Exhibit 10.1


 


3COM CORPORATION


 


MANAGEMENT RETENTION AGREEMENT


 


Amended
and Restated as of July 15, 2003


 


This Management Retention
Agreement (the “Agreement”) is made and entered into by and between Bruce
Claflin (the “Employee”) and 3Com Corporation (the “Company”), amended and
restated effective as of July 15, 2003 (the “Effective Time”).


 


R E C I T A L S


 


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
Employee and can cause the Employee 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
Employee, notwithstanding the possibility, threat or occurrence of a Change of
Control (as defined herein) of the Company.


 


B.                                     The
Board believes that it is in the best interests of the Company and its
stockholders to provide the Employee with an incentive to continue his
employment and to motivate the Employee to maximize the value of the Company
upon a Change of Control for the benefit of its stockholders.


 


C.                                     Employee
and the Board, upon reviewing Employee’s Management Retention Agreement as in
effect prior to this amendment and restatement (the “Prior Agreement”),
determined that payments and benefits were likely to have been made thereunder
pursuant to the Company’s restructuring. Thereafter, Employee and the Board
agreed to eliminate substantially all of the benefits otherwise payable under
the Prior Agreement pursuant to the Company’s restructuring.  The Board continues to believe that it is
imperative to provide the Employee with benefits upon a Change of Control (and
upon certain terminations of employment prior to a Change of Control) which
provides the Employee with enhanced financial security and provides incentive
and encouragement to the Employee to remain with the Company notwithstanding
the possibility of a Change of Control. 
The Board also believes that it is important to provide meaningful
long-term incentives to Employee to remain with the Company.


 


D.                                    Certain
capitalized terms used in the Agreement are defined in Section 6 below.


 


E.                                      Employee
and the Company are parties to an Employment Agreement dated December 22,
2000, as may be modified or amended from time to time by the mutual written
agreement of the parties (the “Employment Agreement”).  References in the Employment Agreement to
the “Management Retention Agreement” shall be deemed to refer to the Management


 

















 


Retention Agreement as
amended and restated as of July 15, 2003 or as may be further modified or
amended from time to time by the mutual written agreement of the parties.


 


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.  Subject to the Company
discharging any of its obligations to provide Employee with payments and
benefits under the Employment Agreement and this Management Retention
Agreement, the Company and the Employee acknowledge that the Employee’s
employment is and shall continue to be at-will, as defined under Massachusetts
law, and may be terminated by either party at any time, with or without
cause.  If the Employee’s employment
terminates for any reason, including (without limitation) any termination more
than 3 months prior to a Change of Control, the Employee shall not be entitled
to any payments, benefits or compensation other than as provided by this
Agreement, the Employment Agreement, or as may otherwise be available in
accordance with the Company’s established employee plans or pursuant to other
written agreements with the Company.


 


3.                                       Retention
Arrangement.


 


(a)                                  Deferred
Compensation Plan Account Credit. 
No later than October 31, 2003, the Company will credit Employee’s
account in the 3Com Deferred Compensation Plan with an amount equal to (i) two
hundred percent (200%) of the Employee’s Annual Compensation, plus (ii) one
hundred percent (100%) of Employee’s Target Bonus as in effect for the 2004
fiscal year, pro-rated by multiplying such Target Bonus amount by a fraction,
the numerator of which shall be the number of Company 2004 fiscal year days
elapsed on July 15, 2003, and the denominator of which shall be
three-hundred and sixty-five (the “Retention Benefit”); provided, however, that
if Employee remains with the Company through the end of the 2004 fiscal year,
then the Company may subtract the gross pro-rated amount previously credited to
Employee’s account pursuant to this paragraph from the gross annual target bonus
amount otherwise payable to Employee on account of the 2004 fiscal year;
provided, further, that on each vesting date, Employee’s Deferred Compensation
Plan account will be debited in an amount equal to the employee-side Medicare
amounts paid out by 3Com on account of such vesting.


 


(b)                                 Retention
Benefit Vesting.


