By Karen Freifeld

(Reuters) - China’s No. 2 telecommunications equipment maker ZTE secured a lifeline from the Trump administration on Thursday after agreeing to pay a $1 billion fine and overhaul leadership in a deal that will lift a ban on its doing business with U.S. suppliers.

The agreement comes as U.S. President Donald Trump seeks trade concessions from China and negotiations continue to avoid a trade war between the world's two largest economies.

Shares of U.S. companies that do business with ZTE rose on Thursday.

U.S. lawmakers immediately attacked the agreement, citing intelligence warnings that ZTE poses a national security threat.

ZTE pleaded guilty last year to conspiring to evade U.S. embargoes by selling U.S. equipment to Iran. The ban on buying U.S. parts was imposed in April after the company lied about disciplining some executives responsible for the violations. ZTE then ceased major operations.

Under the deal, ZTE will change its board and management within 30 days, pay a $1 billion fine and put an additional $400 million in escrow. The deal also includes a new 10-year ban that is suspended unless there are future violations.

"We will closely monitor ZTE's behavior," Ross said in a statement. "If they commit any further violations, we would again be able to deny them access to U.S. technology as well as collect the additional $400 million in escrow."

Reuters reported exclusively on Tuesday that ZTE had signed a preliminary agreement with the Commerce Department, along with the fine and other terms.

Ross said the penalty is the largest the Commerce Department has ever levied.

The agreement does not take effect until ZTE pays the $1 billion fine and puts the $400 million in escrow, which is likely to take at least a few days, according to a person familiar with the matter.

ZTE did not immediately respond to requests for comment on Thursday.

Under the new agreement, ZTE must also retain a compliance team selected by the Commerce Department for 10 years. The company already has a U.S. court-appointed monitor.

#VeryBadDeal

U.S. senators said they plan legislation to roll back the agreement.

"I assure you with 100 percent confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe," Republican U.S. Senator Marco Rubio tweeted with the hashtag #VeryBadDeal.

U.S. intelligence agencies have concluded that ZTE poses a "significant" national security threat.

"ZTE is a state-controlled telecommunications company that poses significant espionage risks, which this agreement appears to do little to address," U.S. Senator Mark Warner, the top Democrat on the Intelligence Committee, said in a statement.