Exhibit
10.99


 


[***].  Confidential Treatment Requested – Certain information in this
exhibit has been omitted and filed separately with the commission.  Confidential treatment has been requested
with respect the omitted portions.


 


 


 












 


ASSET PURCHASE AGREEMENT


 












 


By and Among


 


HYUNDAI SYSCOMM, INC.


 


3R INC.


 


DR. SEONG IK JANG


 


and


 


UTSTARCOM, INC.


 


Dated as of
February 26, 2004


 

















 


TABLE OF CONTENTS


 


 


	
  ARTICLE I

  
	
   

  
	
  DEFINITIONS

  
	
   

  
	
  SECTION
  1.01. Certain Defined Terms

  
	
  SECTION
  1.02. Definitions

  
	
   

  
	
  ARTICLE II

  
	
   

  
	
  PURCHASE AND SALE

  
	
   

  
	
  SECTION
  2.01. Purchase and Sale of Purchased Assets

  
	
  SECTION
  2.02. Seller’s Liabilities

  
	
  SECTION
  2.03. Purchase Price; Allocation of Purchase Price

  
	
  SECTION
  2.04. Closing

  
	
  SECTION
  2.05. Closing Deliveries by the Seller

  
	
  SECTION
  2.06. Closing Deliveries by the Purchaser

  
	
  SECTION
  2.07. Holdback.

  
	
   

  
	
  ARTICLE III

  
	
   

  
	
  REPRESENTATIONS AND WARRANTIES OF
  THE SELLER

  
	
   

  
	
  SECTION
  3.01. Organization, Authority and Qualification of the Seller

  
	
  SECTION
  3.02. No Conflict

  
	
  SECTION
  3.03. Governmental Consents and Approvals

  
	
  SECTION
  3.04. Financial Information; Books and Records

  
	
  SECTION
  3.05. Absence of Undisclosed Liabilities

  
	
  SECTION
  3.06. Acquired Assets

  
	
  SECTION
  3.07. Conduct in the Ordinary Course; Absence of Certain Changes, Events and
  Conditions

  
	
  SECTION
  3.08. Litigation

  
	
  SECTION
  3.09. Compliance with Laws

  
	
  SECTION
  3.10. Environmental and Other Permits and Licenses; Related Matters

  
	
  SECTION
  3.11. Material Contracts

  
	
  SECTION
  3.12. Intellectual Property

  
	
  SECTION
  3.13. Tangible Personal Property

  
	
  SECTION
  3.14. Purchased Assets

  
	
  SECTION
  3.15. Employee Benefit Matters

  
	
  SECTION
  3.16. Labor Matters

  
	
  SECTION
  3.17. Employees

  
	
  SECTION
  3.18. Taxes

  



 


i

















 


	
  SECTION
  3.19. Insurance

  
	
  SECTION
  3.20. Full Disclosure

  
	
  SECTION
  3.21. Brokers

  
	
  SECTION
  3.22. Preferences; Solvency

  
	
  SECTION
  3.23. Principal Creditors

  
	
  SECTION
  3.24. Accounts Receivable

  
	
  SECTION
  3.25. Accounts Payable

  
	
  SECTION
  3.26. Competition

  
	
  SECTION
  3.27. Fair Price

  
	
  SECTION
  3.28. Board Approval

  
	
  SECTION
  3.29. Past Due Obligations

  
	
  SECTION
  3.30. Availability of Documents

  
	
  SECTION
  3.31. Disclaimer of the Seller

  
	
   

  
	
  ARTICLE IV

  
	
   

  
	
  REPRESENTATIONS AND
  WARRANTIES OF THE PURCHASER

  
	
   

  
	
  SECTION
  4.01. Organization and Authority of the Purchaser

  
	
  SECTION
  4.02. No Conflict

  
	
  SECTION
  4.03. Governmental Consents and Approvals

  
	
  SECTION
  4.04. Brokers

  
	
  SECTION
  4.05. Funds

  
	
   

  
	
  ARTICLE V

  
	
   

  
	
  ADDITIONAL AGREEMENTS

  
	
   

  
	
  SECTION
  5.01. Conduct of Business

  
	
  SECTION
  5.02. Access to Information

  
	
  SECTION
  5.03. Confidentiality

  
	
  SECTION
  5.04. Regulatory and Other Authorizations; Notices and Consents

  
	
  SECTION
  5.05. Notice of Developments

  
	
  SECTION
  5.06. No Solicitation or Negotiation

  
	
  SECTION
  5.07. Use of Intellectual Property

  
	
  SECTION
  5.08. Non-Competition

  
	
  SECTION
  5.09. Training Services

  
	
  SECTION
  5.10. Manufacturing Agreement

  
	
  SECTION
  5.11. Distributorship Agreement

  
	
  SECTION
  5.12. Further Action with Respect to Purchased Assets

  
	
  SECTION
  5.13. Intellectual Property License Agreement

  
	
  SECTION
  5.14. Transition Services

  
	
  SECTION
  5.15. Further Action

  
	
  SECTION
  5.16. 2003 Audited Financial Statements

  



 


ii

















 


	
  ARTICLE VI

  
	
   

  
	
  EMPLOYEE MATTERS

  
	
   

  
	
  SECTION
  6.01. Key Employees

  
	
  SECTION
  6.02. Required Filings

  
	
   

  
	
  ARTICLE VII

  
	
   

  
	
  TAX MATTERS

  
	
   

  
	
  SECTION
  7.01. Tax Cooperation and Exchange of Information

  
	
  SECTION
  7.02. Conveyance Taxes

  
	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  CONDITIONS TO CLOSING

  
	
   

  
	
  SECTION
  8.01. Conditions to Obligations of the Seller

  
	
  SECTION
  8.02. Conditions to Obligations of the Purchaser

  
	
   

  
	
  ARTICLE IX

  
	
   

  
	
  INDEMNIFICATION

  
	
   

  
	
  SECTION
  9.01. Survival of Representations and Warranties

  
	
  SECTION
  9.02. Indemnification by the Seller, 3R and Dr. Jang

  
	
  SECTION
  9.03. Indemnification by the Purchaser

  
	
  SECTION
  9.04. Notice of Loss; Third Party Claims

  
	
  SECTION
  9.05. Limitations on Liability

  
	
  SECTION
  9.06. Exclusivity

  
	
  SECTION
  9.07. Knowing Fraud

  
	
  SECTION
  9.08. Tax Treatment

  
	
   

  
	
  ARTICLE X

  
	
   

  
	
  TERMINATION,
  AMENDMENT AND WAIVER

  
	
   

  
	
  SECTION
  10.01. Termination

  
	
  SECTION
  10.02. Effect of Termination

  
	
  SECTION
  10.03. Amendment

  
	
  SECTION
  10.04. Waiver

  
	
   

  
	
  ARTICLE XI

  
	
   

  
	
  GENERAL PROVISIONS

  
	
   

  
	
  SECTION
  11.01. Expenses

  



 


iii

















 


	
  SECTION
  11.02. Notices

  
	
  SECTION
  11.03. Public Announcements

  
	
  SECTION
  11.04. Severability

  
	
  SECTION
  11.05. Entire Agreement

  
	
  SECTION
  11.06. Assignment

  
	
  SECTION
  11.07. No Third Party Beneficiaries

  
	
  SECTION
  11.08. Governing Law

  
	
  SECTION
  11.09. Dispute Resolution

  
	
  SECTION
  11.10. Headings

  
	
  SECTION
  11.11. Counterparts

  
	
  SECTION
  11.12. Interpretation and Rules of Construction

  



 


iv

















 


EXHIBITS


 


	
  A

  	
   

  	
  List
  of Principal Creditors

  
	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  Form of
  Creditor Consent

  
	
   

  	
   

  	
   

  
	
  C

  	
   

  	
  Form of
  Intellectual Property License Agreement

  
	
   

  	
   

  	
   

  
	
  2.05(a)(i)

  	
   

  	
  Form of Bill of Sale and
  Assignment

  
	
   

  	
   

  	
   

  
	
  2.05(a)(ii)

  	
   

  	
  Form of Assignment of
  Owned Intellectual Property

  
	
   

  	
   

  	
   

  
	
  2.05(a)(iii)

  	
   

  	
  Form of Assumption Agreement

  



 


v

















 


DISCLOSURE SCHEDULE


 


The Disclosure Schedule shall include the
following Sections:


 


	
  3.03

  	
   

  	
  Governmental
  Consents and Approvals

  
	
   

  	
   

  	
   

  
	
  3.05

  	
   

  	
  Absence of
  Undisclosed Liabilities

  
	
   

  	
   

  	
   

  
	
  3.07

  	
   

  	
  Conduct in
  the Ordinary Course; Absence of Certain Changes, Events and Conditions

