” shall be the date occurring one (1) year after the Date
Restricted Stock Grant.
(u) “Notice of Grant” shall mean the “NOTICE OF GRANT OF RESTRICTED STOCK”. The
Notice of Grant is part of this Award Agreement.
(v) “Number of Restricted Stock” shall mean the “Total Number of Restricted Stock
Granted” as set forth in the Notice of Grant.
(w) “Offer Letter” means the offer of employment letter issued May 9, 2007.
(x) “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.
(y) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
(z) “Restricted Stock” means shares of Common Stock or units/rights to
acquire shares of Common Stock granted pursuant to the Plan that are subject to vesting.
(aa) “Service Provider” means an Employee, Director or Consultant.
3
(bb) “Share” means a share of the Common Stock, as adjusted in accordance with the
Plan.
(cc) “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.
(dd)“Vested Ratio” means:
| Vested Ratio | ||||
Prior to Initial Vesting Date
|
0 | |||
On Initial Vesting Date, for each full year of the Participant’s remaining a Service
Provider from the Date of Restricted Stock Grant until the Initial Vesting Date
|
1/4 | |||
Plus |
||||
For each subsequent full year thereafter of the Participant’s remaining a Service
Provider from the Initial Vesting Date
|
1/4 | |||
In no event shall the Vested Ratio exceed 1/1. |
||||
Notwithstanding the foregoing, in the event that the Participant is terminated without Cause
or resigns for Good Reason other than in Connection with a Change of Control, the Participant shall
receive twelve (12) months accelerated vesting with respect to the Participant’s then outstanding
unvested portion of the Award, provided that the Participant signs and does not revoke a Release
Agreement as described in paragraphs 3 of the Management Retention Agreement and the Severance
Benefits Agreement, both signed on June 21, 2007.
Notwithstanding the foregoing, in the event that the Participant is terminated without Cause
in Connection with a Change of Control or resigns for Good Reason in Connection with a Change of
Control, the Participant shall become fully vested in the Participant’s then outstanding unvested
portion of the Award, provided that the Participant signs and does not revoke a Release Agreement
as described in paragraphs 3 of the Management Retention Agreement and the Severance Benefits
Agreement, both signed on June 21, 2007.
2. Leaves of Absence. Unless the Administrator provides otherwise or as otherwise
required by Applicable Laws, the Restricted Stock shall cease to vest on the 91st day of
any unpaid leave of absence and shall only recommence upon the Participant’s return to active
service.
3. Rights as a Shareholder or Employee. The Participant shall have no rights as a
stockholder with respect to any Shares until the date of the issuance of a certificate or
certificates for the Shares which have vested has been exercised.
4. No Guarantee of Continued Service. THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN
EMPLOYEE OR OTHER SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THE RESTRICTED STOCK OR ACQUIRING SHARES HEREUNDER). THE
4
PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE OR OTHER SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH THE PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE PARTICIPANT’S RELATIONSHIP AS AN EMPLOYEE OR OTHER SERVICE PROVIDER OF THE COMPANY AT
ANY TIME, WITH OR WITHOUT CAUSE OR NOTICE.
5. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation or Change
of Control.
(a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Award, as well as the
price per share of Common Stock covered by each such outstanding Award, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from
a stock split, reverse stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Award.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify the Participant as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for the Participant to have the right to exercise his Award until ten (10) days prior to
such transaction as to all of the stock covered thereby, including Shares as to which the Award
would not otherwise be vested or exercisable.
(c) Change of Control. In the event of a Change of Control, each outstanding
Restricted Stock award shall be assumed or an equivalent award substituted by the successor
corporation or a Parent or subsidiary of the successor corporation. In the event that the
successor corporation refuses to assume or substitute for the Restricted Stock, the Participant
shall fully vest in the Restricted Stock, including Shares as to which it would not otherwise be
vested. For the purposes of this paragraph, the Restricted Stock shall be considered assumed if,
following the Change of Control, the Restricted Stock confers the right to receive, for each Share
and each unit/right to acquire a Share that is subject to the Restricted Stock award immediately
prior to the Change of Control, the consideration (whether stock, cash, or other securities or
property) received in the Change of Control by holders of Common Stock for each Share and each
unit/right to acquire a Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in the Change of
Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received, for each Share
and each unit/right to acquire a Share subject to the Restricted Stock award, to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change of Control.
5
6. Non-Transferability of Restricted Stock. Restricted Stock may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution.
7. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exercise or vesting
of an Award unless the exercise or vesting of such Award and the issuance and delivery of such
Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel
for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the Participant or any authorized person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the opinion of counsel
for the Company, such a representation is required.
(c) Inability to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
8. Legends. The Company may at any time place legends referencing any applicable
federal and/or state securities restrictions on all certificates representing shares of stock
subject to the provisions of this Award Agreement. The Participant shall, at the request of the
Company, promptly present to the Company any and all certificates representing Shares acquired
pursuant to the Restricted Stock in the possession of the Participant in order to effectuate the
provisions of this Section.
9. Escrow.
(a) Establishment of Escrow. To ensure that the Shares subject to the Unvested Share
Reacquisition Right will be available for reacquisition, the Company may require the Participant to
deposit the certificate or certificates evidencing the Unvested Shares with an escrow agent
designated by the Company under the terms and conditions of an escrow agreement approved by the
Company. If the Company does not require such deposit as a condition of the issuance of Shares to
the Participant, the Company reserves the right at any time to require the Participant to so
deposit the Unvested Share certificate or certificates in escrow. The Company shall bear the
expenses of the escrow.
