<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 23, 1999
REGISTRATION NO. 333-93069
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
UTSTARCOM, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3661 52-1782500
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1275 HARBOR BAY PARKWAY, SUITE 100
ALAMEDA, CA 94502
(510) 864-8800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
HONG L. LU
PRESIDENT AND CHIEF EXECUTIVE OFFICER
UTSTARCOM, INC.
1275 HARBOR BAY PARKWAY, SUITE 100
ALAMEDA, CA 94502
(510) 864-8800
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
STEVEN E. BOCHNER, ESQ. ALAN F. DENENBERG, ESQ.
STEVEN L. BERSON, ESQ. Shearman & Sterling
CARMEN C. CHANG, ESQ. 1550 El Camino Real
Wilson Sonsini Goodrich & Rosati Menlo Park, CA 94025-4100
Professional Corporation (650) 330-2200
650 Page Mill Road
Palo Alto, CA 94304-1050
(650) 493-9300
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for same offering. / / __________
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The purpose of this Amendment No. 1 is solely to file exhibits to the
Registration Statement as set forth below as in Item 16 of Part II.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale and
distribution of the securities being registered. All amounts are estimates
except the Securities and Exchange Commission registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
Securities and Exchange Commission registration fee......... $33,000
NASD filing fee............................................. 13,000
Nasdaq National Market listing fee..........................
Printing and engraving expenses.............................
Legal fees and expenses.....................................
Accounting fees and expenses................................
Blue sky fees and expenses.................................. 10,000
Transfer agent and registrar fees...........................
Director and officer insurance premiums.....................
Miscellaneous expenses......................................
-------
Total.......................................................
=======
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, we can indemnify
any person who is, or is threatened to be made, a party to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative other than action by us or on our behalf, by
reason of the fact that such person is or was one of our officers or directors,
or is or was serving at our request as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that such officer or director acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to our best
interests, and, for criminal proceedings, had no reasonable cause to believe his
or her conduct was illegal. Under Delaware law, we may also indemnify officers
and directors in an action by us or on our behalf under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to us in the performance of his or
her duty. Where an officer or director is successful on the merits or otherwise
in the defense of any action referred to above, we must indemnify him or her
against the expenses which such officer or director actually and reasonably
incurred.
Our certificate of incorporation contains a provision to limit the personal
liability of our directors for violations of their fiduciary duty. This
provision eliminates each director's liability to us or our stockholders for
monetary damages to the fullest extent permitted by Delaware law. The effect of
this provision is to eliminate the personal liability of directors for monetary
damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
Our bylaws provide for indemnification of our officers and directors to the
fullest extent permitted by applicable law.
We have entered, or concurrently with this offering, will enter, into
indemnification agreements with our directors and officers, a form of which is
attached as Exhibit 10.1 and incorporated by
II-1
<PAGE>
reference to this registration statement. The indemnification agreements provide
indemnification to our directors and officers under certain circumstances for
acts or omissions which may not be covered by directors' and officers' liability
insurance. We intend to obtain directors' and officers' liability insurance,
which will insure against liabilities that our directors or officers may incur
in such capacities.
The purchase agreement, a form of which is attached as Exhibit 1.1 to this
registration statement, provides for indemnification by the underwriters of us
and our officers and directors, and by us of the underwriters, for certain
liabilities arising under the Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since December 1996, we have issued and sold the following securities which
were not registered under the Securities Act:
(i) Between October 1995 and December 1996, we issued and sold
14,492,752 shares of our Series B preferred stock to one investor for an
aggregate purchase price of $29,999,996.64.
(ii) Between December 1996 and January 1997, we issued and sold
13,589,056 shares of our Series C preferred stock to six investors for an
aggregate purchase price of $46,746,352.64.
(iii) In October 1997, we issued and sold 8,032,128 shares of our
Series D preferred stock to two investors for an aggregate purchase price of
$49,999,996.80.
(iv) In October 1997, we issued 13,686,000 shares of our common stock to
an entity in connection with our acquisition of Talent Group
(International), Limited.
(v) In October 1997, we issued and sold 581,824 shares of common stock
to an entity for an aggregate purchase price of $200,002 upon the entity's
exercise of warrants.
(vi) Between October 1997 and March 1998, we issued an aggregate of
30,269,318 shares of our Series E preferred stock in a one-to-one exchange
of our common stock held by participating stockholders.
(vii) In February 1998, we issued a warrant to purchase 32,000 shares of
our common stock at an exercise price of $2.50 per share to one investor.
(viii) In September 1999, we issued a warrant to purchase 500,000 shares
of our common stock at an exercise price of $6.25 per share to one investor.
(ix) Between November 1999 and December 1999, we issued and sold an
aggregate of 6,152,106 shares of our Series F preferred stock to three
investors for an aggregate purchase price of $50,000,011.
(x) In December 1999, we issued an aggregate of 4,523,700 shares of our
Series G preferred stock in connection with the acquisition of our
subsidiary, Wacos, Inc., through a merger.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in reliance
upon Section 4(2) of the Securities Act, or Regulation D promulgated thereunder,
or Rule 701 promulgated under Section 3(b) of the Securities Act, as
transactions by an issuer not involving any public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensations
as provided under Rule 701. The recipients of securities in each such
transaction represented to us their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the securities
issued in such transactions. All recipients had adequate access, through their
relationships with us, to information about us.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
1.1* Form of U.S. Purchase Agreement.
1.2* Form of International Purchase Agreement.
2.1** Distribution Agreement dated July 30, 1999 between
UTStarcom, Inc. and DirecTouch Communications Limited.
2.2** Agreement and Plan of Merger dated December 14, 1999 between
UTStarcom, Inc. and Wacos, Inc.
3.1** Twelfth Amended and Restated Certificate of Incorporation of
UTStarcom, Inc., as currently in effect.
3.2** Form of Thirteenth Amended and Restated Certificate of
Incorporation of UTStarcom, Inc. to be filed following the
closing of the offering pursuant to this registration
statement.
3.3** Bylaws of UTStarcom, Inc. as currently in effect.
3.4** Form of Amended and Restated Bylaws of UTStarcom, Inc. to be
in effect immediately following the closing of the offering
pursuant to this registration statement.
4.1* Specimen Common Stock Certificate.
4.2** Third Amended and Restated Registration Rights Agreement
dated December 14, 1999.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1** Form of Indemnification Agreement.
10.2** 1992 Omnibus Equity Incentive Plan and form of related
agreement.
10.3** 1995 Stock Plan and forms of related agreements.
10.4** 1997 Stock Plan, as amended, and forms of related
agreements.
10.5** 2000 Employee Stock Purchase Plan and forms of related
agreements.
10.6** Common Stock Purchase Warrant dated February 5, 1998 between
UTStarcom, Inc. and Lintech Limited.
10.7** Common Stock Purchase Warrant dated September 20, 1999
between UTStarcom, Inc. and Talent Group International, Ltd.
10.8** Employment and Non-Competition Agreement dated October 6,
1995 between UTStarcom, Inc. and Hong Lu.
10.9** Employment and Non-Competition Agreement dated October 6,
1995 between UTStarcom, Inc. and Ying Wu.
10.10+ Product Manufacture & License Agreement dated May 13, 1997
between UTStarcom, Inc. and Tollgrade Communications, Inc.
10.11+ Sales Agreement dated February 12, 1999 between UTStarcom
(China) Ltd. and BaoDing Telecommunication Bureau, Hebei
Province.
10.12+ Sales Contract dated August 23, 1999 between UTStarcom
(China) Ltd. and Xi'an Telecommunication Bureau.
10.13*+ Technical License and Assistance Agreement dated
November 2, 1999 between UTStarcom, Inc. and Mitsubishi
Electric Corporation.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
10.14+ Technical Assistance Agreement dated October 1, 1999 between
Matsushita Communication Industrial Co. Ltd. and UTStarcom,
Inc.
10.15*+ Joint Product Development and Marketing Memorandum and
Understanding dated September 2, 1999 between UTStarcom,
Inc. and Matsushita Communication Industrial Co., Ltd.
10.16+ Joint Patent Filing Agreement dated December 1, 1998 between
UTStarcom, Inc. and Matsushita Communication Industrial Co.,
Ltd.
10.17** Loan Agreement dated June 15, 1998 between UTStarcom, Inc.
and SOFTBANK Corp.
10.18(a)+ Loan Agreement dated March 9, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(b)+ Loan Agreement dated June 7, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(c)+ Loan Agreement dated June 29, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(d)+ Loan Agreement dated July 7, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(e)+ Loan Agreement dated July 14, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(f)+ Loan Agreement dated July 21, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(g)+ Loan Agreement dated August 5, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(h)+ Loan Agreement dated August 17, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(i)+ Loan Agreement dated September 2, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(j)+ Loan Agreement dated September 17, 1999 between Bank of
China and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.19+ Joint Venture Agreement dated July 31, 1997 between
UTStarcom, Inc. and Zhejiang Telecommunication Equipment
Factory.
10.20+ Joint Venture Agreement dated December 8, 1995 between
UTStarcom, Inc. and Chinese Guangdong Nanfeng
Telecommunication Group Co. Ltd.
10.21+ Joint Venture Agreement dated September 12, 1997 between
UTStarcom, Inc. and Zhejiang Nantian Post and
Telecommunication Development Group Co. Ltd.
10.22 Lease dated December 23, 1997 between UTStarcom, Inc. and
Tech Center Partners.
10.23 Lease Agreement dated April 1995, as amended, between
UTStarcom, Inc. and Metro Park Associates.
10.24 Lease Agreements dated December 31, 1997 and May 14, 1998
between Guangdong UTStarcom Telecom Co., Ltd. and Guangdong
Southern Telecom Group Huizhou Company.
10.25 Lease Contract dated December 15, 1996 between UTStarcom
(Hangzhou) Telecommunications Co., Ltd. and Yile Village,
Gudang Township.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
21.1** List of Subsidiaries of UTStarcom, Inc. (see Note 1 to Notes
to Consolidated Financial Statements).
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
24.1** Power of Attorney (see page II-6).
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for certain portions of this
exhibit pursuant to Rule 406 under the Securities Act. In accordance with
Rule 406, these confidential portions have been omitted from this exhibit
and filed separately with the Commission.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, UTStarcom, Inc.
has duly caused this Amendment No. 1 to Registration Statement on Form S-1 to be
signed on its behalf by the undersigned thereunto duly authorized, in the City
of Alameda, State of California, on the 23rd day of December, 1999.
<TABLE>
<S> <C> <C>
UTSTARCOM, INC.
By: /s/ MICHAEL SOPHIE
-----------------------------------------
Michael Sophie
CHIEF FINANCIAL OFFICER AND ASSISTANT
SECRETARY
</TABLE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement on Form S-1 has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
*
--------------------------------- Chairman of the Board of Directors December 23, 1999
Masayoshi Son
* President, Chief Executive Officer
--------------------------------- and Director (Principal Executive December 23, 1999
Hong Liang Lu Officer)
/s/ MICHAEL SOPHIE Chief Financial Officer and
--------------------------------- Assistant Secretary (Principal December 23, 1999
Michael Sophie Financial and Accounting Officer)
*
--------------------------------- Director December 23, 1999
Ying Wu
*
--------------------------------- Director December 23, 1999
Charles Xue
*
--------------------------------- Director December 23, 1999
Yoshitaka Kitao
*
--------------------------------- Director December 23, 1999
Chauncey Shey
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
*
--------------------------------- Director December 23, 1999
Thomas Toy
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ MICHAEL SOPHIE
--------------------------------------
Michael Sophie
ATTTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
1.1* Form of U.S. Purchase Agreement.
1.2* Form of International Purchase Agreement.
2.1** Distribution Agreement dated July 30, 1999 between
UTStarcom, Inc. and DirecTouch Communications Limited.
2.2** Agreement and Plan of Merger dated December 14, 1999 between
UTStarcom, Inc. and Wacos, Inc.
3.1** Twelfth Amended and Restated Certificate of Incorporation of
UTStarcom, Inc., as currently in effect.
3.2** Form of Thirteenth Amended and Restated Certificate of
Incorporation of UTStarcom, Inc. to be filed following the
closing of the offering pursuant to this registration
statement.
3.3** Bylaws of UTStarcom, Inc. as currently in effect.
3.4** Form of Amended and Restated Bylaws of UTStarcom, Inc. to be
in effect immediately following the closing of the offering
pursuant to this registration statement.
4.1* Specimen Common Stock Certificate.
4.2** Third Amended and Restated Registration Rights Agreement
dated December 14, 1999.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1** Form of Indemnification Agreement.
10.2** 1992 Omnibus Equity Incentive Plan and form of related
agreement.
10.3** 1995 Stock Plan and forms of related agreements.
10.4** 1997 Stock Plan, as amended, and forms of related
agreements.
10.5** 2000 Employee Stock Purchase Plan and forms of related
agreements.
10.6** Common Stock Purchase Warrant dated February 5, 1998 between
UTStarcom, Inc. and Lintech Limited.
10.7** Common Stock Purchase Warrant dated September 20, 1999
between UTStarcom, Inc. and Talent Group International, Ltd.
10.8** Employment and Non-Competition Agreement dated October 6,
1995 between UTStarcom, Inc. and Hong Lu.
10.9** Employment and Non-Competition Agreement dated October 6,
1995 between UTStarcom, Inc. and Ying Wu.
10.10+ Product Manufacture & License Agreement dated May 13, 1997
between UTStarcom, Inc. and Tollgrade Communications, Inc.
10.11+ Sales Agreement dated February 12, 1999 between UTStarcom
(China) Ltd. and BaoDing Telecommunication Bureau, Hebei
Province.
10.12+ Sales Contract dated August 23, 1999 between UTStarcom
(China) Ltd. and Xi'an Telecommunication Bureau.
10.13*+ Technical License and Assistance Agreement dated
November 2, 1999 between UTStarcom, Inc. and Mitsubishi
Electric Corporation.
10.14+ Technical Assistance Agreement dated October 1, 1999 between
Matsushita Communication Industrial Co. Ltd. and UTStarcom,
Inc.
10.15*+ Joint Product Development and Marketing Memorandum and
Understanding dated September 2, 1999 between UTStarcom,
Inc. and Matsushita Communication Industrial Co., Ltd.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
10.16+ Joint Patent Filing Agreement dated December 1, 1998 between
UTStarcom, Inc. and Matsushita Communication Industrial Co.,
Ltd.
10.17** Loan Agreement dated June 15, 1998 between UTStarcom, Inc.
and SOFTBANK Corp.
10.18(a)+ Loan Agreement dated March 9, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(b)+ Loan Agreement dated June 7, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(c)+ Loan Agreement dated June 29, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(d)+ Loan Agreement dated July 7, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(e)+ Loan Agreement dated July 14, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(f)+ Loan Agreement dated July 21, 1999 between Bank of China and
UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(g)+ Loan Agreement dated August 5, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(h)+ Loan Agreement dated August 17, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(i)+ Loan Agreement dated September 2, 1999 between Bank of China
and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.18(j)+ Loan Agreement dated September 17, 1999 between Bank of
China and UTStarcom Hangzhou Telecommunications Co., Ltd.
10.19+ Joint Venture Agreement dated July 31, 1997 between
UTStarcom, Inc. and Zhejiang Telecommunication Equipment
Factory.
10.20+ Joint Venture Agreement dated December 8, 1995 between
UTStarcom, Inc. and Chinese Guangdong Nanfeng
Telecommunication Group Co. Ltd.
10.21+ Joint Venture Agreement dated September 12, 1997 between
UTStarcom, Inc. and Zhejiang Nantian Post and
Telecommunication Development Group Co. Ltd.
10.22 Lease dated December 23, 1997 between UTStarcom, Inc. and
Tech Center Partners.
10.23 Lease Agreement dated April 1995, as amended, between
UTStarcom, Inc. and Metro Park Associates.
10.24 Lease Agreements dated December 31, 1997 and May 14, 1998
between Guangdong UTStarcom Telecom Co., Ltd. and Guangdong
Southern Telecom Group Huizhou Company.
10.25 Lease Contract dated December 15, 1996 between UTStarcom
(Hangzhou) Telecommunications Co., Ltd. and Yile Village,
Gudang Township.
21.1** List of Subsidiaries of UTStarcom, Inc. (see Note 1 to Notes
to Consolidated Financial Statements).
23.1 Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
- ---------------------
<C> <S>
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1)
24.1** Power of Attorney (see page II-6).
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
+ Confidential treatment has been requested for certain portions of this
exhibit pursuant to Rule 406 under the Securities Act. In accordance with
Rule 406, these confidential portions have been omitted from this exhibit
and filed separately with the Commission.
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
PRODUCT MANUFACTURE AND LICENSE AGREEMENT
BY AND BETWEEN
UTSTARCOM, INC.
AND
TOLLGRADE COMMUNICATIONS, INC.
DATED: MAY 13, 1997
<PAGE>
PRODUCT MANUFACTURE AND LICENSE AGREEMENT
THIS AGREEMENT, dated as of May 14, 1997 is entered into by and between
UTSTARCOM, INC., a _____________________ corporation with an office at 33 Wood
Avenue South, 8th Floor, Iselin, New Jersey 08830 (herein called "UTStarcom"),
and TOLLGRADE COMMUNICATIONS, INC., a Pennsylvania corporation with its
principal offices at 493 Nixon Road, Cheswick, Pennsylvania 15024 (herein called
"Tollgrade").
WHEREAS, UTStarcom has developed certain UTStarcom Licensed Know-How,
as defined herein, which would enable Tollgrade to produce versions of the
Product, as defined herein, that would be compatible with UTStarcom's System, as
defined herein; and
WHEREAS, Tollgrade desires the right and license to use the UTStarcom
Licensed Know-How and apply the same to production of the Product; and
WHEREAS, UTStarcom is willing to grant, and represents that it has the
right to grant, such right and license to Tollgrade under all of the terms and
conditions of this Agreement.
NOW, THEREFORE, the parties, in consideration of the premises and
mutual covenants contained herein, intending to be legally bound, do hereby
agree as follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, each of the terms identified below
shall have the meaning set forth.
1.1 "CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 6.
1.2 "EFFECTIVE DATE" means the date as described in Section 4.1 hereof.
1.3 "PARTY" shall mean either UTStarcom or Tollgrade, as the case may
be, and "Parties" shall mean both of them.
1.4 "PRODUCT" means that switchable MCU-Registered Trademark-
product for [*], designed and manufactured by Tollgrade and to which
Tollgrade will apply the UTStarcom Licensed Know-How in order to produce
versions of such products compatible with UTStarcom's System.
1.5 "PURCHASE PRICE" shall have the meaning set forth in Section 3
hereof. All amounts are denominated in U.S. dollars.
1.6 "TERM" shall have the meaning set forth in Section 4.1 hereof.
1.7 "TERRITORY" means [*].
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
1
<PAGE>
1.8 "TOLLGRADE LICENSED KNOW-HOW" shall include but not be limited to
technical information, interface component, intellectual property (including any
existing patents owned by or licensed to Tollgrade which Tollgrade has a right
to license, and any patents granted pursuant to applications now pending,
including any and all reissues and patent applications to be filed in the United
States or other countries), hardware, software, firmware, discoveries,
inventions, copyrights, trade methods, technology, designs, plans, drawings,
business secrets, samples, schematics, blueprints, formulations, test
instructions and processes relating to Tollgrade's MCU-Registered Trademark-
products and related information that will be used by Tollgrade in connection
with its development and production of the Product hereunder.
1.9 "UTSTARCOM LICENSED KNOW-HOW" shall include but not be limited to
technical information, interface components, intellectual property (including
any existing patents owned by or licensed to UTStarcom which UTStarcom has a
right to license, and any patents/ranted pursuant to applications now pending,
including any and all reissues and patent applications to be filed in the United
States or other countries), hardware, software, firmware, discoveries,
inventions, copyrights, trade methods, technology, designs, plans, drawings,
business secrets, samples, schematics, blueprints, formulations, test
instructions and processes relating to UTStarcom's System.
1.10 "UTSTARCOM'S SYSTEM" means UTStarcom's AN-2000 carrier system.
SECTION 2. DEVELOPMENT; DELIVERABLES AND GRANT.
2.1 DEVELOPMENT. Set forth on Exhibit A attached hereto and made a part
hereof is the schedule for development, review and field testing of the Product.
The schedule includes each Parties' responsibilities in the development effort,
including deliverables of components required for development and production.
Tollgrade shall use its best efforts to incorporate the UTStarcom Licensed
Know-How into the Product to produce a version of such Product that will be
compatible with UTStarcom's System. The Parties shall use their best efforts to
comply with the scheduling requirements of Exhibit A, but shall not be liable
for their failure to do so.
2.2 UTSTARCOM DELIVERABLES. Set forth on Exhibit A are certain
deliverables to be provided by UTStarcom, including one fully operational
end-to-end AN-2000 system with documentation (referred to as "System 1") and a
second such AN-2000 system with six remote terminal banks (referred to as
"System 2"). It will be necessary for Tollgrade to use System 1 during the
development and testing phases of this Agreement. UTStarcom agrees to provide
System 1 to Tollgrade [*], for Tollgrade's use during the development phase.
System 1 will be returned to UTStarcom by Tollgrade upon completion of
development and testing. It will be necessary for Tollgrade to use System 2
during the production phase of this Agreement. UTStarcom agrees to lend System 2
to Tollgrade for a period of [*] from the delivery date. At the end of such [*]
period, Tollgrade shall have the option to purchase System 2 from UTStarcom [*],
or return System 2 to UTStarcom [*] to Tollgrade. Tollgrade shall not be
responsible for reasonable wear and tear to System 1 or System 2 as a result of
Tollgrade's proper use for development, testing or production. UTStarcom shall
also provide, [*], face plates for the Product. At UTStarcom's option, Tollgrade
will install the face plates, provided that UTStarcom notifies Tollgrade with
its order for Product that it desires for the faceplates to be installed by
Tollgrade and UTStarcom provides Tollgrade with the necessary faceplates at that
time. If UTStarcom does not so notify Tollgrade, the Product will be shipped to
UTStarcom without faceplates for installation by UTStarcom.
2.3 GRANT. Subject to the terms of this Agreement and commencing on the
Effective Date; UTStarcom hereby grants to Tollgrade a [*] right and license to
use and practice the
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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UTStarcom Licensed Know-How in order to incorporate such UTStarcom Licensed
Know-How into the manufacture, design, engineering and service of the Product in
the Territory. Tollgrade shall have the right to manufacture, design and
engineer the Product in the Territory. Unless otherwise agreed, the license set
forth herein shall not include, and, except as otherwise specifically provided
herein, UTStarcom shall exclusively reserve for itself, the right to market or
sell the Product in the Territory under UTStarcom's private label. UTStarcom
represents and warrants to Tollgrade that it shall, at all times when Product is
available for marketing or sale under this Agreement, use its best efforts to
market and sell the Product in the Territory. Other than the Product, Tollgrade
shall not design or manufacture any other AN-2000-compatible units without the
prior written consent of UTStarcom. However, Tollgrade shall not be restricted
or construed in anyway from applying the Tollgrade Licensed Know-How in other
applications to systems manufactured by other system vendors in modified or
similar form, or from using such Tollgrade Licensed Know-How, unmodified by the
UTStarcom Licensed Know-How, in any other application whatsoever.
2.4 FUTURE IMPROVEMENTS OF UTSTARCOM LICENSED KNOW-HOW. To the extent
any improvements to the UTStarcom Licensed Know-How are developed after the
Effective Date and such improvements are not provided to Tollgrade, the Parties
hereto acknowledge and agree that Tollgrade shall not be responsible or liable
for any incompatibility of the Product with UTStarcom's System as modified by
such future improvements to the UTStarcom Licensed Know-How.
2.5 TOLLGRADE LICENSED KNOW-HOW. Subject to the restrictions of
Section 5 hereof and the other terms of this Agreement, and commencing on the
Effective Date, Tollgrade hereby grants to UTStarcom a [*] right and license
to use the Tollgrade Licensed Know-How in the market, sale and support of the
Product in the Territory under UTStarcom's private label, subject to the
confidentiality restrictions set forth in Section 6 hereof. Nothing herein
shall be interpreted to allow UTStarcom to use the Tollgrade Licensed
Know-How for any purpose other than in connection with the market, sale and
support of the Product in the Territory. In addition, UTStarcom may not
sublicense its rights under this Agreement without Tollgrade's prior written
consent.
2.6 PRODUCT SUPPORT. Following development of the Product, Tollgrade
shall provide UTStarcom with [*] of service and training for up to [*], [*].
Tollgrade will provide UTStarcom with additional training or presentations at
the cost of [*], plus reimbursement for reasonable travel expenses, to
be scheduled as mutually agreed by the Parties. Any training, service and
presentations to be provided by Tollgrade at the cost outlined above shall be
only within [*]. Any training, service and presentations required outside of the
continental United States shall be separately negotiated by the Parties. Any
repair or other support services provided to UTStarcom by Tollgrade, outside of
those required by warranty, shall be charged at Tollgrade's standard charges for
such services.
2.7 CERTIFICATIONS OR APPROVALS. UTStarcom will obtain, at its sole
cost and expense, any certifications or approvals required for the sale,
marketing or utilization of the Produce by UTStarcom or its customers.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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SECTION 3. ORDERING, PURCHASE AND PAYMENT.
3.1 FORECASTS. During the manufacturing phase of this Agreement, and
for the remainder of the Term, UTStarcom will provide Tollgrade with
quarterly forecasts which will specify expected monthly volumes of Product
that UTStarcom anticipates ordering from Tollgrade for the next quarter. In
preparing and submitting such forecasts, UTStarcom acknowledges that
Tollgrade will be relying on such forecasts in planning capital, labor and
any other expenditures necessary to meet the anticipated volumes. As a
result, Tollgrade must ship to UTStarcom only that number of Product on a
monthly basis which is within [*] of the monthly forecasted volumes. (For
example, if the monthly forecast is [*], but UTStarcom submits purchase
orders for [*], Tollgrade will only be obligated to ship up to [*] for that
month.) In the event that UTStarcom submits orders for a number of Product
which exceeds [*] of the monthly forecast, Tollgrade and UTStarcom will work
together to negotiate a mutually acceptable delivery schedule.
3.2 ORDERING. UTStarcom will, from time to time, cause its United
States based operations to submit purchase orders to Tollgrade, which purchase
order will specify the number of units of Product to be shipped and the delivery
address, which shall be within the United States. The Parties agree that the
Tollgrade terms and conditions of sale, including any special payment or credit
terms that may be imposed on a going-forward basis by Tollgrade, shall apply to
any sale hereunder, notwithstanding the terms of the UTStarcom purchase order.
To the extent that UTStarcom can establish a credit and payment history with
Tollgrade that is reasonably satisfactory to Tollgrade, Tollgrade may permit
payment terms of net 30 with possible lot size limitations. If the Tollgrade
payment or credit terms conflict with the terms of this Agreement, then the
terms of this Agreement shall control. Subject to the limitations of Section 3.1
above, within thirty (30) days after receipt of the purchase order, Tollgrade
will ship the Product to the location specified. All shipments will be F.O.B.
shipping point designated as Tollgrade's, business address in Cheswick,
Pennsylvania.
3.3 NON-RECURRING ENGINEERING CHARGES. UTStarcom shall pay to Tollgrade
certain Non-recurring Engineering Charges ("NRE") for its development efforts,
as specified below:
3.3.1 CONTRACT SIGNING. Upon execution of this Agreement by
the Parties, but no later than May 14, 1997, prior to release of
prototypes UTStarcom will pay to Tollgrade an NRE in the amount of [*].
3.3.2 PROTOTYPE ACCEPTANCE. Provided that Tollgrade has
delivered acceptable prototype units to UTStarcom by the date specified
on Exhibit A, UTStarcom will pay to Tollgrade a second NRE in the
amount of [*] on or before [*].
3.3.3 PILOT RELEASE. Within [*] following Tollgrade's Pilot
Release date (projected to be near [*]), UTStarcom will pay to
Tollgrade a third NRE in the amount of [*].
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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<PAGE>
3.4 MINIMUM PURCHASE COMMITMENT. UTStarcom agrees that, following
completion of successful field testing, UTStarcom shall purchase from
Tollgrade at least [*] of the Product, with [*] to be ordered and delivered
on or before [*] and an additional [*] to be ordered and delivered on or
before [*]. The purchase price for these [*] of Product shall be [*] (herein
referred to as the "Initial Purchase Price"), and UTStarcom agrees that it
shall pay cash in advance or upon delivery for the purchase of these [*]. In
the event that UTStarcom fails to purchase this minimum quantity hereunder,
UTStarcom agrees that it shall pay to Tollgrade, within [*] of [*], a sum
equal to the Initial Purchase Price for these units; [*].
3.5 PURCHASE PRICE AND PAYMENT. During the Term of the Agreement,
UTStarcom shall pay to Tollgrade, for each unit of Product purchased hereunder,
a price as follows:
3.5.1 PURCHASE PRICE. In the event that UTStarcom meets the
minimum volume commitment for purchase of Product, as specified in
Section 3.4, UTStarcom shall be entitled to purchase, until [*], an
additional [*] of Product at the Initial Purchase Price. After [*],
UTStarcom shall pay Tollgrade an amount equal to [*] per Product for
each unit of Product purchased from Tollgrade (herein referred to as
the "Purchase Price").
3.6 RESTOCKING CHARGE. For any unit of Product returned to Tollgrade
by UTStarcom (other than units returned as a result of warranty claims),
Tollgrade will, to the extent UTStarcom has already paid the Purchase Price
for such Product, refund to UTStarcom [*] of the Purchase Price for such
unit. To the extent UTStarcom has not yet paid the Purchase Price for such
returned Product at the time of return, Tollgrade will credit to UTStarcom
the [*] fee. The [*] remainder of the Purchase Price is a restocking charge
which will not be refunded or credited to UTStarcom, but will be retained by
Tollgrade.
3.7 INTEREST. If any fee, charge or payment payable under this
Agreement is not paid on the due date thereof, it shall bear interest from the
due date until the date paid at a rate equal to [*].
SECTION 4. TERM AND TERMINATION.
4.1 EFFECTIVE DATE AND TERM. The Effective Date of this Agreement shall
be as of the date last signed below. The initial term of this Agreement shall
commence as of the Effective Date and shall continue for an initial two (2) year
period, and shall automatically be renewed thereafter on a year-to-year basis,
unless the Agreement is terminated as provided below in Section 4.2. Following
the initial term of the Agreement, Tollgrade shall be entitled to modify its
prices upon each annual renewal, with sixty (60) days prior written notice to
UTStarcom.
4.2 TERMINATION. Each of UTStarcom and Tollgrade shall be entitled to
terminate this Agreement at any time, upon ninety (90) days prior written notice
to the other Party.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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4.3 UTSTARCOM'S OBLIGATIONS IN THE EVENT OF TERMINATION. In the event
UTStarcom terminates this Agreement during any period that UTStarcom is subject
to the minimum volume requirement specified in Section 3.4 above, UTStarcom
shall remain obligated to purchase such minimum requirements in accordance with
the terms of Section 3.4, or in the absence of such purchase, pay the sums
specified therein, and shall remain obligated under any outstanding orders. In
the event UTStarcom terminates this Agreement or abandons the development effort
prior to successful field testing of the Product, UTStarcom shall pay to
Tollgrade a termination fee equal to [*] less any amounts paid to
Tollgrade by UTStarcom for NRE as defined in Section 3.3 of the Agreement,
payable within sixty (60) days of such termination or abandonment. Therefore,
upon payment in full by UTStarcom of all NRE amounts due under the Agreement,
UTStarcom will not be required to pay this termination fee if it terminates the
Agreement. The Parties agree that this sum is a reasonable estimate of the
damages that would be suffered by Tollgrade in the event of such termination or
abandonment, and is not intended as a penalty.
SECTION 5. TOLLGRADE'S PRODUCTS.
Notwithstanding, anything that may be implied herein, but subject to
the limited license grated to UTStarcom to use Tollgrade Licensed Know-How as
specified in Section 2.4 above, any of Tollgrade's technical information,
components or other intellectual property that are used in the manufacture,
development, engineering, sale Or marketing of the Product, or that encompass
any component of or are derived from the benefit of the UTStarcom Licensed
Know-How, shall remain the sole and exclusive property of Tollgrade. UTStarcom
shall not disassemble, alter, reverse engineer or change the Product in any
manner whatsoever while such Product is in the possession of UTStarcom.
UTStarcom shall also obtain a covenant to this effect to the benefit of
Tollgrade from any third party end user of the Product. In the event there is
any malfunction or otherwise is a need to alter, change or disassemble the
Product, UTStarcom shall immediately notify Tollgrade prior to taking any such
action for resolution of the matter.
SECTION 6. CONFIDENTIALITY.
6.1 CONFIDENTIAL INFORMATION. Each of Tollgrade and UTStarcom agree to
hold the other's ideas, inventions, proprietary technical information, trade
secrets, know-how and confidential business information, including the UTStarcom
Licensed Know-How and the Tollgrade Licensed Know-How ("Confidential
Information"), in confidence and each such Party shall not use or disclose such
Confidential Information to third parties except as provided in this Agreement.
The Parties will use their best efforts to have all Confidential Information be
in writing and suitably identified. Said information shall be treated by each
Party as it would treat its own Confidential Information.
6.2 EXCEPTIONS. Not included within the restrictions set forth above
shall be information: (a) published or otherwise made available to the public
other than by a breach of this Agreement by the receiving Party; (b) known to a
Party hereto before disclosure by the other Party; (c) rightfully received by a
Party hereunder from an independent third party without restrictions on
disclosures; (d) approved in writing for release by the disclosing Party, or
known to or independently developed by the receiving Party without reference to
such information; (e) furnished to a third party by the disclosing Party without
a similar restriction on the third party's right to publish or disseminate; or
(f) disclosed pursuant to a
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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<PAGE>
court order, provided the other Party receives prior written notification of
such court order and is given the opportunity to restrict or stop such
disclosure.
6.3 RETURN OF DOCUMENTS. Upon termination of this Agreement, the
receiving Party shall turn over to the disclosing Part, all plans,
specifications, drawings, documents, or other writings and recorded materials of
any kind embodying the disclosing Party's Confidential Information.
SECTION 7. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
7.1 WARRANTIES AND DISCLAIMER. Each unit of Product sold hereunder will
be accompanied by Tollgrade's [*] limited warranty. Defective components will be
repaired or replaced at Tollgrade's option. OTHER THAN AS SPECIFICALLY PROVIDED
HEREIN, TOLLGRADE SPECIFICALLY DISCLAIMS ANY AND ALL OTHER WARRANTIES, WHETHER
EXPRESS, IMPLIED OR STATUTORY, INCLUDING THE WARRANTIES OF MERCHANTABILITY,
MARKETABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
7.2 NO CONFLICT. Tollgrade and UTStarcom warrant that they have the
right to enter into and perform this Agreement. This Agreement neither
contradicts nor constitutes a breach of any other agreement or obligation to
which Tollgrade or UTStarcom is subject.
7.3 UTSTARCOM REPRESENTATION AND WARRANTY. UTStarcom represents and
warrants that in the event the UTStarcom Licensed Know-How is being infringed,
or is being used, as the case may be, by a third party other than Tollgrade and
such third party has no right to do so, UTStarcom shall take all such actions as
are necessary and appropriate to enjoin such unauthorized infringement or use.
UTStarcom represents and warrants that (i) use of the UTStarcom Licensed
Know-How by Tollgrade for the manufacture, marketing and sale of the Product,
and (ii) the performance by UTStarcom under this Agreement, will not infringe
upon any upon the patent rights, trade secrets, or any other proprietary
confidential information of a third party. UTStarcom warrants that the UTStarcom
Licensed Know-How shall be of the same form and content as used by UTStarcom in
the UTStarcom System, and except for inadvertent error, will be in accordance
with the most recent practice at UTStarcom at the time of delivery.
7.4 UTSTARCOM INDEMNITY. UTStarcom shall, at its sole expense, defend
and hold Tollgrade, its officers, directors, shareholders, employees, agents,
affiliate corporations, successors and assigns, free and harmless from all
losses, costs and damages in respect to any claim, action or suit, or for any
claim arising out of any such action or suit for infringement upon any patent or
proprietary rights of a third party or based on the use of the UTStarcom
Licensed Know-How, or for actively inducing infringement, or for contributory
infringement arising out of the performance of any action by Tollgrade under
this Agreement; provided, however, that Tollgrade may be represented in any such
action or suit by attorneys of its own selection, at Tollgrade's expense. In the
event that any injunction shall be obtained against the use of the UTStarcom
Licensed Know-How, or against the design or manufacture of the Product by
Tollgrade, in addition to its above obligations, UTStarcom shall, at the option
of Tollgrade and at UTStarcom's expense, procure for Tollgrade the right to
continue using said UTStarcom Licensed Know-How and design and manufacturing of
the Product under the infringed patent or proprietary rights, or modifying said
UTStarcom Licensed Know-How to become non-infringing.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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7.5 TOLLGRADE INDEMNITY. Tollgrade shall, at its sole expense, defend
and hold UTStarcom, its officers, directors, shareholders, employees, agents,
affiliate corporations, successors and assigns, free and harmless from all
losses, costs and damages in respect to any claim, action or suit, or for any
claim arising out of any such action or suit for infringement upon any patent or
proprietary rights of a third party or based on the use of any of Tollgrade's
components, or for actively inducing infringement, or for contributory
infringement arising out of the performance of any action by UTStarcom under
this Agreement; provided, however, that UTStarcom may be represented in any such
action or suit by attorneys of its own selection, at UTStarcom's expense. In the
event that any injunction shall be obtained against the use of the Tollgrade
components, or against the marketing or sale of the Product by UTStarcom, in
addition to its above obligations, Tollgrade shall, at the option of UTStarcom
and at Tollgrade's expense, procure for UTStarcom the right to continue using
said Tollgrade components and marketing and sale of the Product under the
infringed patent or proprietary rights, or modifying said Tollgrade components
to become non-infringing.
7.6 NOTICE OF CLAIM. Each Party shall promptly inform the other about
any claims under patent rights of third parties and shall impart all details
referring thereto, and the indemnifying Party shall have the right and
obligation to defend against said claims as provided in and subject to Sections
7.4 and 7.5 above.
7.7 EXCLUSIVE REMEDY. The provisions in Sections 7.4 and 7.5 above set
forth the sole and exclusive rights and obligations of UTStarcom and Tollgrade
with respect to any infringement or claim of infringement as to the Product.
SECTION 8. GENERAL PROVISIONS
8.1 NO CONSEQUENTIAL DAMAGES. In no event shall either Party be liable
for special, indirect, incidental, or consequential damages, whether arising
from or based upon breach of warranty, breach of contract, tort, including
negligence, indemnity or any other cause or basis whatsoever.
8.2 LIMITATION OF LIABILITY. Tollgrade's total liability hereunder,
whether arising from breach of warranty, breach of contract or tort, including
liability arising from Tollgrade's negligence, strict liability, indemnity or
any other cause or basis whatsoever, is expressly limited to the compensation
actually received by Tollgrade hereunder.
8.3 TRADEMARK RIGHTS. At all times that UTStarcom uses the trademark
"MCU" or otherwise refers to the "Metallic Channel Unit" in connection with its
sale or support of Product hereunder, it shall acknowledge Tollgrade's
proprietary rights therein.
8.4 NOTICES. All notices and other communications between the Parties
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given and received when delivered by hand, facsimile or mailed first
class, postage prepaid to the following addresses:
If to Tollgrade: Tollgrade Communications, Inc.
493 Nixon Road
Cheswick, Pennsylvania 15024
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Fax: (412) 274-8014
Attention: Christian L. Allison,
Chief Executive Officer
If to UTStarcom: UTStarcom, Inc.
33 Wood Avenue South, 8th Floor
Iselin, New Jersey 08830
Fax: (908) 548-1099
Attention: Chang Kao
or to such other address or telephone number as to which notice has been duly
given.
8.5 GOVERNING LAW. This Agreement shall be governed by and construed
according to the laws of the Commonwealth of Pennsylvania.
8.6 ENTIRE AGREEMENT. This Agreement and all of its exhibits forming a
part hereof, all incorporated herein by this reference, constitute the complete
and entire statement of the agreement between the Parties hereto with respect to
the subject matter of this Agreement and any and all prior or contemporaneous
proposals, negotiations, agreements, commitments and representations, oral or
written, are merged herein.
8.7 AMENDMENTS. No amendment or alteration may be made to this
Agreement in any manner other than in writing, and no such amendment or
alteration shall be effective unless signed by a duly authorized officer of each
of the Parties.
8.8 WAIVER. No delay or omission by either Party to exercise any right
or power hereunder shall impair such right or power nor shall be construed to be
a waiver thereof. A waiver by either Party of any breach thereof shall not be
construed to be a waiver of any succeeding breach thereof or of any other
covenant contained herein.
8.9 INVALIDITY. If any provision of this Agreement, or portion hereof,
violates applicable law, such provision or portion thereof shall be void and the
remainder of this Agreement shall remain in full force and effect.
8.10 CAPTIONS. The sections and headings contained in this Agreement
are for ease of reference only and shall not in any way affect the meaning or
interpretation of this Agreement.
8.11 INDEPENDENT CONTRACTOR. Nothing contained in this Agreement shall
be construed to constitute a relationship between the Parties hereto as one of
employer/employee, principal/agent, partnership, joint venture, or evidence that
either Party intends to constitute such a relationship. Each Party hereto shall
not hold itself out contrary to the terms of this Section 8.11 and each Party
shall not become liable or be bound by any representations, act, or omission
whatsoever of the other Party hereto contrary to the provisions of this
Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Agreement by their
duly authorized officers as of the date indicated below.
UTSTARCOM, INC. TOLLGRADE COMMUNICATIONS, INC.
By: /s/ Paul Berkowitz By: /s/ Sara M. Antol
-------------------------------- -----------------------------
Print Name: Paul Berkowitz Print Name: Sara M. Antol
----------------------- ---------------------
Title: V.P. Product Planning Title: Chief Counsel & Secretary
---------------------------- --------------------------
Date: 14 May 1997 Date: May 15, 1997
----------------------------- ---------------------------
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EXHIBIT A
SCHEDULE AND DELIVERABLES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
ITEM RESPONSIBLE PARTY DATE
---- ----------------- ----
<S> <C> <C>
- --------------------------------------------------------------------------------------------
All relevant AN-2000 interface
Information required for the Integration
of the Product UTStarcom [*]
- --------------------------------------------------------------------------------------------
OEM Agreement Review Both Parties [*]
- --------------------------------------------------------------------------------------------
OEM Agreement Executed Both Parties [*]
- --------------------------------------------------------------------------------------------
Fully operational end-to-end AN-2000
system with Associated documentation
delivered to Tollgrade (System 1) for
development and testing UTStarcom [*]
- --------------------------------------------------------------------------------------------
3 AN-2000 Extender Cards applicable for
testing the Product delivered to
Tollgrade UTStarcom [*]
- --------------------------------------------------------------------------------------------
10 prototype units of Product sent to
UTStarcom in Iselin, NJ Tollgrade [*]
- --------------------------------------------------------------------------------------------
Fully operational end-to-end AN-2000
system with 6 remote terminal banks
delivered to Tollgrade (System 2) for
production UTStarcom [*]
- --------------------------------------------------------------------------------------------
Product available for sale to UTStarcom Tollgrade [*]
- --------------------------------------------------------------------------------------------
</TABLE>
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
CONTRACT
CONTRACT NO.: UTA-BJ-9902006
PRE-DATE: 1999-02-12
CONCLUDED IN: Baoding City, Hebei Province
THE BUYER: THE SELLER:
Baoding Telecom Burea, Hebei UT STARCOM (CHINA) LTD.
Baoding City, Hebei Province
Tel: (0312) 3061816 Tel: (010)-65542030
Fax: (0315) 3060000 Fax: (010)-65512058
TAX Register No.: 110108734116590
Bank Where Account [*]
Opened & A/C Number:
This contract is made between the BUYER and the SELLER, whereby the
BUYER agrees to buy and the SELLER agrees to sell the under-mentioned
commodities and services according to the terms and conditions as stipulated
hereafter:
1. TOTAL CONTRACT PRICE: [*]
2. COMMODITIES, SERVICES, SPECIFICATIONS, QUANTITY AND PRICES:
3. COUNTRY OF ORIGIN AND MANUFACTURER'S NAME:
UT Starcom (China), Inc.
4. DATE OF SHIPMENT:
4/10/1999
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
5. PLACE OF SHIPMENT:
Hangzhou, ZheJiang Province
6. PLACE OF DESTINATION:
Baoding Telecom Breau, Hebei Province
7. PACKING:
The goods shall be packed in new strong case(s) / carton(s) suitable
for long distance transportation and well protected against dampness, moisture,
shock, and rust. The SELLERS shall be liable for any damage to the goods on
account of improper packing and for any rust damage attributable to inadequate
or improper protective measures taken by the SELLERS.
