Company Name: 3Com Corp.
Public Availability Date: August 15, 2000Document Sections: LETTER OF INQUIRY 1
APPENDIX
LETTER OF INQUIRY 2
LETTER OF INQUIRY 3
APPENDIX
STAFF REPLY LETTER [LETTER OF INQUIRY 1]
July 21, 2000 VIA FEDERAL EXPRESS Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549 Attention: Office of Chief Counsel Re: 3Com Corporation
Omission of Stockholder Proposal Ladies and Gentlemen: 3Com Corporation ("3Com" or the "Company") has received for inclusion in the
proxy materials for its 2000 Annual Meeting of Stockholders the proposal (the
"Proposal") set forth in the enclosed correspondence from Harrington
Investments, Inc. and Global Exchange, the proponents of the Proposal. Enclosed are six copies of this letter, including the enclosures, and an
additional receipt copy of this letter. Please date-stamp the receipt copy and
return it to my attention in the enclosed self-addressed stamped envelope. I am providing this opinion as counsel to 3Com in support of the position that
the Company may omit the Proposal from its proxy materials because the Proposal
is excludable under Rule 14a-8(i)(5). Rule 14a-8(i)(5) permits the omission of proposals that relate to operations
that account for less than 5% of the Company's total assets at the end of its
most recent fiscal year, that relate to operations that account for less than 5%
of its net earnings and gross sales for its most recent fiscal year, and that
are not otherwise significantly related to its business. During our fiscal year
recently ended June 2, 2000, gross sales from our operations in China comprised
approximately 1.6% of 3Com's gross sales. Although our accounting methods do not
provide us with the exact percentage of 3Com's total assets that are committed
to our operations in China, or with the exact percentage of 3Com's net earnings
from our operations in China, our operations in China primarily relate to sales
and marketing activities, and we believe (i) that such operations comprised
substantially less than 5% of 3Com's total assets at June 2, 2000, (ii) that net
earnings from those operations comprised substantially less than 5% of 3Com's
net earnings at June 2, 2000, and (iii) that the operations at issue are de
minimis and are not significantly related to 3Com's business. Accordingly, we
believe that the Proposal can be excluded under Rule 14a-8(i)(5). We are sending a copy of this letter to the proponents, Harrington Investments,
Inc. and Global Exchange, notifying such proponents that we intend to omit the
Proposal from our proxy materials for the reason described above. If you have
any questions concerning the Proposal or this request, please call the
undersigned at (408) 326-5000. Very truly yours, Mark Michael
S.V.P., General Counsel & Secretary Enclosures cc: John C. Harrington (w/encl.)
President, Harrington Investments, Inc. Medea Benjamin (w/encl.)
Co-Director, Global Exchange [APPENDIX]
US BUSINESS PRINCIPLES FOR HUMAN RIGHTS OF WORKERS IN CHINA WHEREAS: our company's business practices in China respect human and labor
rights of workers. The eleven principles below were designed to commit a company
to a widely accepted and thorough set of human and labor rights standards for
China. They were defined by the International Labor Organization, the United
Nations Covenants on Economic, Social and Cultural Rights, and Civil, and
Political Rights. They have been signed by the Chinese government and China's
national laws. (1) No goods or products produced within our company's facilities or those of
suppliers shall be manufactured by bonded labor, forced labor, within prison
camps or as part of reform-through-labor or reeducation-through-labor programs.
(2) Our facilities and suppliers shall adhere to wages that meet workers' basic
needs, fair and decent working hours, and at a minimum, to the wage and hour
guidelines provided by China's national labor laws. (3) Our facilities and suppliers shall prohibit the use of corporal punishment,
any physical, sexual or verbal abuse or harassment of workers. (4) Our facilities and suppliers shall use production methods that do not
negatively affect the worker's occupational safety and health. (5) Our facilities and suppliers shall prohibit any police or military presence
designed to prevent workers from exercising their rights. (6) We shall undertake to promote the following freedoms among our employees and
the employees of our suppliers: freedom of association and assembly, including
the rights to form unions and bargain collectively; freedom of expression, and
freedom from arbitrary arrest or detention. (7) Company employees and those of our suppliers shall not face discrimination
in hiring, remuneration or promotion based on age, gender, marital status,
pregnancy, ethnicity or region of origin. (8) Company employees and those of our suppliers shall not face discrimination
in hiring, remuneration or promotion based on labor, political or religious
activity, or on involvement in demonstrations, past records of arrests or
internal exile for peaceful protest, or membership in organizations committed to
non-violent social or political change. (9) Our facilities and suppliers shall use environmentally responsible methods
of production that have minimum adverse impact on land, air and water quality.