  
	
   

  	
   

  	
   

  
	
  3.08

  	
   

  	
  Litigation

  
	
   

  	
   

  	
   

  
	
  3.11

  	
   

  	
  Material
  Contracts

  
	
   

  	
   

  	
   

  
	
  3.12

  	
   

  	
  Intellectual
  Property

  
	
   

  	
   

  	
   

  
	
  3.13

  	
   

  	
  Tangible
  Personal Property

  
	
   

  	
   

  	
   

  
	
  3.14

  	
   

  	
  Purchased
  Assets

  
	
   

  	
   

  	
   

  
	
  3.16

  	
   

  	
  Labor
  Matters

  
	
   

  	
   

  	
   

  
	
  3.17

  	
   

  	
  Employees

  
	
   

  	
   

  	
   

  
	
  3.18

  	
   

  	
  Taxes

  
	
   

  	
   

  	
   

  
	
  3.24

  	
   

  	
  Accounts
  Receivable

  
	
   

  	
   

  	
   

  
	
  3.29

  	
   

  	
  Past Due
  Obligations

  
	
   

  	
   

  	
   

  
	
  5.01(b)

  	
   

  	
  Conduct of
  Business

  
	
   

  	
   

  	
   

  
	
  5.04(c)

  	
   

  	
  Regulatory
  and Other Authorizations; Notices and Consents

  
	
   

  	
   

  	
   

  
	
  5.08

  	
   

  	
  Non-Competition

  
	
   

  	
   

  	
   

  
	
  6.01

  	
   

  	
  Key
  Employees

  



 


vi

















 


This ASSET PURCHASE AGREEMENT (this “Agreement”),
dated as of February 26, 2004, by and among HYUNDAI SYSCOMM, INC., a
corporation organized and existing under the Laws of Korea (the “Seller”),
3R INC., a corporation organized and existing under the Laws of Korea (“3R”),
DR. SEONG-IK JANG (“Dr. Jang”), and UTSTARCOM, INC., a Delaware
corporation (the ”Purchaser”).


 


WHEREAS, the Seller, directly and through Brain
Technology Industries Company Ltd., a corporation organized and existing under
the laws of Korea (“BTI”), is engaged in the business of manufacturing
and selling wireless telecommunication equipment, software, systems and related
products (the ”Business”);


 


WHEREAS, the Seller wishes to sell to the Purchaser
(or to one or more Affiliates of the Purchaser designated by the Purchaser),
and the Purchaser (through the Purchaser or any such Affiliate of the
Purchaser) wishes to purchase from the Seller, certain assets of the Seller,
all upon the terms and subject to the conditions set forth herein;


 


WHEREAS, the Purchaser and BTI have entered into an
agreement dated as of today (the “BTI Agreement”) pursuant to which BTI
wishes to sell certain tangible personal property of BTI (the “BTI Assets”)
to the Purchaser (or to its designee) and the Purchaser (or its designee) wishes
to purchase such property from BTI, all upon the terms and subject to the
conditions set forth therein;


 


WHEREAS, the Seller has facilitated, or will
facilitate, the hiring of certain of the Seller’s employees by the Purchaser or
its designated Affiliate on or prior to the Closing Date;


 


WHEREAS, the Board of Directors of the Seller has
determined that this Agreement and the transactions contemplated hereby are in
the best interests of the Seller, its shareholders and its creditors;


 


WHEREAS, the shareholders of the Seller with requisite
voting power have duly approved the transactions contemplated in this
Agreement;


 


WHEREAS, it is a condition to the consummation of the
transactions contemplated hereby that each of the creditors of the Seller set
forth in Exhibit A (the ”Principal Creditors”) execute
and deliver the creditor consent (the ”Creditor Consent”)
substantially in the form set forth in Exhibit B to each of the
Seller and the Purchaser;


 


WHEREAS, concurrently with the consummation of the
transactions contemplated hereby, the Purchaser and/or one or more of its
Affiliates and the Seller will enter into an Intellectual Property License
Agreement (the ”Intellectual Property License Agreement”)
substantially in the form attached hereto as Exhibit C, pursuant to
which, among other things, the Purchaser and/or one or more of its Affiliates
are willing to license to the Seller certain Intellectual Property assets
purchased by the Purchaser (through the Purchaser or one or more Affiliates of
the Purchaser designated by the Purchaser) pursuant to this Agreement, upon the
terms and subject to the conditions set forth in the Intellectual Property
License Agreement; and


 


WHEREAS, 3R and Dr. Jang are direct or indirect
stockholders of the Seller.


 

















 


NOW, THEREFORE, in consideration of the promises and
the mutual agreements and covenants hereinafter set forth, and intending to be
legally bound, the Seller, 3R and Dr. Jang and the Purchaser hereby agree
as follows:


 


ARTICLE I



DEFINITIONS


 


SECTION 1.01.  Certain Defined Terms.  For purposes of this Agreement:


 


“Acquisition Documents” means this Agreement,
the Ancillary Agreements and any certificate delivered pursuant to this
Agreement or the transactions contemplated by this Agreement.


 


“Action” means any claim, action, suit,
arbitration, inquiry, proceeding or investigation by or before any Governmental
Authority.


 


“Affiliate” means, with respect to any
specified Person, any other Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such specified Person; with respect to the Seller, such other Person
shall include Dr. Jang and 3R.


 


“Business Day” means any day that is not a
Saturday, a Sunday, a holiday or other day on which banks are required or
authorized by Law to be closed in The City of New York or Seoul, Korea.


 


“Claims” means any and all administrative,
regulatory or judicial actions, suits, petitions, appeals, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigations,
proceedings, consent orders or consent agreements.


 


“Code” means the Internal Revenue Code of 1986,
as amended through the date hereof.


 


“control” (including the terms “controlled
by” and “under common control with”), with respect to the
relationship between or among two or more Persons, means the possession,
directly or indirectly or as trustee, personal representative or executor, of
the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee,
personal representative or executor, by contract, credit arrangement or
otherwise.


 


“Conveyance Taxes” means all sales, use, value
added, transfer, stamp, stock transfer, real property transfer or capital gains
and similar Taxes.


 


“Copyrights” means mask works, rights of
publicity and privacy, and copyrights in works of authorship of any type,
including Software, registrations and applications for registration thereof
throughout the world, all rights therein provided by international treaties and
conventions, all moral and common law rights thereto, and all other rights
associated therewith.


 


2

















 


“Disclosure Schedule” means the Disclosure
Schedule attached hereto, dated as of the date hereof, delivered by the
Seller to the Purchaser in connection with this Agreement.


 


“due inquiry”, as used in this Agreement and as
it pertains to the Seller, means inquiring about the  knowledge of the Seller’s Affiliates.


 


“Encumbrance” means any security interest
(including yang do tambo),
pledge, hypothecation, mortgage (including kun
mortgage), lien (including environmental and tax liens), violation, charge,
lease, license, encumbrance, servient easement, adverse claim, reversion,
reverter, preferential arrangement, restrictive covenant, condition or
restriction of any kind, including any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.


 


“Environment” means surface waters,
groundwaters, soil, subsurface strata and ambient air.


 


“Environmental Claims” means any Claims
relating in any way to any Environmental Law or any Environmental Permit,
including (a) any and all Claims by Governmental Authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law and (b) any and all Claims by
any Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the Environment.


 


“Environmental Laws” means all Laws, now or
hereafter in effect and as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the environment, health, safety, natural
resources or Hazardous Materials.


 


“Environmental Permits” means all permits,
approvals, identification numbers, licenses and other authorizations required
under or issued pursuant to any applicable Environmental Law.


 


“Governmental Authority” means any federal,
national, supranational, state, provincial, local, or similar government,
governmental, regulatory or administrative authority, agency or commission or
any court, tribunal, or judicial or arbitral body.


 


“Governmental Order” means any order, writ,
judgment, injunction, decree, stipulation, determination or award entered by or
with any Governmental Authority.


 


“Hazardous Materials” means (a) petroleum
and petroleum products, radioactive materials, asbestos-containing materials,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls and radon gas, (b) any other chemicals, materials
or substances defined as or included in the definition of “hazardous
substances”, “hazardous wastes”, “hazardous materials”, “extremely hazardous
wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”,
“contaminants” or “pollutants”, or words of similar import, under any
applicable Environmental Law, and (c) any other chemical, material or
substance which is regulated by any Environmental Law.


 


3

















 


“Indebtedness” means, with respect to any
Person, (a) all indebtedness of such Person, whether or not contingent,
for borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services over an initial period of 180 days or
more, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all obligations
of such Person as lessee under leases that have been or should be, in
accordance with Korean GAAP, recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance, letter
of credit or similar facilities, (g) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of such Person or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Indebtedness of others referred to in clauses (a)
through (g) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through
an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(iv) otherwise to assure a creditor against loss, and (i) all
Indebtedness referred to in clauses (a) through (g) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Encumbrance on property (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.


