Exhibit 10.7

 

3COM CORPORATION

 

2003 STOCK PLAN

 

PERFORMANCE VESTING

RESTRICTED STOCK AGREEMENT

 

THIS RESTRICTED STOCK GRANT AGREEMENT (the “Award Agreement”) is made effective
January 25, 2006 (the “Grant Date”), by and between 3Com Corporation (the
“Company”), and R. Scott Murray (the “Participant”).

 

The Company desires to issue and the Participant desires to acquire shares of
the Common Stock as herein described, pursuant to the Company’s 2003 Stock Plan,
as amended (the “Plan”), on the terms and conditions set forth in this Award
Agreement and the Plan, the terms and conditions of which are incorporated
herein by reference. Unless otherwise defined herein, capitalized terms shall
have the meaning given to them in the Plan.

 

IT IS AGREED between the parties as follows:

 

1.          Issuance of Shares. On the Grant Date, the Company shall issue to
the Participant, subject to the provisions hereof and the Plan, 500,000 shares
of Common Stock (the “Shares”) in consideration for the Participant’s service
with the Company.

 

No Shares shall be issued pursuant to this Award Agreement if the issuance and
delivery of such Shares would constitute a violation of any applicable federal
or state securities law or other law or regulation, or would fail to satisfy the
requirements of any stock exchange upon which the Shares may then be listed. As
a condition to the issuance and delivery of the Shares, the Company may require
the Participant to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by
the Company.

 

2.          Administration. All questions of interpretation concerning this
Award Agreement shall be determined by the Administrator. All determinations by
the Administrator shall be final and binding upon all persons having an interest
in this Award Agreement.

 

3.

Vesting and Unvested Share Reacquisition Right.

 

(a)

Vesting.

 

See Exhibit A

 

(b)       One Year Holding Requirement. The Participant is prohibited from
selling, transferring, or otherwise disposing of the Shares for a period of one
(1) year following the vesting, if any, of the Shares, except that Executive may
sell or otherwise dispose of that number of shares sufficient to cover any tax
withholding obligations as determined by the Company.

 

(c)       Unvested Share Reacquisition Right. In the event the Participant’s
Service Provider relationship with the Company is terminated for any reason,
with or without Cause (as defined in the Plan), or in the event that the Vesting
metrics set forth in Exhibit A are not achieved, the Company shall automatically
reacquire Shares that are not then Vested Shares (the “Unvested Shares”) and the
Participant shall not be entitled to any payment therefor (the “Unvested Share
Reacquisition Right”).

 

 

(d)       Change in Control. Subject to Section 14(c) of the Plan, in the event
of a Change in Control (as defined in the Plan), this Award Agreement shall be
assumed or an equivalent award substituted by the successor corporation or a
Parent or Subsidiary of the successor corporation, and the Unvested Share
Reacquisition Right attached to the Shares shall continue in full force and
effect. In the event that the successor corporation refuses to assume this Award
Agreement or substitute for the Shares, the Participant shall fully vest in such
Shares, including Shares as to which he or she would not otherwise be vested.

 

(e)        Parachute Payment. In the event that the acceleration of the vesting
of any Unvested Shares pursuant to Section 3(d) above will result in a
"parachute payment" as defined in Section 280G of the Code, notwithstanding
Section 3(d), the extent to which vesting will be accelerated in connection with
a Change in Control shall not exceed the amount of vesting which produces the
greatest after-tax benefit to the Participant, as determined by the Company in a
fair and equitable manner.

 

4.          Legends. The Company may at any time place legends referencing the
Unvested Share Reacquisition Right set forth in Section 3 above and any
applicable federal and/or state securities law restrictions on all certificates
representing Shares 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 under this Award
Agreement in the possession of the Participant in order to carry out the
provisions of this Section 4. Unless otherwise specified by the Company, legends
placed on such certificates may include, but shall not be limited to, the
following:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS SET
FORTH IN THIS AWARD AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER,
OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE CORPORATION.”

 

5.

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 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.

 

6.          Transfers in Violation of Award Agreement. The Company shall not be
required (a) to transfer on its books any Shares which are sold or transferred
in violation of any of the provisions set forth in this Award Agreement, or (b)
to treat as the owner of the Shares or to accord the right to vote as such owner
or to pay dividends to any transferee to whom the Shares shall have been so
transferred.

 

7.          Rights as a Stockholder or Employee. The Participant shall have no
rights as a stockholder with respect to the Shares until such time the Shares
are issued to the Participant in the form of a certificate or certificates for
the Shares. Except as provided in Section 14(a) of the Plan, no adjustment shall
be made for dividends or distributions or other rights for which the record date
is prior to the date such certificate or certificates are issued. Nothing in the
Plan or in this Award Agreement shall confer upon the Participant any right to
continue as a Service Provider or to interfere in any way with any right of the
Company to terminate the Participant’s Service Provider relationship at any
time.

