Exhibit 10.1
UTSTARCOM, INC.
AMENDED AND RESTATED CHANGE OF
CONTROL/INVOLUNTARY TERMINATION
SEVERANCE AGREEMENT
This Change of
Control/Involuntary Termination Severance Agreement (the
“Agreement”) is made and entered into effective as of
November 30, 2007 (the “Effective Date”), by and
between Hong Liang Lu (the “Employee”) and UTStarcom,
Inc., a Delaware corporation (the “Company”).
Certain capitalized terms used in this Agreement are defined in
Section 1 below.
RECITALS
A.
The Company and the
Employee previously entered into a Change of Control Severance
Agreement dated January 17, 2003 which provided the Employee with
severance benefits upon the Employee’s termination of
employment under certain circumstances (the “Original
Agreement”).
B.
The Board of Directors of
the Company (the “Board”) believes that it is in the
best interests of the Company and its shareholders to provide the
Employee with enhanced financial security and sufficient
encouragement to remain with the Company and wishes to augment
certain terms of the Original Agreement, which is hereby amended
and restated in its entirety.
AGREEMENT
In consideration
of the mutual covenants herein contained and the continued
employment of Employee by the Company, the parties agree as
follows:
1.
Definition of
Terms .
The following terms referred to in this Agreement shall have the
following meanings:
(a)
Cause
.
“Cause” shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his
responsibilities as an employee which is intended to result in
substantial personal enrichment of the Employee,
(ii) Employee’s conviction of a felony which the Board
reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business, (iii) a
willful act by the Employee which constitutes misconduct and is
injurious to the Company, and (iv) continued willful
violations by the Employee of the Employee’s obligations to
the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the
basis for the Company’s belief that the Employee has not
substantially performed his duties.
(b)
Change of
Control .
“Change of Control” shall mean the occurrence of any of
the following events:
(i)
the approval by
shareholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;
(ii)
the approval by the
shareholders of the Company of a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s
assets;
(iii)
any “person”
(as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the
“beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company
representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities;
or
(iv)
a change in the
composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors.
“Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date hereof, or
(B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of those directors
whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or
(iii) or in connection with an actual or threatened proxy
contest relating to the election of directors of the
Company.
(c)
Good Reason
. “Good
Reason” shall mean (i) without the Employee’s
express written consent, a significant reduction of the
Employee’s duties, position or responsibilities relative to
the Employee’s duties, position or responsibilities in effect
immediately prior to such reduction, or the removal of the Employee
from such position, duties and responsibilities, unless the
Employee is provided with comparable duties, position and
responsibilities; provided, however, that a reduction in duties,
position or responsibilities solely by virtue of the Company being
acquired and made part of a larger entity shall not constitute a
“Good Reason;” (ii) without the Employee’s
express written consent, a substantial reduction, without good
business reasons, of the facilities and perquisites (including
office space and location) available to the Employee immediately
prior to such reduction; (iii) a reduction by the Company of
the Employee’s base salary as in effect immediately prior to
such reduction; (iv) a material reduction by the Company in
the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that
the Employee’s overall benefits package is significantly
reduced; (v) without the Employee’s express written
consent, the relocation of the Employee to a facility or a location
more than fifty (50) miles from his current location;
(vi) any purported termination of the Employee by the Company
which is not effected for Cause or for which the grounds relied
upon are not valid; or (vii) the failure of the Company to
obtain the assumption of this Agreement by any successors
contemplated in Section 9 below.
(d)
Involuntary
Termination . “Involuntary Termination”
shall mean any termination (other than a termination for Cause) of
the Employee by the Company.
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(e)
Termination
Date .
“Termination Date” shall mean the effective date of any
notice of termination delivered by one party to the other
hereunder.
2.
Term of
Agreement . This Agreement will have a term of
three (3) years commencing on the Effective Date.
Following the expiration of the three-year term, the Employee and
the Company may, but are not obligated to, enter into a new
agreement. If Employee’s employment continues following
the expiration of the three-year term, and the Company and Employee
do not enter into a new agreement, Employee’s then current
benefits arrangements shall continue in accordance with the terms
of this Agreement until the Parties agree otherwise.
3.
At-Will
Employment . The Company and the Employee
acknowledge that subject to the provisions of this Agreement, the
Employee’s employment is and shall continue to be at-will, as
defined under applicable law. If the Employee’s
employment terminates for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation
other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee
benefit plans or policies at the time of termination.
4.
Severance
Benefits .
(a)
Termination Following A
Change of Control . If the Employee’s employment with
the Company terminates as a result of a Good Reason or an
Involuntary Termination at any time within eighteen
(18) months after a Change of Control, Employee shall be
entitled to the following severance benefits:
(i)
twenty-four
(24) months of Employee’s base salary as in effect as of
the date of such termination, less applicable withholding, payable
in a lump sum within thirty (30) days of the termination
date;
(ii)
two hundred percent (200%)
of Employee’s full annual performance target bonus for the
year in which the termination occurs, payable in a lump sum within
thirty (30) days of the date of termination;
(iii)
all equity awards,
including without limitation stock option grants, restricted stock
and stock purchase rights, granted by the Company to the Employee
prior to the Change of Control shall become fully vested or
released from the Company’s repurchase right (if any shares
of stock purchased by or granted to the Employee prior to the
Change of Control remain subject to such repurchase right) and
exercisable as of the date of the termination to the extent such
equity awards are outstanding and unexercisable or unreleased at
the time of such termination. The Employee shall be permitted
to exercise his vested equity awards (including awards that vest as
a result of the Agreement) for twelve (12) months from the
date of termination; and
(iv)
an amount equal to twelve
(12) months of health insurance premiums for continuation coverage
pursuant to the Consolidated Omnibus Reconciliation Act of 1985 as
amended (“COBRA”) at the same level of health (i.e.,
medical, vision and dental) coverage and benefits as in effect for
the Employee on the day immediately preceding the day of the
Employee’s termination of employment, payable in a lump sum
within thirty (30) days of the date of termination.
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(b)
Termination Apart from
a Change of Control . If the Employee’s employment with
the Company terminates as a result of a Good Reason or an
Involuntary Termination during the term of this Agreement, then the
Employee shall be entitled to the following severance
benefits:
(i)
twenty-four
(24) months of Employee’s base salary as in effect as of
the date of such termination, less applicable withholding, payable
in a lump sum within thirty (30) days of the
termination;
(ii)
one hundred percent (100%)
of Employee’s full annual performance target bonus for the
year in which the termination occurs, payable in a lump sum within
thirty (30) days of the termination;
(iii)
all equity awards,
including without limitation stock option grants, restricted stock
and stock purchase rights, grante
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