 


“Indemnified Party” means a Purchaser
Indemnified Party or a Seller Indemnified Party, as the case may be.


 


“Indemnifying Party” means the Seller pursuant
to Section 9.02 and the Purchaser pursuant to Section 9.03, as the
case may be.


 


“Intellectual Property” means (a) Patents,
(b) Trademarks, (c) Copyrights, (d) Trade Secrets and
(e) Software.


 


“IP Agreements” means (a) licenses of
Owned Intellectual Property from the Seller to third parties other than with
respect to systems sold by the Seller, (b) licenses of Intellectual
Property (other than Trademarks and the Retained Trade Secrets) from third
parties to the Seller, (c) agreements between the Seller and third parties
relating to the development or use of Intellectual Property (other than
Trademarks and the Retained Trade Secrets), and (d) consents, settlements,
decrees, orders, injunctions, judgments or rulings governing the use, validity
or enforceability of Owned Intellectual Property.


 


“Korea” means the Republic of Korea.


 


4

















 


“Korean GAAP” means generally accepted
accounting principles and practices in Korea in effect from time to time
applied consistently throughout the periods involved.


 


“Law” means any foreign, federal, national,
supranational, state, provincial, local or similar statute, law, ordinance, regulation,
rule, code, order, requirement or rule of law (including common law and the law
of Korea).


 


“Liabilities” means any and all debts,
liabilities and obligations, whether accrued or fixed, absolute or contingent,
matured or unmatured or determined or determinable, including those arising
under any Law (including any Environmental Law), Action or Governmental Order
and those arising under any contract, agreement, arrangement, commitment or
undertaking.


 


“Licensed Intellectual Property” means
Intellectual Property (other than Trademarks and the Retained Trade Secrets)
licensed to the Seller pursuant to the IP Agreements.


 


“Material Adverse Effect” means any
circumstance, change in or effect on the Seller, or the Purchased Assets that,
individually or in the aggregate with all other circumstances, changes in or
effects on the Seller, or the Purchased Assets:  (a) is or is reasonably likely to be materially adverse to
the continuing business, continuing operations, assets or liabilities
(including contingent liabilities), employee relationships, liquidity or the
condition (financial or otherwise) of the Seller, (b) is or is reasonably
likely to be materially adverse to the Seller’s ability to perform its
obligations under this Agreement or any of the Ancillary Agreements, or
(c) is reasonably likely to be materially adverse to (i) the
Purchased Assets or (ii) the use or intended use of the Purchased Assets
by the Seller or BTI.


 


“Owned Intellectual Property” means
Intellectual Property (other than Trademarks and the Retained Trade Secrets)
owned by the Seller.


 


“Patents” means United States, foreign and
international patents, patent applications, utility models, utility model
applications, designs, design applications and statutory invention
registrations, including reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, and all rights therein provided by
international treaties and conventions.


 


“Permitted Encumbrances” means such of the
following as to which no enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced and as to which the Seller is
not otherwise subject to civil or criminal liability due to its existence:  Encumbrances imposed by Law, such as
materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other
similar liens arising in the ordinary course of business securing obligations
that (i) are not overdue for a period of more than 30 days and
(ii) are not in excess of 50,000,000 Korean Won in the aggregate at any
time.


 


“Person” means any individual, partnership,
firm, corporation, limited liability company, association, trust,
unincorporated organization or other entity; for purposes of this Agreement,
two or more individuals or entities acting as a partnership, syndicate or group
for the purpose of acquiring, holding or disposing of securities of an issuer
shall be deemed to be a ”Person”.


 


5

















 


“Reference Balance Sheet Date” means the date
of the latest audited balance sheet included in the Financial Statements.


 


“Release” means disposing, discharging,
injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying,
seeping, placing and the like into or upon any land or water or air or otherwise
entering into the Environment.


 


“Retained Trade Secrets” means Trade Secrets
which are (i) financial and tax records of the Seller and
(ii) employment records of the Seller.


 


“Seller’s Software” means all Software owned by
the Seller.


 


“Software” means computer software, programs
and databases in any form, including source code, object code, operating
systems and specifications, data, databases, database management code,
utilities, graphical user interfaces, menus, images, icons, forms, methods of
processing, software engines, platforms, and data formats, all versions,
updates, corrections, enhancements and modifications thereof, and all related
documentation, developer notes, comments and annotations.


 


“subsidiaries” of a Person means any and all
corporations, partnerships, limited liability companies, joint ventures,
associations and other entities in which such Person holds, directly or
indirectly, through one or more intermediaries, whether through the ownership
of voting securities, as trustee, personal representative or executor, by
contract, credit arrangement or otherwise, (i) the ability to designate a
majority of the directors or other Persons performing similar functions, or
(ii) a majority of the economic equity interest.


 


“Tax” or “Taxes” means any and all
taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing
authority, including taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers’ compensation,
unemployment compensation, or net worth; taxes or other charges in the nature
of excise, withholding, ad valorem, stamp, transfer, value added, or gains
taxes; license, registration and documentation fees; and customs’ duties,
tariffs, and similar charges.


 


“Tax Returns” means any return, declaration,
report, election, claim for refund or information return or other statement or
form filed or required to be filed with any Tax authority relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.


 


“Trade Secrets” means trade secrets, know-how
and other confidential or proprietary technical, business and other
information, including inventions (whether or not patentable or reduced to
practice) and improvements thereto, manufacturing and production processes and
techniques, research and development information, technology, drawings,
specifications, designs, plans, proposals, technical data, financial, marketing
and business data, pricing and cost information, business and marketing plans,
customer and supplier lists and information, and all rights in any jurisdiction
to limit the use or disclosure thereof.


 


6

















 


“Trademarks” means trademarks, service marks,
trade dress, logos, trade names, corporate names, URL addresses, domain names
and symbols, slogans and other indicia of source or origin, including the
goodwill of the business symbolized thereby or associated therewith, common law
rights thereto, registrations and applications for registration thereof
throughout the world, all rights therein provided by international treaties and
conventions, and all other rights associated therewith.


 


“Transferred IP Agreements” means the IP
Agreements other than (i) those agreements to be set forth in writing by the
Purchaser prior to the Closing and (ii) those commercial off-the-shelf software
licenses to be mutually agreed upon by the Seller and the Purchaser.


 


SECTION 1.02.  Definitions.  The following terms have the meanings set
forth in the Sections set forth below:


 


	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  “3R”

  	
   

  	
  Preamble

  
	
  “Agreement”

  	
   

  	
  Preamble

  
	
  “Allocation”

  	
   

  	
  2.03(c)

  
	
  “Ancillary
  Agreements”

  	
   

  	
  2.05(a)

  
	
  “Assignment of Owned
  Intellectual Property

  	
   

  	
  2.05(a)

  
	
  “Assumed Liabilities”

  	
   

  	
  2.02

  
	
  “Assumption
  Agreement”

  	
   

  	
  2.05(a)

  
	
  “Audited Financial
  Statements”

  	
   

  	
  3.04(a)

  
	
  “Bill of Sale”

  	
   

  	
  2.05(a)

  
	
  “BTI”

  	
   

  	
  Recitals

  
	
  “BTI Agreement”

  	
   

  	
  Recitals

  
	
  “BTI Assets”

  	
   

  	
  Recitals

  
	
  “Business”

  	
   

  	
  Recitals

  
	
  “Closing”

  	
   

  	
  2.04

  
	
  “Closing Date”

  	
   

  	
  2.04(b)

  
	
  “Contingent Payment
  Condition”

  	
   

  	
  2.03(b)

  
	
  “Creditor Consent”

  	
   

  	
  Recitals

  
	
  “Distributorship
  Agreement”

  	
   

  	
  5.11

  
	
  “Dr. Jang”

  	
   

  	
  Preamble

  
	
  “Financial
  Statements”

  	
   

  	
  3.04(a)

  
	
  “FTL”

  	
   

  	
  3.26

  
	
  “Holdback Amount”

  	
   

  	
  2.03(a)(iii)

  
	
  “Insolvency Event”

  	
   

  	
  3.22

  
	
  “Insolvency Statute”

  	
   

  	
  3.22

  
	
  “Intellectual
  Property License Agreement”

  	
   

  	
  Recitals

  
	
  “Key Employees”

  	
   

  	
  6.01(a)

  



 


7

















 


	
  Definition

  	
   

  	
  Location

  
	
   

  	
   

  	
   

  
	
  “KFTC”

  	
   

  	
  3.26

  
	
  “Loss”

  	
   

  	
  9.02

  
	
