Document:

Exhibit 10.4

 

CHANGE
OF CONTROL AGREEMENT

 

This Change of Control Agreement (the “Agreement”), dated and
effective as of February 1, 2010 (the “Effective
Date”), is entered into by and between Summer Infant
(USA), Inc., a Rhode Island corporation (the “Company”), and the Employee of the Company named
on the signature page hereto (the “Employee”).

 

Preliminary Statements

 

The Board of Directors of the Company (the “Board”) has determined that it is in
the best interest of the Company and its shareholders to assure itself of the
continued availability of the services of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company.

 

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 a Change of Control.

 

Agreement

 

In consideration of the foregoing premises and the
respective covenants and agreements of the parties set forth below, and
intending to be legally bound hereby, the parties agree as follows:

 

1.             Incentive
for Continuous Employment.  If prior to
the last day of the 12th full calendar month following the date of
occurrence of an event constituting a Change of Control (it being recognized
that more than one event constituting a Change of Control may occur in which
case the 12-month period shall run from the date of occurrence of each such
event) (i) the Company terminates the Employee’s employment other than (A) for
Cause (as herein defined), or (B) because of the Employee’s Disability (as
defined below) or death, or (ii) the Employee terminates his employment
for Good Reason (as herein defined) (any such termination in clauses (i) or
(ii) being referred to as a “Payment Event”),
then, within ten (10) business days (or such other time as specified in Section 9(r) hereof)
after such termination (the “Payment Date”)
the Employee shall be entitled to receive from the Company a cash payment (the “Payment”) in one lump sum equal to
the sum of: (i) the Payment Percentage provided for on Schedule 1
attached to this Agreement (“Schedule 1”),
multiplied by the Employee’s annual base salary as in effect at the time of
such termination and (ii) the average of the Employee’s annual cash
bonuses from the Company for the two fiscal years (whether or not paid so long
as accrued and declared by the Company) preceding the fiscal year in which such
termination occurs.  In addition, the
Employee shall be entitled to the severance benefits listed on Schedule 1
(the “Severance Benefits”). The
Employee shall not be entitled to any Payment or any Severance Benefits if the
Employee terminates the Employee’s employment without Good Reason.

 

2.             Definitions. 
In addition to the capitalized terms used and defined elsewhere in this
Agreement, the following capitalized terms used in this Agreement shall, for
purposes of this Agreement, have the meanings set forth below.

 

 

“Affiliate” shall mean any Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person, and with respect to any natural person, includes the members of such
person’s immediate family (spouse, children and parents, whether by blood,
marriage or adoption, or anyone residing in such person’s home).

 

“Cause” shall mean the occurrence of one or more
of the following:  (i) Employee’s
willful and continued failure to substantially perform Employee’s reasonably
assigned duties with the Company (other than any such failure resulting from
incapacity due to disability or from the assignment to Employee of duties that
would constitute Good Reason), which failure continues for a period of at least
thirty (30) days after written demand for substantial performance has been
delivered by the Company to the Employee which specifically identifies the
manner in which the Employee has failed to substantially perform his duties; (ii) Employee’s
willful conduct which constitutes misconduct and is materially and demonstrably
injurious to the Company, as determined in good faith by a vote of at least
two-thirds of the non-employee directors of the Company at a meeting of the
Board at which the Employee is provided an opportunity to be heard; (iii) Employee
being convicted of, or pleading nolo contendere to a felony; or (iv) Employee
being convicted of, or pleading nolo contendere to a misdemeanor based in
dishonesty or fraud.

 

“Change
of Control” shall mean (i) individuals who, as of the
Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board, provided
that any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the Company’s shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934) shall be considered as though such individual
was a member of the Incumbent Board; or (ii) the approval by the
shareholders of the Company of a reorganization, merger, consolidation or other
form of corporate transaction or series of transactions (but not including  an underwritten public offering of the
Company’s common stock or other voting securities (or securities convertible
into voting securities of the Company) for the Company’s own account registered
under the Securities Act of 1933), in each case, with respect to which Persons
who were shareholders of the Company immediately prior to such reorganization,
merger, consolidation or other corporate transaction do not, immediately
thereafter, own more than fifty percent (50%) of the combined voting power
entitled to vote generally in the election of directors of the reorganized,
merged or consolidated entity’s then outstanding voting securities, or a
liquidation or dissolution of the Company or the sale of all or substantially
all of the assets of the Company (unless such reorganization, merger,
consolidation or other corporate transaction, liquidation, dissolution or sale
is subsequently abandoned or terminated prior to being consummated); or (iii) the
acquisition by any Person, entity or “group”, within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, of more than thirty percent (30%) of either the then
outstanding shares of the Company’s common stock or the combined voting power
of the Company’s then outstanding voting securities entitled to vote generally
in the election of directors (hereinafter referred to as a “Controlling Interest”) excluding any
acquisitions by (x) the Company or any of its Affiliates, (y) any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its Affiliates or (z) any Person, 

 

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entity or “group” that as
of the Effective Date owns beneficially (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934) a Controlling Interest.

 

“Disability” shall mean that the Employee has been
unable to perform his or her Company duties as the result of his or her
incapacity due to physical or mental illness, and such inability, at least
                    
(    ) weeks after its commencement, is determined to be
total and permanent by a physical selected by the Company or its insurers and
acceptable to the Employee or the Employee’s legal representative (such
Agreement as to acceptability not to be unreasonably withheld).  Termination resulting from Disability may
only be affected after at least thirty (30) days’ written notice by the Company
of its intention to terminate the Employee’s employment.  In the event that the Employee resumes the
performance of substantially all of his or her duties hereunder before the
termination of his or her employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked

 

“Good Reason” shall mean (i) the material
diminution in Employee’s authority, duties or responsibilities; (ii) the
relocation of Employee to a location more than thirty (30) miles from his
employment location at the Effective Date; (iii) a material diminution in
the Employee’s annual base salary as in effect immediately prior to such diminution,
other than in connection with a general diminution in Company compensation
levels and in amounts commensurate with the percentage diminutions of other
Company employees of comparable seniority and responsibility; or (iv) any
other action or inaction which constitutes a material breach by the Company or
any of its Affiliates of any agreement under which the Employee provides
services to the Company or any of its Affiliates.

 

No violation described in
clauses (i) through (iv) above shall constitute Good Reason unless
the Employee has given written notice to the Company specifying the applicable
clause and related facts giving rise to such violation within ninety (90) days
after the occurrence of such violation and the Company has not remedied such violation
to the Employee’s reasonable satisfaction within thirty (30) days of its
receipt of such notice.

 

“Person” shall mean any natural person or entity with legal
status.

 

“Restricted Period” shall mean the period of time after
termination of the Employee’s employment with the Company identified on Schedule
1.

 

3.         Restrictive Covenants.  The Employee
acknowledges that in order to assure the Company that it will retain the value
of its business relationships, it is reasonable that the Employee be limited in
utilizing trade secrets and other confidential information of the Company,
Employee’s special knowledge of the business of the Company and Employee’s
relationships with customers, suppliers and others having business
relationships with the Company in any manner or for any purpose other than the
advancement of the interests of the Company, as hereinafter provided.  The Employee acknowledges that the Company
would not enter into this Agreement and provide the benefits provided for
herein without the covenants and agreements of the Employee set forth in this Section 3.  Notwithstanding anything else herein
contained, the term “Company”, as
used in this Section 3, shall refer to the Company and its
Affiliates and their respective successors and assigns.

 

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(a)           Confidentiality. 
The Employee acknowledges that in the course of the Employee’s
employment with the Company, Employee has had and is expected to continue to
have extensive contact with Persons with which the Company has, had or
anticipates having business relationships (including current and anticipated
customers and suppliers), and to have knowledge of and access to trade secrets
and other proprietary and confidential information of the Company, including,
without limitation, the identity of Persons with whom the Company has, had or
anticipates having business relationships, technical information, know-how,
plans, specifications, and information relating to the financial condition,
results of operations, employees, products and services, sources, leads or
methods of obtaining new business, pricing formulae, methods or procedures,
cost of supplies or services and marketing strategies of the Company or any
other information relating to the Company that could reasonably be regarded as
confidential or proprietary or which is not in the public domain (other than by
reason of Employee’s breach of the provisions of this section) (collectively,
the “Confidential  Information”), and that such information, even to
the extent it may be developed or acquired by or through the efforts of the
Employee, constitutes valuable, special and unique assets of the Company
developed or acquired at great expense which are the exclusive property of the
Company.  Accordingly, the Employee shall
not at any time, either during the time Employee is employed by the Company or
thereafter, use or purport to authorize any Person to use, reveal, report,
publish, transfer or otherwise disclose to any Person, any Confidential
Information without the prior written consent of the Company, except for
disclosures by the Employee required by applicable law (but only to the extent
the Company is given a reasonable opportunity to object to such disclosure and
protect the Confidential Information) to responsible officers of the Company
and other responsible Persons who are in a contractual or fiduciary
relationship with the Company and who have a need for such information for
purposes in the best interests of the Company. 
Without limiting the generality of the foregoing, the Employee shall
not, directly or indirectly, disclose or otherwise make known to any Person any
information as to the Company’s employees and others providing services to the
Company, including with respect to their abilities, compensation, benefits and
other terms of employment or engagement. 
Upon the termination of the Employee’s employment with the Company, the
Employee shall promptly deliver to the Company all files, correspondence,
manuals, notes, notebooks, computer diskettes, tapes, reports and copies
thereof, and all other materials relating to the Company’s business, including
without limitation any materials incorporating Confidential Information, which
are in the possession or control of the Employee.

