Exhibit 10.1
UTSTARCOM, INC.
AMENDED AND RESTATED CHANGE OF
CONTROL/INVOLUNTARY
TERMINATION
SEVERANCE
AGREEMENT
This Amended and
Restated Change of Control/Involuntary Termination Severance
Agreement (the “Agreement”) is made and entered into
effective as of January 30, 2008 (the “Effective
Date”), by and between Hong Liang Lu (the
“Employee”) and UTStarcom, Inc., a Delaware
corporation (the “Company”). Certain capitalized
terms used in this Agreement are defined in Section 1
below.
RECITALS
A.
The Company and the Employee previously entered into a Change of
Control Severance Agreement dated January 17, 2003, as amended
November 30, 2007 (the “Amended Agreement”) which
provided the Employee with severance benefits upon the
Employee’s termination of employment under certain
circumstances and pursuant to which Employee agreed that certain
amendments may be required to the Amended Agreement in order to
comply with Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”).
B.
The Board of Directors of the Company (the “Board”)
believes that it is in the best interests of the Company and its
shareholders to amend the terms of the Amended Agreement in order
to comply with Section 409A of the Code and make certain other
changes.
AGREEMENT
In consideration
of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as
follows:
1.
Definition of Terms . The following terms referred to
in this Agreement shall have the following
meanings:
(a)
Cause . “Cause” shall mean (i) any
act of personal dishonesty taken by the Employee in connection with
his responsibilities as an employee which is intended to result in
substantial personal enrichment of the Employee,
(ii) Employee’s conviction of a felony which the Board
reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business, (iii) a
willful act by the Employee which constitutes misconduct and is
injurious to the Company, and (iv) continued willful
violations by the Employee of the Employee’s obligations to
the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the
basis for the Company’s belief that the Employee has not
substantially performed his duties.
(b)
Change of Control . “Change of Control”
shall mean the occurrence of any of the following
events:
(i)
the
approval by shareholders of the Company of a merger or
consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the total voting power
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represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;
(ii)
the
approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company’s assets;
(iii)
any
“person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becoming the “beneficial
owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
50% or more of the total voting power represented by the
Company’s then outstanding voting securities; or
(iv)
a
change in the composition of the Board, as a result of which fewer
than a majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or
(iii) or in connection with an actual or threatened proxy
contest relating to the election of directors of the
Company.
(c)
Good Reason . “Good Reason” shall mean,
without the Employee’s express written consent, (i) a
significant reduction of the Employee’s duties, position or
responsibilities relative to the Employee’s duties, position
or responsibilities in effect immediately prior to such reduction,
or the removal of the Employee from such position, duties and
responsibilities, unless the Employee is provided with comparable
duties, position and responsibilities; provided, however, that the
sole occurrence of the Company being acquired and made part of a
larger entity shall not constitute a “Good Reason;”
(ii) a reduction by the Company of the Employee’s base
salary as in effect immediately prior to such reduction;
(iii) a material reduction by the Company in the kind or level
of employee compensation or benefits to which the Employee is
entitled immediately prior to such reduction with the result that
the Employee’s overall benefits package is significantly
reduced; (iv) the relocation of the Employee to a facility or
a location where such relocation increases the distance the
Employee must travel to work by more than thirty (30) miles from
the Employee’s commute prior to the relocation; (v) any
purported termination of the Employee by the Company which is not
effected for Cause or for which the grounds relied upon are not
valid; or (vi) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in
Section 10 below.
(d)
Involuntary Termination . “Involuntary
Termination” shall mean any termination (other than a
termination for Cause) of the Employee by the
Company.
(e)
Termination Date . “Termination Date”
shall mean the effective date of any notice of termination
delivered by one party to the other hereunder.
2.
Term of Agreement . This Agreement will have a term of
three (3) years commencing on the Effective Date.
Following the expiration of the three-year term, the Employee and
the Company may, but are not obligated to, enter into a new
agreement. If Employee’s employment continues following
the expiration of the three-year term, and the Company and Employee
do not enter into a new agreement, Employee’s then current
benefits arrangements shall continue in accordance with the terms
of this Agreement until the Parties agree
otherwise.
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3.
At-Will Employment . The Company and the Employee
acknowledge that subject to the provisions of this Agreement, the
Employee’s employment is and shall continue to be at-will, as
defined under applicable law. If the Employee’s
employment terminates for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation
other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee
benefit plans or policies at the time of
termination.
4.
Severance Benefits .
(a)
Termination Following A Change of Control . If the
Employee’s employment with the Company terminates as a result
of a Good Reason or an Involuntary Termination at any time within
eighteen (18) months after a Change of Control, Employee shall
be entitled to the following severance benefits:
(i)
twenty-four (24) months of Employee’s base salary as in
effect as of the date of such termination, less applicable
withholding, payable in a lump sum within thirty (30) days of
the termination date; provided, however, that if Employee is a
Specified Employee at the time of such termination,
then
payment shall be delayed as provided for in
Section 5;
(ii)
two hundred percent (200%) of Employee’s full annual
performance target bonus for the year in which the termination
occurs, payable in a lump sum within thirty (30) days of the date
of termination; provided, however, that if Employee is a Specified
Employee at the time of such termination, then payment shall be
delayed as provided for in Section 5;
(iii) all
equity awards, including without limitation stock option grants,
restricted stock and stock purchase rights, granted by the Company
to the Employee prior to the Change of Control shall become fully
vested or released from the Company’s repurchase right (if
any shares of stock purchased by or granted to the Employee prior
to the Change of Control remain subject to such repurchase right)
and exercisable as of the date of the termination to the extent
such equity awards are outstanding and unexercisable or unreleased
at the time of such termination. The Employee’s equity
awards shall be exercisable until the earliest of (a) twelve
(12) months from the Employee’s date of termination,
(b) the latest date the equity award could have expired by its
original terms under any circumstances, (c) the tenth (10
th ) anniversary of the original date of grant of the
equity award, or (d) the date provided for under the equity
plan under which the award was granted; and
(iv)
an amount equal to twelve (12) months of health insurance premiums
for continuation coverage pursuant to the Consolidated Omnibus
Reconciliation Act of 1985 as amended (“COBRA”) at the
same level of health (i.e., medical, vision and dental) coverage
and benefits as in effect for the Employee on the day immediately
preceding the day of the Employee’s termination of
employment, payable in a lump sum within thirty (30) days of the
date of termination; provided, however, that if Employee is a
Specified Employee at the time of such termination,
then
payment shall be delayed as provided for in Section 5
.
(b)
Termination Apart from a Change of Control . If the
Employee’s employment with the Company terminates as a result
of a Good Reason or an Involuntary Termination during the term of
this Agreement, then the Employee shall be entitled to the
following severance benefits:
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(i)
twenty-four (24) months of Employee’s base salary as in
effect as of the date of such termination, less applicable
withholding, payable in a lump sum within thirty (30) days of
the termination; provided, however, that if Employee is a Specified
Employee at the time of such termination, then payment shall be
delayed as provided for in Section 5;
(ii)
one hundred percent (100%) of Employee’s full annual
perfo
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