8. SHIPPING MARK:
On the surface of each package, the package number, measurements, gross
weight, the lifting positions, such cautions as "DO NOT STACK UP SIDE DOWN",
"HANDLE WITH CARE", "KEEP AWAY FROM MOISTURE" and the following shipping mark
shall be stenciled legibly in faceless paint:
9. TRANSPORTATION:
10. PAYMENT CONDITIONS:
10.1 General
All payments by the BUYER to the SELLER shall be
effected in RMB (the exchange rate of which is determined as
the foreign currency middle price offered by the People's Bank
of China on the same day of transfer) by telegraphic transfer
to the Fu Hua Branch of Zhong Xin Bank of China, account
number is [*].
10.2 Equipment & Paying
(1) [*]
[*] [*]
(2) [*]
[*] [*]
(3) [*]
[*] [*]
(4) [*]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
-2-
<PAGE>
[*] [*]
(5) [*]
[*] [*]
10.3 In the event that a payment required by 10.2 isn't
made by the BUYER within the time period specified, the BUYER shall pay to
the SELLER, in addition to the amount owed, a late payment fee of [*] of the
amount owed per week or part thereof for each week the payment is delayed.
The total amount of penalty shall not, however, exceed [*] of the total value
of the goods.
11. WARRANTY:
The SELLER warrants items supplied hereunder to be free from defects in
workmanship and material. The SELLER'S warranty for Equipment and Material will
commence upon delivery of the goods and will continue for a period of [*].
During the Warranty period the SELLER will, at its option, either repair or
replace items not conforming to the above warranty. If the BUYER determines that
any items should be returned, the SELLER shall bear transportation charges for
items returned to the SELLER in the PRC and return of the repaired or replaced
items to the installation site.
12. INSPECTION AND CLAIMS:
12.1 Within seven (7) days after the arrival of the goods
at the place of destination, the packages shall be opened by the BUYERS in the
presence of the SELLER, shall be checked and signed jointly by the
representatives of the BUYER and SELLER.
12.2 In case of missing parts or damage due to the
SELLER'S faulty packing, the BUYER shall make a detailed record on the site, the
representatives of the BUYER and SELLER shall make and sign a protocol. Such
certificate or protocol may be utilized as proper evidence for replacement of
missed or damaged parts. Replacement of missing parts or repair of damaged parts
shall be completed in accordance with the provisions of Article 11, Warranty.
13. FORCE MAJEURE:
The SELLER shall not be liable for any loss, damage, delay or failure
of performance resulting directly or indirectly from any cause which is beyond
its reasonable control including, but not limited to the laws, regulations, acts
or failure to act of any governmental authority. If performance under this
contract is prevented for two (2) months or longer by any of the foregoing
causes, SELLER or BUYER shall have the right to terminate this Contract by
giving written notice to the other party.
14. LATE DELIVERY AND PENALTY:
In case of delayed shipment, except for force majeure, the SELLER shall
pay to the BUYER for every week of delay a penalty amounting to [*] of the
total value of the goods whose shipment has been delayed. Any fractional part of
a week is to be considered as a full week. The total amount
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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of penalty shall not, however, exceed [*] of the total value of the goods
involved in late shipment and is to be deducted from the amount due at the
time of payment. In case the period of delay exceeds 10 weeks after the
stipulated shipment date the BUYER has the right to terminate this Contract
but the SELLERS shall still be liable for payment of the penalty, if
applicable.
15. CONFIDENTIALITY, USE OF INFORMATION AND EXPORT CONTROL:
15.1 All documentation, technical information, business
information and all software and related documentation (all herein after
designated as "Information") which SELLER has furnished and which is indicated
as being confidential or proprietary shall remain SELLER'S property, SELLER
grants BUYER the right to use such Information subject to the following
conditions:
15.1.1 Such Information shall be treated in
confidence (except for any part thereof which is known to the BUYER to be free
of any obligation to keep in confidence) and used by the BUYER only to the
extent necessary to use, operate and repair the Equipment and Material.
15.2 BUYER agrees that it will not transmit any product
furnished here under to any third party, without the consent of the SELLER.
15.3 The obligations of the parties under this article
shall survive any expiration or termination of this Contract.
16. ARBITRATION:
Both Parties shall strictly execute the contract in accordance with the
relevant laws and regulations of P.R.C. All disputes in connection with the
execution of the contract hereof shall be settled through mutual understanding
and friendly negotiation. In case no settlement can be reached through
negotiations, either party can apply to the appropriate organization for
arbitration or mediation. The arbitration fee shall be borne by the losing
party.
17. LIMITATION OF LIABILITY:
17.1 In the event of any breach of this Contract by
SELLER, or of any loss or injury to the BUYER arising out of this Contract for
which the SELLER is liable to the BUYER, the SELLER'S total cumulative liability
for all such breaches, losses, and injuries shall be the lesser of:
17.1.1 The actual value of the injury or loss to
the BUYER.
17.1.2 The total payments made to the SELLER.
18. VALIDITY, TERMINATION OF THE CONTRACT AND MISCELLANEOUS:
18.1 This Contract will come into force after being sealed
by both parties and signed by the representatives of both parties.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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18.2 This Contract will be terminated after both parties
have fulfilled their respective duties and obligations.
18.3 This Contract may be amended only by an instrument in
writing signed and sealed by the duly authorized representative of each party.
18.4 During implementation of this Contract, all notices
between the parties shall be by certified mail, telex or facsimile.
19. REMARKS:
This Contract is made in two original copies, one copy to be held by
each party.
20.
21. NOTES:
THE BUYER: THE SELLER:
(Signature) (Signature)
Baoding Telecom Breau, UT STARCOM (CHINA) LTD.
Hebei Province
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
SALES CONTRACT OF PAS-TM- SYSTEM FOR XIAN TELECOMMUNICATION BUREAU
Contract Serial No.: UTXAO-199908-1-01 Project Serial No.: XI'AN-PAS
Buyer: Seller:
Xian Telecommunication Bureau UTStarcom (China) Co., Ltd.
Address: Address:
No. 28 Lianhu Road Fl. 11, Beihaiwantai Building
Xian No. 6 Chaoyangmenbeidajie
Dongcheng District, Beijing 100027
Tel.: 029-3288900 Tel.: 010-65542030
Fax: 029-3288900 Fax: 010-66542058
Taxpayer's Registration Number: 110108600045544
Bank of Account Establishment and Account No.:
Bank of Industry and Commerce, Chaoyang Branch, Ritan Subbranch
Account Number: [*]
This Contract is made between and by the Seller and the Buyer. In
accordance with the provisions of this Contract, the Buyer agrees to buy and the
Seller agrees to sell the following commodities:
1. Scope of the Contract:
PAS personal wireless cut-in system equipment (including hardware and
software) and related materials and services. Please see the attachment
for details.
2. Contract Price
The total price of the "equipment" and "services" is as follows:
[*]
The rate of conversion was based on the median price of the foreign
exchange rate of RMB827.74/USD100 published by the Bank of China on
August 20, 1999.
3. Country of Production and Name of Manufacturer: UTStarcom (Hangzhou)
Telecom Co., Ltd.
4. Schedule of Delivery: The goods shall be delivered in four
installments, and the last installment of which shall arrive at the
site designated by the Buyer no later than [*].
5. Site of Hand over of the Goods: Goods and Materials Supply Center
of Xian Telecommunications Bureau
(Person of Contact: Li Ximin, No. 6 Renhouzhuangbeilu, Xian)
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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6. Site of Delivery of the Goods: Goods and Materials Supply Center of
Xian Telecommunications Bureau (Person of Contact: Li Ximin, No. 6
Renhouzhuangbeilu, Xian)
7. Packaging
The goods shall be packed in solid wooden boxes, good for long-distance
transportation and proof from rain, moisture, earthquake and rust. The
Seller shall be held responsible totally for any damage resulted from
poor packaging or any damage related to dust caused by inadequate and
improper protective measures.
8. Packing Marks
The Seller shall use fast ink to clearly mark on each packaging case
the number, size, gross weight and such signs as "this side up",
"please handle with care" and "keep from moisture" along with packing
marks.
9. Transportation
Any cost and risk occurred prior to the official hand-over of the goods
at the site of delivery designated by the Buyer shall be borne by the
Seller.
10. Terms of Payment
The terms of payment for the equipment are as follows:
10.1 The Buyer shall make a prepayment to the Seller, equal to [*]
of the total Contract price for such equipment within [*]
upon execution of the Contract in the amount of [*]. If the
prepayment is delayed, the schedule of delivery for the
last installment of the goods shall be postponed
correspondingly.
10.2 Within [*] upon delivery of the goods, the Buyer shall, pay
the Seller [*] of the total Contract price for such
equipment in the amount of [*].
10.3 Within [*] upon qualification of an initial testing of the
equipment, the Buyer shall pay [*] of the total Contract
price in the amount of [*].
10.4 Within [*] upon the date of final testing (which should
begin within [*] after the initial test), the Buyer shall
pay [*] of the total Contract price for such equipment in
the amount of [*].
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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11. Guarantee for Good Repair
11.1 The Seller guarantees that the devices provided will be
free from faults both in technology and materials. The
period of guarantee for good repair provided by the Seller
for the equipment and materials is [*] beginning from the
date of qualification for the system's initial testing.
During the period of such guarantee for good repair, the
Buyer may opt to have the foregoing unqualified equipment
and materials under guarantee repaired or replaced. If the
Buyer decides that some parts should be returned to the
Seller, then the Seller shall bear the transportation cost
for the returned parts or in the case of repaired or
returned parts, the transportation cost to the site of
installation.
11.2 Any damages caused by carelessness, improper handling,
accidents or misuse shall not be included in the list below
of guarantee for good repair under the provisions of
Article 11.1.
11.2.1 Any damage caused by a third party's wiring,
repair or replacement other than the Seller and
its agent;
11.2.2 Any third party's improper installation, storage,
operations and maintenance other than the Seller
and its agent; and
11.2.3 Any removal from the site of installation, or
components that are easy to wear and tear such
wire fuses, luminous tubes, electric brushes for
electric motors.
12. Inspection and Claims
12.1 Within three (3) business days upon arrival of the goods at
the destination, the Buyer shall open the boxes with the
Seller present at the site. The representatives of the parties
shall make an inventory of the goods and affix their
signatures.
12.2 If, due to the improper packaging on the part of the Seller,
some parts are found missing or damaged, the Buyer shall make
a detailed record at the site of installation, or may
commission China Commodities Inspection Bureau to have another
inspection, or the representatives of the Buyer and the Seller
may draft and execute a memorandum. Such certificates or
memorandum may serve as appropriate documents to make up for
the missing parts or repair the damages ones, which shall be
implemented according to the terms of guarantee set forth in
Article 11.
13. Installation and Debugging
It is the responsibility of the Seller to supervise and guide the
installation of the equipment and it is the responsibility of the Buyer
to install the equipment. In order to guarantee the progress of
installation and its quality for such equipment as well as to lay down
the preparatory work for such project pursuant to the schedule set
forth in the Contract, the Buyer shall have adequate contingent of
qualified installation personnel while the Seller shall also have
adequate and qualified personnel for the guidance of the project and
the debugging of the system.
14. Test and Acceptance
14.1 The Seller shall be responsible for the installation design,
supervision and guidance of the equipment and the debugging of
the system. During the course of installation and opening, the
Buyer shall assist the Seller in technical management and
other related work. The installation of equipment and the
opening of access shall be carried out in accordance with the
schedule of progress set forth in the attachment.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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14.2 With regard to the specific contents and requirements of the
inspection and acceptance, the Seller shall submit them to the
Buyer in writing for approval [*] before the test and
acceptance work starts. Initial test shall be conducted within
[*] after the opening and number release of the system, and
the period of time for acceptance upon testing shall not
exceed [*] (except for the postponement caused by the Seller).
If the testing results are up to the test and acceptance
standards mentioned above, they shall be deemed as being
qualified for the initial test. If the initial test fails to
meet the standards, the Seller shall be responsible for the
adjustment and a new
round of test shall be conducted until the "equipment" reaches
the quality index set forth for such work. But minor problems
shall not affect the validity of an initial test certificate.
14.3 The final test shall start within [*] upon execution of the
initial test certificate by the parties. If the final test
meets the test and acceptance standards, the parties shall
sign the final test certificate within [*]. During the [*]
trial operation, the Seller shall ensure the normal operation
of the equipment. If, during the period of a final test, the
Seller is held accountable for any malfunction occurred as a
result of failure to meet the standards during the foregoing
trial operations, the final test shall start anew at that
time. The final test shall only be completed until all the
standards of test and acceptance for the equipment are met.
14.4 The test and acceptance of the system shall be based on the
provisions for terminal equipment illustrated on the book of
general technical standards for telephone exchange equipment ,
the "compilation subscribers' cut-in network documents and
technical provisions" and "the book of general technical
standards for cut-in network equipment" (Provisional
Regulations) set forth by the former Ministry of Post and
Telecommunications on cut-in network equipment and other
acceptance conditions agreed upon by the parties.
15. After-Sale Services
15.1 The Seller shall provide maintenance services [*] for [*]
after the final test, and, moreover, [*] technical support
shall be provided. A technical support center will be set up
in Xian to ensure that any emergency calls shall be answered
promptly and technical personnel dispatched to the site within
[*].
15.2 During the period of maintenance for the system, the Seller
shall provide such services pursuant to the provisions of
Article 11.1.
15.3 Upon expiration of the maintenance period for the equipment,
the Seller shall continue providing services for the repair of
such equipment in case of malfunction, and the Seller further
guarantees that backup or substitute equipment be provided at
a preferential price.
16. Force Majeure
The Seller shall not be held liable for any losses, damages or delay of
delivery of or functional damages to the goods caused, whether directly
or indirectly, by such act which is beyond the scale of reasonable
control by the Seller and which is not limited to the laws and
regulations imposed by the authorities of any government. If the
delivery of goods under this Contract is delayed for more than two
months
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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due to any one of the above-mentioned reasons, either the Seller
or the Buyer shall be entitled to terminate this Contract by notifying
the other party in writing.
17. Arbitration
The parties shall implement this Contract rigorously in accordance with
the relevant laws and regulations of the People's Republic of China.
Any dispute arising from or in connection with the execution of the
Contract shall be settled through consultation on the basis of mutual
understanding and friendliness. If such consultation fails to reach an
agreement, any party may apply for an arbitration at Xian Arbitration
Commission. The arbitral cost shall be covered by the losing party.
18. Limited Liability
18.1 In case the Seller breaches the Contract or the Buyer suffers
from any losses or damages under this Contract due to the
Seller's fault, the total aggregated amount for such breach,
losses or damages that the Seller is liable for shall be lower
than the following:
18.1.1 The actual value afflicted upon the Buyer by such
losses or damages.
18.1.2 The total amount paid to the Seller.
18.2 The Seller shall not be responsible for any indirect or
supplementary losses or damages arising out of this Contract.
19. Patents
The Sellers guarantees that the "equipment" does not infringe upon any
third party's patents or ownership. If a third party lodges a claim
upon the "equipment" used by the Buyer, the Buyer has the right to
refuse it, and then notify the Seller immediately. The Seller shall
take the responsibility to solve such problems, and the Buyer shall be
bear any legal and economic responsibilities. The Seller shall
compensate any direct losses caused therefrom to the Buyer.
20. Confidentiality
Unless permitted by the Seller in writing, the Buyer agrees that it
shall not disclose any technical document or data related to this
Contract including this Contract to any party that has nothing to do
with this Contract, nor shall it transfer any equipment out of the
People's Republic of China. These confidential principles shall apply
to any other party related to this Contract. Likewise, the
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Seller shall also observe the provisions of this Article with regard
to the confidential information about the Buyer or its subscribers.
21. Validity and Termination of the Contract and Supplementary Provisions
21.1 This Contract shall come in force upon affixation of the
parties' official seals and signatures of their
representatives.
21.2 This Contract shall be terminated upon completion of the
parties' responsibilities and obligations.
21.3 Any amendment to this Contract shall be based on the written
document executed by the representatives of the parties and
affixed with their official seals.
21.4 All notices dispatched by the parties in the course of
executing this Contract shall be in the reliable forms of
telexes, faxes or letters.
22. Supplementary Note:
This Contract is written in four originals, each party in possession of
two copies. This Contract consists of 22 Articles and the documents
listed in the attachments. These documents listed in the attachments
are attached thereafter its text and shall be treated as an inseparate
part of this Contract with equal legal power.
Buyer: Seller:
Xian Telecommunications Bureau UTStarcom (China) Co., Ltd.
Legal Representative or Representative: Legal Representative or Representative:
(Signature) (Signature)
Date: August 23, 1999 Date: August 23, 1999
WIRELESS MUNICIPAL TELEPHONE (PAS-TM-)
OF
XIAN TELECOMMUNICATION BUREAU
TABLE OF CONTENTS
<TABLE>
<S> <C>
(1) Contract
(2) Appendix 1 Total Price and List of Equipment (Omitted)
(3) Appendix 2 Memorandum
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(4) Appendix 3 PAS-TM-Technical Proposal for the Wireless Municipal
Telephone of Xian Telecommunications Bureau (Omitted)
(5) Appendix 4 Schedule of Progress and the Parties' Responsibilities
(6) Appendix 5 Training Program (Omitted)
(7) Appendix 6 Technical Manual of Wireless Municipal Telephone
(PAS-TM-) (Omitted)
(8) Appendix 7 Reply to the Price Inquiry with regard the PAS Project in
Xian (Omitted)
</TABLE>
<PAGE>
APPENDIX II
MEMORANDUM
Party A: Party B:
Xian Telecommunications Bureau UTStarcom (China) Co., Ltd.
No. 28, Lianhu Road Fl. 11, Beihaiwantai Building
Xian No. 6 Chaoyangmenbeidajie
Dongcheng District, Beijing 100027
This memorandum consists of three parts and nineteen (19) clauses.
I. Supply and Maintenance of PAS Handsets
The price of a PS handset currently provided by Party B to Party A
is [*], and the PS models are comprised of two kinds, 702-S and 702-P.
Party B is committed to decrease the supply price of a handset by [*]
within [*] on the basis of the current price, and [*] within [*]. Moreover,
Party B guarantees that, within [*], the maintenance will be provided [*],
and that after [*], [*] maintenance of handsets and services for component
and spare parts be provided. Party B plans to set up a maintenance and repair
center in Xian in cooperation with the Telecommunications Bureau in the near
future. (The explanation of this section is aimed at PS handsets provided by
Party B in both Chinese and English.)
Party B shall open up the air interface protocol for handsets within
[*] upon execution of the Contract. Party A may independently purchase PS
handsets directly from the manufacturers, and by the time, there will be
three Japanese manufacturers, [*] that will provide STEPHII standard handsets
to Party B's subscribers.
II. Explanation on the Equipment Given as [*] (See the list for details)
1. When the local wireless telephone network in Xian enters into
the stage of network adjustment and optimization, Party B
shall [*] to Party A (including interface boards in
relation to the corresponding RPC) to cover the vast border
area in Xian. The goods will arrive by the end of the year.
2. Party B is committed to provide a set of data application
business without any charge, whereby [*] can log
on simultaneously when the second-generation data application
business of PAS system is commercialized (the rate of speed
for communication is [*], and the system is scheduled to
open within [*]). At the time of opening, Party
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TO THE OMITTED PORTIONS.
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B shall provide Party A [*] a set of first-generation data
application equipment used in the PAS system, the capacity of
which can [*] to log on in the interconnected network.
3. Party B shall contribute [*] to Party A [*] of RPC and other
backup device. The backup device shall be used to maintain
equipment in the future. The goods will arrive by the end of
the year.
4. Party B shall give Party A [*] a set of [*], and the schedule
of delivery is set by the end of the year.
5. 110 and 119 Alarm Signal System: The function of such
system involves the coordination and cooperation of 110 and
119 centralized monitoring center, including the necessity
for the monitoring center to set up a data bank and a
retrieval system correspondingly in relation the PAS system
in Xian. In the meantime, the network management center of
the PAS system can provide the related information of 110
and 119 alarm signal telephones to the monitoring center,
which will eventually determine the location of the
subscriber through the retrieval data bank. The interface
standards between PAS network management center and the
monitoring center will be provided to Party A within a
month upon execution of the Contract. The said system will
be jointly developed by Party A and Party B in their
concerted efforts and provided to Party A for use [*]
(including software and hardware).
6. With regard to RP antenna adversity system, Party B is
committed to provide the Bureau 10 sets of such equipment to
conduct tests at selected points within three (3) months upon
execution of the Contract.
7. Based on the terms of network operations, Party B
undertakes to give Party A [*] of COT (containing the
function of indicating the caller's number) and [*] of RPC
and [*] of RP. All the equipment contributed [*] shall have
frames.
8. Party B is committed to Party A that [*] shall be given [*],
and their models are of 702-S and 702-P.
9. The collocation of soft- and hardware for the system's
indicator of calling subscriber's number has been included in
the quoted price. Depending on the operation of the network,
Party B is committed to increase the software and hardware of
the calling subscriber's indicators [*] if the current
collocation does not meet the subscribers' requirements.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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III. Other Items
1. Party B is committed to provide [*] technical training for 60
people from Party A, 30 of whom shall have their technical
training program in China, 12 outside of China and 18 at
overseas manufacturers for practical experience. The training
cost includes round trip airline tickets of the personnel and
other related expenses such as transportation and
accommodation.
2. Party B is committed to fulfil the goals set forth in Article
1.3 of Appendix 3. If such goals cannot be achieved, Party B
is committed to provide equipment to Party A [*] to meeting
the foregoing requirements.
3. Party B is committed to co-operate with Party A in further
optimizing the reliability of operations for S-ATC equipment.
Party B undertakes to meet the Bureau's following requirement
within three months after the opening of the system:
(1) The service unit is equipped with [*] CPU cards, and
may expand into [*] cards.
(2) The capacity of storage is no less than [*].
(3) The RAID memory unit will have the backup of [*], and
the disk controller will have the backup of [*].
(4) The use of LAN-SWITCH (and equipment with [*] single
mould optical fiber interface to facilitate remote
backup). Party B will join Party A in its further
efforts to improve the stability of the whole
network.
4. Party B is committed to continuously optimize the network
infrastructure of S-ATC, ATC and COT. When the network
subscribers reach [*] or within a period of [*], Party B will
replace S-ATC, ATC and COT with the equipment having Party B's
latest technology.
5. Party B guarantees to Party A that adequate indoors base
stations and directive antennas will be provided during the
engineering period, and that adjustments be made based on the
actual needs for area coverage.
6. Party B guarantees that sales of PAS will only be made
available to Party A in the Xian area, and that no other
subscribers shall be provided.
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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7. Party B will [*] concerning new businesses that are
not listed in this Contract but will be provided to the
Bureau; however, it will charge the related hardware cost.
Party A: Party B:
Xian Telecommunications Bureau UTStarcom (China) Co., Ltd.
Legal Representative or Legal Representative or
Representative: (Signature) Representative: (Signature)
Date: August 23, 1999 Date: August 23, 1999
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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APPENDIX IV
SCHEDULE OF PROGRESS FOR THE PROJECT
AND
THE PARTIES' RESPONSIBILITIES
I Proposed Schedule of Progress for the Project
[*]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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II The Parties' Responsibilities
Party A: Xian Telecommunications Bureau
Party B: UTStarcom (China) Co., Ltd.
In order to guarantee the success of cooperation between and
by the parties during the implementing stage of the project, the
parties hereby clearly define the following matters in connection with
the project:
I. The parties' responsibilities;
II. Survey, design and preparation of the project;
III. Materials and interface for the installation of the
project;
IV. Testing and trial operations of the system; and
V. Supplementary facilities.
I. The Parties' Responsibilities
1.1 Prior to the start of the project, Party A must be
equipment with the necessary conditions available for
installation. If such conditions are unavailable or
inadequate, Party B shall rearrange the schedule of
progress for the project and set a new date to start
the operations.
1.2 Party A shall be responsible to supply stable direct
and alternate power sources, and transfer them to the
locations designated at the project site. In addition,
Party A shall guarantee the quality and capacity of
electric supply.
1.3 Party B shall supply the equipment necessary for the
project, and guarantees that the quality of such
equipment is up to the technical standards.
1.4 The installation of all the equipment provided by
Party B shall be completed jointly by the parties.
Party B shall be responsible for the debugging and
opening of the system, and Party A shall provide
assistance and coordination. Any wiring, installation,
setup or debugging that involve Party A's facilities
shall be Party A's responsibilities whereby Party B
will provide assistance and coordination.
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1.5 Any matters occurred during the course of this project
and not defined in this appendix shall be solved
through discussions by the parties.
II. Survey, Design and Preparation of the Project
Party B shall be responsible for the project survey
and the network plan whereas Party A shall coordinate with
Party B in its survey and network plan as well as relevant
data and information in connection with such work.
2.1 Party A shall provide equipment rooms at the central
office's and the far-end terminals as well as the
site for construction. In addition, it will provide
Party B detailed information with regard to the
equipment rooms (including draft of the locations and
information about the environmental conditions and
available facilities). Party B shall work out a
master plan, make proposals and requests in
connection with Party A's preparatory conditions on
equipment rooms.
2.2 Party A shall be responsible to provide a map (at the
scale of [*]) outing the service area under the
project. Party B shall conduct on-the-site wireless
survey based on such map and determine the exact
locations for the corresponding base stations, and
provide a list of locations for base stations as well
as detailed schedule of installation.
2.3 Party A shall arrange engineering and technical
personnel concerned to assist and coordinate such
wireless survey.
2.4 Party A shall be responsible to coordinate with the
local authorities and institutions to fix the locations
for the installation of such base stations.
2.5 Party B shall be responsible to put forward specific
requirements for the preparation of the project, and
Party A shall be responsible to carry out such
preparatory work for the project and to timely feed
back the progress to Party B.
III. Materials and Interface for the Installation of the Project
3.1 Party A shall be responsible to provide the interface,
technical information and necessary technical
assistance for the switchboard.
3.2 If the [*] is adopted, Party A shall be responsible for
the connection of [*] from [*]
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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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to Party B's equipment. The adapter of [*] on the
side of Party B's equipment shall be provided and
installed by Party B. If the [*] is adopted, Party A
shall be responsible for the [*] to [*] and that from
[*] to [*], and shall also be responsible for the clock
line at the precision of [*].
3.3 Party A shall be responsible for the wiring of
connection from the [*] at the base stations [*] to [*].
The interface on the side of [*] shall be provided and
installed by Party A whereas the interface on the side
of [*] shall be provided and installed by Party B.
3.4 Party A shall be responsible to fasten the frame body
and extend the [*] power source and ground wire to the
main distribution frame [*] of Party B's equipment.
3.5 Party B shall be responsible for the installation of the
machine frame in the rack, power source line and ground
lines.
3.6 Party A shall be responsible for the remaining wiring at
the equipment rooms whereas Party B shall provide
assistance and coordination. If the [*] frame is used,
Party A shall provide [*]; Party A shall also be
responsible for the [*] among the main distribution
frames.
3.7 The manufacturing of fastening pieces and the
installation of the base stations as well as the
inspection of the related lines shall be Party A's
responsibility. The testing of the base stations and
fault correction shall be performed through the joint
efforts of the parties.
3.8 Party A shall be responsible to provide vehicles,
tools, materials and personnel required for the
installation of the project.
3.9 Party A shall be responsible to provide number
sources required for this network of wireless
connection.
IV. Testing and Trial Operations of the System
4.1 The testing of various parts of the system and
general combined debugging shall be completed by the
joint efforts of the parties. Party A shall conduct
testing in coordination with the tests on Party B's
equipment, confirm the results of such testing on the
function of the system, and provide necessary tools
for such
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testing. Party B shall be responsible for technical
guidance and support.
4.2 Party B shall provide a plan for trial operations as
well as maintenance and technical guidance during the
period of trial operations, and in the meantime,
provide training on maintenance for Party A's personnel
so as to enable them to master the knowledge for
maintenance. Party A shall work out the plan for trial
operations.
4.3 If faults or errors are discovered in the software or
hardware of the equipment or technical information
that result in failures to reach the standard and
targets set forth in the Contract, Party B shall be
responsible for the repair of such equipment, the
replacement of hardware materials and the upgrade of
software.
4.4 As Party A is Party B's key subscriber, Party B shall
make tract records on the operations and maintenance
of the equipment and keep them in the files for key
subscribers.
V. Supplementary Facilities
The supplementary facilities provided for the
implementation of the project are defined as follows:
5.1 The Bureau will provide supplementary facilities and
equipment for the installation of equipment such as
computer desks and chairs, sites for the storage of
tools, equipment and goods.
5.2 Party A shall provide PS handsets and telephone
numbers required for testing.
5.3 The communication facilities required for the project
such as IDD direct dial telephones and faxes for
domestic use shall be provided by Party A, and Party
B will use them in accordance with Party A's
management regulations. Party A shall provide
sockets, plugs and cables used for power sources of
general purpose and extend them to where the
equipment is located when the equipment is installed.
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CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
TECHNICAL ASSISTANCE AGREEMENT
AGREEMENT made and entered into, by and between
Matsushita Communication Industrial Co., Ltd., Communication Systems Division, a
Japanese Corporation, having its principal offices at 3-1 Tsunashima-Higashi
4-chome, Kohoku-ku, Yokohama 223-8639, Japan (hereinafter called "Licensor"),
and
UTStarcom Inc., a Delaware corporation, having its principal offices at 1275
Harbor Bay Parkway, Suit 100, Alameda, California 94502, U.S.A. (hereinafter
called "Licensee").
WITNESSETH:
RECITALS:
Licensor and Licensee have been the parties to Purchase Agreement for P.R. China
Market effective as of April 1, 1997 which is subsequently renewed and amended
(hereinafter referred to as the "Purchase Agreements"), under which Licensee
purchased a certain products from Licensor on an OEM basis so that Licensee
connects and integrates the products with other products to build up the
wireless local loop system, and resells and installs such system in P.R. China.
Licensee has some difficulties in obtaining the license to import the products
purchased from Licensor into P.R. China and is desirous of receiving from
Licensor, technical assistance and information for, and know-how in connection
with, the manufacture and assembly in P.R.China of such products,
Licensor is willing and ready to render such technical assistance, information
and know-how to Licensee, all upon and subject to the terms and conditions
hereinafter set forth,
NOW, THEREFORE, in consideration of the recitals and the mutual promises herein
contained, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS
1.01 The term "Item(s)" means,
1) radio port controllers, and
2) radio ports.
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Any other items may be added to the aforesaid items or any of the aforesaid
items may be excluded from the scope of Items by mutual written agreement or the
parties hereto and subject to the approval of the Japanese Government, if then
required.
1.02 The term "Products" means the product models and the subassemblies therefor
within the scope of Items, that are designed and/or manufactured by Licensor
during the term of this Agreement and are selected by a written agreement of the
parties hereto. The initial Products are set forth in Exhibit A attached hereto
and made a part hereof. Exhibit A may be amended by a written agreement of the
parties from time to time during the term or this Agreement and subject to the
approval of the Japanese Government, if then required.
1.03 The term "Effective Date" means the date on which both parties signed this
Agreement (if different, the later date of signature), subject to the approval
of the Japanese Government, if necessary.
1.04 The term "Components" means parts, components, materials, subassemblies,
printed circuit boards, control cards, interface cards, accessories, packing
materials, and printed materials used in the Products.
1.05 The term "Production Equipment" means machine, tools, jigs, molds, dies,
and instruments, required by Licensee for manufacture (including assembly,
adjustment, programming, and tests) and inspection of the Products.
1.06 The term "Production" means procurement of Production Equipment,
Components, assembly, adjustment, in-process test, quality control inspection
and repair.
1.07 The term "Calculation Period" means the period from January 1 to June 30 of
each year, the period from July 1 to December 31 of each year, and the period
from the later coming January 1 or July 1 to the date of termination or
expiration of this Agreement.
1.08 The term "Affiliates" means companies or other entities controlling,
controlled by, or under the common control with, either party, and the term
"Subsidiaries" means, among the Affiliates, companies or other entities
controlled by either party. As used in this Article, the term "control" means
the direct or indirect ownership or control of the majority of the outstanding
shares or the ownership representing the power to direct the business of the
companies or entities, as long as such ownership or control exists.
ARTICLE 2. TECHNICAL ASSISTANCE
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2.01 Technical Information and Advice:
2.01A During the term of this Agreement, Licensor shall furnish Licensee with a
set of written technical information for use by Licensee in the manufacture
and/or assembly of the Products to the extent freely disposable by Licensor
without any obligation to any third party, necessary for the Production of the
Products by Licensee. Such information (hereinafter called "Technical
Information") shall be as set forth in Exhibit B attached hereto and made a
part of this Agreement.
2.01B From time to time during the term of this Agreement, whenever a new
Product is selected pursuant to Article 1.02. hereof, Licensor will furnish
Licensee with the technical information therefor, to the extent provided for in
Article 2.01A hereof and required in addition to what has been previously
supplied. Such technical information shall also be the Technical Information.
2.01C From time to time during the term of this Agreement, whenever necessary
in the reasonable judgment of Licensee, Licensor will furnish Licensee with
advice and information which is incidental or supplemental to the Technical
Information furnished pursuant to Articles 2.01A and 2.01B hereof and which may
be properly disclosed by Licensor.
2.01D All Technical Information furnished hereunder shall be in the English
language, and the measurements and specifications used therein shall be in the
metric system.
2.02 Technical Service:
2.02A From time to time during the term of this Agreement, at the reasonable
request of Licensee in writing, Licensor may permit officers and/or employees of
Licensee to visit Licensor's facilities at which it manufactures or assembles
the Products, for such periods of time as mutually agreed, to train such
personnel of Licensee in the process of manufacturing and assembling the
Products.
2.02B From time to time during the term of this Agreement, at the reasonable
request of Licensee in writing, Licensor may send one or more of its engineers
and/or technicians to Licensee's facilities at which it manufactures and/or
assembles the Products, for such periods of time as mutually agreed, to provide
advisory and instructive technical service to Licensee regarding the manufacture
and/or assembly of the Products hereunder.
2.02C Details of the terms and conditions applicable to the technical services
to be provided to Licensee as set forth in Articles 2.02A and 2.02B that are to
be rendered by Licensor's engineers or technicians visiting Licensee's factory
as herein provided shall be confirmed in writing between both parties hereto to
the extent practicable prior to any such visit.
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2.02D From time to time during the term of this Agreement, at the reasonable
request of Licensee, Licensor may inspect or test samples of the Products
produced by Licensee or the Components obtained by Licensee pursuant to the
provisions of Article 4.02 hereof, and Licensor may inform Licensee of the
results of such inspection or the test with any pertinent comments, if any, that
Licensor may have to make. Such samples shall be given to Licensor free of
charge and at the sole expense of Licensee. Licensee shall also reimburse
Licensor, in Japanese Yen, for the expenses of inspection or test of such
samples, the customs clearance charges, transportation expenses and all other
sundry expenses involved after receipt by Licensee of Licensor's invoice
therefor.
2.03A [*] costs and expenses for the technical information, advice and
services to be provided to Licensee as set forth in Articles 2.01 and 2.02
hereof (hereinafter called "Technical Services"), including those for
technical information, advice, technical service, accommodation,
transportation to and from Japan by air coach, meals and allowances, in
respect of Licensor's engineers and/or technicians and Licensee's officers
and/or employees as the case may be, shall be paid, or if paid by Licensor,
shall be reimbursed, by Licensee to Licensor in Japanese Yen by means of
telegraphic transfer within [*] after Licensor's presentation to Licensee of
bills or invoices for any such costs or expenses.
2.03B The schedule of the Technical Services at the initial stage and the
payment therefor shall be set forth in Exhibit C.
2.03C Anything to the contrary herein notwithstanding, all such personnel of
Licensor shall be deemed at all times to be employees of Licensor, subject to
Licensor's ultimate direction and control, and shall not be deemed to be
employees of Licensee.
2.04 Governmental Approval:
Any of the Technical Assistance (as defined in Article 3.01A hereof) herein
contemplated shall be made available to Licensee subject to a required approval
by the competent authority of the Japanese Government under the Foreign
Exchange and Foreign Trade Law of Japan, and/or the Japanese governmental
administration guidance if and to the extent from time to time so required. It
is further agreed by the parties hereto that any addition or selection of Item
or Product pursuant hereto and any renewal of this Agreement shall also be
subject to a required approval of the Japanese Government under the aforesaid
law and/or governmental guidance, if and to the extent then required.
ARTICLE 3. LICENSES
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3.01A During the term of this Agreement, Licensor hereby grants to Licensee a
[*] license, with [*], to use the Technical Information and advice and
information related thereto and the Technical Services and such other
technical assistance as may be furnished by Licensor hereunder (all of which
are hereinafter collectively called "Technical Assistance") in order to
manufacture and/or assemble the Products in P.R. China for sale, use, lease
or other disposition of the same in P.R. China.
3.01B To the extent any patent owned by Licensor is embodied within the
Technical Assistance and is applicable to manufacturing or selling the
Products, Licensor agrees and hereby grants to Licensee during the term
hereof, a [*] license under such patent, with no right to sub-license, to the
extent necessary to exercise the license granted under Article 3.01A.
3.01C Notwithstanding Articles 3.01A and 3.01B, Licensee shall grant a
sub-license of the license granted to it under Articles 3.01A and 3.01B to [*]
(hereinafter called "Sub-Licensee"), as long as the Sub-Licensee remains a
Subsidiary of the Licensee and provided that Licensee obtains at its risk and
responsibility any permits and licenses necessary for such sub-license
including, but not limited to, those by the governments of [*], that the
Licensee shall have Sub-Licensee observe and comply with the terms and
conditions hereof, and that Licensee shall be responsible for the performance
of the Sub-Licensee. In the event there is a major change in the management
or ownership of the Sub-Licensee, the Licensee shall inform the Licensor
thereof without delay.
3.01D In the event the Licensee or the Sub-Licensee invents, creates or
perceives any improvement, enhancement, addition or other modification on the
Products and/or Technical Assistance during the term of this Agreement, the
Licensee and the Sub-Licensee hereby grants to Licensor and its Subsidiaries
a [*] license, with no right to sublicense, to use such improvement,
enhancement and modification in order to manufacture/assemble the Item for
sale, use, lease or other disposition of the same.
3.01E In the event any improvement, enhancement, addition or other modification
on the Products and/or Technical Assistance is invented, created or perceived
jointly by (i) the Licensor and (ii) the Licensee and/or Sub-Licensee during the
term of this Agreement, such improvement, enhancement, addition or other
modification shall be jointly owned by the Licensor (or its parent company,
Matsushita Electric Industrial Co., Ltd.) and the Licensee. The application for
protection and its costs for such jointly owned improvement, enhancement,
addition or other modification ("Joint Property") shall be discussed separately
by the parties. Each party and its Affiliates may use such Joint Property for
any purpose
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without the consent of the other party and without any compensation or
accounting to the other party, provided that granting a license, sale, transfer
or other disposition of the Joint Property to any third party (excluding
respective Affiliates) requires a prior written consent of the other party and
the income resulting from such license, sale, transfer or other disposition
shall be shared equally between the parties hereto.
ARTICLE 4. PRODUCTION EQUIPMENT & COMPONENTS
4.01 Production Equipment:
In the event that Licensee purchases any of the Production Equipment excluding
the molds and dies from any third party, Licensee agrees that in order for
Licensor to properly provide Technical Assistance to Licensee pursuant to this
Agreement, Licensee shall purchase such Production Equipment only in accordance
with the specifications therefor that are given to Licensee by Licensor. Any
such purchases shall be subject to the prior approval (which shall not be
unreasonably withheld) by Licensor of the actual specifications, function or
performance of such Production Equipment that may be purchased. As for the molds
and dies, the Licensor provides the specification of the Components to be
manufactured with such molds and dies, and the Licensee shall purchase the molds
and dies at its sole discretion and responsibility.
4.02 Components:
In the event Licensee purchases any Components from any third party, Licensee
agrees that in order for Licensor to properly provide Technical Assistance to
Licensee pursuant to this Agreement, any such Components that Licensee purchases
from any third party shall meet and maintain the specifications and quality
standards set therefor by Licensor.
ARTICLE 5. REMUNERATION
5.01 The parties hereto agrees to establish the [*] quantities as to the each
of the Products which Licensee shall manufactures and sells in [*] during
each annual term of this Agreement. Such [*] quantities shall be separately
confirmed in writing, which writing becomes a part of this Agreement.
5.02 In consideration of the Technical Assistance to be provided by Licensor to
Licensee and the Licenses granted to Licensee pursuant to this Agreement,
Licensee agrees to pay to Licensor a technical assistance fee set forth in
Exhibit D.
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5.03 Licensee agrees to provide Licensor with written reports, in such a form
as may be reasonably indicated and requested by Licensor, within [*] after
the end of each Calculation Period beginning with the Calculation Period
commencing on the Effective Date, setting forth the number of Products to be
calculated based on the Components kit of the Products shipped from Licensor
during the immediately preceding Calculation Period, and also showing
computation of the technical assistance fee payable pursuant to the
provisions of this Article and compensation of the tax described in Article
5.05 hereof. The report following expiration or termination of this Agreement
shall include all of the Products shipped from Licensor prior to the
expiration or termination hereof and not previously reported to Licensor.
Within [*] after the end of each Calculation Period, Licensee shall pay to
Licensor the technical assistance fee for the Products included in such
report in United States Dollars, by telegraphic transfer to Licensor's
account at such bank as shall be designated by Licensor. The conversion to
United States Dollars from Chinese Yuan shall be made based on the TTB rate
quoted by the Citibank in California, U.S.A. on the date of relative payment.
5.04 Licensee agrees to keep records showing the total number of the Products
calculated based on the Components kit of the Products shipped from Licensor,
and showing other related information in sufficient detail to enable the
technical assistance fee payable hereunder by Licensee to be determined.
Licensee further agrees, if Licensor so requests, to permit its books and
records to be examined by Licensor from time to time during the term hereof and
for one (1) year after termination or expiration hereof and to take extracts
therefrom, to verify the technical assistance fee due and payable hereunder.
Such examination shall be made at the expense of Licensor by its duly authorized
representative(s) or agent(s) appointed by Licensor.
5.05 The technical assistance fee payable to Licensor by Licensee hereunder is
net of the withholding tax or the tax at the source, and, if there is any such
tax, the amount of the technical assistance fee is adjusted to compensate for
such tax. Licensee shall promptly after payment of such tax furnish Licensor
with a copy or the pertinent receipt of such tax issued by the tax agency or
proof of payment thereof.
5.06 If, as of the expiration or termination of this Agreement, there are
any: (1) Products then completed by Licensee but not yet sold or otherwise
disposed of; or (2) Products then in the process or manufacture or assembly;
the technical assistance fee shall be paid thereon, as set forth above, by
Licensee to Licensor by telegraphic transfer for all of such products within
[*] after such expiration or termination hereof. Licensee agrees to provide
Licensor with written reports in respect of any Products provided for in this
Article 5.06 in like form and manner set forth in Article 5.03 hereof, within
[*] after the expiration or termination hereof, setting forth the number of
each such Product then completed or then in process as or the date of
expiration or termination hereof.
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ARTICLE 6. MAINTENANCE OF QUALITY
6.01A Licensee agrees that in order for Licensor to properly provide the
Technical Assistance to Licensee pursuant to this Agreement, Licensee shall
strictly comply, in the Production of the Products hereunder, with all
specifications and quality standards that are reasonably established by Licensor
for Production of the Products. Licensee agrees to submit to Licensor, as
Licensor reasonably requests, Licensee's quality control and inspection data in
such form as may be reasonably established by Licensor for its inspection.
Licensee shall keep, during and for one (1) year after the term of this
Agreement, copies of such quality control and inspection data so furnished to
Licensor. Licensee agrees, upon reasonable request of Licensor, to send to
Licensor samples of Products or the Components obtained by Licensee or its
Sub-Licensee in reasonable quantities. Licensor may give Licensee, as promptly
as possible, such Technical Assistance and such pertinent advice and/or
instructions in written form in English with respect to the Products and/or
Components, as shall be necessary in the reasonable opinion of Licensor after
inspecting and/or testing such samples and/or after reviewing the reports of
quality control, inspection and/or manufacturing data.
6.01B If, at any time during the term of this Agreement, Licensee and Licensor
deem it necessary, Licensor may send to Licensee, Licensor's engineer(s) and/or
technician(s) for the purpose of checking and/or inspecting the quality and/or
performance of the Products and/or Components manufactured or assembled by,
and/or the performance of the Production Equipment and/or the quality of the
Components purchased by, Licensee or the Sub-Licensee, and in any such event,
the provisions of Article 2.03 hereof shall be applicable to such sending of
Licensor's engineer(s) and/or technician(s).
6.01C Licensee further agrees to promptly furnish Licensor with information in
connection with complaints or claims, if any, from users with respect to the
Products, the nature of such complaints or claims in written or oral form.