 

(b)           Restriction
on Competition.  During the Employee’s employment with the
Company and thereafter during the Restricted Period, the Employee shall not,
and shall not permit any Persons subject to Employee’s direction or control
(including Employee’s Affiliates) to, directly or indirectly, whether alone or
in association with others, as principal, officer, agent, consultant, employee,
director or owner of any corporation, partnership, association or other entity,
or through the investment of capital, lending of money or property, rendering
of services or otherwise, engage in, influence, control, have an interest in or
otherwise become actively involved with any business that competes with the
Company.  The Employee acknowledges that
the business of the Company is national and international in scope, as its
current and anticipated customers and suppliers are located throughout the
United States and abroad, and that it is therefore reasonable that the
restrictions set forth in this Section 3(b) not be limited to
any specified geographic area.

 

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(c)           Non-solicitation. 
During the Employee’s employment with the Company and thereafter during
the Restricted Period, the Employee shall not, and shall not permit any Persons
subject to Employee’s direction or control (including Employee’s Affiliates)
to, directly or indirectly, on their own behalf or on behalf of any other
Person (except the Company or its Affiliates), (i) call upon, accept
business from, or solicit the business of any Person who is, or who had been at
any time during the preceding twelve months, a customer or supplier of the
Company, (ii) otherwise divert or attempt to divert any business from the
Company, (iii) interfere with the business relationships between the
Company and any of its customers, suppliers or others with whom they have
business relationships or (iv) recruit or otherwise solicit or induce, or
enter into or participate in any plan or arrangement to cause, any Person who
is an employee of, or otherwise performing services for, the Company to
terminate his or her employment or other relationship with the Company, or hire
any Person who has left the employ of or ceased providing services to the
Company during the preceding twelve months.

 

(d)           Nondisparagement. 
The Employee shall not at any time, either during the time Employee is
employed by the Company or thereafter, directly or indirectly, engage in any
conduct or make any statement, whether in commercial or noncommercial speech,
disparaging or criticizing in any way the Company (including its directors and
employees and other providing services to the Company), or any of its products
or services, nor shall the Employee engage in any other conduct or make any
other statement that could reasonably be expected to impair the goodwill of any
of them, the reputation of any products or services of the Company or the
marketing of such products or services, in each case except as may be required
by law, and then only after consultation with the Company to the extent
possible.

 

(e)           Exception. 
The ownership or control by the Employee or Employee’s Affiliates, as a
passive investor, of up to two percent of the outstanding voting securities or
securities of any class of an entity with a class of securities registered
under the Securities Exchange Act of 1934, as amended, shall not be deemed to
be a violation of the provisions of this Section 3.

 

4.             Remedies. 
The Employee agrees that the restrictions set forth in Section 3,
including the length of the Restricted Period, the geographic area covered and
the scope of activities proscribed, are reasonable for the purposes of
protecting the value of the business and goodwill of the Company.  The Employee acknowledges that compliance
with the restrictions set forth in Section 3 will not prevent
Employee from earning a livelihood, and that in the event of a breach by the
Employee of any of the provisions of Section 3, monetary damages
would not provide an adequate remedy to the Company.  Accordingly, the Employee agrees that, in
addition to any other remedies available to the Company, the Company shall be
entitled to seek injunctive and other equitable relief (without having to
post bond or other security and without having to prove damages or the
inadequacy of available remedies at law) to secure the enforcement of these
provisions, and shall be entitled to receive reimbursement from the Employee
for attorneys’ fees and expenses incurred by it in enforcing these
provisions.  In addition to its other
rights and remedies hereunder, the Company shall have the right to require the
Employee to account for and pay over to it all compensation, profits, money,
accruals and other benefits derived or received, directly or indirectly, by the
Employee from any breach of the covenants of Section 3, and may set
off any such amounts due it from the Employee against any amounts otherwise due
Employee from the Company.  If the
Employee breaches any covenant 

 

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set forth in Section 3,
the running of the Restricted Period as to such covenant only shall be tolled
for so long as such breach continues.  It
is the desire and intent of the parties that the provisions of Sections 3
and 4 be enforced in full; however, if any court of competent jurisdiction
shall at any time determine that, but for the provisions of this paragraph, any
part of this Agreement relating to the time period, scope of activities or
geographic area of restrictions is invalid or unenforceable, the maximum time
period, scope of activities or geographic area, as the case may be, shall be
reduced to the maximum which such court deems enforceable with respect only to
the jurisdiction in which such adjudication is made.  If any other part of this Agreement is determined
by such a court to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in
which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement
of the parties.

 

5.             Termination
of this Agreement.  This Agreement shall commence on the
Effective Date and terminate on December 31, 2012, provided,
however, that if an event constituting a Change of Control shall
occur while this Agreement is in effect, this Agreement shall automatically be
extended for twelve (12) months from the date the Change of Control occurs;
provided that the Company may extend this Agreement in its sole discretion by
written notice to the Employee.  For
purposes of this Section 5 only (and not for purposes of
determining whether the Payment and the Severance Benefits have become
payable), a Change of Control shall be deemed to have occurred if the event
constituting a Change of Control has been consummated on or prior to expiration
of the term of this Agreement or if such event or one or more other events
constituting a Change of Control have not been consummated but the material
agreements for any of such events have been executed and delivered by the
parties to any such event on or prior to expiration of the term of this
Agreement (each such event being referred to as a “Pending
Event”). For any Pending Event, this Agreement shall
automatically be extended until such time as the related material agreements
have been unconditionally terminated without consummation of the applicable
Pending Event and if any such Pending Event is consummated pursuant to the
related material agreements (as amended, restated, supplemented or otherwise
modified), this Agreement shall further automatically be extended for twelve
(12) months from the date each such Pending Event is so consummated. For
avoidance of doubt and ambiguity, any event constituting a Change of Control
that occurs after expiration of the term of this Agreement and during any
extension of this Agreement as so extended by virtue of a Pending Event shall
not result in this Agreement being extending after expiration of its term in
accordance with the immediately preceding sentence.

 

6.             No
Alteration of Employment Terms or Status.  Except as
expressly provided in this Agreement, nothing herein shall alter in any way any
of the terms of employment of the Employee, including without limitation the
Employee’s rights with respect to any stock options or other equity based awards
Employee may have been granted under the Summer Infant, Inc. 2006
Performance Equity Plan.  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 is
terminated 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 existing
employee benefit plans or policies at the time of termination.

 

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7.             Parachute Payments. (a) If Independent Tax Counsel (as defined below) determines that the
aggregate payments and benefits provided or to be provided to the Employee pursuant to this Agreement, and any other
payments and benefits provided or to be provided to the Employee from the
Company or any of its Affiliates or any successors thereto constitute “parachute payments” as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the “Code”)
(or any successor provision thereto) (“Parachute  Payments”) that would be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then, except as otherwise provided in the next
sentence, such Parachute Payments shall be reduced to the extent necessary so
that no portion thereof shall be subject to the Excise Tax. If Independent Tax
Counsel determines that the Employee would receive in the aggregate greater
payments and benefits on an after tax basis if the Parachute Payments were not
reduced pursuant to this Section 7(a), then no such reduction shall
be made; provided, however, that in such case the
provisions of Sections 7(b)(i) and 7(b)(ii) shall not be
operative. The determination of the Independent Tax Counsel under this
subsection (a) shall be final and binding on all parties hereto. The
determination of which payments or benefits to reduce in order to avoid the
Excise Tax shall be determined in the sole discretion of the Employee; provided, however, that unless the Employee gives written
notice to the Company specifying the order to effectuate the limitations
described above within ten (10) days of the Independent Tax Counsel’s
determination to make such reduction, the Company shall first reduce those
payments or benefits that will cause a dollar-for-dollar reduction in total
Parachute Payments, and then by reducing other Parachute Payments, to the
extent possible, in reverse order beginning with payments or benefits that are
to be paid the farthest in time from the date the reduction is to be made. Any
notice given by the Employee pursuant to the preceding sentence, unless
prohibited by law, shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Employee’s rights and entitlement to any
benefits or compensation. For purposes of this Section 7(a), “Independent Tax Counsel” shall mean
an attorney, a certified public accountant with a nationally recognized
accounting firm, or a compensation consultant with a nationally recognized
actuarial and benefits consulting firm with expertise in the area of Employee
compensation tax law, who shall be selected by the Company and shall be
acceptable to the Employee (the Employee’s acceptance not to be unreasonably
withheld), and whose fees and disbursements shall be paid by the Company.