(10) Our facilities and suppliers shall prohibit child labor, at a minimum
comply with guidelines on minimum age for employment within China's national
labor laws. (11) We will issue annual statements to the Human Rights for Workers in China
Working Group detailing our efforts to uphold these principles and to promote
these basic freedoms. RESOLVED: Stockholders request the Board of Directors to make all possible
lawful efforts to implement and/or increase activity on each of the principles
named above in the People's Republic of China. SUPPORTING STATEMENT: As U.S. companies import more goods, consumer and
shareholder concern is growing about working conditions in China that fall below
basic standards of fair and humane treatment. We hope that our company can prove
to be a leader in its industry and embrace these principles. [LETTER OF INQUIRY 2]
August 11, 2000 VIA FACSIMILE AND FEDERAL EXPRESS Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549 Attention: Office of Chief Counsel Re: 3Com Corporation
Omission of Stockholder Proposal Ladies and Gentlemen: In a letter dated July 21, 2000 to the SEC, 3Com Corporation ("3Com" or the
"Company") requested a no-action letter relating to 3Com's intention to omit a
stockholder proposal received by 3Com from Harrington Investments, Inc. and
Global Exchange, the proponents of the Proposal. Under Rule 14a-8(j), a filing of a no-action request must be made more than 80
days prior to the date the Company intends to file its definitive proxy
statement and form of proxy with the Commission. In 1999, the Company's proxy
statement provided that stockholder proposals for inclusion in the 2000 Proxy
Statement must be received by June 23, 2000. This date was calculated
incorrectly in that the Company mailed its 1999 Proxy Statement on August 19,
1999 for the Company's 1999 Annual Meeting which was held on September 23, 1999.
The correct stockholder proposal cut off date based on that timing (which is the
same timing for the 2000 Annual Meeting) should have been April 21, 2000. Due to
the incorrect date, the Company received notice of the Proposal too late to be
able to comply with the 80-day deadline set forth in Rule 14a-8(j). Therefore,
we respectfully request that the Staff waive the 80-day filing requirement with
respect to this no-action request. The Company intends to mail its Proxy Materials on or about August 21, 2000.
Therefore, on behalf of the Company, we request that the Staff promptly review
this no-action request and issue its response as soon as practicable. If you have any questions concerning the Proposal or the request, please call
the undersigned at (650) 565-3522. Sincerely, WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
Katharine A. Martin
650 Page Mill Road
Palo Alto, CA 94304-1050
650-493-9300 Tel
650-493-6811 Fax
www.wsgr.com [LETTER OF INQUIRY 3]
August 7, 2000 Office of Chief Counsel
Division of Corporate Finance
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Stockholder Proposal submitted to 3Com Ladies and Gentlemen: This letter is in response to a July 24, 2000 letter from 3Com, indicating the
company had filed a request to exclude from its proxy material statement and
form of proxy for 3Com's 2000 Annual Meeting of Shareholders, a stockholder
proposal and supporting statement filed by myself, John Harrington, President &
CEO of Harrington Investments, Inc. Acting on behalf my clients, I filed this
shareholder resolution in order to allow shareholders the right to not on
whether or not 3Com should adopt The U.S. Business Principles for Human Rights
of Workers in China. 3Com seeks to exclude the shareholder resolution from their proxy material based
on Rule 14a-8(i)(5) which states that the proposal may be omitted if it relates
to operations which account for less than 5 percent of the company's total
assets at the end of its most recent fiscal year, and for less than 5 percent of
its net earnings and gross sales for its most recent fiscal year, and is not
otherwise significantly related to the company's business. I am requesting that the Commission not allow the company to exclude the
resolution from its proxy materials because the proposal significantly relates
to 3Com's business. Although it may be true that the company's operations in
China amount to approximately 1.6% of total operations, those operations
significantly relate to the business of the company and should not be considered
insignificant. Representing the world's largest population and its pending accession to the
World Trade Organization (WTO), China stands to become the largest economic
market potential ever for U.S. corporations, including those in the high tech
industry. Under new agreements set forth between China and the U.S. for
normalized trade relations, China would join the Information Technology
Agreement, pledging to bring tariffs on information technology down to zero by
2005. Foreigner investors in China would be able to own up to 50 percent of
Chinese Internet ventures. In addition, China has recently received approval by
the United States House of Representatives regarding U.S. extension of Permanent
Normal Trade Relations (PNTR). These highly publicized aspects make any business
involvement in China a highly significant matter, not only to 3Com but all U.S.
