**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”) andUTStarcom, Inc., a Delaware corporation (the “Company”). Certain capitalizedterms used in this Agreement are defined in Section 1 below.

 

RECITALS

 

A.            TheCompany desires to retain the services of the Employee, and the Employeedesires to be employed by the Company, on the terms and subject to theconditions set forth in this Agreement.

 

B.            The Board of Directorsof the Company (the “Board”) believes that it is in the best interests of theCompany and its shareholders to provide the Employee with enhanced financialsecurity and sufficient encouragement to remain with the Company.

 

AGREEMENT

 

Inconsideration of the mutual covenants herein contained and the employment ofEmployee by the Company, the parties agree as follows:

 

# 1.     Definition of Terms. The following terms referred to in thisAgreement shall have the following meanings:

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## (a)   Cause. “Cause” shallmean (i) any act of personal dishonesty taken by the Employee inconnection with his responsibilities as an employee which is intended to resultin substantial personal enrichment of the Employee, (ii) Employee’sconviction of a felony which the Board reasonably believes has had or will havea material detrimental effect on the Company’s reputation or business,(iii) a willful act by the Employee which constitutes misconduct and isinjurious to the Company, and (iv) continued willful violations by theEmployee of the Employee’s obligations to the Company after there has beendelivered to the Employee a written demand for performance from the Companywhich describes the basis for the Company’s belief that the Employee has notsubstantially performed his duties.

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## (b)   Change of Control.“Change of Control” shall mean the occurrence of any of the following events:

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### (i)    the approval by shareholdersof the Company of a merger or consolidation of the Company with any othercorporation, other than a merger or consolidation which would result in thevoting securities of the Company outstanding immediately prior thereto

 

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### continuing to represent(either by remaining outstanding or by being converted into voting securitiesof the surviving entity) more than fifty percent (50%) of the total votingpower represented by the voting securities of the Company or such survivingentity outstanding immediately after such merger or consolidation;

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### (ii)   the approval by theshareholders of the Company of a plan of complete liquidation of the Company oran agreement for the sale or disposition by the Company of all or substantiallyall of the Company’s assets;

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### (iii)  any “person” (as such term isused 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-3under said Act), directly or indirectly, of securities of the Companyrepresenting 50% or more of the total voting power represented by the Company’sthen outstanding voting securities; or

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### (iv)  a change in the composition ofthe Board, as a result of which fewer than a majority of the directors areIncumbent Directors. “Incumbent Directors” shall mean directors who either(A) are directors of the Company as of the date hereof, or (B) areelected, or nominated for election, to the Board with the affirmative votes ofat least a majority of those directors whose election or nomination was not inconnection with any transactions described in subsections (i), (ii), or(iii) or in connection with an actual or threatened proxy contest relatingto the election of directors of the Company.

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Notwithstandingthe foregoing or anything in this Agreement to the contrary, a “Change ofControl” will not include any transaction described in clauses (i), (ii) or(iii) of this Section 1(b) which is pursuant to a definitive agreement executedwithin 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 ofControl”.

 

## (c)   Good Reason. “GoodReason” shall mean (i) without the Employee’s express written consent, asignificant reduction of the Employee’s duties, position or responsibilitiesrelative to the Employee’s duties, position or responsibilities in effectimmediately prior to such reduction, or the removal of the Employee from suchposition, duties and responsibilities, unless the Employee is provided withcomparable duties, position and responsibilities; provided, however, that areduction in duties, position or responsibilities solely by virtue of theCompany being acquired and made part of a larger entity shall not constitute a “GoodReason;” (ii) without the Employee’s express written consent, asubstantial reduction, without good business reasons, of the facilities andperquisites (including office space and location) available to the Employeeimmediately prior to such reduction; (iii) a reduction by the Company ofthe 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 employeebenefits to which the Employee is entitled immediately prior to such reductionwith the result that the Employee’s overall benefits package is significantlyreduced; (v) without the Employee’s express written consent, therelocation of the Employee to a facility or a location more than fifty(50) miles from his current location; (vi) any purported terminationof the Employee by the Company which is not effected for Cause or for which thegrounds relied upon are not valid; or (vii) the failure of the Company toobtain the assumption of this Agreement by any successors contemplated inSection 9 below.

 

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## (d)   Involuntary Termination.“Involuntary Termination” shall mean any termination (other than a terminationfor Cause) of the Employee by the Company.