 


(i)                                     Vesting.  Employee shall vest as to one-third (1/3) of
the Retention Benefit (and proportional earnings and losses thereon) upon each
anniversary of the Effective Time, so as to be 100% vested on July 15,
2006, subject to Employee remaining employed by the Company on each vesting
date.  However, the Retention Benefit
shall vest earlier as to 100% upon (i) a Change of Control, (ii) subject to
Employee entering into a mutual release of claims with the Company in
substantially the form attached hereto as Exhibit A, as updated to reflect
different applicable state and federal laws (a “Release”) Employee’s
termination by the Company other than for Cause, (iii) subject to Employee
entering into a Release, Employee’s termination for Good Reason, or (iv)
Employee’s termination of employment pursuant to Employee’s death or
Disability; provided, that with respect to the pro-rated Target Bonus portion
of the Retention Benefit, such amount shall vest, if earlier, upon the last day
of the Company’s 2004 fiscal year so long as Employee remains employed with the
Company through such date.  If the
Employee does not remain employed with the Company through a Retention Benefit
vesting date, the unvested Retention


 


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Benefit
(and credited earnings and losses thereon) shall revert to the Company.  Once vested, the Retention Benefit shall
continue to remain subject to the terms and conditions of the 3Com Deferred Compensation
Plan and Employee’s elections thereunder.


 


(ii)                                  Severance
Pay Under the Employment Agreement From July 15, 2004 Through
July 15, 2006.  In the event
that, prior to a Change of Control and in the period from July 15, 2004
through July 15, 2006, Employee’s employment with the Company terminates
and the benefits provided in Section (h)(i) of the Employment Agreement
become due and payable to Employee (a “Triggering Event”), then, in lieu of the
severance payment of “continued payments of two year’s Base Salary plus Target
Bonus” set forth in such provision (the “Severance Pay”), Employee shall
instead receive severance pay in an amount calculated by multiplying the
Severance Pay (A) for Triggering Events from July 15, 2004 through
July 15, 2005, by one-third, and (B) for Triggering Events from
July 15, 2005 through July 15, 2006, by two-thirds.  Nothing in this provision shall affect in
any way the Employee’s entitlement to unvested stock options and restricted
shares pursuant to the Employment Agreement and the Employee shall continue to
be entitled to receive unvested stock options and restricted shares as provided
for in the Employment Agreement upon a Triggering Event.  Subject to Section 4(c) hereof,
Employee shall also be eligible to receive 100% of Severance Pay for Triggering
Events outside of the period from July 15, 2005 through July 15,
2006.


 


(iii)                               Forfeiture
in the Event Employee Materially Competes Within One Year Following Termination
of Employment.  In the event that
Employee, within one year following his termination as an employee, Materially
Competes With the Company (as defined in Section 6 hereof), then Employee
shall forfeit any Retention Benefit (and earnings or losses thereon) then
remaining in his 3Com Deferred Compensation Plan account, including vested
amounts, and such amounts shall revert to the Company; provided, however, that
the pro-rated target bonus component of the Retention Benefit (and earnings or
losses thereon), shall not be subject to such forfeiture if Employee remains
employed by the Company through the end of the Company’s 2004 fiscal year.


 


(c)                                  Retention
Benefit Distribution Election. 
Employee may elect to receive the Retention Benefit (and credited
earnings and losses thereon) in a lump-sum or in from one to six annual
installments, one of which installments may, by election, be on Employee’s
termination date (which installment payments shall be substantially equal after
giving effect to earnings and losses between installments) following either (i)
his termination as a Company employee, or (ii) upon Employee’s prior written
election, his termination as an officer of the Company.  Employee may change his distribution
election by means of a new written election filed with the Company at least one
year prior to the initial distribution date.


