Exhibit 10.89


 


UTSTARCOM, INC.


 


CHANGE OF CONTROL
SEVERANCE AGREEMENT


 


This
Change of Control Severance Agreement (the ”Agreement”) is made and
entered into effective as of January 17, 2003 (the ”Effective Date”),
by and between Hong Liang Lu (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.            It
is expected that the Company from time to time will consider the possibility of
a Change of Control.  The Board of
Directors of the as Company (the ”Board”) recognizes that such
consideration can be a distraction to the Employee and can cause the Employee
to consider alternative employment opportunities.


 


B.            The
Board believes that it is in the best interests of the Company and its
shareholders to provide the Employee with an incentive to continue his
employment and to maximize the value of the Company upon a Change of Control
for the benefit of its shareholders.


 


C.            In
order to provide the Employee with enhanced financial security and sufficient
encouragement to remain with the Company notwithstanding the possibility of a
Change of Control, the Board believes that it is imperative to provide the
Employee with certain severance benefits upon the Employee’s termination of
employment following a Change of Control.


 


AGREEMENT


 


In consideration of the mutual
covenants herein contained and the continued 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.


 


(c)           Involuntary Termination.  “Involuntary Termination” 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 (as, for example, following a Change of Control,
the Chief Financial Officer of the Company is made the Chief Financial Officer
of the acquiring entity); (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 6 below.


 


(d)           Termination Date. 
“Termination Date” shall mean the effective date of any notice of
termination delivered by one party to the other hereunder.


 


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2.             Term of Agreement.  This Agreement shall terminate upon the date
that all obligations of the parties hereto under this Agreement have been
satisfied or, if earlier, on the date, prior to a Change of Control, Employee
is no longer employed by the Company.


 


3.             At-Will Employment.  The Company and the Employee acknowledge that
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.             Severance Benefits.


 


(a)           Termination Following A Change of Control.  If the Employee’s employment with the Company
terminates as a result of an Involuntary Termination at any time within
twelve (12) 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 Involuntary Termination;


 


(ii)           one
hundred percent (100%) of Employee’s bonus for the year in which the
termination occurs;


 


(iii)          all
stock options granted by the Company to the Employee prior to the Change of
Control shall become fully vested and exercisable as of the date of the termination
to the extent such stock options are outstanding and unexercisable at the time
of such termination and all stock subject to a right of repurchase by the
Company (or its successor) that was purchased prior to the Change of Control
shall have such right of repurchase lapse with respect to all of the shares;


 


(iv)          the
same level of health (i.e., medical, vision and dental) coverage and benefits
as in effect for the Employee on the day immediately preceding the day of the
Employee’s termination of employment; provided, however, that (i) the
Employee constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended;
and  (ii) Employee elects continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”), within the time period prescribed pursuant to
COBRA.  The Company shall continue to
provide Employee with health coverage until the earlier of (i) the date
Employee is no longer eligible to receive continuation coverage pursuant to
COBRA, or (ii) twelve (12) months from the termination date.


 


(b)           Termination Apart from a Change of Control.  If the Employee’s employment with the Company
terminates other than as a result of an Involuntary Termination within the
twelve (12) months following a Change of Control, then the Employee shall
not be entitled to receive severance or other benefits hereunder, but may be
eligible for those benefits (if any) as may


 


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then be established
under the Company’s then existing severance and benefits plans and policies at
the time of such termination.


 


(c)           Accrued Wages and Vacation; Expenses.  Without regard to the reason for, or the
timing of, Employee’s termination of employment:  (i) the Company shall pay the Employee
any unpaid base salary due for periods prior to the Termination Date;
(ii) the Company shall pay the Employee all of the Employee’s accrued and
unused vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company shall
reimburse the Employee for all expenses reasonably and necessarily incurred by
the Employee in connection with the business of the Company prior to the
Termination Date.  These payments shall
be made promptly upon termination and within the period of time mandated by
law.


 


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


 


(a)           delivered in full, or


 


(b)           delivered as to such lesser extent which would result in
no portion of such benefits being subject to the Excise Tax,


 


whichever of the
foregoing amounts, taking into account the applicable federal, state and local
income taxes and the Excise Tax, results in the receipt by Employee on an
after-tax basis, of the greatest amount of benefits, notwithstanding that all
or some portion of such benefits may be taxable under Section 4999 of the
Code.


