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Employment Agreement Edgar Masri

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3COM CORPORATION


EMPLOYMENT AGREEMENT


This Employment Agreement (the "Agreement") is by and between 3Com Corporation (the "Company) and Edgar Masri ("Executive") and is as of August 8, 2006.


1. Duties and Scope of Employment.


(a) Positions and Duties. As of August 18, 2006 (the
"Effective Date"), Executive will serve as the Company's President and
Chief Executive Officer. As soon as reasonably practicable thereafter,
Executive will be appointed to the Board of its Huawei Joint Venture as
its Chairman. Executive will report to the Company's Board of Directors
(the "Board"). As of the Effective Date, Executive will render such
business and professional services in the performance of his duties,
consistent with Executive's position within the Company, as will
reasonably be assigned to him by the Board. The period Executive is
employed by the Company under this Agreement is referred to herein as
the "Employment Term."


(b) Board Membership. Executive will be appointed to serve as
a member of the Board as of the Effective Date. However, in the event
that the Effective Date is prior to September 20, 2006, Executive will
be appointed to serve as a member of the Board effective immediately
following the Company's Fiscal Year 2006 Annual Shareholders' Meeting
which is scheduled for September 20, 2006. Thereafter, at each annual
meeting of the Company's stockholders during the Employment Term, the
Company will nominate Executive to serve as a member of the Board.
Executive's service as a member of the Board will be subject to any
required stockholder approval. Upon the termination of Executive's
employment for any reason, unless otherwise requested by the Board,
Executive will be deemed to have resigned from the Board (and all other
positions held at the Company and its affiliates, including (without
limitation) the Huawei Joint Venture) voluntarily, without any further
required action by Executive, as of the end of Executive's employment
and Executive, at the Board's request, will execute any documents
necessary to reflect his resignation.


(c) Obligations. During the Employment Term, Executive will
devote Executive's full business efforts and time to the Company and
will use good faith efforts to discharge Executive's obligations under
this Agreement to the best of Executive's ability and in accordance
with each of the Company's corporate guidance and ethics guidelines,
conflict of interests policies and code of conduct. For the duration of
the Employment Term, Executive agrees not to actively engage in any
other employment, occupation, or consulting activity, including
membership of boards of directors, for any direct or indirect
remuneration without the prior approval of the Board (which approval
will not be unreasonably withheld); provided, however, that Executive
may, without the approval of the Board, serve in any capacity with any
civic, educational, or charitable organization, provided such services
do not interfere with Executive's obligations to Company.


(i) Executive hereby represents and warrants to the Company that Executive is not party to any contract, understanding, agreement or policy, written or otherwise, that would be breached by Executive's entering into, or performing services under, this Agreement. Executive further represents that as of the date of this Agreement there are no threatened, pending, or actual claims against Executive of which he is aware as a result of his employment with his current employer (or any other previous employer) or his membership on any boards of directors.


(d) Other Entities. Executive agrees to serve and may be
appointed, without additional compensation, as an officer and director
for each of the Company's subsidiaries, partnerships, joint ventures,
limited liability companies and other affiliates, including entities in
which the Company has a significant investment as determined by the
Company. As used in this Agreement, the term "affiliates" will include
any entity controlled by, controlling, or under common control of the
Company.


2. At-Will Employment. Executive and the Company agree that Executive's employment with Company constitutes "at-will" employment. Executive and the Company acknowledge that this employment relationship may be terminated at any time, upon written notice to the other party, with or without Cause or Good Reason (as each such term is defined in Section 10 below), at the option either of the Company or the Executive. However, as described in this Agreement, Executive may be entitled to severance benefits depending upon the circumstances of Executive's termination of employment.


3. Compensation.


(a) Base Salary. As of the Effective Date, the Company will
pay Executive an annual salary of $650,000.00 as compensation for his
services (such annual salary, as is then effective, to be referred to
herein as "Base Salary"). The Base Salary will be paid periodically in
accordance with the Company's normal payroll practices and be subject
to the usual, required withholdings.


(b) Annual Incentive. Executive will be eligible to receive
annual cash incentives payable for the achievement of performance goals
established by the Board or by the Committee. During the Employment
Term, Executive's target annual incentive ("Target Annual Incentive")
will be not less than 100% of Base Salary, with a maximum potential
opportunity of 200% of Base Salary, subject to the terms of the bonus
plan approved by the Committee. The actual earned annual cash
incentive, if any, payable to Executive for any performance period will
depend upon the extent to which the applicable performance goal(s)
specified by the Committee are achieved or exceeded and will be
adjusted for under- or over-performance. Any incentive earned during
the first half of fiscal 2007 will be pro-rated based on the Effective
Date (calculated by multiplying any incentive earned by Executive by a
fraction with a numerator equal to the number of days between the
Effective Date and the close of the first half of the fiscal year and a
denominator equal to 182). The Company will notify Executive of the
performance goals in respect of fiscal 2007 within 60 days after the
Effective Date.