  “Manufacturing
  Agreement”

  	
   

  	
  5.10

  
	
  “Material Contracts”

  	
   

  	
  3.11(a)

  
	
  “Multiemployer Plan”

  	
   

  	
  3.15

  
	
  “Multiple Employer
  Plan”

  	
   

  	
  3.15

  
	
  “Outstanding Claims”

  	
   

  	
  2.07(b)(ii)

  
	
  “Principal Creditors”

  	
   

  	
  Recitals

  
	
  “Purchase Price”

  	
   

  	
  2.03(a)

  
	
  “Purchased Assets”

  	
   

  	
  2.01(a)

  
	
  “Purchaser”

  	
   

  	
  Preamble

  
	
  “Purchaser
  Indemnified Party”

  	
   

  	
  9.02

  
	
  “Reserve Amount”

  	
   

  	
  2.07(b)(ii)

  
	
  “Restricted Period”

  	
   

  	
  5.08(a)

  
	
  “Seller”

  	
   

  	
  Preamble

  
	
  “Seller Indemnified
  Party”

  	
   

  	
  9.03

  
	
  “Tangible Personal
  Property”

  	
   

  	
  3.13(a)

  
	
  “Third Party Claim”

  	
   

  	
  9.04(b)

  
	
  “Training Agreement”

  	
   

  	
  5.09

  
	
  “Transition Services
  Agreement”

  	
   

  	
  5.14

  
	
  “Unaudited Balance
  Sheet”

  	
   

  	
  3.04(a)

  
	
   

  	
   

  	
   

  



 


ARTICLE II



PURCHASE AND SALE


 


SECTION 2.01.  Purchase and Sale of Purchased Assets.  (a) 
Upon the terms and subject to the conditions of this Agreement, at the
Closing, the Seller shall sell, assign, transfer, convey and deliver, or cause
to be sold, assigned, transferred, conveyed and delivered, to the Purchaser (or
to one or more Affiliates of the Purchaser designated by the Purchaser at or
prior to Closing), and the Purchaser shall (or shall cause one or more
Affiliates of the Purchaser designated by the Purchaser at or prior to the
Closing to) purchase from the Seller and, with respect to the BTI Assets, BTI
the following assets and properties of the Seller or BTI (the ”Purchased
Assets”):


 


(i)            all of the Seller’s
right, title and interest in, to and under the Owned Intellectual Property
(including Patents claiming any Trade Secrets existing as of the Closing Date)
and the Transferred IP Agreements, copies and tangible embodiments thereof in
whatever form or medium, and all rights to sue and recover damages for past,
present and future infringement, dilution, misappropriation, violation,
unlawful imitation or breach thereof;


 


8

















 


(ii)           all Claims, causes
of action, choices in action, rights of recovery and rights of setoff of any
kind (including rights to insurance proceeds and rights under and pursuant to
all warranties, representations and guarantees made by suppliers of products,
materials, or equipment, or components thereof), related to the Owned
Intellectual Property and the Transferred IP Agreements;


 


(iii)          all literature and
graphical or written expressions, in whatever form, related to the Owned
Intellectual Property, including technical documentation, user manuals, and
development documentation;


 


(iv)          such equipment,
machinery, furniture, fixtures and other tangible personal property owned by
the Seller or BTI to be set forth in writing by the Purchaser on or prior to
the Closing; provided, however, that the Seller and the Purchaser
shall negotiate in good faith with respect to such tangible personal property
that the Seller or BTI reasonably requires to conduct the Business in Korea
after the Closing;


 


(v)           to the extent
transferable under applicable law, the military service exemptions applicable
to any employees of the Seller who are hired by the Purchaser pursuant to this
Agreement; and


 


(vi)          to the extent
transferable, any franchises, permits, licenses, agreements, waivers and
authorizations of any Governmental Authority held or used by the Seller or BTI
in connection with any items listed in clause (i), (ii), (iii), (iv) or
(v) of this Section 2.01; provided, however, that with
respect to such franchises, permits, licenses, agreements, waivers or
authorizations that the Seller or BTI reasonably requires to conduct the
Business in Korea after the Closing, the Seller and the Purchaser shall
negotiate in good faith with respect to which franchises, permits, licenses,
agreements, waivers and authorizations shall be retained by the Seller or BTI.


 


(b)           Notwithstanding
anything in Section 2.01(a) to the contrary, the Seller shall retain, and
the Purchaser shall not purchase from the Seller, any of the assets and
properties owned by the Seller, other than the Purchased Assets.


 


SECTION 2.02.  Seller’s Liabilities.  At the Closing, the Purchaser shall assume
and become responsible for paying, performing and discharging all obligations
arising after the Closing (i) under the Transferred IP Agreements and
(ii) in connection with or related to any claims made by Motorola Inc.
against the Purchaser or its Affiliates with respect to products sold, or
services provided, by the Purchaser or its Affiliates using the Purchased
Assets after the Closing; provided, however, that the Purchaser
is not assuming any liabilities in connection with or related to any claims
made by Motorola Inc. or any other third party with respect to products sold,
or services provided by (i) any Person using the Purchased Assets on or
before the Closing or (ii) the Seller using the license under the Intellectual
Property License Agreement on or after the Closing (collectively, the “Assumed
Liabilities”).  Notwithstanding
anything to the contrary contained herein, the Seller shall retain, and shall
be responsible for paying, performing and discharging all of the Seller’s
Liabilities when due, and neither the Purchaser nor any of its Affiliates shall
assume or have any responsibility for, any of the Liabilities of the Seller
other than the Assumed Liabilities.


 


9

















 


SECTION 2.03.  Purchase Price; Allocation of Purchase
Price.  (a)  The purchase price for the Purchased Assets
and for the performance by the Seller, 3R and Dr. Jang under this Agreement
(including, without limitation, the covenants contained in Section 5.08)
(the ”Purchase Price”) shall consist of and be payable as follows:


 


(i)            On the Closing
Date, the Purchaser shall pay to the Seller (subject to Section 2.03(d)) an
amount equal to U.S. $[***] less the amount, if any, to be paid to BTI in
consideration for the tangible personal assets, if any, to be purchased by the
Purchaser pursuant to the BTI Agreement, provided, however, that,
if the aggregate depreciated book value of the Purchased Assets described in
Section 2.01(a)(iv), as reflected on the Seller’s or BTI’s balance sheet,
as the case may be, as of the Closing Date (to be prepared by the Seller and
BTI on or prior to the Closing Date in accordance with Korean GAAP on a basis
consistent with the past practices of the Seller or BTI, as the case may be,
and converted into U.S. Dollars at then-prevailing exchange rates),
exceeds U.S. $1,500,000, then the Purchaser shall pay to the Seller, at
the Closing, an additional amount equal to the amount by which the aggregate
depreciated book value of the Purchased Assets described in
Section 2.01(a)(iv) exceeds U.S. $1,500,000; it being agreed and
understood that, if the Seller or BTI, as the case may be, in good faith is
unable to prepare such balance sheets on or before the Closing, the parties
shall in good faith agree upon a reasonable estimate of such depreciated book
value for purposes of the Closing and shall confirm such depreciated book value
and, if necessary, reconcile any additional payment as soon as practicable
after the Closing; and


 


(ii)           The Purchaser shall
retain U.S. $[***] (the ”Holdback Amount”) and, pursuant to
Section 2.07, shall pay the Seller (subject to Section 2.03(d)) a portion or
all of such amount on such dates as specified in Section 2.07.


 


(b)           The Purchaser shall
pay, on or before 180 days after the Closing Date, to the Seller (subject to
Section 2.03(d)) U.S. $[***] if and only if the Contingent Payment
Condition is satisfied on or before 5:00 p.m. (Seoul, Korea time) on the
date [***] from the Closing Date.  For
purposes of this Agreement, the ”Contingent Payment Condition”
shall be satisfied at such time as [***].


 


(c)           The Purchase Price
set forth in Section 2.03(a)(i), and (ii) shall be allocated among the
Purchased Assets and the covenants contained in Section 5.08 as of the
Closing Date in accordance with an allocation to be mutually agreed upon before
the Closing (the ”Allocation”). 
For all Tax purposes, the Purchaser and the Seller agree to report the
transactions contemplated in this Agreement in a manner consistent with the
terms of this Agreement, including the Allocation, and that neither the Seller
nor the Purchaser shall take any position inconsistent therewith in any Tax
Return, in any refund claim, in any litigation, or otherwise.