 


Unless the Company and the
Employee otherwise agree in writing, any determination required under this
Section shall be made in writing by the Company’s independent public
accountants (the ”Accountants”), whose determination shall be conclusive
and binding upon the Employee and the Company for all purposes.  For purposes of making the calculations
required by this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Section 280G and 4999
of the Code.  The Company and the
Employee shall furnish to the Accountants such information and documents as the
Accountants may reasonably request in order to make a determination under this
Section.  The Company shall bear all
costs the Accountants may reasonably incur in connection with any calculations
contemplated by this Section.


 


6.             Successors.


 


(a)           Company’s Successors.  Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement and agree expressly
to perform the Company’s obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform


 


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such obligations in the
absence of a succession.  For all
purposes under this Agreement, the term “Company” shall include any successor
to the Company’s business and/or assets which executes and delivers the
assumption agreement described in this subsection (a) or which becomes bound by
the terms of this Agreement by operation of law.


 


(b)           Employee’s Successors.   Without the written consent of the Company,
Employee shall not assign or transfer this Agreement or any right or obligation
under this Agreement to any other person or entity. Notwithstanding the
foregoing, the terms of this Agreement 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.


 


7.             Notices.


 


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


 


(b)           Notice of Termination.  Any termination by the Company for Cause or
by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section. 
Such notice shall indicate the specific termination provision in this
Agreement relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated, and shall specify the Termination Date (which shall be not more than
30 days after the giving of such notice). 
The failure by the Employee to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall
not waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.


 


8.             Arbitration.


 


(a)           Any dispute or controversy arising out of, relating to, or
in connection with this Agreement, or the interpretation, validity,
construction, performance, breach, or termination thereof, shall be settled by
binding arbitration to be held in Santa Clara County, California, in accordance
with the National Rules for the Resolution of Employment Disputes then in
effect of the American Arbitration Association (the ”Rules”).  The arbitrator may grant injunctions or other
relief in such dispute or controversy. 
The decision of the arbitrator shall be final, conclusive and binding on
the parties to the arbitration.  Judgment
may be entered on the arbitrator’s decision in any court having jurisdiction.


 


(b)           The arbitrator(s) shall apply California law to the merits
of any dispute or claim, without reference to conflicts of law rules.  The arbitration proceedings shall be governed
by


 


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federal arbitration law and by the Rules, without reference
to state arbitration law.  Employee
hereby consents to the personal jurisdiction of the state and federal courts
located in California for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the parties are
participants.


 


(c)           Employee understands that nothing in this Section modifies
Employee’s at-will employment status. 
Either Employee or the Company can terminate the employment relationship
at any time, with or without Cause.


 


(d)           EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH
DISCUSSES ARBITRATION.  EMPLOYEE
UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES
A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF
ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:


 


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


 


(ii)           ANY
AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE,
INCLUDING, BUT NOT LIMITED TO, 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 WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE
CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, et
seq;


 


(iii)          ANY
AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO
EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.


 


9.             Miscellaneous Provisions.


 


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


 


(b)           Waiver.  No
provision of this Agreement may be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by the


 


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Employee and by an
authorized officer of the Company (other than the Employee).  No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the
other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time.


 


(c)           Integration. 
This Agreement and any outstanding stock option agreements and
restricted stock purchase agreements referenced herein represent the entire
agreement and understanding between the parties as to the subject matter herein
and supersede all prior or contemporaneous agreements, whether written or oral,
with respect to this Agreement and any stock option agreement or restricted
stock purchase agreement.


 


(d)           Choice of Law. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal substantive laws, but not the
conflicts of law rules, of the State of California.


 


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


 


(f)            Employment Taxes. 
All payments made pursuant to this Agreement shall be subject to withholding
of applicable income and employment taxes.


 


(g)           Counterparts. 
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same
instrument.


 


IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of the
day and year first above written.


 


	
  COMPANY:

  	
  UTSTARCOM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Sophie

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO/VP Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
  /s/ Hong Liang Lu

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Hong Liang Lu

  
	
   

  	
  Printed Name

  
				



 


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