Licensor may give Licensee appropriate advice in connection with such complaints
and claims after checking the information furnished by Licensee. The preceding
provision shall not be interpreted to oblige Licensor to be responsible for any
such complaints or claims and/or Licensor's advice.
6.01D Licensee hereby agrees to inform Licensor forthwith in writing of any
current or future standards, legal or otherwise, applicable to the Products,
if any, in [*]. Licensor agrees to provide Licensee with such information and
assistance as may be reasonably required by Licensee in obtaining any
approvals, ratings or listings for the Products.
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6.02 Manufacture and assembly of the Products and the sale or other disposition
thereof by Licensee or the Sub-Licensee, as well as any guarantee thereon to
Licensee's customers of the Products including, without limitation,
responsibility for product liability, obtaining approval for the Products
pursuant to any standard, legal or otherwise, applicable to the Products, shall
be at Licensee's sole cost and expense and at Licensee's sole risk and
responsibility, and Licensor shall not be responsible therefor to Licensee, the
Sub-Licensee or any third party. Licensee shall indemnify Licensor for and hold
Licensor harmless from any losses, liabilities, damages, claims, actions, suits,
proceedings, costs and expenses (including fees and expenses of counsel) arising
out of or in connection with the use by Licensee of any Technical Assistance,
Production Equipment, Components, Technical Information, advice or service
furnished by Licensor hereunder and the manufacture or assembly and sale or
other disposition of the Products or Components hereunder, including, without
limitation, claims for product liability (excepting those claims relating to
defects in design of the Products) and obtaining approval for the Products
pursuant to any standards, legal or otherwise, applicable to the Products or for
infringement of any patents, trademarks or other proprietary rights or any third
party.
6.03 The sole obligation of Licensor with respect to the Technical Assistance,
advice or service to be provided to Licensee under this Agreement shall be to
furnish the same to Licensee as provided for in this Agreement. Licensor shall
have no responsibility for the ability of Licensee or the Sub-Licensee to use
such Technical Assistance, Technical Information, advice or service or for the
Products manufactured or assembled by Licensee or the Sub-Licensee thereunder.
ARTICLE 7. TRADEMARK
7.01 Licensee shall affix Licensee's brand name and/or its trade name designated
by Licensee on the Products. Licensee shall not use any trademark, model numbers
or tradename used by the Licensor or any mark which shall be, in the Licensor's
opinion, similar to or shall resemble such Licensor's trademarks, model numbers
or tradename, on the Products or with respect to the sale, use, lease or other
disposition thereof (including relevant printings and advertising materials).
ARTICLE 8. GENERAL PROVISIONS
8.01 Secrecy and Unauthorized Use of Technical Information:
8.01A Except as specifically set forth in Article 8.01 hereof or otherwise
approved by Licensor in a separate writing, Licensee agrees to treat and keep
secret and confidential and not to disclose, except as herein provided pursuant
to Article 8.01B below, to any person, Licensor's technical know-how which may
be disclosed by Licensor's engineers or technicians and/or acquired by
Licensee's officers or
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employees and agents, as well as all Technical Information, advice and service
furnished or disclosed by Licensor to Licensee hereunder, except to the extent
Licensee may be required to disclose the same to obtain any approvals for the
Products as provided for in Article 6 above or as may otherwise be required by
law. Licensee further shall not use any Technical Information, advice or service
furnished hereunder for any purpose other than that of this Agreement and shall
not file or cause to be filed application for any patent or similar right in any
countries based on or with respect to the Technical Information, advice or
service furnished hereunder.
8.01B In the event Licensee shall disclose any of the Technical Information to
the Sub-Licensee, except as provided in Article 8.01A hereof, Licensee shall
obtain from the Sub-Licensee a confidential information agreement or arrangement
as shall be mutually satisfactory to Licensor and Licensee.
8.01C Licensee shall take all necessary actions to comply and to compel
compliance with the provisions of Article 8.01A hereof and with the provisions
of any confidential information agreement or arrangement entered into pursuant
to the provisions of Article 8.01B hereof.
8.01D The provisions of Article 8.01 hereof shall survive the expiration or
termination of this Agreement, unless and until any Technical Information and
advice or service furnished in connection therewith, as referred to in Article
8.01A above, shall have become part of the public domain or until two (2) years
after the expiration or termination of this Agreement.
8.02 No Warranty:
8.02A Nothing herein contained shall be construed as the making or giving by
Licensor of any warranty or representation that any Products manufactured or
assembled by Licensee or the Sub-Licensee hereunder or that any process or
method for manufacturing or assembling the Products by Licensee or the
Sub-Licensee or that any Components or Production Equipment purchased by
Licensee or the Sub-Licensee according to the specifications supplied from
Licensor shall not infringe upon any proprietary property rights, including but
not limited to, patent rights and trademark rights owned or otherwise controlled
by a third party. Any license or permission, if any, that is required by
Licensee or the Sub-Licensee from any third party, to manufacture or assemble
or sell or otherwise dispose of the Products hereunder, shall be acquired by
Licensee at its own cost and risk. Notwithstanding the foregoing, Licensor
represents that it is not presently aware that any of the Technical Information
infringes upon any intellectual property rights owned or otherwise controlled by
any third party, and that no claim of such infringement has been asserted
against Licensor as of the date of this Agreement.
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8.02B During and after the term hereof, nothing herein contained shall be
construed as the making or giving by Licensor of any warranty or
representation that any Products meet the current or future standards, legal
or otherwise, applicable to the Products, if any, in the [*] or any country
of the world.
8.03 Force Majeure:
Neither party shall be liable for delay or failure in performance arising from
any of the following: (a) acts of God, or public enemy, or war (declared or
undeclared); (b) acts of governmental or quasi-governmental authorities or any
political subdivision thereof, or of any department or agency thereof, or
regulations or restrictions imposed by law or by court action; (c) acts of
persons engaged in subversive activities or sabotage; (d) fires, floods,
explosions, or other catastrophes; (e) epidemics or quarantine restrictions; (f)
strikes, slowdowns, lockouts, or labor stoppages, or disputes of any kind; (g)
freight embargoes or interruption of transportation; (h) any other causes,
similar or dissimilar, beyond the control of the affected party, and the time
for performance by such party shall be extended by a period of any such delay.
8.04 Breach or Default and Waiver:
Either party hereto has the right to terminate this Agreement by giving a
written notice to the other party to that effect in the event such other party
shall have been in a material breach and/or default of this Agreement and such
material breach and/or default shall not have been corrected within sixty (60)
days after receipt of notice specifying the nature of such breach and/or
default. The termination of this Agreement shall be without any prejudice to the
rights which such terminating party may have under this Agreement. No failure or
delay on the part of any party to exercise its right of termination of this
Agreement for any one or more breaches and/or defaults shall be construed to
prejudice its rights of termination for any other or subsequent breaches and/or
defaults.
8.05 Disputes:
Any disagreement in connection herewith shall be finally settle by arbitration.
If Licensor initiates the arbitration, the arbitration shall be held in San
Francisco, California, the U.S.A. in accordance with the arbitration rules of
American Arbitration Association. If Licensee initiates the arbitration, the
arbitration shall be held in Tokyo, Japan in accordance with the arbitration
rules of Japan Commercial Arbitration Association.
8.06 Applicable Law:
This Agreement shall be interpreted and governed in accordance with the laws of
Japan, without reference to its conflicts of laws principles.
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TO THE OMITTED PORTIONS.
<PAGE>
8.07 Assignment:
Neither this Agreement or any rights and obligations hereunder shall be
assignable or otherwise transferable by either party, voluntarily or by
operation or law or otherwise, without the prior written consent of the other
party hereto, and any assignment or transfer without such consent of the other
party shall be null and void; provided, however, that all of the terms of this
Agreement shall inure to the benefit of and shall be binding upon each of the
parties hereto and their respective successors and assigns as may be expressly
consented to in writing by the other party.
8.08 Entire Agreement and Amendment.
This Agreement and the exhibits thereto, contains the entire and only agreement
between the parties hereto with respect to the subject matter herein contained
and, with the foregoing exceptions, this Agreement supersedes and cancels all
previous agreements, negotiations, commitments and writings with respect to the
subject matter hereof. This Agreement may not be amended, modified, superseded
or canceled, nor may any of the terms, provisions or conditions hereof be
waived, except by a written instrument duly executed by an authorized officer of
each of the parties hereto. No waiver by either party of any condition of this
Agreement, in any one instance, shall be deemed to be or construed as a further
or continuing waiver or any such condition.
8.09 Obligations After Expiration or Termination:
Except as to Products completed and/or in process as referred to in Article 5.05
hereof, upon and after the expiration or termination of this Agreement, Licensee
shall not engage, nor contract with third parties to engage, in the manufacture
or assembly or sale or other disposition of the Products, and Licensee shall,
upon and after the expiration or termination of this Agreement, neither use nor
contract with third parties to use any Technical Information or technical
know-how embodied in the Technical Information, advice, service or other
technical assistance furnished by Licensor hereunder, and Licensee shall return
to Licensor without charge, within fourteen (14) days after notice to that
effect sent by Licensor to Licensee, all or such Technical Information
theretofore delivered or furnished by Licensor hereunder in written form
relating to the Products and the manufacture and assembly thereof, including all
copies or reproductions thereof.
8.10 Article Headings:
The article headings contained in this Agreement are for the convenience of
reference only and do not form a part of this Agreement, and shall not in any
way affect the interpretation of this Agreement.
8.11 Notice:
- 12 -
<PAGE>
For the purpose of this Agreement, any notice hereunder shall be sufficiently
given if:
8.11A Delivered personally, in which case it shall be deemed to have been
received at the time of delivery; or
8.11B Sent by prepaid registered or certified air mail, addressed as follows:
To Licensee at:
UTStarcom Inc.
1275 Harbor Bay Parkway, Suit 100, Alameda, California 94502, the U.S.A.
Attention: Russell L. Boltwood
To Licensor at:
Matsushita Communication Industrial Co., Ltd.
Communication Systems Division
4-3-1, Tsunashima-higashi, Kohoku-ku, Yokohama 223-8639, Japan
Attention: General Manager,
International Business Department
or to such other addresses as may hereafter be furnished in writing by either
party hereto to the other, and such mail shall be deemed conclusively to have
been received on the tenth (10th) business day of the recipient following the
date on which it is so mailed.
8.12 Scope of Technical Assistance and Licenses:
The Technical Assistance to be provided and licenses granted pursuant to this
Agreement are solely for manufacturing, assembling and selling the Products and
not for manufacturing, assembling and selling any individual Components or
Production Equipment.
8.13 Change of Specifications:
8.13A Licensee, when it or the Sub-Licensee desires to make any change(s) in the
specifications or to the physical appearance of the Products, shall notify
Licensor of any such change in writing and shall obtain the prior written
consent of Licensor. Such changed Products shall be also deemed to be Products
for the purpose of this Agreement.
8.13B Upon written notice to Licensee, Licensor may from time to time alter the
specifications of any Products (including but not limited to change and
substitution of materials and Components) in any manner which, in the judgment
of Licensor, does not degrade the performance or quality of the Products,
without incurring any liability to Licensee.
- 13 -
<PAGE>
ARTICLE 9. TERM & TERMINATION
9.01 This Agreement shall be effective for the period of three (3) years
commencing on the Effective Date unless earlier terminated pursuant to the
provisions of this Agreement, and after expiration of the original term, this
Agreement may be renewed by the mutual written consent of the parties hereto
under the terms and conditions to be then mutually agreed upon and subject to
the approval of the Japanese Government, if then required.
9.02 If at any time during the term of this Agreement, Licensee makes any
unauthorized use of any Technical Information, advice or service furnished by
Licensor to Licensee, Licensor shall have the right to terminate this Agreement
upon notice without prejudice to any rights which Licensor may have under or in
connection with this Agreement.
9.03 Should Licensee at any time default in making payment of any technical
assistance fee or in providing any report as herein provided for and fail to
remedy such default within sixty (60) days after written notice to that effect
given by Licensor, Licensor may, at its option, terminate this Agreement by
giving notice in writing to Licensee. No failure or delay on the part of
Licensor to exercise its right of termination of this Agreement for any one or
more defaults of Licensee in the payment of any technical assistance fee or in
providing any report pursuant hereto shall be construed to prejudice Licensor's
rights of termination hereof for any other or subsequent default.
9.04 Licensor may terminate this Agreement immediately by giving a written
notice to Licensee upon any of the following events:
(a) any arrangement with direction or any application for bankruptcy,
receivership, winding-up or other similar proceeding against Licensee and/or
Sub-Licensee shall be made by Licensee, Sub-Licensee or any other person;
(b) all of or, in the opinion of Licensor, substantial part of the assets of
Licensee and/or Sub-Licensee shall be seized or attached in conjunction with
any action against Licensee and/or Sub-Licensee by any third party.;
(c) a sale of all of or in the opinion of Licensor, substantially all of the
assets of Licensee and/or Sub-Licensee is made, or this Agreement is assigned
by Licensee without the prior written consent of Licensor;
(d) there occurs any such change in the capital ownership and/or management
control of Licensee and/or Sub-Licensee as, in the opinion of Licensor, may
adversely affect the performance of this Agreement and/or the benefits or
rights of Licensor in this Agreement;
- 14 -
<PAGE>
(e) there occurs any difficulties, in Licensor's opinion, to perform the
obligation under this Agreement due to any of significant changes of the
political, economic or taxation policy by the governmental or quasi-governmental
organization or agencies in the USA or P.R. China;
(f) an agreement concerning the supply of the Components of the Products is,
in any reason, terminated.;
(g) Licensor judges that the quality of the Products assembled by Licensee or
Sub-Licensee hereunder is found to be insufficient and such insufficiency
seems not to be corrected within a reasonable period of time;
(h) an import license of the Components and/or Production Equipment into the
USA and/or an import license of the Components and/or Production Equipment
from Licensee to Sub-Licensee is not obtained from the competent authority of
the government of the USA or P.R.China, (to the extent that such license is
required by law), within one hundred and eighty (180) days from the
Effective Date hereof; or
(i) the sub-licensing arrangement between Licensee and Sub-Licensee is not
completed or is terminated
9.05 Expiration or termination of this Agreement for any reason whatsoever shall
not affect the rights of Licensor or Licensee which shall have been accrued
hereunder.
ARTICLE 10.
10.01 No Joint Venture:
This Agreement is not a joint venture or a partnership, and nothing herein shall
be deemed, construed or in any way interpreted to constitute the parties as
joint venturers or as partners.
10.02 Export Control:
A. In connection with the performance of this Agreement and the transactions
contemplated hereunder, Licensor and Licensee each hereby agree to fully comply
with all applicable provisions of the export control laws and regulations of
Japan and the United States.
B. Licensee agrees to treat all data communicated to it by Licensor as
required by the appropriate export control laws of [*]. If such data are
subject to the export control laws of [*], Licensor shall so notify Licensee
together with the applicable Classification Numbers. Should Licensee transmit
any non-public technical data to Licensor in the course of the performance of
this Agreement, Licensor shall comply with applicable U.S. regulations
governing the use and communication of such technical data. If such data are
subject to the export control regulations of the United States, Licensee
shall also notify Licensor together with the applicable Classification Number.
- 15 -
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
C. Licensee agrees that it shall not export the Products manufactured hereunder
to any country to which export is restricted by the Export Administration
Regulations without the required approval of the United Slates Government to the
extent required.
D. Licensee shall not knowingly sell, lease or otherwise dispose of either any
data transmitted hereunder, or the Products, directly or indirectly, to any
customer who makes use of, or is likely to or intends to make use of, the same
for "Military Purposes". For the purpose of this section, "Military Purposes"
means the design, development, manufacture or use of any weapon, including
without limitation nuclear weapon, biological weapon, chemical weapon and
missiles, other than the design, development, manufacture or use of the same by
or on behalf of the Government of Japan, the Government of the United States or
any other country which was a member of COCOM as of March 1, 1994.
E. The provisions of this Article 10.02 shall survive the expiration or earlier
termination of the Agreement, and shall continue in full force and effect as
long as any data communicated hereunder is subject to export controls.
F. In order to assure the observance and/or implementation by Licensee of the
foregoing provisions, Licensee shall submit necessary documents (including
without limitation, sales contract, sales notes and invoices) in accordance with
request of Licensor.
G. In the event that Licensee violates the provisions of this Article 10.02,
Licensee shall bear responsibility for any and all damages incurred by Licensor
because of such violation, and further, notwithstanding the provisions of
Article 8.04 hereof, Licensor shall have the right to terminate this Agreement
forthwith by giving a written notice to Licensee, without any prejudice to the
rights and remedies which Licensor may have under this Agreement.
H. In the course of operation under this Agreement, Licensor may wish to obtain
from Licensee, technical data, whether by direct communication between Licensee
and Licensor, or by communication between Licensee and employees of Licensor who
are not U.S. citizens, but who are assigned to Licensee by Licensor. To the
extent that any such technical data is subject to U.S. export controls and may
not be exported except with prior receipt of a Letter of Assurances, this
Agreement is intended to serve as such Assurances. Licensor assures that it will
not re-export, re-transfer or otherwise release any such data or the direct
product thereof except in conformity with the then applicable U.S. export
control laws and regulations. As used in this Article 10.02, the terms
"technical data" and "direct product" shall have the meaning specified in the
U.S. Export Control Regulations. The obligations contained in this Article 10.02
shall survive the expiration or earlier termination of this Agreement.
- 16 -
<PAGE>
Article 11. SEVERABILITY
11.01 If any provision(s) of this Agreement shall contravene the laws of Japan
and/or the U.S.A., it is agreed that the invalidity or illegality of such
provision(s) shall not invalidate the whole of this Agreement but this Agreement
shall be construed as if it did not contain the provision(s) claimed or held to
be invalid or illegal in the particular jurisdiction concerned insofar as such
construction does not effect the substance of this Agreement, and the rights and
obligations of the parties hereto shall be construed and enforced accordingly.
In the event, however, that such claim of invalidity or illegality shall
substantially and adversely effect the interest of either party hereto, the
parties hereto shall negotiate a mutually acceptable provision(s) not
conflicting with such laws, and, if the parties hereto cannot agree upon a
substitute provision(s) within a reasonable period, Licensor or Licensee may
terminate this Agreement forthwith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement in two (2)
original counterpart instruments, to be executed and delivered in English, as of
the date written below, by their duly authorized officers.
Matsushita Communication Industrial UTStarcom Inc.
Co., Ltd., Communication Systems Division
By: /s/ Y. Katsura By: /s/ Hong Liang Lu
-------------------------------------- -------------------------------
Name: Yasuo Katsura Name: Hong Liang Lu
------------------------------------ -----------------------------
Title: Director, Member of the Board Title: President & CEO
----------------------------------- ----------------------------
Date: October 1, 1999 Date: October 1, 1999
------------------------------------ -----------------------------
- 17 -
<PAGE>
EXHIBIT A
LIST OF PRODUCTS
1) Radio Port Controller
EC-H11940A
2) Radio Port
EA-7H75B
EA-7H74B
- 18 -
<PAGE>
EXHIBIT B (1/2)
LIST OF TECHNICAL INFORMATION
(1) Design related materials
Technical Specifications
Hardware
Function
Design Standard
Design Review
Reliability, Safety, Design Standard
Design Drawing
Schematics
Paris Drawing
Assembling Drawing
PCB Diagram
PCB Layout Diagram
Component List
Component Specifications
Adjustment Specification
Inspection Test Specification
software Specification
Programming data for Equipment Operating
Test Planning
Test Procedure
Test Report
Test Program
Chip mount CAD Data
Schematic CAD Data
Mechanical component CAD Data
PCB CAD Data
Quality Report
(2) Production Related materials
Manufacturing Process Flow-chart
Management Process Diagram
QC Process Diagram
Asembling Instruction Specifications
Manufacturing Equipment Specifications and its List
(3) Quality Control & Assurance Related materials
Acceptance Inspection Standard
Process Inspection Standard
Shipment Inspection Standard
Acceptance Inspection Instruction
Shipment Inspection Instruction
Process Inspection Instruction
Service Manual
(4) Operating Instruction
Instruction Manual
Installation Manual
Parameter Setting Manual
Programming Manual
- 19 -
<PAGE>
EXHIBIT B (2/2)
- 20 -
<PAGE>
Exhibit C (1/3)
SCHEDULE OF TECHNICAL SERVICES AT THE INITIAL STAGE AND THE PAYMENT
[*]
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS
- 21 -
<PAGE>
Exhibit C (2/3)
TECHNICAL SERVICE COSTS AND EXPENSES (RPC)
UNIT: [*]
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ---------------- ------------------ --------------
ITEM PLACE MAN-MONTH AMOUNT
- ---------------------------------------------------------- ---------------- ------------------ --------------
<S> <C> <C> <C>
1 Technical Information
1) Parts Drawings (Electric, Mechanical) Japan [*] [*]
2) Factory Line Flow-chart (Factory) Japan [*] [*]
3) QA & Inspection Manual (QA) Japan [*] [*]
4) Assembling Instruction Manual (Factory) Japan [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Sub-Total 1 [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
2 Technical Services
1) Training at UTS (Factory) China [*] [*]
(QA) China [*] [*]
(Electric) China [*] [*]
(Mechanical) China [*] [*]
2) Evaluation on UTS made sample (QA) Japan [*] [*]
(Electric) Japan [*] [*]
(Mechanical) Japan [*] [*]
3) Business Trip Expense (factory) China [*] [*]
(QA) China [*] [*]
(Electric) China [*] [*]
(Mechanical) China [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Sub-Total 2 [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Total [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
<CAPTION>
- ---------------------------------------------------------- ----------------
Calculation basis Unit
- ---------------------------------------------------------- ----------------
<S> <C>
1-man/day (1-man/month = 20 days, 4 Wk =1 month) [*]
- ---------------------------------------------------------- ----------------
Air ticket & Other transportation fee/time [*]
- ---------------------------------------------------------- ----------------
Hotel Accomodation/day [*]
- ---------------------------------------------------------- ----------------
Meal & Trip expense/day [*]
- ---------------------------------------------------------- ----------------
</TABLE>
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS
- 22 -
<PAGE>
Exhibit C (3/3)
TECHNICAL SERVICE COSTS AND EXPENSES (RP)
UNIT: [*]
<TABLE>
<CAPTION>
- ---------------------------------------------------------- ---------------- ------------------ --------------
ITEM PLACE MAN-MONTH AMOUNT
- ---------------------------------------------------------- ---------------- ------------------ --------------
<S> <C> <C> <C>
1 Technical Information
1) Parts Drawings (Electric, Mechanical) Japan [*] [*]
2) Factory Line Flow-chart (Factory) Japan [*] [*]
3) QA & Inspection Manual (QA) Japan [*] [*]
4) Assembling Instruction Manual (Factory) Japan [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Sub-Total 1 [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
2 Technical Services
1) Training at UTS (Factory) China [*] [*]
(QA) China [*] [*]
(Electric) China [*] [*]
(Mechanical) China [*] [*]
2) Evaluation on UTS made sample (QA) Japan [*] [*]
(Electric) Japan [*] [*]
(Mechanical) Japan [*] [*]
3) Business Trip Expense (factory) China [*] [*]
(QA) China [*] [*]
(Electric) China [*] [*]
(Mechanical) China [*] [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Sub-Total 2 [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
Total [*]
- ---------- ----------------------------------------------- ---------------- ------------------ --------------
<CAPTION>
- ---------------------------------------------------------- ----------------
Calculation basis Unit
- ---------------------------------------------------------- ----------------
<S> <C>
1-man/day (1-man/month = 20 days, 4 Wk =1 month) [*]
- ---------------------------------------------------------- ----------------
Air ticket & Other transportation fee/time [*]
- ---------------------------------------------------------- ----------------
Hotel Accomodation/day [*]
- ---------------------------------------------------------- ----------------
Meal & Trip expense/day [*]
- ---------------------------------------------------------- ----------------
</TABLE>
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS
- 23 -
<PAGE>
EXHIBIT D
TECHNICAL ASSISTANCE FEE
1. The technical assistance fee for each unit of the Products shall be
calculated [*] in accordance with the following formula ("Formula");
[*]
2. For the first year, the technical assistance fee calculated in accordance
with the Formula shall be as follows;
Radio Port Controller (EC-H11940A)
[*]
Radio Port (EA-7H75B)
[*]
Radio Port (EA-7H74B)
[*]
3. For the following year, the same FOB price of the finished Product is used
for the purpose of the Formula provided that, if the FOB price of the
Components kit of the Product is adjusted, the FOB price of the finished
Product is also adjusted by the same percentage.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS
- 24 -
<PAGE>
Exhibit 10.16
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.
JOINT PATENT FILING AGREEMENT
This Memorandum of Understanding is made and entered into effect as of this
1st day of December, 1998, by and between Matsushita Communication Industrial
Company Limited, a Japanese corporation having its principal place of
business at 4-3-1, Tsunashima Higashi, Kohokuku, Yokohama 223 Japan
(hereinafter referred to as MCI) and UT Starcom, Inc., a Delaware corporation
having its principal place of business at 1275 Harbor Bay Parkway, Suite 100,
Alameda, California 94502, USA (hereinafter referred to as UTS), in order to
set forth the basic understanding between the parties regarding patent
application of [*].
Whereas, MCI and UTS have cooperated in devising certain [*], which is deemed
to be eligible for patent application.
Whereas, MCI and UTS is eager to apply for patent regarding this [*] in [*]
and with the consent of both parties, in any other third country.
Now therefore, in consideration of the foregoing paragraphs, MCI and UTS
agree as follows:
1) UTS shall immediately file the said patent application in [*].
2) Matsushita Electric Industrial Co., Ltd. (hereinafter referred to as
MEI), which is the parent company of MCI, shall file a patent
application corresponding to the said patent in [*] and with the
consent of UTS, in any other third country, six months after the
application of the said patent in [*] by UTS, and/ or after the
necessary approval of [*] regulatory authorities.
3) The total cost of necessary application fees shall be [*] between MCI
and UTS.
4) Either party, when supplying [*] utilizing the said patent to any
other third party, shall require the prior written consent of the
other party, but shall be free of any compensation, including but not
limited to royalty payment.
5) Both parties must consent in writing when licensing the said patent
to any other third party, and any royalty income collected as the
result shall be shared equally among the two parties.
In witness whereof, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives, effective as of
the date first above written.
Matsushita Communication Industrial Co., Ltd. UT Starcom, Inc.
Signed: /s/ M. Akiyama Signed: /s/ Paul Berkowitz
- --------------------------------------------------------------------------------
Name: M. Akiyama Name Paul Berkowitz
- --------------------------------------------------------------------------------
Title: Senior Managing Director Titles VP Product Planning
- --------------------------------------------------------------------------------
Date: November 30, 1998 Date: 9 Nov 98
- --------------------------------------------------------------------------------
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
<PAGE>
Exhibit 10.18(a)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO., LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ037
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Zhejiang Branch
Telecom Co., Ltd
Legal address Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ037
Borrower: UTStarcom (Hangzhou) Telecom Co., Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB20,000,000(in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is
decided according to the relevant regulations.
e. Life of loan: One year, (From Mar. 9, 1999 to Mar. 9, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during
the aforesaid conventional term. In case of installment, the borrower
shall comply with the plan as follows:
Date:__________________, Repayment amount:___________________
The borrower may apply to the lender for a grace period 15 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of
utilizing on the amount that the borrower actually has used. The interest is
calculated daily and paid quarterly.
b. The interest is collected actively at the interest payment day
by the lender from the running account or any other saving account which is
opened in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and
severally guaranteed by UTStarcom (China) Telecom Co., Ltd in full, the
number of the guarantee contract is 98BRB107. ___________________ provides
assets as a mortgage, the number of the mortgage contract is _____________.
______________ provides chattels as a pledge, the number of the pledge
contract is _______________.
6. Borrower's obligations.
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party,
the borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify the
lender in advance.
6.9 During the period of this period, if there arises any circumstance
that is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection
with the contract, as well as the expenses incurred by the lender in
collecting its loan. Such expenses shall include, but shall not be limited
to the assessment fee, auction fee, lawyer's fee, investigation fee, and
costs for assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the
safety of the loan. Where the lender collects partial or all amount
hereunder before due according to this contract, laws and regulations, the
borrower and the guarantor voluntarily waiver the right of defense against
the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of
the court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies's seal, and terminates
as soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The Lender: Bank of China Zhejiang Branch
Legal rep. (agent): Legal re. (agent):
Sign (Seal): Sign (Seal):
Date of the Contract: Mar. 9, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(b)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO., LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ100
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co., Ltd Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ100
Borrower: UTStarcom (Hangzhou) Telecom Co., Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB25,000,000 (in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is
decided according to the relevant regulations.
e. Life of loan: One year, (From June 8, 1999 to June 8, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during
the aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:__________________, Repayment amount:___________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
the relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of
utilizing on the amount that the borrower actually has used. The interest is
calculated daily and paid quarterly.
b. The interest is collected actively at the interest payment day
by the lender from the running account or any other saving account which is
opened in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and
severally guaranteed by UTStarcom (China) Telecom Co., Ltd in full, the
number of the guarantee contract is 98BRB107. ___________________provides
assets as a mortgage, the number of the mortgage contract is _____________.
______________ provides chattels as a pledge, the number of the pledge
contract is_______________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party,
the borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify the
lender in advance.
6.9 During the period of this period, if there arises any circumstance
that is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection
with the contract, as well as the expenses incurred by the lender in
collecting its loan. Such expenses shall include, but shall not be limited
to the assessment fee, auction fee, lawyer's fee, investigation fee, and
costs for assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the
safety of the loan. Where the lender collects partial or all amount
hereunder before due according to this contract, laws and regulations, the
borrower and the guarantor voluntarily waiver the right of defense against
the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of
the court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates
as soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The Lender: Bank of China Zhejiang Branch
Legal rep. (agent): Legal rep.(agent):
Sign (Seal): Sign (Seal):
Date of the Contract: June 7, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(c)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO., LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ133
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co., Ltd Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ133
Borrower: UTStarcom (Hangzhou) Telecom Co., Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB20,000,000(in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is
decided according to the relevant regulations.
e. Life of loan: One year, (From June 29, 1999 to June 29, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during
the aforesaid conventional term. In case of installment, the borrower
shall comply with the plan as follows:
Date:__________________, Repayment amount:___________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the relevant
regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of
utilizing on the amount that the borrower actually has used. The interest is
calculated daily and paid quarterly.
b. The interest is collected actively at the interest payment day
by the lender from the running account or any other saving account which is
opened in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and
severally guaranteed by UTStarcom (China) Telecom Co., Ltd in full, the
number of the guarantee contract is 98BRB069. ___________________ provides
assets as a mortgage, the number of the mortgage contract is _____________.
______________ provides chattels as a pledge, the number of the pledge
contract is_______________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party,
the borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify the
lender in advance.
6.9 During the period of this period, if there arises any circumstance
that is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection
with the contract, as well as the expenses incurred by the lender in
collecting its loan. Such expenses shall include, but shall not be limited
to the assessment fee, auction fee, lawyer's fee, investigation fee, and
costs for assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the
safety of the loan. Where the lender collects partial or all amount
hereunder before due according to this contract, laws and regulations, the
borrower and the guarantor voluntarily waiver the right of defense against
the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of
the court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates
as soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The Lender: Bank of China Zhejiang Branch
Legal rep. (agent): Legal rep. (agent):
Sign (Seal): Sign (Seal):
Date of the Contract: June 29, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(d)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTSRCOM (HANGZHOU)
TELECOM CO., LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ144
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co., Ltd Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ144
Borrower: UTStarcom (Hangzhou) Telecom Co., Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB35,000,000(in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is
decided according to the relevant regulations.
e. Life of loan: One year, (From July 7, 1999 to July 5, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during
the aforesaid conventional term. In case of installment, the borrower
shall comply with the plan as follows:
Date:__________________, Repayment amount:___________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the relevant
regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of
utilizing on the amount that the borrower actually has used. The interest is
calculated daily and paid quarterly.
b. The interest is collected actively at the interest payment day
by the lender from the running account or any other saving account which is
opened in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and
severally guaranteed by UTStarcom (China) Telecom Co., Ltd in full, the
number of the guarantee contract is 98BRB107. ___________________provides
assets as a mortgage, the number of the mortgage contract is _____________.
______________ provides chattels as a pledge, the number of the pledge
contract is_______________.
6. Borrower's obligations.
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party,
the borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify the
lender in advance.
6.9 During the period of this period, if there arises any circumstance
that is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection
with the contract, as well as the expenses incurred by the lender in
collecting its loan. Such expenses shall include, but shall not be limited
to the assessment fee, auction fee, lawyer's fee, investigation fee, and
costs for assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the
safety of the loan. Where the lender collects partial or all amount
hereunder before due according to this contract, laws and regulations, the
borrower and the guarantor voluntarily waiver the right of defense against
the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of
the court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates
as soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The Lender: Bank of China Zhejiang Branch
Legal rep. (agent): Legal rep. (agent):
Sign (Seal): Sign (Seal):
Date of the Contract: July 7, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(e)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM(HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ155
<PAGE>
Name of borrower:UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co.,Ltd Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ155
Borrower:UTStsrcom (Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB20,000,000 (in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is
decided according to the relevant regulations.
e. Life of loan: Six months, (From July 14, 1999 to Jan. 10, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during
the aforesaid conventional term. In case of installment, the borrower
shall comply with the plan as follows:
Date:__________________, Repayment amount:___________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to
the relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of
utilizing on the amount that the borrower actually has used. The interest is
calculated daily and paid quarterly.
b. The interest is collected actively at the interest payment day
by the lender from the running account or any other saving account which is
opened in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and
severally guaranteed by UTStarcom(China) Telecom Co.,Ltd in full, the
number of the guarantee contract is 98BRB107. _________________ provides
assets as a mortgage, the number of the mortgage contract is _____________.
______________ provides chattels as a pledge, the number of the pledge
contract is_______________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party,
the borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify the
lender in advance.
6.9 During the period of this period, if there arises any circumstance
that is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection
with the contract, as well as the expenses incurred by the lender in
collecting its loan. Such expenses shall include, but shall not be limited
to the assessment fee, auction fee, lawyer's fee, investigation fee, and
costs for assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the
safety of the loan. Where the lender collects partial or all amount
hereunder before due according to this contract, laws and regulations, the
borrower and the guarantor voluntarily waiver the right of defense against
the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of
the court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates
as soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign (Seal): Sign (Seal):
Date of the Contract: July 14, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(f)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ179
<PAGE>
Name of borrower: UTStarcom(Hangzhou) Name of lender: Bank of China
Zhejiang Branch Telecom Co.,Ltd.
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ179
Borrower: UTStarcom(Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB15,000,000(in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is decided
according to the relevant regulations.
e. Life of loan: Six months, (From July 21, 1999 to Jan. 19, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during the
aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:______________________, Repayment amount: _____________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of utilizing
on the amount that the borrower actually has used. The interest is calculated
daily and paid quarterly.
b. The interest is collected actively at the interest payment day by the
lender from the running account or any other saving account which is opened
in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and severally
guaranteed by UTStarcom (China) Telecom Co.,Ltd in full, the number of the
guarantee contract is 98BRB107. _______________ provides assets as a
mortgage, the number of the mortgage contract is ____________. _____________
provides chattels as a pledge, the number of the pledge contract is _________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party, the
borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify
the lender in advance.
6.9 During the period of this period, if there arises any circumstance that
is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection with
the contract, as well as the expenses incurred by the lender in collecting
its loan. Such expenses shall include, but shall not be limited to the
assessment fee, auction fee, lawyer's fee, investigation fee, and costs for
assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the safety
of the loan. Where the lender collects partial or all amount hereunder before
due according to this contract, laws and regulations, the borrower and the
guarantor voluntarily waiver the right of defense against the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of the
court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates as
soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign(Seal): Sign(Seal):
Date of the Contract: July 21, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(g)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTSRCOM (HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ183
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co.,Ltd. Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ183
Borrower: UTStarcom (Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB20,000,000(in words)
d. Rate of interest:
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is decided
according to the relevant regulations.
e. Life of loan: Six months, (From August 5, 1999 to Feb. 3, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during the
aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:______________________, Repayment amount: _____________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of utilizing
on the amount that the borrower actually has used. The interest is calculated
daily and paid quarterly.
b. The interest is collected actively at the interest payment day by the
lender from the running account or any other saving account which is opened
in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and severally
guaranteed by UTStarcom (China) Telecom Co.,Ltd in full, the number of the
guarantee contract is 98BRB069. _______________ provides assets as a
mortgage, the number of the mortgage contract is ____________. _____________
provides chattels as a pledge, the number of the pledge contract is _________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party, the
borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify
the lender in advance.
6.9 During the period of this period, if there arises any circumstance that
is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection with
the contract, as well as the expenses incurred by the lender in collecting
its loan. Such expenses shall include, but shall not be limited to the
assessment fee, auction fee, lawyer's fee, investigation fee, and costs for
assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the safety
of the loan. Where the lender collects partial or all amount hereunder before
due according to this contract, laws and regulations, the borrower and the
guarantor voluntarily waiver the right of defense against the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of the
court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates as
soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign (Seal): Sign (Seal):
Date of the Contract: August 5, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(h)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ195
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Telecom Co.,Ltd. Zhejiang Branch
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ195
Borrower: UTStarcom (Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB20,000,000(in words)
d. Rate of interest
i. RMB loan [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is decided
according to the relevant regulations.
e. Life of loan: Six months, (From August 17, 1999 to Feb. 16, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during the
aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:______________________, Repayment amount: _____________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of utilizing
on the amount that the borrower actually has used. The interest is calculated
daily and paid quarterly.
b. The interest is collected actively at the interest payment day by the
lender from the running account or any other saving account which is opened
in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and severally
guaranteed by UTStarcom (China) Telecom Co.,Ltd in full, the number of the
guarantee contract is 98BRB069. _______________ provides assets as a
mortgage, the number of the mortgage contract is ____________. _____________
provides chattels as a pledge, the number of the pledge contract is _________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party, the
borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify
the lender in advance.
6.9 During the period of this period, if there arises any circumstances that
is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection with
the contract, as well as the expenses incurred by the lender in collecting
its loan. Such expenses shall include, but shall not be limited to the
assessment fee, auction fee, lawyer's fee, investigation fee, and costs for
assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the safety
of the loan. Where the lender collects partial or all amount hereunder before
due according to this contract, laws and regulations, the borrower and the
guarantor voluntarily waiver the right of defense against the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of the
court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates as
soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign(Seal): Sign(Seal):
Date of the Contract: August 17, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(i)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ208
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Zhejiang Branch Telecom Co.,Ltd.
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No.: 99BRJ208
Borrower: UTStarcom (Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB10,000,000(in words)
d. Rate of interest
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is decided
according to the relevant regulations.
e. Life of loan: Six months, (From Sep. 2, 1999 to Mar. 1, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during the
aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:______________________, Repayment amount: _____________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of utilizing
on the amount that the borrower actually has used. The interest is calculated
daily and paid quarterly.
b. The interest is collected actively at the interest payment day by the
lender from the running account or any other saving account which is opened
in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and severally
guaranteed by UTStarcom (China) Telecom Co.,Ltd in full, the number of the
guarantee contract is 98BRB069. _______________ provides assets as a
mortgage, the number of the mortgage contract is ____________. _____________
provides chattels as a pledge, the number of the pledge contract is _________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party, the
borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify
the lender in advance.
6.9 During the period of this period, if there arises any circumstances that
is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection with
the contract, as well as the expenses incurred by the lender in collecting
its loan. Such expenses shall include, but shall not be limited to the
assessment fee, auction fee, lawyer's fee, investigation fee, and costs for
assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the safety
of the loan. Where the lender collects partial or all amount hereunder before
due according to this contract, laws and regulations, the borrower and the
guarantor voluntarily waiver the right of defense against the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of the
court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates as
soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign (Seal): Sign (Seal):
Date of the Contract: Sep. 2, 1999
Place of the Contract: Hangzhou
<PAGE>
Exhibit 10.18(j)
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
BANK OF CHINA
CONTRACT OF LOAN
BORROWER: UTSTARCOM (HANGZHOU)
TELECOM CO.,LTD
LENDER: BANK OF CHINA ZHEJIANG BRANCH
Contract No.: 99BRJ226
<PAGE>
Name of borrower: UTStarcom (Hangzhou) Name of lender: Bank of China
Zhejiang Branch Telecom Co.,Ltd.
Legal address: Legal address: 320 Yan'an Rd., Hangzhou
Legal rep.: Legal rep.:
Bank of deposit: Bank of China Zhejiang Branch
Account No.: [*]
Tel: 8856112 Tel: 0571-7077996
Fax: 8855203 Fax: 0571-7132286
Telex: Telex: 35019 BOCHZ CN
P.C.: 310012 P.C.: 310006
Any notice, legal documentary as well as payment order hereunder is
required to be made in written form. Once the telex, telegraph and fax send
out, or seven days after the letters mail out, or once the correspondence
that must be delivered by hand send off, those documents are considered to
arrive the opposing party.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
CONTRACT OF LOAN
Contract No., 99BRJ226
Borrower: UTStarcom (Hangzhou) Telecom Co.,Ltd
Lender: Bank of China Zhejiang Branch
Whereas Borrower and Lender agree to make and fulfill this contract
under the General Lending Rules and Regulations of Loan Contract and other
Chinese laws and regulations concerned, it is hereby agreed as follows:
1. Content under this contract:
a. Lending category: Short-term Loan
b. Use of Lending: Circulating
c. Principal RMB30,000,000(in words)
d. Rate of interest
i. RMB loan: [*]
ii. Foreign currency loan:
Where the rate of interest is adjusted by the government, it is decided
according to the relevant regulations.
e. Life of loan: Six months, (From Sep. 17, 1999 to March 10, 2000).
2. After this Contract takes effect, the borrower shall apply for drawing
according to the detailed drawing plan in case of using the loan in batches.
3. Repayment. The borrower shall repay the principal and interest during the
aforesaid conventional term. In case of installment, the borrower shall
comply with the plan as follows:
Date:______________________, Repayment amount: _____________________
The borrower may apply to the lender for a grace period 30 days before
the maturity, and it can be extended with the lender's consent and the
fulfillment of the corresponding procedure.
The borrower may make prepayment with the consent of the lender, and
the interest on the amount of prepayment is calculated according to the
relevant regulations.
4. Interest calculation.
a. The interest hereunder is calculated from the first day of utilizing
on the amount that the borrower actually has used. The interest is calculated
daily and paid quarterly.
b. The interest is collected actively at the interest payment day by the
lender from the running account or any other saving account which is opened
in the lender or one of the lender's branches.
5. The principal, interest and corresponding fee are jointly and severally
guaranteed by UTStarcom (China) Telecom Co.,Ltd in full, the number of the
guarantee contract is 98BRB069. _______________ provides assets as a
mortgage, the number of the mortgage contract is ____________. _____________
provides chattels as a pledge, the number of the pledge contract is _________.
6. Borrower's obligations
6.1 The borrower shall open an account for settlement in the lender or in
one of the lender's branches. Any settlement arising from this contract shall
be processed through the aforesaid account.
6.2 The borrower shall provide monthly the lender with authentic balance
sheet, profit and loss sheet, financial statement and the true information
such as the name of the bank with which the borrower's account is opened,
account number, balances of its outstanding deposits and loans, etc.
6.3 The borrower shall accept the lender's inspection and supervision on
utilizing the loan, status of business and the financial affairs. The
borrower shall provide the lender with the documents at the lender's request.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
<PAGE>
6.4 The borrower shall utilize the loan according to the agreed purpose
stipulated in this contract.
6.5 The borrower shall pay the loan interest on time and render the
repayment on time.
6.6 In case that the borrower provides any warranty for the third party, the
borrower shall notify the lender in advance and such warranty shall not
affect the borrower's repayment to the lender on time.
6.7 During the period of this contract, in case that the borrower changes
the pattern of management or the ownership construction by the means of
contracting, leasing, pooling, transforming to stock company, establishing
joint venture, separating, merger, foreign investment, transferring of
ownership, resolving or any other action, the borrower shall seek the
lender's consent and ascertain the new source of repayment or provide new
warranties.
If the borrower transfers partial or all the obligations under this
contract to a third party, the borrower should obtain the lender's consent in
writing and ascertain exactly the rights and obligations.
6.8 During the period of this contract, if the borrower changes its legal
representative, legal address or business address the borrower shall notify
the lender in advance.
6.9 During the period of this period, if there arises any circumstances that
is to cause damage to the lender's credit, the borrower shall inform the
lender in time and take measures to protect the lender's right.
7. Default responsibilities
7.1 If the borrower breaches any part of the aforesaid obligations, the
lender has the right of collecting all amounts payable hereunder by the
borrower before it's due, freezing the balance of the loan which the borrower
has not utilized, taking the measures of credit punishment as well as
bringing a lawsuit.