 

(b) (i) The Employee shall notify the Company in writing within thirty
(30) days of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Employee of an Excise Tax. Upon receipt of
such notice, the Company may, in its sole discretion, contest such claim or
provide the Employee with an additional payment (a “Gross-Up  Payment”) intended to
reimburse the Employee for any such Excise Tax and all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties
with respect to such taxes (except to the extent such interest or penalty
results from the Employee’s failure to act in accordance with the Company’s or
a Affiliate’s reasonable directions or the Employee’s failure to exercise due
care), or do nothing. If the Company notifies the Employee in writing that it
desires to contest such claim and that it will bear the costs and provide the
indemnification as required by this sentence, the Employee shall:

 

(A) give the Company any information reasonably requested by the
Company relating to such claim,

 

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(B) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

 

(C) cooperate with the Company in good faith in order to
effectively contest the claim, and

 

(D) permit the Company to participate in any proceedings relating
to the claim; provided, however, that the
Company shall pay (or cause to be paid) directly all costs and expenses (including any
interest and penalties, except to the extent such interest or penalty results
from the Employee’s failure to act in accordance with the Company’s or an
Affiliate’s reasonable directions or the Employee’s failure to exercise due
care) incurred in connection with the contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, for any Excise Tax or income or other
tax, including interest and penalties with respect thereto (except to the
extent such interest or penalty results from the Employee’s failure to act in
accordance with the Company’s or a Affiliate’s reasonable directions or the
Employee’s failure to exercise due care), imposed as a result of such
representation and payment of costs and expenses. The Company shall control all
proceedings taken in connection with such contest; provided,
however, that if the Company directs the Employee to pay such claim
and sue for a refund, the Company shall, unless prohibited by law, advance (or
cause to be advanced) the amount of such payment to the Employee, on an
interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income or other tax, including interest or
penalties with respect thereto (except to the extent such interest or penalty
results from the Employee’s failure to act in accordance with the Company’s or
a Affiliate’s reasonable directions or the Employee’s failure to exercise due
care), imposed with respect to such advance or with respect to any imputed
income with respect to such advance. If the advancement described in the
preceding sentence is prohibited by law, the Company and the Employee shall
cooperate in an effort to determine an alternative approach to payment of the
claim in a manner permitted by applicable law and consistent with the original
intent and economic benefit to the Employee of this provision.

 

(ii) If, after the receipt by the Employee of an amount advanced by
the Company  pursuant to Section 7(b)(i),
the Employee becomes entitled to receive a refund with respect to a payment by the Company with
respect to such claim, the Employee shall, within ten (10) days after the
receipt of such refund, pay to the Company the amount of such refund, together
with any interest paid or credited thereon after taxes applicable thereto.

 

(iii) Notwithstanding anything herein to the contrary, this Section 7(b) shall
be interpreted (and, if determined by the Company to be necessary, reformed) to
the extent
necessary to fully comply with the Sarbanes-Oxley Act and Section 409A of
the Code; provided that the Company agrees to maintain, to the maximum extent
practicable, the original intent and economic benefit to the Employee of the
applicable provision without violating the  provisions of
the Sarbanes-Oxley Act and Code Section 409A.

 

8.             Code Section 409A. 
(a) If any provision of this Agreement (or of any payment of compensation,  including benefits) would cause the Employee to incur any additional tax  or interest under Code Section 409A or any regulations or Treasury
guidance promulgated  thereunder, the
Company shall, after consulting with the Employee, reform such provision to  

 

8

 

comply with Code Section 409A; provided that the Company agrees to
make only such  changes as are
necessary to bring such provisions into compliance with Code Section 409A
and  to maintain, to the maximum extent practicable, the original intent and
economic benefit to the Employee of the applicable provision without violating
the provisions of Code Section 409A.

 

(b)           Notwithstanding any provision to the contrary in this Agreement, if the
Employee is deemed on the date of termination of employment to be a “specified employee” within the meaning of that term under
Code Section 409A(a)(2)(B), then with regard to any payment or the
provision of any benefit that is required to be delayed in compliance with Section 409A(a)(2)(B) such
payment or benefit shall not be made or provided (subject to the last sentence
hereof) prior to the earlier of (i) the expiration of the six (6)-month
period measured from the date of the Employee’s “separation
from service” (as such term is defined in Treasury Regulations
issued under Code Section 409A) or (ii) the date of his death (the “Deferral Period”). Upon the
expiration of the Deferral Period, all payments and benefits deferred pursuant
to this Section 8 (whether they would have otherwise been payable
in a single sum or in installments in the absence of such deferral) shall be
paid or reimbursed to the Employee in a lump sum, and any remaining payments
and benefits due under this Agreement shall be paid or provided in accordance
with the normal payment dates specified for them herein. Notwithstanding the
foregoing, to the extent that the foregoing applies to the provision of any
ongoing welfare benefits to the Employee that would not be required to be delayed if the premiums therefor were paid by the
Employee, the Employee shall pay the full cost of premiums for such welfare
benefits during the Deferral Period and the Company shall pay (or cause to be
paid) to the Employee an amount equal to the amount of such premiums paid by the
Employee during the Deferral Period promptly after its conclusion.

 

(c)           Any reimbursements by the Company to the
Employee of any eligible expenses under this Agreement that are not excludable
from the Employee’s income for Federal income tax purposes (the “Taxable Reimbursements”) shall be
made by no later than the earlier of the date on which they would be paid under
the Company’s normal policies and the last day of the taxable year of the
Employee following the year in which the expense was incurred.  The amount of any Taxable Reimbursements, and
the value of any in-kind benefits to be provided to the Employee, during any
taxable year of the Employee shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year of
the Employee.  The right to Taxable
Reimbursements, or in-kind benefits, shall not be subject to liquidation or
exchange for another benefit.

 

(d)           Payment of any Taxable Reimbursements under this Agreement must be made by no
later than the end of the taxable year of the Employee  following the taxable year of the Employee in
which the Employee remits the related taxes.

 

9.             Miscellaneous.

 

(a)           Entire Agreement. 
This Agreement (including Schedule 1) sets forth the entire
understanding of the parties with respect to the subject matter hereof and
merges and supersedes any prior or contemporaneous agreements (whether written
or oral) between the parties pertaining thereto, including without limitation
any prior agreements, arrangements, understandings or commitments of any nature
whatsoever relating to severance payments or 

 

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other compensation in
connection with termination of Employee’s employment.  The Employee acknowledges that he has read and
understands the provisions of this Agreement. 
The Employee further acknowledges that he has been given an opportunity
for his legal counsel to review this Agreement and that the provisions of this
Agreement are reasonable.

 

(b)           Amendment. 
This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.

 

(c)           Waiver. 
No waiver by any party of any of its rights under this Agreement shall
be effective unless in writing and signed by the party against which the same
is sought to be enforced.  No such waiver
by any party of its rights under any provision of this Agreement shall
constitute a waiver of such party’s rights under such provisions at any other
time or a waiver of such party’s rights under any other provision of this
Agreement.  No failure by any party
hereto to take any action against any breach of this Agreement or default by
another party shall constitute a waiver of the former party’s right to enforce
any provision of this Agreement or to take action against such breach or
default or any subsequent breach or default by such other party.

 

(d)           Successors and Assigns. 
The Employee shall not have the right to assign Employee’s rights or
obligations hereunder.  The Company shall
not have the right to assign its rights or obligations under this Agreement
without the prior written consent of the Employee, except in accordance with
subsection (j) below.  Subject to
the foregoing, this Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their legal representatives, heirs, successors and
permitted assigns.  Except as otherwise
specifically provided herein, the rights and obligations of the parties under
this Agreement shall be unaffected by a Change of Control of the Company.