 


(d)                                 Continued
Employee Benefits.  At any time when
Employee’s employment terminates, voluntarily or involuntarily, for any or no
reason and with or without Cause, the Company shall provide Company-paid
health, dental, vision, long-term disability and life insurance coverage at the
same level of coverage as was provided to such Employee immediately prior to
the termination of employment and at the same ratio of Company premium payment
to Employee premium payment as was in effect immediately prior to the
termination of employment (the “Company-Paid Coverage”).  If such coverage included the Employee’s
dependents immediately prior to the Change of Control, such dependents shall
also be covered at Company expense. 
Company-Paid Coverage shall continue until the earlier of (i) two
years from the date of termination, or (ii) the date upon which the
Employee and his dependents become covered under another employer’s comparable
group health, dental, vision, long-term disability or life insurance plans that


 


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provide Employee
and his dependents with comparable benefits and levels of coverage.  For purposes of Title X of the Consolidated
Budget Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying event”
for Employee and his or her dependents shall be the date upon which the
Company-Paid Coverage commences, and each month of Company-Paid Coverage
provided hereunder shall offset a month of continuation coverage otherwise due
under COBRA. This Section 3(d) supercedes Section (b)(i)(iii) of the
Employment Agreement which provides the Employee and his covered dependents
with only eighteen (18) months of continued Employee Benefits upon the
occurrence of specified events.


 


4.                                       Change
of Control Benefits.


 


(a)                                  Benefits.  Upon a Change of Control of the Company
occurring while Employee is still employed by the Company, then subject to
Employee entering into a standard form of mutual release of claims with the
Company in substantially the form attached hereto as Exhibit A (as
updated to reflect applicable state and federal law), the Company shall provide
Employee with the following benefits:


 


(i)                                     Lump-Sum
Payment for Change of Controls Occurring On or After July 15, 2004.  For Change of Controls occurring (A) on or
after July 15, 2004 through July 14, 2005, a lump-sum cash payment in an amount equal to two-thirds of
the Employee’s Annual Compensation, (B) on or after July 15, 2005 through
July 14, 2006, a lump-sum
cash payment in an amount equal to one and one-third of the Employee’s Annual
Compensation, and (C) on or after July 15, 2006, a lump-sum cash payment
in an amount equal to 200% of the Employee’s Annual Compensation.


 


(ii)                                  Pro-Rated
Bonus Payment.  Regardless of when a
Change of Control occurs, a lump-sum cash payment equal to 100% of such
Employee’s target bonus as in effect for the fiscal year in which the Change of
Control occurs, pro-rated by multiplying such bonus amount by a fraction, the
numerator of which shall be the number of days prior to occurrence of the
Change of Control during such fiscal year, and the denominator of which shall
be three-hundred and sixty-five; provided, however, that if Employee remains
with the Company through the end of the fiscal year in which the Change of
Control occurs, then the Company may subtract the amount previously paid to
Employee pursuant to this paragraph from the annual target bonus amount
otherwise payable to Employee on account of such fiscal year; provided,
further, that with respect to a Change of Control in the Company’s 2004 fiscal
year, such payment shall be reduced by an amount equal to the pro-rated target
bonus component of the Retention Benefit.


 


(iii)                               Equity
Compensation Accelerated Vesting. 
Regardless of when a Change of Control occurs, one hundred percent
(100%) of the unvested portion of any stock option, restricted stock or other
Company equity compensation held by the Employee shall automatically be
accelerated in full so as to become completely vested.


 


(iv)                              Extension
of Stock Option or Stock Appreciation Right Post-Termination Exercisability.  Regardless of when a Change of Control
occurs, the post-termination exercise period of any outstanding Company stock
options or stock appreciation rights held by Employee shall be extended to the
lesser of (A) one year from the date of Employee’s termination, or (B) the
original term of such award.


