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                                                                    EXHIBIT 10.1

(ENTERASYS LOGO)

                   ENTERASYS PERFORMANCE INCENTIVE PLAN (EPIP)

PURPOSE

Provide an outcome-based annual cash incentive to key employees for their
contributions to the success and profitability of Enterasys Networks. This Plan
is intended to provide participants with an opportunity to receive above average
incentive compensation for above average performance, with lower levels of
incentive compensation associated with lower levels of performance.

EFFECTIVE DATE

This plan is effective as of January 2, 2005, for the fiscal year ending
December 31, 2005.

ELIGIBILITY

Full-time executives, managers and key employees not participating in any other
cash incentive compensation plan unless such other plan expressly provides for
participation in EPIP. Non-exempt employees are not eligible to participate in
this plan.

INCENTIVE TARGETS

A participant's target cash incentive compensation opportunity, which is set
individually within each Tier specified below, will range from 10% to 200% of
base salary, depending upon position and role (see guide chart below):

<TABLE>
<CAPTION>
 Tier             Position/Job Level                           Incentive Target Range*
 ----             ------------------                           ----------------------
<S>          <C>                                       <C>
  I          Executive Chairman                        As determined by Compensation Committee
             President / Chief Executive Officer                        200%
  II         Senior / Executive Vice President                       60% - 100%
  III        Director / Vice President                                40% - 70%
  IV         Manager / Key Employee                                   20% - 50%
  V          Individual Contributors                                  10% - 20%
</TABLE>

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* Expressed as a percentage of Base Salary

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INCENTIVE PLAN ELEMENTS

EPIP has two elements: (i) overall funding of the EPIP on an aggregate basis,
and (ii) individual annual incentive awards (which, in the aggregate, may be
less than but may not exceed actual aggregate EPIP funding). Maximum aggregate
EPIP funding will be equal to the aggregate of individual participant target
bonus amounts, plus any funding based on the occurrence of a qualifying Business
Combination as set forth below.

EPIP FUNDING

-     PERFORMANCE OBJECTIVES FUNDING FACTOR: The portion of EPIP funding
      relative to aggregate target levels allocable for awards based on
      Departmental KPI's/Individual Performance objectives (as described below)
      will be made in the exclusive discretion of the Board of Directors of
      Enterasys Networks, Inc. The portion of EPIP funding allocable for awards
      based on corporate financial performance objectives established by the
      Enterasys Networks, Inc. Board of Directors will be based on the Company's
      actual achievement of such financial performance objectives. The financial
      performance objectives for 2005 will be based on quarterly and
      year-to-date metrics for Revenue, Operating Profitability, and Free Cash
      Flow. Achieving funding at aggregate target levels will require financial
      performance substantially exceeding the Company's base annual operating
      plan objectives. Determination of achievement of specific corporate
      financial performance metrics is subject to the sole and exclusive
      discretion of the Board of Directors of Enterasys Networks, Inc.

-     CORPORATE TRANSACTION FUNDING FACTOR: In addition to funding based on
      achievement of Departmental KPI's/Individual Performance objectives and
      the Company's financial performance objectives, in the event of a merger
      or consolidation involving the Company, or a sale or other disposition of
      all or substantially all of the stock or assets of the Company
      (collectively, a "Business Combination") at any time during the fiscal
      year, provided that such Business Combination is approved in advance by
      the Enterasys Networks, Inc. Board of Directors and results in a transfer
      of ownership of more than 50% of the equity or assets of the Company to an
      individual, entity, or group of related individuals or entities, EPIP will
      be funded in an amount equal to 20% of aggregate individual EPIP target
      amounts.

-     PERIODIC ACCRUAL OF FUNDING. Accrual of funding will occur based on Board
      discretion, achievement of corporate financial performance targets and/or
      the occurrence of a qualifying Business Combination. Accrual of EPIP
      funding based on Board discretion may be made quarterly in the sole
      discretion of the Board. EPIP funding will accrue quarterly based on
      achievement of Board-approved corporate financial performance objectives
      as determined by the Board. For each quarter, funding (if any) based on
      corporate financial performance will increase by an amount equal to the
      lesser of (a) the funding amount determined based on the results for such
      quarter, and (b) the difference (but not less than zero) between (i) the
      aggregate funding for all prior quarters of the fiscal year and (ii) the
      funding amount determined based on year-to-date results for the most
      recently completed quarter. Accruals based on corporate financial
      performance targets will not be reduced in subsequent periods based on
      failure to achieve corporate financial targets in such subsequent periods.
      EPIP funding for corporate transaction incentive awards will be made upon
      closing of a qualifying Business Combination.

PRELIMINARY ALLOCATION OF AWARDS

-     Preliminary allocation of EPIP funding toward individual incentive awards
      will be made quarterly based on achievement of Board-approved corporate
      financial performance objectives.

-     Preliminary allocation of EPIP funding for corporate transaction incentive
      awards will be made upon closing of a qualifying Business Combination.

                                      -2-

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INDIVIDUAL INCENTIVE AWARDS

-     Actual EPIP incentive awards will be based on:

      -     Achievement of the Company's financial performance objectives;

      -     Achievement of departmental Key Performance Indicators ("KPI's")
            and/or individual goals and objectives;

      -     The occurrence of a qualifying corporate transaction;

      -     Individual target bonus levels; and

      -     Position/Job Level.

-     Based on assigned Tier, and subject to funding criteria being met and
      satisfaction of all other terms and conditions set forth in this plan,
      actual incentive awards that are funded based on achievement of corporate
      financial performance targets will be based on a combination of Company
      and Departmental KPI's/Individual performance.