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## (e)   Termination Date.“Termination Date” shall mean the effective date of any notice of terminationdelivered by one party to the other hereunder.

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# 2.     Term of Agreement. This Agreement will have a term of three(3) years commencing on the Effective Date. Following the expiration ofthe three-year term, the Employee and the Company may, but are not obligatedto, enter into a new agreement. If Employee’s employment continues followingthe expiration of the three-year term, and the Company and Employee do notenter into a new agreement, the terms of this Agreement shall continue ineffect until the Parties agree otherwise.

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# 3.     At-Will Employment. The Company and the Employee acknowledge thatsubject to the provisions of this Agreement, the Employee’s employment is andshall continue to be at-will, as defined under applicable law. If theEmployee’s employment terminates for any reason, the Employee shall not beentitled to any payments, benefits, damages, awards or compensation other thanas provided by this Agreement, or as may otherwise be established under theCompany’s then existing employee benefit plans or policies at the time oftermination.

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# 4.     Failure to Receive Offer to Become Chief ExecutiveOfficer. If the Employee remainsemployed with the Company through the date that is the twelve (12)-monthanniversary of the Effective Date (the “Trigger Date”) and the Employee is notoffered the position of Chief Executive Officer of the Company on or before theTrigger Date, the Employee shall be entitled to the following benefits:

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## (a)   twelve (12) months of theEmployee’s base salary as in effect as of the Trigger Date, less applicablewithholding, payable in a lump sum within thirty (30) days of the TriggerDate;

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## (b)   one hundred percent (100%) ofthe Employee’s full annual performance target bonus for the year of the TriggerDate, payable in a lump sum within thirty (30) days of the Trigger Date;

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## (c)   all equity awards, includingwithout limitation stock option grants, restricted stock and stock purchaserights, granted by the Company to the Employee shall become fully vested orreleased from the Company’s repurchase right (if any shares of stock purchasedby or granted to the Employee remain subject to such repurchase right) andexercisable as of the Trigger Date to the extent such equity awards areoutstanding and unexercisable or unreleased at such date; and

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## (d)   all Employee’s outstandingrestricted cash awards shall become fully vested, payable in a lump sum withinthirty (30) days of the Trigger Date.

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Notwithstandingthe foregoing or anything in this Agreement to the contrary, the Board and theEmployee may mutually agree to extend the Trigger Date beyond the twelve(12)-month anniversary of the Effective Date; provided, however, that theTrigger Date cannot be extended beyond February 13, 2009 and such change mustbe in writing. For the avoidance of doubt, if the Trigger Date is extended, toreceive 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 extendedTrigger Date, and (ii) not be offered the position of Chief Executive Officerof the Company on or before the extended Trigger Date.

 

# 5.     Severance Benefits.

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## (a)   Termination Following AChange of Control. If the Employee’s employment with the Company terminatesas a result of a Good Reason or an Involuntary Termination at any time withineighteen (18) months after a Change of Control, Employee shall be entitledto the following severance benefits:

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### (i)    twenty-four (24) monthsof Employee’s base salary as in effect as of the date of such termination, lessapplicable withholding, payable in a lump sum within thirty (30) days ofthe termination;

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### (ii)   two hundred percent (200%) ofEmployee’s full annual performance target bonus and a monthly pro rated amountof the Employee’s full annual performance bonus for the year in which thetermination occurs, payable in a lump sum within thirty (30) days of thetermination;

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### (iii)  all equity awards, includingwithout limitation stock option grants, restricted stock and stock purchaserights, granted by the Company to the Employee prior to the Change of Controlshall become fully vested or released from the Company’s repurchase right (ifany shares of stock purchased by or granted to the Employee prior to the Changeof Control remain subject to such repurchase right) and exercisable as of thedate of the termination to the extent such equity awards are outstanding andunexercisable or unreleased at the time of such termination. The Employee shallbe permitted to exercise his vested equity awards (including awards that vestas a result of the Agreement) for twelve (12) months from the date oftermination;

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### (iv)  all Employee’s outstandingrestricted cash awards shall become fully vested, payable in a lump sum withinthirty (30) days of the termination; and

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### (v)   the same level of health (i.e.,medical, vision and dental) coverage and benefits as in effect for the Employeeon the day immediately preceding the day of the Employee’s termination ofemployment; provided, however, that (A) the Employee constitutes aqualified beneficiary, as defined in Section 4980B(g)(l) of the InternalRevenue Code of 1986, as amended (the “Code”); and (B) Employee electscontinuation coverage pursuant to the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended (“COBRA”), within the time periodprescribed pursuant to COBRA. The Company shall continue to reimburse Employeefor such health coverage until the earlier of (A) the date Employee is nolonger eligible to receive continuation coverage pursuant to COBRA, or(B) twelve (12) months from the termination date.

 

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## (b)   Termination Apart from aChange of Control. If the Employee’s employment with the Company terminatesas a result of a Good Reason or an Involuntary Termination during the term ofthis Agreement, then the Employee shall be entitled to the following severancebenefits:

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### (i)    twelve (12) months ofEmployee’s base salary as in effect as of the date of such termination, lessapplicable withholding, payable in a lump sum within thirty (30) days ofthe termination;

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### (ii)   one hundred percent (100%) ofEmployee’s full annual performance target bonus for the year in which the terminationoccurs, payable in a lump sum within thirty (30) days of the termination;

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### (iii)  all equity awards, includingwithout limitation stock option grants, restricted stock and stock purchaserights, granted by the Company to the Employee shall become fully vested orreleased from the Company’s repurchase right (if any shares of stock purchasedby or granted to the Employee remain subject to such repurchase right) andexercisable as of the date of the termination to the extent such equity awardsare outstanding and unexercisable or unreleased at the time of suchtermination. The Employee shall be permitted to exercise his vested equityawards (including awards that vest as a result of the Agreement) for twelve(12) months from the date of termination;

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### (iv)  all Employee’s outstandingrestricted cash awards shall become fully vested, payable in a lump sum withinthirty (30) days of the termination; and

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### (v)   the same level of health (i.e.,medical, vision and dental) coverage and benefits as in effect for the Employeeon the day immediately preceding the day of the Employee’s termination ofemployment; provided, however, that (A) the Employee constitutes aqualified beneficiary, as defined in Section 4980B(g)(l) of the Code; and(B) Employee elects continuation coverage pursuant to COBRA, within thetime period prescribed pursuant to COBRA. The Company shall continue toreimburse Employee for such health coverage until the earlier of (A) thedate Employee is no longer eligible to receive continuation coverage pursuantto COBRA, or (B) twelve (12) months from the termination date.

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## (c)   Termination Apart from aChange of Control or Involuntary Termination. For avoidance of doubt, ifthe Employee’s employment with the Company terminates as a result of Cause,then the Employee shall not be entitled to receive severance or other benefitshereunder, except those benefits required to be provided by law.

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## (d)   Accrued Wages and Vacation;Expenses. Without regard to the reason for, or the timing of, Employee’stermination of employment: (i) the Company shall pay the Employee anyunpaid base salary due for periods prior to the Termination Date; (ii) theCompany shall pay the Employee all of the Employee’s accrued and unusedvacation through the Termination Date; and (iii) following submission ofproper expense reports by the Employee, the Company shall reimburse theEmployee for all expenses reasonably and necessarily incurred by the Employeein connection with the business of the Company prior to the Termination Date.These payments shall be made promptly upon termination and within the period oftime mandated by law.

 

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# 6.     Section 409A. Notwithstanding anything to the contrary in thisAgreement, if the Company, based on the advice of independent counsel,reasonably determines that Section 409A of the Code will result in theimposition of additional tax to an earlier payment of any severance or otherbenefits otherwise due to the Employee pursuant to Section 3 or Section 4of this Agreement or otherwise on or within the six (6) month periodfollowing the Employee’s termination, the severance benefits will accrue duringsuch six (6) month period and will become payable in a lump sum payment onthe date six (6) months and one (1) day following the Employee’s dateof termination. All subsequent payments, if any, will be payable as provided inthis Agreement. In addition, notwithstanding anything to the contrary in thisAgreement, this Agreement will be deemed amended to the extent necessary toavoid imposition of any additional tax or income recognition prior to actualpayment to the Employee under Code Section 409A and any temporary,proposed or final Treasury Regulations and guidance promulgated thereunder andthe parties agree to cooperate with each other and to take reasonably necessarysteps in this regard. The Employee agrees to work with the Company in goodfaith to amend this Agreement by December 31, 2007 to comply with the finalTreasury Regulations and any subsequent guidance promulgated under Code Section409A.

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# 7.     Limitation on Payments. In the event that the severance and otherbenefits provided for in this Agreement or otherwise payable to the Employee(i) constitute “parachute payments” within the meaning ofSection 280G of the Code, and (ii) would be subject to the excise taximposed by Section 4999 of the Code (the “Excise Tax”), then Employee’sbenefits under this Agreement shall be either

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## (a)   delivered in full, or

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## (b)   delivered as to such lesserextent which would result in no portion of such benefits being subject to theExcise Tax, whichever of the foregoing amounts, taking into account theapplicable federal, state and local income taxes and the Excise Tax, results inthe receipt by Employee on an after-tax basis, of the greatest amount ofbenefits, notwithstanding that all or some portion of such benefits may betaxable under Section 4999 of the Code.

 

Unless theCompany and the Employee otherwise agree in writing, any determination requiredunder this Section shall be made in writing by the Company’s independentpublic accountants (the “Accountants”), whose determination shall be conclusiveand binding upon the Employee and the Company for all purposes. For purposes ofmaking the calculations required by this Section, the Accountants may makereasonable assumptions and approximations concerning applicable taxes and mayrely on reasonable, good faith interpretations concerning the application ofSection 280G and 4999 of the Code. The Company and the Employee shall furnishto the Accountants such information and documents as the Accountants mayreasonably request in order to make a determination under this Section. TheCompany shall bear all costs the Accountants may reasonably incur in connectionwith any calculations contemplated by this Section. The Company shall indemnifyEmployee for any tax, penalties or interest incurred by Employee as a result ofany errors caused by Employee’s reliance on such calculations.

 

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# 8.     Release and Non-Disparagement Agreement. As a condition to receiving severance or otherbenefits under this Agreement, Employee will be required to sign a waiver andrelease of all claims arising out of his Involuntary Termination or separationfor Good Reason and an agreement not to disparage the Company, its directors,or its executive officers, in a reasonable form satisfactory to the Company;provided, however, Employee will not be required to waive or release any rightsrelated to the Company’s indemnification obligations or that arise under theCompany’s D&O insurance coverage.

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# 9.     Successors.

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## (a)   Company’s Successors.Any successor to the Company (whether direct or indirect and whether bypurchase, lease, merger, consolidation, liquidation or otherwise) to all orsubstantially all of the Company’s business and/or assets shall assume theCompany’s obligations under this Agreement and agree expressly to perform theCompany’s obligations under this Agreement in the same manner and to the sameextent as the Company would be required to perform such obligations in theabsence of a succession. For all purposes under this Agreement, the term“Company” shall include any successor to the Company’s business and/or assetswhich executes and delivers the assumption agreement described in thissubsection (a) or which becomes bound by the terms of this Agreement byoperation of law.

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## (b)   Employee’s Successors.Without the written consent of the Company, Employee shall not assign ortransfer this Agreement or any right or obligation under this Agreement to anyother person or entity. Notwithstanding the foregoing, the terms of thisAgreement and all rights of Employee hereunder shall inure to the benefit of,and be enforceable by, Employee’s personal or legal representatives, executors,administrators, successors, heirs, distributees, devisees and legatees.

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# 10.   Notices.

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## (a)   General. Notices and allother communications contemplated by this Agreement shall be in writing andshall be deemed to have been duly given when personally delivered or whenmailed by U.S. registered or certified mail, return receipt requested andpostage prepaid. In the case of the Employee, mailed notices shall be addressedto him at the home address which he most recently communicated to the Companyin writing. In the case of the Company, mailed notices shall be addressed toits corporate headquarters, and all notices shall be directed to the attentionof its Secretary.

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## (b)   Notice of Termination.Any termination by the Company for Cause or by the Employee as a result of avoluntary resignation or an Involuntary Termination shall be communicated by anotice of termination to the other party hereto given in accordance with thisSection. Such notice shall indicate the specific termination provision in thisAgreement relied upon, shall set forth in reasonable detail the facts andcircumstances claimed to provide a basis for termination under the provision soindicated, and shall specify the Termination Date (which shall be not more thanthirty (30) days after the giving of such notice). The failure by theEmployee to include in the notice any fact or circumstance which contributes toa showing of Involuntary Termination shall not waive any right of the Employeehereunder or preclude the Employee from asserting such fact or circumstance inenforcing his rights hereunder.

 

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# 11.   Arbitration.

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## (a)   Any dispute or controversyarising out of, relating to, or in connection with this Agreement, or theinterpretation, validity, construction, performance, breach, or terminationthereof, shall be settled by binding arbitration to be held in Santa ClaraCounty, California, in accordance with the National Rules for the Resolution ofEmployment Disputes then in effect of the American Arbitration Association (the“Rules”). The arbitrator may grant injunctions or other relief in such disputeor controversy. The decision of the arbitrator shall be final, conclusive andbinding on the parties to the arbitration. Judgment may be entered on thearbitrator’s decision in any court having jurisdiction.

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## (b)   The arbitrator(s) shall applyCalifornia law to the merits of any dispute or claim, without reference toconflicts of law rules. The arbitration proceedings shall be governed byfederal arbitration law and by the Rules, without reference to statearbitration law. Employee hereby consents to the personal jurisdiction of thestate and federal courts located in California for any action or proceedingarising from or relating to this Agreement or relating to any arbitration inwhich the parties are participants.

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## (c)   Employee understands thatnothing in this Section modifies Employee’s at-will employment status.Either Employee or the Company can terminate the employment relationship at anytime, with or without Cause.

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## (d)   EMPLOYEE HAS READ ANDUNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDSTHAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITHTHIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OFEMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTESRELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUTNOT LIMITED TO, THE FOLLOWING CLAIMS:

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### (i)    ANY AND ALL CLAIMS FORWRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED;BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS ANDIMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENTOR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITHCONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.

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### (ii)   ANY AND ALL CLAIMS FORVIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITEDTO, 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 WITHDISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIREMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, *et seq*;

 

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### (iii)  ANY AND ALL CLAIMS ARISING OUTOF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENTDISCRIMINATION.

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# 12.   Miscellaneous Provisions.

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## (a)   No Duty to Mitigate. TheEmployee shall not be required to mitigate the amount of any paymentcontemplated by this Agreement, nor shall any such payment be reduced by anyearnings that the Employee may receive from any other source.

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## (b)   Waiver. No provision ofthis Agreement may be modified, waived or discharged unless the modification,waiver or discharge is agreed to in writing and signed by the Employee and byan authorized officer of the Company (other than the Employee). No waiver byeither party of any breach of, or of compliance with, any condition orprovision of this Agreement by the other party shall be considered a waiver ofany other condition or provision or of the same condition or provision atanother time.

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## (c)   Integration. ThisAgreement, together with the offer letter agreement between the Company and theEmployee dated May 10, 2007, and any outstanding restricted cash agreements andequity award agreements referenced herein represent the entire agreement andunderstanding between the parties as to the subject matter herein and supersedeall prior or contemporaneous agreements, whether written or oral, with respectto this Agreement, any restricted cash agreement and equity award agreements.

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## (d)   Choice of Law. Thevalidity, interpretation, construction and performance of this Agreement shallbe governed by the internal substantive laws, but not the conflicts of lawrules, of the State of California.

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## (e)   Severability. Theinvalidity or unenforceability of any provision or provisions of this Agreementshall not affect the validity or enforceability of any other provision hereof,which shall remain in full force and effect.

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## (f)    Employment Taxes. Allpayments made pursuant to this Agreement shall be subject to withholding ofapplicable income and employment taxes.

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## (g)   Counterparts. ThisAgreement may be executed in counterparts, each of which shall be deemed anoriginal, but all of which together will constitute one and the sameinstrument.

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## (h)   No Representations. TheEmployee represents that he has had the opportunity to consult with hisattorneys and tax advisors, and has carefully read and understands the scope,effect and potential tax consequences of the provisions of this Agreement,including, but not limited to, the potential consequences of Section 409A ofthe Code. The Employee represents that he is not relying on the Company for anytax advice.

 

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IN WITNESSWHEREOF, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the day and year first abovewritten.

 
| COMPANY:  | UTSTARCOM, INC.     |
|-----------|---------------------|
|      |                |
|      | By:                 | /s/ Mark Green |   |
|      |                |
|      | Title:              | Senior VP, Human Resources |   |
|      |                |
|      |                |
| EMPLOYEE: | /s/ Peter Blackmore |   |
|      | Signature           |
|      |                |
|      | Peter Blackmore     |   |
|      | Printed Name        |
|           |                     |  |  |  |

 

**SIGNATURE PAGE TO CHANGE OFCONTROL/INVOLUNTARY TERMINATION SEVERANCE AGREEMENT**

 

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