(c) Stock Options.


(i) Executive will be granted nonstatutory stock options to purchase 3,500,000 shares of Company common stock (the "Initial Options"). The exercise price will be at a per share exercise price equal to the closing price per share of Company common stock on Nasdaq Global Select Market ("Nasdaq") on the first Tuesday in the month immediately succeeding the month in which Executive commences employment with the Company (the "First Tuesday Exercise Price"). The Initial Option will be granted under and subject to the terms, definitions and provisions of the Company's 2003 Stock Plan, as amended (the "2003 Plan"), except that the terms of this Agreement shall control to the extent that this Agreement provides for more favorable terms with respect to the stock option grants. The stock option grants will be scheduled to vest at a rate of 25% on each anniversary of the grant over four (4) years assuming Executive's continued employment with the Company on each scheduled vesting date, and will have the maximum term permitted in the 2003 Plan. Except as provided in this Agreement, the Initial Option will be subject to the Company's standard terms and conditions for options granted under the 2003 Plan.


(ii) Executive will be granted nonstatutory stock options to purchase eight million five hundred thousand (8,500,000) shares of Company common stock (the "Stand-Alone Grant"). Two million five hundred thousand (2,500,000) shares of Company common stock subject to the Stand-Alone Grant will be granted with a per share exercise price equal to the First Tuesday Exercise Price. Three million (3,000,000) shares of Company common stock subject to the Stand-Alone Grant will be granted with a per share exercise price equal to a 20% premium to the First Tuesday Exercise Price. An additional three million (3,000,000) shares of Company common stock subject to the Stand-Alone Grant will be granted with a per share exercise price equal to a 30% premium to the First Tuesday Exercise Price. The Stand-Alone Grant will be granted under a non-stockholder approved arrangement outside of any Company equity plan pursuant to Nasdaq's "inducement exception." Executive agrees that the granting of the Stand-Alone Grant is an inducement material to his decision to enter into this Agreement and accept employment with the Company. Subject to the provisions of this Agreement, the terms and conditions of the Stand-Alone Grant will be identical to those of the Initial Option (except that they will not be granted under a Company equity plan) and will be scheduled to vest at a rate of 25% on each anniversary of the grant over four (4) years assuming Executive's continued employment with the Company on each scheduled vesting date.


(iii) The Company will use its commercially reasonable best efforts to register all shares covered by the Initial Option, the Stand-Alone Option, and the Restricted Stock Grant on Form S-8 as soon as administratively practicable following the Effective Date.


(iv) As of the Effective Date, Executive will be granted 500,000 shares of restricted stock (the "Restricted Stock Grant"). The Restricted Stock Grant will be granted under and subject to the terms, definitions and provisions of the Company's 2003 Plan, will vest in three equal installments on each anniversary date of the grant over three (3) years assuming Executive's continued employment with the Company on each scheduled vesting date. Except as provided in this Agreement, the Restricted Stock Grant will be subject to the Company's standard terms and conditions for restricted stock granted under the 2003 Plan.


(v) The parties anticipate that the Initial Option, the Stand-Alone Option, and the Restricted Stock Grant are being granted in lieu of any additional individualized equity grants for a four (4) year period commencing on the Effective Date, except that should the Company and/or Executive significantly overperform, additional equity grants may be made at the discretion of the Company.


4. Employee Benefits.


(a) Generally. Executive will be eligible to participate in
accordance with the terms of all Company employee benefit plans,
policies and arrangements that are applicable to other executive
officers of the Company, as such plans, policies and arrangements may
exist from time to time.


(b) Vacation. Executive will be entitled to receive paid
annual vacation in accordance with Company policy for other senior
executive officers. In no event will Executive receive less than four
(4) weeks of paid vacation time per calendar year.


(c) Life Insurance. Upon the Effective Date and throughout the
duration of Executive's employment with the Company, the Company will
purchase and maintain a $10,000,000.00 term life insurance policy for
the benefit of Executive or his estate. Executive will assist the
Company in procuring such insurance by submitting to typical
examinations and by completing such applications and other instruments
as may be required by the insurance carriers to which application is
made for any such insurance. Notwithstanding the preceding, in no event
will the Company be required to pay more than $30,000.00 for any annual
premium for the policy. The Company's obligation to maintain this
policy will terminate immediately upon Executive's voluntary
termination of employment or his termination for Cause. In the event of
a termination without Cause, a resignation for Good Reason, or a
termination following a Change of Control, the Company will keep the
policy in effect for a period equal to the earlier of one (1) year
after such termination, or the date on which Executive becomes eligible
for coverage under another employer's life insurance plan.