(b) Delivery of Shares to the Participant. As soon as practicable after the
expiration of the Unvested Share Reacquisition Right, the escrow agent shall deliver to the
Participant the Shares no longer subject to such restriction.
Section 83(b) Election. The Participant acknowledges and understands that when the
Shares become Vested Shares under this Award Agreement, Section 83 of the Code imposes a tax at
ordinary income rates with respect to such Vested Shares in an amount equal to the fair market
value of such Vested Shares, determined on the date such Shares become Vested Shares. The
Participant also understands that (i) alternatively, the Participant may elect to be taxed in the
year the Shares were granted rather than when the Shares become Vested Shares by filing an election
under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the
Grant Date; (ii) if the Participant files such an election, the Participant will be taxed at
ordinary income rates on the fair market value of the
6
Shares on the Grant Date; (iii) if the
Participant makes such an election he must provide the Company with a copy of the election no later
than three (3) business days after filing the election with the Internal Revenue Service; and (iv)
the Participant must file another copy of the election with his federal income tax return for the
tax year in which Participant filed the election. The Participant acknowledges that it is the
Participant’s sole responsibility and not the Company’s responsibility to determine whether it is
advisable to make the election and, if the Participant so elects, to file the election in a timely
fashion and to make any filings under corresponding provisions of state tax law.
10. Withholding. At the time that this Award Agreement is executed, or at any time
thereafter as determined by the Company, the Company shall have the right to withhold the
applicable minimum withholding taxes, including but not limited to federal tax, state tax, foreign
taxes, or social taxes, if any, which arise in connection with the acquisition of Shares pursuant
to the Plan, including, without limitation, obligations arising upon (i) the transfer, in whole or
in part, of any Shares, (ii) the lapse of any restriction with respect to any Shares acquired
pursuant to the Plan, or (iii) the filing of an election to recognize a tax liability. The
Participant authorizes the Company to withhold from the Participant’s compensation such amounts as
may be necessary to satisfy the minimum applicable tax withholding obligations arising in
connection with the issuance of the Shares pursuant to the Plan. The Company shall have no
obligation to issue a certificate as to the Shares and/or to release the Shares from escrow until
applicable withholding obligations have been satisfied.
11. Trade for Taxes (Swap). Please circle the applicable election below if you wish
to trade Shares to satisfy the minimum required tax withholding determined upon the date of vesting
outlined in Section 9 above. If you elect to trade Shares to satisfy the minimum taxes due, the
remaining amount due after the trade, less than the value of one Share, will be deducted from your
cash compensation. If you wish to change your election during the life of the Award Agreement, you
must contact stock administration at least thirty (30) days prior to the applicable vesting date.
TRADE SHARES FOR TAXES DUE (please circle one): YES NO
If you do not wish to trade Shares for taxes, and select “no” above, you must provide payment to
stock administration within fifteen (15) days from date of vesting. If payment is not provided
within fifteen (15) days after applicable taxes are due, stock administration will have the
authority and discretion to (i) trade Shares to satisfy such applicable taxes or (ii) to withhold
the entire tax obligation from your compensation.
12. Broker. Your Shares will be deposited directly into your brokerage account with
the Company’s approved broker when vested and the applicable withholding obligations have been
satisfied.
13. Binding Effect. This Award Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators, successors and
assigns.
14. Amendment or Termination. The Administrator may at any time amend, alter, suspend
or terminate the Agreement; provided, however, that no such amendment, alteration, suspension or
termination may adversely affect the Restricted Stock hereof without the written consent of the
Participant. Termination of the Agreement shall not affect the Administrator’s ability to exercise the
powers granted to it hereunder with respect to Awards granted under the Agreement prior to the date
of such termination.
15. Entire Agreement; Applicable Law. This Award Agreement, along with the
Participant’s Offer Letter, constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes in their entirety all prior undertakings and agreements of the
Company and the Participant with respect to the subject matter hereof. To the extent that this
Award Agreement sets forth
7
terms and conditions that are less beneficial to the Participant than
the Offer Letter, the terms of the Offer Letter shall prevail. This Award Agreement shall be
construed in accordance with, and all disputes hereunder shall be governed by, the laws of the
Commonwealth of Massachusetts without regard to its conflict of laws rules.
16. Notices. Any notice to be given to the Company hereunder shall be in writing and
shall be addressed to the Company at its then current principal executive office or to such other
address as the Company may hereafter designate to the Participant. Any notice to be given to the
Participant hereunder shall be addressed to the Participant at the last address known to the
Company, or at such other address as the Participant may hereafter designate to the Company. A
notice shall be deemed to have been duly given when personally delivered or mailed by registered or
certified mail to the party entitled to receive it.
PARTICIPANT
|
3COM CORPORATION | |||
/s/ Xxx Xxxxx
|
/s/ Xxxx X. Xxxxxxx | |||
Xxx Xxxxx
|
Xxxx X. Xxxxxxx | |||
Chief Financial Officer
|
Executive Vice President and Chief Legal and Administrative Officer | |||
7/3/07
|
7/3/07 | |||
Date
|
Date |
8
