Exhibit 10.3

 

Agreement of Entry into the Zone

 

No.: 09BDA/SDK-R075

 

This Agreement (this “Agreement”) is made in Beijing by and between the
Management Committee of Beijing Economic and Technology Development Zone (the
“Zone”) of the People’s Republic of China (the “PRC”) and UTStarcom, Inc., after
amicable negotiation and based on the principles of equality and mutual benefits
in accordance with the relevant laws, rules and regulations of the PRC.

 

Section 1 Parties to the Agreement

 

The Parties to this Agreement are:

 

Management Committee of Beijing Economic and Technology Development Zone
(hereinafter referred to as “ Party A”)

Address: Boda Building, No.15 Ronghuazhong Road

Beijing Economic and Technology Development Zone

Legal representative: Zhang Boxu

Title: Chief Officer of the Committee

Nationality: PRC

 

UTStarcom, Inc (hereinafter referred to as “Party B”)

Address: 1275 Harbor Bay Parkway, Alameda, CA 94502 USA

Legal representative: Thomas Toy

Title: Chairman of the Board

Nationality: United States

 

Section 2 Contents of the Agreement

 

I.    Project contents:

 

UTStarcom is mainly engaged in the business of IP-based telecommunications with
products and technologies covering areas including wireless, broadband, next
generation networks and end-to-end networking, providing a variety of products
and system solutions including TMRollingStream®IPTV and IP video information
publishing solutions, Interactive iDTV, Mobile TV and OpticalXpressEPON system
solutions that can be applied to broadcast and television industries, broadband
integration and industry application solutions such as PTN/MSTP comprehensive
solutions, NetRing next generation optical network systems, AN/iAN series new
generation multi-service access platforms, EBox enterprise telecommunication
systems, PDSN and CDMA,CMMB, TD-SCDMA and WiFi mobile phone terminals.

 

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UTStarcom is planning to set up a wholly foreign-owned enterprise (the “New
WFOE”) in the Zone and authorize the New WFOE as its operational headquarters.

 

II.  Party A’s support to Party B.

 

1. As a newly registered foreign investment enterprise in the Mobile Silicon
Valley Park, If New WFOE’s contracted foreign investment amount is more than
US$15 million, then after it starts production and generating taxes within the
first year from the date of its registration in the Zone, the New WFOE may apply
for a financial support in an amount equal to 3% of the paid-in registered
capital (as converted into RMB) up to a maximum amount of RMB 20 million.

 

2. As a newly introduced enterprise in the Mobile Silicon Valley Park, if the
New WFOE leases the office facilities or real properties developed by the Head
Company for its research, development and production, after it starts generating
taxes, the New WFOE may apply for rent support. The term and amount of such
support shall be based on the relevant encouraging policies of of Mobile Silicon
Valley Park in Beijing Economic And Technology Development Zone (the “Silicon
Valley Encouraging Policies”).

 

If the New WFOE meets both the conditions set forth in the subsections 1 and 2
above, it may choose to apply for only one of the two financial supports.

 

3. If the New WFOE qualifies for the support under the relevant provisions of
thebn Management Measures for the Special Funds for Science and Innovation of
Beijing Economic and Technology Development Zone, it may apply for the relevant
monetary support.

 

4. The New WFOE may apply for the benefits of the support and financial
encouragement policies applicable to the senior management and senior under the
Silicon Valley Encouraging Policies.

 

5. As an enterprise registered in the Mobile Silicon Valley Park, the New WFOE
may apply for the benefits of the relevant preferential policies according to
the relevant Silicon Valley Encouraging Policies.  Party A agrees to use its
best efforts to help the New WFOE obtain the benefits of relevant preferential
policies.

 

6. Party A may help Party B in developing markets in Beijing, coordinate with
Party B regarding any issues relating to export credit, bank financing etc. and
support Party B in obtaining the high-tech enterprise certificate.

 

7. Party A will render continuous support for the growth of Party B’s project,
and provide high-quality services for the entry of Party B’s project into the
Zone.

 

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III. Party B’s Commitments

 

Party B agrees to make the following commitments:

 

1. Party B commits to initiate the application process for the incorporation of
the New WFOE in the Zone within one month after the closing of the investment by
Beijing Yizhuang International Investment and Development Corporation in Party B
and register or move its operational headquarters in or to the Zone within three
months following the completion of all procedures of various governmental
approvals, registrations and filings related to the formation and funding of the
New WFOE. The registered capital of the project shall reach US$15 million by the
end of the six months after Party B completes the registration of the New WFOE.