5. Expenses. The Company will reimburse Executive for reasonable travel, entertainment and other expenses incurred by Executive in the furtherance of the performance of Executive's duties hereunder, in accordance with the Company's expense reimbursement policy as in effect from time to time.


6. Term and Termination of Employment. In the event Executive's employment with the Company terminates for any reason, Executive will be entitled to any (a) unpaid Base Salary accrued up to the effective date of termination; (b) unpaid, but earned and accrued annual incentive for any completed fiscal year as of his termination of employment; (c) pay for accrued but unused vacation; (d) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive; (e) unreimbursed business expenses required to be reimbursed to Executive; and (f) rights to indemnification Executive may have under the Company's Articles of Incorporation, Bylaws, the Agreement, or separate indemnification agreement, as applicable. In addition, if the termination is by the Company without Cause or Executive resigns for Good Reason, Executive will be entitled to amounts and benefits specified in Section 8.


7. Survival of Covenants.


(a) Non-solicitation and Non-competition. The Executive agrees
that during the Employment Term and for twelve (12) months thereafter,
Executive will not (i) solicit any employee of the Company (other than
Executive's personal assistant) for employment other than at the
Company or one of its subsidiaries or affiliates, or (ii) directly or
indirectly engage in, have any ownership interest in or participate in
any entity that as of the date of termination, competes with the
Company in any substantial business of the Company or any business
reasonably expected to become a substantial business of the Company.
Executive's passive ownership of not more than 1% of any publicly
traded company and/or 5% ownership of any privately held company will
not constitute a breach of this Section 7(a).


(b) Nondisparagement. During the Employment Term and for
twelve (12) months thereafter, Executive will not knowingly and
materially disparage, criticize, or otherwise make any derogatory
statements regarding the Company, and the members of the Chief
Executive staff and the Board will not knowingly and materially
disparage, criticize, or otherwise make any derogatory comments
regarding Executive. Notwithstanding the foregoing, nothing contained
in this Agreement will be deemed to restrict Executive, the Company or
any of the Company's current or former officers and/or directors from
providing information to any governmental or regulatory agency (or in
any way limit the content of any such information) to the extent they
are requested or required to provide such information pursuant to
applicable law or regulation.


(c) Confidentiality. During the Employment Term and
thereafter, Executive will continue to comply with the terms of the
Restrictive Covenant Agreement.


8. Severance.


(a) Termination Without Cause or Resignation for Good Reason
other than in Connection with a Change of Control. If Executive's
employment is terminated by the Company without Cause or if Executive
resigns for Good Reason, and such termination is not in Connection with
a Change of Control, then, subject to Section 8(d), Executive will
receive: (i) continued payment of the aggregate of executive's Base
Salary plus the Target Annual Incentive for the year in which the
termination occurs (less applicable tax withholdings) for twelve (12)
months, such amounts to be paid out bi-weekly in accordance with the
Company's normal payroll policies; (ii) twelve (12) months accelerated
vesting with respect to Executive's then outstanding, unvested equity
awards, other than performance-based awards, (iii) extension of the
exercise period for all Executive's outstanding stock options to the
earlier of 165 calendar days from the date of termination or the
expiration date of the stock options (iv) reimbursement for premiums
paid for continued health benefits for Executive (and any eligible
dependents) under the Company's health plans until the earlier of (x)
eighteen (18) months, payable when such premiums are due (provided
Executive validly elects to continue coverage under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA"), or (y) the date upon which
Executive and Executive's eligible dependents become covered under
similar plans, and iv) any life insurance policy in accordance with
Section 4(c) above.


(b) Termination Without Cause or Resignation for Good Reason
in Connection with a Change of Control. If Executive's employment is
terminated by the Company without Cause or by Executive for Good
Reason, and the termination is in Connection with a Change of Control,
then, subject to Section 8(d), Executive will receive: (i) continued
payment of two (2) year's Base Salary, less applicable tax
withholdings, in accordance with the Company's normal payroll policies;
(ii) two (2) payments each equal to 100% of Executive's Target Annual
Incentive for the year in which the termination occurs, less applicable
tax withholdings, paid in two equal annual installments in accordance
with the Company's normal schedule for the payment of annual cash
incentives; (iii) full vesting with respect to Executive's then
outstanding unvested equity awards, other than performance-based
awards; (iv) extension of the exercise period for all Executive's
outstanding stock options to the earlier of 165 calendar days from the
date of termination or the expiration date of the stock options; (v)
reimbursement for premiums paid for continued health benefits for
Executive (and any eligible dependents) under the Company's health
plans until the earlier of (x) eighteen (18) months, payable when such
premiums are due (provided Executive validly elects to continue
coverage under COBRA), or (y) the date upon which Executive and
Executive's eligible dependents become covered under similar plans, and
(vi) any life insurance policy in accordance with Section 4(c) above.


(c) Voluntary Termination Without Good Reason or Termination
for Cause. If Executive's employment is terminated voluntarily,
including due to death or Disability, without Good Reason or is
terminated for Cause by the Company, then, except as provided in
Section 6, (i) all further vesting of Executive's outstanding equity
awards will terminate immediately; (ii) all payments of compensation by
the Company to Executive hereunder will terminate immediately; and
(iii) Executive will be eligible for severance benefits only in
accordance with the Company's then established plans.


(d) Separation Agreement and Release of Claims. The receipt of
any severance or other benefits pursuant to this Section 8 will be
subject to Executive signing and not revoking a separation agreement
and release of claims appended hereto as Exhibit B. No severance or
other benefits will be paid or provided until the separation agreement
and release agreement becomes effective.


(e) No Duty to Mitigate. Executive will not be required to
mitigate the amount of any payment contemplated by this Agreement, nor
will any earnings that Executive may receive from any other source
reduce any such payment.


9. Excise Tax Gross-Up. In the event that the benefits provided for in this Agreement 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 Executive will receive (i) a payment from the Company sufficient to pay such excise tax, and (ii) an additional payment from the Company sufficient to pay the federal and state income and employment taxes and additional excise taxes arising from the payments made to Executive by the Company pursuant to this sentence. However, the Company may elect not to make payments under the preceding sentence to the extent it reasonably determines that (a) the "parachute payments" arise from the acceleration of options with exercise prices exceeding the price at which the underlying shares could be sold on the date of the Change in Control and (b) any payments under the preceding sentence would not significantly benefit the Executive. Unless Executive and the


Company agree otherwise in writing, the determination of Executive's excise tax liability, if any, and the amount, if any, required to be paid under this Section 9 will be made in writing by a certified public accounting firm selected by the Company and reasonably acceptable to the Executive (the "Accountants"). For purposes of making the calculations required by this Section 9, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. Executive and the Company agree to furnish such information and documents as the Accountants may reasonably request in order to make a determination under this Section 9. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 9.


10. Definitions.


(a) Cause. For purposes of this Agreement, "Cause" will mean:


(i) Executive's willful and continued failure to perform the duties and responsibilities of his position after there has been delivered to Executive a written demand for performance from the Board which describes in reasonable detail the basis for the Board's belief that Executive has not substantially performed his duties and provides Executive the opportunity to present to the Board his good faith reasons for not so performing and, if the Board does not agree with such reasons, with thirty (30) days to take corrective action;


(ii) Any act of personal dishonesty taken by Executive in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in the substantial personal enrichment of Executive;


(iii) Executive's conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Company's reputation or business;


(iv) A breach of any fiduciary duty owed to the Company by Executive that has a material detrimental effect on the Company's reputation or business;


(v) Executive being found liable in any Securities and Exchange Commission or other civil or criminal securities law action or entering any cease and desist order with respect to such action (regardless of whether or not Executive admits or denies liability);


(vi) Executive (A) obstructing or impeding; (B) endeavoring to influence, obstruct or impede, or (C) failing to materially cooperate with, any investigation authorized by the Board or any governmental or self-regulatory entity (an "Investigation"). However, Executive's failure to waive attorney-client privilege relating to communications with Executive's own attorney in connection with an Investigation will not constitute "Cause"; or


(vii) Executive's disqualification or bar by any U.S. governmental or self-regulatory authority from serving in the capacity contemplated by this Agreement or Executive's loss of any U.S. governmental or self-regulatory license that is reasonably necessary for Executive to perform his responsibilities to the Company under this Agreement, if (A) the disqualification, bar or loss continues for more than thirty (30) days, and (B) during that period the Company uses its good


faith efforts to cause the disqualification or bar to be lifted or the license replaced. While any disqualification, bar or loss continues during Executive's employment, Executive will serve in the capacity contemplated by this Agreement to whatever extent legally permissible and, if Executive's employment is not permissible, Executive will be placed on leave (which will be paid to the extent legally permissible).


(b) Change of Control. For purposes of this Agreement, "Change
of Control" will mean the occurrence of any of the following events:


(i) The consummation by the Company 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) more than 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;


(ii) The approval by the stockholders of the Company, or if stockholder approval is not required, approval by the Board, of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets;


(iii) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company's then outstanding voting securities; or


(iv) A change in the composition of the Board within any twelve (12) month period during the Term and pursuant to a plan in which the proponent proposes alternative directors to the Board, and as a result of which fewer than a majority are Incumbent Directors. "Incumbent Directors" will mean directors who either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a maj
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