 

(e)           Additional Acts. 
The Employee and the Company shall execute, acknowledge and deliver and
file, or cause to be executed, acknowledged and delivered and filed, any and
all further instruments, agreements or documents as may be necessary or
expedient in order to consummate the transactions provided for in this
Agreement and do any and all further acts and things as may be necessary or
expedient in order to carry out the purpose and intent of this Agreement.

 

(f)            Communications. 
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been given at the
time personally delivered, on the business day following the day such
communication is sent by national overnight delivery service, upon electronic
confirmation of recipient’s receipt of a facsimile of such communication, or
five days after being deposited in the United States mail enclosed in a
registered or certified postage prepaid envelope, return receipt requested, and
addressed to the recipient at the address set forth beneath the recipient’s
signature to this Agreement, or sent to such other address as a party may
specify by notice to the other party in accordance herewith, provided that
notices of change of address shall only be effective upon receipt.

 

(g)           Severability. 
If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall not affect the validity and enforceability of the other
provisions of this Agreement and the provision 

 

10

 

held to be invalid or
unenforceable shall be enforced as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.

 

(h)           Withholding Taxes. 
The Company may withhold from amounts payable under this Agreement such
federal, state and local taxes as are required to be withheld pursuant to any
applicable law or regulation and the Company shall be authorized to take such
action as may be necessary in the opinion of the Company’s counsel to satisfy
all obligations for the payment of such taxes.

 

(i)            Governing Law. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Rhode Island applicable
to agreements made and to be performed entirely in such state, without regard
to the conflict of laws principles of such state.

 

(j)            Consolidation, Merger or Sale of
Assets.  If the Company consolidates or merges into or with, or transfers all or
substantially all of its assets to, another entity the term “Company” as used in this Agreement shall mean such other
entity and this Agreement shall continue in full force and effect. In the case
of any transaction in which a successor would not by the foregoing provision or
by operation of law be bound by this Agreement, the Company shall require such successor expressly and unconditionally
to assume and agree to perform the Company’s obligations under this Agreement,
in the same manner and to the same extent that the Company would be required to
perform if no such succession had taken place.

 

(k)           Headings. 
The section and other headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
any provisions of this Agreement.

 

(l)            Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.  In the
event that any signature to this Agreement is delivered by facsimile
transmission or email attachment, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or email-attached
signature page were an original thereof.

 

(m)          Litigation; Prevailing Party.  If any
litigation is instituted regarding this Agreement, the prevailing party shall
be entitled to receive from the non-prevailing party, and the non-prevailing
party shall pay, all reasonable fees and expenses of counsel for the prevailing
party.

 

(n)           Waiver of Jury Trial. 
Each party hereto knowingly, irrevocably and voluntarily waives its
right to a trial by jury in any litigation which may arise under or involving
this Agreement.

 

(o)           Venue; Jurisdiction. 
If any litigation is to be instituted regarding this Agreement, it shall
be instituted in the state and federal courts located in Providence County,
Rhode Island, and each party irrevocably consents and submits to the personal
jurisdiction of such courts in any such litigation, and waives any objection to
the laying of venue in such courts. 
Service of process in any such litigation shall be effective as to any
party if given to such party 

 

11

 

by registered or
certified mail, return receipt requested, or by any other means of mail that
requires a signed receipt, postage prepaid, mailed to such party as provided in
Section 9(f).

 

(p)           Remedies Cumulative. 
No remedy made available by any of the provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity.

 

(q)           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.

 

(r)           Release.  Notwithstanding any provision herein to the
contrary, the Company shall not have any obligation to pay (or cause to be
paid) any amount or provide any benefit under this Agreement unless and until the Employee executes,
within sixty (60) days after a Payment Event, a release of the Company and its
Affiliates and related parties, in such form as the Company may reasonably
request, of all claims against the Company and its Affiliates and related
parties relating to the Employee’s employment and termination thereof and
unless and until any  revocation period applicable to such release
has expired.

 

[Remainder of Page Left
Intentionally Blank]

 

12

 

IN WITNESS WHEREOF, the parties hereto have each duly executed this
Agreement as of the date set forth above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUMMER
  INFANT (USA), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jason Macari

  
	
   

  	
   

  	
  Name: Jason Macari

  
	
   

  	
   

  	
  Title: President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Joseph Driscoll

  
	
   

  	
  Joseph Driscoll

  
	
   

  	
  5 Dicaro Road

  
	
   

  	
  Hopkinton, MA
  01748

  

 

 

Schedule
1

 

	
  Employee:

  	
   

  	
  Joseph Driscoll

  
	
   

  	
   

  	
   

  
	
  Position/Title:

  	
   

  	
  CFO

  
	
   

  	
   

  	
   

  
	
  Payment Percentage:

  	
   

  	
  100%

  
	
   

  	
   

  	
   

  
	
  Severance Benefits:

  	
   

  	
  For a period commencing
  with the month in which termination of employment shall have occurred and
  ending - 12 months thereafter, the Employee and, as applicable, the
  Employee’s covered dependents shall be entitled to all benefits under the
  Company’s welfare benefit plans (within the meaning of
  Section 3(1) of the Employee Retirement Income Security Act of
  1974, as amended), as if the Employee were still employed during such period,
  at the same level of benefits and at the same dollar cost to the Employee as
  is in effect at the time of termination. If and to the extent that equivalent
  benefits shall not be payable or provided under any such plan, the Company
  shall pay or provide (or cause to be paid or provided) equivalent benefits on
  an individual basis. The benefits provided in accordance herewith shall be
  secondary to any comparable benefits provided to the Employee and, as
  applicable, the Employee’s covered dependents by another employer of the
  Employee.

  
	
   

  	
   

  	
   

  
	
  Restricted Period:

  	
   

  	
  12 monthsExhibit 4.1

 

STOCKHOLDERS RIGHTS AGREEMENT

 

This
STOCKHOLDERS RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 1, 2010 by and among  UTStarcom, Inc.,
a Delaware corporation (the “Company”), and each of the entities listed on Schedule A
hereto (the “Investors”).

 

WHEREAS,
the Investors have agreed to purchase shares of common stock of the Company,
par value US$0.00125 per share (“Common Stock”),
pursuant to that certain Common Stock Purchase Agreement between the Company
and the Investor, dated as of even date hereof
(the “Purchase Agreement,” and the shares of
Common Stock purchased thereunder, the “Purchase Shares”).

 

WHEREAS,
the parties hereto desire to enter into this Agreement so that, as of the
Effective Date (as defined below) the Investors may (i) from time to time
register under the Securities Act (as defined below) the sale of the Purchase
Shares, and (ii) have the other rights and obligations provided for
hereunder.

 

NOW
THEREFORE, in consideration of the mutual agreements, representations,
warranties and covenants herein contained, as well as other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
accepted, and intending to be legally bound hereby, the parties hereto agree as
follows:

 

SECTION 1                              INTERPRETATION

 

1.1                               Definitions.  As used in this Agreement, the following
terms shall have the following respective meanings:

 

“Affiliate” means, with respect to any given
Person, a Person that Controls, is Controlled by, or is under common Control
with the given Person.

 

“BEIID” means Beijing E-town International
Investment and Development Co., Ltd. and any direct shareholder BEIID.

 

“Change of Control Transaction” means (i) the
acquisition of the Company by another entity by means of any transaction or
series of related transactions to which the Company is party (including,
without limitation, any stock acquisition, reorganization, merger or
consolidation but excluding any sale of stock for capital raising purposes and
any transaction or series of related transactions the sole purpose of which is
to change the state of the Company’s incorporation) other than a transaction or
series of related transactions in which the holders of the voting securities of
the Company outstanding immediately prior to such transaction or series of
related transactions retain, immediately after such transaction or series of
related transactions, as a result of shares in the Company held by such holders
prior to such transaction or series of related transactions, at least a
majority of the total voting power represented by the outstanding voting
securities of the Company or such other surviving or resulting entity (or if
the Company or such other surviving or resulting entity is a wholly-owned subsidiary
immediately following such acquisition, its parent); (ii) a sale, lease or
other disposition of all or substantially all of the assets of the Company and
its subsidiaries 

 

 

taken
as a whole; or (iii) a transaction constituting a change of control
pursuant to Nasdaq Listing Rule 5635(b).

 

“Commission” means the U.S. Securities
and Exchange Commission.

 

“Control” means, when used with respect to
any Person, the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms “Controlling”
and “Controlled” have meanings
correlative to the foregoing.

 

“Effective Date” means the date upon which
the Purchase Shares are sold to the Investors pursuant to the Purchase
Agreement.