7.2 The lender has the right of charging a penalty fine according to
stipulations promulgated by the People's Bank of China or the Bank of China
if the borrower can not render the repayment during the loan period or the
extension of the loan.
7.3 If the borrower do not utilize the loan for purpose specified in this
contract or engross and embezzle the loan, the lender can impose additional
interest according to the stipulations promulgated by the People's Bank of
China or the Bank of China.
7.4 The borrower shall pay interest calculated on the basis of the unpaid
due interest at the exact interest rate of this loan or if the borrower do
not pay the due interest in full, the lender has the right of charging the
interest calculated on the basis of unpaid due interest according to the
stipulations promulgated by the People's Bank of China or the Bank of China.
8. The borrower shall pay all expenses arising out of or in connection with
the contract, as well as the expenses incurred by the lender in collecting
its loan. Such expenses shall include, but shall not be limited to the
assessment fee, auction fee, lawyer's fee, investigation fee, and costs for
assignment of assets, taxes, etc.
9. During the period of this contract, the lender may collect all amounts
payable hereunder by the borrower before it is due or terminate the contract,
where the borrower or the guarantor is or may be in financial difficulties,
or withdraws or transfers its capital and assets without consent of the
lender, or involves in any disputes with a third party and the estates under
mortgage/pledge destroyed or lose, or any such events may endanger the safety
of the loan. Where the lender collects partial or all amount hereunder before
due according to this contract, laws and regulations, the borrower and the
guarantor voluntarily waiver the right of defense against the lender, and the
<PAGE>
lender has the right to transfer the amount directly to its own from the
borrower's or the guarantor's bank account.
10. The loan receipt, guarantee/mortgage/pledge contract, application for
loan and any other documents hereunder are parts of this contract, and have
the same legal effect as this contract.
11. Other agreements upon by and between parties.
a.
b.
c.
12. The contract is governed by China law and under the jurisdiction of the
court in the lender's domicile place.
13. The contract takes effect from and after the legal representatives or
agents of all parties sign and affix their companies' seal, and terminates as
soon as the borrower pays off the amount hereunder in full.
14. The original of the contract is triplicate which the lender takes two
and the borrower takes one.
The borrower: The lender: Bank of China Zhejiang Branch
Legal rep.(agent): Legal rep.(agent):
Sign(Seal): Sign(Seal):
Date of the Contract: Sep. 17, 1999
Place of the Contract: Hangzhou
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
UT STARCOM (HANGZHOU) TELECOMMUNICATION CO. LTD.
CONTRACT
CHAPTER ONE
GENERAL RULES
UT Starcom (Hangzhou) Telecommunication Co. Ltd. (abbreviated as
HUTS) which was established in May 1992, is a branch company set up in China
by UT Starcom Inc. of USA whose registered capital is 3,500,000 US dollars.
It has been chosen as the Advanced Enterprises of Hangzhou High-tech Industry
Development Zone for 1995 and 1996. The sales volume of 1996 is [*], the
profit is [*], and the tax it paid to the country is [*]. It mainly produces
OMUX-Optical terminal equipment, HDSL, ACCESS and wireless local loop, etc.
Zhejiang Yutong Telecommunication Equipment Co. Ltd. (abbreviated as
UTL) is a joint venture enterprises jointly invested by Zhejiang
Telecommunication Equipment Factory and UT Starcom Inc. of USA with 2,350,000
US dollars' registered capital. It has been chosen as the Advanced
Enterprises of Hangzhou High-tech Industry Development Zone for 1994, 1995
and 1996 Its sales volume of 1996 is [*], the profits is [*], and the taxes
paid to the country is [*]. It mainly produces LCS-9/9B access network
systems incorporating digital loop carrier equipment.
Since the two companies share the same foreign investor--UT Starcom
Inc. of USA and the products they produced are all access network systems of
telecommunication, in order to make one company's superiority in production
and process, products auxiliary systems, capital running and human resources
as the complementation of the other company, the leaders in the two companies
negotiated for several times and applied for the approval of their investor.
In accordance with the Laws of the People's Republic of China on Joint
Ventures Using Chinese and Foreign Investment and other relevant Chinese laws
and regulations, both companies enter into agreement to reorganize the assets
and merge into establishing a new joint venture company--UT Starcom
(Hangzhou) Telecommunication Co. Ltd. in Hangzhou, China.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
CHAPTER TWO
PARTIES OF JOINT VENTURE
ARTICLE 1: The parties of this contract:
Zhejiang Telecommunication Equipment Factory (hereinafter
referred to as Party A) is registered in Zhejiang Province;
Legal residence: No.118 Moganshan Road Gongshu District,
Hangzhou, China. 310005.
Legal representative: Zhao Xing-Huang Title: Director
Nationality: China
UT Starcom Inc. of USA (hereinafter referred to as Party B)
is registered in Delaware, USA.
Legal residence: 1275 Harbor Bay Parkway, Suite 100 Alameda,
California 94502 USA.
Legal representative: Hong Liang-Lu Title: Chairman
Nationality: USA
CHAPTER THREE
ESTABLISHMENT OF JOINT VENTURE COMPANY
ARTICLE 2: In accordance with the Laws of the People's Republic of
China on Joint Ventures Using Chinese and Foreign Investment
and other relevant Chinese laws and regulations, Party A and
Party B enter into establishing a joint venture company of UT
Starcom (Hangzhou) Telecommunication Co. Ltd. in the territory
of China.
ARTICLE 3: Full name of the Joint Venture Company: UT STARCOM
(Hangzhou) Telecommunication CO. LTD. (hereinafter referred to
as the Joint Venture Company). Legal residence of the Joint
Venture Company: Building No.2 and No.3 of Yile Industry Zone,
No.129 Wenyi Road, Hangzhou, China. 310012.
ARTICLE4: The Joint Venture Company is a Chinese legal entity and is
governed and protected by Chinese laws. All of its activities
shall obey Chinese laws rules and relevant regulations.
ARTICLE 5: The Company is a limited liability company. Party A and
Party B shall undertake responsibilities of the Company's
liabilities on the basis of the invested capital of each
party, and shall share profits and risks and deficits in
proportion to their investment.
<PAGE>
CHAPTER FOUR
THE PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
ARTICLE 6: The purposes of the Joint Venture Company: With the purpose
to strengthen economic cooperation and technology exchange,
The Joint Venture Company shall apply advanced and proper
technology and scientific operation and management methods,
develop new products, enhance its competitive ability in
international market in quality and price, and achieve
satisfactory economic profits.
ARTICLE 7: The production and business scope of the Joint Venture
Company: Designs, develops, assembles, produces, sells and
installs high-tech telecommunication hardware and software,
including digital integration of telecommunication access
network systems (including wireless and cable access network),
optical transmission equipment, intelligent network systems,
personal communication and multi-media, data and information
network systems and other telecommunication systems (with the
exception of the programs restricted or banned by the
country), and provides maintenance and technical consultation
services of its own products.
ARTICLE 8: The production scale:
1. [*] of OMUX serial optical terminal machines;
2. [*] of digital integration access network systems;
3. [*] of subscriber digital loop;
4. [*] of wireless local loop;
5. [*] of HDSL;
6. Other telecommunication products and equipment.
CHAPTER FIVE
TOTAL INVESTMENT AND REGISTERED CAPITAL
ARTICLE 9: The total investment of the Joint Venture Company is [*].
ARTICLE 10: The investment of Party A and Party B is [*] and it is the
registered capital of the Joint Venture Company
in which Party A invests [*], accounting for 12% of
shares, and Party B invests [*], accounting for 88%
of shares.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
ARTICLE 11: The investment of Party A and Party B is the following.
Party A: materials and cash amount to [*].
Party B: materials and cash amount to [*].
The exchange rate of RMB and US dollar shall be determined on
the basis of the exchange quotation published by the State
Administration Bureau of Foreign Currency of the PRC for the
date of concern.
ARTICLE 12: The registered capital of the Joint Venture Company shall
be paid off within six months from the date when the business
license of the Joint Venture Company is signed and issued in
proportion to the investment of Party A and Party B.
ARTICLE 13: In case any of the two parties transfers part or all of
its investment to a third party, it shall be agreed by the
other party and shall be submitted to examination and approval
authority for approval. The other party shall have priority to
buy the transferred investment.
CHAPTER SIX
RESPONSIBILITIES OF THE PARTIES
ARTICLE 14: Party A and Party B shall be responsible for the following
matters:
Duties of Party A:
1. Assisting the Joint Venture Company to apply for approval of
relevant Chinese authorities concerned, register the Joint
Venture Company and receive business license, etc.;
2. Providing cash and materials according to Chapter Five;
3. Assisting to handle with the import declaration procedures of
machine equipment and instruments provided by Party B as
investment and to transport them in the territory of China;
4. Assisting the Joint Venture Company to purchase or rent
equipment, materials, office appliances, means of
transportation, telecommunication facilities, etc. in the
territory of China;
5. Assisting the Joint Venture Company to implement
infrastructures for water, electricity, transportation and
facilities for meals, health, activity, etc.;
6. Assisting the Joint Venture Company to recruit and employ
Chinese operation and management staff, technical staff and
workers and others;
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
7. Assisting foreign staff to handle entry visas, working
certificates and travel procedures;
8. Assisting foreign staff to handle accommodation and
transportation problems;
9. Handling the other matters appointed by the Joint Venture
Company.
Duties of Party B:
1. Providing cash and materials according to Chapter Five, and
transporting the machine equipment and other materials which
are part of its investment to Chinese port;
2. Handling the purchasing of machines, instruments, materials,
parts outside of Chinese territory appointed by the Joint
Venture Company;
3. Assisting to install, adjust, test, maintain the newly
purchased equipment;
4. Training the technical staff and workers of the Joint Venture
Company;
5. Being responsible for steadily producing qualified products in
accordance with the designed capacity within the time limits;
6. Assisting the Joint Venture Company to providing American
documents and materials necessary for the staff who go abroad;
7. Assisting the settlement of accommodation and transportation
of the company's staff abroad outside Chinese territory;
8. Providing information of telecommunication market outside of
Chinese territory for the Joint Venture Company;
9. Assisting the establishment and management of branch
organizations of the Joint Venture Company outside of Chinese
territory, and provide business convenience for the branch
organizations; Being responsible of the selling of the
products of the Joint Venture Company for sale abroad and
providing services after the sale of products outside of
Chinese territory;
10. Handling other matters appointed by the Joint Venture Company.
CHAPTER SEVEN
TECHNOLOGY TRANSFER
ARTICLE 15: Party A and Party B enter into agreement that the new
technologies and products studied and developed by Party B
shall be produced in the joint Venture Company. The Joint
Venture Company and Party B shall stipulate contract of
transferring
<PAGE>
technologies with the purpose of gaining the advanced
technologies necessary for achieving the production and
business purpose and scale stipulated in Chapter Four,
including designs of products, part of production crafts,
testing methods, quality standard and training staff, etc.
(The items relevant to technology transfer shall be separately
submitted to examination and approval authority.)
ARTICLE 16: Party B shall be responsible for the following duties in
technology transfer:
1. Guaranteeing that the designs, production technologies, flow
process of crafts and tests of the new technologies and
products provided for the Joint Venture Company are complete,
accurate, and reliable, fitting the operation purpose and
requirement of the Joint Venture Company and achieving the
quality and production capacity required by the contract;
2. Listing out in detail the technologies and technical services
provided at each stage stipulated by the agreement on
technology transfer as a supplement to the agreement, and
guaranteeing its implementation;
3. Guaranteeing to submit on time the drawings, technical
conditions and other detailed materials which are part of the
transferred technologies;
4. Timely providing improvements of technologies, information of
improvements and technical materials for the Joint Venture
Company with no additional charge within the valid term of the
agreement on technology transfer;
5. Guaranteeing that the technical staff and workers in the Joint
Venture Company are able to grasp the technology transferred
within the time limits stipulated by the agreement on
technology transfer.
ARTICLE 17: The expenses of transferring technologies shall be paid by
means of [*]. The [*] rate shall be [*]. In case the foreign
currency is imbalance, the part lacked shall be settled
by RMB.
ARTICLE 18: The term of the agreement on technology transfer is [*].
After it expires, the Joint Venture Company shall have
the rights to continue using, studying and developing the
transferred technologies. The Joint Venture Company may use,
amend, and develop the technologies transferred by Party B.
The Joint Venture Company shall not transfer part or all of
the technologies to the enterprises besides Party A and Party
B.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
CHAPTER EIGHT
THE SALES OF PRODUCTS
ARTICLE 19: The products of the Joint Venture Company shall be sold to
the markets inside and outside of [*] after the products are
put into production formally.
ARTICLE 20: With the purpose of selling products inside or outside of
[*] and providing maintenance and repair services after the
sale of products, the Joint Venture Company may establish
branch organizations for sale and repair services inside and
outside of the [*].
ARTICLE 21: The trademark used by the products of the Joint Venture
Company shall be trademarks determined by the Joint Venture
Company.
CHAPTER NINE
BOARD OF DIRECTORS
ARTICLE 22: The Board of Directors of the Joint Venture Company shall
be established from the date when the Joint Venture Company is
registered.
ARTICLE 23: The Board of Directors shall be composed of six Directors,
two appointed by Party A and four appointed by Party B. The
Chairman shall be appointed by Party B, and the Vice Chairman
shall be appointed by Party A. The Chairman and Vice Chairman
shall hold the office for a period of four years and may be
reappointed consecutively.
ARTICLE 24: The Board of Directors shall be the highest authority of
the Company, determining all important matters of the Company.
The Board meetings shall be held with the participation of
two-thirds of the Directors (including at least one from Party
A). The determination of important issues shall be unanimously
approved by the Directors attending the meeting or all
Directors:
1. Amendment of the regulations of the Joint Venture Company;
2. Termination and dismissal of the Joint Venture Company;
3. Increases and transfers of the registered capital of the Joint
Venture Company;
4. Mergers of the Joint Venture Company with other economic
organizations.
Other matters shall be determined by majority's approval (at
least with the approval of one Directors from Party A).
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.
<PAGE>
ARTICLE 25: In case the Chairman cannot fulfill his duties, he shall
appoint the Vice Chairman or other Directors to temporarily
carry out his duties.
ARTICLE 26: The Board meetings shall be held at least once a year and
shall be organized by the Chairman. The Chairman may convene a
special meeting with the proposal of one-third of the
Directors. The minutes of Board meetings shall be written in
Chinese and English and shall be filed in the Joint Venture
Company.
ARTICLE 27: The Chairman shall inform Party A and Party B of the
important matters and resolutions of the Joint Venture Company
within the term of joint venture.
CHAPTER TEN
BUSINESS MANAGEMENT OFFICE
ARTICLE 28: The Joint Venture Company shall set up a business
management office, in charge of daily operational management.
The Joint Venture Company shall have one General Manager
nominated by Party B. One Deputy General Manager shall be
nominated by Party A and another Deputy General Manager shall
be nominated by Party B. The General Manager and the Deputy
General Managers shall be appointed by the Board of Directors
and shall hold office for a period of three years.
ARTICLE 29: The duties of General Manager is executing the resolutions
of the Board meetings, organizing the routine operation and
management of the Joint Venture Company. The Deputy General
Manager shall assist the work of General Manager.
The business management office may have several department
managers who are being responsible to General Manager and
Deputy General Manager. The number and candidates of
department managers shall be nominated by General Manager and
Deputy General Manager, and shall be appointed and dismissed
by General Manager. If necessary, department managers may be
recruited and employed publicly. The General Manager shall
inform the Chairman of the appointment or dismissal of
department managers within ten days.
ARTICLE 30: In case of graft and corruption or serious neglect on the
part of the General Manager and the Deputy General Manager,
the Board of Directors shall have the rights to dismiss them
at any time.
<PAGE>
CHAPTER ELEVEN
PURCHASES OF EQUIPMENT
ARTICLE 31: The raw materials, parts, auxiliary parts, means of
transportation and office appliances necessary for the Joint
Venture Company may be purchased inside or outside of China.
ARTICLE 32: The Joint Venture Company shall appoint Party B to
purchase equipment in foreign market case. The function and
price of equipment shall be consulted and approved by the
Joint Venture Company. Party B shall invite the
representatives of Party A or the Joint Venture Company to
participate in the purchasing of machines of big size.
CHAPTER TWELVE
LABOR MANAGEMENT
ARTICLE 33: The employment, dismissal, wages, labor insurance,
welfare, rewards and penalties, etc. of the stuff and workers
of the joint Venture Company shall be planned by the Board of
Directors and stipulated by labor contracts made together or
respectively between the Joint Venture Company and the labor
union according to the Administration Regulations of the
People's Republic of China on Joint Ventures Using Chinese and
Foreign Investment and its implementations.
After the labor contract is signed, it shall be submitted to
local labor management authority to be filed.
ARTICLE 34: The employment, wages, achievement rewards, insurance,
welfare, standard of travel expenses, etc. shall be determined
by the Board of Directors.
CHAPTER THIRTEEN
TAX, FINANCE ACCOUNTING AND FOREIGN CURRENCY
ARTICLE 35: The Joint Venture Company shall pay taxes in accordance
with the relevant laws and regulations of the PRC.
ARTICLE 36: The staff and workers of the Joint Venture Company shall
pay individual income taxes according to the Individual Income
Tax Law of the People's republic of China.
ARTICLE 37: The Joint Venture Company shall draw funds in accordance
with the relevant regulations of the PRC. The proportion of
every year shall be discussed and
<PAGE>
determined by the Board of Directors according to the
operation status of the Joint Venture Company.
ARTICLE 38: The fiscal year of the Joint Venture Company is from the
first of January to the thirty-first of December. Vouchers,
documents, statements and account books shall be prepared in
Chinese. The vouchers and documents of foreign business shall
be prepared in Chinese, English or both.
ARTICLE 39: The Joint Venture Company shall invite accountants and
auditors registered in China or other countries to check the
finance and accounts, and shall submit the result to the Board
of Directors and the General Manager.
ARTICLE 40: The General Manager shall prepare the balance sheets, the
statement of loss and profit and the profits allocation
proposal of the previous fiscal year, and submit them to the
Board of Directors for examination and approval within the
first three months of the present fiscal year. After the
profit allocation proposal is decided, the Joint Venture
company shall allocate the profits to Party A and Party B
immediately in accordance with the relevant laws of the PRC.
The foreign currency shall be settled by either RMB or US
dollar.
ARTICLE 41: All the foreign currency matters of the Joint Venture
Company shall be handled according to the relevant
stipulations of the Regulations of the People's Republic of
China on Foreign Currency Administration.
CHAPTER FOURTEEN
TERMS OF JOINT VENTURE
ARTICLE 42: The term of the Joint Venture Company shall be 50 years.
The establishment of the Joint Venture Company is on the day
when the business license of the Joint Venture Company is
signed and issued.
With the proposal of two parties and the unanimous approval of
the Board of Directors, the Joint Venture Company may apply to
the Ministry of Foreign Trade and Economic Cooperation of the
PRC (or the examination and approval authority it appointed)
for prolonging the term of joint venture within six months
before the original term expires.
<PAGE>
CHAPTER FIFTEEN
THE DISPOSAL OF ASSETS WHEN THE JOINT VENTURE TERM EXPIRES
ARTICLE 43: When the term of joint venture expires or is terminated,
the Joint Venture Company shall conduct liquidation according
to the laws. The assets after liquidation shall be allocated
in proportion to the investment of Party A and Party B.
CHAPTER SIXTEEN
INSURANCE
ARTICLE 44: The insurance of the Joint Venture Company that is inside
China shall be underwritten with the insurance companies in
China, and insurance outside Chinese territory may be
underwritten with the local insurance companies or other
insurance companies. The coverage, insurance value and
insurance term shall be discussed and decided by the Board of
Directors of the Joint Venture Company according to the
regulations of the insurance companies in the territory of
China and other insurance companies.
CHAPTER SEVENTEEN
THE AMENDMENT, ALTERATION AND CANCELLATION OF THE CONTRACT
ARTICLE 45: The amendment of the contract shall be signed in writing
by Party A and Party B and shall be submitted to the original
examination and approval authority for approval to be
effective.
ARTICLE 46: Owing to the failure of fulfilling the contract due to
Force Majeure or of continuing operation due to the constant
deficits of the Joint Venture Company, the termination of the
term of joint venture and the cancellation of the contract
before the end of the term shall be unanimously approved by
the Board of Directors and shall be submitted to the original
examination and approval authority for approval.
ARTICLE 47: In case one party doesn't fulfill the obligations
stipulated in the contract and articles of association or
seriously violate the contract and articles of association,
which lead to the failure of operating or achieving the
business purpose of the Joint Venture Company as stipulated in
the contract, it shall be regarded as the Delinquent party's
unilateral termination the contract. Besides claiming to the
delinquent party for compensation, the observant party also
has rights to apply to the original examination and approval
authority for the approval of terminating the joint venture
contract according the stipulation of the contract. In case
Party A and Party B agree to
<PAGE>
continue the operation, the delinquent party shall compensate
the economical losses of the Joint Venture Company.
CHAPTER EIGHTEEN
LIABILITIES FOR BREACH OF CONTRACT
ARTICLE 48: In case any of the two parties doesn't pay off its
investment in accordance with the Chapter Five of the
contract, the delinquent party shall pay penalty fee which
amount to 1% of the investment it shall pay a month counted
from the first month that exceeds the time limits to the
observant party a month counted from the first month that
exceeds the time limits. In case the delinquent party doesn't
pay off its investment three months after the time limits,
besides requiring the delinquent party to pay the penalty fee
which accumulated to 3% of the investment it shall pay, the
observant party also has rights to terminate the contract
according to Chapter Seventeen of the contract and require the
delinquent party to compensate its losses.
ARTICLE 49: The liability of the failure of fulfilling or partially
fulfilling the contract due to the faults of one party shall
be undertaken by the party who is guilty. In case both parties
are guilty, the liabilities for breach of contract shall be
undertaken by the two parties respectively according to the
actual situations.
CHAPTER NINETEEN
FORCE MAJEURE
ARTICLE 50: Due to earthquake, typhoon, flood, war and other
unpredictable and unavoidable Force Majeure accidents which
directly influence the fulfillment of the contract on the
agreed conditions, the party that suffers from the
above-mentioned accident shall inform the other party of the
accident by telegram or facsimile in time, and present the
detailed minutes of the accident and a valid certificate
stating the reasons why it cannot fulfill or partially fulfill
the contract or why it needs to prolong the fulfillment of the
contract within fifteen days. This certificate shall be
presented by local notary authority of where the accident
happens. Whether to cancel the contract or partially relieve
the responsibilities of fulfilling the contract or prolonging
its fulfillment shall be decided through negotiations between
the two parties according to the degree of the influence of
the accident on the fulfillment of the contract.
<PAGE>
CHAPTER TWENTY
GOVERNING LAWS
ARTICLE 51: The formulation, effect, explanation and execution of the
contract and the settlement of disputes shall be governed by
the laws of the People's Republic of China.
CHAPTER TWENTY-ONE
SETTLEMENT OF DISPUTES
ARTICLE 52: All disputes due to the fulfillment of the contract or
related to the contract shall be settled through friendly
negotiations of the two parties. In case the negotiation does
not work. The dispute shall be submitted to an arbitrary
organization agreed by both parties for arbitration.
The arbitrary award is final and binding upon both parties.
ARTICLE 53: During the arbitration, except for the parts that causes
the disputes and is being arbitrated, the contract shall
continue to be fulfilled.
CHAPTER TWENTY-TWO
CONTRACTUAL LANGUAGE
ARTICLE 54: The contract shall be prepared in Chinese.
CHAPTER TWENTY-THREE
EFFECTIVENESS OF THE CONTRACT AND OTHERS
ARTICLE 55: The articles of association of the Joint Venture Company
formulated in accordance with the principals of the contract
shall be regarded as a part of it.
ARTICLE 56: The contract shall be approved by the Ministry of Foreign
Trade and Economic Cooperation of the PRC.(or the examination
and approval authority it appointed) and will enter into
effect from the day of approval. The contracts of the former
UT Starcom (Hangzhou) Equipment Co. Ltd. (Sole proprietorship)
and Zhejiang Yutong Telecommunication Equipment Co. Ltd. shall
be submitted to the original examination and approval
authority for cancellation and termination.
ARTICLE 57: The ways Party A and Party B dispatch notices, such as by
telegram, telex and facsimile, which relate to the rights and
obligations of each party, shall be followed
<PAGE>
with written letters. The legal residences listed out in the
contract are the addresses of Party A and Party B where the
letters are received.
ARTICLE 58: The contact shall be signed by the representatives
appointed by Party A and Party B and is made into five copies.
Zhejiang Telecommunication Equipment Factory UT Starcom Inc. of USA
Representative: Representative:
/s/ (Signature) /s/ (Signature)
Date of signature: July 31, 1997 Date of signature:
<PAGE>
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
SINO-FOREIGN JOINT VENTURE
GUANGDONG UTSTARCOM TELECOMMUNICATION CO. LTD.
CONTRACT
ARTICLE 1 GENERAL
In accordance with the "Law of the People's Republic of China
Sino-Foreign Equity Joint Venture enterprise" and other relevant laws and
regulations, Chinese Guangdong Nanfang telecommunication Group Co. and UTStarcom
Inc., adhering to the principle of equality and mutual benefit, agree to jointly
invest to set up a joint venture enterprise. The contract hereunder worked out.
ARTICLE 2 PARTIES OF THE JOINT VENTURE
Chinese Guangdong Nanfang telecommunication Group Co. (hereafter
referred to as Party A), registered with Guangzhou City of Guangdong province in
China, and its legal address is at Guangzhou City.
Legal representative: Name: Li Yisheng
Position: Chairman of the board
Nationality: China
UTStarcom Inc. (hereafter referred to as Party B), registered in
U.S.A., and its legal address is at Alameda, California, U.S.A.,
Legal representative: Name: Lu Hongliang
Position: CEO
Nationality: U.S.A.
ARTICLE 3 ESTABLISHMENT OF JOINT VENTURE COMPANY
3.1 In accordance with the "Law of the People's Republic China on
Sino-Foreign Equity Joint Ventures Enterprise" and other relevant laws and
regulations, both parties of the Joint venture agree to set up a equity joint
venture company in business of manufacturing and operating telecommunication
equipment.
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<PAGE>
3.2 The name of joint venture company is Guangdong UTStarcom telecom
Co. Ltd. The name in English is: GUANGDONG UT STARCOM TELECOM CO. LTD. The legal
address of the joint venture company is No. 4, JiangBei YunShan DongLu, Huizhou
City, Guangdong province, P.R.C.
3.3 All activities of the joint venture company shall be governed by
the laws, decrees and pertinent rules and regulations of the People's Republic
of China.
3.4 The organization form of the joint venture company is a limited
liability company. The profit, risks and losses of the joint venture company
shall be shared by the parties in proportion to their contributions of the
registered capital.
ARTICLE 4 THE PURPOSE OF THE JOINT VENTURE COMPANY
The joint venture company will operate on the basis of fair, legality,
equality, mutual benefit, and enhance the economic cooperation and technical
exchanges, to raise economic results and ensure satisfactory economic benefits
for each party by improving the product quality, decreasing the cost, quickly
delivery, and improving after-sale service, and gaining competitive position in
the world market and national market through advanced, appropriate and
scientific management.
ARTICLE 5 THE PRODUCTS AND BUSINESS SCOPE
The joint venture company manufacture and operate telecom subscriber
access network set product, provide maintenance service after the sale of the
products; research and develop new products. The production scale may be:
output value for the year 1996 is [*]; output value for the year 1997 is [*].
The production scale may be increased with needs of the market.
5.1 Starting period: joint manufacture and sale of optical terminal
products [*] by using [*] technology; digital loop carrier system [*];
high-rate digital subscriber lines HDSL; Access network systems [*] and [*];
products used for the connection of intelligent network and other products
relevant to subscriber access network.
5.2 Joint develop manufacture period: manufacture and sale of access
network systems incorporating digital loop system [*] and other subscriber
access products.
5.3 The products manufactured and operated by the joint venture company
shall be exclusive in [*] market and both parties shall not solely or with other
third party to establish a company to manufactured and sale the same products
the joint venture company manufactured.
ARTICLE 6 TOTAL AMOUNT OF INVESTMENT AND THE REGISTERED CAPITAL
6.1 The total amount of investment of the joint venture company is
[*]. The registered capital is US$2.4 million. Party A shall invest [*],
accounting for 51% of the total amount of investment, and Party B shall
invest [*], accounting for 49% of the total amount of investment.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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<PAGE>
Party A will pay [*], accounting for 51% of the registered capital; and
Party B will pay [*], accounting for 49% of the registered capital.
6.2 Party A shall contribute the ReiMinBi equivalent to be determined
in accordance with the quoted rate of exchange published by the people's bank of
China on the month of payment. Party B shall contribute US dollar in cash.
6.3 The registered capital shall be paid in two installments. The first
installment shall be remitted amount of [*] within [*] after the date
of issuance of the joint venture company's business license. The second
installment will be [*], it shall be remitted within [*] after the date
of issuance of the business license.
6.4 The net profit at the end of the year shall be determined in
accordance with the quoted rate of exchange for RMB and USD published by the
people's bank of China.
6.5 In case any party to the joint venture intends to assign all or
part of his investment subscribed to a third party, consent shall be obtained
from the other party to the joint venture, and approval from the examination and
approval authority is required. When one party to the joint venture assigns all
or part of his investment, the other party has preemptive right.
ARTICLE 7 RESPONSIBILITY OF EACH PARTY TO THE JOINT VENTURE
7.1 Responsibilities of Party A:
- Handling applications for approval, registration, huskiness
license; Organizing the design and decoration of the
engineering facilities of the joint venture company; and
handling processing import and export Customs declaration and
transportation within Chinese territory;
- Assisting the joint venture in recruiting Chinese management
personnel, technical personnel, workers and other personnel
needed;
- Assisting the joint venture in developing domestic products
market;
- Assisting foreign workers and staff in applying for the entry
visa;
- Responsible for handling other matters entrusted by the joint
venture company.
7.2 Responsibilities of Party B:
- Handling selecting advanced and suitable equipment and
providing relative information, selecting good quality and
importing good quality equipment;
- The importing contract shall be approved by the board of
meeting and send to the authority for control;
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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<PAGE>
- Providing free manufacturing technology for the current
products and training for the management of the joint venture
company.
- Responsible for handling other matters entrusted by the joint
venture company.
ARTICLE 8
8.1 Party B is possessed of the starting products technology, and
responsible for passing on the technology to the technical personnel of the
joint venture company; the joint venture company and Party A shall not disclose
or licenses the starting technology. The technology developed after the joint
venture company established shall be possessed by the joint venture company.
Party A and Party B shall not disclose and license the technological secrets.
8.2 Party A responsible for the provide market for the products of the
joint venture company, especially in Guangdong. In the same conditions, the
products of the joint venture company shall be given priority for using in
Guangdong province. And Party A shall assist to the joint venture company to
publicize the products and extend influence.
ARTICLE 9 SELLING OF PRODUCTS
9.1 The products of joint venture company will be sold both on the
Chinese market and on overseas market, the export part accounting for [*], [*]
for domestic market. With the development of the production scale, the
proportion of the export will be increased.
9.2 The market for the products of the joint venture company will
based in Guangdong and radiate to [*].
ARTICLE 10 THE BOARD OF DIRECTORS
10.1 The date of registration of the joint venture company shall be the
date of the establishment of the board of directors of the joint venture
company. The board of directors are composed of five directors, of which 3 shall
be appointed by Party A, 2 shall be appointed by Party B. The chairman of the
board shall be appointed by Party A, and its vice-chairman by party B. The
highest authority of the joint venture company shall be its board of directors.
It shall decide all major issues. As for other matters, approval by majority
shall be required. The chairman of the board is the legal representative of the
joint venture company. Should the chairman be unable to exercise his
responsibilities for some reasons, he shall authorize the vice-chairman or any
other directors to represent the joint venture company temporarily.
10.2 The board of directors shall convene at least one meeting every
year. The meeting shall be called and presided over by the chairman of the
board. The chairman may convene an interim meeting based on a proposal made by
three third of the total number of directors. Minutes of the meeting shall be
filed.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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<PAGE>
ARTICLE 11 BUSINESS MANAGEMENT
11.1 The joint venture company shall establish a management office as
follows: General manager Office, development department, marketing department,
financial department, production department. With the development of the
business, the joint venture company may set up office or branch overseas and
Hong Kong area.
11.2 The joint venture company shall have a general manager, appointed
by Party B, two deputy general managers, appointed by the general manager,
invited by the board of directors.
11.3 The responsibility of the general manager is to report to the
board of directors and carry out the decision of the board meeting and organize
and conduct the daily manufacture, technology and management of the joint
venture company. The general manager represent the joint venture company within
the scope of authorized by the board of directors. And the general manager have
right to appoint and remove personnel's and conduct other duty authorized by the
board of directors. Deputy managers shall assist the work of the general
manager. In case the general manager unavailable, deputy managers shall
represent the duty of the general manager.
11.4 The term of office for the general manager and the deputy managers
is four years whose term of office may be renewed if continuously invited by the
board of directors.
11.5 The Chairman, Vice Chairman and other Directors may hold posts
concurrently as General Manager, Deputy General Manager and other high-level
positions appointed by the Board of Directors.
11.6 The General Manager, Deputy General Manager shall not hold
concurrent high-level positions in other economic organizations, and shall not
participate in other organizations in competition with the Company.
11.7 The general Manager, Deputy General Manager and other high-ranking
staff shall submit written notice in three months' advance when they decide to
resign.
11.8 During the period of preparation and construction, a preparation
and construction office shall responsible for the joint venture company. The
preparation and construction shall have one director appointed by Party A and
vice director appointed by Party B. Appointed by Party B, it have members.
In case the above members have actions of graft and corruption, they can be
removed by the resolution of the board of directors and find out who will be
blame.
ARTICLE 12 LABOR MANAGEMENT
12.1 The appointment of high-ranking administrative personnel
recommended by both parties, their salaries, social insurance, welfare and the
standard of traveling expenses etc. shall decided by the board of directors.
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<PAGE>
12.2 Labor contract covering the employment, dismissal and resignation,
wages, labor insurance, warfare, rewards, penalty and other matters shall be
drawn up, approved by the board of directors and implement. The labor contract
shall, after being signed, be filed with the local labor management department.
12.3 The staff and workers of the Company have the rights to set up a
labor union and to develop labor union activities in accordance with the Labor
Union Law of the People's Republic of China. The employees have right to set up
trade union.
ARTICLE 13 TAXES, FINANCE ACCOUNTING AND FOREIGN CURRENCY
13.1 The fiscal year of the joint venture company shall be from January
1 to December 31. All vouchers, receipts, statistic statements and reports,
account books shall be written both in Chinese and English.
13.2 The joint venture of company shall pay taxes due in accordance
with the Income Tax Law of the People's Republic of China for Foreign Investment
Enterprises and Foreign Enterprises, and apply for enjoying favorable treatment
in accordance with relevant regulations.
13.3 The joint venture of company shall pay individual income taxes
according to relevant regulations of the Individual Income Tax Law of the
People's Republic of China.
13.4 Allocation for reserved funds, expansion fund of the joint venture
company and welfare funds and bonuses for staff and workers shall be set aside
in accordance with the stipulations in the "Law of the People's Republic of
China on Sino-foreign Equity Joint Venture enterprises." The proportions of
allocations shall be decided by the board directors according to the business
situations of the joint venture company.
13.5 Financial auditing of the joint venture company shall be conducted
by an auditor registered in China and reports shall be submitted to the board of
directors and general manager. If Party B propose to employ a foreign auditor
registered in other country to undertake annual financial audit, Party A shall
give its consent. All the expenses shall be borne by Party B.
13.6 In the first three months of each fiscal year, the manager shall
prepare previous year's balance sheet, profit and loss statement and proposal
regarding the disposal of profits, and submit them to the board of directors for
approval.
ARTICLE 14 DURATION OF THE JOINT VENTURE
14.1 The duration of the joint venture company is 20 years. The
establishment of the joint venture company shall start from the date on which
the business license of the joint venture company is issued. An application for
the extension of the duration, proposed by one party and unanimously approved by
the board of directors, shall be submitted to the authority six months prior to
the expire date of the joint venture.
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<PAGE>
14.2 Upon the expiration of the duration or termination before the date
of the expiration of the joint venture, liquidation shall be carried out
according to relevant laws. The liquidated assets shall be distributed in
accordance with the proportion of investment contributed by Party A and Party B.
ARTICLE 15 LIABILITIES FOR BREACH OF CONTRACT
15.1 Should either Party A or Party B fails to pay on schedule the
contributions in accordance with the provisions defined in article 5 of this
contract, the breaching party shall pay to the other party 0.05% per day of the
contribution starting from the first 30 days after exceeding the time limit.
Should the breaching party fails to pay after 90 days, it shall pay 4.5% of the
contribution to the other party, who shall have the right to terminate the
contact and to claim damages to the breaching party.
15.2 Should all or part of the contract and its appendices be unable to
be fulfilled owing to the fault of one party, the breaching party shall bear the
responsibilities thus caused. Should it be the fault of both parties, they shall
bear their respective responsibilities according to actual situations.
15.3 In order to guarantee the performance of the contract and its
appendices, both Party A and Party B shall provide each other the bank
guarantees for the performance of the contract.
ARTICLE 16 THE AMENDMENT, TERMINATION AND DISSOLUTION OF THE CONTRACT
16.1 Amendment of the contract or other appendices shall come into
force only after the written agreement signed by Party A and Party B and
approved by the original examination and approval authority.
16.2 In case of inability to continue operation due to heavy losses in
successive years or inability to fulfill the contract in accordance with
stipulated in article 15.1, the contract shall be terminated before the time of
expiration after unanimously agreed upon by the board of directors and approval
of approval authority.
ARTICLE 17 INSURANCE
All risks insurance policies of the joint venture company shall
underwritten with The People's Insurance Company of China. The detailed matter
shall be fulfill in accordance with the stipulations of the approval authority.
ARTICLE 18 FORCE MAJEURE
Should either of the parties to the contract be prevented from
executing contract by force majeure, such as earthquake, typhoon, flood, fire
and war and other unforeseen events, and their happening and consequences are
unpreventable and unavoidable, the prevented party shall notify the other party
by cable/fax on written without any delay, and with 15 days thereafter provide
the detailed information of the events and a valid document for evidence issued
by the relevant public
-7-
<PAGE>
notary organization for explaining the reason of its inability to execute or
delay the execution of all or part of the contract. Both parties shall,
through consultations, decide whether to terminate the contract or to exempt
the part of obligations for implementation of the contract or whether to
delay the execution of the contract according to the effects of the events on
the performance of the contract.
ARTICLE 19 ARBITRATION
19.1 Any disputes arising from the execution of, or in connection with
the contract shall be settled through friendly consultations between both
parties. In case no settlement can be reached through consultations, the
disputes shall be submitted to Chinese arbitration organization. The arbitration
award is final and binding upon both parties.
19.2 During the arbitration, the contract shall be executed
continuously by both parties except for matters in disputes.
ARTICLE 20 EFFECTIVENESS OF THE CONTRACT
20.1 The terms under this contract and its appendices (including joint
venture company articles of association) are integral part of this contract.
20.2 The contract and its appendices shall come into force beginning
from the date of approval of the approval authority.
20.3 Should notices in connection with any party's rights and
obligations be sent by either party A or Party B by telegram or telex, etc., the
written letter notices shall be also required afterwards. The legal addresses of
party A and Party B listed in this contract shall be the posting addresses. In
case the legal addresses change, the notice shall be sent to the other party
prior to thirty days.
ARTICLE 21 GOVERNING LAW
The formation of this contract, its validity, interpretation, execution
shall be governed by related laws of the People's of Republic of China.
ARTICLE 22 LANGUAGE
22.1 The contract shall be written in Chinese.
22.2 The headings in this agreement are inserted for convenience only
and shall not be used to explain the contract.
Party A: Chinese Guangdong Nanfang telecommunication Group Co.
Party B: UTStarcom Inc.
-8-
<PAGE>
Date: Dec. 8, 1995
-9-
<PAGE>
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
HANGZHOU NANTIAN STARCOM COMMUNICATION
EQUIPMENT CO. LTD.
CONTRACT
<PAGE>
CONTENT
<TABLE>
<S> <C>
1. Chapter one General rules
2. Chapter two Parties of joint venture
3. Chapter three Establishment of the Joint Venture Company
4. Chapter four The purpose, scope and scale of business
5. Chapter five Total investment and the registered capital
6. Chapter six Responsibilities of each party
7. Chapter seven Craft and technology
8. Chapter eight Sales of products
9. Chapter nine Board of Directors
10. Chapter ten Business management office
11. Chapter eleven Labor management
12. Chapter twelve Taxes, finance, audit and foreign currency
13. Chapter thirteen Terms of joint venture
14. Chapter fourteen Handle of assets when the joint venture expires
15. Chapter fifteen Insurance
16. Chapter sixteen Amendment, change and cancellation of contract
17. Chapter seventeen Liabilities for breach of contract
18. Chapter eighteen Force Majeure
19. Chapter nineteen Governing laws and settlement of disputes
20. Chapter twenty Language
21. Chapter twenty-one Validity of contract and others
</TABLE>
10
<PAGE>
CHAPTER ONE: GENERAL RULES
In accordance with the Laws of the People's Republic of China on Joint Ventures
Using Chinese and Foreign Investment and other relevant laws and implemented
regulations, Zhejiang Nantian Post and Telecommunication Development Group Co.
Ltd. and UT Starcom Inc. of USA enter into agreement to invest jointly in
Hangzhou(China), set up joint venture company and formulate this contract on the
basis of the principle of equality and mutual benefit. The contract is amended
in Hangzhou in the year 1997.
CHAPTER TWO: PARTIES OF JOINT VENTURE
ARTICLE 1: The parties of the contract:
1. Zhejiang Nantian Post and Telecommunication Development Co. Ltd.
(hereinafter referred to as Party A) has registered to the Administration
of Industry and Commerce of Zhejiang Province, China.
Legal residence: 118 Mo ganshan Street, Hangzhou, Zhejiang Province,
China. Post code: 310005.
Legal representative: Rong Ming-Bao. Position: Chair of Board.
Nationality: China.
2. UT Starcom Inc. of USA (hereinafter referred to as Party B) has registered
in the United States. Legal residence: Suite 100 Alameda, Harbor Bay Park,
CA 94502, USA. Legal representative: Ying-Wu. Position: Director
Nationality: LISA.
CHAPTER THREE: ESTABLISHMENT OF THE JOINT VENTURE COMPANY
ARTICLE 2: In accordance with the Laws of the People's Republic of China on
Joint Ventures Using Chinese and Foreign Investment, Party A and
Party B enter into agreement to set up a joint venture company of
Hangzhou Nantian Starcom Communication Equipment Co. Ltd. in the
territory of PRC.
11
<PAGE>
ARTICLE 3: The full name of the company: Hangzhou Nantian Starcom
communication Equipment Co. Ltd (hereinafter referred to as the
Joint Venture Company). The legal residence of the Joint Venture
Company: 70 Tian Mushan Street, Hangzhou, Zhejiang Province. Post
code: 310013.
ARTICLE 4: All activities of the Joint Venture company shall observe the
laws, decrees and relevant regulations of the People's Republic
of China.
ARTICLE 5: The Joint Venture Company is a limited liability company. Party A
and Party B shall undertake the debts liability of the Joint
Venture company in proportion to their contribution to the
registered company. Each party shares profits, risks and deficits
in proportion to its contribution to the registered capital.
CHAPTER FOUR: BUSINESS PURPOSE, SCOPE AND SCALE
ARTICLE 6: The purpose of the Joint Venture Company: According to the
purpose or strengthen economic cooperation and technology
exchange, the Joint Venture Company will adopt advanced
international technologies and scientific management experiences
to enhance the technology and quality level of the products of
the Joint Venture Company, and will introduce and develop new
products that are competitive in the international market in
quality, price and service, etc. to achieve more economic
profits.
ARTICLE 7: The business scope of the Joint Venture: Designs, develops,
assembles, installs telecommunication network systems, provides
maintenance and technical services for its own products, and
provides system integrating of telecommunication network, and
undertake eight telecommunication systems every year.
CHAPTER FIVE: TOTAL INVESTMENT AND THE REGISTERED CAPITAL
ARTICLE 8: The total investment of the Joint Venture Company is [*].
ARTICLE 9: The contribution of Party A and Party B is altogether [*] and
it is used as the registered capital of the Joint Venture
Company. The contribution of Party A is RMB equal to [*] ( the
conversion rate of RMB and US dollar shall be determined on
the basis of the exchange quotation published by the National
Foreign Currency Administration Bureau of
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
12
<PAGE>
PRC for the date of concern), accounting for 35% of the
registered capital; Party B contributes [*], accounting for
65% of the registered capital.