companies seeking business opportunities there as well. 3Com's business operations in China have been continuously growing at a
considerable rate. According to International Data Corporation (IDC) Asia
Pacific, 3Com registered the highest growth of any company in the Asia-Pacific
market during the first six months of 1999 and there are no signs of this growth
rate regressing. During the signing ceremony at Beijing's Great Hall of the
People, Matthew Kapp, President, 3Com Asia Pacific, said "...we are reaffirming
our commitment to the future of the China market, and to enhancing China's
talent and capabilities in high-tech research, development, manufacturing and
marketing." Furthermore, 3Com is the leading vendor of Internet dial-up ports in
china holding better than 55% of the market. With operations including researching, developing, manufacturing, educating,
consulting, and providing technical support and administration, 3Com is a
strategic technology and business partner to the Chinese government and state
corporations, which is clearly significantly related to the company's present
and future business in China and on the entire Asian continent. The labor & human rights principles outlined in the proposal were defined by the
International Labor Organization, Global Exchange, United Nations Covenants on
Economic, Social & Cultural, and Civil & Political Rights. They are intended to
apply to the treatment of 3Com employees in China, where numerous human and
labor rights violations of Chinese workers have consistently been a hot issue in
the media (attachment A), before the United Nations, numerous agencies and
affiliated UN organizations, the WTO, and other trade-related organizations.
Additionally, human and labor rights issues have been the subject of extensive
coverage and review not only by the California State University system & State
of California (attachment B), but also the U.S. State Department and the U.S.
Congress (attachment C). Although China has decent wage, hour, health and safety laws, most if not all
are routinely ignored by transnational corporations doing business in China.
Human Rights in China were the subject of extensive debate recently when the
U.S. House of Representatives approved PNTR. U.S. business operations in China
are considered a highly significant social matter. In the past, the Securities &
Exchange Commission has ruled important issues that relate to business
operations in South Africa & Burma as extraordinary matters, thereby allowing
the shareholder proposals to remain on the proxy statement. However, there is
much more U.S. corporate involvement in China than either South Africa or Burma
and therefore, the economic impact of such involvement is far greater; making
these extraordinary matters highly significant for U.S. businesses operating in
China. As proponents of the proposal and shareholders of 3Com, we do not want
the company to find itself ill-prepared and tangled in the middle of these
matters or debates. By adopting the principles outlined in the proposal, 3Com
can successfully continue to expand its market potential in China with less risk
of human & labor rights violations, bad media publicity, and greater shareholder
support. I thank the members of the Commission for your time and respectfully urge you to
allow shareholders of 3Com the right to vote on this important policy issue at
its 2000 Annual Shareholders' Meeting. Sincerely, John C. Harrington
President ams Enclosure Cc: Tim Smith, Executive Director, Interfaith Center for Corporate
Responsibility (ICCR) David Schilling, Director of Global Corporate Accountability, ICCR Media Benjamin, Co-Director, Global Exchange [APPENDIX]
Eric A.Benhamou
Chairman and Chief Executive Officer
3COM
5400 Bayfront Plaza
Santa Clara, CA 95052-8145
Dear Mr. Benhamou: As Co-Director of Global Exchange, I am co-filing the attached shareholder
resolution filed by John Harrington. The resolution serves to express my, and
Global Exchange's, continuing and growing concern of human rights issues,
including low wages and dangerous working conditions existing in factories in
China. We would like to see 3Com become a signatory of the US Business
Principles for Human Rights of Workers in China. Global Exchange is the beneficial owner of 100 shares of 3Com. A statement of
proof of ownership is enclosed. Should management intend to recommend voting
against the proposal, I request that the supporting statement also be included
in the proxy printed material. If you desire to discuss the substance of the proposal, prior to your deadline
for printing the proxy statements, or if you require clarification of my actions
please contact me. You may also contact John Harrington at (707) 252-6166. Sincerely, Medea Benjamin
Co-Director Encl. Cc: John Harrington, Harrington Investments, Inc.