 

“Exchange Act” means the United States
Securities Exchange Act of 1934, as amended.

 

“Form S-1” means a registration
statement on Form S-1 promulgated by the Commission under the Securities
Act or any substantially similar form then in effect.

 

“Form S-3” means a registration
statement on Form S-3 promulgated by the Commission under the Securities
Act or any substantially similar form then in effect.

 

“GAAP” means United States generally
accepted accounting principles.

 

“Holders” means any Investor together with
any permitted transferees and assigns of such Investor.

 

“Nasdaq” means The Nasdaq Global Select
Market.

 

“Person” means any individual, corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or governmental entity.

 

The
terms “register,”
“registered”
and “registration”
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.

 

“Registrable Securities” means (i) the
Purchase Shares, and (ii) any Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the
Purchase Shares; provided, however, that Registrable Securities
shall not include any shares of Common Stock described in clause (i) or (ii) above
which have previously been registered or which have been sold to the public
either pursuant to a registration statement or Rule 144, or which have
been sold in a private transaction in which the transferor’s rights under this
Agreement are not validly assigned in accordance with this Agreement.

 

“Registration Expenses” shall mean all
expenses incurred in effecting any registration pursuant to this Agreement,
including, without limitation, all registration, qualification, and filing
fees, printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and expenses of any regular or special 

 

2

 

audits
incident to or required by any such registration, but shall not include Selling
Expenses and the compensation of regular employees of the Company (which shall
be paid in any event by the Company).

 

“Securities Act” means the United States
Securities Act of 1933, as amended.

 

“Selling Expenses” shall mean all
underwriting discounts, selling commissions and stock transfer taxes applicable
to the sale of Registrable Securities and fees and disbursements of counsel for
any Holder.

 

1.2                               Additional Definitions.  The following capitalized terms shall have
the respective meanings ascribed thereto in the respective sections of this
Agreement set forth opposite each of the capitalized terms below:

 

	
  Term

  	
   

  	
  Section Reference

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  BEIID
  Lock-Up

  	
   

  	
  3.1(a)

  
	
  Board

  	
   

  	
  3.2(a)

  
	
  Common
  Stock

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Preamble

  
	
  Correspondence

  	
   

  	
  4.4(a)

  
	
  Effective
  Date Percentage

  	
   

  	
  3.2(b)

  
	
  Investor
  Nominee(s)

  	
   

  	
  3.3(a)

  
	
  Investors

  	
   

  	
  Preamble

  
	
  Nominating
  Committee

  	
   

  	
  3.3(c)

  
	
  Other Stockholders Agreement

  	
   

  	
  2.2(c)(1)

  
	
  Purchase Agreement

  	
   

  	
  Recitals

  
	
  Purchase Shares

  	
   

  	
  Recitals

  
	
  Transfer

  	
   

  	
  3.1(a)

  
	
  Violation

  	
   

  	
  2.6(a)

  
	
  Voting
  Securities

  	
   

  	
  3.3(g)

  

 

SECTION 2                              REGISTRATION RIGHTS.

 

2.1                               Demand Registration
Rights.

 

(a)                                 Registration.

 

(1)                                 Subject to the
terms of this Agreement, following expiration of the BEIID Lock-Up, Holders
holding at least 1,000,000 Registrable Securities (as adjusted for any stock
splits, stock dividends, recapitalizations, reorganizations or similar events)
may request the Company in writing to register all or part of the Registrable
Securities.  Upon receipt of such a
request, the Company shall (i) promptly, and in any event within twenty
(20) business days after receipt of such written request, give written notice
of the proposed registration to all other Holders, and (ii) use
commercially reasonable efforts to cause, as soon as reasonably practicable,
the registration of the sale of the Registrable Securities specified in the
request, together with any Registrable Securities of any Holder who requests in
writing to join such registration within thirty (30) business days after the
Company’s delivery of written notice, to become effective.

 

3

 

(2)                                 Notwithstanding
anything to the contrary contained herein, the Company shall not be obligated
to effect more than one (1) registration pursuant to this Section 2.1(a).

 

(3)                                 The
registration made pursuant to this Section 2.1(a) shall be made: (i) on
registration statement on Form S-3 (or any successor to Form S-3) if
such form is available for use by the Company; or (ii) otherwise on Form S-1
(or any successor to Form S-1) if such form is available for use by the
Company.

 

(4)                                 The
registration of the sale of the Registrable Securities in accordance with this Section 2.1(a) shall,
irrespective of whether such Registrable Securities are distributed by the
Holder thereof, satisfy the Company’s obligations under this Section 2.1(a).

 

(b)                                 Right of Deferral.  Notwithstanding anything to the contrary in
this Section 2.1:

 

(1)                                 The Company
shall not be obligated to register the sale of Registrable Securities pursuant
to Section 2.1(a) if, within the six (6) month period preceding
the date of such request, the Company has already effected a registration in which
Holders had an opportunity to participate pursuant to the provisions of Section 2.2
and no Registrable Securities of the Holders were excluded from such
registration pursuant to the provisions of Section 2.2(c).

 

(2)                                 The Company
shall not be obligated to register the sale of Registrable Securities pursuant
to Section 2.1(a) if the Company shall furnish to the Holders a
certificate signed by the Chief Executive Officer of the Company stating that,
in the good faith judgment of the Board of Directors of the Company, any
registration of the sale of Registrable Securities should not be made because
it would be materially detrimental to the Company and its shareholders for a
registration statement to be filed in the near future.  Following delivery of such certificate, the
Company shall have the right to defer such filing for a period not to exceed
ninety (90) days from the receipt of any request duly submitted by Holders
under Section 2.1(a) to register Registrable Securities; provided,
however, that the Company shall not utilize this right more than twice
in any twelve (12) month period.

 

(c)                                  Underwriting Requirements.

 

(1)                                 If the Holders
requesting a registration pursuant to this Section 2.1 intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2.1(a)(1) and the Company shall include such
information in the written notice given to the other Holders pursuant to such Section 2.1(a)(1).  In such event, the Company shall not be
required to register the Registrable Securities of a Holder under this Section 2.1
unless such Holder shall include such Registrable Securities in the
underwriting and such Holder enters into an underwriting agreement in customary
form with the underwriters selected by the Company and setting forth such terms
for the underwriting as have been agreed upon between the Company and the
underwriters.  In the event the underwriters
advise Holders seeking registration of the sale of Registrable Securities
pursuant to this Section 2.1 in writing that market factors (including the
aggregate number of Registrable Securities requested to be registered, the
general condition of the market, and the status of the Persons proposing to
sell securities pursuant to the registration) require a limitation of the
number of securities to be underwritten, the underwriters may exclude some or
all Registrable Securities 

 

4

 

from the registration and
underwriting after excluding any other securities from the underwriting, and
the number of securities and Registrable Securities that may be included in the
registration and the underwriting shall be allocated (i) first, among the
Holders requesting inclusion of their Registrable Securities in such
registration statement in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities which the Holders would otherwise
be entitled to include in the registration, (ii) second, to Persons other
than Holders who, by virtue of agreements with the Company, are entitled to
include their shares of Common Stock in such registration and (iii) third,
to the Company, which the Company may allocate, at its discretion, for its own
account, or for the account of other holders or employees of the Company.

 

(2)                                 If any Holder
disapproves of the terms of any underwriting, the Holder may elect to withdraw
therefrom by written notice to the Company and the underwriters delivered at
least seven (7) days prior to the effective date of the registration
statement.  Any Registrable Securities
excluded or withdrawn from the underwriting shall be withdrawn from the
registration.

 

2.2                               Piggyback Registration.

 

(a)                                 Registration of the Company’s Securities.  Subject to Section 2.2(c),
if the Company proposes to register for its own account or for the account of
any Person that is not a Holder or that is a Holder holding both Registrable
Securities and other securities of the Company (unless such Person is
contractually entitled to exclude participation by the Holders in its
registration, and subject to any rights to partially exclude participation by
the Holder in its registration) the sale of any of its Common Stock in
connection with the public offering of such securities, the Company shall
promptly give each Holder written notice of such registration and, upon the
written request of any Holder given within ten (10) days after delivery of
such notice, the Company shall use its commercially reasonable efforts to
include in such registration any Registrable Securities thereby requested by
such Holder.  If a Holder decides not to
include all or any of its Registrable Securities in such registration by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its Common Stock, all upon the terms and conditions set forth
herein.  Any Registrable Securities
registered pursuant to this Section 2.2 shall continue to be subject to
the BEIID Lock-Up and may only be Transferred in connection with such
registration to the extent that such registration is still effective upon
expiration of the BEIID Lock-Up.