ARTICLE 10: Party A and Party B shall pay the contribution in the following
way:
Party A: pays in RMB equals to [*] (the conversion rate of RMB
and US dollar shall be determined on the basis of the exchange
quotation published by the State Administration Bureau of the
PRC for the date of concern); Party B: spot exchange [*].
ARTICLE 11: The registered capital of the Joint Venture Company shall be paid
off in one time within two month from the date when the business
license is signed and issued according to the proportion of
contribution of Party A and Party B.
ARTICLE 12: In case one party from Party A and Party B transfers all or part
of its contributed capital to a third party besides Party A and
Party B, it shall be agreed by the other party and shall be
submitted to examination and approval authority for approval.
CHAPTER SIX: THE RESPONSIBILITIES OF EACH PARTY
ARTICLE 13: Party A and Party, B shall fulfill the following duties:
The duties of Party A:
l. Applying for the approval of the relevant Chinese
Authorities concerned to register the establishment of the
Joint Venture Company and receive the business license;
2. Providing contributed capital according to the regulations
in Chapter Five;
3. Handling the procedures of renting the places for handling
official business and places for manufacturing;
4. Assisting the Joint Venture Company in choosing and
purchasing advanced foreign equipment for test and
production, assemble parts of SKD, raw materials, means of
transportation and articles used in office;
5. Assisting the Joint Venture Company in employing local
Chinese operation, management, technology and other staff
and workers;
6. Providing information of supply and demand of the domestic
communication market and actively opening up the market;
7. Handling other matters appointed by the Joint Venture
Company.
The duties of Party B:
1. Providing the contributed capital according to Chapter Five;
2. Assisting the Joint Venture Company in choosing and
purchasing advanced foreign equipment for test and
production, assemble parts of SKD, raw materials, means or
transportation and articles used in office;
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
13
<PAGE>
3. Providing free technological material of communication
products for the Joint Venture Company, training technical,
management and manipulating staff;
4. Actively opening up external sales channels, achieving
balance of foreign currency and economic profits;
5. Providing information of supply and demand of communication
equipment and technology in international market, and
opening up the international market;
6. Providing the Joint Venture Company with advanced
communication products and assemble parts of SKD, and
ascertaining the preference and timely delivery for the
whole set of wireless communication access network equipment
ordered by the Joint Venture Company;
7. Handling other matters appointed by the Joint Venture
Company.
CHAPTER SEVEN: CRAFT AND TECHNOLOGY
ARTICLE 14: Party B must provide craft, technical service, test, design,
quality standard and training staff for the Joint Venture Company
to make the products reach the advanced international and
domestic level.
CHAPTER EIGHT: SALES OF PRODUCTS
ARTICLE 15: The products of the Joint Venture Company shall be sold to
markets [*]. In order to sell the products in [*] and
conducting repair services after sale, the Joint Venture
Company has get the permission of relevant authorities to set
up branches the sale, maintenance and repair services [*].
CHAPTER NINE: BOARD OF DIRECTORS
ARTICLE 16: The Board of Directors is set up from the date when the Joint
Venture Company registered.
ARTICLE 17: The Board of Directors consists of seven Directors, three from
Party A and four from Party B, including one Chair, one Vice
Chair and one Finance Supervisor. The Finance Supervisor will
attend the Board meetings as a nonvoting delegate. Chair, Vice
Chair, other Directors and Finance Supervisor shall hold the
office for a period of four years and may be reappointed
consecutively.
[*] = CERTAIN INFORMATION IS THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
14
<PAGE>
ARTICLE 18: The Board of Directors shall be the highest authority of the
Joint Venture Company, deciding all important matters of the
Joint Venture Company. The following matters shall be decided
with the unanimous approval or the Directors who participate in
the Board meetings:
1. Amendment of the article of association of the Joint Venture
Company;
2. Termination, dismissal of the Joint Venture Company and
prolonging of the joint venture time limits;
3. Increases and transfers of the registered capital of the
Joint Venture Company;
4. Merges or the Joint Venture Company with other economic
organizations.
Other matters shall be decided with the majority's approval of
the Directors (including one from Party A) who attend the Board
meetings.
ARTICLE 19: The Chair is the legal representative of the Joint Venture
Company. When the Chair is unable to fulfill his or her duties, he or she may
appoint the Vice Chair or other Directors to take his place.
ARTICLE 20: The Board meetings shall be held at least once in a year. All
Directors shall be informed fifteen days before the meetings. The Chair shall
preside the Board meetings, and may convene a special meeting suggested by
one-third of the Directors. The file meetings shall be kept.
CHAPTER TWENTY-ONE: BUSINESS MANAGEMENT OFFICE
ARTICLE 21: The Joint Venture Company shall set up a business management
office, being responsible for the routine operation and management of the
Joint Venture Company. The organization structure includes one General Manger
and one Standing Deputy Manager who are appointed by the Board of Directors
and shall hold the office for a period of four years.
ARTICLE 22: The duty of the General Manager is to execute the resolutions of
the board of Directors and the Standing Deputy Manager shall assist the
General Manager.
ARTICLE 23: In cases of graft, serious violation of the rules and
regulations or grave neglect on the part of the General Manager and the
Standing Deputy Manager, they shall be dismissed by the Board of Directors at
any time.
CHAPTER ELEVEN: LABOR MANAGEMENT
ARTICLE 24: After the consideration of the Board of Directors, the
recruitment, employment, dismissal, wages, labor, insurance, welfare, awards
and penalties of the staff and workers shall be stipulated in detail in the
labor contracts made between the Joint Venture Company, the labor union and
the staff and workers, in accordance with the Administration Regulations on
Labors of Foreign Investment Enterprises and relevant Chinese regulations.
15
<PAGE>
ARTICLE 25: The appointment, wages, insurance, welfare, and the expense
standard of business trip of high-ranking management staff nominated by Party
A and Party B shall be decided by the Board meetings.
CHAPTER TWELVE: TAXES, FINANCE, AUDITS AND FOREIGN CURRENCY
ARTICLE 26: The Joint Venture Company and its staff and workers shall pay
taxes according to the relevant Chinese laws and regulations.
ARTICLE 27: The Joint Venture Company shall draw funds according to the
relevant laws of the PRC. The proportion of drawing shall be decided by the
Board of Directors on the basis of the operation status of the Joint Venture
Company.
ARTICLE 28: The fiscal year of the Joint Venture Company is from the first
of January to the twenty-first of December. All vouchers, certificates,
account books and reports shall be prepared in Chinese.
ARTICLE 29: The Joint Venture Company shall invite accountants registered in
China to examine and check the finance and submit the result to the Board of
Directors and the General Manager. In case Party A and Party B need to invite
other accountants or auditors to examine the annual finance, the Joint
Venture Company shall give them the approval. The expenses shall be paid by
the party who invites the accountants or auditors.
ARTICLE 30: The General Manager shall prepare the balance sheets, the
statements of loss and profit and the profit allocation plans within the
first three months of every fiscal year and submit them to the Board of
Directors for approval.
ARTICLE 31: All the foreign currency matters of the Joint Venture Company
shall be handled in accordance with the Regulations of the People's Republic
of China on Foreign Currency Administration and stipulations. In case the
income and expenses of foreign currency is imbalance, Party A and Party B
shall allocate profits in RMB.
CHAPTER THIRTEEN: TERM OF JOINT VENTURE
ARTICLE 32: The Joint Venture Company's term is 20 years, counted from the
date on which the business license is signed and issued. After one party's
nomination and the unanimous approval of the Board of Directors, the
application for prolonging the joint venture time limits shall be submitted
to the examination and approval authority in writing within six months before
the end of the time limits.
CHAPTER FOURTEEN: HANDLE OF ASSETS WHEN JOINT VENTURE EXPIRES
16
<PAGE>
ARTICLE 33: When the joint venture expires or is terminated, the Joint
Venture Company shall conduct liquidation in accordance with the laws. After
the income tax of the part of properties after liquidation (which exceeds the
amount of actually-paid contribution) is paid, the properties shall be
allocated in proportion to the contributed capital of Party A and Party B.
CHAPTER FIFTEEN: INSURANCE
ARTICLE 34: The insurance of the Joint Venture Company shall be covered with
the insurance organizations in Chinese territory. The coverage, insured value
and insured terms shall be decided by the Board of Directors according to the
stipulations of the insurance organizations in Chinese territory.
CHAPTER SIXTEEN: THE AMENDMENT, CHANGE AND CANCELLATION OF THE CONTRACT
ARTICLE 35: The amendment of the contract and its supplements shall require
written agreement signed by Party A and Party B, and shall be submitted to
the original examination and approval authority for approval to become
effective.
ARTICLE 36: Owing to the failure to carry out the contract due to Force
Majeure, or to continue operation due to the constant deficits of the Joint
Venture Company, the termination of joint venture before its time limits or
the cancellation of the contract shall be unanimously approved by the Board
of Directors and shall be submitted to the examination and approval authority
for approval.
ARTICLE 37: The failure of operating the Joint Venture Company or achieving
the business purpose stipulated by the contract due to one party's not
fulfilling its obligations stipulated by the contract and the articles of
association or seriously violating the contract and the articles of
association shall be considered as unilaterally germinating the contract of
the delinquent party. The observant party shall have rights to claim to the
delinquent party and to terminate the Joint Venture Company with the approval
of the examination and approval authority according to the stipulations of
the contract. In case both parties agree to continue operation, the
delinquent party shall compensate the economic losses of the Joint Venture
Company.
CHAPTER SEVENTEEN: LIABILITIES FOR BREACH OF CONTRACT
ARTICLE 38: In case any of the two parties doesn't pay off the contributed
capital oil time according to the stipulations in Chapter Five of the
contract, the delinquent party shall pay 1% of its contributed capital a
month as penalty for to the observant party from the first month of exceeding
the time limits. In case the
17
<PAGE>
delinquent party doesn't pay three months after the time limits, besides
requiring it pay off the penalty fee which adds up to 3% of the contribution,
the observant party shall have rights to apply for approval to terminate the
contract and ask the delinquent party to compensate its losses.
CHAPTER EIGHTEEN: FORCE MAJEURE
ARTICLE 39: Due to earthquake, typhoon, flood, acts of war and other
unpredictable and unavoidable Force Majeure accidents which directly
influence the fulfillment of the contract according to the agreed conditions,
the party which suffers from the above mentioned Force Majeure accidents
shall inform the other party of the situation by telegram or facsimile, and
provide detailed report of the accident and valid certificates stating the
reasons for not fulfilling part or all of the contract or prolonging to
fulfill it within fifteen days. The certificates shall be presented by the
local notary organizations where the accident happens. Two parties shall
negotiate and decide whether to cancel the contract, or to relieve part of
the liabilities to fulfill the contract, or to prolong the fulfillment of the
contract according to the degree of the influence of the accident on the
fulfillment of the contract.
CHAPTER NINETEEN: GOVERNING LAWS AND THE SETTLEMENT OF DISPUTES
ARTICLE 40: The stipulation, effectiveness, explanation, fulfillment and
settlement of disputes shall all de governed by the laws of the People's
Republic of China.
ARTICLE 41: All disputes caused by the fulfillment of the contract or
related to the contract shall be settled through friendly negotiation. In
case the dispute cannot be resolved through negotiation, it shall be
submitted to China Foreign Economic and Trade Arbitration Commission for
arbitration in accordance with its rules of procedures. The arbitral award is
final and binding upon both parties.
CHAPTER TWENTY: CONTRACTUAL LANGUAGE
ARTICLE 42: This contract shall be made in Chinese.
CHAPTER TWENTY-ONE: EFFECTIVENESS OF THE CONTRACT AND OTHERS
ARTICLE 43: The articles of association of the Joint Venture Company
stipulated according to the principals of the contract shall be regarded as
part of the contract.
18
<PAGE>
ARTICLE 44: This contract is subjected to the approval of the Ministry of
Foreign Trade and Economic Cooperation of the People's Republic of China or
the examination and approval authority it appointed, and shall enter into
effect upon the date of approval.
ARTICLE 45: The way of the two parties to dispatch a notice, such as by
telegram or by facsimile, which is related to the rights and obligations of
each party, shall be followed with a letter to inform the other party. The
legal residences listed in the contract are the addresses of Party A and
Party B.
ARTICLE 46: This contract is signed by representatives appointed by Party
A and Party B in Hangzhou, China.
ARTICLE 47: This contract is made into six copies, two of them shall be
submitted to the authorities concerned and each party keeps two copies.
ARTICLE 48: The matters which are not discussed in the contract shall be
handled according to the Cooperation Law of the People's Republic of China.
Party A: Zhejiang Nantian Post and Party B: UT Starcom Inc. of USA
Telecommunication
Development Group Co. Ltd.
Representative: Representative: (Signature)
(Signature)
September 12, 1997
19
<PAGE>
STANDARD FORM LEASE
1255-1275 HARBOR BAY PARLAY
HARBOR BAY BUSINESS PARK
ALAMEDA, CALIFORNIA
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- -----
<S> <C>
1. SUMMARY LEASE TERMS AND PROVISIONS 2
2. PREMISES AND COMMON AREA 4
3. TERM 5
4. RENT 6
5. LATE PAYMENT CHARGES 7
6. SECURITY DEPOSIT 8
7. REAL PROPERTY TAXES 8
8. INSURANCE 9
9. UTILITIES AND SERVICES 11
10. REPAIR AND MAINTENANCE 12
11. CONDITION OF PREMISES 13
12. USE OF PREMISES 14
13. ALTERATIONS AND LIENS 15
14. LANDLORD'S RIGHT TO ENTER THE PREMISES 16
15. SIGNS 17
16. DAMAGE OR DESTRUCTION 17
17. CONDEMNATION 18
18. ASSIGNMENT AND SUBLETTING 19
19. DEFAULT 21
20. SUBORDINATION, ESTOPPEL AND ATTORNMENT 24
21. NOTICES 25
22. SURRENDER OF THE PREMISES 26
23. COST OF SUIT 26
24. TRANSFER OF THE BUILDING BY LANDLORD 27
25. AIRPORT NOISE 27
26. GENERAL 27
27. ACCEPTANCE 29
28. LANDLORD'S CONDITION 29
29. BROKERS 29
30. OPTION TO EXTEND 30
31. ADA CODE COMPLIANCE 31
32. ASCEND TERMINATION 31
33. EXHIBITS 31
"A" PREMISES AND BUILDING PLAN
"B" TENANT IMPROVEMENT SPECIFICATIONS
"C" COMMENCEMENT DATE MEMORANDUM
"D" RULES AND REGULATIONS
"E" TENANT SIGN DESIGN GUIDELINES
"F" ASCEND TERMINATION AGREEMENT
</TABLE>
1
<PAGE>
STANDARD FORM LEASE
1255-1275 HARBOR BAY PARKWAY
HARBOR BAY BUSINESS PARK
This "Lease" is entered into by and between TECH CENTER PARTNERS, a
California General Partnership ("Landlord") and UT STARCOM, INC., a Delaware
corporation("Tenant").
1. SUMMARY LEASE TERMS AND PROVISIONS.
The following Summary Lease Provisions constitute an integral part of
this Lease, and each reference herein to the Summary Lease Provisions shall mean
the provisions set forth in this Section 1.0. In the event of any conflict
between the Summary Lease Provisions and the remainder of the Lease, the latter
shall control.
LEASE REFERENCE
<TABLE>
<S> <C> <C>
1.1 Lease Date: December 23, 1997
-----------------
Section 2.1 1.2 Premises:
Premises Rentable Square Feet: 25,576
--------------
Premises Usable Square Feet: 25,576
--------------
Section 2.1 1.3 Building:
Building Rentable Square Feet: 25,576
--------------
Building Usable Square Feet: 25,576
--------------
Section 2.3 1.4 Project:
Project Rentable Square Feet: 69,875
Project Usable Square Feet: 69,875
Section 4.2.1 1.5 Tenant's Building Percentage: 100%
--------------
Section 4.2.1 1.6 Tenant's Project Percentage: 36.40%
--------------
Section 3 1.7 Lease Term: Five (5) Years
--------------
Section 3.1 1.8 Anticipated Commencement Date: 01/15/98
--------------
Section 4.1 1.9 Monthly Base Rent:
</TABLE>
<TABLE>
<CAPTION>
MONTHS RENT PER S/F MONTHLY
------ ------------ -------
<S> <C> <C>
01-01 No rent .00
02-12 $ 1.25, per r/s/f $ 31,970.00
13-24 $ 1.28, per r/s/f $ 32,723.28
25-48 $ 1.35, per r/s/f $ 34,527.60
49-60 $ 1.40, per r/s/f $ 35,806.40
</TABLE>
<TABLE>
<S> <C> <C>
Section 4.1.1 1.10 Prepaid Rent: $ 31,970.00
-----------
Section 4.1.2 1.11 Adjustment Date: N/A
2
<PAGE>
Section 4.1.2 1.12 Rent Adjustment Base: N/A
--------------
Section 4.2.2 1.13 Base Year: 1998
--------------
Section 6 1.14 Security Deposit: $35,806.40
--------------
Section 12.1 1.15 Permitted Uses: Office and Computer Laboratories
---------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Section 21 1.16 Notices:
To Landlord: Tech Center Partners
c/o Redding Management, Inc.
1411 Harbor Bay Parkway, Ste. 1000
Alameda, CA 94502
To Tenant: UT Starcom, Inc.
1275 Harbor Bay Parkway
Alameda, CA 94502
Section 29 1.17 Broker(S): CB COMMERCIAL
-------------------------------
155 Grand Avenue, Suite 100
-------------------------------
Oakland, CA 94612
-------------------------------
REDDING MANAGEMENT, INC.
-------------------------------------
1411 Harbor Bay Parkway, Suite 1000
-------------------------------------
Alameda, CA 94502
-------------------------------------
1.18 Broker's Fee or Commission,
if any, paid by: Landlord
--------------
1.19 Riders to Lease: N/A
--------------
</TABLE>
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<PAGE>
2. PREMISES AND COMMON AREA.
2.1 PREMISES. The approximate location of premises leased hereunder
("Premises") is shown on the drawing attached hereto as Exhibit A. The Premises
consist of the approximate rentable square footage as specified in Section 1.2
in "Building" described in Section 1.3. As used in this Lease, the term
"rentable" or "rentable square footage" means the entire area of the Premises,
including any utility and public areas, measured from the exterior of exterior
walls, and from the center line of interior demising walls.
2.2 LANDLORD'S RESERVED RIGHTS. Landlord reserves the right to: (1) Use
the roof, exterior walls and the area beneath and above the Premises, together
with the right to install, use, maintain and replace equipment, machinery,
pipes, conduits and wiring through the Premises, which serve other parts of the
Project, in a manner and in locations which do not unreasonably interfere with
Tenant's use of the Premises; (2) Alter, replace or change the appearance of the
Building interior and exterior and any portion of the Common Area or Project and
to make such other use of or changes to Common Area and Project as Landlord
reasonably deems appropriate; and (3) Grant easements on the Project and
dedicate for public use portions of the Project without Tenant's consent;
Provided that no such grant or dedication shall substantially interfere with
Tenant's use of the Premises. Upon Landlord's demand, Tenant shall execute,
acknowledge and deliver to Landlord documents, instruments, maps and plats
necessary to effectuate Tenant's covenants hereunder.
2.3 COMMON AREA. The Premises are (or when constructed will be) a part
of a business/commercial complex consisting of other buildings, landscaping,
parking facilities and other improvements described as the "Project" in Section
1.4 hereof. Landlord may in its sole discretion change the size, shape,
location, number and extent of any or all of the improvements in the Project
without any liability to or consent of Tenant. Tenant does not rely on the fact
nor does Landlord represent that any specific tenant or number of tenants shall
occupy any space in the Project. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project the areas appurtenant to the
Premises ("Common Area"), described as all areas and facilities within the
Project, exclusive of the interior of the Building and any other buildings on
the Project, now or hereafter designated by Landlord for the general use and
convenience of Tenant and other tenants of the Project, including without
limitation the parking areas, access and perimeter roads, sidewalks, landscaped
areas, service areas, trash disposal facilities, and similar areas and
facilities.
2.3.1 PARKING. Tenant shall have the right to park on the Project's
parking facilities in common with other tenants of the Project upon terms and
conditions, including imposition of a reasonable parking charge, as may from
time to time be established by Landlord. The planned parking ratio available for
all tenants in the Project is 3.3 parking spaces per one thousand rentable
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square feet of space leased. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord and other tenants in the use
of the parking facilities. Landlord reserves the right in its discretion to
determine whether the parking facilities are becoming crowded and to allocate
and assign parking spaces among Tenant and other tenants The use of said
parking area shall be at the sole risk of Tenant. Unless caused by the
wrongful act of Landlord, its agents or employees, Tenant hereby agrees to
indemnify and hold Landlord harmless against any liability, loss, cost or
expense for any damage to or loss or theft of any vehicle or property within
any vehicle or any other property, or injury to or death of any person,
arising directly or indirectly out of or in connection with the use by Tenant
or such other persons of the parking area or any part thereof.
3. TERM.
The "Term" of this Lease shall be for the period set forth in Section
1.7, (plus the partial month, if any, immediately following the commencement
Date of the Term), and ending on the expiration of such period, unless the Term
is sooner terminated as hereinafter provided.
3.1 COMMENCEMENT DATE. The "Commencement Date" shall be the earlier of
the following dates: (a) the date stipulated in Section 1.8 of this Lease, or
(b) the date Tenant assumes beneficial occupancy of the Premises. The date
currently estimated to be the Commencement Date is specified in Section 1.8
("Anticipated Commencement Date"). Notwithstanding the above, if the
Commencement Date has not occurred on or before the Anticipated Commencement
Date due to the fault of Tenant, the Commencement Date of this Lease shall be
the date specified as the Anticipated Commencement Date. Tenant shall then
commence payment to Landlord of the Monthly Rent and Additional Rent due
hereunder. Once the actual Commencement Date has been determined, the parties
shall execute a Commencement Date Memorandum in the form attached as Exhibit C.
3.2 DELIVERY OF POSSESSION. Landlord shall use its best efforts to
substantially complete Landlord's work (re-painting of the premises only) on or
before the Anticipated Commencement Date. Tenant understand and agrees that the
modifications per Exhibit A will be constructed during Tenant's occupancy. If
Landlord is unable to deliver possession of the Premises, through no fault of
Tenant, on the Anticipated Commencement Date, Landlord shall not be subject to
liability therefore, nor shall such failure effect the validity of this Lease,
the obligation of Tenant, or extend the Term. In such case, Tenant shall not be
obligated to pay Rent or perform any other obligations of Tenant under this
Lease, except as may be otherwise provided herein, until possession of the
Premises is tendered to Tenant. If Landlord has not delivered possession of the
Premises within ninety (90) days from the Anticipated Commencement Date (plus
the period of delays by reason of any of the matters described in Section
26.12), either party may, by notice to the other party given within ten (10)
days after such date, elect to cancel this Lease. Such cancellation shall be the
sole and exclusive remedy of such party and shall extinguish all
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obligations under this Lease. If neither party elects to cancel within such
period, its right to do so thereafter, by reason of the delay in the
Commencement Date, shall terminate.
3.3 EARLY ENTRY. If Tenant is permitted to occupy the Premises prior to
the Commencement Date for the purpose of fixturing or any other purpose
permitted by Landlord, such early entry shall be at Tenant's sole risk and
subject to all the terms and provisions hereof, except for the payment of
monthly Rent which shall commence on the Commencement Date. Landlord shall have
the right to impose such additional conditions on Tenant's early entry as
Landlord shall deem appropriate, and shall further have the right to require
that Tenant execute an early entry agreement containing such conditions prior to
Tenant's early entry.
4. RENT.
4.1 BASE RENT. Tenant shall pay to Landlord in lawful money of the
United States, beginning on the Commencement Date and continuing on the first
day of each calendar month thereafter throughout the Term, the Monthly Base
Rent, set forth in section 1.9. Monthly Base Rent shall be payable in advance,
without abatement, deduction, claim, offset, prior notice or demand. Monthly
Base Rent for any partial month shall be prorated.
4.1.1 PREPAID RENT. Tenant shall pay to Landlord upon execution the
amount set forth in Section 1.10 as payment for the first month that Monthly
Base Rent is due under this Lease.
4.2 ADDITIONAL RENT. "Additional Rent" shall include all monies, in
addition to Monthly Base Rent, required to be paid by Tenant to Landlord under
the Lease, including without limitation, any late payments, interest, and
payments required to be made by Tenant to Landlord on account of costs incurred
by Landlord for "Operating Expenses" (specified in Section 4.2.2) or "Tenant
Expenses" (specified in Sections 9 and 10.1).
4.2.1 TENANT'S PERCENTAGES. "Tenant's Building Percentage"
shall be determined by dividing the appropriate rental square footage of the
Premises by the appropriate total rentable square footage of the Building.
Tenant's Building Percentage is agreed to be the percentage set forth in Section
1.5. "Tenant's Project Percentage" shall be determined by dividing the
approximate rental square footage of the Premises by the approximate total
rentable square footage of all buildings on the Project. Tenant's Project
Percentage is agreed to be the percentage set forth in Section 1.6.
4.2.2 OPERATING EXPENSES. For each calendar year during the
term subsequent to the year specified in Section 1.13 as the Base Year, Tenant
shall pay Tenant's Project Percentage of the increase in Operating Expenses for
such calendar year over "Base Operating Expenses". As reasonably determined by
Landlord, Tenant's Building Percentage may be substituted for Tenant's Project
Percentage for those Operating Expenses that relate to the Building only and
said expenses shall be limited to alterations or improvements required by
governmental authority or Association, and
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the cost of maintaining, repairing and repairing exterior walls and the roof
membrane of the Building. Base Operating Expenses shall mean Operating Expenses
incurred by Landlord during the Base Year and shall exclude those expenses
specifically referred to in Paragraph 33 of this Lease. Operating Expenses may
include, as permitted by Generally Accepted Accounting Principles, the cost of
any policies of insurance covering the Building and the Common Area, Real
Property Taxes, Association assessments, Assessment Bond payments, property
management fees, amortization on Project furnishings, cost of labor, materials
and services used or consumed in operating, maintaining, repairing and replacing
the Common Area, including landscaping and sprinkler systems, hardscape,
walkways and paved parking areas, signs and site lighting, exterior window
cleaning, alterations or improvements required by governmental authority or
Association, and the cost of maintaining, repairing and replacing exterior walls
and the roof membrane of the Building. Utilities included in Operating Expenses
are electricity for parking lot and Common Area lighting and sprinkler systems,
and water for irrigation. Operating Expenses for both the Base Year and each
subsequent calendar year shall be adjusted to equal Landlord's reasonable
estimate of Operating Expenses had the total rentable area of the Project been
occupied.
4.2.3 MONTHLY PAYMENTS. Commencing with the first day of the
calendar year following the Base Year, Tenant shall pay to Landlord each month,
at the same time and in the same manner as Monthly Base Rent 1/12th of
Landlord's estimate of Tenant's Percentage of the increase in Operating Expenses
for the then current calendar year. Within 90 days after the close of each
calendar year, or as soon after such 90-day period as practical, Landlord shall
deliver to Tenant a statement of the actual increases in Operating Expenses for
such calendar year over the Base Year. If on the basis of such statement Tenant
owes an amount that is less than the estimated payments for such calendar year
previously made by Tenant, Landlord shall either offset the excess against the
Operating Expenses next thereafter to become due to Landlord or shall refund the
amount of the overpayment to Tenant, as Landlord shall elect. If on the basis of
such statement, Tenant owes an amount that is more than the estimated payments
for such calendar year previously made by Tenant, Tenant shall pay the
deficiency to Landlord within ten (10) days after delivery of statement. The
obligations of Landlord and Tenant under this subparagraph with respect to the
reconciliation between estimated payments and the actual increases in Operating
Expenses for the last year of the term shall survive the termination of the
Lease. Notwithstanding any other provision hereof, if Landlord incurs costs,
including Landlord's administrative costs which relate only to the Premises
or Tenant's use of the Premises or the Project, such costs shall be payable
solely by Tenant. Landlord may either bill such costs directly to Tenant, in
which case Tenant shall pay such costs within ten (10) days of receipt of a
statement therefore, or Landlord may include such costs on the statement of
Operating Expenses payable by Tenant.
4.2.4 TENANT'S AUDIT RIGHTS: Tenant shall have the right, to
be exercised not more than once during any calendar year,
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to audit Operating Expenses, any taxes, utilities or any other assessments or
charges made against Tenant, and to examine Landlord's records relating to the
same. Tenant's audit shall be conducted by a C.P.A. mutually acceptable to
Landlord and Tenant. The Landlord shall submit the backup data to Tenant within
ten (10) business days of a written notice from Tenant. The costs of any such
audit shall be borne by Tenant, provided, however, that in the event such audit
reveals a discrepancy greater than three percent (3%) more than the amount
charged to Tenant, Landlord shall pay the costs of that audit. Landlord shall
pay to Tenant within fifteen (15) days of notice thereof, any amounts determined
to be owed to Tenant as a result of such audit, with interest thereon, from the
date any overpayment was made or Landlord failed to make the appropriate refund
or deduction from Tenant's obligations, provided, however, the Tenant may, at
its own option and without limiting its rights hereunder, deduct amounts it is
owed by Landlord from any future payment due to Landlord of any kind whatsoever.
5. LATE PAYMENT CHARGES.
Tenant acknowledges that late payment by Tenant to Landlord of Rent and
other charges provided for under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such costs being extremely
difficult or impracticable to fix. Therefore, if any installment of Rent or any
other charge due from Tenant is not received by Landlord within five (5) days
after such payment is due and without any requirement for notice to Tenant,
Tenant shall pay to Landlord an additional sum equal to eight percent (8%) of
the amount overdue as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant.
6. SECURITY DEPOSIT.
Upon Tenant's execution of this Lease, Tenant shall deposit with
Landlord the sum specified in Section 1.14, for the Security Deposit, which
shall be held by Landlord as security for the faithful performance by Tenant of
all of the terms, covenants, and conditions of this Lease, it being expressly
understood and agreed that the Security Deposit is not an advance deposit for
rent or a measure of Landlord's damages in case of Tenant's default. The
Security Deposit may be retained, used or applied by Landlord to remedy and
default by Tenant, to repair damage caused by Tenant to any part of the Premises
or the Building, and to clean the Premises upon expiration or earlier
termination of this Lease, as well as to reimburse Landlord for any amount which
Landlord may spend by reason of Tenant's default or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion of the Security Deposit is so used or applied, Tenant
shall, within ten (10) days after written demand therefore, deposit cash with
Landlord in an amount sufficient to restore the security Deposit to the full
amount required hereunder, and Tenant's failure to do so shall be a material
breach of this
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Lease. Landlord shall not be required to keep the Security Deposit separate
from its general funds, and Tenant shall not be entitled to interest on such
deposit. Tenant may not elect to apply any portion of said Security Deposit
toward payment of Base Rent or any other amounts payable by Tenant under this
Lease, although Landlord may elect to do so in the event Tenant is in default
or is insolvent. If Tenant shall fully and faithfully perform every provision
of this Lease, the Security Deposit or any balance thereof shall be returned
to Tenant at Tenant's last known address (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder) within thirty (30) days after
the Term has ended and the Premises have been vacated by Tenant.
7. REAL PROPERTY TAXES.
7.1 REAL PROPERTY TAXES. Real Property Taxes shall mean all real
property taxes and assessments, personal property taxes, (other than those
within Section 7.2,) and all other assessments, dues or charges against the
Project on which the Building is located shall be paid by Landlord. The
amount so paid shall be included within Operating Expenses under Section
4.2.2. Such taxes and assessments shall include, without limitation, any
assessment or improvement district or other district, now existing or
hereafter established or imposed, having a lien or claim against the Building
or the Project; license fees, business taxes, commercial rental taxes, levy,
penalty, tax or similar imposition imposed by any authority having the power
to tax. Such taxes, shall include without limitation, any tax on Landlord's
right to Rent or income from the Premises (excluding state and federal income
taxes), any charge in substitution, partially or totally, of any assessment,
tax or charge previously included in the definition of property tax;
assessments for such services as fire protection, police protection street,
landscape, sidewalk and road maintenance, refuse removal, sewer assessments
and for other governmental services formerly provided without charge to
property owners or occupants; any assessment, tax, or charge allocable to or
measured by the area of the Premises or the Rent payable hereunder; and any
expenses, including attorneys' fees reasonably incurred by Landlord in
seeking reduction by the taxing authority of such taxes, less tax refunds
obtained as a result of Landlord's application for review.
7.2 TAXES ON ALTERATIONS AND PERSONAL PROPERTY. Notwithstanding any
other provision hereof, Tenant shall pay the full amount of any increase in Real
Property Taxes during the Term resulting from any and all alterations of any
kind whatsoever placed in, on or about the Premises and the Project for the
benefit of, at the request of, or by Tenant. Tenant shall pay prior to
delinquency all taxes assessed or levied against Tenant's personal property in,
on or about the Premises. When possible, Tenant shall cause its personal
property to be assessed and billed separately from the real or personal property
of Landlord.
7.3 PRORATION. Tenant's liability to pay increases in Real Property
Taxes shall be prorated on the basis of a 365-day year to account for any
fractional portion of a fiscal tax year included at the commencement or
expiration of the Term.
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8. INSURANCE
8.1 INDEMNIFICATION. Tenant hereby agrees to defend, indemnify and hold
harmless Landlord and its agents, partners, officers and employees from and
against any and all damage, loss, liability or expense including without
limitation, attorneys' fees and legal costs suffered directly or by reason of
any claim, suit or judgment brought by or in favor of any person or persons for
damage, loss or expense due to, but not limited to, bodily injury and property
damage sustained by such person or persons which arises out of, is occasioned
by, or in any way attributable to the use or occupancy of the Premises, the
Building or the Project or any part thereof and adjacent areas by the Tenant,
the acts or omissions of the Tenant, its agents, employees or any contractors
brought onto the Premises, the Building or the Project by Tenant, except to the
extend caused by the negligence or willful misconduct of Landlord or its agents,
partners, officers or employees.
8.2 TENANT'S INSURANCE. Tenant agrees to maintain in full force and
effect at all times during the Term, at its own expense, for the protection of
Tenant and Landlord, as their interests may appear, policies of insurance which
afford the following coverages:
8.2.1 LIABILITY. Comprehensive general liability insurance in
an amount not less that One Million and no/100ths Dollars ($1,000,000.00)
combined single limit for both bodily injury and property damage which includes
blanket contractual liability broad form property damage, personal injury,
completed operations, products liability, and fire legal (in an amount not less
than Fifty Thousand Dollars ($50,000), naming Landlord and any mortgagee of
Landlord as additional insureds.
8.2.2 PERSONAL PROPERTY. "All Risk" property insurance
(including without limitation, vandalism, malicious mischief, inflation
endorsement, and sprinkler leakage endorsement) on Tenant's personal property,
located on or in the Premises, including alterations and improvements to
Premises installed by Tenant. Such insurance shall be in the full amount of the
replacement cost, as the same may from time to time increase as a result of
inflation or otherwise, and shall be in a form providing coverage comparable to
the coverage provided in the standard ISO All-Risk form.
8.3 ALL-RISK INSURANCE. During the Term, Landlord shall maintain "All
Risk" property insurance (including, at Landlord's option, inflation
endorsement, sprinkler leakage endorsement and earthquake and flood coverage) on
the Building, excluding coverage of all Tenant's personal property located on or
in the Premises, but including Tenant Improvements installed by Landlord. Such
insurance shall also include insurance against loss of rents, on an "All Risk"
basis, in an amount equal to the Monthly Rent and Additional Rent, and any other
sums payable under the Lease, for a period of at least twelve (12) months
commencing on the date of loss. Such insurance shall name Landlord and any
mortgagee of Landlord as named insureds and include a tender's loss payable
endorsement in favor of Landlord's lender.
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8.3.1 PAYMENT BY TENANT. If above insurance premiums are
increased after the Commencement Date due to Tenant's use of the Premises or any
other cause solely attributable to Tenant, Tenant shall pay the full amount of
the increase within ten (10) days notice of such increase.
8.4 CO-INSURER. If, due to Tenant's failure to comply with the
foregoing provisions, Landlord is adjudged a co-insurer by its insurance
carrier, then, any loss or damage Landlord sustains by reason thereof, including
attorneys fees and costs, shall be borne by Tenant and shall be immediately paid
by Tenant upon receipt of a bill therefore and evidence of such loss.
8.5 INSURANCE REQUIREMENTS. All insurance carried by Tenant shall be in
a form satisfactory to Landlord and shall be carried with companies that have a
general policy holder's rating of not less than "A" in the most current edition
of Best's Insurance Reports, shall provide that such policies shall not be
subject to material alteration or cancellation except after at least thirty (30)
days prior written notice to Landlord, and shall be primary as to Landlord. The
policy or policies, or duly executed certificates for them together with
satisfactory evidence of payment of the premium thereon shall be deposited with
Landlord prior to the Commencement Date, and upon renewal of such policies, not
less than thirty (30) days prior to the expiration of the term of such coverage.
The certificates shall expressly provide that the interest of Landlord therein
shall not be affected by any breach of Tenant of any policy provision for which
such certificates evidence coverage. If Tenant fails to procure and maintain the
insurance required hereunder, Landlord may, upon written notice to Tenant, order
such insurance at Tenant's expense and Tenant shall reimburse Landlord upon
demand. Such reimbursement shall include all sums incurred by Landlord,
including Landlord's reasonable attorneys' fees and costs with interest thereon
at the maximum rate permitted by law.
8.6 LANDLORD'S DISCLAIMER. Landlord and its agents, partners, officers
and employees shall not be liable for any loss or damage to persons or property
resulting from fire, explosion, falling plaster, glass, tile or sheetrock,
steam, gas, electricity, water or rain which may leak from any part of the
Building, or from the pipes, appliances or plumbing works therein or from the
roof, street or subsurface or whatsoever, unless caused by or due to the
negligence or willful acts of Landlord. Landlord and its agents, partners,
officers and employees shall not be liable for interference with the light, air,
or any latent defect in the Premises. Tenant shall give prompt written notice to
Landlord in case of a casualty, accident or repair needed in the Premises.
8.6 WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive all
rights of recovery against the other on account of loss and damage occasioned to
such waiving party for its property or the property of others under its control
to the extent that such loss or damage is insured against under any insurance
policies which may be in force at the time of such loss or damage. Tenant and
Landlord shall, upon obtaining policies of insurance required hereunder, give
notice to the insurance carrier that the foregoing
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mutual waiver of subrogation is contained in this Lease and Tenant and
Landlord shall cause each insurance policy obtained by such party to provide
that the insurance company waives all right of recovery by way of subrogation
against either Landlord or Tenant in connection with any damage covered by
such policy.
9. UTILITIES AND SERVICES.
Tenant shall be responsible for and shall pay promptly all charges for
water, gas electricity, sewer, telephone, refuse pickup, janitorial service and
all other utilities, materials and services furnished directly to or used by
Tenant in, on or about the Premises, or Project, during the Term, together with
any taxes thereon. These costs shall be considered "Tenant Expenses" (along with
those specified in Section 10.1 below) which are separate and apart from those
Operating Expenses described in Section 4.2.2. Landlord shall not be liable for
damages or otherwise for any failure or interruption of any utility service or
other service furnished to the Premises, except that resulting from the willful
act or negligence of Landlord. Any utilities which are not separately metered,
(e.g. domestic and fire service water) or services which are not separately
billed to the Premises (e.g. refuse pickup), shall be charged to Tenant on an
equitable basis as determined by Landlord. Tenant shall pay directly, or
reimburse Landlord for, the costs thereof, as and when billed by vendor or
Landlord.
With regard to refuse pickup, Tenant must store within Premises such
refuse as pallets or metal drums, and arrange for their separate disposal. If
Hazardous Materials are involved, Tenant must comply with Section 12.4. Tenant
must collapse any cardboard shipping containers prior to disposal in Landlord
provided dumpsters. Tenant will be billed for excessive use of refuse disposal
that require oversized dumpsters or extra pickups. At all times, Tenant will not
be permitted to store refuse or goods outside of Premises if unsightly or in
violation of Covenants, Conditions and Restrictions ("C,C&R's").
10. REPAIRS AND MAINTENANCE.
10.1 LANDLORD'S OBLIGATIONS. Landlord shall keep in good order,
condition and repair the structural parts of the Buildings, which structural
parts include only the Foundation, exterior walls (excluding the interior of all
exterior walls), roof structure and subflooring of the Premises, except for any
damage thereto caused by the negligence or willful acts or omissions of Tenant
or of Tenant's agents, employees or invitees, or by reason of the failure of
Tenant to perform or comply with any terms, conditions or covenants in this
Lease, or caused by alterations made by Tenant or by Tenant's agents, employees
or contractors which shall be Tenant's responsibility. Except for repairs
readily discernable by visual inspection of exterior, it is a condition
precedent to all obligations of Landlord to repair and maintain under this
Section 10.1.1 that Tenant shall have notified Landlord in writing of the need
for such repairs or maintenance.
Landlord shall also maintain, repair and replace the HVAC
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system for the Premises and Tenant shall pay directly or reimburse Landlord for
the costs thereof, as and when billed by vendor or landlord. If such HVAC system
is not separately metered to the Premises, Tenant shall be billed for its
proportionate share of such cost as reasonably determined by Landlord. Landlord
shall obtain an HVAC system preventive maintenance contract with monthly service
which shall be paid for by Tenant and which shall provide for and include
replacement of filters, oiling and lubricating of machinery, parts replacement,
adjustment of drive belts, oil changes and other preventive maintenance. Tenant
shall have the benefit of all warranties available to Landlord regarding such
equipment.
10.1.2 TENANT'S OBLIGATIONS. Tenant shall at all times and at
its own expense clean, keep and maintain in good, safe and sanitary order,
condition and repair every part of the Premises which is not within Landlord's
obligation pursuant to Section 10.1.1. Tenant's repair rand maintenance
obligations shall include, without limitation, all plumbing and sewage
facilities within the Premises, fixtures, interior walls, floors, ceilings,
interior windows, store front, doors, entrances, plate glass, showcases,
skylights, all electrical facilities and equipment, including lighting fixtures,
lamps fans and any exhaust equipment and systems, any fire extinguisher
equipment within the Premises, electrical motors and all other appliances and
equipment of every kind and nature located in, upon or about the Premises.
Tenant shall also be responsible for all pest control within the Premises. All
glass is at the sole risk of Tenant, and any broken glass shall promptly be
replaced by Landlord, at Tenant's expense, with glass of the same kind, size and
quality.
10.2 COMMON AREA. Landlord shall maintain and repair the Common Area,
including the membrane and exterior walls of the Building, in a good, safe and
sanitary manner. Landlord shall at all times have exclusive control of the
Common Area and may, at any reasonable time, temporarily close any part thereof,
exclude and restrain anyone from any part thereof, except the bona fide
customers, employees and invitees of Tenant who use such areas in accordance
with the reasonable rules and regulations as Landlord may from time to time
establish. In addition, Landlord may reasonably change the configuration or
location of the Common Area. In exercising any such rights, Landlord shall use
diligent efforts to minimize any disruption of Tenant's business. Landlord shall
have the right to reconfigure the parking area and ingress to and egress from
the parking area, and to modify the directional flow of traffic of the parking
area.
10.3 WAIVER. Landlord and Tenant agree that the terms of this Lease
shall govern the respective obligations of Landlord and Tenant with respect to
repairs and maintenance. Accordingly, Tenant waives the provisions of Sections
1941 and 1942 of the California Civil Code and any similar or successor law
regarding Tenant's right to make repairs and deduct the expenses of such repairs
from the Rent due under this Lease.
11. CONDITION OF PREMISES.
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Tenant acknowledges that Tenant has inspected the Premises and accepts
the Premises as of the Commencement Date in their "as is" condition with the
understanding and agreement that Landlord will construct only those Tenant
Improvements outlined on the attached Exhibit "B", Tenant Improvement
Specifications. Tenant acknowledges that neither Landlord nor its agents have
made any representations or warranties as to the suitability or fitness of the
Premises for the conduct of Tenant's business or for any other purpose, nor has
Landlord or its agents agreed to undertake any alterations or construct any
Tenant Improvements to the Premises except as expressly provided in this Lease.
To the extent Landlord is required to perform Tenant Improvements to the
Premises pursuant to Exhibit B, Tenant Improvement Specifications and Exhibit A,
Premises and Building Plan, Landlord shall use reasonable diligence to complete
such work in a timely manner. If Tenant Improvements are to be constructed by
Landlord; then, within ten (10) days after completion of the Tenant
Improvements, Tenant shall conduct a walk-through inspection of the Premises
with Landlord and complete a punch-list of items needing additional work by
Landlord and pertaining to the Landlord's Tenant Improvement work as outlined on
Exhibits A and B. Other than the items specified in the punch-list, by taking
possession of the Premises, Tenant shall be deemed to have accepted the Premises
and Tenant Improvements in good, clean and completed Condition and repair,
Subject to all applicable laws, codes and ordinances.
