Exhibit 10.1
UTSTARCOM, INC.
CHANGE OF CONTROL/INVOLUNTARY TERMINATION
SEVERANCE AGREEMENT
This Change of
Control/Involuntary Termination Severance Agreement (the
“Agreement”) is made and entered into effective as of
July 2, 2007 (the “Effective Date”), by and between
Peter Blackmore (the “Employee”) and UTStarcom, Inc., a
Delaware corporation (the “Company”). Certain
capitalized terms used in this Agreement are defined in
Section 1 below.
RECITALS
A.
The Company desires to retain the services of the Employee, and the
Employee desires to be employed by the Company, on the terms and
subject to the conditions set forth in this Agreement.
B.
The Board of Directors of the Company (the “Board”)
believes that it is in the best interests of the Company and its
shareholders to provide the Employee with enhanced financial
security and sufficient encouragement to remain with the
Company.
AGREEMENT
In consideration
of the mutual covenants herein contained and the employment of
Employee by the Company, the parties agree as follows:
1. Definition of
Terms . The following terms referred to in this Agreement shall
have the following meanings:
(a) Cause .
“Cause” shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his
responsibilities as an employee which is intended to result in
substantial personal enrichment of the Employee,
(ii) Employee’s conviction of a felony which the Board
reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business, (iii) a
willful act by the Employee which constitutes misconduct and is
injurious to the Company, and (iv) continued willful
violations by the Employee of the Employee’s obligations to
the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the
basis for the Company’s belief that the Employee has not
substantially performed his duties.
(b) Change of Control .
“Change of Control” shall mean the occurrence of any of
the following events:
(i) the approval by
shareholders of 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 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;
(ii) the approval by the
shareholders of the Company 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, 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 hereof, 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 transactions described in subsections (i),
(ii), or (iii) or in connection with an actual or threatened
proxy contest relating to the election of directors of the
Company.
Notwithstanding
the foregoing or anything in this Agreement to the contrary, a
“Change of Control” will not include any transaction
described in clauses (i), (ii) or (iii) of this Section 1(b) which
is pursuant to a definitive agreement executed within one hundred
twenty (120) days of the Effective Date; provided, however, an
event that could be described in clause (iv) will be deemed a
“Change of Control”.
(c) Good Reason .
“Good Reason” shall mean (i) without the
Employee’s express written consent, a significant reduction
of the Employee’s duties, position or responsibilities
relative to the Employee’s duties, position or
responsibilities in effect immediately prior to such reduction, or
the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable
duties, position and responsibilities; provided, however, that a
reduction in duties, position or responsibilities solely by virtue
of the Company being acquired and made part of a larger entity
shall not constitute a “Good Reason;” (ii) without
the Employee’s express written consent, a substantial
reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the
Employee immediately prior to such reduction; (iii) a
reduction by the Company of the Employee’s base salary as in
effect immediately prior to such reduction; (iv) a material
reduction by the Company in the kind or level of employee benefits
to which the Employee is entitled immediately prior to such
reduction with the result that the Employee’s overall
benefits package is significantly reduced; (v) without the
Employee’s express written consent, the relocation of the
Employee to a facility or a location more than fifty
(50) miles from his current location; (vi) any purported
termination of the Employee by the Company which is not effected
for Cause or for which the grounds relied upon are not valid; or
(vii) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated in Section 9
below.
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(d) Involuntary
Termination . “Involuntary Termination” shall mean
any termination (other than a termination for Cause) of the
Employee by the Company.
(e) Termination Date .
“Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other
hereunder.
2. Term of
Agreement . This Agreement will have a term of three
(3) years commencing on the Effective Date. Following the
expiration of the three-year term, the Employee and the Company
may, but are not obligated to, enter into a new agreement. If
Employee’s employment continues following the expiration of
the three-year term, and the Company and Employee do not enter into
a new agreement, the terms of this Agreement shall continue in
effect until the Parties agree otherwise.
3. At-Will
Employment . The Company and the Employee acknowledge that
subject to the provisions of this Agreement, the Employee’s
employment is and shall continue to be at-will, as defined under
applicable law. If the Employee’s employment terminates for
any reason, the Employee shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be established under the
Company’s then existing employee benefit plans or policies at
the time of termination.
4. Failure to
Receive Offer to Become Chief Executive Officer . If the
Employee remains employed with the Company through the date that is
the twelve (12)-month anniversary of the Effective Date (the
“Trigger Date”) and the Employee is not offered the
position of Chief Executive Officer of the Company on or before the
Trigger Date, the Employee shall be entitled to the following
benefits:
(a) twelve (12) months of
the Employee’s base salary as in effect as of the Trigger
Date, less applicable withholding, payable in a lump sum within
thirty (30) days of the Trigger Date;
(b) one hundred percent (100%)
of the Employee’s full annual performance target bonus for
the year of the Trigger Date, payable in a lump sum within thirty
(30) days of the Trigger Date;
(c) all equity awards, including
without limitation stock option grants, restricted stock and stock
purchase rights, granted by the Company to the Employee shall
become fully vested or released from the Company’s repurchase
right (if any shares of stock purchased by or granted to the
Employee remain subject to such repurchase right) and exercisable
as of the Trigger Date to the extent such equity awards are
outstanding and unexercisable or unreleased at such date; and
(d) all Employee’s
outstanding restricted cash awards shall become fully vested,
payable in a lump sum within thirty (30) days of the Trigger
Date.
Notwithstanding
the foregoing or anything in this Agreement to the contrary, the
Board and the Employee may mutually agree to extend the Trigger
Date beyond the twelve (12)-month anniversary of the Effective
Date; provided, however, that the Trigger Date cannot be extended
beyond February 13, 2009 and such change must be in writing. For
the avoidance of doubt, if the Trigger Date is extended, to receive
any of the payments and benefits provided in this Section 4,
the
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Employee must (i)
remain employed with the Company through the extended Trigger Date,
and (ii) not be offered the position of Chief Executive Officer of
the Company on or before the extended Trigger Date.
5. Severance
Benefits .
(a) Termination Following A
Change of Control . If the Employee’s employment with the
Company terminates as a result of a Good Reason or an Involuntary
Termination at any time within eighteen (18) months after a
Change of Control, Employee shall be entitled to the following
severance benefits:
(i) twenty-four
(24) months of Employee’s base salary as in effect as of
the date of such termination, less applicable withholding, payable
in a lump sum within thirty (30) days of the termination;
(ii) two hundred percent (200%)
of Employee’s full annual performance target bonus and a
monthly pro rated amount of the Employee’s full annual
performance bonus for the year in which the termination occurs,
payable in a lump sum within thirty (30) days of the
termination;
(iii) all equity awards, including
without limitation stock option grants, restricted stock and stock
purchase rights, granted by the Company to the Employee prior to
the Change of Control shall become fully vested or released from
the Company’s repurchase right (if any shares of stock
purchased by or granted to the Employee prior to the Change of
Control remain subject to such repurchase right) and exercisable as
of the date of the termination to the extent such equity awards are
outstanding and unexercisable or unreleased at the time of such
termination. The Employee shall be permitted to exercise his vested
equity awards (including awards that vest as a result of the
Agreement) for twelve (12) months from the date of
termination;
(iv) all Employee’s outstanding
restricted cash awards shall become fully vested, payable in a lump
sum within thirty (30) days of the termination ; and
(v) the same level of health
(i.e., medical, vision and dental) coverage and
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