 

(b)                                 Right to Terminate Registration.  The Company shall
have the right to terminate or withdraw any registration initiated by it under Section 2.2(a) prior
to the effectiveness of such registration, whether or not any Holder has
elected to participate therein.  The
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.3.

 

(c)                                  Underwriting Requirements.

 

(1)                                 In connection with any
offering involving an underwriting of the Company’s Common Stock initiated by
the Company, the Company shall not be required to register the Registrable
Securities of a Holder under this Section 2.2 unless such Holder shall
include such Registrable Securities in the underwriting and such Holder enters
into an underwriting agreement in customary form with the underwriters selected
by the Company 

 

5

 

and setting forth such terms
for the underwriting as have been agreed upon between the Company and the
underwriters.  In the event the
underwriters advise Holders seeking registration of the sale of Registrable
Securities pursuant to this Section 2.2 in writing that market factors
(including the aggregate number of Registrable Securities requested to be
registered, the general condition of the market, and the status of the Persons
proposing to sell securities pursuant to the registration) require a limitation
of the number of securities to be underwritten, the underwriters may exclude
some or all Registrable Securities from the registration and underwriting after
excluding any other securities from the underwriting (other than any Securities
which the Company may seek to include in the underwriting for its own account),
and the number of securities and Registrable Securities that may be included in
the registration and the underwriting shall be allocated (i) first, to the
Company, and (ii) thereafter, among the Holders requesting inclusion of
their Registrable Securities in such registration statement in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
which the Holders would otherwise be entitled to include in the registration
(it being understood that solely for purposes of determining the amount of
securities that may be included in such registration pursuant to the foregoing
clause (ii) of this Section 2.2(c)(1), the definitions of Holders and
Registrable Securities shall be deemed to include “Holders” and “Registrable
Securities,” respectively, each as defined in that certain Stockholders Rights
Agreement dated on or around the date of this Agreement, by and among the
Company and the investors named therein (the “Other
Stockholders Agreement”)).

 

(2)                                 If any Holder
disapproves of the terms of any underwriting, the Holder may elect to withdraw therefrom
by written notice to the Company and the underwriters delivered at least seven (7) days
prior to the effective date of the registration statement.  Any Registrable Securities excluded or
withdrawn from the underwriting shall be withdrawn from the registration.

 

(d)                                 Exempt Transactions.  The Company shall have no obligation to
register the sale of any Registrable Securities under this Section 2.2 in
connection with a registration by the Company (i) relating solely to the
sale of securities to participants in a Company share or option plan, or (ii) relating
to a corporate reorganization or other transaction under Rule 145 of the
Securities Act.

 

2.3                               Expenses.  All Registration Expenses incurred in
connection with registrations pursuant to this Agreement shall be borne by the
Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 2.1 if the registration request is subsequently withdrawn at
the request of the Holders of a majority of the Registrable Securities to be
registered or because a sufficient number of Holders shall have withdrawn so
that the minimum offering conditions set forth in Section 2.1 are no
longer satisfied (in which case all participating Holders shall bear such
expenses pro rata among each
other based on the number of Registrable Securities requested to be so
registered).  All Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by
the holders of securities included in such registration pro rata among each other on the basis of
the number of Registrable Securities so registered.

 

2.4                               Obligations of the
Company.  Subject to the provisions of Section 2.3
hereof, whenever required to effect the registration of the sale of any
Registrable Securities under this Agreement the Company, shall as expeditiously
as reasonably possible:

 

(a)                                 keep such registration effective for a period ending on the
earlier of the date which is ninety (90) days from the effective date of the
registration statement or such 

 

6

 

time as the Holder or Holders have
completed the distribution described in the registration statement relating
thereto;

 

(b)                                 prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the period set forth in
subsection (a) above;

 

(c)                                  furnish such number of prospectuses, including any
preliminary prospectuses, and other documents incident thereto, including any
amendment of or supplement to the prospectus, as a Holder from time to time may
reasonably request;

 

(d)                                 use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdiction as shall be reasonably requested by the
Holders; provided, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;

 

(e)                                  notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in light of the circumstances
then existing, and following such notification promptly prepare and furnish to
such seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
incomplete in light of the circumstances then existing;

 

(f)                                   provide a transfer agent and registrar for the sale of all
Registrable Securities registered pursuant to such registration statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration;

 

(g)                                  cause all such Registrable Securities sold pursuant
hereunder to be listed on Nasdaq;

 

(h)                                 notify each seller of Registrable Securities covered by such
registration statement (or if they have appointed an attorney-in-fact, such
attorney-in-fact), after it shall receive notice thereof, of the time when such
registration statement has become effective;

 

(i)                                     notify each seller of Registrable Securities covered by such
registration statement (or if they have appointed an attorney-in-fact, such
attorney-in-fact), after it shall receive notice, of the issuance of any stop
order by the Commission suspending the effectiveness of such registration
statement or the initiation of any proceeding for that purpose and use its
commercially reasonable efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued; and

 

7

 

(j)                                    use commercially reasonable efforts to furnish, at the
request of the underwriters on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration (i) an
opinion, dated as of such date, of the counsel representing the Company, for
purposes of such registration, in form and substance as is customarily given by
company counsel to the underwriters in an underwritten public offering
addressed to the underwriters, if any, and (ii) a “comfort” letter dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters.

 

2.5                               Obligations of Holders.  It shall be a condition precedent to the obligations
of the Company to register the sale of Registrable Securities of any Holder
pursuant to this Section 2 that the selling Holder shall furnish to the
Company such information regarding itself, the Registrable Securities held
thereby and the intended method of disposition of such securities as shall be
required to timely effect the registration of the sale of such Holder’s
Registrable Securities.

 

2.6                               Indemnification.  In the event any Registrable Securities are
included in a registration statement under this Section 2:

 

(a)                                 Company
Indemnity.  To the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, its partners, officers, directors, shareholders, legal counsel,
accountants, any underwriter (as
defined in the Securities Act) for such Holder and each Person, if any, who
controls (as defined in the Securities Act) such Holder or underwriter against
any losses, claims, damages, or liabilities (joint or several) to which they
may become subject under laws which are applicable in connection with any
registration, qualification, or compliance, of the Company’s securities insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a “Violation”):

 

(1)                                 any untrue
statement (or alleged untrue statement) of a material fact contained or
incorporated by reference in any registration statement, any prospectus
included in the registration statement, any issuer free writing prospectus (as
defined in Rule 433 of the Securities Act), any issuer information (as
defined in Rule 433 of the Securities Act) filed or required to be filed
pursuant to Rule 433(d) under the Securities Act or any other
document incident to any such registration, qualification or compliance
prepared by or on behalf of the Company or used or referred to by the Company,
and any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or

 

(2)                                 any violation (or alleged violation) by
the Company of the Securities Act, any state securities laws or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any offering covered by
such registration, qualification or compliance, 

 

and the Company will reimburse each such Holder, its
partners, officers, directors, legal counsel, accountants, underwriter or
controlling Person for any legal or other expenses reasonably incurred by them,
as incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 2.6(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the 

 

8

 

Company
(which consent shall not be unreasonably withheld or delayed), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation
which occurs in reliance upon and in conformity with written information
furnished for use in connection with such registration by such Holder,
underwriter or controlling Person of such Holder.

 

(b)                                 Notice.  Promptly after receipt by an indemnified
party under this Section 2.6 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section 2.6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflict of interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall relieve
such indemnifying party of liability to the indemnified party under this Section 2.6
to the extent the indemnifying party is prejudiced as a result thereof, but the
omission to so deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 2.6.

 

(c)                                  Contribution.  If any indemnification provided for in this Section 2.6
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and of the indemnified party, on the
other, in connection with the statements or omissions that resulted in such
loss, liability, claim, damage or expense, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.

 

(d)                                 Survival.  The obligations of the Company and Holders
under this Section 2.6 shall survive the completion of any offering of
Registrable Securities in a registration statement for a period of twenty-four
(24) months, regardless of the expiration of any statutes of limitation or
extensions of such statutes.

 

2.7                               Termination of the
Company’s Obligations.  The registration
rights set forth in Section 2.1 and Section 2.2 of this Agreement
shall terminate upon the earlier of (i) when with respect to any Holder,
in the reasonable opinion of counsel to the Company, all Registrable Securities
proposed to be sold by such Holder may then be sold without registration in any
ninety (90) day period pursuant to Rule 144 under the Securities Act, (ii) 

 

9

 

the date as of
which all of the Registrable Securities have been sold pursuant to a
registration statement or (iii) thirty-six (36) months following the
Effective Date.