12. USE OF PREMISES.
12.1 TENANT'S USE. Tenant shall use the Premises solely for the use
specified in Section 1.15 and shall not use the Premises for any other purpose
without obtaining the prior written consent of Landlord.
12.2 RULES AND REGULATIONS. Tenant shall abide by the Rules and
Regulations respecting use of the Premises, Building, Common Areas and Project.
The provisions of the Rules and Regulations attached hereto as Exhibit "D" are
incorporated herein by this reference. Landlord reserves the right to amend
Rules and Regulations as are reasonably necessary or appropriate to the
operation or use of the Premises, Building, Common Areas or Project. Tenant
shall comply with any such amendments or supplements.
12.3 COMPLIANCE. Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Project which will in any way conflict with
any law, statute, zoning restriction, ordinance or governmental law, rule,
regulation or requirement of duly constituted public authorities now in force or
which may hereafter be in force, or the requirements of the Board of Fire
Underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use or occupancy of the Premises or the Project. Tenant
shall, at its cost, comply with all present and future regulations, rules, laws,
ordinances, and requirements of all governmental authorities including any
transportation systems management program adopted by the County, City or
Association, arising from governing Tenant's use or
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occupancy of or applicable to the Premises or the Project or privileges
appurtenant thereto. Tenant shall not commit any public or private nuisance or
any other act or thing which might or would disturb the quiet enjoyment of any
other tenant of Landlord or any occupant of nearby property. Tenant shall place
no loads upon the floors, walls or ceilings in excess of the maximum designed
load determined by Landlord or which endanger the structure, nor place any
harmful liquids in the drainage systems, nor dump or store waste materials or
refuse or allow such to remain outside the Building proper, except in the
enclosed trash areas provided.
12.4 HAZARDOUS MATERIAL. Tenant shall strictly comply with all
statutes, laws, ordinances, rules, regulations, and precautions now or hereafter
mandated or advised by any federal, state, local or other governmental agency
with respect to the use, generation, storage, or disposal of hazardous, toxic,
or radioactive materials "Hazardous Materials") Tenant shall not cause, or
(collectively, allow anyone else to cause any Hazardous Materials to be used,
generated, stored, or disposed of on or about the Premises, Building, or
Project, without the prior written consent of Landlord, which consent may be
withheld in the sole discretion of Landlord, and which consent may be revoked at
any time. Tenant's indemnification of Landlord pursuant to Section 8.1 shall
extend to all liability, including all foreseeable and unforeseeable
consequential damages, directly or indirectly arising out of the use,
generation, storage, or disposal of Hazardous Materials by Tenant or any person
claiming under Tenant, including, without limitation, the cost of any required
or necessary repair, cleanup, or detoxification and the preparation of any
closure or other required plans, whether such action is required or necessary
prior to or following the termination of this Lease, to the full extent that
such action is attributable, directly or indirectly, to the use, generation,
storage, or disposal of Hazardous Materials by Tenant or any person claiming
under Tenant. Neither the written consent by Landlord to the use, generation,
storage, or disposal of Hazardous Materials nor the strict compliance by Tenant
with all statutes, laws, ordinances, rules, regulations, and precautions
pertaining to Hazardous Materials shall excuse Tenant from Tenant's obligation
of indemnification pursuant to this subsection. Tenant's obligations pursuant to
the foregoing indemnity shall survive the termination of this Lease.
12.5 BUSINESS PARK COVENANTS, CONDITIONS AND RESTRICTIONS. Tenant
acknowledges that the Premises are subject to the Business Park C,C&R's. Tenant
hereby accepts the Lease, use and occupancy of the Premises subject to such
C,C&R's and agrees to comply with C,C&R's throughout the term of this Lease.
13. ALTERATIONS AND LIENS.
13.1 ALTERATIONS. Tenant shall not make or permit to be made any
alterations, additions or improvements to the Premises, Building, Project, or
Common Areas, without obtaining Landlord's prior written consent. When applying
for such consent, Tenant shall, if required by Landlord, furnish complete plans
and specifications of such alterations, additions or improvements. Tenant may,
without Landlord's prior approval, make improvements to
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the interior of the Premises which do not affect the structure of the Building
and which do not exceed a cost of Five Thousand Dollars ($5,000). All
alterations, additions or improvements to the Premises shall be performed by
contractors approved or selected by Landlord for Tenant's account and at
Tenant's sole cost and expense. Within ten (10) days after receipt of a written
statement from Landlord, Tenant shall reimburse Landlord for all costs arising
in connection with Landlord's review of plans and specifications and supervision
of contractors. Landlord shall have the right to require that any contractor
performing alterations, improvements or additions to the Premises shall, prior
to commencement of any work, provide Landlord with a performance bond and labor
and materials payment bond in the amount of the contract price for the work,
naming Landlord or Tenant, shall at once belong to Landlord and become part of
the Premises and shall remain on the Premises without compensation of any kind
to Tenant. Tenant shall carry insurance as required by Section 8 covering any
alterations, additions or improvements to the Premises made by Tenant under the
provisions of this Section 13, it being understood and agreed that none of such
alterations, additions or improvements shall be insured by Landlord nor shall
Landlord be required under any provision for reconstruction to reinstall any
such alteration, additions or improvements. Movable furniture and equipment
which are removable without material damage to the Building or the Premises
shall remain the property of Tenant. Tenant shall be responsible for the
maintenance and repair of any alterations made by it to the Premises.
13.2 LIENS. Tenant shall keep the Premises, Building, Project, and
Common Areas free from any liens arising out of work performed, materials
furnished, or obligations incurred by Tenant and shall indemnify, hold harmless
and defend Landlord from any liens and encumbrances arising out of any work
performed or materials furnished by or at the direction of Tenant. In the event
that Tenant shall not, within twenty (20) days following imposition of any such
lien, cause such lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided in this
Lease and by law, the right, but no obligation, to cause the same to be released
by such means as it shall deem proper, including payment of the claim giving
rise to such lien. All such sums paid by Landlord and all expenses incurred by
it in connection therewith, including attorneys' fees and administrative costs,
shall be payable to Landlord by Tenant on demand with interest at the maximum
rate permitted by law from the date such sums are paid or expenses incurred by
Landlord. Landlord shall have the right at all times to post and keep posted on
the Premises any notices permitted or required b y law, or which Landlord shall
deem proper, for the protection of Landlord and the premises, and any other
party having an interest therein, from mechanics and materialmen's liens, and
Tenant shall give to Landlord at least ten (10) business days prior written
notice of the expected date of commencement of any work relating to alterations,
additions or improvements in or to the Premises.
14. LANDLORD'S RIGHT TO ENTER THE PREMISES.
Landlord and its authorized representatives shall have the
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right to enter the Premises at all reasonable times during normal business hours
and at any time in case of any emergency (i) to determine whether the Premises
are in good condition and whether Tenant is complying with its obligations under
this lease, (ii) to maintain or to make any repair or restoration to the
Building or Premises that Landlord has the right or obligation to perform,(iii)
to install any meters or other equipment which Landlord may have the right to
install, (iv) to protect the Premises, the Building and adjacent areas from
damage or destruction, (v) to serve, post, or keep posted any notices required
or allowed under the provisions of this Lease, to post "for sale" signs at any
time during the term, and to post "for rent" or "for lease" signs during the
last four (4) months of the term or during any period while Tenant is in
default, (vi) to show the Premises to prospective brokers, lenders, agents,
buyers, tenants, or persons interested in an exchange, (vii) to shore the
foundations, footings, and walls of the Building and to erect scaffolding and
protective barricades around and about the Building or the Premises, but not so
as to prevent entry into the Premises, and (viii) to do any other act or thing
necessary for the safety or preservation of the Premises or the Building.
Landlord shall at all times have and retain a key with which to unlock all doors
in, upon and about the Premises, excluding Tenant's vaults and safes, and
Landlord shall have the right to use any and all means which Landlord may deem
proper to gain entry in an emergency. Entry to the premises by Landlord by any
of said means shall not be construed or deemed to be a forcible or unlawful
entry into, or a detainer of, the Premises, or an eviction of Tenant from the
Premises or any portion thereof. Tenant hereby waives any claim for damages for
any injury or inconvenience to or interference with Tenant's business and any
loss of occupancy or quiet enjoyment of the Premises by reason of Landlord's
exercise of its rights of entry in accordance with this Section, and Tenant
shall not be entitled to an abatement or reduction of Rent or Expenses in
connection therewith.
15. SIGNS.
Landlord shall provide space for Tenant's identification sign (s) as
per the approved Tenant Sign Design Guidelines ("Guidelines") as set forth in
Exhibit E. Tenant shall have no right to maintain a Tenant identification sign
in any other location in, on or about the Premises, the Building or the Project
and shall not display or erect any other Tenant identification signs, display or
other advertising material that is visible from the exterior of the Building.
The size, design, color and other physical aspects of any sign, advertisement or
notice, whether temporary or permanent, shall be subject to: Guidelines,
Architectural Review Committee approval in accordance with C,C&R'S, and
appropriate municipal or other governmental approvals. The cost of the sign and
its installation, maintenance and removal shall be Tenant's sole expense. If
Tenant fails to maintain its sign or, if Tenant fails to remove such sign upon
termination of this Lease, Landlord may do so at Tenant's expense and Tenant's
reimbursement to Landlord for such amounts shall be deemed Additional Rent.
16. DAMAGE OR DESTRUCTION
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16.1 PARTIAL DAMAGE - INSURED. If the Premises are damaged by any
casualty which is covered under the "All Risk" insurance carried by Landlord
pursuant to Section 8.3, then Landlord shall restore such damage, provided
insurance proceeds are available to pay at least ninety percent (90%) or more of
the cost of restoration and provided such restoration can be completed within
one hundred twenty (120) days after the commencement of the work in the
reasonable opinion of a registered architect or engineer appointed by Landlord
for such determination. In such event, this Lease shall continue in full force
and effect, except that Tenant shall be entitled to a proportionate reduction in
Monthly Base Rent to be based upon the extent to which the restoration efforts
interfere with Tenant's use of the Premises, as reasonably agreed upon between
Tenant and Landlord.
16.2 PARTIAL DAMAGE - UNINSURED. If the Premises or the Building is
damaged by a risk not covered by Landlord's insurance, or the proceeds of
available insurance are less than ninety percent (90%) of the cost of
restoration, or the restoration cannot be completed within one hundred twenty
(120 ) days after the commencement of work in the reasonable opinion of the
registered architect or engineer appointed by Landlord for such determination,
then Landlord shall have the option either to: (1) repair or restore such
damage, this Lease continuing in full force and effect, but the Monthly Base
Rent to be proportionately abated as provided in Section 16.1 or (2) give notice
to Tenant at any time within thirty (30) days after such damage terminating this
Lease as of a date to be specified in such notice which date shall be not less
than thirty (30) nor more than sixty (60) days after giving such notice. If
notice of termination is given, this Lease shall expire and all interest of
Tenant in the Premises shall terminate on such date so specified in such notice
and the Monthly Base Rent, reduced by any proportionate reduction based upon the
extent, if any, to which such damage interfered with the use of the Premises by
Tenant, shall be paid to the date of such termination.
16.3 TOTAL DESTRUCTION. If the Premises or Building is damaged or
destroyed to the extent that Landlord determines that the Premises or Building
cannot, with reasonable diligence, be fully repaired or restored by Landlord
within one hundred eighty (180) days after the date of the damage or
destruction, notwithstanding the fact that the Premises have not been damaged or
destroyed, the sole right of both Landlord and Tenant shall be the option to
terminate this Lease. Landlord's determination with respect to the extent of
damage or destruction shall be conclusive on Tenant. Landlord shall notify
Tenant of Landlord's determination, in writing, within thirty (30) days after
the date of the damage or destruction. If Landlord determines that the Premises
or Building can be fully repaired or restored within the one hundred eighty
(180) day period, or if Landlord determines that such repair or restoration
cannot be made within said period but neither party elects to terminate within
thirty (30) days from the date of said determination, this Lease shall remain in
full force and effect and Landlord shall diligently repair and restore the
damage as soon as reasonably possible.
16.4 LANDLORD'S OBLIGATIONS. Landlord shall not be required
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to repair any injury or damage by fire or any other cause of to make any
restoration of replacement to any paneling, decorations, partitions,
railings, floor coverings, office fixtures which are alterations or personal
property installed in the Premises by Tenant or at the expense of Tenant.
Except for abatement of Monthly Base Rent, if any, Tenant shall have no claim
against Landlord for any damage suffered by reason of any such damage,
destruction, repair or restoration nor shall Tenant have the right to
terminate this Lease as the result of any statutory provision now or
hereafter in effect pertaining to the damage and destruction of the Premises,
except as expressly provided herein.
16.5 DAMAGE NEAR END OF TERM. Anything herein to the contrary
notwithstanding, if the Premises or the Building is destroyed or damaged during
the last twelve (12) months of the Term, then Landlord may cancel and terminate
this Lease as of the date of the occurrence of such damage. If Landlord does not
elect to so terminate this Lease the repair of such damage shall be governed by
the other provisions of this Section 16.
17. CONDEMNATION.
If title to all of the Premises, the Building or the Project or so much
thereof, is taken or appropriated for any public or quasi-public use under any
statute or by right of eminent domain so that reconstruction of the Premises or
the Building will not, in Landlord's and Tenant's mutual reasonable judgment,
result in the Premises being suitable for Tenant's continued occupancy for the
uses and purposes permitted by this Lease, this Lease shall terminate as of the
date that possession of the Premises or Building or part thereof is taken. A
sale by Landlord to any authority having the power of eminent domain, either
under threat of condemnation or while condemnation proceedings are pending,
shall be deemed a taking under the power of eminent domain for all purposes of
this Section. If any part of the Premises, the Building or the Project is taken
and the remaining part is reasonably suitable for Tenant's continued occupancy
for the purposes and uses permitted by the Lease, this Lease shall, as to the
part so taken, terminate as of the date that possession of such part of the
Premises or Building is taken. If the Premises are partially taken, the Rent and
other sums payable hereunder shall be reduced in the same proportion that
Tenant's use and occupancy of the Premises is reduced. No award for any partial
or entire taking shall be apportioned. Tenant assigns to Landlord its interest
in any award which may be made in such taking or condemnation, together with any
and all rights of Tenant arising in or to the same or any part thereof. Nothing
contained herein shall be deemed to give Landlord any interest in or require
Tenant to assign to Landlord any separate award made to Tenant for the taking of
Tenant's personal property, for the interruption of Tenant's business, or its
moving costs, or for the loss of its goodwill. No temporary taking of the
Premises shall terminate this Lease or give Tenant any right to any abatement of
Rent. Any award made to Tenant, by reason of such temporary taking shall belong
entirely to Tenant. Each party agrees to execute and deliver to the other all
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instruments that may be required to effectiveness the provisions of this
Section.
18. ASSIGNMENT AND SUBLETTING.
18.1 DEFINITIONS.
18.1.1 SUBLET. Any transfer, sublet, assignment, license or
concession agreement, change of ownership, hypothecation of this Lease or the
Tenant's interest in the Lease or in a portion of the Premises.
18.1.2 SUBRENT. Any consideration of any kind received, or to
be received, by Tenant from a Subtenant if such sums are related to received for
Tenant's interest in this Lease or in the Premises.
18.1.3 SUBTENANT. The person or entity with whom a Sublet
agreement is proposed to be or is made.
18.2 LANDLORD'S CONSENT. Tenant shall not enter into a Sublet without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. Any attempted or purported Sublet without Landlord's prior
written consent shall be void and confer no rights upon any third person and
shall be deemed a material default of this Lease. Each subtenant shall agree in
writing, for the benefit of Landlord, to assume, to be bound by, and to perform
that its subtenancy will be subject to the terms, conditions and covenants of
this Lease to be performed by Tenant. Notwithstanding anything contained herein,
Tenant shall not be released from personal liability for the performance of each
term, condition and covenant of this Lease by reason of Landlord's consent to a
sublet unless Landlord specifically grants such release in writing.
18.3 INFORMATION TO BE FURNISHED. If Tenant desires at any time to
transfer this Lease (which transfer shall in no event be for less than its
entire interest in this Lease) or to sublet the Premises or any portion thereof,
Tenant shall submit to Landlord at least sixty (60) thirty (30) days prior to
the proposed effective date of the transfer or sublease ("Proposed Effective
Date"), in writing: (1) a notice of intent to transfer or sublease, setting
forth the Proposed Effective Date, which shall be no less than sixty (60) nor
more than ninety (90) days after the sending of such notice; (2) the name of the
proposed subtenant or transferee; (3) the nature of the proposed subtenant's or
transferee's business to be carried on in the Premises; (4) the terms and
provisions of the proposed sublease or transfer; (5) such certified financial
information as Landlord may reasonably request concerning the proposed subtenant
or transferee, including recent financial statements and bank references; and
(6) evidence satisfactory to Landlord that the proposed subtenant or transferee
will immediately occupy and thereafter use the affected portion of the Premises
for the entire term of the sublease or transfer agreement.
18.4 LANDLORD'S ALTERNATIVES. At any time within thirty (30) days
after Landlord's receipt of the information specified in
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Section 18.3, Landlord may, by written notice to Tenant, elect upon any terms
desired by Landlord, (1) to consent to the Sublet by Tenant; or (2) to refuse
its consent to the Sublet. If Landlord consents to the Sublet, Tenant may
thereafter enter into a valid Sublet of the Premises or portion thereof, upon
the terms and conditions and with the proposed Subtenant set forth in the
information furnished by Tenant to Landlord pursuant to Section 18.3, subject,
however, to the condition that Fifty Percent (50%) of any excess of the Subrent
over the Rent and Additional Rent required to be paid by Tenant hereunder shall
be paid to Landlord as and with the Monthly Base Rent.
18.5 REQUIRED SUBLEASE PROVISIONS. Any and all transfer or sublease
agreements shall (1) contain such terms as are described under this Section or
as otherwise agreed by Landlord; (2) prohibit further assignments, transfers, or
subleases; (3) impose the same obligations and conditions on the transferee or
sublessee as are imposed on Tenant by this Lease (except as to Rent and Term or
as otherwise agreed by Landlord); (4) be expressly subject and subordinate to
each and every provision of this Lease; (5) have a term that expires on or
before the expiration of the Term of this Lease; and (6) provide that Tenant
and/or transferee or sublessee shall pay Landlord the amount of any additional
costs or expenses incurred by Landlord for repairs, maintenance or otherwise as
a result of any change in the nature of occupancy caused by the transfer or
sublease.
18.6 FEES FOR REVIEW. Tenant shall pay to Landlord or Landlord's
designee, together with the notice described in Section 18.3, a non-refundable
fee as reimbursement for expenses incurred by Landlord in connection with
reviewing each such transaction (including any administrative expenses for
Landlord's property manager), in the amount of Five Hundred Dollars ($500.00).
In addition to such reimbursement, if Landlord retains the services of an
attorney to review the transaction, Tenant shall pay to Landlord all attorneys'
fees incurred by Landlord in connection therewith, up to a maximum amount of
Fifteen Hundred and no/100 Dollars ($1,500.00). Tenant shall pay such attorneys'
fees to Landlord within thirty (30) days after written request therefor.
18.7 PRORATION. If a portion of the Premises is Sublet, the pro rata
share of the Rent attributable to such partial area of the Premises shall be
determined by Landlord by dividing the Rent payable by Tenant hereunder by the
total square footage of the Premises and multiplying the resulting quotient (the
per square foot rent) by the number of square feet of the Premises which are
sublet.
18.8 EXECUTED COUNTERPART. No Sublet shall be valid nor shall any
Subtenant take possession of the Premises until an executed counterpart of the
Sublet agreement has been delivered to and acknowledged by Landlord.
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18.9 EXEMPT SUBLETS. Notwithstanding the above, Landlord's prior
written consent shall not be required for a sublet an assignment of this Lease
to a subsidiary, affiliate, joint venture or parent corporation of Tenant, or a
corporation into which Tenant merges or consolidates, if Tenant gives Landlord
prior written notice of the name of any such assignee, and if the assignee
assumes, in writing, all of Tenant's obligations under the Lease. An assignment
or other transfer of this Lease to a purchaser of all or substantially all of
the assets of Tenant shall be deemed a Sublet requiring Landlord's prior written
consent.
19. DEFAULT.
19.1 TENANT'S DEFAULT. A default under this Lease by Tenant shall exist
if any of the following events shall occur:
19.1.1 If Tenant fails to pay Rent or any other sum required
to be paid hereunder within five (5) days of when due; or
19.1.2 The failure by Tenant to observe or perform any of
the terms, covenants, conditions or provisions of the Lease to be observed or
performed by Tenant, if such failure is not cured within ten (10) days after
written notice thereof from Landlord to Tenant, provided, however, that if
the nature of Tenant's default is such that it cannot be cured solely by
payment of money and that more than then (10) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant
commences such cure within the ten (10) day period and thereafter diligently
prosecutes such cure to completion, and provided, further, that violations by
Tenant of the Rules and Regulations described in Exhibit "D" shall be cured
by Tenant within forty-eight (48) hours after written notice thereof from
Landlord, failing which Landlord may (but need not) cure same at Tenant's
sole cost; or
19.1.3 If Tenant assigns its assets for the benefit of its
creditors; or
19.1.4 If the sequestration or attachment of or execution on
any material part of Tenant's personal property essential to the conduct of
Tenant's business occurs, and Tenant fails to obtain a return or release of such
personal property within thirty (30) days thereafter, or prior to sale pursuant
to such sequestration, attachment or levy, whichever is earlier; or
19.1.5 If a court shall make or enter any decree or order
other than under the bankruptcy laws of the United States adjudging Tenant to be
insolvent; or approving as property filed a petition seeking reorganization of
Tenant; or directing the winding up or liquidation of Tenant and such decree or
order shall have continued for a period of thirty (30) days; or
19.1.6 Chronic delinquency by Tenant in the payment of Rent or
any other periodic payments required to be paid by Tenant under this lease shall
constitute a separate default. "Chronic delinquency" shall mean the failure by
Tenant to pay the Rent or any other periodic payments required to be paid by
Tenant under this Lease when due for any three (3) months (consecutive or
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nonconsecutive) in any twelve (12) month period. In the event of a chronic
delinquency, Landlord shall have the right to require Tenant to pay Rent
quarterly, in advance.
19.2 LANDLORD'S REMEDIES. Upon a default, Landlord shall have the
following remedies, in addition to all other rights and remedies provided by law
or otherwise provided in this Lease to which Landlord may resort cumulatively or
in the alternative:
19.2.1 Landlord may continue this Lease in full force and
effect, and this Lease shall continue in full force and effect as long as
Landlord does not terminate this Lease and Landlord shall have the right to
collect Rent when due.
19.2.2 Landlord may terminate Tenant's right to possession
of the Premises at any time by giving written notice to that effect, and
relet the Premises or any part thereof. Tenant shall be liable immediately to
Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, brokerage commissions, expenses of
cleaning and redecorating the Premises required by the reletting and like
costs. Reletting may be for a period shorter or longer than the remaining
Term of this Lease. No act by Landlord other than giving written notice to
Tenant shall terminate this Lease. Maintenance efforts to relet the Premises
or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession. On termination, Landlord has the right to
remove all Tenant's personal property and store same at Tenant's cost and to
recover from Tenant as damages:
(a) The worth at the time of award of unpaid Rent
and other sums due and payable which had been earned at the time of
termination; plus
(b) The worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable which would have been
payable after termination until the time of award exceeds the amount of such
Rent loss that Tenant proves could have been reasonably avoided; plus
(c) The worth at the time of award of the amount by
which the unpaid Rent and other sums due and payable for the balance of the Term
after the time of award exceeds the amount of such Rent loss that Tenant proves
could be reasonably avoided; plus
(d) Any other amount necessary which is to compensate
Landlord for all the detriment proximately caused by Tenant's failure to perform
Tenant's obligations under this Lease or which, in the ordinary course of
things, would be likely to result therefrom, including, without limitation, any
costs or expenses incurred by Landlord (1) in retaking possession of the
Premises; (2) in maintaining, repairing, preserving, restoring, replacing,
cleaning, altering or rehabilitating the Premises or any portion thereof,
including such acts for reletting to a new tenant or tenants; (3) for leasing
commissions; or (4) for any other costs necessary or appropriate to relet the
Premises; plus
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(e) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
the laws of the State of California.
The "worth at the time of award" of the amounts referred to in Sections
19.2.2 (a) and 19.2.2 (b) is computed by allowing interest at the maximum rate
permitted by law on the unpaid rent and other sums due and payable from the
termination date through the date of award. The "worth at the time of award" of
the amount referred to in Section 19.2.2 (c) is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award.
19.2.3 Landlord may, with or without terminating this Lease,
re-enter the Premises and remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant. No re-entry or taking possession of
the Premises by Landlord pursuant to this section shall be construed as an
election to terminate this Lease unless a written notice os such intention is
given to Tenant.
19.2.4 If Tenant fails to make any payment or perform any
other act on its part to be made or performed under this Lease, Landlord may,
but shall not be obligated to and without waiving or releasing Tenant from any
obligation of Tenant under this Lease, make such payment or perform such other
act to the extent Landlord may deem desirable, and in connection therewith, pay
expenses and employ counsel. All sums so paid by Landlord, and all penalties,
interest and costs in connection therewith, shall be due and payable by Tenant
on the next day after any such payment by Landlord, together with interest
thereon at the maximum rate permitted by law from such date to the date of
payment by Tenant to Landlord, plus collection costs and attorneys' fees.
Landlord shall have the same rights and remedies for the nonpayment thereof as
in the case of default in the payment of Rent.
19.3 LANDLORD'S DEFAULT. Landlord shall not be deemed to be in default
in the performance of any obligation under this Lease unless and until it has
failed to perform such obligation within thirty (30) days after receipt of
written notice by Tenant to Landlord specifying such failure; provided, however,
that if the nature of Landlord's default is such that more than thirty (30) days
are required for its cure, then Landlord shall not be deemed to be in default if
it commences such cure within the thirty (30) day period and thereafter
diligently prosecutes such cure to completion.
19.4 TENANT'S REMEDY. If, as a consequence of a default by Landlord
under this Lease, Tenant recovers a money judgment against Landlord, such
judgment shall be satisfied only out the of the proceeds of sale receiving upon
execution of such judgment and levied thereon against the right, title and
interest of Landlord in the Building or Project and out of Rent or other income
from the Building or Project receivable by Landlord or out of consideration
received by Landlord from the sale or other disposition of all or
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any part of Landlord's right, title or interest in the Building, and neither
Landlord nor its agents, partners, officers or employees shall be liable for any
deficiency.
19.5 MORTGAGEE PROTECTION. If Landlord defaults under this Lease,
Tenant will notify any beneficiary of a deed of trust or mortgagee of a mortgage
covering the Building or the Project, and offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to obtain possession
of the Building or the Project by power of sale or a judicial foreclosure, if
such should prove necessary to effect a cure.
20. SUBORDINATION, ESTOPPEL AND ATTORNMENT.
20.1 SUBORDINATION. This Lease is subject and subordinate to ground and
underlying leases, mortgages and deeds of trust (collectively "Encumbrances")
which may now affect the Premises, the Building, or the Project, and to all
renewals, modifications, consolidations, replacements and extensions thereof;
provided, however, if the holder or holders ("Holder") of any such Encumbrances
shall require this Lease to be prior and superior thereto, within ten (10) days
after written request from Landlord, Tenant shall execute, have acknowledged and
deliver any and all documents or instruments, in the from presented to Tenant,
which Landlord or Holder deems necessary and desirable for such purposes.
Landlord shall have the right to cause this Lease to be and become and remain
subject and subordinate to any and all Encumbrances which are now or may
hereafter be executed covering the Premises, the Building, or the Project, or
any renewals, modifications, consolidations, replacements or extensions thereof,
for the full amount of all advances made or to be made thereunder, together with
interest thereon and subject to all the terms and provisions thereof; provided
only, that in the event of termination of any such lease or upon the foreclosure
of any such mortgage or deed of trust, Holder agrees to recognize Tenant's
rights under this Lease as long as Tenant is not then in default and continues
to pay the Rent and observe and perform all the provisions of this Lease. Within
ten (10) days after Landlord's written request, Tenant shall execute any and all
the documents required by Landlord or the Holder to make this Lease subordinate
to any lien of the Encumbrances. If Tenant fails to do so, it shall be deemed
that this Lease is so subordinated.
20.2 ESTOPPEL CERTIFICATES. Tenant shall execute and deliver to
Landlord any documents, including estoppel certificates in the form prepared by
Landlord (1) certifying that this Lease is unmodified and in full force and
effect or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect, and the date to
which the Rent and other charges are paid in advance, if any; and (2)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord, or, if there are uncured defaults on the part of the
Landlord, stating the nature of such uncured defaults; and (3) evidencing the
status of the Lease as may be required either by a lender making a loan to
Landlord to be secured by deed of trust or mortgage covering the Building or the
Project or a purchaser of the Building or the Project from
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Landlord. Tenant's failure to deliver an estoppel certificate within seven
(7) days after delivery of Landlord's written request therefor shall be
conclusive upon Tenant (1) that this Lease is in full force and effect,
without modification except as may be represented by Landlord; (2) that there
are no uncured defaults in Landlord's performance; and (3) that no Rent has
been paid in advance.
20.3 ATTORNMENT. Tenant shall, if requested, attorn to the purchaser of
the Building or Project, and recognize such purchases as Landlord under this
Lease in the event of (1) foreclosure proceeding or grant of deed in lieu of
foreclosure; (2) the exercise of the power of sale under any mortgage or deed of
trust, made by Landlord or Landlord's successors or assigns, which encumbers the
Premises, or any part thereof; (3) the termination of a ground lease; or (4) a
sale of the Building or Project.
21. NOTICES.
Any notice or demand required or desired to be given under this Lease
shall be in writing and shall be personally served, or in lieu of personal
service, may be given by mail. If given by mail, such notice shall be deemed to
have been given seventy-two (72) hours after deposit in the United States mail,
registered or certified, postage prepaid, and addressed to the party to be
served. At the date of execution of this Lease, the addresses of Landlord and
Tenant are as set forth in Section 1.16 of this Lease. After the Commencement
Date, the address of Tenant shall be the address of the Premises. Either party
may change its address by giving written notice of same in accordance with this
Section.
22. SURRENDER OF THE PREMISES.
On expiration or termination of this Lease, Tenant shall surrender to
Landlord the Premises and all Tenant's improvements and alterations in good
condition and repair (ordinary wear and tear excepted), and shall remove all of
its personal property including any signs, notices and displays. Tenant agrees
that is shall, upon Landlord's written request made prior to or within thirty
(30) days following the expiration or termination of this Lease, at Tenant's
sole cost and expense promptly remove any alterations, additions, fixtures or
improvements designated by Landlord to be removed and repair any damage to the
Premises resulting from such removal. Landlord may, in connection with any such
removal which might in Landlord's judgment involve damage to the Premises,
require that such removal be performed by a bonded contractor or other person
from whom a bond satisfactory to Landlord has been furnished covering the cost
of repairing the anticipated damage. Landlord may retain or dispose of, in any
manner, any such improvements or alterations or Tenant's personal property that
Tenant does not remove from the Premises on expiration or termination of the
Term as allowed or required by this Lease. Title to any such improvements or
alterations or Tenant's personal property that Landlord so elects to retain, or
dispose of, shall vest in Landlord. Tenant waives all claims against Landlord
for any damage or loss to Tenant arising out of Landlord's retention or
dispositions of any such improvements,
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removing and disposing of any such improvements, alterations or Tenant's
personal property. If Tenant fails to surrender the Premises to Landlord on
expiration or termination of the Lease as required by this Section, Tenant shall
indemnify, defend and hold Landlord harmless from all damages, loss, cost and
expense (including attorneys' fees) arising out of or in connection with
Tenant's failure to do so, including, without limitation, any claims made by a
succeeding tenant resulting from Tenant's failure to surrender the Premises.
23. COST OF SUIT.
If either party brings action for relief against the other, declaratory
or otherwise, arising out of this Lease, including any suit by Landlord for the
recovery of Rent or possession of the Premises, the losing party shall pay the
successful party its costs incurred in connection with and in preparation for
said action, including its attorneys' fees (which costs shall be deemed to have
accrued on the commencement of such action and shall be paid whether or not such
action is prosecuted to judgment). If Landlord, without fault on Landlord's
part, is made a party to any action instituted by Tenant or any third party
against Tenant, or by or against any person holding under or using the Premises
by License of Tenant, or for the foreclosure of any lien for labor or material
furnished to or for Tenant or of any such other person, or otherwise arising out
of or resulting from any action or omission of Tenant or of any such other
person, Tenant shall indemnify, defend and hold Landlord harmless from any
judgment rendered in connection therewith and all costs and expenses (including
attorneys' fees) incurred by Landlord in connection with such action.
24. TRANSFER OF THE BUILDING BY LANDLORD.
In the event of any conveyance of the Building or the Project and
assignment by Landlord of this Lease, Landlord shall be entirely released from
all liability under any and all of its covenants and obligations contained in
from this Lease occurring after the date of such conveyance and assignment
provided such transferee assumes Landlord's obligations under this Lease.
25. AIRPORT NOISE.
Tenant acknowledges that Landlord has informed Tenant that noise
produced by aircraft using Metropolitan Oakland International Airport
("Airport") which adjoins the Business Park may be heard at the Building of
which the Premises form a part. Tenant further acknowledges that Landlord has
informed Tenant that the real property on which the building and the Premises
are located is subject to a recorded Noise Easement and Release whereby the
owners of the Airport are released from any claims or law suits for damages by
any persons using the property, including Tenant, with respect to Airport
operations, including aircraft related noise. Tenant shall indemnify and hold
Landlord harmless from any and all claims, damages, causes of action or
liability, including legal fees and costs, arising from or in any way related to
aircraft-related noise perceived by Tenant, its employees, agents or
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invitees at the Premises or in any way connected with the Premises.
26. GENERAL.
26.1 CAPTIONS. With the exception of Section 1, the captions and
headings used in this Lease are for the purpose of convenience only and shall
not be construed to limit or extend the meaning of any part of this Lease.
26.2 EXECUTED COPY. Any fully executed copy of this Lease shall be
deemed an original for all purposes.
26.3 TIME. Time is of the essence for the performance of each term,
condition and covenant of this Lease.
26.4 SEPARABILITY. If one or more of the provisions contained herein,
except for the payment of Rent, is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect any other provision of this Lease, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had not been
contained herein.
26.5 CHOICE OF LAW. This Lease shall be construed and enforced in
accordance with the laws of the State of California. The language in all parts
of this Lease shall in all cases be construed as a whole according to its fair
meaning and not strictly for or against either Landlord or Tenant.
26.6 GENDER; SINGULAR, PLURAL. When the context of this Lease requires,
the neuter gender includes the masculine, the feminine, a partnership or
corporation or joint venture, and the singular includes the plural.
26.7 BINDING EFFECT. The covenants and agreement contained in this
Lease shall be binding on the parties hereto and on their respective successors
and assigns to the extent this Lease is assignable.
26.8 WAIVER. The waiver by Landlord of any breach of any term,
condition or covenant of this Lease shall not be deemed to be a waiver os such
provision or any subsequent breach of the same or any other term, condition or
covenant of this Lease. The subsequent acceptance of Rent hereunder by Landlord
shall not be deemed to be a waiver of any preceding breach at the time of
acceptance of such payment. No covenant, term or condition of this Lease shall
be deemed to have been waived by Landlord unless such waiver is in writing
signed by Landlord.
26.9 ENTIRE AGREEMENT. This Lease is the entire agreement between the
parties, and there are no agreements or representations between the parties
except as expressed herein. Except as otherwise provided herein, no subsequent
change or addition to this Lease shall be binding unless in writing and signed
by the parties hereto.
26.10 AUTHORITY. If Tenant is a corporation or a partnership,
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each individual executing this Lease on behalf of said corporation or
partnership, as the case may be, represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said entity in
accordance with its corporate bylaws, statement of partnership or certificate of
limited partnership, as the case may be, and that this Lease is binding upon
said entity in accordance with its terms. Landlord, at its option, may require a
copy of such written authorization to enter into this Lease. The failure of
Tenant to deliver the same to Landlord within seven (7) days of Landlord's
request therefore shall be deemed a default under this Lease.
26.11 RECORDING. Neither party shall record this Lease nor a short form
memorandum thereof.
26.12 FORCE MAJEURE. Any construction, repairs or rebuilding of any
building, improvement or other structure herein shall be excused or postponed
for the duration of delay occasioned by the other party (including, without
limitations, delays caused by change orders requested or required by Tenant and
delays in Tenant's approval of Plans and Specifications), strikes, threats of
strikes, blackouts, war, threats of war, acts of God, violent action of the
elements, fire, act or regulations of or obtaining of any necessary permits or
approvals from any governmental authority, impossibility of obtaining materials
or energy, earthquakes, or other matters beyond the reasonable control of the
obligated party.
26.13 SUBSTITUTED PREMISES. Upon providing Tenant sixty (60) days'
notice in writing, Landlord reserves the right during the term of the Lease, at
its sole cost, to substitute for the Premises a comparable area within the
Building or Project. The substituted area shall have substantially equivalent
area, location and interior improvements as the Premises and thereupon such
other area shall be deemed to be the premises governed by this Lease. If the
substituted area is smaller than the Premises, the Monthly Base Rent, Security
Deposit and Tenant's Percentage specified in this Lease shall be adjusted
proportionately.
26.14 HOLDING OVER. If Tenant remains in possession of all or any part
of the Premises after the expiration of the Term, with or without the express or
implied consent of Landlord, such tenancy shall be from month-to-month only and
not a renewal hereof or any extension for any further term, and in such case,
Monthly Base Rent shall be payable at a rate equal to one hundred fifty percent
(150%) of the Monthly Base Rent in effect at the time of expiration, and such
month-to-month tenancy shall be subject to every other term, covenant and
agreement of this Lease.
26.15 QUIET ENJOYMENT. Landlord covenants that Tenant, upon performing
the terms, conditions and covenants of this Lease, shall have quiet and peaceful
possession of the Premises as against any person claiming the same by, through
or under Landlord.
26.16 LIMITATION OF RECOURSE. Each of the obligations of any Partner of
Landlord under this Lease and the agreements related thereto is hereby expressly
limited so that in the event any action is brought to enforce any obligations
reflected herein, any
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judgment or decree so obtained shall be enforceable only against the assets of
the Partnership, and the interest of each partner in such Partnership, and no
writ of execution shall be levied against any other assets of any Partner of
Landlord.
27. ACCEPTANCE.
Delivery of this Lease, duly executed by Tenant, constitutes an offer
to lease the Premises, and under no circumstances shall such delivery be deemed
to create an option or reservation to lease the Premises for the benefit of
Tenant. This Lease shall only become effective and binding upon approval by
Holder, execution hereof by Landlord and delivery of a signed copy to Tenant.
28. LANDLORD'S CONDITION.
Notwithstanding any other provision hereof, this Lease and Landlord's
obligation to lease the Premises to Tenant shall be subject to the condition
precedent that Landlord's lender shall approve this Lease within ten (10)
fifteen (15) days from the date of its full execution. If Landlord's lender
fails to so approve this Lease, Landlord shall have the right, upon notice to
Tenant to terminate this Lease, and, if so terminated, the parties' rights and
obligations hereunder shall be discharged.
29. BROKERS.
Landlord and Tenant warrant and represent, each to the other, that they
have had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease except for the broker(s) named in Section 1.17 and
that they know of no other real estate broker or agent who is or might be
entitled to a commission in connection with this Lease. Tenant agrees to defend,
indemnify and hold harmless Landlord and its agents, partners, officers and
employees from and against any and all liabilities or expenses, including
attorneys' fees and costs, arising out of or in connection with claims made by
any other broker or individual for commissions or fees resulting from Tenant's
execution of this Lease.
30. OPTION TO EXTEND
Landlord grants Tenant one option to extend the Term of the Lease, for
one five-year period (the "Extension Term"), on all the provisions contained in
the Lease, subject to the following terms, conditions and exceptions:
Tenant shall notify Landlord in writing of Tenant's exercise of said option at
least twelve (12) months, prior to the expiration of the Term then in effect.
Tenant shall pay to Landlord during the Extension Term Monthly Base Rent equal
to the Fair Market Rental Value (as that term is hereinafter defined) of the
Premises as of the commencement of the Extension Term. The term Fair Market
Rental Value shall mean the prevailing market rental rate (determined by actual
transaction for new leases) for properties similar to the Premises located
within
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the Harbor Bay Business and Research Park. For the purposes hereof, the fair
market rental value of the premises shall be the monthly rental rate per square
foot of rentable area then prevailing for comparable office tech space including
standard office improvements in the Harbor Bay project site, that is then being
offered for lease to prospective tenants, multiplied by the rentable area of the
premises. If Tenant in good faith disputes Landlord's determination of fair
market rental value, Tenant shall so notify Landlord and the parties shall
negotiate in good faith to resolve the dispute. If such dispute is not resolved
by negotiations between the parties within 30 days, then fair market rental
value shall be determined by appraisal. Tenant shall pay monthly Base Rent when
due based upon Landlord's determination of fair market rental value, subject to
retroactive adjustment between the parties if the determination by appraisal is
different from Landlord's determination.
When fair market rental value is to be determined by appraisal, within ten (10)
days after the expiration of the 30-day negotiation period, Landlord and Tenant
shall each appoint as an appraiser, a real estate appraiser or broker with at
least five (5) years of experience in appraising commercial real property in
Alameda County, and give notice of such appointment to the other. If either
Landlord or Tenant shall fail to appoint an appraiser within ten (10) days after
receiving notice of the identity of the other party's appointed appraiser, then
the single appraiser appointed shall be the sole appraiser and determine the
fair market value of the premises. In the event each party appoints an
appraiser, such appraisers shall, within thirty (30) days after the appointment
of the last of them to be appointed, complete their determination of fair market
rental value and furnish the same to Landlord and Tenant. If the low appraisal
varies from the higher appraisal by 5% or less, the fair market rental value
shall be the average of the two valuations. If the low appraisal varies from the
high appraisal by more than 5%, the two appraisers shall, within ten (10) days
after submission of the last appraisal report, appoint a third appraiser who
shall meet the qualifications set forth in this paragraph. If the two appraisers
shall be unable to agree on the selection of a third appraiser in a timely
manner then either Landlord or Tenant may request such appointment by the
presiding judge of the Superior Court of Alameda County. The third appraiser,
however selected, shall be a person who has not previously acted in any capacity
for or against either party. Such third appraiser shall, within 30 days after
appointment, make a determination of fair market rental value and submit an
appraisal report to Landlord and Tenant. The fair market rental value of the
premises shall be as determined by the third appraiser, unless it is less than
the valuation set forth in the lower appraisal previously obtained, in which
case the valuation set forth in the lower prior appraisal shall be controlling,
or unless it is greater than the valuation set forth in the higher appraisal
previously obtained, in which case the valuation set forth in the higher prior
appraisal shall be controlling. All fees and costs incurred in connection with
the determination of fair market rental value by appraisal shall be paid
one-half by Landlord and one-half by Tenant. Prior to the commencement of an
option period, Tenant and Landlord shall execute an amendment to this Leasing
setting forth
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the option period and revised monthly Base Rent amounts.
31. ADA CODE COMPLIANCE
The Premises, to the best of Landlord's knowledge, is substantially in
compliance with the Americans with Disabilities Act. If, following lease
commencement, any Tenant alterations of Tenant's specific use of the Premises
trigger additional code compliance, then Tenant shall be solely responsible for
any costs associated with same (assuming Tenant proceeds with its proposed
alterations). If, during Tenant's Lease Term, a new law or ordinance is
established, in regard to the Americans with Disabilities Act, requiring
compliance, and not triggered by Tenant's alterations or specific use, then any
costs to comply with said new law or ordinance shall be borne by Landlord.
Landlord reserves the right to make alterations only as required by law, within
the time limits imposed by said new law or ordinance.
32. ASCEND TERMINATION
Landlord and Tenant understand and agree that this Lease and the Ascend
Termination Agreement attached hereto as Exhibit G must be signed by both
parties (UT Starcom and Ascend Communications) simultaneously to be valid and
accepted by Landlord for execution.
33. ITEMS EXCLUDED FROM OPERATING EXPENSES AND TAXES
1. Leasing commissions, attorneys' fees, costs, disbursements and other expenses
incurred in connection with negotiations or disputes with Tenants or leasing,
renovating or improving space for Tenants or other occupant or prospective
Tenants or the occupants of the Building.
2. Costs, including permits, licenses and inspection fees incurred in renovating
or otherwise improving or decorating, painting or redecorating vacant space or
space for Tenants or other occupants.
