EXHIBIT 10.4

 

3COM CORPORATION

 

1984 EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated by the Board as of 9/20/2001)

 

        1.             Purpose.  The 3Com Corporation 1984 Employee Stock
Purchase Plan (the “Prior Plan”) was established to provide eligible employees
of 3Com Corporation (“3Com”) and any current or future subsidiary corporation(s)
of 3Com (collectively referred to as the “Company”) with an opportunity, through
payroll deductions, to acquire common stock of 3Com.  The Prior Plan has been
amended from time to time.  On September 28, 1995, the Board of Directors of
3Com (the “Board”) amended and restated the Prior Plan as amended in order to
make various changes to the Prior Plan considered beneficial for continuing to
carry out the purposes of such plan, all in the form set forth herein (the
“Plan”).  For purposes of the Plan, a parent corporation and a subsidiary
corporation shall be as defined in sections 424(e) and 424(f) of the Internal
Revenue Code of 1986, as amended (the “Code”).  The Company intends that the
Plan shall qualify as an “employee stock purchase plan” under section 423 of the
Code (including any future amendments or replacements of such section), and the
Plan shall be so construed.  Any term not expressly defined in the Plan but
defined for purposes of section 423 of the Code shall have the same definition
herein.  Because an eligible employee who participates in the Plan (a
“Participant”) may withdraw the Participant’s accumulated payroll deductions and
terminate participation in the Plan or any Offering (as defined below) therein
at any time during an Offering Period (as defined below), the Participant is, in
effect, given an option which may or may not be exercised during any Offering
Period.

 

        2.             Share Reserve.  The maximum number of shares which may be
issued under the Plan shall be 41,687,441 (as adjusted for stock splits and
stock dividends, and similar events) shares of 3Com’s authorized but unissued
common stock (the “Shares”).  In the event that any option granted under the
Plan (an “Option”) for any reason expires or is terminated, the Shares allocable
to the unexercised portion of such Option may again be subjected to an Option.

 

        3.             Administration.  The Plan shall be administered by the
Board and/or by a duly appointed committee of the Board having such powers as
shall be specified by the Board.  Any subsequent references to the Board shall
also mean the committee if it has been appointed.  All questions of
interpretation of the Plan or of any Options shall be determined by the Board
and shall be final and binding upon all persons having an interest in the Plan
and/or any Option.  Subject to the provisions

 

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of the Plan, the Board shall determine all of the relevant terms and conditions
of Options granted pursuant to the Plan; provided, however, that all
Participants granted Options pursuant to the Plan shall have the same rights and
privileges within the meaning of section 423(b)(5) of the Code.  All expenses
incurred in connection with the administration of the Plan shall be paid by the
Company.

 

        4.             Eligibility.  Any regular employee of the Company is
eligible to participate in the Plan and any Offering (as hereinafter defined)
under the Plan except the following:

 

                        (a)           employees who are customarily employed by
the Company for less than twenty (20) hours a week;

 

                        (b)           employees who own or hold options to
purchase or who, as a result of participation in the Plan, would own or hold
options to purchase stock of the Company possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
within the meaning of section 423(b)(3) of the Code; and

 

                        (c)           with respect to participation in the
Additional Chipcom Offering described in paragraph 5(a) below, employees who
were not employed by the Company or Chipcom Corporation (“Chipcom”) as of
October 2, 1995.

 

        5.             Offerings.

 

                        (a)           Offering Periods Beginning On or After
October 1, 1999.  Except as otherwise set forth below, effective October 1,
1999, the Plan shall be implemented by offerings (individually, an “Offering”)
of twenty-four (24) months duration (an “Offering Period”).  An Offering shall
commence on April 1 and October 1 of each year and end on the second March 31
and September 30, respectively, occurring thereafter.  Notwithstanding the
foregoing, the Board may establish a different term for one or more of the
Offerings and/or different commencing and/or ending dates for such Offerings. 
An employee who becomes eligible to participate in the Plan after such Offering
but may participate in any subsequent Offering provided such employee is still
eligible to participate in the Plan as of the commencement of any such
subsequent Offering. Eligible employees may not participate in more than one
Offering at a time.  The first day of an Offering Period shall be the “Offering
Date” for such Offering Period.  In the event the first and/or last day of an
Offering Period is not a business day, the Company shall specify the business
day that will be deemed the first or last day, as the case may be, of the
Offering Period.

 

                        (b)           Purchase Periods.  Each Offering Period
shall consist of four (4) consecutive purchase period of six (6) months duration
(a “Purchase Period”).  The last day of each Purchase Period shall be the
“Purchase Date” for such Purchase Period.  A Purchase Period commencing on

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April 1 shall end on the next September 30.  A Purchase Period commencing on
October 1 shall end on the next March 31.  Notwithstanding the foregoing, the
Board may establish a different term for one or more Purchase Periods and/or
different commencing dates and/or Purchase Dates for such Purchase Periods.   In
the event the first and/or last day of a Purchase Period is not a business day,
the Company shall specify the business day that will be deemed the first or last
day, as the case may be, of the Purchase Period.