 

2.8                               Rule 144
Reporting.  With a view to
making available the benefits of Rule 144 promulgated under the Securities
Act which may at any time permit the sale of the Registrable Securities to the
public without registration or pursuant to a registration, the Company agrees
to:

 

(a)                                 use reasonable, diligent efforts to make and keep public
information available, as those terms are understood and defined in Rule 144,
at all times;

 

(b)                                 use reasonable, diligent efforts to file with the Commission
in a timely manner all reports and other documents required of the Company
under the Securities Act and Exchange Act; and

 

(c)                                  so long as a Holder owns any Registrable Securities, to
furnish to such Holder forthwith upon request (1) a certificate by the
Company as to its compliance with the reporting requirements of the Securities
Act (including, without limitation, Rule 144) and the Exchange Act, (2) a
copy of the most recent annual report of the Company and such other reports and
documents as may be filed by the Company with the Commission, and (3) such
other reports, documents or information of the Company, as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission that permits the selling of any such securities without
registration.

 

2.9                               Limitations on
Subsequent Registration Rights.  Other than as set
forth in the Other Stockholders Agreement, the Company shall not, without the
prior written consent of the Holders of at least a majority of the Registrable
Securities then outstanding, grant any rights to any Persons to register any
shares of capital stock or other securities of the Company if such rights are
on parity with or superior to the registration rights of the Holders of Registrable
Securities under this Agreement.

 

SECTION 3                              OTHER ITEMS

 

3.1                               BEIID Lock-Up.

 

(a)                                 For a period of nine (9) months from the Effective
Date, BEIID shall not offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly (including, without limitation any of the foregoing
with respect to any holding company with recent ownership of the Registrable
Securities, any Registrable Securities or enter into any swap, hedging or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of any of such Registrable Securities (any of the
foregoing, a “Transfer”) without
the prior written consent of the Company (the “BEIID Lock-Up”).

 

(b)                                 Each Holder shall further refrain at all times (including
with respect to time periods after the expiration of the BEIID Lock-Up) from
selling Registrable Securities to any Person that in any manner, directly or
indirectly, is in competition with the Company,

 

10

 

except
in a genuine open market sale where the identity of the purchaser of the
Purchase Shares is not known to the Holder or its agent effecting such sale.

 

3.2          Stand-Still.

 

(a)           Subject
to the other provisions of this Section 3.2, each Holder agrees that, for
a period of twenty-four (24) months from the Effective Date, such Holder and
its Affiliates will not, without the prior written consent of the Company or
the approval of the Company’s Board of Directors (the “Board”), directly or indirectly:

 

(1)           make, effect, initiate,
cause or in any way participate in (i) any acquisition of beneficial
ownership of any securities of the Company or any securities of any subsidiary
or other affiliate of the Company, (ii) any acquisition of any assets of
the Company or any assets of any subsidiary or other affiliate of the Company,
or (iii) any tender offer, exchange offer, merger, business combination,
recapitalization, restructuring, liquidation, dissolution or extraordinary
transaction involving the Company or any subsidiary or other affiliate of the
Company, or involving any securities or assets of the Company or any securities
or assets of any subsidiary or other affiliate of the Company;

 

(2)           seek or propose to influence
or control the management or policies of the Company (other than as provided
for herein), make, effect, initiate, cause or in any way participate in any “solicitation”
of “proxies” (as such terms are used in the rules of the Commission) to
vote any voting securities of the Company or any subsidiary thereof, or seek to
advise or influence any Person with respect to the voting of any voting
securities of the Company or any subsidiary thereof;

 

(3)           make any public announcement
with respect to, or submit a proposal for or offer of (with or without conditions),
any merger, recapitalization, reorganization, business combination or other
extraordinary transaction involving the Company or any subsidiary thereof or
any of their securities or assets;

 

(4)           enter into any arrangements
or understandings with any third party with respect to any of the foregoing, or
otherwise form, join or participate in, a “group” within the meaning of Section 13(d)(3) of
the Exchange Act, in connection with any of the foregoing, and

 

(5)           take any action that might
require the Company to make a public announcement regarding any of the types of
matters set forth in clause (1), (2), or (3) above;

 

(6)           agree or offer to take, or
encourage or propose (publicly or otherwise) the taking of, any action referred
to in clause (1), (2), (3), (4) or (5) above;

 

(7)           assist, induce or encourage
any other Person to take any action of the type referred to in clause (1), (2),
(3), (4), (5) or (6) above;

 

(8)           enter into any arrangement
or agreement with any other Person relating to any of the foregoing; or

 

(9)           request the Company or any
of its Affiliates to amend or waive or consider the amendment or waiver of any
provision of this Section 3.2; provided, however, 

 

11

 

that the Holders may make any such request
if, and only if, such request is made on a strictly confidential basis and does
not require (in the opinion of counsel to the Company) the Company or any third
party to make public disclosure of the same under applicable law or the rules and
regulations of Nasdaq and the Commission.

 

(b)           Notwithstanding
anything to the contrary in this Section 3.2, nothing in this Section 3.2
shall prevent Holder from purchasing up to such number of shares of Common
Stock in the open market as would be required to enable Holder to maintain its
percentage ownership in the Company equal to Holder’s Effective Date
Percentage.  For purposes of this
Agreement, the “Effective Date Percentage”
with respect to Holder shall mean the quotient obtained by dividing (x) the
number of shares of Common Stock held by Holder as of the Effective Date as
listed under the column entitled “Total Shares” on Schedule A attached hereto by (y) the total number of shares of Common Stock
outstanding as of the Effective Date (for the avoidance of doubt, after giving
effect to the transactions contemplated by the Purchase Agreement and that
certain Common Stock Purchase Agreement by and among the Company Ram Max Group Limited and
Shah Capital Management, dated as of the date hereof).

 

(c)           Each
Holder shall promptly advise the Company in writing of any inquiry or proposal
made to it with respect to any item listed in Section 3.2(a).

 

3.3          Board of Directors.

 

(a)           As
of the Effective Date, the Board shall have an authorized size of seven (7) directors,
and Xiaoping Li shall have been appointed to the Board as the nominee of BEIID
(such member of the Board appointed pursuant to this Section 3.3, an “Investor Nominee”).  Mr. Li shall be appointed as a Class II
director, with a term expiring 2011.

 

(b)           Subject
to the terms and conditions herein, BEIID shall, following the Effective Date,
continue to have the right to nominate an Investor Nominee to the Board, and
the Company shall, at any annual or special meeting of shareholders of the
Company at which directors are to be elected, nominate the Investor Nominee for
election to the Board and use all commercially reasonable efforts to cause the
Investor Nominee to be elected as a director of the Board; provided that BEIID
shall not be entitled under this Agreement to nominate any member of the Board
in the event that, at any time following the Effective Date, BEIID holds a
number of Registrable Securities that is less than five percent (5%) of the
number of outstanding shares of Common Stock, (it being understood that,
subject to the provisions of this Agreement (including Section 3.3(g)), (i) nothing
in this Section 3.3(b) shall prevent BEIID from exercising its voting
rights with respect to the election of directors generally as a stockholder of
the Company and (ii) nothing in this Section 3.3(b) shall
prevent any former Investor Nominee from serving on the Board henceforth if
such former Investor Nominee is otherwise elected in accordance with the
Company’s then current certificate of incorporation and bylaws).

 

(c)           Notwithstanding
anything contained herein to the contrary: (i) the appointment of the
Investor Nominee shall be subject to compliance with the rules, regulations and
requirements of Nasdaq and applicable law (including, without limitation, the
Securities Act and the Exchange Act) applicable to service on a board of
directors; (ii) the Investor Nominee shall be independent under applicable
law (including, without limitation, the Securities Act and Exchange Act) and
Nasdaq rules and regulations applicable to service on a board of
directors; (iii) the Investor Nominee shall be reasonably acceptable to
the 

 

12

 

Nominating
and Corporate Governance Committee of the Board (the “Nominating Committee”); and (iv) the
Investor Nominee shall comply in all respects with the Company’s corporate
governance guidelines applicable to directors generally in effect from time to
time.

 

(d)           For
so long as an Investor Nominee serves on the Board pursuant to the terms of this
Agreement, such Investor Nominee shall be appointed to each committee of the
Board, subject in all cases to such appointment satisfying the rules,
regulations and requirements of Nasdaq and applicable law (including, without
limitation, the Securities Act and the Exchange Act) for service on such
committee.