 


(b)                                 Termination
Prior to a Change of Control.  In
the event (i) the Employee’s employment is terminated for any reason prior to a
Change of Control, then the Employee shall be


 


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entitled to receive
severance pursuant to the severance provisions of the Employment Agreement as
modified by Section 3(b)(ii) of this Agreement and Retention Benefits
(upon certain terminations of employment as set forth in Section 3 hereof)
and any other benefits as may then be established or provided under the
Company’s existing severance and benefits plans or other written agreements
with the Company; provided, however, that notwithstanding any other provisions
of this Agreement, if Employee’s employment with the Company is terminated
without Cause or pursuant to a Voluntary Termination for Good Reason within
three (3) months prior to a Change of Control, then Employee shall receive, on
the occurrence of the Change of Control, the benefits that he would have
received under this Agreement had he remained employed with the Company through
such Change of Control.


 


(c)                                  No
Dual Benefits.  In the event that
Employee receives benefits pursuant to Section 4(a)(iii) or 4(a)(iv)
hereof, he shall not be entitled to receive severance benefits pursuant to the
Employment Agreement or the Section 16 Severance Plan.


 


5.                                       Golden
Parachute Excise Tax Full Gross-Up. 
In the event that the benefits provided for in this Agreement or
otherwise payable to the Employee constitute “parachute payments” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”) and will be subject to the excise tax imposed by Section 4999
of the Code, 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 Employee
pursuant to this sentence.  Unless the
Company and the Employee otherwise agree in writing, the determination of
Employee’s excise tax liability and the amount required to be paid under this
Section 5 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 Section 5, the
Accountants shall assume that applicable taxes are applied at the maximum rates
provided by law 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.  The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations contemplated
by this Section 5.


 


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 Employee’s Company annual
base salary as in effect immediately preceding the Change of Control or
Retention Benefit payment, as applicable, and (ii) 100% of the Employee’s
Target Bonus.


 


(b)                                 Cause.  “Cause” shall mean (i) an act of
personal dishonesty taken by the Employee in connection with his
responsibilities as an employee and intended to result in substantial personal
enrichment of the Employee, (ii) Employee being convicted of a felony,
(iii) a willful act by the Employee which constitutes gross misconduct and
which is injurious to the Company, (iv) following delivery to the Employee
of a written demand for performance from the Company which describes the basis
for the Company’s reasonable belief that the Employee has not substantially


 


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performed his duties,
continued violations by the Employee of the Employee’s obligations to the
Company which are demonstrably willful and deliberate on the Employee’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 (“Beneficial Owner”), 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.


 


(d)                                 Disability.  “Disability” shall mean that the Employee
has been unable to perform his Company duties as the result of his incapacity
due to physical or mental illness with reasonable accommodation, and such
inability continues at least 26 weeks and after the end of the twenty-six (26)
week period, the disability is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Employee or the Employee’s legal representative (such Agreement as to
acceptability not to be unreasonably withheld).  Termination resulting from Disability may only be effected after
at least 30 days’ written notice by the Company of its intention to terminate
the Employee’s employment.  In the event
that the Employee resumes the performance of substantially all of his duties
hereunder with or without reasonable accommodation before the termination of
his employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.


 


(e)                                  Materially
Competes With the Company. 
“Materially Competes With the Company” shall mean engaging in any
business activity (whether as an employee, consultant, proprietor, partner,
director or otherwise) that materially competes with the Company or its
affiliates, including the Huawei joint venture if the Company is then a major
shareholder of same (the “Affiliates”), including developing, selling,
marketing, manufacturing, licensing, or distributing products or services that
are competitive with the products and services being developed, sold, marketed,
manufactured, licensed, or distributed by the Company or its Affiliates at the
time Employee’s employment terminates; or owning a material interest in, or
materially participating in


 


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the financing, operation,
management or control of any entity whose products or services compete in whole
or in part with those of the Company or its Affiliates, provided, however, that
ownership (directly or indirectly) of up to five percent (5%) of the capital
stock or other securities of any corporation or other entity shall not be
deemed to Materially Compete With the Company.


 


(f)                                    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.


 


(g)                                 Target
Bonus.  “Target Bonus” shall mean
Employee’s bonus, equal to 100% of Base Salary.