 

                        (c)           Governmental Approval; Shareholder
Approval.  Notwithstanding any other provision of the Plan to the contrary, any
Option granted pursuant to the Plan shall be subject to (i) obtaining all
necessary governmental approvals and/or qualifications of the sale and/or
issuance of the Options and/or the Shares, and (ii) in the case of Options with
an Offering Date after an amendment to the Plan, obtaining any necessary
approval of the shareholders of the Company required in paragraph 17.

 

        6.             Participation in the Plan.

 

                        (a)           Initial Participation.  An eligible
employee may elect to become a Participant effective as of the first Offering
Date after satisfying the eligibility requirements set forth in paragraph 4
above by delivering a subscription agreement authorizing payroll deductions (a
“Subscription Agreement”) to the Company’s Stock Administration office not later
than fifteen (15) calendar days, or such other period as the Company may
determine in its sole discretion, prior to such Offering Date.  Such
Subscription Agreement shall state the eligible employee’s election to
participate in the Plan and the rate at which payroll deductions shall be
accumulated.  An eligible employee who does not deliver a Subscription Agreement
to the Company’s Stock Administration office at least fifteen (15) calendar
days, or such period as the Company may determine in its sole discretion, prior
to the first Offering Date after becoming eligible to participate in the Plan,
shall not participate in the Plan for that Offering Period or for any subsequent
Offering Period unless such employee subsequently enrolls in the Plan by filing
a Subscription Agreement with the Company in accordance with this paragraph
6(a).

 

                        (b)           Automatic Participation in Subsequent
Offerings.  A Participant shall automatically participate in each subsequent
Offering Period until such time as such Participant ceases to be eligible as
provided in paragraph 4, the Participant withdraws from the Plan pursuant to
paragraph 10 below, or the Participant terminates employment as provided in
paragraph 11 below.  A Participant is not required to file an additional
Subscription Agreement for such Offering Periods in order to automatically
participate therein.  Unless otherwise indicated in a subsequently filed

 

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Subscription Agreement, the rate at which payroll deductions shall be
accumulated with respect to any such subsequent Offering Period shall equal the
rate applicable to the immediately preceding Offering Period.

 

        7.             Purchase Price

 

                        (a)           Purchase Price.  The purchase price at
which Shares may be acquired in any Offering Period under the Plan shall be
eighty-five percent (85%) of the lesser of (a) the fair market value of the
Shares on the Offering Date of such Offering Period or (b) the fair market value
of the Shares on the Purchase Date of such Offering Period.  For purposes of the
Plan, the fair market value of the Shares at any point in time shall be
determined by the Board based on such factors as the Board deems relevant;
including, without limitation, the mean of the bid and asked price of the Shares
on the date in question as reported by the National Association of Securities
Dealers Automated Quotation System.

 

                        (b)           Automatic Transfer to Low Price Offering
Period.  To the extent permitted by any applicable laws, regulations, or stock
exchange rules, if the Fair Market Value of the common stock on any Exercise
Date in an Offering Period is lower than the Fair Market Value of the common
stock on the Enrollment Date of such Offering Period, then all participants in
such Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their option on such Exercise Date and
automatically re-enrolled in the immediately following Offering Period as of the
first day thereof.

 

        8.             Payment of Purchase Price; Payroll Deductions.

 

                        (a)           Accumulation of Payroll Deductions.  The
purchase price of Shares to be acquired in an Offering Period shall be
accumulated only by payroll deductions over the Offering Period.  Payroll
deductions from a Participant’s compensation on each payday during the Offering
Period (i) shall not exceed ten percent (10%) of such Participant’s base pay per
month reduced by any payroll deductions from such Participant’s compensation to
purchase stock under any other plan of the Company intended to qualify as an
“employee stock purchase plan” under section 423 of the Code, and (ii) shall not
be less than one percent (1%) of the Participant’s base pay per month.  For
purposes hereof, a Participant’s “Compensation” from the Company is an aggregate
that shall include base wages or salary, commissions, overtime, discretionary
bonuses, semi-annual bonuses, other incentive payments, shift premiums, stand-by
payments and call-out payments paid in cash during such Offering Period before
deduction for any contributions to any plan maintained by the Company and
described in section 401(k) or section 125 of the Code.  Compensation shall not
include

 

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reimbursement of expenses, allowances, long-term disability, workers’
compensation or any amount deemed received without the actual transfer of cash
or any amounts directly or indirectly paid pursuant to the Plan or any other
stock purchase or stock option plan, or any other compensation not included in
the preceding sentence.  Payroll deductions shall commence on the first payday
following the first day of a Offering Period or as soon as administratively
feasible thereafter and shall continue to the end of such Offering Period unless
sooner altered or terminated as provided in the Plan.

 

                        (b)           Election to Change Payroll Deduction
Rate.  A Participant may decrease (but not increase) the rate of payroll
deductions with respect to an Offering  Period only on or before and effective
as of the date three (3) months after the beginning of such Offering Period by
filing an amended Subscription Agreement with the Company.  A Participant may
increase or decrease the rate of payroll deductions for any subsequent Offering
Period by filing a new Subscription Agreement with the Company not later than
fifteen (15) calendar days, or such other period as the Company may determine in
its sole discretion, prior to the beginning of such subsequent Offering Period.

 

                        (c)           Participant Accounts.  Individual accounts
shall be maintained for each Participant.  All payroll deductions from a
Participant’s compensation shall be credited to the Participant’s account under
the Plan and shall be deposited with the general funds of the Company.  No
interest shall accrue on such payroll deductions.  All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.

 

        9.             Purchase of Shares.

 

                        (a)           Purchase.  On the Purchase Date of each
Offering Period, each remaining Participant shall automatically purchase,
subject to the limitations set forth in paragraphs 9(b) and 9(c) below, that
number of whole Shares arrived at by dividing the total amount theretofore
credited to the Participant’s account pursuant to paragraph 8(c) by the purchase
price established for such Offering Period pursuant to paragraph 7.  Any cash
balance remaining in the Participant’s Plan account shall be refunded to the
Participant as soon as practicable after the Purchase Date.  In the event the
cash to be returned to a Participant pursuant to the preceding sentence is an
amount less than the amount necessary to purchase a whole Share, such amount
shall continue to be credited to the Participant’s Plan account and shall be
applied toward the purchase of Shares in the immediately subsequent Offering
Period.  No Shares shall be purchased in a given Offering Period on behalf of a
Participant whose participation in the Plan has terminated prior to the Purchase
Date for such Offering Period.

 

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                        (b)           Share Limitation.  Subject to the
adjustments set forth in paragraph 13 below, no Participant shall be entitled to
purchase more than 4,000 Shares in a single Offering.

 

                        (c)           Fair Market Value Limitation. 
Notwithstanding any other provision of the Plan, no Participant shall be
entitled to purchase Shares under the Plan (or any other employee stock purchase
plan which is intended to meet the requirements of section 423 of the Code
sponsored by 3Com or a parent corporation or subsidiary corporation of 3Com) at
a rate which exceeds $25,000 in fair market value (or such other limit as may be
imposed by section 423 of the Code) for each calendar year in which the
Participant participates in the Plan or any other employee stock purchase plan
described in this sentence, as determined in accordance with section 423(b)(8)
of the Code.

 

                        (d)           Pro Rata Allocation.  In the event the
number of Shares which might be purchased by all Participants in the Plan
exceeds the number of Shares available in the Plan, the Company shall make a pro
rata allocation of the remaining Shares in as uniform a manner as shall be
practicable and as the Company shall determine to be equitable.

 

                        (e)           Rights as a Shareholder and Employee.  A
Participant shall have no rights as a shareholder by virtue of the Participant’s
participation in the Plan until the date of issuance of a stock certificate(s)
for the Shares being purchased pursuant to the exercise of the Participant’s
Option.  No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date such stock certificate(s)
are issued.  Nothing herein shall confer upon a Participant any right to
continue in the employ of the Company or interfere in any way with any right of
the Company to terminate the Participant’s employment at any time.

 

                        (f)            The Company may, from time to time,
establish or change (i) limitations on the frequency and/or number of changes in
the amount withheld during an Offering, (ii) an exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, (iii) procedures for
permitting unequal percentages of payroll withholding from a Participant’s
compensation in order to accommodate the Company’s established payroll
procedures or mistakes or delays in following those procedures when processing
Participants’ withholding elections, and (iv) such other limitations or
procedures as deemed advisable by the Company in the Company’s sole discretion
which are consistent with the Plan and section 423 of the Code.

 

                        (g)           Any portion of a Participant’s Option
remaining unexercised after the end of the Offering Period to which such right
relates shall expire immediately upon the end of such period.

 

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        10.           Withdrawal.