3. Landlord's cost of any service sold to Tenant's or other occupants for which
Landlord is entitled to be reimbursed as an additional charge or rental over and
above the basic rent and escalations payable under the Lease with that Tenant or
other occupant.
4. Costs incurred by Landlord for alterations or additions that are considered
capital improvements and replacements under generally accepted accounting
principles, capital repairs, capital equipment and capital tools, except those
capital items required by a governmental authority or items that result in a
reduction of the Operating Expenses.
5. Any depreciation and amortization on the building.
6. Costs incurred due to violation by Landlord of any of the terms and
conditions of this Lease or any other Lease relating to the Building.
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7. Overhead and profit increments paid to subsidiaries affiliates of Landlord
for management or other services on or to the building or for supplies or other
materials to the extent that the cost of the services, supplies or materials
exceed the cost that would have been paid had the services, supplies or
materials been provided by unaffiliated parties on a competitive basis.
8. Interest on debt or amortization payments or increases in interest or debt on
any mortgages and rental under any ground or underlying lease or changes in
deeds of trust or any other debt for borrowed money.
9. Any compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord.
10. Rentals and other related expenses incurred in leasing air conditioning
systems, elevators or other equipment ordinarily considered to be of a capital
nature, except equipment used in providing janitorial services that is not
affixed to any building in the complex.
11. Advertising and promotional expenditure except those costs involved with the
maintenance and repair of the complex signage.
12. Repairs and other work occasioned by fire, windstorm or other casualty of an
insurable nature to the extent that the costs are paid by insurance or
condemnation proceeds.
13. Costs incurred in operating the parking facilities for the building except
repair and maintenance of the parking areas.
14. Any costs, fines or penalties incurred due to violations by Lessor of any
governmental rule or authority.
15. Management costs unless they are included in the computation for the expense
base year and so long as they are considered reasonable for like projects within
the Harbor Bay Business Park.
16. Costs for sculpture, paintings or other objects of art.
17. Wages, salaries or other compensation paid to any executive employee above
the grade of building manager shall be limited to Landlord's general overhead
not to exceed ten percent (10%) of any such expense.
18. The cost of correcting any code violations, including environmental issues,
which were violations prior to the commencement of the term.
19. Any other expense that, under generally accepted accounting principles and
practice, would not be considered a normal maintenance or operating expense,
except those capital costs which result in a reduction of Operating Expenses or
which are required by governmental authority.
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34. EXHIBITS.
All exhibits, amendments, riders and addenda attached hereto are hereby
incorporated within this Lease.
EXHIBIT A The Premises and Building Plan
EXHIBIT B Tenant Improvement Specifications
EXHIBIT C Commencement Date Memorandum
EXHIBIT D Rules & Regulations
EXHIBIT E Tenant Sign Design Guidelines
EXHIBIT F Ascend Termination Agreement
This Lease is effective as of the date the last signatory necessary to execute
the Lease. shall have executed this Lease.
LANDLORD TENANT
TECH CENTER PARTNERS
REDDING MANAGEMENT INC. AS AGENT /s/ E.A. Supplee Jr.
------------------------------
By: /s/ [Illegible] By: E.A. SUPPLEE JR.
--------------------- -----------------------------
Its: CFO Its: VP
--------------------- -----------------------------
By: By:
--------------------- -----------------------------
Its: Its:
--------------------- -----------------------------
Dated Dated 1/14/98
--------------------- -----------------------------
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EXHIBIT A - PREMISES AND BUILDING PLAN
[FLOOR PLAN IMAGE]
<PAGE>
EXHIBIT A - PREMISES AND BUILDING PLAN
[CLOSE UP DESCRIPTION OF
FLOOR PLAN IMAGE - A]
<PAGE>
EXHIBIT A - PREMISES AND BUILDING PLAN
[CLOSE UP DESCRIPTION OF
FLOOR PLAN IMAGE - B]
<PAGE>
EXHIBIT B
TENANT IMPROVEMENT SPECIFICATIONS
Landlord shall provide the following tenant improvements to the Premises.
Landlord and Tenant understand and agree that the only work Landlord is required
to complete PRIOR TO THE LEASE COMMENCEMENT is re-painting the currently
unoccupied area. The remainder of the work will be provided in a timely fashion,
taking into consideration the City of Alameda permit approval processing time
requirements.
1) Re-paint all existing painted areas with one coat of paint to
match currently occupied portions of Premises. Cross-hatched
areas on Exhibit A will not be painted per Tenant's request
2) Provide wall/door modifications per Exhibit A. Details of
modification are listed on Exhibit A. Landlord shall have the
option to re-use existing inventory of doors stored in
warehouse. Carpet shall be patched and new walls shall be
given two coats of paint.
3) Landlord shall provide a reasonable alternative to the current
air supply in the southwest corner office. Landlord shall not
be required to spend more than Five Thousand and no/100
Dollars ($5,000.00) for this alternative.
4) Landlord shall provide all architectural drawings required by
the City of Alameda as well as provide for the total cost of
the construction permit.
B-1
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SCHEDULE A
TO
EXHIBIT B
APPROVED WORKING DRAWINGS AND SPECIFICATIONS ("PLANS")
To become a material part of this Lease when completed and signed by Landlord
and Tenant.
B-2
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EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
This Acknowledgement is made as of ____________________with
reference to that certain lease Agreement (hereinafter referred to as the
"Lease") dated __________________ by and between TECH CENTER PARTNERS, a
California General Partnership ("Landlord") and _______________________
_______________________________________________________________("Tenant").
The undersigned hereby confirms the following:
1. That the Tenant accepted possession of the Premises (as described
in said Lease) on _________________________, and acknowledges that the
Premises are as represented by Landlord and in good order, condition and
repair; and that the improvements, if any, required to be constructed for
Tenant by Landlord under this Lease have been so constructed and are
satisfactorily completed in all respects, excepting, if applicable, minor
punch-list items.
2. That all conditions of said Lease have been satisfied and that
Landlord has fulfilled all of its obligations.
3. That in accordance with the provisions of Section 3 of said
Lease, the Commencement Date of the Term is ____________________ and that,
unless sooner terminated, the original Term thereof expires on
______________________.
4. That said Lease is in full force and effect and that the same
represents the entire agreement between Landlord and Tenant concerning said
Lease.
5. That there are no existing defenses which Tenant has against the
enforcement of said Lease by Landlord, and no offsets or credits against
rentals.
6. That the minimum rental obligation of said Lease is presently in
effect, including all rentals, charges and other obligations on the part of
Tenant under said Lease.
7. That the undersigned Tenant has not made any prior assignment,
hypothecation or pledge of said Lease or of the rents thereunder.
TENANT:
By
--------------------------------------
Signature
--------------------------------------
Name: Please Print
--------------------------------------
Title
C-1
<PAGE>
EXHIBIT D
LANDLORD'S RULES AND REGULATIONS (OFFICE/FLEX)
HARBOR BAY BUSINESS PARK
1. SIGNS
No sign, placard, picture, advertisement, curtain, shade or window
covering, name or notice shall be installed on any part of the outside or inside
of the building without the prior written consent of Landlord. Landlord shall
have the right to remove, at Tenant's expense and without notice, any sign
installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at
Tenant's expense by a person chosen or approved by Landlord.
2. WINDOW TREATMENTS
No curtain, blind, shade, screen, awning, hanging plant or window covering
or other object shall be installed or displayed on any part of the inside or
outside of the building without prior written consent of Landlord. If Landlord
object in writing to any such installation, tenant shall immediately discontinue
such use and remove the item at Tenant's sole cost. Tenant shall not place
anything against or near glass partitions or doors or windows which in the
opinion of Landlord appear unsightly from outside the Premises.
3. CLEANING
A. Cleaning and janitorial services for the Premises may be provided by
either Tenant, Tenant's janitorial contractor, or Landlord.
B. Tenant shall not cause any unnecessary labor by carelessness or
indifference to the good order and cleanliness of the Premises or the Building
or the Parcel upon which the Building is located.
4. SECURITY
A. Landlord shall not in any way be responsible to any Tenant for any loss
of property on the Premises, however occurring, or for any damage to any
Tenant's property by janitor or any other person, including maintenance
personnel.
B. Tenant shall not alter any lock or install a new additional lock or bolt
on any door of its Premises without permission of Landlord, which shall not be
unreasonably withheld. Locks installed by Tenant shall be subordinate to the
Building master key for fire protection. Tenant, upon termination of its
tenancy, shall deliver to Landlord the keys of all doors which have been
furnished to Tenant.
C. Tenant shall close and lock the doors of Premises and
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entirely shut off all water faucets or other water apparatus, and electricity,
gas or air outlets before Tenant and its employees leave the Premises. Tenant
shall be responsible for any damage or injuries sustained by other tenants or
occupants of the Building or by Landlord for noncompliance with this rule.
Tenant assumes any and all responsibility for protecting Premises from theft,
robbery and pilferage, which includes keeping doors locked and other means of
entry to the Premises closed.
D. Canvassing, soliciting and distribution of handbills or any other
written materials, and peddling in the Building are prohibited, and each Tenant
shall cooperate to prevent same.
E. Landlord reserve the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence of
liquor or drugs or who is in violation of any of the Rules and Regulations of
the Building.
F. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
Tenant will observe all posted No Smoking Areas.
5. USE OF PREMISES
A. Without Landlord approval, Tenant shall not use or keep in the Premises
any kerosene, gasoline or other inflammable or combustible fluid or material
other than those limited quantities necessary for the operation or maintenance
of office equipment. Tenant shall not use or permit to be used in the Premises
any foul or noxious gas or substance, or permit or allow the Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors or vibrations.
B. No animals may be kept within or brought onto the Premises.
C. Tenant shall not use the Premises for any business or activity other
than that specifically provided for in Tenant's Lease.
D. Tenant shall not mark, drive nails, screw or drill into the partitions,
woodwork or plaster or in any way deface the Premises or any part thereof.
Landlord reserves the right to direct where and how telephone and
telecommunications wires, cables, conductors and conduit are to be introduced to
the Premises. Tenant shall not cut or bore holes for wires and cables. Tenant
shall not affix any floor covering to the floor of the Premises in any manner
except as approved by Landlord. Tenant shall repair any damage resulting from
noncompliance with this rule.
E. Tenant shall not place in any trash box or receptacle any material which
cannot be disposed of in the ordinary and customary manner of trash and garbage
disposal. All garbage and refuse disposal shall be made in accordance with
directions issued from time to time by Landlord.
D-2
<PAGE>
F. The Premises shall not be used for any improper, immoral or
objectionable purpose. No cooking shall be done or permitted by Tenant in the
Premises, except in a facility designed therefore and approved by Landlord.
However, use by Tenant of Underwriters' Laboratory-approved equipment for
brewing coffee, soup, tea, hot chocolate and similar beverages shall be
permitted, provided that such equipment and use are in accordance with all
applicable federal, state, county and city laws, codes, ordinances, rules and
regulations. Outdoor cooking for social or business entertainment shall be
prohibited unless approved by Landlord in advance and Tenant is adequately
insured and in compliance to fire codes and other applicable governmental
regulations.
6. DELIVERIES/SHIPMENTS
A. Tenant shall be responsible for all damage to Building or Premises
caused by Tenant in any delivery activity.
B. Delivery trucks to Premises, or goods and equipment dropped off by
delivery trucks, shall not block parking spaces or ingress or egress by other
vehicles in Common Area.
7. FLOOR LOADING
Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. Landlord shall have the right to prescribe the weight, size and
position of all equipment, materials, furniture or other property brought into
the Building. Heavy objects shall, if considered necessary by Landlord, stand on
such platforms as determined by Landlord to be necessary to properly distribute
the weight.
8. MECHANICAL EQUIPMENT, HVAC, ENERGY USE
A. Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or to any tenants in the Building, shall be placed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration.
B. Tenant shall not use any method of heating or air conditioning other
than that supplied or approved by Landlord, or expressly permitted or required
under the Lease.
9. PARKING
A. Tenant shall not obstruct any sidewalks, bike paths, parking areas,
halls, passages, exits, entrances, elevators, or stairways of the Building. The
halls, passages, exits, entrances, any elevators, and stairways are not open to
the general public. Landlord shall in all cases retain the right to control and
prevent access thereto for all persons whose presence, in the judgment of
Landlord, would be prejudicial to the safety, character, reputation and interest
of the Building and its Tenants provided that nothing
D-3
<PAGE>
herein contained shall be construed to prevent such access to persons with whom
any Tenant normally deals in the ordinary course of its business, unless such
persons are engaged in illegal or disruptive activities or unreasonably
interfere with the use or occupancy of the Building by Landlord or Tenants. No
Tenant and no employee or invitee of any Tenant shall go upon the roof of the
Building.
B. Tenant's non-exclusive right to use parking spaces within the parking
facilities located within the parcel on which the Building is located shall be
subject to such Rules and Regulations as Landlord may, from time to time,
establish.
C. Landlord may restrict certain portions or spaces within the parking area
for the exclusive use of one or more Tenants of the Building, and may designate
other areas to be used at large only by licensees, customers and invitees of
tenants of the Building.
D. Landlord shall have the right to require employees of Tenant to display
identification badges, stickers or other markings at a place visible from the
exterior of all vehicles using such parking spaces, in order to ensure that only
authorized persons are using the parking areas, or designated portions thereof.
At Landlord's request, Tenant shall supply Landlord with a list of all license
plates of its employees who are authorized to park in the parking area.
E. Landlord shall have the right to remove any vehicle not parked within a
marked parking space, or parked in violation of any of Landlord's Rules and
Regulations. In the event any vehicle so removed has been parked by an employee
of Tenant, Tenant agrees to reimburse Landlord, upon demand, for the cost of
such removal and any storage charges.
F. Landlord reserves the right to designate certain parking spaces for use
only by compact or small cars and all vehicles shall be parked within the lines
marked upon the pavement delineating parking spaces.
G. Parking areas shall be used solely for the parking of automobiles,
motorcycles, motor driven or non-motor driven bicycles, and four-wheeled trucks
or automobile sized trailers.
H. Tenant and its employees shall observe all directional and other signs
placed on or adjacent to the parking areas designating means of ingress or
egress, or limiting driveways for ingress or egress of particular types of
vehicles.
10. MISCELLANEOUS
A. Landlord reserves the right, exercisable with reasonable notice and
without liability to Tenant, to change the name and street address of the
Building.
B. Tenant shall not install any telephone, telecommunications, satellite,
microwave, radio or television antenna, dish, wire, loudspeaker or other device
on the roof or exterior walls of the
D-4
<PAGE>
Building. Tenant shall not interfere with telephone, telecommunications,
satellite, video conferencing, microwave, radio or television broadcasting from,
or reception in, the Building or elsewhere within the Business Park.
C. Without the written consent of Landlord, Tenant shall not use the name
of the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
D. Landlord may waive any one or more of these Rules and Regulations for
the benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a continuous waiver of such Rules and Regulations in favor of
Tenant or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the Building.
E. These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of Tenant's Lease of Premises in the
Building.
F. Landlord reserves the right to make such other reasonable Rules and
Regulations as, in its judgment, may from time to time be needed or appropriate
for safety and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all such Rules and
Regulations, hereinabove stated, and any additional Rules and Regulations which
are adopted.
G. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees and guests.
D-5
<PAGE>
EXHIBIT E
TENANT SIGN
DESIGN GUIDELINES
(SIGN LOCATION MAP)
SIGN LOCATION
E-1
<PAGE>
(SUITE SIGN LOCATION MAP)
SUITE SIGN
E-3
<PAGE>
(TENANT SIGN LOCATION MAP)
TENANT SIGN
E-4
<PAGE>
(EXTERIOR DIRECTORY LOCATION MAP)
EXTERIOR DIRECTORY
E-5
<PAGE>
EXHIBIT F
Ascend Termination Agreement
TERMINATION AGREEMENT
This Termination Agreement is made this ___ day of _____________,
1998 by and between TECH CENTER PARTNERS, a California general partnership
(hereinafter referred to as "Landlord"), and ASCEND COMMUNICATIONS, INC., a
Delaware corporation (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS Landlord and Tenant entered into a Lease dated August 8, 1991
for the premises described as follow: a portion of 1275 Harbor Bay Parkway,
Alameda, California, hereinafter referred to as the "Lease" for a term of five
(5) years commencing on December 16, 1991, upon the terms and conditions set
forth in said Lease; and
WHEREAS Landlord and Tenant entered into a First Addendum to Lease
dated August 8, 1991, whereby giving the Tenant an option to expand into the
entire building known as 1275 Harbor Bay Parkway, a set tenant improvement
allowance for said expansion, and an option to extend the Lease; and
WHEREAS Landlord and Tenant entered into a Second Addendum to Lease
dated February 25, 1994 whereby exercising Tenants option to expand into the
entire 1275 Harbor Bay Parkway building, extending the Lease to terminate on
November 30, 2000 and allowing the Tenant an option to cancel the Lease
Agreement on May 31, 1998; and
WHEREAS Landlord and Tenant entered into a Third Addendum to Lease
dated June 20, 1994 whereby outlining the Tenant's tenant improvement allowance
amortization; and
WHEREAS, the parties desire to cancel and terminate said Lease upon the
terms and conditions herein provided:
1. SURRENDER: Tenant will surrender possession of the premises described in the
Lease to Landlord and Landlord will accept the surrender thereof, on January 15,
1998, and the said Lease shall be and the same will be, canceled and terminated
as of that date.
2. CONSIDERATION: For and in consideration of the foregoing surrender and
acceptance and cancellation of the Lease, Tenant shall make a payment in the
amount of Thirty Nine Thousand Three Hundred Thirty-Nine and no/100 Dollars
($39,339.00) to Landlord upon Tenant's signing of this Termination Agreement.
3. SECURITY DEPOSIT/LAST MONTH'S RENT: Tenant has paid full Base Rent through
the termination date of January 15, 1998. In addition, Tenant has paid Base
Rent in the amount of $19,997.96 for the dates of January 16, 1998 through
January 31, 1998. Landlord and Tenant understand and agree that the full
January Base Rent amount of $39,995.92 shall be credited
1
<PAGE>
EXHIBIT F
Ascend Termination Agreement
toward the final termination consideration so long as the date of termination
remains January 15, 1998. Landlord has no security deposit held for Tenant.
4. UT STARCOM RENT: Landlord and Tenant understand and agree that, in addition
to the Consideration paid to Landlord by Tenant, Tenant shall also forward the
rent paid to Tenant by UT Starcom for January 1, 1998 through January 14, 1998.
This amount of $5,994.39 shall be paid at termination by Tenant to Landlord.
5. UTILITIES: Landlord and Tenant understand and agree that any change of
responsible parties' names for the payment of utilities serving the premises
shall be the responsibility of Tenant.
6. RELEASE: The respective parties hereby agree that the Lease is hereby
terminated as of the date hereof and that each party is relieved from any and
all rights and responsibilities set forth in said Lease.
7. UT STARCOM LEASE: This Termination Agreement shall only be considered binding
and valid upon its full execution by Landlord and Tenant and upon the full
execution of the UT Starcom lease.
8. ENTIRE AGREEMENT: This Termination Agreement constitutes the entire agreement
between the parties relating to the matters discussed herein and supersedes any
and all oral discussions and/or written correspondence or agreement between the
parties.
LANDLORD: TENANT:
TECH CENTER PARTNERS ASCEND COMMUNICATIONS, INC.
a California general partnership a Delaware corporation
By: By:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
By: By:
------------------------- -----------------------------
Title: Title:
------------------------- -----------------------------
2
<PAGE>
[LOGO]
ESTOPPEL CERTIFICATE
LESSEE: UT STARCOM, INC. A DELAWARE CORPORATION
Tech Center Partners, a California
General Partnership
and its successors and assigns
Re: Lease of space at 1275 Harbor Bay Parkway, Suite C-100, Alameda, California,
By and between UT Starcom, Inc., a Delaware Corporation, as Tenant ("Lessee")
And Tech Center Partners, as Landlord ("Lessor")
Ladies/Gentlemen:
Lessee understands that Financial Institutional Partners Mortgage Company
("Lender") may be making a loan, the repayment of which would be secured by a
deed of trust (the "Deed of Trust") on the above-referenced building (the
"Building") and an assignment of the Lease, and that Lender will be relying upon
this letter in connection with such loan. Therefore, with respect to the Lease,
Lessee hereby certifies to and agrees with Lessor and Lender as follows:
1. A complete, true and accurate copy of the Lease and all amendments or
modifications thereto is attached hereto as Exhibit A.
2. The Lease is in good standing and in full force and effect and has not
been modified or amended, except as follows: NA
3. Lessee has accepted the premises demised under the Lease ("Premises"),
and Lessor has completed all requirements under the terms of the Lease
to be completed by Lessor.
4. The Premises is comprised of 25,576 square feet of space [located on
the Ground floor of the Building] [comprising the entire Building].
5. The term of the Lease commenced on January 15, 1998 and will terminate
on January 14, 2003 Lessee has no options to renew or extend the term
of the Lease except as follows: Option to extend for one five-year
period at fair market value.
6. Lessee has paid Lessor a security deposit under the Lease in the amount
of $38,806.40. (Lessee agrees that Lender shall have no responsibility
or liability for any security deposit, except to the extent such
security deposit has been actually received by Lender).
7. (a) Base monthly rent under the Lease is $32,723.28, and is adjusted as
follows: January 15, 2000 = $34,527.60, January 15, 2002 = $35,806.40
Base monthly rent in the amount of $32,723.28 has been paid through and
including March 31, 1999.
(b) Percentage rent is payable under the Lease as follows: NA, and has
been paid through and including __________________________.
(c) In addition to base monthly rent and percentage rent, the Lease
provides for Lessee to pay its proportionate share of property taxes,
insurance premiums, and
<PAGE>
common area expenses, all as defined in the Lease, incurred by Lessor.
Lessee's proportionate share of such expenses is 36.40 percent.
8. There are no defaults of Lessor under the Lease nor any existing
conditions which upon the giving of notice or lapse of time or both
would constitute a default by Lessor under the Lease except as follows:
____________________________.
9. Lessee has not received any rental concession which is presently in
effect or will in the future be in effect in connection with renting
the Premises and there are no offsets or credits against the payment of
rent due under the Lease, except as follows: _________________________
____________________________________.
10. Lessee has no options or rights of first offer or refusal with respect
to renting additional space or acquiring any additional interest in the
Building, except as follows: None.
11. Lessee has no notice of any prior assignment, hypothecation or pledge
of the Lease or the rents due thereunder.
12. From the date hereof until the Deed of Trust is reconveyed, the
Lessee will not consent to or enter into any modification or
termination of the Lease without the prior written consent of Lender.
13. From the date hereof until the Deed of Trust is reconveyed, in the
event of a default by Lessor under the Lease, Lessee shall give prompt
written notice thereof to Lender at the address set forth above and
Lender shall have the right (but not the obligation) to cure any
default of Lessor under the Lease (the cure period to include such time
as may be required for Lender to cure the default, including taking
possession of the Building, by foreclosure, through deed in lieu of
foreclosure or otherwise). Lessee shall accept such cure by Lender as
that of Lessor under the Lease and, if Lender elects to cure said
default and prosecutes such cure to completion as herein provided, and
Lessee will not exercise any right or remedy under the Lease upon a
default by Lessor.
14. Lender (and any successor or assign of Lender) shall not be (i) liable
for any act or omission of Lessor or any predecessor-in-interest, (ii)
subject to any offsets, counterclaims or defenses which Lessee may have
against Lessor or any predecessor-in-interest, (iii) liable for any
security deposit or payment of rent (for more than one (1) month in
advance of the date due under the Lease) made by Lessee to Lessor or
predecessor-in-interest, except to the extent actually received by
Lender or (iv) obligated to expand the Project, construct additional
improvements or otherwise expend funds which are capital in nature
except for items of ordinary maintenance and repair.
15. Upon foreclosure under the Deed of Trust, or deed-in-lieu thereof,
Lessee shall attorn to Lender or any other purchaser or transferee at
foreclosure or deed-in-lieu thereof and recognize such party as
landlord under the Lease and, so long as Tenant is not in default in
the payment or performance of any of the terms, covenants or conditions
of the Lease, (a) Tenant's possession of the Premises shall not be
interfered with by Lender, and (b) Lender will not join Tenant in any
action or proceeding foreclosing the Deed of Trust unless such joinder
is necessary to foreclose the Deed of Trust and then only for such
purpose and not for the purpose of terminating the Lease.
16. Notwithstanding any term of the Lease, upon foreclosure of the Deed of
Trust or acceptance of a deed in lieu thereof or other similar
transfer, any environmental/hazardous materials indemnity and/or
reimbursement provisions under the Lease shall
2
<PAGE>
not be applicable to, or enforceable against, Lender, any successor in
interest to or assigns of Lender and/or any purchaser at foreclosure
and any transferee thereof.
Dated: April 9 , 1999.
------------------
- -----------------------------
- ------------------------------
By /s/ RUSSELL BOLTWOOD
--------------------------------
Its: HR Director/Corporate Counsel
--------------------------------
3
<PAGE>
EXHIBIT 10.23
LEASE AGREEMENT
This Agreement is made on the day of April, 1995,
B E T W E E N: METRO PARK ASSOCIATES
A Partnership of the State of New Jersey
820 Morris Turnpike, Suite 301
Short Hills, New Jersey 07078
(hereinafter referred to as "Landlord"),
A N D: STARCOM
(hereinafter referred to as "Tenant").
W I T N E S S E T H :
1. PREMISES, TERM AND USE. The Landlord does hereby lease to the Tenant,
and the Tenant does hereby rent from the Landlord the following described
premises: approximately 3,962 rentable square feet of eighth floor space in
the office building located at 33 Wood Avenue South, Iselin, New Jersey, for
a term of two (2) years, commencing May , 1995, and ending April , 1997,
to be used and occupied only and for no other purpose than general office space.
2. PAYMENT OF RENT. The Tenant covenants and agrees to pay to the
Landlord, as rent for and during the term hereof, the sum of One Hundred
Thirty-Four Thousand Seven Hundred Eight and 00/100 ($134,708.00) Dollars,
payable as follows: Sixty-Seven Thousand Three Hundred Fifty-Four and 00/100
($67,354.00) Dollars Per Annum; Five Thousand Six Hundred Twelve and 83/100
($5,612.83) Dollars Per Month, due and payable on the first day of each
calendar month. Notwithstanding anything to the contrary contained herein,
however, Tenant shall not be required to make payments of basic monthly rent
for the first and thirteenth months of the initial term of this Lease.
3. LATE PAYMENTS. In the event that payment of rent is not received by
Landlord by the tenth (10th) day of each month, Tenant shall pay, as
additional rent, a late charge equal to five (5) percent of the late payment.
Landlord shall be entitled to the same remedies for non-payment of late
charges as for non-payment of rent.
4. REPAIRS AND CARE. (a) The Tenant has examined the premises and has
entered into this Lease without any representation on the part of the
Landlord as to the condition thereof. The Tenant shall take good care of the
premises and shall, at the Tenant's own cost and expense, make all
non-structural repairs, including painting and decorating, and shall maintain
the premises in good condition and state of repair. The Tenant shall neither
encumber nor obstruct the sidewalks, driveways, yards, entrances, hallways
and stairs. The Tenant shall not place a load upon any floor of the Demised
Premises exceeding the floor load per square foot area which it was designed
to carry and which is allowed by law. Landlord reserves the right to
prescribe the weight and position of all safes, business machines and
mechanical equipment.
(b) Not later than the last day of the term, Tenant shall, at Tenant's
expense, remove all Tenant's personal property and those improvements made by
Tenant which have not become the property of Landlord, including but not
limited to trade fixtures, moveable panelling and the like; repair all injury
done by or in connection with the installation or removal of said property
and improvements; and surrender the Premises in as good condition as they
were at the beginning of the term, excepting reasonable wear and damage by
fire, the elements, casualty, or other cause not due to the misuse or neglect
by Tenant, Tenant's agents, servants, visitors or licensees. All other
property of Tenant remaining on the premises after the last day of the term
or earlier termination of this Lease
<PAGE>
shall be conclusively deemed abandoned and may be removed by Landlord, and
Tenant shall reimburse Landlord for the cost of such removal. Landlord may
have any such property stored at Tenant's risk and expense.
5. COMPLIANCE WITH LAWS. The Tenant shall promptly comply with all laws,
ordinances, rules, regulations, requirements and directives of the Federal,
State and Municipal Governments or Public Authorities and of all their
departments, bureaus and subdivisions, applicable to and affecting the said
premises, their use and occupancy, for the correction, prevention and
abatement of nuisances, violations or other grievances in, upon or connected
with the said premises, during the term hereof; and shall promptly comply
with all orders, regulations, requirements and directives of the Board of
Fire Underwriters or similar authority and of any insurance companies which
have issued or are about to issue policies of insurance covering the said
premises and its contents, for the prevention of fire or other casualty,
damage or injury, at the Tenant's own cost and expense. Tenant shall observe
and comply with the rules and regulations hereinafter set forth in Exhibit B,
attached hereto and made a part hereof by this reference, and with such
further reasonable rules and regulations as Landlord may prescribe, upon
written notice to Tenant, for the safety, care and cleanliness of the
Building and the comfort, quiet and convenience of other occupants of the
Building.
6. ALTERATIONS AND IMPROVEMENTS. No alterations, additions or improvements
shall be made, and no climate regulating, air conditioning, cooling, heating
or sprinkler systems, television or radio antennas, heavy equipment,
apparatus and fixtures, shall be installed in or attached to the leased
premises, without the prior written consent of the Landlord. Unless otherwise
provided herein, all such alterations, additions or improvements and systems,
when made, installed in or attached to the said premises, shall belong to and
become the property of the Landlord and shall be surrendered with the
premises and as part thereof upon the expiration or sooner termination of
this Lease, without hindrance, molestation, injury or charge to Landlord.
7. TENANT'S LIABILITY INSURANCE. Tenant shall provide, at its own expense,
and keep in force during the term of this Lease and any renewal terms,
general comprehensive liability insurance with an insurance company licensed
to do business in the State of New Jersey, selected by Tenant and reasonably
acceptable to Landlord, and in an amount reasonably required by Landlord, but
in any event not less than $1,000,000.00 with respect to injury or death to
any one person and $1,000,000.00 with respect to injury or death to more than
one person in any one accident or other occurrence and $1,000,000.00 with
respect to damage to property. Such policy or policies shall include Landlord
and Landlord's mortgagee, if any, as additional insureds. Tenant agrees to
deliver certificates evidencing such insurance to Landlord within thirty (30)
days of the date of execution of this Lease and within thirty (30) days after
the date of renewal of the policies. Such insurance shall not be cancellable
without thirty (30) days prior written notice to Landlord.
8. TENANT'S CASUALTY INSURANCE. During the term of this Lease, and any
renewal terms, Tenant shall cause its improvements to the Demised Premises to
be insured for the benefit of Landlord and Tenant, as their respective
interests may appear, against loss or damage by fire and customary extended
coverage in an amount equal to the replacement value thereof, if insurance in
such amount is available. Tenant agrees to deliver a certificate evidencing
such insurance to Landlord within thirty (30) days of the date of execution
of this Lease.
9. DAMAGE OR DESTRUCTION BY FIRE OR OTHER CASUALTY. (a) If the Building is
damaged by fire or other casualty to such extent that the cost of
restoration, as determined by an insurance adjustor
2
<PAGE>
licensed in the State of New Jersey, will equal or exceed fifty (50) percent
of the replacement value of the Building (exclusive of foundations) just
prior to the occurrence of the damage, then either Landlord or Tenant may,
within sixty (60) days from the date of the damage, give the other party a
written notice of election to terminate this Lease, effective thirty (30)
days from the date of such notice. However, in the event that neither party
terminates this Lease in such circumstance, then the basic rent and
additional rent shall be abated in direct proportion to that amount of square
footage in the Demised Premises which cannot be used by Tenant for the
purposes set forth in Paragraph 1 herein. In addition, Landlord shall be
responsible for making restoration within one hundred eighty (180) days after
the date of the damage, subject to Force Majeure. In the event that
restoration is not made within said time period, Tenant shall have the right
to terminate this Lease, upon thirty (30) days written notice to Landlord.
(b) If the Building is damaged by fire or other casualty to such extent
that the cost of restoration, as determined by an insurance adjustor licensed
in the State of New Jersey, will be less than (50) percent of the replacement
value of the Building (exclusive of foundations) just prior to the occurrence
of the damage, then Landlord may, within sixty (60) days from the date of
damage, give the Tenant written notice of election to terminate this Lease,
effective thirty (30) days from the date of such notice. However, in the
event that Landlord does not terminate this Lease in such circumstance, then
the basic rent and additional rent shall be abated in direct proportion to
that amount of square footage in the Demised Premises which cannot be used by
Tenant for the purposes set forth in Paragraph 1 herein. In addition,
Landlord shall be responsible for making restoration within one hundred
eighty (180) days after the date of the damage, subject to Force Majeure. In
the event that restoration is not made within said time period, Tenant shall
have the right to terminate this Lease, upon thirty (30) days written notice
to Landlord.
(c) Notwithstanding anything to the contrary contained herein, in no
event shall the provisions of this Paragraph become effective or be
applicable if the fire or other casualty and damage shall be the result of
the carelessness, negligence or improper conduct of the Tenant or the
Tenant's agents, employees, guests, licensees, invitees, subtenants,
assignees or successors. In such case the Tenant's liability for the payment
of the rent and the performance of all the covenants, conditions and terms
hereof on the Tenant's part to be performed shall continue and the Tenant
shall be liable to the Landlord for the damage and loss suffered by the
Landlord. The Tenant shall have the proceeds of its insurance paid over to
the Landlord to the extent of the Landlord's costs and expenses to make the
repairs hereunder, and such insurance carriers shall have no recourse against
the Landlord for reimbursement. Should the insurance proceeds be insufficient
to cover Landlord's expenses, Tenant shall remain liable for any balance.
10. WAIVER OF SUBROGATION. Landlord and Tenant shall obtain, for each
policy of insurance secured by them regarding the Demised Premises, or any
Property located therein, whether required by this Lease or in addition to
that which is required by this Lease, an appropriate clause therein or
endorsement thereon, pursuant to which such insurance company waives
subrogation or consents to the waiver of the right of one party to recover
against the other.
11. INCREASE OF INSURANCE RATES. If for any reason it shall be impossible
to obtain fire and other hazard insurance on the buildings and improvements
on the leased premises, in an amount and in the form and with insurance
companies acceptable to the Landlord, the Landlord may, if the Landlord so
elects at any time thereafter, terminate this Lease and the term hereof, upon
giving to the Tenant fifteen days notice in writing of the Landlord's
intention to do so, and upon the giving of such notice, this Lease and the
term thereof shall terminate. If by reason of the use to
3
<PAGE>
which the premises are put by the Tenant or character of or the manner in
which the Tenant's business is carried on, the insurance rates for fire and
other hazards shall be increased, the Tenant shall upon demand, pay to the
Landlord, as rent, the amounts by which the premiums for such insurance are
increased. Such payment shall be paid with the next installment of rent but
in no case later than thirty (30) days after such demand, whichever occurs
sooner.
12. ASSIGNMENT AND SUBLEASE. Tenant may assign or sublease the within Lease
to any party subject to the following:
(a) In the event that the Tenant desires to sublease the whole or any
portion of the Demised Premises or assign the within Lease to any other
party, the terms and conditions of such sublease or assignment shall be
communicated to the Landlord in writing prior to the effective date of any
such sublease or assignment. Prior to such effective date, Landlord shall
have the option, exercisable in writing to Tenant, to recapture the within
Lease so that such prospective sublessee or assignee shall then become the
sole tenant of Landlord hereunder, or alternatively, to recapture the Demised
Premises, and this Tenant shall then be fully released from any and all
obligations hereunder.
(b) In the event that the Landlord elects not to recapture either the
Lease or the Demised Premises as hereinabove provided, Tenant may
nevertheless assign this Lease or sublet the whole or any portion of the
Demised Premises, subject to Landlord's prior written consent, and subject to
the consent of any mortgagee, trust deed holder or ground lessor, on the
basis of the following terms and conditions:
(1) The Tenant shall provide to Landlord the name and address of the
proposed assignee or sublessee.
(2) The assignee or sublessee shall assume, by written instrument, all
of the obligations of this Lease, and a copy of such assumption agreement
shall be furnished to Landlord within Tenant (10) days of its execution. Any
sublease shall expressly acknowledge that said sublessee's rights against the
Landlord shall be no greater than those of the Tenant.
(3) The tenant and each assignee shall be and remain liable for the
observance of all the covenants and provisions of this Lease, including, but
not limited to the payment of rent and additional rent reserved herein,
through the entire term of this Lease, as the same may be renewed, extended
or otherwise modified.
(4) The Tenant and any assignee shall promptly pay to Landlord: (i) any
consideration received by Tenant for any assignment; or (ii) all of the rent,
as and when received by Tenant, in excess of the rent required to be paid by
Tenant to Landlord for the area sublet, computed on the basis of an average
square foot rent for the gross square footage Tenant has leased.
(5) In any event, acceptance by Landlord of any rent from the assignee,
or from any of the subtenants, or the failure of Landlord to insist upon a
strict performance of any of the terms, conditions and covenants herein shall
not release Tenant herein, nor any assignee assuming this Lease, from any and
all of the obligations herein during and for the entire term of this Lease,
as the same may be renewed, extended or otherwise modified.
(6) Tenant shall be responsible for payment to Landlord of Landlord's
reasonable attorneys' fees and handling costs incurred for each request for
consent to any sublet or
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assignment, with such payment to be made within (10) business days of written
notice from Landlord, but in no event beyond the effective date of assignment.
(7) Tenant acknowledges and understands that its sole remedy with
respect to any assertion that Landlord's failure to consent to any sublet or
assignment is unreasonable shall be the remedy of specific performance, and
Tenant shall have no other claim or cause of action against Landlord as a
result of Landlord's actions in refusing to consent thereto.
(c) Notwithstanding anything to the contrary contained herein, Tenant
shall have the right to assign this Lease or sublet the Demised Premises, in
whole or in part, to any parent or subsidiary of Tenant or in connection with
a merger of Tenant provided that the surviving entity in a merger shall have
a tangible net worth (determined in accordance with generally accepted
accounting principles) not less than the net worth of Tenant and its
guarantors, if any, as of the date of commencement of this Lease.
(d) Without limiting any of the provisions of this Lease, if pursuant
to the Federal Bankruptcy Code (hereinafter referred to as the "Code"), or
any similar law hereinafter enacted having the same general purpose, Tenant
is permitted to assign this Lease notwithstanding the restrictions contained
in this Lease, then adequate assurance of future performance by an assignee
expressly permitted under such Code shall be deemed to mean the deposit of
cash security in an amount equal to the sum of one (1) year's basic rent plus
an amount equal to the additional rent for the calendar year preceding the
year in which such assignment is intended to become effective, which deposit
shall be held by Landlord for the balance of the term of the Lease, without
interest, as security for the full performance of all of Tenant's obligations
under this Lease, to be held and applied in the manner specified for security
in Paragraph 18.
(e) Except as specifically set forth above, no portion of the Demised
Premises or of Tenant's interest in this Lease may be acquired by any other
person or entity, whether by assignment, mortgage, sublease, transfer,
operation of law or act of the Tenant, nor shall Tenant pledge its interest
in this Lease or in any security deposit required hereunder.
13. INSPECTION AND REPAIR. The Tenant agrees that the Landlord and the
Landlord's agents, employees or other representatives, shall have the right
to enter into and upon the said premises or any part thereof, at all
reasonable hours, for the purpose of examining the same or making such
repairs or alterations therein as may be necessary for the safety and
preservation thereof. This clause shall not be deemed to be a covenant by the
Landlord nor be construed to create an obligation on the part of the Landlord
to make such inspection or repairs.
14. GLASS AND OTHER DAMAGE REPAIRS. In case of the destruction of or any
damage to the glass in the leased premises, or the destruction of or damage
of any kind whatsoever to the said premises caused by the carelessness,
negligence or improper conduct on the part of the Tenant or the Tenant's
agents, employees, guests, licensees, invitees, subtenants, assignees or
successors, the Tenant shall repair the said damage ore replace or restore
any destroyed parts of the premises, as speedily as possible, at the Tenant's
own cost and expense.
15. SIGNS. The Tenant shall not place nor allow to be placed any signs of
any kind whatsoever, upon, in or about the said premises or any part thereof,
except of a design and structure and in or at such places as may be indicated
and consented to by the Landlord in writing. Landlord shall place Tenant's
name: (1) adjacent to the
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primary entrance door to the Demised Premises; (ii) the directory in the
lobby; and (iii) the outside directory, if any. Tenant shall not have the
right to have additional names placed on the directories without Landlord'
prior written consent. In case the Landlord or the Landlord's agents,
employees or representatives shall deem it necessary to remove any such signs
in order to paint or make any repairs, alterations or improvements in or upon
said premises or any part thereof, they may be so removed, but shall be
replaced at the Landlord's expense when the said repairs, alterations or
improvements shall have been completed. Any signs permitted by the Landlord
shall at all times conform with all municipal ordinances or other laws,
ordinances and regulations applicable thereto.
16. MORTGAGE PRIORITY. This Lease shall not be a lien against the said
premises in respect to any mortgages that may herebefore or hereafter be
placed upon said premises. The recording of such mortgage or mortgages shall
have preference and precedence and be superior and prior in lien to this
Lease, irrespective of the date of recording and the Tenant agrees to execute
any instruments, without cost, which may be deemed necessary or desirable, to
further effect the subordination of this Lease to any such mortgage or
mortgages. A refusal by the Tenant to execute such instruments shall entitle
the Landlord to the option of cancelling this Lease, and the term hereof is
hereby expressly limited accordingly. Tenant hereby appoints Landlord as its
attorney-in-fact to execute any documents requested by the mortgagee(s) to
effectuate the intent of this Paragraph.
17. NON-LIABILITY OF MORTGAGEE. Tenant hereby agrees not to look to the
mortgagee, as mortgagee, mortgagee in possession, or successor in title to
the property, for accountability for any security deposit required by the
Landlord hereunder, unless said sums have actually been received by said
mortgagee as security for the Tenant's performance of this Lease.
18. UTILITIES. Landlord shall provide Tenant with HVAC. Tenant shall be
responsible for its electrical use for lights and business machines by way of
an energy audit, to be performed by a licensed energy audit company chosen by
Landlord. Tenant shall also be responsible for payment to Landlord for use of
the HVAC system during hours other than 8 AM to 6 PM, Monday through Friday
and Saturdays, 8 AM to 1 PM, at the rate of $40.00 per hour.
19. EVENTS OF DEFAULT; REMEDIES. (a) If Tenant does not: (a) within (10)
days after the due date thereof pay any installment of basic annual rent,
additional rent or any other monetary obligation; or (b) within thirty (30)
days after written notice from Landlord cure a default other than a default
in the payment of basic annual rent or additional rent (provided, however,
that such thirty (30) day period shall be extended if the default is of such
a nature that it could not reasonably be cured within such period of thirty
(30) days and Tenant promptly commences and thereafter diligently pursues the
curing of such default), then, in any such event, Tenant shall be deemed in
default under this Lease.
(b) If there should occur any default on the part of the Tenant as set
forth in this Lease, or if during the term hereof the premises or any part
thereof shall be or become abandoned or deserted, vacated or vacant, or
should the Tenant be evicted by summary proceedings or otherwise, the
Landlord, in addition to any other remedies herein contained or as may be
permitted by law, may either, by force or otherwise, without being liable for
prosecution therefor, or for damages, re-enter the said premises and the same
have and again possess and enjoy.
(c) At any time or from time to time after any such expiration or
termination, the Landlord may, as agent for the Tenant or otherwise, re-let
the premises, for such term or terms (which may be greater or less than the
period which would otherwise
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have constituted the balance of the term of this Lease) and on such
conditions (which may include concessions or free rent) as the Landlord, in
its reasonable discretion, may determine, and receive the rents therefor,
applying the same: (i) to the payment of such expenses, reasonable attorney
fees and costs, as the Landlord may have been put to in re-entering and
repossessing the same and in making such repairs and alterations as may be
necessary; and (ii) to the payment of the rents due hereunder. The Tenant
shall remain liable for such rents as may be in arrears and also the rents as
may accrue subsequent to the re-entry by the Landlord, to the extent of the
difference between the rents reserved hereunder and the rents, if any,
received by the Landlord during the remainder of the unexpired term hereof,
after deducting the aforementioned expenses, fees and costs; the same to be
paid as such deficiencies arise and are ascertained each month. Landlord
shall in no way be responsible or liable for any failure to relet the Demised
Premises or any part thereof, or for any failure to collect any rent due upon
any such reletting.
(d) Upon the occurrence of an event of default as set forth in this
Lease, or should the Tenant be adjudicated a bankrupt, insolvent or placed in
receivership, or should proceedings be instituted by or against the Tenant
for bankruptcy, insolvency, receivership, agreement of composition or
assignment for the benefit of creditors, or if this Lease or the estate of
the Tenant hereunder shall pass to another by virtue of any court
proceedings, writ of execution, levy, sale, or by operation of law, the
Landlord may, if the Landlord so elects, at any time thereafter, terminate
this Lease and the term hereof, upon giving to the Tenant or to any trustee,
receiver, assignee or other person in charge of or acting as custodian of the
assets or property of the Tenant, five (5) days written notice of the
Landlord's intention to do so. Upon the giving of such notice, this Lease and
the term hereof shall end on the date fixed in such notice as if the said
date was the date originally fixed in this Lease for the expiration hereof;
and the Landlord shall have the right to remove all persons, goods, fixtures
and chattels therefrom, by force or otherwise, without liability for damages.
20. SURVIVAL OF COVENANTS. No expiration or termination of this Lease shall
relieve the Tenant of its liability and obligations under this Lease, and all
liability and obligations shall survive any expiration or termination. In the
event of an expiration or termination, whether or not the Demised Premises,
or a portion thereof, shall have been relet, Tenant shall pay to Landlord the
rent up to the time of such expiration or termination, and thereafter,
Tenant, until the expiration date as stated in Paragraph 1 herein, shall be
liable to Landlord for, and shall pay to Landlord, as and for liquidated and
agreed current damages, the difference, if any, between: (1) the basic annual
rental and additional rent as stated in this Lease; and (2) any rent and
additional rent received by Landlord from any new tenant in the Demised
Premises, or a portion thereof.
21. REMOVAL OF TENANT'S PROPERTY. Any equipment, fixtures, goods or other
property of the Tenant, not removed by the Tenant upon the termination of
this Lease, or upon any quitting, vacating or abandonment of the premises by
the Tenant, or upon the Tenant's eviction, shall be considered as abandoned
and the Landlord shall have the right, without any notice to Tenant, to sell
or otherwise dispose of the same, at the expense of Tenant, and shall not be
accountable to the Tenant for any part of the proceeds of such sale, if any.
22. REIMBURSEMENT OF LANDLORD. If the Tenant shall fail or refuse to comply
with or perform any conditions and covenants of the within Lease, the
Landlord may, if the Landlord so elects, carry out and perform such
conditions and covenants, at the cost and expense of the Tenant, and the said
cost and expense shall be payable on demand. At the option of the Landlord
the costs and
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expenses shall be added to the installment of rent due immediately thereafter
but in no case later than thirty (30) days after such demand, whichever
occurs sooner, and shall be due and payable as such. This remedy shall be in
addition to such other remedies as the Landlord may have hereunder by reason
of the breach by the Tenant of any of the covenants and conditions in this
Lease.
23. NON-PERFORMANCE BY LANDLORD. This Lease and the obligation of the
Tenant to pay the rent hereunder and to comply with the covenants and
conditions hereof, shall not be affected, curtailed, impaired or excused
because of the Landlord's inability to supply any service or material called
for herein, by reason of any act of God, riot, civil commotion, strikes,
lock-out, acts, orders or regulations of governmental authority, acts or
failure to act of the other party, fire, tornado, windstorm, adverse weather
conditions, rule, order, regulation or preemption by any governmental entity,
authority, department, agency or subdivision or for any delay which may arise
by reason of negotiations for the adjustment of any fire or other casualty
loss or for any cause beyond the control of Landlord.
24. NON-LIABILITY OF LANDLORD. The Landlord shall not be liable for any
damage or injury which may be sustained by the Tenant or any other person, as
a consequence of the failure, breakage, leakage or obstruction of the water,
plumbing, stream, sewer, waste or soil pipes, roof, drains, leaders, gutters,
valleys, downspouts or the like or of the electrical, gas, power, conveyor,
refrigeration, sprinkler, airconditioning or heating systems, elevators or
hoisting equipment; or by reason of the elements; or resulting from the
carelessness, negligence or improper conduct on the part of any other Tenant
or this Tenant or any other Tenant's agents, employees, guests, licensees,
invitees, subtenants, assignees or successors; or attributable to any
interference with, interruption of or failure, beyond the control of the
Landlord, of any services to be furnished or supplied by the Landlord.
25. NON-WAIVER BY LANDLORD. The various rights, remedies, options and
elections of the Landlord, expressed herein, are cumulative, and the failure
of the Landlord to enforce strict performance by the Tenant of the conditions
and covenants of this Lease or to exercise any election or option or to
resort or have recourse to any remedy herein conferred or the acceptance by
the Landlord of any installment of rent after any breach by the Tenant, in
any one or more instances, shall not be construed or deemed to be a waiver or
a relinquishment for the future by the Landlord of any such conditions and
covenants, options, elections or remedies, but the same shall continue in
full force and effect.
26. HAZARDOUS SUBSTANCES. (a) Tenant agrees not to generate, store,
manufacture, refine, transport, treat, dispose of, or otherwise permit to be
present on or about the Premises any Hazardous Substances. As used herein,
Hazardous Substances shall be defined as any "hazardous chemical," "hazardous
substance" or similar term as defined in the Comprehensive Environmental
Responsibility Compensation and Liability Act, as amended (42) U.S.C. 9601,
ET SEQ.), the New Jersey Environmental Cleanup Responsibility Act, as amended
(N.J.S.A. 13:1K-6 ET SEQ.), the New Jersey Spill Compensation and Control
Act, as amended (N.J.S.A. 58:10-23.11B ET SEQ.), any rules or regulations
promulgated thereunder, or in any other applicable federal, state or local
law, rule or regulation dealing with environmental protection. It is
understood and agreed that the provisions contained in this Paragraph shall
be applicable notwithstanding the fact that any substance shall not be deemed
to be a Hazardous Substances at the time of its use by the Tenant but shall
thereafter be deemed to be a Hazardous Substance. Tenant agrees to indemnify
and hold harmless the Landlord and each mortgagee of the Demised Premises
from and against any and all liabilities, damages, claims, losses, judgments,
causes of action, costs and expenses (including reasonable attorneys' fees)
which may be incurred by Landlord or
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any such mortgagee or threatened against the Landlord or such mortgagee,
relating to or arising out of any breach by Tenant of the terms of this
Paragraph, said indemnity to survive the expiration or earlier termination of
this Lease.
(b) Within thirty (30) days of request therefor by Landlord, Tenant
shall provide Landlord with: (i) its Standard Industrial Classification
Number (said Standard Industrial Classification number to be obtained by
reference to the then current Standard Industrial Classification Manual
prepared and published by the Executive Office of the President, Office of
Management and Budget or the successor or such publications); and (ii) an
opinion letter from the DEP (or such other agency or body as shall then have
jurisdiction over ECRA matters) in a form satisfactory to Landlord's counsel,
stating the ECRA does not then apply to Tenant, Tenant's use and occupancy of
the Demised Premises and the closing, terminating or transferring of
operations at the Demised Premises, a Negative Declaration (as said term is
defined in ECRA) duly approved by DEP or such other agency or body as shall
then have jurisdiction over ECRA matters, or a Cleanup Plan (as said term is
defined in ECRA) duly approved by DEP or such other agency or body as shall
then have jurisdiction over ECRA matters.
27. REAL ESTATE TAXES. Commencing no earlier than the second year of the
term hereof, upon receipt of written notification, Tenant shall pay, as
additional rent, its proportionate share of the increased real estate taxes
assessed or imposed on the property over the base year (base year shall be
defined as the calendar year 1995). Such additional rent shall be paid
monthly or quarterly, as designated by Landlord. Landlord shall be entitled
to the same remedies for non-payment of additional real estate taxes as for
non-payment of rent. Tenant's liability for such increase in real estate
taxes shall be imposed whether the increase is due to an increase in the tax
rate or valuation or both. Tenant's proportionate share shall be determined
by dividing the area of the Demised Premises by the total amount of leasable
floor area in the building.
28. MAINTENANCE. Commencing no earlier than the second year of the term
hereof, upon receipt of written notification, Tenant shall pay, as additional
rent, its proportionate share of the increase in operating expenses incurred
by Landlord over the base year (base year shall be defined as the calendar
year 1995). Such additional rent is to be paid quarterly, and shall be
determined by dividing the area of the Demised Premises by the total amount
of area in the building. For purposes of this Lease, expenses for maintaining
and operating the building shall mean and include those expenses incurred in
respect to the operation and maintenance of the building (excluding real
estate taxes) in accordance with accepted principles of sound management and
accounting practices as applied to the operation and maintenance of
non-institutional, first class office buildings, including, but not limited
to, expenses for heat, water, snow removal, landscaping, insurance and
janitorial services.
29. CONDEMNATION AND EMINENT DOMAIN. (a) In the event of a taking for any
public or quasi-public use or purpose, by any lawful power or authority, by
exercise of the right of condemnation or eminent domain, or by agreement
between Landlord and those having the authority to exercise such right
(hereinafter called a "Taking") of the entire Demised Premises or such
substantial portion thereof so that the balance of the Demised Premises is
not suitable for the conduct of Tenant's normal business operations therein,
then this Lease and the terms hereof shall cease and expire on the date of
transfer of possession in connection with the Taking.
(b) In the event of a Taking of any portion of the Demised Premises as
a result of which this Lease is not terminated as provided above, or a Taking
of more than forty (40%) percent of the
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leasable space at the Building (whether or not any portion of Demised
Premises is included in the Taking), or a permanent denial or substantial
impairment of adequate access to the Building and Demised Premises, then, in
such event, Landlord or Tenant may, at its option, terminate this Lease by
giving notice of termination to the other within sixty (60) days after
receipt by Tenant of notice that the Taking will occur, such notice of
termination to be effective as of the date of transfer of possession in
connection with the Taking.
(c) In the event this Lease is not terminated pursuant to the terms of
this Paragraph, then Landlord shall promptly commence and with due diligence
continue to restore the portion of the Building and the Demised Premises
remaining after the Taking to substantially the same condition and
tenantability as existed immediately preceding the Taking, to the extent such
restoration may be accomplished with the available net proceeds of the award
or payment to Landlord in connection with the Taking. During the period of
restoration by Landlord, if the Taking or such restoration shall cause a
material adverse impact on Tenant's business at Demised Premises, basic
annual rent and additional rent shall be abated and adjusted in an equitable
fashion. Upon completion of the restoration, basic annual rent and additional
rent shall also be abated and adjusted in such manner as shall be just and
equitable. In the event that Landlord shall fail to commence such restoration
as hereinabove required, or if such restoration shall not be completed within
twelve (12) months from and after the date of transfer of possession in
connection with Taking, then, in either such event, Tenant shall have the
right, as its exclusive remedy, to terminate this Lease by notice to
Landlord, such notice to specify the effective date of termination.
(d) Whether or not this Lease shall be terminated pursuant to the terms
of this Paragraph, Tenant shall have the right in connection with any Taking
to assert all claims available to it for loss of leasehold improvements,
trade fixtures and equipment, and such other items of loss or damage as
Tenant shall suffer as a result of the Taking with respect to which Tenant
shall, from time to time under applicable law, be permitted to make an
independent claim, provided that such claim by Tenant will not reduce the
award or payment to Landlord in connection with the Taking.
(e) Notwithstanding any provision of this Paragraph, in no event shall
Landlord be obligated to expend, in connection with the repair or restoration
of the Demised Premises pursuant to this Paragraph, any amount in excess of
the award or payment in connection with the Taking. In the event that such
award or payment shall be insufficient for the repair or restoration or in
the event that Landlord's mortgagee shall apply all or any portion of such
award of payment to the reduction of the indebtedness secured by such
mortgage, then to the extent of such unavailable award or payment, Landlord
shall be excused from the performance of repair or restoration work hereunder.
30. HOLDING OVER BY TENANT. If Tenant shall remain in possession of the
Demised Premises after the conclusion of the term of this Lease (and any
renewal terms), Tenant shall become a month-to-month tenant under the
provisions herein provided, but at a monthly basic rental equal to two (2)
times the basic annual rental as set forth in Paragraph 2 herein. However,
the amount due for additional rental shall remain as set forth in this Lease.
Such month-to-month tenancy shall then continue until terminated by either
Landlord or Tenant, upon sixty (60) days prior written notice to the other
party, but, in any event, such termination shall not occur on a date other
than the last day of a calendar month.
31. RIGHT TO EXHIBIT. The Tenant agrees to permit the Landlord and the
Landlord's agents, employees or other representatives to show the premises to
persons wishing to rent or purchase the same
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on and after six (6) months next preceding the expiration of the term hereof.
32. BROKER'S COMMISSION. The parties hereto hereby agree that there was no
broker in this matter. Landlord and Tenant hereby indemnify and hold each
other harmless for any and all claims by any brokers in connection with this
transaction.
33. OPTIONAL RENEWAL PERIOD. Tenant shall have the right to renew the
within Lease for one (1) term of three (3) years, consecutive with the term
herein provided, at the then prevailing "fair market rent". Tenant shall give
the Landlord no less than six (6) months prior written notice by Certified
Mail, Return Receipt Requested, of Tenant's intention to exercise the option
to renew.
34. OPTIONAL RENEWAL PERIOD - RENT. The "fair market rent" as contemplated
by Paragraph 33 hereof shall be determined as follows: Landlord shall notify
Tenant of Landlord's opinion of the fair market rent for the Renewal Period
at lease six (6) months prior to the end of the then current term hereof. If
Tenant disputes Landlord's opinion, Tenant shall, within thirty (30) days
after Landlord's said notice, by written notice to Landlord, either withdraw
its exercise of its renewal option or notify Landlord that Tenant elects
arbitration in accordance with then prevailing Rules of Commercial
Arbitration of the American Arbitration Association. The said Association
shall designated an appraiser familiar with office buildings located in the
Middlesex County, New Jersey area. The arbitrator shall, after hearing
testimony from the parties and their expert witnesses, have the authority to
fix and determine the fair market rent for the Renewal Period. Each party
shall pay the cost and expenses of its own expert witnesses and attorneys
fees, and the cost of the arbitration shall be shared equally by the parties.
35. TENANT'S ESTOPPEL. If, at any time after the commencement of the term
hereof, Landlord or Tenant shall make written request therefor, Landlord or
Tenant shall, within Tenant (10) days after such request, deliver to the
other a written instrument, duly executed by Landlord or Tenant, certifying,
if such be the case: (i) that this Lease is in force and effect; (ii) that
this Lease has not been modified, amended or supplemented or specifying the
modification, amendment or supplement; (iii) that Tenant or Landlord, as the
case may be, is not in default hereunder, or if it is then in default,
specifying the nature of the default and whether or not the time period for
curing same has expired; (iv) the date or dates through which basic annual
rent and additional rent have been paid; and (v) that there are no offsets or
deductions against basic annual rent or additional rent, or if any are
claimed, specifying the amount thereof and the basis therefor.
36. GOVERNING LAW. This Lease, and the rights and obligations of the
parties thereto, shall be interpreted and construed in accordance with the
laws of the State of New Jersey.
37. PARTIAL INVALIDITY. If any provision of this Lease shall be determined
by a court of competent jurisdiction to be invalid, such determination shall
not affect any of the other provisions of this Lease and such other
provisions shall remain in full force and effect. If any provision of this
Lease shall be capable of two constructions, one of which would render the
provision valid and the other of which would render it invalid, then such
provision shall have the construction and meaning which would render it valid.
38. NOTICES. All notices required under the terms of this Lease shall be
given and shall be complete by mailing such notices by certified or
registered mail, return receipt requested, to the address of the parties as
shown at the head of this Lease, or to such other address as may be
designated in writing, which notice of change of address shall be given in
the same manner.
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39. TITLE AND QUIET ENJOYMENT. The Landlord covenants and represents that
the Landlord is the owner of the premises herein leased and has the right and
authority to enter into, execute and deliver this Lease; and does further
covenant that the Tenant on paying the rent and performing the conditions and
covenants herein contained, shall and may peaceably and quietly have, hold
and enjoy the leased premises for the term aforementioned.
40. ENTIRE CONTRACT. This Lease contains the entire contract between the
parties. No representative, agent or employee of the Landlord has been
authorized to make any representations or promises with reference to the
within letting or to vary, alter or modify the terms hereof. No additions,
changes or modifications, renewals or extensions hereof, shall be binding
unless reduced to writing and signed by the Landlord and the Tenant.
41. RIGHT OF FIRST REFUSAL. Tenant shall have the right of first refusal to
lease any available space contiguous to the Demised Premises as shown on
Exhibit A attached hereto. Tenant shall respond to Landlord's written notice
within five (5) business days. In the event that Tenant fails to respond
within said time period, Tenant's right of first refusal shall have been
waived.
The Landlord may pursue the relief or remedy sought in any invalid
clause, by conforming the said clause with the provisions of the statutes or
the regulations of any governmental agency in such case made and provided as
if the particular provisions of the applicable statutes or regulations were
set forth herein at length.
In all references herein to any parties, persons, entities or
corporations the use of any particular gender or the plural or singular
number is intended to include the appropriate gender or number as the text of
the within instrument may require. All the terms, covenants and conditions
herein contained shall be for and shall inure to the benefit of and shall
bind the respective parties hereto, and their heirs, executors,
administrators, personal or legal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written:
WITNESS OR ATTEST: METRO PARK ASSOCIATES - LANDLORD
BY: /s/ (Signature)
- ------------------------- -------------------------
STARCOM - TENANT
BY: /s/ (Signature)
- ------------------------- --------------------------
<PAGE>
EXHIBIT B
RULES AND REGULATIONS
1. OBSTRUCTION OF PASSAGEWAYS. The sidewalks, entrances, passages, courts,
elevators, vestibules, stairways, corridors and public parts of the Building
shall not be obstructed or encumbered by Tenant or used by Tenant for any
purpose other than the purpose for which they were intended
2. PROJECTIONS FROM BUILDING. No equipment or other fixtures shall be
attached to the outside walls or the windowsills of the Building or otherwise
affixed so as to project from the Building without the prior written consent
of the Landlord.
3. SIGNS. Except as otherwise provided in this Lease, no sign or lettering
shall be affixed by Tenant to any part of the outside of the premises, or any
part of the inside of the premises so as to be clearly visible from the
outside of the premises without the prior written consent of the Landlord.
4. WINDOWS. Windows in the premises shall not be covered or obstructed by
Tenant. No bottles, parcels or other articles shall be placed on the
windowsills, in the halls, or in any other part of the Building other than
the premises.
5. FLOOR COVERING. Tenant shall not lay linoleum or other similar floor
covering so that the same shall come in direct contact with the floor of the
premises. If linoleum or other similar floor covering is desired to be used,
an interlining of builder's deadening felt first shall be fixed to the floor
by a paste or other material that may be easily removed with water, with the
use of cement or other similar material being expressly prohibited.
6. INTERFERENCE WITH OCCUPANTS OF BUILDING. Tenant shall not make, or
permit to be made, any unseemly or disturbing noises or odors and shall to
interfere with the other tenants or those having business with them.
7. LOCKS AND KEYS. No additional locks or bolts of any kind shall be
placed on any of the doors by Tenant. Tenant shall, upon termination of
Tenant's tenancy, deliver to Landlord all keys to any space within the
Building, either furnished to or procured by Tenant, and in the event of the
loss of any keys furnished, Tenant shall pay to Landlord the cost of
replacement thereof.
8. MOVEMENT OF FURNITURE, FREIGHT OR BULKY MATTER. The carrying in or out
of freight, furniture or bulky matter of any description must take place
during such hours as Landlord may, from time to time, reasonably determine
and only after advance notice to Landlord. The persons employed by Tenant for
such work must be reasonably acceptable to Landlord. Tenant may, subject to
such provisions, move freight, furniture, bulky matter, and other material
into or out of the premises on Saturdays between the hours of 9:00 a.m. and
1:00 p.m., provided that Tenant shall pay for any additional costs incurred
by Landlord for elevator operators or security guards, and for other expenses
occasioned by such activity of Tenant. If, at least five (5) days prior to
such activity, Landlord requests that Tenant deposit with Landlord, as
security for Tenant's obligation to pay such additional costs, a sum which
Landlord reasonably estimates to be the amount of such additional cost, the
Tenant shall deposit such amount with Landlord as security for such cost.
9. SAFES AND OTHER HEAVY EQUIPMENT. Landlord reserves the right to
prescribe the weight and position of all safes and other heavy equipment so
as to distribute properly the weight thereof and to prevent any unsafe
condition from arising. Business machines and other equipment shall be placed
and maintained by Tenant at Tenant's expense in settings sufficient in
Landlord's reasonable
<PAGE>
judgment to absorb and prevent unreasonable vibration, noise and annoyance.
10. NON-OBSERVANCE OR VIOLATION OF RULES BY OTHER TENANTS. Landlord shall
not be responsible to Tenant for the non-observance or violation of any of
these rules and regulations by any other tenant.
11. AFTER HOURS USE. Landlord reserves the right to exclude from the
Building, between the hours of 6:00 p.m. and 8:00 a.m. and at all hours on
Saturdays, Sundays and Building holidays, all persons who do not present a
pass to the Building signed by the Tenant. Each Tenant shall be responsible
for all persons for whom such a pass is issued and shall be liable to the
Landlord for the acts of such person.
12. PLUMBING FACILITIES USE. Tenant shall not use the Building's plumbing
facilities for any purpose other than that for which they were constructed
and will not permit any foreign substance of any kind to be thrown therein
and the expense of repairing any breakage, seepage or damage, no matter where
occurring, resulting from a violation of this provision by Tenant or its
agents, servants, employees, invitees or licensees shall be borne by Tenant.
Wasteful and excessive or unusual use or misuse of Building standard office
electrical service, water, sewer or other utilities is hereby expressly
prohibited.
13. VEHICLES. No bicycles, mopeds, motorcycles or other vehicles of any
kind shall be brought into or kept in, on or about the premises, Building or
Building area, except in those locations specifically designated by Landlord
for same.
14. ANIMALS. No animal of any kind shall be brought into, kept in, on or
about the premises, Building or Building area, other than seeing eye dogs.
15. LANDLORD'S RIGHTS. Landlord hereby reserves to itself any and all
rights not granted to Tenant hereunder, including, but not limited to the
following rights which are reserved to Landlord for its purposes in operating
the Building:
(a) the exclusive right to the use of the name of the Building for all
purposes, except that Tenant may use the name as its business address and for
no other purpose;
(b) the right to change the name of the Building at any time and from
time to time, without incurring any liability to Tenant for so doing;
(c) the right to install and maintain a sign or signs on the exterior
of the Building and/or anywhere in the Building area; and
(d) the right to grant anyone the right to conduct any particular
business or undertaking in the Building or Building area.
16. MOVING. Moving in and out of the Building must be coordinated with the
Landlord. At the discretion of the Landlord, moving may be required to be
done under the supervision of the management personnel. No furniture will be
moved in the Building's elevators without the permission of the Landlord and
until necessary pads have been installed.
<PAGE>
ADDENDUM TO LEASE BETWEEN
METROPARK ASSOCIATES, LANDLORD
AND STARCOM, TENANT
1. This Addendum is hereby made a part of the attached Lease. Where the
terms ofthis Addendum differ from the terms of the Lease, this Addendum
shall control.
2. The Lease is hereby amended to provide that the Demised Premises shall
consist of a total of 6,668 square feet, rather than 3,962 square feet.
3. The Lease is hereby amended to provide that, commencing on May 31, 1995,
the rent for the Demised Premises shall be One Hundred Three Thousand
Three Hundred Fifty Four Dollars per annum ($103,354). Eight Thousand Six
Hundred Twelve ($8,612) Dollars Per Month, due and payable on the first
day of each calendar month.
4. The Lease is hereby amended to provide that Tenant shall pay, as
additional rent, the cost of Tenant's electrical usage, based upon an
energy audit to be performed by a licensed energy audit company chosen
by the Landlord. Landlord estimates that Tenant's costs shall be $194.91
per month (based on previous usage for smaller space). However, this
amount is subject to increase pursuant to the results of the energy
audit, which audit shall be performed within sixty (60) days from date
of execution of this Agreement.
5. The Lease is hereby amended to provide that Tenant's proportionate share
for purposes of operating expense and tax reimbursement shall be 4.95%.
6. The Lease is hereby amended to provide that Tenant shall be provided with
a total of five (5) reserved parking spaces, marked "Starcom".
7. ALL OTHER TERMS AND CONDITIONS OF THE LEASE DATED APRIL 19, 1995 SHALL
REMAIN THE SAME.
IN WITNESS WHEREOF, the parties hereto set their hands and seals.
METRO PARK ASSOCIATES - LANDLORD
Dated: [ILLEGIBLE] BY: /S/ [ILLEGIBLE
--------------------------- ---------------------------------
STARCOM - TENANT
BY: /S/ [ILLEGIBLE
---------------------------------
<PAGE>
[Floor Plan]
<PAGE>
ADDENDUM TO LEASE BETWEEN
METRO PARK ASSOCIATES, LANDLORD
AND UTSTARCOMM, INC, TENANT
1. This Addendum is hereby made a part of the attached Lease. Where the
terms of this Addendum differ from the terms of the Lease, this Addendum
shall control.
2. Paragraph 1 of the Lease is hereby amended to provide that the Demised
Premises shall consist of a total of 10,067 rentable square feet, rather
than 6,668 square feet.
3. Paragraph 2 of the Lease is hereby amended to provide that, commencing
July 1, 1996, the rent for the Demised Premises shall be Thirteen
Thousand One Hundred Forty-Four and 00/100 ($13,144.00) Dollars Per
Month, due and payable on the first day of each calendar month.
4. Paragraphs 27 and 28 of the Lease are hereby amended to provide that,
effective July 1, 1996, Tenant's proportionate share shall be 7.53%.
5. All other terms and conditions of the lease dated shall remain the same.
IN WITNESS WHEREOF, the parties hereto set their hands and seals.
METRO PARK ASSOCIATES - LANDLORD
Dated: 6/17/96 BY: /s/ (Signature)
-------------------------- -------------------------------
UTSTARCOMM, INC. - TENANT
Dated: 6/11/96 BY: /s/ (Signature)
-------------------------- -------------------------------
<PAGE>
ADDENDUM TO LEASE
BETWEEN METRO PARK ASSOCIATES, LANDLORD
AND UTSTARCOMM, INC, TENANT
1. This Addendum is hereby made a part of the attached Lease. Where the
terms of this Addendum differ from the terms of the Lease, this Addendum
shall control.
2. Paragraph 1 of the Lease is hereby amended to provide that, effective
on the later of: (a) completion of Landlord's Work as described in
Exhibit A attached hereto; or (b) August 1, 1997, (hereinafter the "New
Commencement Date"), the Demised Premises shall consist of 12,080
rentable square feet of eighth floor space (the "New Demised Premises").
The Paragraph is further amended to provide that the initial term of the
Lease shall expire on July 31, 1998.
3. Paragraph 2 of the Lease is hereby amended to provide that, commencing
on the New Commencement Date, the basic rent shall be the sum of Two
Hundred One Thousand Three Hundred Seventy-Three and 60/100 ($201,373.60)
Dollars Per Annum; Sixteen Thousand Seven Hundred Eighty-One and 13/100
($16,781.13) Dollars Per Month, due and payable in advance on the first
day of each calendar month.
4. Paragraphs 27 and 28 of the Lease are hereby amended to provide that
Tenant's proportionate share shall be 9.06%.
5. The Lease is hereby amended to provide that Tenant shall be responsible
for the costs of installation of data and telephone wiring for Select
Software Tools, Inc., another tenant in the Building. In addition,
Tenant shall share equally with Landlord with costs of moving the
operations of Select Software Tools, Inc. from their current location
to their new location in the Building.
6. The Lease is hereby amended to provide that Tenant shall have the right
to renew this Lease, for two (2) terms of one (1) year each, consecutive
with the initial term, at the same terms and conditions as the original
Lease, as modified. Tenant shall provide Landlord with sixty (60) days
prior written notice of its intention to exercise its right to renew this
Lease.
IN WITNESS WHEREOF, the parties set their hands and seals this ______
day of July, 1997.
WITNESS OR ATTEST: METRO PARK ASSOCIATES - LANDLORD
BY: CHAUNCEY SHEY
- ------------------------------ ------------------------------
UTSTARCOMM, INC. - TENANT
BY: /s/ (Signature)
- ------------------------------ ------------------------------
<PAGE>
EXHIBIT 10.24
CONTRACT FOR THE LEASE OF BUILDINGS AND OPEN GROUND
OF YUNSHAN POSTS AND TELECOMMUNICATIONS VILLAGE
Renter: Guangdong Southern Telecom Group Huizhou Company (hereinafter referred
to as Party A)
Tenant: Guangdong UT Starcom Telecom Co., Ltd. (hereinafter referred to as Party
B)
Pursuant to the Economic Contract Law of the People's Republic of China and the
relevant regulations and in accordance with the equitable, fair and reasonable
principle of consultation, the two parties hereby conclude this contract
defining their rights and obligations.
I. Location of the buildings concerned:
II. Name, area, unit price and monthly rent rate of the buildings concerned (see
the table below):
<TABLE>
<CAPTION>
Name Area (m2) Unit price Monthly rent Remarks
(yuan/m(2)) rate (yuan)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
3rd-4th floor, Building 2 (factory building) 2,493.76 9 22,443.84
1st floor, Building 2 (factory building) 144 1,296.00
- -----------------------------------------------------------------------------------------------------------------------------
Two apartments, Building 4 (living quarters) 187.72 9 1,689.48
- -----------------------------------------------------------------------------------------------------------------------------
2nd floor, Building 6 (living quarters) 1,208.56 9 10,877.04
- -----------------------------------------------------------------------------------------------------------------------------
2nd floor, Building 2 (factory building) 1,246.88 12 14,962.56
- -----------------------------------------------------------------------------------------------------------------------------
Total 5,280.92 51,268.92
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
III. The use of the buildings leased: Office
IV. Lease period: One year from January 1, 1998 to December 31, 1998.
Party A shall hand over the relevant buildings to Party B for use according to
the schedule specified in the contract.
In one of the following circumstances, the renter may terminate the contract and
take the buildings back.
1. The tenant sublets, transfers or lends the buildings or open ground to a
third party without authorization.
2. The tenant uses the buildings to carry out illegal activities and harm
public interest.
3. The tenant is in arrears with rent payment for two months.
4. The tenant alters the structure of the buildings or changes their use.
5. For special reasons, the competent authority in charge of Party A needs to
use the buildings or open ground Party B has rented.
If Party B fails to move when the lease period expires, Party A had the right to
take the case to a people's court and ask the court to make sure Party A moves.
The losses incurred therein for Party A shall be paid for by Party B.
If Party A intends to continue letting the relevant buildings when the lease
period expires, Party B shall
<PAGE>
enjoy priority when conditions are the same.
V. Rent and rent payment period:
Party B shall pay rent to Party A every month and the monthly rent is 51,268.92
Renminbi yuan. The payment shall be made in a lump sum before the 10th day of
the month. If Party B fails to make the payment in full on schedule, it shall
have to pay a daily late payment fee of 0.1% of the difference. Party A shall
give Party B receipts of payments. Rent shall be paid at an office of Party A.
VI. Changes of the renter and the tenant:
1. If Party A transfers the ownership of the relevant buildings to a third
party during the lease period, it shall not have to ask Party B for
approval but shall have to notify Party B of the change. When the third
party has the ownership, it shall become the natural Party A, enjoying the
rights and undertaking the obligations of the original Party A.
2. If Party B sublets the relevant buildings to a third party with the
approval of Party A during the lease period, the third party shall become
the natural Party B, enjoying the rights and undertaking the obligations of
the original Party B.
VII. Responsibilities of Party A:
1. If the relevant buildings face the danger of collapsing for natural reasons
during the lease period, Party A shall fix the matter. Party A shall also
fix any leakage and cracks caused by natural reasons in the roofs of the
relevant buildings during the lease period.
2. The house property tax and land use fee for the relevant buildings shall be
the concern of Party A.
3. If Party A has to take back the relevant buildings during the lease period,
it must notify Party B of the matter in writing two months in advance and
terminate the contract. In this case, Party A shall pay Party B a
compensation, which shall be 20% of the rent for the remaining time.
4. During the lease period, Party A shall manage well security at the main
entrance and carry out regular security inspections to ensure security.
5. During the lease period, Party A shall be responsible for the maintenance
of the public water and power supply facilities except the water and
electricity meters of Party B. Party A shall repair any damages of these
facilities caused by natural factors.
VIII. Responsibilities of Party B:
1. Party B shall not change the use of the relevant buildings, otherwise, it
shall be considered to have violated the contract and shall pay Party A a
compensation of 20% of the rent for the period during which it violated the
contract.
2. During the lease period, Party B shall pay the monthly management fee and
water and electricity charges on schedule.
3. If Party B has to return the relevant buildings for special reasons during
the lease period, it must notify Party A of its intention in writing two
months in advance to terminate the contract. In this case, Party B shall
pay Party A a compensation of 20% of the rent for the remaining lease
period.
4. If Party B alters the structure of the buildings or changes their use
without authorization during the lease period, resulting in damages of the
buildings and facilities, it shall restore them or pay for the damages. If
Party B needs to carry out fitting-out works and alter water and power
supply facilities, it shall win the approval of Party A in advance and
shall not carry out the construction without going
<PAGE>
through the necessary procedures. When Party B moves, it shall not remove
the decorations it has made in the relevant buildings. Party B shall be
responsible for the maintenance of the interior fitting-out and power and
water supply facilities in the relevant buildings.
5. When the lease period expires or when the contract is terminated, Party B
shall remove all its belongings in the relevant buildings on schedule.
Things remain in the buildings ten days after the date of move shall be
regarded to have been discarded by Party B and shall be dealt with by
Party A.
6. If anyone from Party B damages the public facilities in the posts and
telecommunications village during the lease period, Party B shall pay for
the damages.
IX. If the relevant buildings are damaged by elements of force majeure, such as
natural disasters, the contract shall be naturally terminated and neither party
shall be held responsible for it.
X. The two parties shall settle through consultation disputes arising during the
implementation of the contract. If this does not work, either party may apply to
the Huizhou Arbitration Commission for arbitration.
XI. If there are any incomplete matters in this contract, they shall be dealt
with in a supplementary agreement concluded by the two parties through
consultation. The supplementary agreement shall have the same legal effect as
the contract.
Supplementary provisions: This contract is done in quadruplicate, with one for
each of the two parties. One copy is submitted to the House Property
Administration for record and still another one is submitted to the authority in
charge of Party A. Each copy is legally valid.
This contract of lease is concluded in Huizhou on December 31, 1997.
For Party A: (signature) For Party B: (signature)
Guangdong Southern Telecom Group Guangdong UT Starcom Telecom
Co., Ltd.
Huizhou Company (stamp) Contract Stamp (stamp)
<PAGE>
CONTRACT FOR THE LEASE OF BUILDINGS AND OPEN GROUND
OF YUNSHAN POSTS AND TELECOMMUNICATIONS VILLAGE
Renter: Guangdong Southern Telecom Group Huizhou Company (hereinafter referred
to as Party A)
Tenant: Guangdong UT Starcom Telecom Co., Ltd. (hereinafter referred to as
Party B)
Pursuant to the Economic Contract Law of the People's Republic of China and the
relevant regulations and in accordance with the equitable, fair and reasonable
principle of consultation, the two parties hereby conclude this contract
defining their rights and obligations.
I. Location of the buildings concerned: YuShan industry Village
II. Name, area, unit price and monthly rent rate of the buildings concerned (see
the table below):
<TABLE>
<CAPTION>
Name Area (m(2)) Unit price Monthly rent Remarks
(yuan/m(2)) rate (yuan)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1st floor, No.2 Building 226.88 9 2041.92
- -----------------------------------------------------------------------------------------------------------------------------
Total 226.88 2041.92
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
III. The use of the buildings leased: Factory Building
IV. Lease period: from June 1, 1998 to December 31, 1998.
Party A shall hand over the relevant buildings to Party B for use according to
the schedule specified in the contract.
In one of the following circumstances, the renter may terminate the contract and
take the buildings back.
1. The tenant sublets, transfers or lends the buildings or open ground to a
third party without authorization.
2. The tenant uses the buildings to carry out illegal activities and harm
public interest.
3. The tenant is in arrears with rent payment for two months.
4. The tenant alters the structure of the buildings or changes their use.
5. For special reasons, the competent authority in charge of Party A needs to
use the buildings or open ground Party B has rented.
If Party B fails to move when the lease period expires, Party A had the right to
take the case to a people's court and ask the court to make sure Party A moves.
The losses incurred therein for Party A shall be paid for by Party B.
If Party A intends to continue letting the relevant buildings when the lease
period expires, Party B shall enjoy priority when conditions are the same.
V. Rent and rent payment period:
<PAGE>
Party B shall pay rent to Party A every month and the monthly rent is 51,268.92
Renminbi yuan. The payment shall be made in a lump sum before the 10th day of
the month. If Party B fails to make the payment in full on schedule, it shall
have to pay a daily late payment fee of 0.1% of the difference. Party A shall
give Party B receipts of payments. Rent shall be paid at an office of Party A.
VI. Changes of the renter and the tenant:
1. If Party A transfers the ownership of the relevant buildings to a third
party during the lease period, it shall not have to ask Party B for
approval but shall have to notify Party B of the change. When the third
party has the ownership, it shall become the natural Party A, enjoying the
rights and undertaking the obligations of the original Party A.
2. If Party B sublets the relevant buildings to a third party with the
approval of Party A during the lease period, the third party shall become
the natural Party B, enjoying the rights and undertaking the obligations of
the original Party B.
VII. Responsibilities of Party A:
1. If the relevant buildings face the danger of collapsing for natural reasons
during the lease period, Party A shall fix the matter. Party A shall also
fix any leakage and cracks caused by natural reasons in the roofs of the
relevant buildings during the lease period.
2. The house property tax and land use fee for the relevant buildings shall be
the concern of Party A.
3. If Party A has to take back the relevant buildings during the lease period,
it must notify Party B of the matter in writing two months in advance and
terminate the contract. In this case, Party A shall pay Party B a
compensation, which shall be 20% of the rent for the remaining time.
4. During the lease period, Party A shall manage well security at the main
entrance and carry out regular security inspections to ensure security.
5. During the lease period, Party A shall be responsible for the maintenance
of the public water and power supply facilities except the water and
electricity meters of Party B. Party A shall repair any damages of these
facilities caused by natural factors.
VIII. Responsibilities of Party B:
1. Party B shall not change the use of the relevant buildings, otherwise, it
shall be considered to have violated the contract and shall pay Party A a
compensation of 20% of the rent for the period during which it violated the
contract.
2. During the lease period, Party B shall pay the monthly management fee and
water and electricity charges on schedule.
3. If Party B has to return the relevant buildings for special reasons during
the lease period, it must notify Party A of its intention in writing two
months in advance to terminate the contract. In this case, Party B shall
pay Party A a compensation of 20% of the rent for the remaining lease
period.
4. If Party B alters the structure of the buildings or changes their use
without authorization during the lease period, resulting in damages of the
buildings and facilities, it shall restore them or pay for the damages. If
Party B needs to carry out fitting-out works and alter water and power
supply facilities, it shall win the approval of Party A in advance and
shall not carry out the construction without going through the necessary
procedures. When Party B moves, it shall not remove the decorations it has
made in the relevant buildings. Party B shall be responsible for the
maintenance of the interior fitting-out and power and water supply
facilities in the relevant buildings.
<PAGE>
5. When the lease period expires or when the contract is terminated, Party B
shall remove all its belongings in the relevant buildings on schedule.
Things remain in the buildings ten days after the date of move shall be
regarded to have been discarded by Party B and shall be dealt with by Party
A.
6. If anyone from Party B damages the public facilities in the posts and
telecommunications village during the lease period, Party B shall pay for
the damages.
IX. If the relevant buildings are damaged by elements of force majeure, such as
natural disasters, the contract shall be naturally terminated and neither party
shall be held responsible for it.
X. The two parties shall settle through consultation disputes arising during the
implementation of the contract. If this does not work, either party may apply to
the Huizhou Arbitration Commission for arbitration.
XI. If there are any incomplete matters in this contract, they shall be dealt
with in a supplementary agreement concluded by the two parties through
consultation. The supplementary agreement shall have the same legal effect as
the contract.
Supplementary provisions: This contract is done in quadruplicate, with one for
each of the two parties. One copy is submitted to the House Property
Administration for record and still another one is submitted to the authority in
charge of Party A. Each copy is legally valid.
This contract of lease is concluded in Huizhou on May 14, 1998.
For Party A: (signature) For Party B: (signature)
Guangdong Southern Telecom Group Guangdong UT Starcom Telecom Co., Ltd.
Huizhou Company (stamp) Contract Stamp (stamp)
<PAGE>
LEASING CONTRACT OF FACTORY PREMISES
Party A: Yile Village, Gudang Township (hereinafter referred to as
Party A)
Party B: UTStarcom (Hangzhou) Telecom Co., Ltd. (hereinafter referred
to as Party B)
Party A and Party B reach the following agreement with regard to the
leasing of factory premises on the basis of equality and mutual benefit and
through friendly consultation:
1. Party B will lease from Party A the first, third and fourth
floors with an area of 2,282 M TO THE POWER OF 2, 2,757.8 M
TO THE POWER OF 2 and 2,757.8 M TO THE POWER OF 2,
respectively at No. 3 Building, Yile Industrial Park inside
the Yile Village having a total area of 7,797.6 M TO THE
POWER OF 2 at a monthly price of RMB14 YUAN per M TO THE
POWER OF 2 with an aggregated monthly rent of 109,166.40
YUAN and a aggregated yearly rent of 1,309,996.80 YUAN. The
lease is set for five (5) years from September 6, 1997 to
March 1, 2002. The rent shall remain unchanged for the
first three years, and, thereafter, it will increase
according to the price increase index. An adjustment will
be made every three (3) years.
2. Method of Payment: Party B shall pay Party A half a year's
rent within fifteen (15) days upon execution of this Contract.
After that, Party B shall make monthly payment for the rent of
a given month. It shall take the initiative to make onetime
payment at Party A's financial department on or prior to the
fifteenth day of every month. In case the rent is not paid on
time and the due date is over a month, the overdue fine shall
be 2% of the monthly rent per day. If it is overdue for more
than two (2) months, Party A has the right to take necessary
measures or unilaterally terminate this Contract and be
compensated by the breaching party for the liabilities.
3. Party A shall provide water for normal daily consumption, 450
kilowatts of electricity for industrial use and six
telephones. The cost for the water, electricity and telephones
shall be covered by Party B itself.
4. Under the premises of not adversely affecting the
infrastructure of the premises, Party A shall allow Party B to
make internal decoration and adjustments towards the leased
property, but Party B is required to submit a proposal for
such decoration and obtain Party's prior approval. If Party B
needs to renew the lease upon expiration of this Contract,
Party A shall give the priority to Party B.
-1-
<PAGE>
5. During the leasing period, Party B shall bear the cost by
ratio of maintenance for public utilities and general
management of Building No. 3.
6. During the leasing period, Party B shall engage in lawful
operations, rigorously observe various regulations and
policies formulated by the central and local governments and
the various authorities concerned. In the meantime, it shall
pay taxes and management fees related to the enterprise
pursuant to the relevant provisions.
7. During the term of the Contract, the parties shall stand by
their rights and obligations set forth in the Contract. If any
party fails to implement its obligations and causes damages
toward the other party, it shall compensate for all of the
other party's claims.
8. If, due to some special circumstances, any party desires to
terminate the Contract prior to its expiration, it shall
notify the other party of such decision six (6) months ahead
of time. In case of amendment or termination of the Contract
due to force majeure, the parties shall hold discussion to
solve the problem.
9. Upon expiration of the leasing period, Party B shall have the
priority to renew the lease. The rent for the renewed lease
shall be decided by the parties through consultation based on
the price increase index.
10. This Contract shall become effective immediately upon
execution with legal interests. In case any dispute occurs
upon its validity, the parties shall take positive approach
trying to solve such dispute. If the parties fail to solve
such dispute by means of consultation, they may submit it to
the local economic arbitration organization or judicial organ
for arbitration.
11. Matters that are not dealt with in this Contract shall be
discussed and solved through friendly consultation, and
supplementary agreements shall be signed.
12. This Contract has four (4) original copies with each party in
possession of two having equal legal power, which will
supervise the other party to carry out the Contract and
protect its own rights.
Party A: Party B:
Economic Cooperative of Yile Village, UTStarcom Hangzhou)Telecom Co.,
Gudang Township Ltd.
(Official Seal) (Official Seal)
Date: December 15, 1996
-2-
<PAGE>
EXHIBIT 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the use in this registration statement on Form S-1 of
our reports dated December 16, 1999, relating to the financial statements and
financial statement schedule of UTStarcom, Inc. which appear in such
registration statement. We also consent to the references to our firm under the
heading "Experts."
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
San Francisco, California
December 23, 1999