<TABLE>
<CAPTION>
                                                          Incentive Target Distribution
                                                          -----------------------------
                  Metric                Tier I      Tier II     Tier III     Tier IV     Tier V
                  ------                ------      -------     --------     -------     ------
<S>                                     <C>         <C>         <C>          <C>         <C>
Company Performance                       100%        90%          80%         75%         70%
Dept KPI / Individual Performance           0%        10%          20%         25%         30%
Total                                     100%       100%         100%        100%        100%
</TABLE>

Example: a Software Engineer Manager in Tier IV might have an incentive of 30%
of base salary, of which 75% depends on Company performance and 25% depends on
Departmental KPI's/Individual Performance.

PRORATION FACTORS

-     Individual annual incentive awards will be prorated for partial years in
      the following situations:

      -     Employees who were hired during the plan's year and who have at
            least 60 days of active service in an eligible position.

      -     Employees who were transferred from ineligible to eligible positions
            during the plan's year and who have at least 60 days of active
            service in the eligible position within year.

      -     Employees who transferred between positions for which the incentive
            plans are different, and who have at least 60 days of active service
            in an eligible position within the year, will have their bonuses
            prorated based on length of time in each eligible position.

                                      -3-

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      -     Employees who were eligible for the plan, terminated their
            employment, and were rehired into plan-eligible positions during the
            plan year.

-     Incentive awards will be prorated on a weekly basis, not on working days
      during any given performance measurement period.

PAYMENT SCHEDULE

-    Payment of annual incentive awards, if any, which are funded based on Board
     discretion and achievement of corporate financial performance objectives,
     will be made following the end of the defined plan year and the Company's
     announcement of financial results for the full year, determination by the
     Board of Directors of the achievement of established metrics and funding of
     the plan, and determination by management of the degree to which
     Departmental KPI's and individual goals have been achieved, but in any
     event no later than March 15 of the following year.

-    Payment of incentive awards funded based on closing of a qualifying
     Business Combination will be made to participants (who were participants on
     the date immediately preceding the date of said Business Combination was
     consummated), such payment to be made on the earliest of (i) the date that
     annual EPIP payments are made based on corporate financial performance, and
     (ii) March 15 of the year in which the transaction occurred or March 15 of
     the next calendar year if the transaction occurred after March 15 in any
     calendar year; provided, however, that any person who was a participant on
     the date said Business Combination was consummated and whose employment is
     terminated prior to payment of incentive awards pursuant to (i) or (ii)
     above other than voluntarily by the Participant or for cause by the
     Company, shall receive payment of his or her incentive award within five
     business days of the date the Participant's employment with the Company is
     terminated.

ADDITIONAL TERMS AND CONDITIONS - 2005 EPIP

-     BASE SALARY: A Participant's base salary in effect on the last Friday of
      the fiscal year will be used for the purpose of EPIP calculations.

-     INCENTIVE TARGET: a participant's target incentive bonus, expressed as a
      percentage of base salary, in effect on the last Friday of the fiscal year
      will be used for the purpose of award calculations.

-     ELIGIBILITY: Employees become eligible to participate in this plan on the
      date they become actively employed in an eligible position. Eligible
      positions are specifically identified by HR and may change from time to
      time in Enterasys' sole discretion. Employee must be a plan participant
      for a minimum of 60 days to be eligible to receive an award.

-     PERFORMANCE NOTICE: Plan participants placed on a Performance Improvement
      Notice during the plan year are not guaranteed to receive an award under
      any circumstance.

-     TERMINATION: Plan participants who terminate employment voluntarily or
      involuntarily prior to payment date will not receive an EPIP award based
      on corporate financial performance or departmental/individual performance.
      Participants who terminate employment voluntarily or whose employment is
      terminated by the company for cause are not eligible for any awards under
      this Plan.

                                      -4-

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-     LEAVE OF ABSENCE: Awards will be prorated based on number of weeks worked
      during the plan year and paid upon return for those Plan participants on
      Leave of Absence.

-     FUNDING: All payments are from funds made available to the plan as
      prescribed by this document and any addendum hereto and in accordance with
      performance against pre-established goals and objectives and subject to
      the discretion of the Board of Directors described above.

-     DISCRETIONARY AWARDS: Awards are not guaranteed compensation and employees
      eligible to participate in the plan are not guaranteed to receive any
      award.

-     TAX RELATED LIABILITIES: Participants are responsible for determining the
      tax consequences for incentive awards, which will be subject to
      appropriate withholding by the Company.

-     PAYMENT DISPUTES: Plan participants agree that payment disputes, including
      but not limited to disputes relating to promotions, demotions, changes in
      positions, prorating of payment, must be submitted within 30 days of the
      earlier of (i) notice of the amount of any earned award, and (ii) check
      receipt.

-     ACKNOWLEDGEMENT OF RECEIPT: Plan participants shall receive access to a
      copy of the plan document or a communication outlining plan criteria and
      guidelines.

-     NO CONTRACT OF EMPLOYMENT: Participation in this plan does not constitute
      a guarantee of employment in any way, for any given performance period or
      other time period.

-     PLAN CHANGES: The Company reserves the right to revise or terminate this
      plan, with or without notice, at any time for any reason it deems
      appropriate, provided however that Plan provisions relating to incentive
      awards based on qualifying Business Combination may not be amended from
      and after the consummation of such a Business Combination.

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