 

(e)           So
long as BEIID has the right to nominate an Investor Nominee pursuant to Section 3.3(a) above,
the Board will not take any action to increase or decrease the authorized size
of the Board from seven (7) members.

 

(f)            The
Company shall obtain and maintain for the Investor Nominee third party
directors’ and officers’ insurance as is maintained for the other directors of
the Company.

 

(g)           In
connection with any proposal submitted for Company shareholder approval (at any
annual or special meeting called, or in connection with any other action
(including the execution of written consents)) related to the election or
removal of directors of the Board or any business or proposal involving the
Company, each Holder will (1) cause all of its respective shares of
Company capital stock that are entitled to vote, whether now owned or hereafter
acquired (collectively, the “Voting
Securities”), to be present in person or represented by proxy at all
meetings of shareholders of the Company, so that all such shares shall be
counted as present for determining the presence of a quorum at such meetings
and (2) vote all of their Voting Securities: (i) in favor of any
nominee or director nominated by the Nominating Committee (provided that the
Governance Committee is consistent with the terms of this Section 3.3); (ii) against
the removal of any director nominated by the Nominating Committee; and (iii) with
respect to any other business or proposal, in accordance with the
recommendation of the Board; provided, however, that the
foregoing clause (iii) shall not apply to any proposal constituting a
Change of Control Transaction that is submitted to the shareholders of the
Company for approval; provided, further, that Voting Securities
held by BEIID (but only for so long as they are held by BEIID or a wholly-owned
subsidiary of BEIID) shall not be subject to the restrictions set forth in the
foregoing clauses (i), (ii) or (iii); and provided, further,
that notwithstanding the foregoing proviso, in no event shall BEIID propose,
recommend or nominate any alternative nominee for director.

 

SECTION 4          MISCELLANEOUS

 

4.1          Binding Effect; Assignment.  This
Agreement shall be binding upon and shall be enforceable by each party, its successors
and permitted assigns.  No party may
assign any of its rights or obligations hereunder without the prior written
approval of the other parties, provided that BEIID may assign its rights and
obligations hereunder (in whole and not in part) to any wholly-owned subsidiary
that holds all Registrable Securities owned by BEIID.  Any such assignment shall not relieve the assignor
of any obligations hereunder and BEIID shall be treated as the Holder of such
Registrable Securities for purposes of Section 3.3 of this Agreement.  For purposes of determining the number of
Registrable Securities held by BEIID as a Holder, the percent of BEIID’s
ownership of its subsidiary holding the 

 

13

 

Registrable
Securities shall be multiplied by the number of Registrable Securities held by
such subsidiary.

 

4.2          Governing Law;
Arbitration.

 

(a)           This
Agreement shall be governed by and construed in accordance with the internal
and substantive laws of the State of California and without regard to any
conflicts of laws concepts which would apply the substantive law of some other
jurisdiction.

 

(b)           Each of the parties hereto irrevocably (i) agrees that
any dispute or controversy arising out of, relating to, or concerning any
interpretation, construction, performance or breach of this Agreement, shall be
settled by arbitration to be held in County of Santa Clara, State of
California, in accordance with the rules then in effect of the American
Arbitration Association, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such arbitration, and (iii) submits to the
exclusive jurisdiction of the State of California in any such arbitration.  If submitted to arbitration in any
jurisdiction, 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.  The parties to the
arbitration shall each pay an equal share of the costs and expenses of such
arbitration, and each party shall separately pay for its respective counsel
fees and expenses; provided, however, that the prevailing party
in any such arbitration shall be entitled to recover from the non-prevailing
party its reasonable costs and attorney fees.

 

4.3          Amendment. 
This
Agreement may not be amended, modified or terminated, and no rights or
provisions may be waived, except with the written consent of the Company and
Holders holding 75% of the Registrable Securities then held by all Holders.

 

4.4          Notices.

 

(a)           Any
notices, reports or other correspondence (hereinafter collectively referred to
as “correspondence”) required or
permitted to be given hereunder shall be sent by international courier,
facsimile, electronic mail or delivered by hand to the party to whom such
correspondence is required or permitted to be given hereunder.  Where
a notice is sent by overnight courier, service of the notice shall be deemed to
be effected by properly addressing, and sending such notice through an
internationally recognized express courier service, delivery fees pre-paid, and
to have been effected three (3) business days following the day the same
is sent as aforesaid.  Where a notice is
delivered by facsimile, electronic mail, by hand or by messenger, service of
the notice shall be deemed to be effected upon delivery.

 

(b)           All
correspondence to the Company shall be addressed as follows:

 

	
  UTStarcom, Inc.

  
	
  1275 Harbor Bay Parkway

  
	
  Alameda, CA 94502

  
	
  Facsimile: (510) 864-8802

  
	
  Email: legal.notice@utstar.com

  
	
  Attention: General Counsel

  

 

14

 

	
  with a copy to:

  
	
   

  
	
  Wilson Sonsini Goodrich & Rosati

  
	
  650 Page Mill Road

  
	
  Palo Alto, California 94304

  
	
  Facsimile:

  	
  (650) 493-6811

  
	
  Attention:

  	
  Carmen Chang and Scott Anthony

  

 

(c)           All
correspondence to any Investor shall be sent to such Investor at the address
set forth under such Investor’s name on Schedule A hereto.

 

(d)           Any
entity may change the address to which correspondence to it is to be addressed
by notification as provided for herein.

 

4.5          Further Assurances.  Each party agrees to act in good faith and
cooperate fully with the other parties and to execute such further instruments,
documents and agreements and to give such further written assurances, as may be
reasonably requested by the other parties to better evidence and reflect the
transactions described herein and contemplated hereby, and to carry into effect
the intents and purposes of this Agreement.

 

4.6          Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or
oral.  No modification, alteration,
waiver or change in any of the terms of this Agreement shall be valid or
binding upon the parties hereto unless made in writing and in accordance with
the provisions of Section 4.3 hereof.

 

4.7          Captions.  The captions and paragraph headings
of this Agreement are solely for the convenience of reference and shall not
affect its interpretation.

 

4.8          Severability.  Should any part or provision of
this Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or
provisions shall be replaced with a provision which accomplishes, to the extent
possible, the original business purpose of such part or provision in a valid and
enforceable manner, and the remainder of this Agreement shall remain binding
upon the parties hereto.

 

4.9          Remedies Cumulative.  Each and all of the various rights, powers and remedies of
the parties shall be considered to be cumulative with and in addition to any
other rights, powers and remedies which such parties may have at law or in
equity in the event of the breach of any of the terms of this Agreement.  The exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.

 

4.10        Counterparts; Reproductions.  This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument.  A facsimile, portable document file (PDF) or
other reproduction of this Agreement may be executed by one or more parties and
delivered by such party by facsimile, electronic mail or any similar electronic
transmission pursuant to which the 

 

15

 

signature of or on
behalf of such party can be seen.  Such
execution and delivery shall be considered valid, binding and effective for all
purposes.

 

4.11        No Third Party Beneficiary.  Except as contemplated in Section 2.6,
nothing in this Agreement is intended to confer upon any Person other than the parties hereto and their respective
successors and permitted assigns any rights, benefits, or obligations
hereunder.

 

4.12        Effectiveness and Termination.

 

(a)           The
rights and obligations of the parties hereto shall become effective only upon
the Effective Date.

 

(b)           This
Agreement shall automatically terminate upon termination of the Purchase
Agreement in accordance with the terms thereof.

 

(Remainder of Page Intentionally Blank)

 

16

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.

 

 

	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UTSTARCOM,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER BLACKMORE

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Peter Blackmore

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
				

 

SIGNATURE PAGE
TO STOCKHOLDER RIGHTS AGREEMENT

 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.

 

 

	
   

  	
  INVESTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Beijing
  E-town International Investment and Development Co., Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GUANGYI ZHAO

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Guangyi
  Zhao

  
	
   

  	
  Title:

  	
  President

  
				

 

SIGNATURE PAGE
TO STOCKHOLDER RIGHTS AGREEMENT

 

 

Schedule
A

 

SCHEDULE
OF INVESTORS

 

	
  Name

  	
   

  	
  Address

  	
   

  	
  Purchase

  Shares

  	
   

  	
  Other

  Shares

  	
   

  	
  Total

  Shares

  	
   

  
	
  Beijing
  E-town International Investment and Development Co., Ltd.

  	
   

  	
  Bldg
  61, 2 JingYuanBeiJie

  Beijing Development Area

  Beijing 100176

  China

  Facsimile: +86 (10) 6786-2607

  Attn: Xu Wei

  	
   

  	
  11,363,636

  	
   

  	
  0

  	
   

  	
  11,363,636

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