Document:

Exhibit 10.1

 

DIRECTORS AND OFFICERS

 

UTSTARCOM, INC.

 

STOCK OPTION AGREEMENT

 

1.                                       Grant of Option. The Administrator of UTStarcom, Inc., a Delaware corporation (the “Company”),
hereby grants to the Optionee named in the Certificate of Stock Option Grant (the
“Optionee”), an option (the “Option”) to purchase a total number of shares of
Common Stock (the “Shares”) as set forth in the Certificate of Stock Option
Grant, at the exercise price per share set forth in the Certificate of Stock
Option Grant (the “Exercise Price”) subject to the terms, definitions and
provisions of the UTStarcom, Inc. 1997 Stock Plan (the “Plan”) adopted by
Company, which is incorporated herein by reference.  Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option.

 

If designated in the Certificate of Stock Option Grant
as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Internal Revenue
Code ( the “Code”). Nevertheless, to the extent that it exceeds the $100,000 rule of
Code Section 422(d), this Option shall be treated as a Nonstatutory Stock
Option (“NSO”).

 

2.                                       Exercise of Option.

 

(a)                                  Right
to Exercise.  This Option shall be
exercisable during its term in accordance with the Vesting Schedule set
out in the Certificate of Stock Option Grant and with applicable provisions of
the Plan and this Option Agreement.

 

(b)                                 Method
of Exercise. This Option shall be exercisable by delivery of a Cash Letter
of Authorization, which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as may be required by Company.  The Cash Letter of Authorization shall be
accompanied by payment of the aggregate Exercise Price as to All Exercised
Shares.  This Option shall be deemed to
be exercised upon receipt by Company of such fully executed Cash Letter of
Authorization accompanied by the aggregate Exercise Price, together with any
applicable tax withholding.

 

No Shares shall be issued pursuant to the exercise of
an Option unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may be listed.  Assuming such
compliance, for income tax purposes, the Shares shall be considered transferred
to Optionee on the date on which the Option is exercised with respect to such
Shares.

 

3.                                       Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:

 

(a) cash
or check; (b) consideration received by Company under a formal cashless
exercise program adopted by Company in connection with the Plan; or (c) surrender
of other shares which (i) either have been owned by Optionee and not
subject to a substantial risk of forfeiture for more than six (6) months
on the date of surrender or were not acquired, directly or indirectly, from

 

 

Company, and (ii) have
a fair value on the date of surrender equal to the Exercise Price of the Shares
as to which the Option is being exercised.

 

4.                                       Restrictions on Exercise.  This
Option may not be exercised until such time as the Plan has been approved by
the shareholders of Company, or if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation.

 

5.                                       Non-Transferability of Option.  This
Option may not be transferred or assigned in any manner otherwise than by will
or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee.  The
terms of the Plan and this Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of Optionee.

 

6.                                       Term of Option. This Option may be exercised only within the terms set out in the
Certificate of Stock Option Grant and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

 

7.                                       Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event Optionee’s status as a Service Provider terminates as a
result of total and permanent disability (as defined in Section 22(e)(3) of
the Code), Optionee may, but only within twelve (12) months from the date of such
termination (but in no event later than the date of expiration of the term of
this Option as set forth in the Certificate of Stock Option Grant), exercise
the Option to the extent otherwise so entitled at the date of such termination.
 To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option (to the extent otherwise so entitled) within the time
specified within, the Option shall terminate.

 

8.                                       Death of Optionee. The Option may be exercised at any time within
twelve (12) months after Optionee’s death (but in no event later than the date
of expiration of the term of this Option), by Optionee’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent Optionee could exercise the Option at the date of death.

 

9.                                       Change of Control. 
Notwithstanding the provisions of Section 6 above, in the event
Optionee’s status as a Service Provider is terminated following a Change of
Control (defined below), Optionee may, but only within twelve (12) months from
the date of such termination (but in no event later than the date of expiration
of the term of this Option as set forth in the Certificate of Stock Option
Grant), exercise the Option to the extent otherwise so entitled at the date of
such termination.  To the extent that
Optionee was not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option (to the extent otherwise so entitled)
within the time specified within, the Option shall terminate.

 

For
purposes of this Section 9, a “Change of Control” means (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities; or (ii) the
date of the consummation of a merger or consolidation of the Company with any
other corporation that has been approved by the stockholders of the Company,
other than a merger or consolidation which would result in the voting
securities of the

 

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Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (iii) the date of the
consummation of the sale or disposition by the Company of all or substantially
all the Company’s assets.

 

10.                                 Tax Obligations. 

 

(a)                                  Withholding
Taxes.  Optionee agrees to make
appropriate arrangements with the Company (or the Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all Federal, state, and local
income and employment tax withholding requirements applicable to the Option
exercise.  Optionee acknowledges and
agrees that the Company may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of exercise.

 

(b)                                 Notice
of Disqualifying Disposition of ISO Shares. 
If the Option granted to Optionee herein is an ISO, and if Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to the ISO
on or before the later of (1) the date two years after the Date of Grant,
or (2) the date one year after the date of exercise, Optionee will
immediately notify the Company in writing of such disposition.  Optionee agrees that Optionee may be subject
to income tax withholding by the Company on the compensation income recognized
by Optionee.

 

11.                                 Entire Agreement; Governing Law. The Plan is incorporated herein by reference.  The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of
Company and Optionee with respect to the subject matter hereof and may not be
modified adversely to Optionee’s interest, except by means of a writing signed
by Company and Optionee. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.

 

OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF
IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF COMPANY (OR
THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER.
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE RIGHT OF COMPANY
(OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE
OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.

 

Optionee
acknowledges receipt of a copy of the Plan and represents that Optionee is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all the terms and provision thereof. Optionee has reviewed the Plan
and this Option in their entirety, has had an

 

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opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of this Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify Company upon any change in his or her residence address.

 

4Exhibit 10.1

 

PROMISSORY NOTE

 

	
  $400,000.00

  	
   

  	
  Phoenix, Arizona

  
	
   

  	
   

  	
  October 14,
  2005

  
	
   

  	
   

  	
  Note
  Doc.101305400

  

 

FOR VALUED RECEIVED, and
legally bound hereby, RRF LIMITED PARTNERSHIP (“Maker”), a Delaware
partnership, InnSuites Hospitality Trust, General Partner, an Ohio real estate
investment trust, having an office at 1615 East Northern Avenue, Suite 102,
Phoenix, Arizona 85020 hereby promises to pay to the order of Rare Earth
Financial LLC (“Payee”), an Arizona limited liability company, 1615 East
Northern Avenue, Suite 102, Phoenix, Arizona 85020 or a such other place
as the holder hereof may from time to time designate in writing, the principal
sum of FOUR HUNDRED THOUSAND AND 00/100 DOLLARS ($400,000.00), with interest on
the unpaid principal balance thereon from time to time outstanding, at the rate
of seven percent (7.00%) per annum, computed on a three hundred sixty (360)-day
year, to be due and payable in one installment of principal and interest as
follows:

 

(A)                              Commencing
on April 15, 2006, one annual payment of accrued but unpaid interest on
the outstanding principal balance hereunder; and on April 15, 2006 (the “Maturity
date”), one payment in the amount of the then unpaid principal balance
hereunder and all sums and charges due and unpaid by Maker (collectively, the “Note”).

 

Payments shall be applied
first to any charges or sums (other than principal and interest) due and
payable by Maker, second to accrued and unpaid interest on the principal
balance hereof, and then to further reduce the principal balance of this Note.

 

This note is secured in
proportion by units held by RRF Limited Partnership in Tucson Saint Mary’s Suite Hospitality
L.L.C.

 

At any time during the term of this Note Maker may
prepay all or part of the unpaid principal amount of the Note, together with
any accrued and unpaid interest thereon and any other sums or charges due
hereunder without any prepayment premium or penalty.

 

Maker hereby waives for
itself and, to the fullest extent not prohibited by applicable law, for any
subsequent lienor, any right Maker may now or hereafter have under the doctrine
of marshaling of assets or otherwise which would require Payee to proceed
against certain property before proceeding against any other property.

 

Maker hereby agrees that in the event part of principal or interest is
not paid when due or the entire Note is not paid when due, then the rate of
interest on this Note shall, at the election of Payee upon ten (10) days
prior written notice, each of which is hereby expressly waived, be increased to
nine and 00/100 percent (9.00%) per annum or the

 

1

 

highest rate for which the parties may agree under applicable law,
whichever is less (the “Default Rate”). Maker shall be obligated thereafter to
pay interest on the then unpaid principal balance of the Note at the Default
Rate, both before and after judgment, to be computed from the due date through
and including the date of actual receipt of the overdue payment, whether a
payment of interest or the entire Note. 
Nothing herein shall be construed as an agreement or privilege to extend
the date of the payment or any installment or the entire Note, or as a wavier
of any other right or remedy accruing to Payee.

 

In the event that any regular monthly installment of
principal and interest herein provided shall not be received by Payee on the
date such payment is due, Payee shall have the right to assess Maker a late
payment charge in the amount of one-half percent (.5%) of such overdue monthly
installment, which shall become due to Payee for the additional cost incurred
by Payee by reason of such nonpayment. 
The Default Rate will only accrue for periods of delinquent installments
except for when Payee accepts late payments of installments accompanied by a
late payment charge as specified above.

 

Upon any of the following
Events of Default, at the election of Payee, the entire unpaid principle
balance of the Note, together with all accrued but unpaid interest thereon at
the Default Rate and all other sums or changes due hereunder, shall become due
and payable:

 

(a)                                  Maker’s
failure to pay when due any installment required to be paid hereunder, on or
before the tenth (10th) day following the applicable due date;

 

(b)                                 Maker’s
failure to pay when due any other payment required to be under this Note,
subject to any notice and applicable grace period, if any;

 

(c)                                  Maker’s
breach of any other covenant or agreement herein and such breach remains
uncorrected at the expiration of any applicable grace period expressly provided
for herein;

 

(d)                                 Any
creditor’s proceeding in which Maker consents to the appointment or a receiver
or trustee for any of its property;

 

(e)                                  if
any order, judgment or decree shall be entered, without the consent of Maker,
upon an application of a creditor approving the appointment of a receiver or
trustee for any of its property, and such order, judgment, decree, or
appointment is not dismissed or stayed with an appropriate appeal bond within
sixty (60) days following the entry or rendition thereof; or

 

2

 

if
Maker (i) makes a general assignment for the benefit of creditors, (ii) fails
to pay its debts generally as such debts become due, (iii) is found to be
insolvent by a court of competent jurisdiction, (iv) voluntarily files a
petition in bankruptcy or a petition or answer seeking readjustment of debts
under any state or federal bankruptcy or like law, or (v) any such
petition is filed against Maker and is not vacated or dismissed within sixty
(60) days after filling thereof.

 

(f)                                    Maker
and Payee agree that no event of default has occurred by effect of (a) through
(f) above if the event is a result of law or violates any other agreements
that Maker and Payee as President of InnSuites Hospitality Trust, General
Partner of RRF Limited Partnership has agreed.

 

Notice of such election
by Payee is hereby expressly waived as part of the consideration for this
loan.  Nothing contained herein shall be
construed to restrict the exercise of any other rights or remedies granted to
Payee hereunder upon the failure of Maker to perform any provision hereof.

 

If this Note is not paid
when due, whether at maturity or by acceleration, Maker promises to pay all
costs incurred by Payee, including without limitation reasonable attorney’s
fees to the fullest extent not prohibited by law, and all expenses incurred in
connection with the protection or realization of any collateral, whether or not
suit is filed hereon or on any instrument granted a security interest.

 

Maker hereby expressly
acknowledges and represents that the indebtedness is for a business purpose and
not consumer or household purposes.

 

Maker hereby waves
demand, presentment for payment, protest, notice of protest, notice of
non-payments and any and all lack of diligence or delays in collection or
enforcement of this Note, and expressly consents to any extension of time of
payment hereof, release of any party primarily or secondarily liable hereunder
or any of the security for this Note, acceptance of other parties to be liable
for any of the Note or of other security therefore, or any other indulgence or
forbearance which may be made, without notice to any party and without in any
way affecting the liability of any party.

 

No failure by Payee to
exercise any right hereunder shall be construed as a waiver of the right to
exercise the same or any other right any time or from time to time thereafter.

 

This Note shall be
construed and enforced according to, and governed by the laws of the State of
Arizona.

 

3

 

Any notice required
hereunder shall be in writing, and shall be given to the receiving party the
notice by personal delivery or be certified mail, postage prepaid, return
receipt requested, as follows:

 

if to
Payee, then addressed to Payee at 1615 East Northern Avenue Suite 102,
Phoenix, Arizona 85020, (Tel.(602) 944-1500, Fax (602) 678-0281, with a copy to
James W. Reynolds, Esq., Dillingham Cross, P.L.C., 5080 North 40th
Street, Suite 335, Phoenix, Arizona 85018, (Tel.(602) 468-1811, Fax (602)
468-0442);

 

if to
Maker, then addressed to maker at 1615 East Northern Avenue, Suite 102,
Phoenix, Arizona 85020, Attn: President (Tel.(602) 944-1500, Fax (602) 678-0281),
with a copy to James B. Aronoff, Esq., Thompson Hine & Flory,
LLP, 3900 Key center, 127 Public Square, Cleveland, Ohio 44114 (Tel.(216) 566-5500,
Fax (216) 566-5800).

 

Any party may, be given
notice in writing to designate another address as a place for service of
notice. Such notices shall be deemed to be received when delivered, if
delivered in person, or seven (7) business days after deposited in the
United States mails, if mailed as herein above provided.

 

By acceptance of this
Note, Payee agrees that, upon payment in full of the then unpaid principal
balance of this Note, together with all unpaid interest and other sums payable
to Payee under this Note, (a) Note shall be fully satisfied, (b) Payee
shall promptly mark this Note as being paid in full, satisfied and discharged
and shall return the same to Maker.

 

 

	
   

  	
  RRF LIMITED
  PARTNERSHIP, a

  
	
   

  	
  Delaware limited
  partnership,

  
	
   

  	
  InnSuites
  Hospitality Trust, General Partner,

  an Ohio real estate investment trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc E. Berg

  	
   

  
	
   

  	
   

  	
  Name: Marc E. Berg

  
	
   

  	
   

  	
  Title:  
  Executive Vice-President

  

 

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