 


(h)                                 Voluntary
Termination for Good Reason. 
“Voluntary Termination for Good Reason” shall mean the Employee
voluntarily resigns after the occurrence of any of the following:
(i) without the Employee’s express written consent, a material reduction
of the Employee’s duties, title, authority or responsibilities, relative to the
Employee’s duties, title, authority or responsibilities as in effect
immediately prior to such reduction (including a material reduction occurring
through a series of immaterial reductions that constitute, in the aggregate, a
material reduction) or the assignment to Employee of such reduced duties,
title, authority or responsibilities; (ii) without the Employee’s express
written consent, a material reduction of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction (including a material reduction occurring through a
series of immaterial reductions that constitute, in the aggregate, a material
reduction), other than a reduction generally applicable to all senior
management of the Company; (iii) a reduction by the Company in the base
salary of the Employee as in effect immediately prior to such reduction;
(iv) a material reduction by the Company in the aggregate level of
employee benefits, including bonuses, to which the Employee was entitled
immediately prior to such reduction with the result that the Employee’s
aggregate benefits package is materially reduced (including a material
reduction occurring through a series of immaterial reductions that constitute,
in the aggregate, a material reduction) 
(other than a reduction that generally applies to Company employees);
(v) the relocation of the Employee to a facility or a location more than
fifty (50) miles from the Employee’s then present location, without the
Employee’s express written consent; provided, however, that Employee’s
relocation to the Company’s Marlborough, Massachusetts facility shall not
constitute grounds for a Voluntary Termination for Good Reason; or
(vi) any act or set of facts or circumstances which would constitute a
constructive termination of the Employee under Massachusetts law.


 


7.                                       Non-Solicitation.  In consideration for the Change of Control
benefits Employee is to receive herein Employee agrees that he will not, at any
time during the one year following his termination date on or following the
full vesting of his Retention Benefit (other than the vesting of the pro-rated
target bonus component thereof), directly or indirectly solicit any individuals
to leave the Company’s (or any of its subsidiaries’) employ for any reason or
interfere in any other manner with the employment relationships at the time
existing between the Company (or any of its subsidiaries) and its current or
prospective employees.


 


8.                                       Successors.


 


(a)                                  Company’s
Successors.  The Company shall cause
and require that 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 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


 


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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 assumption agreement described in this Section 8(a) or which
becomes bound by the terms of this Agreement by operation of law.  In the event that the Company does not meet
the requirements of this Section 8(a), all payments and benefits under the
Employment Agreement and the Management Retention Agreement shall accelerate
and immediately become payable and due as obligation of the Company as well as
any successor.


 


(b)                                 Employee’s
Successors.  The terms of this Agreement
and all rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.


 


9.                                       Dispute
Resolution.


 


(a)                                  The
parties shall first meet to settle any dispute through good faith negotiation
or non-binding mediation.  If not
settled by good faith negotiation or non-binding mediation between the parties
within 30 days from the date one party requests in writing to meet the other
party, then to the extent permitted by law, any dispute or controversy arising
out of or relating to this Agreement or the Employment Agreement, or the
interpretation, validity, construction, performance, breach, or termination of
either agreement shall be finally settled by binding arbitration by an
arbitrator voluntarily agreed to by the parties or, in the absence of such
agreement, by the American Arbitration Association, to be held in Boston,
Massachusetts, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
“Rules”).  The arbitrator may grant
injunctions or other relief in such dispute or controversy.  The decision of the arbitrator shall be
confidential, final, conclusive and binding on the parties to the
arbitration.  Judgment may be entered
under a protective order on the arbitrator’s decision in any court having
jurisdiction.  The Company shall pay all
costs of any mediation or arbitration; provided, however, that each party shall
pay its own attorney and advisor fees.


 


(b)                                 The
arbitrator shall apply Massachusetts law to the merits of any dispute or claim,
without reference to rules of conflict of law with respect to any disputes
arising under or relating to this Agreement. 
The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to the rules of conflict of law, to any dispute
arising under or relating to the Employment Agreement.  The arbitration proceedings shall be
governed by federal arbitration law and by the Rules, without reference to
state arbitration law.