 


(d)           Any and all payments
made to the Seller pursuant to Section 2.03(a)(i), 2.03(a)(ii) or 2.03(b)
shall be used promptly by the Seller to pay obligations owed to creditors of
the Seller; prior to any payments to the Seller pursuant to
Sections 2.03(a)(i), 2.03(a)(ii) or 2.03(b), the Seller shall present to
the Purchaser for approval, which approval shall not be unreasonably withheld
or delayed, a list of such creditors and the amounts to be paid to each


 


10

















 


such creditor, provided that part or
all of the payments pursuant to Sections 2.03(a)(i) shall first be used to
pay each Key Employee who has accepted the Purchaser’s offer of employment any
and all amounts (to the extent not already paid), including salary and bonuses,
owed by the Seller or its Affiliates to such Key Employees through the Closing
Date; provided, further, that the Purchaser may pay such
creditors or Key Employees directly instead of making any such payments to the
Seller and any and all such payments to such creditors or Key Employees will be
credited towards the Purchase Price.


 


SECTION 2.04.  Closing.  Subject to the terms and conditions of this Agreement, the sale
and purchase of the Purchased Assets contemplated by this Agreement shall take
place at a closing (the ”Closing”) to be held at the offices of
Shearman & Sterling LLP, 1080 Marsh Road, Menlo Park, California 94025
at 10:00 A.M. California time on the later to occur of
(a) March 31, 2004; provided, however, that the
Purchaser may, with a prior written notice to the Seller on or prior to March
31, 2004, designate any date within 15 days from March 31, 2004 as the earliest
day of Closing, or (b) the fifth Business Day following the satisfaction
or waiver of all conditions to the obligations of the parties set forth in
Article VIII, or at such other place or at such other time or on such
other date as the parties hereto may mutually agree upon in writing (the day on
which the Closing takes place being the ”Closing Date”).


 


SECTION 2.05.  Closing Deliveries by the Seller.  At the Closing, the Seller shall deliver or
cause to be delivered to the Purchaser:


 


(a)           a bill of sale
substantially in the form of Exhibit 2.05(a)(i) (the ”Bill
of Sale”), an assignment of Owned Intellectual Property substantially in
the form of Exhibit 2.05(a)(ii) (the ”Assignment of Owned
Intellectual Property”) and an assumption agreement substantially in the
form of Exhibit 2.05(a)(iii) (the “Assumption Agreement,”
and together with the Bill of Sale, the Assignment of Owned Intellectual
Property, the Intellectual Property License Agreement, the Training Agreement, the
Manufacturing Agreement, the Distribution Agreement and the Transition Services
Agreement, the ”Ancillary Agreements”), executed counterparts of
each of the Ancillary Agreements and such other instruments, in form and
substance reasonably satisfactory to the Purchaser, as may be reasonably
requested by the Purchaser to transfer the Purchased Assets to the Purchaser or
to evidence such transfer on the public records;


 


(b)           a true and complete
copy, certified by a representative director of the Seller of the resolutions
duly and validly adopted by the Board of Directors and the shareholders of the
Seller evidencing their authorization of the execution and delivery of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby;


 


(c)           certificates of the
representative directors of the Seller certifying the names and signatures of
the officers of the Seller authorized to sign this Agreement and the Ancillary
Agreements and the other documents to be delivered hereunder and thereunder;


 


(d)           the opinions,
certificates and other documents required to be delivered pursuant to
Section 8.02; and


 


11

















 


(e)           receipt for the
Purchase Price less the Holdback Amount.


 


SECTION 2.06.  Closing Deliveries by the Purchaser.  At the Closing, the Purchaser shall deliver
to the Seller:


 


(a)           a true and complete
copy, certified by an officer of the Purchaser, of the resolutions duly and
validly adopted by the Board of Directors of the Purchaser evidencing its
authorization of the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby;


 


(b)           certificates of
officers of the Purchaser certifying the names and signatures of the officers
of the Purchaser authorized to sign this Agreement and the Ancillary Agreements
and the other documents to be delivered hereunder and thereunder;


 


(c)           opinion,
certificates and other documents required to be delivered pursuant to
Section 8.01;


 


(d)           the executed
counterpart of the Assumption Agreement; and


 


(e)           the Purchase Price
less the Holdback Amount.


 


SECTION 2.07.  Holdback.


 


(a)           At the Closing, the
Purchaser shall retain the Holdback Amount, and, subject to Article IX,
has the right, to pay for and/or settle by offsetting against the Holdback
Amount any Loss suffered or incurred by any Purchaser Indemnified Party
(including any Action brought or otherwise initiated by any Purchaser
Indemnified Party), arising out of or resulting from clause (a), (b), (c)
or (d) of Section 9.02.


 


(b)           On
the fifth Business Day after the first anniversary of the Closing Date, the
Purchaser shall transfer to the Seller (subject to Section 2.03(d)) an amount
in cash equal to the Holdback Amount less the sum of:


 


(i)            the aggregate of
all Losses incurred or suffered by any Purchaser Indemnified Party in
accordance with Section 2.07(a) and Article IX prior to such date;
and


 


(ii)           the aggregate of
such Purchaser Indemnified Party’s good faith estimate (the ”Reserve
Amount”) of the total Losses that could be incurred or suffered (the ”Outstanding
Claims”) by such Purchaser Indemnified Party in accordance with
Section 2.07(a) and Article IX, and specified in a notice to be given
pursuant to Section 9.04; provided, however, that such
notice shall be given at or prior to the time the cash specified in
Section 2.07(b) is transferred.


 


(c)           Upon
the settlement of all Outstanding Claims, the Purchaser shall transfer to the
Seller (subject to Section 2.03(d)) the Reserve Amount less all Losses incurred
or suffered in accordance with Article IX with respect to the Outstanding
Claims.


 


12

















 


ARTICLE III



REPRESENTATIONS AND WARRANTIES

OF THE SELLER


 


As an inducement to the Purchaser to enter into this
Agreement, the Seller, 3R and Dr. Jang, jointly and severally, hereby represent
and warrant to the Purchaser as follows:


 


SECTION 3.01.  Organization, Authority and Qualification
of the Seller.  (a) Each of the
Seller and 3R is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
necessary power and authority to enter into this Agreement and any Ancillary
Agreements to which it is a party, to carry out its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby.  The Seller is duly licensed or
qualified to do business and is in good standing in each jurisdiction which the
properties owned or leased by it or the operation of its business makes such
licensing or qualification necessary, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect.  The execution and delivery of this Agreement
and the Ancillary Agreements to which it is a party by each of the Seller and
3R, the performance by each of the Seller and 3R of its obligations hereunder
and thereunder and the consummation by each of the Seller and 3R of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite action on the part of the Seller and its shareholders and 3R, as the
case may be.  This Agreement has been,
and upon their execution the Ancillary Agreements to which it is a party shall
have been, duly executed and delivered by each of the Seller, 3R and Dr. Jang
and (assuming due authorization, execution and delivery by the Purchaser) this
Agreement constitutes, and upon their execution the Ancillary Agreements to
which it is a party shall constitute, legal, valid and binding obligations of
the Seller, 3R and Dr. Jang enforceable against the Seller, 3R and Dr. Jang in
accordance with their respective terms. 
Dr. Jang has full capacity, right, power and authority to enter into
this Agreement.


 


(b)           The
Seller has no subsidiaries.


 


SECTION 3.02.  No Conflict.  Assuming the obtaining of the approvals
referred to in Sections 4.03, 8.01(e), 8.01(f), and 8.02(j), except as may
result from any facts or circumstances related solely to the Purchaser, the execution,
delivery and performance of this Agreement and the Ancillary Agreements to
which it is a party by the Seller does not and will not (a) violate,
conflict with or result in the breach of any provision of the articles of
incorporation (or similar organizational documents) of the Seller,
(b) conflict with or violate (or cause an event which could have a
Material Adverse Effect as a result of) any Law or Governmental Order
applicable to the Seller, or any of its assets, properties or businesses, which
conflict or violation would have a Material Adverse Effect, (c) conflict
with, result in any breach of, constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under,
require any consent under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any note,
bond, mortgage or indenture, contract, agreement, lease, sublease, license,
permit, franchise or other instrument or arrangement to which the Seller is a
party, which conflict, breach, default, absence of consent or


 


13

















 


rights, all as
referred to in this clause (c), relates to the Purchased Assets or would
otherwise have a Material Adverse Effect, or (d) conflict with, result in
any breach of, constitute a default (or event which with the giving of notice
or lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrance on any of the Purchased Assets pursuant to, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement by which any of the Purchased
Assets is bound or affected.


 


SECTION 3.03.  Governmental Consents and Approvals.  The execution, delivery and performance of
this Agreement and each Ancillary Agreement to which it is a party by the
Seller do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to, any Governmental
Authority, except as described in Section 3.03 of the Disclosure Schedule.  The Seller has obtained all permits,
licenses and authorizations and other approvals of all Governmental Authorities
required for the Seller and BTI to
engage in the Business, all of which (i) are valid and in full
force and effect and (ii) are either assignable to the Purchaser or can be
readily obtained by the Purchaser upon application, other than those permits,
licenses, authorizations and other approvals which, if not obtained, would not
have a Material Adverse Effect.