 

2. Party B commits that, after establishing its operational headquarters in the
Zone and approximately 5 years of such date (and shall take reasonable measures
to ensure that such date is no later than the end of 2015), its accumulated
sales revenue contribution to the Zone will reach approximately US$2.3 billion,
and  its accumulated paid taxes will reach approximately US$34.5 million
(limited to various national and local taxes excluding customs duties).

 

3. Party B commits that its operation term in the Zone shall be no less than six
(6) years from the date of registration.

 

Section 3 Special Agreement Between the Parties

 

To protect the interest of the state, Party B commits that, if Party B has
received the benefits of the preferential policies, all the leased facilities,
offices and other ancillary facilities shall only be used by itself and Party B
shall not sublease or use them for other purposes.

 

Section 4 Liability for Breach

 

1. If this Agreement cannot be performed or completely performed due to the
fault of one Party, such breaching Party shall bear the liabilities for breach
by compensating the other Party’s actual losses.  If both Parties breach this
Agreement, the Parties shall bear respective liabilities depending on the
factual circumstances thereof.

 

2. If Party A has received the benefits of the industry-support fund, the rent
support or the other preferential policies from Party A, Party A has the right
to terminate such support and recover all the funds provided if Party B , due to
its own fault:

 

(i)

fails to register or move the project company in the Zone within the
contemplated term set forth in this Agreement;

(ii)

fails to start its production within the contemplated term set forth in this
Agreement;

 

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(iii)

fails to reach the targets with respect to the total investment amount, the
annual revenue, the annual amount of taxes paid etc. as set forth in this
Agreement;

(iv)

intentionally and illegally withdraws the registered capital; and

(v)

commits other breaches of the Agreement.

 

Section 5 Confidentiality

 

All provisions in this Agreement are for the purpose of promoting the subject
project under the specified conditions. The Parties agree to keep the contents
of this Agreement confidential and will not use the information herein other
than for the purpose of this Agreement. However, Party B, for the approval of
this Agreement, may disclose the contents of this Agreement to its shareholders,
or as required by the relevant governmental and regulatory authorities and stock
exchanges.

 

Section 6 Dispute Resolution

 

The Parties shall settle any dispute arising out of or related to this Agreement
by amicable discussions.  If such discussions fail, the dispute shall be
submitted to the China International Economic and Trade Arbitration Commission
for arbitration in Beijing in accordance with its then applicable arbitration
rules.  The arbitration awards shall be final and binding on both Parties..

 

Section 7 Language and Effectiveness

 

1. This Agreement is written in Chinese.

 

2. Issues not covered in this Agreement may be stipulated in supplements upon
the Parties’ mutual agreement. Such supplements shall have the same legal effect
as this Agreement.

 

3. This Agreement shall be executed in duplicates with each Party retaining one
copy and it shall become effective upon signing and applying the stamps by the
Parties. The Agreement shall be executed and become effective at the same time
with Common Stock Purchase Agreement by and between Party B and Beijing Yizhuang
International Investment and Development Corporation (the “SPA”). However, if
the SPA is not performed, or properly performed or the closing thereof cannot be
consummated, then this Agreement shall terminate automatically without any Party
being liable and will be of no further force and effect.

 

Section 8 Miscellaneous

 

Contact Persons of the Parties

 

Party A: Li He    Dept.: Office of Business Development

Contact Phone No.: 86-10-67887323

Fax No.: 86-10-67889610    Email Address: ailey624@yahoo.com.cn

 

Party B: KP Lim     Dept.:  Administrative Department

 

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Contact Phone No.: 0571-81926649

Fax No.: 0571-81921999    Email Address: kp.lim@ustar.com

 

 

Party A (Stamp):

Party B (Stamp):

Management Committee of

UTStarcom, Inc.

Beijing Economic and Technology

 

Development Zone

 

Signature:

/s/ XINXIN ZHAO

 

Signature:

/s/ THOMAS J. TOY

Title:

Vice Chief Officer of the Committee

Title:

Chairman of the Board

Date:

February 1, 2010

Date:

February 1, 2010

 

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