 


This Section 9
supercedes the Dispute Resolution provision appearing on the fifth page of the
Employment Agreement which is no longer in effect and shall be considered null
and void.


 


10.                                 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 Employee, mailed notices shall be addressed to
him at the home address which he most recently communicated to the Company in
writing.  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 Secretary.


 


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(b)                                 Notice
of Termination.  Any termination by
the Company for Cause or by the Employee 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 9(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 more than 30 days after the giving of such
notice).  The failure by the Employee 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 Employee
hereunder or preclude the Employee from asserting such fact or circumstance in
enforcing his rights hereunder.


 


11.                                 Miscellaneous
Provisions.


 


(a)                                  No
Duty to Mitigate.  The Employee
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 Employee 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 Employee and by two authorized officers
of the Company (other than the Employee). 
No waiver, delay or omission by either party in exercising any right
with respect to any breach of, or of non-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.  A waiver or consent given
by the Company or the Employee on any one occasion shall be effective only in
that instance and shall not be construed as a bar or waiver of any right on any
other occasion.


 


(c)                                  Whole
Agreement.  This Agreement, the
Employment Agreement, the 3Com  1983
Stock Option Plan, Employee’s stock option and restricted stock agreements
under the 3Com 1983 Stock Option Plan, the Confidential Information and
Invention Assignment Agreement previously entered into by and between the
Company and Executive  and the indemnification agreement
previously entered into by and between the Company and Executive (together, the
“Agreement”) represent the entire agreement and understanding between the
Company and Employee concerning Employee’s employment relationship with the
Company, and supersede and replace any and all prior agreements and understandings
concerning Employee’s employment relationship with the Company, including the
offer letter to Employee dated June 16, 1998 and all previous versions of
this Agreement.


 


(d)                                 Choice
of Law.  This Agreement shall be
governed by and interpreted and construed under the laws of the Commonwealth of
Massachusetts, without regard to its rules of conflict of law.  The Employee’s Employment Agreement shall
continue to be governed by and interpreted and construed under the laws of the
State of California with regard to its rules of conflict of laws.  The parties hereby irrevocably submit to and
acknowledge and recognize the jurisdiction of the courts of the Commonwealth of
Massachusetts, or if appropriate, a federal court located in Massachusetts
(which courts, for purposes of this agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding to enforce an
arbitration award made in connection with a claim, dispute or conflict arising
out of this Agreement or the Employment Agreement or for any other claim,
dispute or conflict arising out of or relating to the Employee’s employment.


 


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(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.


 


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IN WITNESS
WHEREOF, each of the parties has executed this Agreement.


 


	
  COMPANY

  	
  3COM
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eric Benhamou

  
	
   

  	
   

  	
  ERIC BENHAMOU

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  Chairman

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark D. Michael

  
	
   

  	
   

  	
  MARK D. MICHAEL

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:  S.V.P., General
  Counsel & Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE

  	
  By:

  	
  /s/ Bruce L. Claflin

  
	
   

  	
   

  	
  BRUCE L. CLAFLIN

  
					



 


11

















 


EXHIBIT A


 


MUTUAL RELEASE OF CLAIMS


 


This Mutual Release of
Claims (“Release”) is made by and between 3Com Corporation, Inc. (the
“Company”) and
                                    
(“Employee”).


 


RECITALS


 


WHEREAS, the Company and
Employee (collectively referred to as “the Parties”) have agreed that Employee
is to receive certain benefits pursuant to the agreement to which this Release
is attached as Exhibit A (the “Management Retention Agreement”);


 


NOW THEREFORE, in
connection with the promises made herein and in the Management Retention
Agreement, the Company and Employee hereby agree as follows:


 


1.                                       Confidential
Information.  Employee shall
continue to maintain the confidentiality of all confidential and proprietary
information of the Company and shall continue to comply with the terms and
conditions of the Confidential Information and Invention Assignment Agreement
previously entered into by and between the Company and Employee.