 


SECTION 3.04.  Financial Information; Books and Records.  (a) 
True and complete copies of the audited balance sheet of the Seller as
of December 31, 2001, the audited balance sheet of the Seller as of
December 31, 2002, and the audited statements of income, retained
earnings, stockholders’ equity and changes in financial position of the Seller
for the period from inception to December 31, 2002, together with all related
notes and schedules thereto, accompanied by the reports thereon of the Seller’s
independent accountants (collectively referred to herein as the “Audited
Financial Statements”) and true and complete copies of the unaudited
balance sheet of the Seller for the year ended as of
December 31, 2003 (the “Unaudited Balance Sheet,” and together
with the Audited Financial Statements, the ”Financial Statements”)
have been delivered by the Seller to the Purchaser.  The Audited Financial Statements (i) were prepared in
accordance with the books of account and other financial records of the Seller,
(ii) present fairly the financial condition and results of operations of
the Seller as of the dates thereof or for the periods covered thereby,
(iii) have been prepared in accordance with Korean GAAP applied on a basis
consistent with the past practices of the Seller and (iv) include all
adjustments (consisting only of normal recurring accruals) that are necessary
for a fair presentation of the financial condition of the Seller and the
results of the operations of the Seller as of the dates thereof or for the
periods covered thereby, except where the failure to be so prepared, to so
present and to so include, all as contemplated by clauses (i) through
(iv), would not have a Material Adverse Effect.  The Unaudited Balance Sheet, subject to any audit adjustments,
(i) was prepared in accordance with the books of account and other financial
records of the Seller, (ii) presents fairly the financial condition of the
Seller as of the date thereof and (iii) has been prepared in accordance with
Korean GAAP applied on a basis consistent with past practices of the Seller,
except where the failure to be so prepared and to so present, all as
contemplated by clauses (i) through (iii), would not have a Material Adverse
Effect.


 


(b)           The books of account
and other financial records of the Seller: 
(i) reflect all items of income and expense and all assets and
Liabilities required to be reflected therein in


 


14

















 


accordance with Korean GAAP applied on a
basis consistent with the past practices of the Seller, (ii) are in all
material respects complete and correct, and do not contain or reflect any
material inaccuracies or discrepancies and (iii) have been maintained in
accordance with good business and accounting practices.


 


SECTION 3.05.  Absence of Undisclosed Liabilities.  There are no material Liabilities of the
Seller of the kind which are recorded as liabilities in a balance sheet
prepared in accordance with Korean GAAP other than (i) Liabilities as of
January 31, 2004, set forth in Section 3.05 of the Disclosure
Schedule and (ii) Liabilities incurred since
January 31, 2004 in the ordinary course of business which do not have
a Material Adverse Effect.  Except as
set forth in Section 3.05 of the Disclosure Schedule, to the Seller’s best
knowledge, there are no Liabilities which are likely to be asserted against the
Seller and, if asserted, to have a Material Adverse Effect.


 


SECTION 3.06.  Acquired Assets.  Since the Reference Balance Sheet Date, all
the Purchased Assets have been acquired for consideration not less than the
fair market value of such Purchased Assets at the date of such acquisition.


 


SECTION 3.07.  Conduct in the Ordinary Course; Absence
of Certain Changes, Events and Conditions. 
Since the Reference Balance Sheet Date (or with respect to
Sections 3.07(b) and 3.07(d), September 30, 2003), except as set forth in
Section 3.07 of the Disclosure Schedule, the Seller has conducted its
business in the ordinary course and consistent with past practice.  As amplification and not limitation of the
foregoing, except as set forth in Section 3.07 of the Disclosure Schedule,
since the Reference Balance Sheet Date, the Seller has not:


 


(a)           permitted or allowed
any of the Purchased Assets to be subjected to any Encumbrance, other than
Permitted Encumbrances and Encumbrances that will be released at or prior to
the Closing;


 


(b)           except in the
ordinary course of business consistent with past practice, discharged or
otherwise obtained the release of any Encumbrance, or paid or otherwise
discharged any Liability, other than current liabilities reflected on the
latest balance sheet in the Financial Statements and current liabilities
incurred in the ordinary course of business consistent with past practice since
September 30, 2003;


 


(c)           amended, terminated,
cancelled or compromised any material claims or waived any other rights which
constitute a portion of the Purchased Assets;


 


(d)           sold, transferred,
leased, subleased, licensed or otherwise disposed of any Purchased Assets since
September 30, 2003;


 


(e)           incurred any
Indebtedness in excess of 50,000,000 Korean Won individually or 100,000,000
Korean Won in the aggregate;


 


(f)            made any loan to,
guaranteed any Indebtedness of or otherwise incurred any Indebtedness on behalf
of any Person, in each case, in excess of 50,000,000 Korean Won in the
aggregate;


 


15

















 


(g)           (i) granted any
increase, or announced any increase, in the wages, salaries, compensation,
bonuses, incentives, pension or other benefits payable by the Seller to any of
its employees, including any increase or change pursuant to any employee plan,
or (ii) established or increased or promised to increase any benefits
under any employee plan, in either case except in the ordinary course of
business or as required by Law or any collective bargaining agreement;


 


(h)           entered into any
agreement, arrangement or transaction related to the Purchased Assets with any
of its directors, officers, employees or stockholders (or with any relative,
beneficiary, spouse or Affiliate of such Persons);


 


(i)            disclosed any secret
or confidential Intellectual Property (except by way of issuance of a patent or
in accordance with the terms of a confidentiality agreement);


 


(j)            (i) abandoned,
permitted to lapse, sold, assigned, or granted any security interest in or to
any item of the Owned Intellectual Property, Licensed Intellectual Property or
IP Agreements, (ii) failed to perform or cause to be performed all
applicable filings, recordings and other acts, and pay or caused to be paid all
required fees and taxes, to maintain and protect its interest in each item of
Owned Intellectual Property, Licensed Intellectual Property and IP Agreements,
other than any such failure which would not have a Material Adverse Effect, (iii) granted to any third party
(other than customers in the ordinary course of business) any license with
respect to any Owned Intellectual Property or Licensed Intellectual Property or
(iv) developed, created or
invented any Intellectual Property jointly with any third party;


 


(k)           suffered any
Material Adverse Effect;


 


(l)            agreed, whether in
writing or otherwise, to take any of the actions specified in this
Section 3.07 or granted any options to purchase, rights of first refusal,
rights of first offer or any other similar rights or commitments with respect
to any of the actions specified in this Section 3.07, except as expressly
contemplated by this Agreement and the Ancillary Agreements;


 


(m)          entered into any
transaction, other than in the ordinary course and consistent with past
practice or where the consummation of such transaction would not have a
Material Adverse Effect;


 


(n)           terminated the
employment of any Key
Employee;


 


(o)           changed
its accounting methods or practices (including, without limitation, any change
in depreciation or amortization policies or rates) in any material respect;


 


(p)           made
any capital expenditures exceeding 50,000,000 Korean Won for a single item or
group of related items;


 


(q)           incurred
any destruction of, damage to or loss of any asset, business or customer
(whether or not covered by insurance) that resulted, or could reasonably be
expected to result, in losses of more than 50,000,000 Korean Won in the
aggregate;


 


16

















 


(r)            authorized any write-off (as uncollectible)
of any note or accounts receivable in excess of 50,000,000 Korean Won in the
aggregate except in the ordinary course and consistent with past practice and
in accordance with Korean GAAP;


 


(s)           settled, or agreed
to settle, any action, suit or proceeding relating to the Business or the
Purchased Assets; or


 


(t)            incurred any
Material Adverse Effect in the relationships with its key customers, suppliers,
vendors and agents or other key business partners.


 


SECTION 3.08.  Litigation.  Except as set forth in Section 3.08 of the Disclosure Schedule (which,
with respect to each Action set forth therein, sets forth the parties, nature
of the proceeding, date and method commenced, amount of charges or other relief
sought and, if applicable, paid or granted), there are no Actions by or against
the Seller or affecting any of the Purchased Assets pending before any
Governmental Authority (or, to the best knowledge of the Seller, threatened to
be brought by or before any Governmental Authority).  None of the matters set forth in Section 3.08 of the Disclosure
Schedule has or has had a Material Adverse Effect or could affect the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated hereby or thereby.  Except as set forth in Section 3.08 of
the Disclosure Schedule, neither the Seller nor any of the Purchased Assets is
subject to any Governmental Order (nor, to the best knowledge of the Seller,
are there any such Governmental Orders threatened to be imposed by any Governmental
Authority) which has or has had a Material Adverse Effect or could affect the
legality, validity or enforceability of this Agreement, any Ancillary Agreement
or the consummation of the transactions contemplated hereby or thereby.


