Exhibit 10.1


 


UTSTARCOM,
INC.


 


AMENDED
AND RESTATED 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 November 30, 2007 (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.                                   The Company and the Employee previously
entered into a Change of Control Severance Agreement dated January 17, 2003
which provided the Employee with severance benefits upon the Employee’s
termination of employment under certain circumstances (the “Original 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 and wishes to augment certain
terms of the Original Agreement, which is hereby amended and restated in its
entirety.


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)          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.


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


 


2

















 


(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, Employee’s
then current benefits arrangements shall continue in accordance with the terms
of this Agreement 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.               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 date;


(ii)          two hundred percent (200%) of Employee’s
full annual performance target bonus for the year in which the termination
occurs, payable in a lump sum within thirty (30) days of the date of
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; and


(iv)      an amount equal to twelve (12) months of health
insurance premiums for continuation coverage pursuant to the Consolidated
Omnibus Reconciliation Act of 1985 as amended (“COBRA”) at 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, payable in a lump sum within thirty (30) days of the
date of termination.


3

















 


(b)         Termination Apart from a Change of
Control.  If the Employee’s employment with the Company
terminates as a result of a Good Reason or an Involuntary Termination during
the term of this Agreement, then the 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)          one hundred percent (100%) of Employee’s
full annual performance target 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 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 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; and


(iv)      an amount equal to twelve (12) months of health
insurance premiums for continuation coverage pursuant to COBRA at 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, payable in a lump sum within thirty (30)
days of the date of termination.


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


(d)         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.               Section 409A. 
Notwithstanding anything to the contrary in this Agreement, if the
Company, reasonably determines that Section 409A of the Code will result
in the imposition of additional tax to an earlier payment of any severance or
other benefits otherwise due to the Employee pursuant to Section 4 of this
Agreement or otherwise on or within the six (6) month period following the
Employee’s termination, the severance benefits will accrue during such six


 


 


4

















 


(6) month
period and will become payable in a lump sum payment on the date six
(6) months and one (1) day following the Employee’s date of
termination.  All subsequent payments, if
any, will be payable as provided in this Agreement.  In addition, notwithstanding anything to the
contrary in this Agreement, this Agreement will be deemed amended to the extent
necessary to avoid imposition of any additional tax or income recognition prior
to actual payment to the Employee under Code Section 409A and any
temporary, proposed or final Treasury Regulations and guidance promulgated
thereunder and the parties agree to cooperate with each other and to take
reasonably necessary steps in this regard. 
The Employee agrees to work with the Company in good faith to amend this
Agreement by December 31, 2008 to comply with the final Treasury Regulations
and any subsequent guidance promulgated under Code Section 409A.


6.               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.


 


 


5

















 


7.               Release and Non-Disparagement Agreement. 
As a condition to receiving severance or other benefits under this
Agreement, Employee will be required to sign a waiver and release of all claims
arising out of his Involuntary Termination or separation for Good Reason and an
agreement not to disparage the Company, its directors, or its executive
officers, in a form reasonably satisfactory to the Company.  No severance benefits will be paid or
provided until the waiver and release agreement becomes effective.


8.               Death or Disability. 
With respect to Employee’s equity awards, in the event of Employee’s
death or disability as such terms are defined in the applicable equity plans,
and Employee is still employed by the Company at the time of such death or
disability, then all of Employee’s equity awards shall become fully vested and
exercisable.


9.               Nonsolicitation. 
Employee agrees further that, for the period of his employment by the
Company and for one (1) year after the date of termination of his employment by
the Company, he will not, either directly or through others, solicit or attempt
to solicit any employee, independent contractor or consultant of the Company to
terminate his or her relationship with the Company in order to become an
employee, consultant or independent contractor to or for any other person or
entity.


10.         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 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.


11.         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.


 


 


6

















 


(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 thirty (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.


12.         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 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;


 


 


7

















 


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.


13.         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 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, together with any outstanding equity award 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 equity award agreements.


(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.


 


 


8

















 


(h)         No Representations. 
The Employee represents that he has had the opportunity to consult with
his attorneys 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 of the Code.  The Employee
represents that he is not relying on the Company for any tax advice.


 


 


9

















 


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/ Susan Marsch

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP
  and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
  /s/ Hong Liang Lu

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Hong Liang Lu

  
	
   

  	
  Printed
  Name

  



 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


SIGNATURE PAGE TO CHANGE OF CONTROL/

INVOLUNTARY TERMINATION SEVERANCE AGREEMENT