 


2.                                       Payment
of Salary.  The Company represents
and Employee acknowledges and represents that the Company has paid (or will pay
pursuant to the terms of the applicable plan or program and the Management
Retention Agreement) all salary, wages, bonuses, commissions, accrued vacation
and expense reimbursements and any and all other benefits due to Employee
through the date of signing of this Release.


 


3.                                       Release
of Claims. Employee agrees that the severance benefits provided pursuant to
the Management Retention Agreement represent settlement in full of all
outstanding obligations owed to Employee by the Company or any subsidiary of
the Company.  Employee and the Company,
on behalf of themselves and their respective heirs, agents, representatives,
immediate family members, executors, assigns, directors, employees, attorneys,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
parents, predecessor and successor corporations, hereby fully and forever
release each other and their respective heirs, agents, representatives,
immediate family members, executors, assigns, directors, employees, attorneys,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
parents, predecessor and successor corporations and agree not to sue or
otherwise institute or cause to be instituted any legal or administrative proceedings
concerning any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee or the Company may possess against each other from
any omissions, acts or facts that have occurred up until and including the
Effective Date of this Release including, without limitation,


 


(a)                                  any
and all claims relating to or arising from Employee’s relationship with the
Company or any subsidiary of the Company and the termination of that
relationship;


 

















 


(b)                                 any
and all claims relating to, or arising from, Employee’s right to purchase, or
actual purchase of shares of stock of the Company or any subsidiary of the
Company, including, without limitation, any claims for fraud, misrepresentation,
breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;


 


(c)                                  any
and all claims for wrongful discharge of employment; termination in violation
of public policy; discrimination; breach of contract, both express and implied;
breach of a covenant of good faith and fair dealing, both express and implied;
promissory estoppel; negligent or intentional infliction of emotional distress;
negligent or intentional misrepresentation; negligent or intentional
interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; invasion of
privacy; false imprisonment; and conversion;


 


(d)                                 any
and all claims for violation of any federal, state or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967,
the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, Older Workers Benefit Protection Act; the
California Fair Employment and Housing Act, and the California Labor Code and
all amendments to each such Act as well as the regulations issued thereunder;


 


(e)                                  any
and all claims for violation of the federal, or any state, constitution;


 


(f)                                    any
and all claims arising out of any other laws and regulations relating to
employment or employment discrimination; and


 


(g)                                 any
and all claims for attorneys’ fees and costs.


 


Notwithstanding
anything to the contrary in this Section 3, nothing in this Release is
intended to relieve the Company of its obligations under California Labor Code
section 2802 or any other federal or state statute or common law principle
of similar effect, and the release set forth under this Section 3 does
not  extend to any obligations incurred
under such statutes or principles or this Release.  Employee and the Company agree that the release set forth in this
Section 3 shall otherwise be and remain in effect in all respects as a
complete general release as to the matters released.


 


4.                                       Acknowledgment
of Waiver of Claims under ADEA. 
Employee acknowledges that he is waiving and releasing any rights he may
have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that
this waiver and release is knowing and voluntary.  Employee and the Company agree that this waiver and release does
not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Release. 
Employee acknowledges that the consideration given for this waiver and
Release is in addition to anything of value to which Employee was already
entitled.  Employee further acknowledges
that he has been advised by this writing that (a) he should consult with an
attorney prior to executing this Release; (b) he has at least twenty-one
(21) days within which to consider this Release; (c) he has seven (7) days
following the execution of this Release by the Parties to revoke the Release;
and (d) this Release shall not be effective until the revocation period has
expired.  Any revocation should be in
writing and delivered to a member of


 


2

















 


the Board of
Directors by close of business on the seventh day from the date that Employee
signs this Release.


 


5.                                       Civil
Code Section 1542.  Employee
and the Company represent that they are not aware of any claim other than the
claims that are released by this Release. 
Employee and the Company acknowledge that they have been advised by
legal counsel and are familiar with the provisions of California Civil Code
Section 1542, which provides as follows:


 


A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.