 


SECTION 3.09.  Compliance with Laws.  (a) 
The Seller has conducted and continues to conduct the Business in
accordance with all Laws and Governmental Orders applicable to the Seller or
any of its properties or assets, including the Purchased Assets, and the Seller
is not in violation, and has not been in violation during the last three years,
of any such Law or Governmental Order, other than, in each case, any
noncompliance which does not have and is not reasonably likely to have a
Material Adverse Effect.


 


(b)           No Governmental Order
applicable to the Seller or any of the Purchased Assets has or has had a
Material Adverse Effect or could affect the legality, validity or
enforceability of this Agreement, any Ancillary Agreement or the consummation
of the transactions contemplated hereby or thereby.


 


SECTION 3.10.  Environmental and Other Permits and
Licenses; Related Matters.  Except
where the failure of a representation contained herein would not have a
Material Adverse Effect:


 


(a)           the Seller is in
compliance with all applicable Environmental Laws and all Environmental Permits
and all such Environmental Permits are valid and in full force and effect for
the conduct of the Business and where applicable, timely renewal applications
have been submitted for all such authorizations and permits;


 


17

















 


(b)           there has been no
Release or threatened Release of any Hazardous Material on, under, or from any
of the Seller’s real property or, during the period of the Seller’s ownership,
lease, use or occupancy thereof, on any property formerly owned, leased, used
or occupied by the Seller;


 


(c)           there are no
Environmental Claims pending or threatened against the Seller, and there are no
circumstances that can reasonably be expected to form the basis of any such
Environmental Claim; the Business is and for the past three years has been
conducted in compliance with all applicable Environmental Laws; and during the
past three years, the Seller has not received any written notice regarding
(i) any actual or alleged violation of any Environmental Law or
(ii) any liabilities or potential liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial
or corrective obligations, relating to the Seller or its facilities arising
under any Environmental Law; and


 


(d)           the Seller has no
actual or alleged liability, whether fixed or contingent, under any
Environmental Law.


 


SECTION 3.11.  Material Contracts.  (a) 
Section 3.11(a) of the Disclosure Schedule lists each of the
following contracts and agreements (including, without limitation, oral
agreements and informal arrangements) of the Seller (such contracts and
agreements, together with all IP Agreements set forth in
Section 3.12(a) of the Disclosure Schedule, being “Material Contracts”):


 


(i)            all contracts and
agreements relating to Indebtedness of the Seller in excess of 50,000,000
Korean Won;


 


(ii)           all contracts and
agreements with any Governmental Authority to which the Seller is a party;


 


(iii)          all contracts and
agreements between or among the Seller and/or any Affiliate of the Seller;


 


(iv)          all employment
contract, written or oral, with any executive officer or director of the
Seller;


 


(v)           all
contracts and agreements relating to restrictions on competition of the Seller
or any of its employees;


 


(vi)          all
joint venture contracts or arrangements or other arrangements involving sharing
of profits;


 


(vii)         all
agreements relating to the disposition or acquisition of assets or any interest
in any business enterprise other than those entered into in the ordinary course
and consistent with past practice; and


 


(viii)        all other contracts
and agreements, whether or not made in the ordinary course of business, the
absence of which would have a Material Adverse Effect.


 


18

















 


(b)           Except as otherwise
noted in Section 3.11(b) of the Disclosure Schedule, (i) each IP Agreement
is valid and binding on the parties thereto and is in full force and effect and
represents the entire agreement between the parties with respect to the subject
matter thereof; (ii) each Transferred IP Agreement is freely and fully
assignable to the Purchaser without penalty, impairment or other adverse
consequences; and (iii) each Transferred IP Agreement, upon consummation
of the transactions contemplated by this Agreement and the Ancillary
Agreements, shall continue in full force and effect without penalty, impairment
or other adverse consequence.  The
Seller is not in material breach of, or default under, any IP Agreement
and no event has occurred that, with notice or lapse of time, would constitute
a material breach or default or permit termination or modification of such IP
Agreement.  To the best knowledge of the
Seller after due inquiry, there is no material dispute concerning any IP
Agreement regarding the scope of such agreement, or performance under such
agreement including with respect to any payments to be made or received by
Seller thereunder.


 


(c)           The Seller has made
available to the Purchaser true and complete copies of all Material Contracts.


 


(d)           Except as set forth
on Section 3.11(d) of the Disclosure Schedule, there is no contract,
agreement or other arrangement granting any Person any preferential right to
purchase any of the Purchased Assets.


 


(e)           Except as set forth
in Section 3.11(e) of the Disclosure Schedule and except where the
failure of a representation contained herein would not have a Material Adverse
Effect, (i) the Seller is not in default under any Material Contracts, and,
to the best knowledge of the Seller, no other party is in default under any of
the Material Contracts; (ii) there is no outstanding notice of
cancellation or termination in connection with any Material Contracts; and
(iii) each of the Material Contracts is a valid and binding obligation of
the Seller and each of the other parties to such Material Contract and is in
full force and effect in accordance with its terms.


 


SECTION 3.12.  Intellectual Property.  (a) 
Section 3.12(a) of the Disclosure Schedule sets forth a true
and complete list of (i) all patents and patent applications, registered
copyrights (including computer software programs and mask works) and copyright
applications included in the Owned Intellectual Property; (ii) all IP
Agreements; and (iii) all other Owned Intellectual Property and Licensed
Intellectual Property material to the Business.


 


(b)           To the best
knowledge of the Seller after due inquiry, the operation of the Business as
currently conducted or as contemplated to be conducted and the use of the Owned
Intellectual Property and Licensed Intellectual Property in connection
therewith do not conflict with, infringe, misappropriate or otherwise violate
the Intellectual Property or other proprietary rights, including rights of
privacy, publicity and endorsement, of any third party, and no Actions or
Claims are pending or, to the best knowledge of the Seller after due inquiry,
threatened against the Seller alleging any of the foregoing, except as set
forth in Section 3.12(b) of the Disclosure Schedule.


 


(c)           Except as disclosed
in Section 3.12(c) of the Disclosure Schedule, the Seller is the exclusive
owner of the entire and unencumbered right, title and interest in and to the
Owned Intellectual Property, and to the best knowledge of the Seller after due
inquiry, the Seller has a


 


19

















 


valid right to use the Owned Intellectual
Property and Licensed Intellectual Property in the ordinary course of the
Business as presently conducted or as contemplated to be conducted subject only
to the terms of IP Agreements in the case of Licensed Intellectual
Property.  Except as disclosed in
Section 3.12(c) of the Disclosure Schedule, the Seller is the applicant or
assignee of record in all applications and owner of record in all registrations
set forth in Section 3.12(a) of the Disclosure Schedule, and no
opposition, extension of time to oppose, interference, rejection, or refusal to
register has been received by the Seller or any of its Affiliates in connection
with any such application.


 


(d)           No Owned
Intellectual Property or, to the best knowledge of the Seller after due
inquiry, any Licensed Intellectual Property, is subject to any outstanding
decree, order, injunction, judgment or ruling restricting the use of such
Intellectual Property or that would impair the validity or enforceability of
such Intellectual Property.


 


(e)           The Owned
Intellectual Property and the Licensed Intellectual Property include all of the
Intellectual Property (other than Trademarks and the Retained Trade Secrets)
used in the ordinary day-to-day conduct of the Business, and there
are no other items of Intellectual Property (other than Trademarks and the
Retained Trade Secrets) that are material to the ordinary day-to-day
conduct of the Business.  The Seller
does not use any material Intellectual Property owned or licensed by any
Affiliate of the Seller.  The Owned
Intellectual Property and, to the best knowledge of the Seller after due
inquiry, the Licensed Intellectual Property are subsisting, valid and
enforceable, and have not been adjudged invalid or unenforceable in whole or
part.


 


(f)            Except as disclosed
in Section 3.12(f) of the Disclosure Schedule, no Actions or Claims have
been asserted or are pending or, to the best knowledge of the Seller after due
inquiry, threatened against the Seller (i) based upon or challenging or
seeking to deny or restrict the use by the Seller of any of the Owned
Intellectual Property or Licensed Intellectual Property; (ii) alleging
that any services provided by, processes used by, or products manufactured or
sold by the Seller infringe or misappropriate any Intellectual Property right
of any third party; or (iii) alleging that the Licensed Intellectual
Property is being licensed or sublicensed in conflict with the terms of any
license or other agreement.