 

8.          Further Instruments. The parties hereto agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Award Agreement.

 

9.          Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
electronic delivery, or upon delivery by certified mail, addressed to the other
party hereto at the address shown below such party’s signature to this Award
Agreement or at such other address as such party may designate by ten (10) days
advance written notice to all other parties hereto.

 

10.        Binding Effect. This Award Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon the Participant and the Participant’s
heirs, executors, administrators, successors and assigns.

 

11.

Taxes.

 

(a) 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.

 

(b) 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 Shares on the Grant Date; (iii) if the
Participant makes such an election he or she 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 or her 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.

 

12.        Trade for Taxes (Swap). Please circle the applicable election below
to confirm whether you wish to trade Shares to satisfy the minimum required tax
withholding determined upon the date of vesting outlined in Section 11 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.

 

13.        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.

 

14.        Certificate Registration. The certificate or certificates for the
Shares acquired pursuant to this Award Agreement shall be registered in the name
of the Participant.

 

15.        Integrated Agreement. This Award Agreement and the Plan constitute
the entire understanding and agreement of the Participant and the Company with
respect to the subject matter contained herein, and there are no agreements,
understandings, restrictions, representations, or warranties among the
Participant and the Company other than those set forth or provided for herein or
therein.

 

16.        Governing Law. This Award Agreement is governed by the laws of the
Commonwealth of Massachusetts, without reference to conflicts of law provisions.
The parties hereby understand and agree that any action to enforce or interpret
or otherwise regarding this Award Agreement shall be filed in the state or
federal courts in the Commonwealth of Massachusetts.

 

17.        Data Privacy. By entering into this Award Agreement, and as a
condition of the grant of the Shares, the Participant consents to the
collection, use and transfer of personal data as described in this Section. The
Participant understands that the Company and its subsidiaries hold certain
personal information about the Participant including, but not limited to, the
Participant’s name, home address and telephone number, date of birth, social
security number or equivalent tax identification number, salary, nationality,
job title, any shares of stock or directorships held in the Company, details of
all Shares or other entitlements to Shares awarded, cancelled, exercised,
vested, unvested or outstanding in the Participant’s favor, for the purpose of
managing and administering the Plan (“Data”). The Participant further
understands that the Company and/or its subsidiaries will transfer Data amongst
themselves as necessary for the purposes of implementation, administration, and
management of the Participant’s participation in the Plan, and that the Company
and/or its subsidiaries may each further transfer Data to any third parties
assisting the Company in the implementation, administration and management of
the Plan (“Data Recipients”). The Participant understands that these Data
Recipients may be located in the Participant’s country of residence, the
European Economic Area, or elsewhere throughout the world, such as the United
States. The Participant authorizes the Data Recipients to receive, possess, use,
retain and transfer Data in electronic or other form, for the purposes of
implementing, administering and managing the Participant’s participation in the
Plan, including any transfer of such Data, as may be required for the
administration of the Plan and/or the subsequent holding of Shares on the
Participant’s behalf, to a broker or third party with whom the Shares acquired
upon vest may be deposited. The Participant understands that he or she may, at
any time, review the Data, require any necessary amendments to it or withdraw
the consent herein in writing by contacting the Company. The Participant further
understands that withdrawing consent may affect the Participant’s ability to
participate in the Plan.

 

IN WITNESS WHEREOF, the parties hereto have executed this Award Agreement as of
the day and year first above written.

 

 

COMPANY: 3COM CORPORATION

PARTICIPANT:

 

 

By: /S/ NEAL D. GOLDMAN

/S/ R. SCOTT MURRAY

 

 

Title: Senior Vice President, Management Services,

General Counsel and Secretary

 

 

Address:

Restricted Stock Administrator

Address:

________________________

 

3Com Corporation

________________________

 

 

350 Campus Drive

________________________

 

 

Marlborough, MA 01752

 

 

 

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Exhibit A

 

The Shares shall vest if, and only if, the Company achieves Profitability as
defined below in two (2) of the first five (5) quarters commencing with the
fourth quarter of the Company’s fiscal year 2006.

 

“Profitability” shall mean net income before income tax, as reported publicly by
the Company under GAAP, excluding amortization and/or write-down of intangibles,
in-process research and development and major one-time items and the effects of
changes in accounting principles, at the discretion of the Compensation
Committee of the Company’s Board of Directors. Restructuring charges in excess
of $2,000,000 per quarter, gains/losses from assets sales, litigation
gains/losses (including legal fees) and other income or loss in excess of
$2,000,000 (an absolute amount) per quarter in total and stock option and stock
awards under FAS 123R in excess of $4,000,000 per quarter shall be excluded from
the determination of “Profitability” for the purpose of this Award Agreement.