 


Employee and the
Company, being aware of said code section, agree to expressly waive any rights
they may have thereunder, as well as under any other federal or state statute
or common law principles of similar effect.


 


6.                                       No
Pending or Future Lawsuits. 
Employee and the Company represent to each other that they have no
lawsuits, claims, or actions pending in their name, or on behalf of any other
person or entity, against each other or any other person or entity referred to
herein.  Employee and the Company also
represent to each other that as of the Effective Date, they do not have any
basis for, and do not intend to bring any claims on their behalf or on behalf
of any other person or entity against each other or any other person or entity
referred to herein.


 


7.                                       No
Cooperation.  Employee agrees that
he will not counsel or assist any attorneys or their clients in the
presentation or prosecution of any lawsuits, disputes, claims, charges, or
complaints by any third party against the Company (including any subsidiary of
the Company, and/or any officer, director, employee, agent, representative,
shareholder or attorney of the Company or any subsidiary in his, her or its
capacity as such on behalf of the Company or any subsidiary) unless under a
subpoena, court order or otherwise required by law to do so.


 


8.                                       Tax
Consequences.  The Company makes no
representations or warranties with respect to the tax consequences of the
payment of any sums to Employee under the terms of the Management Retention
Agreement and this Release.  Employee
agrees and understands that he is responsible for payment, if any, of local,
state and/or federal taxes on the sums paid thereunder by the Company and any
penalties or assessments thereon.


 


9.                                       Costs.  The Parties shall each bear their own costs,
expert fees, attorneys’ fees and other fees incurred in connection with this
Release.


 


10.                                 Authority.  The Company represents and warrants that the
undersigned has the authority to act on behalf of the Company and to bind the
Company and all who may claim through it to the terms and conditions of this
Release.  Employee represents and
warrants that he has the capacity to act on his own behalf and on behalf of all
who might claim through him to bind them to the terms and conditions of this
Release.  Each Party warrants and
represents that there are no liens


 


3

















 


or claims of lien
or assignments in law or equity or otherwise of or against any of the claims or
causes of action released herein.


 


11.                                 No
Representations.  Each Party
represents that it has had the opportunity to consult with an attorney, and has
carefully read and understands the scope and effect of the provisions of this
Release.  Neither party has relied upon
any representations or statements made by the other party hereto which are not
specifically set forth in this Release.


 


12.                                 Severability.  In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Release shall continue in full force and effect
without said provision.


 


13.                                 Entire
Agreement.  This Release, the
Management Retention Agreement and the Confidential Information and Invention
Assignment Agreement previously entered into by and between the Company and
Employee represent the entire agreement and understanding between the Company
and Employee concerning the subject matter herein, and supersede and replace
any and all prior agreements and understandings.


 


14.                                 No
Oral Modification.  This Release may
only be amended in writing signed by Employee and a duly authorized officer
(other than Employee) of the Company.


 


15.                                 Effective
Date.  This Release is effective
eight days after it has been signed by both Parties (the “Effective Date”).


 


16.                                 Counterparts.  This Release may be executed in
counterparts, and each counterpart shall have the same force and effect as an
original and shall constitute an effective, binding agreement on the part of
each of the undersigned.


 


17.                                 Voluntary
Execution of Release.  This Release
is executed voluntarily and without any duress or undue influence on the part
or behalf of the Parties hereto, with the full intent of releasing all
claims.  The Parties acknowledge that:


 


(a)                                  They
have read this Release;


 


(b)                                 They
have been represented in the preparation, negotiation, and execution of this
Release by legal counsel of their own choice or that they have voluntarily
declined to seek such counsel;


 


(c)                                  They
understand the terms and consequences of this Release and of the releases it
contains;


 


(d)                                 They are fully aware of the legal and binding effect of this Release.


 


4

















 


IN WITNESS WHEREOF, the
Parties have executed this Release on the respective dates set forth below.


 


	
   

  	
  3Com Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE, an individual

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated: