Exhibit 10.1


 


LEASE
CONTRACT


 


Contract No.:                        


 


This Lease Contract (hereinafter referred to as this “Contract”) is executed in Hangzhou, the
People’s Republic of China (the “PRC”)
by and between


 


	
  Landlord (“Party A”):

  	
   

  	
  Zhejiang Zhongnan Construction Group Co., Ltd

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  245 Binkang Road, Changhe Street, Binjiang Zone,
  Hangzhou, P.R.C. China.

  
	
   

  	
   

  	
   

  
	
  Business License No.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tenant (“Party B”):

  	
   

  	
  UTStarcom Telecom Co., Ltd.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  368 Liuhe Road, Hi Tech Industrial Development Zone
  (Binjiang), Hangzhou 310053, P.R.China

  



 


Business License No.:


 


Pursuant to The Contract Law of the PRC, the Law on
Urban Real Estate Administration of the PRC, Administrative Measures on Lease
of Urban Real Estate promulgated by the Ministry of Construction of the PRC,
The Regulations on Lease of Real Estate in Zhejiang Province and The
Administrative Rules for Lease of Real Estate in Hangzhou, on the basis of
equality, free-will, fairness and good faith, through consultation, and
pursuant to the principle of the Property Transfer and Leaseback Agreement
entered by the parties on December 19, 2009 (hereinafter called the “Property Transfer and Leaseback Agreement”),
Party A and Party B hereby enter into this Contract on the subject matter of
leasing back the Property (as defined below) by Party B from Party A as
follows:


 


1.                                       Legal Status of Parties
and Certificates


 


1.1                                  Party A is a PRC legal entity approved by
the PRC government and has the legal person status under the PRC law.


 


1.2                                  Party B is a PRC legal entity approved by
the PRC government and has the legal person status under the PRC law.


 


1.3                                  As appendices, the copies of the business
licenses of both Party A and Party B are deemed part of this Contract.


 


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2.                                       Acknowledgements and
Warranties


 


2.1                                  Except as otherwise stipulated in this
Contract, both Party A and Party B acknowledge and warrant that:


 


(1)                                 Both parties have the necessary power,
capacity, authorization and ability for the execution and performance of this
Contract; they are fully aware of and fully understand their respective rights,
obligations and liabilities hereunder and they are willing to exercise or
perform the foregoing rights, obligations and liabilities in strict compliance
with the provisions of this Contract, and either Party is entitled to claim
damages against the other Party if the other Party breaches this Contract.


 


(2)                                 Both parties’ internal approval and
authorization formalities required for execution hereof have been completed.


 


(3)                                 there are no contracts signed with a
third party or any other binding documents or any other matters, whatsoever,
that will preclude the execution and performance of this Contract.


 


3.                                      Size of Property


 


3.1                                 The property leased by Party A to Party B
is located at 368 Liu He Road, Bin Jiang District, Hangzhou, PRC (hereinafter
called the “Property”). The
estimated aboveground construction area leased is 71,027sqm. The underground
parking area leased is 12,000sqm. The designated use of the land is
non-residential. The building structure has a mixed steel and concrete
structure. The detailed leased units and areas are listed in Appendix 1.


 


4.                                       Purpose of Lease


 


4.1                                 Party B undertakes to lease the Property
for conducting activities within the approved scope stipulated in its business
license and to comply with the relevant national and local laws and regulations
in respect of property utilization as well as the policy preferences of the
Development Zone (Binjiang) with regards to the industry development,
environment protection and property management.


 


4.2                                 Party B warrants not to change the
purpose of lease specified in Section 4.1 during the Term (defined in Section 5.1)
without Party A’s written consent and approval by the relevant administrative
authorities.


 


5.                                       Handover Date and Lease
Term


 


5.1                                 Both parties agree that the lease
commencement date shall be the completion date of the Property handover as
defined in the Property Transfer and Leaseback Agreement.  Under no circumstances should the Lease Term
start prior to the


 


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Property ownership
title transfer being completed (“Lease
Commencement Date”) and the term for the Property lease shall be 6
years (the “Term”).


 


Party B shall be
responsible for paying the property management fee and air-conditioning fee
starting on the Lease Commencement Date.


 


6.                                        Rent, Method and Time of
Payment


 


6.1                                 For the sole purpose of calculating the
rent, the property management fee and the air-conditioning fee, the Term shall
be divided into three phases and each phase shall include two years. The amount
of the rent, the property management fee and the air-conditioning fee for each
phase of the Term are as follows:


 


(1)                                 Phase 1 rent: the first and second leasing
years after the Lease Commencement Date, 71,027 sqm GFA aboveground of the
lease area, the unit rent is RMB 2.5 per sqm per day (based on 365 days), the
property management fee is RMB 6.5 per sqm per month, and the air-conditioning
fee is RMB 4 per sqm per month. On the 12,000sqm GFA underground of the
leaseback area, the unit rent is RMB 25 per sqm per month.


 


(2)                                 Phase 2 rent: the third and fourth
leasing years after the Lease Commencement Date, 71,027 sqm GFA aboveground of
the leaseback area, the unit rent is RMB 3 per sqm per day (based on 365 days),
the property management fee is RMB 6.5 per sqm per month, and the
air-conditioning fee is RMB 4 per sqm per month. On the 12,000sqm GFA
underground of the leaseback area, the unit rent is RMB 25 per sqm per month.


 


(3)                                 Phase 3 rent: the fifth and sixth leasing
years after the Lease Commencement Date, 71,027 sqm GFA aboveground of the
leaseback area, the unit rent is RMB 3.2 per sqm per day (based on 365 days),
the property management fee is RMB 6.5 per sqm per month, and the
air-conditioning fee is RMB 4 per sqm per month. On the 12,000sqm GFA
underground of the leaseback area, the unit rent is RMB 25 per sqm per month,
the property management fee is RMB 6.5 per sqm per month, and the
air-conditioning fee is RMB 4 per sqm per month.


 


Subject to the other
terms under this Contract, the rent, the property management fee, and the
air-conditioning fee of the leased area (83,027 sqm in total including
aboveground and underground space) will be calculated according to the above
provisions.  Please refer to Appendix 2
“Payment Schedule” for details regarding the payment.  If the Lease Commencement date occurs after March 15,
2010, the Payment Schedule shall be adjusted accordingly.


 


6.2                                 During the phase 1 of the Term, or the
first two years of the Term, if Party B requires additional parking space as a
result of the leaseback, Party B will pay RMB 300 per month per parking space
for the underground parking or RMB 100


 


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per parking space per
month for the aboveground parking. The above term will be negotiated during
phases 2 and 3 of the Term.


 


6.3                                 The rent of the Property shall be paid in
advance; and the payment should be paid every three months (quarterly) and 20
days in advance (except as otherwise provided in the Contract); the monthly
rent is calculated on calendar days. The first rental payment, in an amount as
noted on the Payment Schedule shall be paid to Party A within three days after
the real estate title of the Property has been transferred from Party B to
Party A. Party A shall provide a tax receipt for the corresponding amount and
content to Party B simultaneously upon receiving each rental payment.  If the last due date of each installment is
Saturday, Sunday or any other statutory holidays, the immediately subsequent
working day shall be the last due date.


 


6.4                                 On the same day as the first rent
payment, Party B shall pay a portion of the aboveground rent, the management
fee and the air-conditioning fee and the underground rent, for the last 6
months of the Term to Party A in advance, equivalent to RMB 23,400,000. Party A
shall provide a tax receipt for the corresponding amount and content to Party B
simultaneously upon receiving such payment.


 


7.            Deposit, Property
Management Fee and Other Fees


 


7.1                                 Both parties agree that, upon the first
rental payment being paid, Party B shall pay a deposit of RMB12,300,000 for
leasing the Property on the same date as the first rental payment (“Deposit”). Party A shall provide receipt
to Party B simultaneously upon receiving the aforesaid Deposit.


 


7.2                                 Under the circumstances that Party B
leases the Property during the lease term as described in this Contract, Party
A shall return the Lease Deposit free of interest within three business days
upon expiration of the Lease Term. If this Contract cannot be performed or
continually performed or is terminated early due to faults of Party A, Party A
shall return the Lease Deposit free of interest within three business days upon
the date on which the Contract cannot be performed or continually performed or
is terminated early.


 


7.3                                 During the Term, all relevant fees in
respect of electricity for lighting and equipments used by Party B and
communications fee for the area leased by Party B  (excluding utilities fees for the heating and
air-conditioning systems) shall be paid by Party B.


 


7.4                                 The property management fee is RMB 6.50
per square meters per month on aboveground construction area of 71,027 sqm. The
air-conditioning fee is RMB 4 per square meter per month on aboveground
construction area of 71,027 sqm.


 


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8.            Requirements on Use of
Property and Maintenance Obligations


 


8.1                                 During the Term, if Party B finds any
damages to the Property or affiliated facilities due to natural causes, Party B
shall immediately notify Party A to repair such damages. Party B shall actively
assist and cooperate in Party A’s repair of such damages.


 


8.2                                 During the Term, Party B shall reasonably
use and protect the Property and the affiliated facilities; Party B shall be
responsible for those damages caused by the negligence or willful misconduct of
its personnel or invitees.


 


8.3                                 Except for the decorations and facilities
originally provided in the Property, Party B may only make additional
decorations or install other facilities affixed to the Property after obtaining
Party A’s prior written consent and upon completion of relevant formalities
with property management department and if required by any regulations, the
approval from relevant government authorities in advance.


 


8.4                                 Upon the termination and release hereof,
Party B shall return the Property.  After
Party A’s inspection and acceptance of the Property, Party B may complete other
formalities in respect of returning the Property.


 


9.            Condition of Property on
Return


 


9.1                                 Except as agreed by the parties to renew
this Contract and to sign a renewal contract, Party B shall notify Party A one
month before the expiration date, and Party B shall return the Property on the
day of the expiration of the Term or the day of the release or termination
hereof due to any reason; if Party B delays the return of the Property or any
part of the Property without Party A’s consent, Party B shall pay an amount
equal to two times of the daily rental for such part for each day of delay as a
charge for occupying the Property or any part of it.  If Party B delays return of the Property for
more than fifteen days, Party A will have the right to enter into and take over
the Property and Party B will be responsible for the related cleaning cost.


 


9.2                                 Party B shall return the Property on
normal working conditions.  Upon return,
the Property shall be inspected and accepted by Party A and both parties shall
settle the relevant fees to be borne by each party, respectively.


 


10.          Sublease and Assignment


 


10.1                           During the Term, Party B has the right to
decide to sublease total or part of the Property but the sublease contracts
shall be kept on record with Party A.


 


10.2                           Party A and Party B hereby expressly
agree that, after this Contract comes into effect, Party A shall be entitled in
its own discretion to sell and mortgage the Property, and to reach any contract
in its own discretion to dispose the Property by transferring, by sale or by any
other means, to which Party B acknowledges and


 


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agrees. Party B
hereby expressly irrevocably, without any condition, waives its right of first
refusal to purchase the Property, in respect of Party A’s disposing the
Property by sale, mortgage or any other means.


 


11.          Insurance


 


11.1                           During the Term, Party A shall purchase
insurance with respect to the Property and Party B shall purchase insurance
with respect to its own assets placed within the Property.


 


11.2                           In the event that there is a shortfall
after the insurance company satisfied a claim on an accident caused by Party A
or Party B, the responsible party for the accident shall compensate the
shortfall to the extent that Party A has maintained adequate insurance for the
property, and after all proceeds have been received and spent on the Property.


 


12.          Confidential Obligations


 


12.1                           Each party of this Contract shall bear
the confidential obligations concerning the other party’s business information
obtaining through negotiation and performance of this Contract, including but
not limited to, the technical secrets and operation structures, except for
information already lawfully published by third parties or authorized to be
disclosed by the other party by writing in advance. Either party shall not
duplicate, use, disseminate, license the business secrets of the other party to
any third party and shall request its employees to observe this provision. The
employees of either party shall not try to inappropriately obtain the business
secrets of the other party from the employees of the other party or other
tenants. The exceptions to the confidentiality obligations of the parties in
the Property Transfer and Leaseback Agreement shall also apply to this Contract.


 


12.2                           A party shall assume the responsibilities
to compensate if the party breaches the above obligations and such breach
causes damages to the other party or other tenants. Party B shall compensate
Party A in full if Party A is liable for damages after being sued due to Party
B’s infringement of the rights and benefits of other tenants.


 


13.                                 Conditions of Early
Termination


 


13.1                           During the Term, should Party B terminate
leasing the Property or a portion of the Property, Party B shall notify Party A
in writing 6 months in advance.


 


13.2                           In the case of an early termination of
the Contract by Party B during the Term, Party A has the right to keep all the
leasing deposit in the amount of RMB12,300,000 plus a penalty of RMB 17,700,000
from Party B to a total of RMB 30,000,000.


 


13.3                           In addition, Party B shall pay extra
compensation to Party A equivalent to 6 month rent calculated based on the then
applicable rent under the Contract (hereinafter


 


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called the “Additional
Compensation”).  Should Party
B refuse to lease part of the Property, Party A should pay the respective
portion of the leasing deposit, penalty and Additional Compensation as set
forth in Section 13.2 above based on the ratio of un-leased space to the
leased space.


 


13.4                         Should Party B reduce the
leased space, Party B shall discuss with Party A about the specific leased
units.


 


14.                               Breach Liabilities


 


14.1                         Should Party B fail to pay the corresponding
rental and fees set forth in this Contract, Party B shall pay Party A daily
compensation equivalent to 0.05% of the delayed amount. The compensation
calculation shall include all the delayed days until the day when it is fully
paid.


 


14.2                         Upon expiration of this Contract, should Party
A fail to pay back the Lease Deposit to Party A as stipulated in this Contract,
Party A should pay Party B daily compensation equivalent to 0.05% of the
delayed amount. The compensation calculation shall include all the delayed days
until the day when it is fully paid.


 


14.3                         Should Party A breach the lease Contract, it
shall compensate all losses suffered by Party B as a result of Party A’s
breach. Party B is also entitled to request Party A to specifically perform its
obligations under this Contract.


 


15.                               Renewal and Expansion Option


 


15.1                         Should Party B request renewal after the Lease
Term expires, Party B shall notify Party A and both parties will sign an
additional lease contract. Party B has a right of first refusal to lease under
the same conditions compared with the other lessees.


 


15.2                         During the Term, if Party B requests to expand
the leased space, both parties should sign another leasing contract which shall
be deemed part of this Contract.


 


16.                                Registration


 


16.1                         After the execution of this Contract, the parties may bring each party’s
business licenses, this Contract (or its amendment as appropriate) and the
title certificate of the Property, etc. and copies of the same and go to the local real estate
administration to make the lease filing.


 


17.                                  Miscellaneous


 


17.1                         This Contract is signed as a supplemental agreement by and between Party A and Party B pursuant
to Section 11 of the Property Transfer and Leaseback Agreement.


 


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17.2                         Any mortgage to be imposed on the Property by Party
A during the Term shall be notified to Party B in writing one month in advance.


 


17.3                         During the Term and any renewal term thereof, Party A shall install the name plate of Party
B on the common tenancy board located in the lobby of the Property building.


 


17.4                         If any Party hereto is prevented from performing
any provisions hereof due to war (regardless of such war has been declared or
not), earthquakes, typhoons, floods and fire, etc. (collectively, the “Force Majeure”), the
affected Party shall immediately notify the other Party in writing and within
fifteen (15) days provide the other Party with the detailed information of such
Force Majeure, reasons for not performing or delay in performance of this
Contract, and effective supporting materials and documents. Party B shall have
the right to terminate the Contract if it is not able to use the Property
or the major part of the Property for more than 30 days due to an event of
Force Majeure.


 


Party A and Party B may
consult and determine to terminate, release in part or delay the performance of
this Contract in light of the impact of the Force Majeure on the performance
thereof.


 


17.5                         This Contract is governed by, and its execution, interpretation and performance, and dispute resolution
shall be pursuant to, the PRC laws and regulations, and local regulations and
rules.


 


17.6                         With respect to any and all
disputes arising out of or related to this Contract, both parties shall first
try to resolve the disputes by friendly negotiations and discussions. Should
the disputes be not resolved after 60 days since either party receives the
notice that requests a negotiation, either party can submit the dispute to
China International Trade Arbitration Committee for arbitration according to the
then effective regulations of the arbitration. The location of arbitration
shall be in Beijing. The result of arbitration will be the final judgment and
binding on both parties.


 


17.7                         Should there be anything not contained in this
Contract, both parties may, through consultation, reach separate written
agreements forming an integral part of this Contract, having the same effect
herewith.


 


17.8                         This Contract shall come into effect as of the date
on which the respective legal or authorized representatives of both parties
sign this Contract and this Contract is affixed with the company chop or
contract chop of both parties.


 


17.9                         This Contract is made in four (4) originals
with each Party holding two (2) originals.


 


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Appendix 1:
Details of Leased Units and Areas


 


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Appendix 2:
Payment Schedule


 


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Signature Page


 


	
  Party A

  	
   

  	
  Party B

  
	
  Zhejiang Zhongnan Construction
  Group Co., Ltd.

  	
   

  	
  UTStarcom Telecom Co., Ltd.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Legal/Authorized
  Representative:

  	
   

  	
  Legal/ Authorized
  Representative:

  
	
   

  	
   

  	
   

  
	
  Jianrong Wu

  	
   

  	
  Haibin Dun

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
  Signature:

  
	
  /s/Jianrong Wu

  	
   

  	
  /s/ Haibin Dun

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: February 1, 2010

  	
   

  	
  Date: February 1, 2010

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bank:

  	
   

  	
  Bank:

  
	
  Bank Account:

  	
   

  	
  Bank Account

  



 


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