Securities & Exchange Commission June 5, 2000 Eric A. Benhamou, Chairman and Chief Executive Officer
3COM
5400 Bayfront Plaza
Santa Clara, CA 95052-8145 Dear Mr. Benhamou: Harrington Investments, Inc. is a registered investment advisor managing over
$170 million in assets for individuals and institutions concerned with a social
as well as a financial return. I am writing to you on behalf of my clients who
collectively hold over 26,000 shares of 3Com. My clients strongly believe that
U.S. companies doing business throughout the world should adopt a labor code of
conduct that is easily implemented and rigorously enforced. We feel it is
important for U.S. companies to ensure the human rights of workers manufacturing
products purchased by U.S. consumers. You may recall two previous letters dated February 9th & March 14th of this
year, in which I inquired about our company's Code of Conduct for workers in
China. I have yet to hear a response from our company or to learn about our
labor codes of conduct in China. My clients and I continue to feel that human
rights and labor rights are especially important for companies, such as 3Com,
who have operations and/or subcontractors in other parts of the world where
democratic rights and freedom are not guaranteed. Workers' human and labor
rights have repeatedly been violated in such countries, and often this has
occurred in U.S. corporate factories or factories of American companies. I would
like to see our company's codes include and implement important principles to
ensure that all workers, in all parts of the world, are provided safety and
guaranteed the right to human decency. My clients and other concerned shareholders would like to see our company make
all possible lawful efforts to adopt, implement and enforce the US Business
Principles for Human Rights of Workers in China. We would like 3Com to be
considered a leader in its industry for protecting the human and labor rights of
its workers in China. For these reasons, I am filing the attached shareholder resolution for inclusion
in the Company's 2000 proxy material, pursuant to rule 14-a-8 of the Securities
and Exchange Commission. I am the beneficial owner of 400 shares of 3Com and
intend to hold all of these shares at least until after the 2000 annual
shareholder's meeting. Should management intend to recommend voting against the
proposal, I request that the supporting statement also be included in the proxy
printed material. Please contact me if you wish to discuss this matter or the attached shareholder
proposal. I thank you in advance for your prompt attention to this matter. Sincerely, John C. Harrington
President Cc: Medea Benjamin, Global Exchange
ICCR, The Interfaith Center for Corporate Responsibility
Securities & Exchange Commission
P.O. BOX 6108
NAPA, CALIFORNIA 94581-1108
707-252-6166
800-788-0154
FAX 707-257-7923
HARRINV@NAPANET.NET May 22, 2000 Eric A. Benhamou, Chairman and Chief Executive Officer
3COM
5400 Bayfront Plaza
Santa Clara, CA 95052-8145 Dear Mr. Benhamou: This letter is to serve as proof of ownership for Global Exchange who holds 100
shares of 3Com in the Charles Schwab account #3715-0449. The shares were purchased on 5/20/99 and will be held at least through the date
of 3Com's 2000 annual shareholder's meeting. If you require independent verification of this account please call Schwab
Institutional at (800) 626-0026. I thank you in advance for your prompt attention to this matter and look forward
to your timely reply. Sincerely, John C. Harrington
President
P.O. BOX 6108
NAPA, CALIFORNIA 94581-1108
707-252-6166
800-788-0154
FAX 707-257-7923
HARRINV@NAPANET.NET Opposition Statement to Stockholder Proposal regarding U.S. Business Principles
for Human Rights of Workers in China The Board of Directors unanimously recommends a vote "against" the proposal for
the following two reasons: 1) 3Com's operations in China are de minimis and are not significantly related
to 3Com's business. During our fiscal year recently ended June 2, 2000, gross
sales from our operations in China comprised approximately 1.6% of 3Com's gross
sales. Although our accounting methods do not provide us with the exact
percentage of 3Com's total assets that are committed to our operations in China,
or the exact percentage of 3Com's net earnings from our operations in China, our
operations in China primarily relate to sales and marketing activities, and we
believe that they comprised substantially less than 5% of 3Com's total assets at
June 2, 2000 and that net earnings from those operations comprised substantially
less than 5% of 3Com's net earnings at June 2, 2000. 2) 3Com's operations are global, and we conduct business all around the world.
Recent developments in trade relations with China are expected to have an
influence on the conditions under which American companies conduct business in
China. We cite two related developments in particular. First, the United States
government endorsed the admittance of China to the World Trade Organization this
year. Second, the United States House of Representative has passed legislation
that confers upon China permanent normal trade relations status. This
legislation is expected to pass in the United States Senate and subsequently to
be signed into law. This legislation provides for the establishment of a
specific agency to monitor the status of human rights in China. FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE "AGAINST" APPROVAL OF THE PROPOSAL SUBMITTED BY HARRINGTON INVESTMENTS,
INC. AND GLOBAL EXCHANGE REGARDING U.S. BUSINESS PRINCIPALS FOR HUMAN RIGHTS OF
WORKERS IN CHINA.
[STAFF REPLY LETTER]
August 15, 2000 Response of the Office of Chief Counsel
Division of Corporation Finance
Re: 3Com Corporation Incoming letter dated July 21, 2000 The proposal requests that the board of directors make all possible lawful
efforts to implement and/or increase activity on principles "defined by the
International Labor Organization, the United Nations Covenants on Economic,
Social and Cultural Rights, and Civil, and Political Rights. They have been
signed by the Chinese government and China's national laws." We are unable to concur in your view that 3Com may exclude the proposal under
rule 14a-8(i)(5). Accordingly, we do not believe that 3Com may omit the proposal
from its proxy materials in reliance on rule 14a-8(i)(5). We note that 3Com did not file its statement of objections to including the
proposal in its proxy materials at least 80 calendar days before the date on
which it will file definitive proxy materials as required by rule 14a-8(j).
Noting the circumstances of the delay, we do not waive the 80-day requirement.
Sincerely, Jonathan Ingram
Attorney-Advisor
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