 

                        (a)           Withdrawal From the Plan.  A Participant
may withdraw from the Plan by signing and delivering to the Company’s Stock
Administration office, a notice of withdrawal on a form provided by the Company
for such purpose.  Such withdrawal must be elected no later than five (5)
business days prior to the end of an Offering Period to be effective for that
Offering Period.  A Participant is prohibited from again participating in an
Offering upon withdrawal from the Plan during such Offering.  A Participant who
elects to withdraw from the Plan may again participate in the Plan by filing a
new Subscription Agreement in the same manner as set forth in paragraph 6(a)
above for initial participation in the Plan.  The Company may impose, from time
to time, a requirement that the notice of withdrawal be on file with the Company
for an additional reasonable period of time prior to the effectiveness of the
Participant’s withdrawal from the Plan.

 

                        (b)           Return of Payroll Deductions.  Upon
withdrawal from the Plan, the accumulated payroll deductions credited to a
withdrawing Participant’s account shall be returned to the Participant and the
Participant’s interest in the Plan shall terminate.  No interest shall accrue on
the payroll deductions of a Participant.

 

        11.           Termination of Employment.  Termination of a Participant’s
employment with the Company for any reason, including retirement or death, or
the failure of a Participant to remain an eligible employee, shall terminate the
Participant’s participation in the Plan immediately.  Upon such termination, the
payroll deductions credited to the Participant’s account shall be returned to
the Participant (or in the case of the Participant’s death, to the Participant’s
legal representative) and all of the Participant’s rights under the Plan shall
terminate.  A Participant whose participation has been so terminated may again
become eligible to participate in the Plan by again satisfying the requirements
of paragraphs 4 and 6.

 

        12.           Repayment of Payroll Deductions Without Interest.  In the
event a Participant’s interest in the Plan is terminated, the Company shall
deliver to the Participant (or in the case of the Participant’s death or
incapacity, to the Participant’s legal representative) the payroll deductions
credited to the Participant’s account.  No interest shall accrue on the payroll
deductions of a Participant.

 

        13.           Capital Changes.  In the event of changes in the common
stock of the Company due to a stock split, reverse stock split, stock dividend,
combination, reclassification or like change in the Company’s capitalization, or
in the event of any merger, sale or reorganization, appropriate adjustments
shall be made by the Company in (a) the number and class of Shares of stock
subject to the Plan and to any outstanding Option, (b) the purchase price per
Share of any outstanding Option and (c) the Share limitation set forth in
paragraph 9(b) above.

 

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        14.           Nonassignability.  Only the Participant may elect to
exercise the Participant’s Option during the Participant’s lifetime, and no
rights or accumulated payroll deductions of any Participant under the Plan may
be pledged, assigned or transferred for any reason, except by will or the laws
of descent and distribution, and any such attempt may be treated by the Company
as an election by the Participant to withdraw from the Plan.

 

        15.           Reports.  Each Participant shall receive after the last
day of each Offering Period a report of the Participant’s account setting forth
the total payroll deductions accumulated, the number of Shares purchased and the
remaining cash balance to be carried over and/or refunded pursuant to paragraph
9(a) above, if any.

 

        16.           Plan Term.  This Plan shall continue until terminated by
the Board or until all of the Shares reserved for issuance under the Plan have
been issued.

 

        17.           Amendment or Termination of the Plan.  The Board may at
any time amend or terminate the Plan, except that such termination cannot affect
Options previously granted under the Plan except as otherwise permitted by the
Plan, nor may any amendment make any change in an Option previously granted
under the Plan which would adversely affect the right of any Participant except
as otherwise permitted by the Plan, nor may any amendment be made without
approval of the shareholders of the Company within twelve (12) months of the
adoption of such amendment if such amendment would authorize the sale of more
shares than are authorized for issuance under the Plan or would change the
designation of corporations whose employees may be offered Options under the
Plan.  Notwithstanding any other provision of the Plan to the contrary, in the
event of an amendment to the Plan which affects the rights or privileges of
Options to be offered under the Plan, each Participant with an outstanding
Option shall have the right to exercise such outstanding Option on the effective
date of the amendment and to participate in the Plan for the remaining term of
such outstanding Option pursuant to the terms and conditions of the Plan as
amended.  If in accordance with the preceding sentence a Participant elects to
exercise such outstanding Option and to commence participation in the Plan as
amended on the effective date of such amendment, the Participant shall be deemed
to have received a new Option on such effective date, and such effective date
shall be deemed the Offering Date for such Option.

 

        18.           Clawback.  The Board may, in its discretion and, to the
extent necessary or desirable, modify or amend the Plan to reduce or eliminate
an unfavorable accounting consequence including, but not limited to: (i)
altering the Purchase Price for an Offering Period including an Offering Period
underway at the time of the change in Purchase Price; (ii) shortening any
Offering Period so that Offering Period ends on a new Exercise Date, including
an Offering Period underway at the time of the Board action; and (iii)
allocating shares.  Such modifications or amendments shall not require
stockholder approval or the consent of any Plan participants.

 

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