 


(g)           To the best
knowledge of the Seller after due inquiry, no Person is engaging in any
activity that infringes the Owned Intellectual Property or the Licensed
Intellectual Property.  Except as
disclosed in Section 3.12(g) of the Disclosure Schedule, the Seller has
not granted any license or other right to any third party with respect to the
Owned Intellectual Property or the Licensed Intellectual Property.  Assuming the obtaining of all approvals
referred to in Sections 4.03, 8.01(e), 8.01(f) and 8.02(j) the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements will not result in the impairment of any of the Owned
Intellectual Property or the Licensed Intellectual Property.


 


(h)           The Seller’s
Software does not incorporate any GNU or “open” source code or object code
under which the Seller’s Software is subject to the GNU general public license,
GNU lesser general public license and other “copyleft” license.  The Seller has obtained all approvals, to
the extent necessary for its Business, for exporting the Seller’s Software
outside Korea and importing the Seller’s Software into any country in which the
Seller’s Software is now sold or


 


20

















 


licensed for use, and all such export and
import approvals in the United States and throughout the world are valid,
current, outstanding and in full force and effect.  No rights in the Seller’s Software have been transferred to any
third party except through customer licenses granted in the ordinary course of
business.  The Seller has the right to
use all software development tools, library functions, compilers, and other
third party software that are material to the Business or that are required to
operate or modify the Seller’s Software.


 


(i)            The Seller has
taken reasonable steps in accordance with normal industry practice to maintain
the confidentiality of the trade secrets and other confidential Intellectual
Property used in connection with the Business. 
Except as disclosed in Section 3.12(i) of the Disclosure Schedule,
to the best knowledge of the Seller (i) there has been no misappropriation
of any material trade secrets or other material confidential Intellectual
Property used in connection with the Business by any Person; (ii) no
employee, independent contractor or agent of the Seller has misappropriated any
trade secrets of any other Person in the course of performance as an employee,
independent contractor or agent of the Seller; and (iii) no employee,
independent contractor or agent of the Seller is in default or breach of any
term of any employment agreement, nondisclosure agreement, assignment of
invention agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of Intellectual Property.


 


(j)            All current and
past technical employees, contractors and consultants of the Seller have
assigned to the Seller all inventions, designs and works made by them during
such employment with the Seller and are under written obligation to continue to
assign all inventions, designs and works made by them during such employment
with the Seller.


 


SECTION 3.13.  Tangible Personal Property.  (a) 
Section 3.13(a) of the Disclosure Schedule lists each item or
distinct group of machinery, equipment, tools, supplies, furniture, fixtures,
personalty, vehicles and other tangible personal property (the ”Tangible
Personal Property”) used in the Business as of the dates set forth in
Section 3.13(a) of the Disclosure Schedule.


 


(b)           Section 3.13(b)
of the Disclosure Schedule sets forth a true and complete list of all
leases and subleases for Tangible Personal Property and any and all material
ancillary documents pertaining thereto (including all amendments, consents and
evidence of commencement dates and expiration dates).


 


(c)           The Seller or BTI
has the full right to exercise any renewal options contained in the leases and
subleases pertaining to the Tangible Personal Property on the terms and
conditions contained therein and upon due exercise would be entitled to enjoy
the use of each item of leased Tangible Personal Property for the full term of
such renewal options.


 


SECTION 3.14.  Purchased Assets.  (a) 
Except as disclosed in Section 3.14 of the Disclosure Schedule, the
Seller or BTI owns, leases or has the legal right to use, sell, transfer and
assign all right, title and interest in and to all the Purchased Assets,
including the Owned Intellectual Property, the Licensed Intellectual Property
and Transferred IP Agreements.  Except
as set forth in Section 3.14 of the Disclosure Schedule, the Seller or BTI
has good and marketable title to, or, in the case of leased or subleased
Purchased Assets, valid and subsisting


 


21

















 


leasehold
interests in, all the Purchased Assets, free and clear of all Encumbrances,
except Permitted Encumbrances.  BTI does
not own any of the Owned Intellectual Property, the Licensed Intellectual
Property and Transferred IP Agreements.


 


(b)           The Purchased Assets
constitute all the Intellectual Property (other than Trademarks and the
Retained Trade Secrets) forming a part of, used, held or intended to be used
in, and all the Intellectual Property (other than Trademarks and the Retained
Trade Secrets) necessary in the conduct of, the Business.  The Seller and BTI have caused the Purchased
Assets described in Section 2.01(iv) to be maintained in accordance with
good business practice, and all such Purchased Assets are in good operating
condition, subject to typical wear and tear, and repair and are suitable for
the purposes for which they are used by the Seller or BTI.


 


(c)           Assuming the
obtaining of the approval referred to in Sections 4.03, 8.01(e), 8.01(f)
and 8.02(j), the Seller and BTI have the complete and unrestricted power and
unqualified right to sell, assign, transfer, convey and deliver the Purchased
Assets to the Purchaser without penalty or other adverse consequences.  Following the consummation of the transactions
contemplated by this Agreement and the BTI Agreement and the execution of the
instruments of transfer contemplated by this Agreement, the Purchaser will own,
with good, valid and marketable title, or lease, under valid and subsisting
leases, or otherwise acquire the interests of the Seller and BTI in the
Purchased Assets, free and clear of any Encumbrances, other than Permitted
Encumbrances, and without incurring any penalty or other adverse consequence,
including any increase in rentals, royalties, or license or other fees imposed
as a result of, or arising from, the consummation of the transactions
contemplated by this Agreement.


 


SECTION 3.15.  Employee Benefit Matters.  Neither the Seller nor any entity that is
(or at any relevant time was) a member of a ”controlled group of corporations”
with or under “common control” (as defined in Section 414(b), (c), (m) or
(o) of the Code) with the Seller sponsors, maintains, contributes to or has an
obligation to contribute to, or has sponsored, maintained, contributed to or
had an obligation to contribute to, any “pension plan” (as defined in
Section 3(2) of ERISA) that is (or was at any relevant time) subject to
Title IV of ERISA, any “multiemployer plan” (as defined in
Section 3(37) of ERISA) (a ”Multiemployer Plan”) or a single
employer pension plan (within the meaning of Section 4001(a)(15) of ERISA)
for which the Seller could incur liability under Section 4063 or 4064 of
ERISA (a ”Multiple Employer Plan”).  The Seller has not incurred any liability under, arising out of,
or by operation of, Title IV of ERISA (other than liability for premiums
to the Pension Benefit Guaranty Corporation arising in the ordinary course),
including any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA
or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists that could give rise to any such liability.


 


SECTION 3.16.  Labor Matters.  Except as disclosed in Section 3.16 of
the Disclosure Schedule, (a)  the Seller is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by the Seller in connection with the Business, and currently there are
no organizational campaigns, petitions or other unionization activities seeking
recognition of a collective bargaining unit which could affect the Business;
(b) there are no controversies, strikes, slowdowns or work stoppages
pending or, to the best knowledge of the Seller, threatened between the Seller
and any of its employees employed in


 


22

















 


connection with
the Business, and the Seller has not experienced any such controversy, strike,
slowdown or work stoppage within the past three years; (c)  the Seller has
not breached or otherwise failed to comply with the provisions of any
collective bargaining or union contract applicable to persons employed by the
Seller in connection with the Business, and there are no grievances outstanding
against the Seller under any such agreement or contract which could have a
Material Adverse Effect; (d) the Seller is currently in compliance with
all applicable Laws relating to the employment of persons employed by the
Seller in connection with the Business, including those related to wages,
hours, collective bargaining and the payment and withholding of taxes and other
sums as required by the appropriate Governmental Authority; (e) there is
no unfair labor practice claim or complaint against the Seller pending or, to
the best knowledge of the Seller, threatened before any Governmental Authority;
and (f) there has not been any Material Adverse Effect, and the Seller
does not believe that there will be any Material Adverse Effect, as a result of
the impact of the transactions contemplated hereunder upon the Seller’s
relations with its employees.


 


SECTION 3.17.  Employees.  (a)  Section 3.17 of
the Disclosure Schedule lists the current annual salary rates and bonuses
of each current salaried employee, officer or consultant of the Seller.


 


(b)           All directors,
officers, management employees, and technical and professional employees of the
Seller are under written obligation to the Seller to maintain in confidence all
confidential or proprietary information acquired by them in the course of their
employment and to assign to the Seller all inventions made by them within the
scope of their employment during such employment and for a reasonable period
thereafter.


 


SECTION 3.18.  Taxes.  Except as disclosed in Section 3.18 of the Disclosure Schedule
and subject to any exceptions that would not have a Material Adverse Effect,
(a) all Tax Returns required to be filed by or with respect to the Seller,
the Purchased Assets or the Business (including any consolidated, combined or
unitary Tax Return that includes the Seller) have been timely filed;
(b) all Taxes required to be shown on such Tax Returns or otherwise due by
or with respect to the Seller, the Purchased Assets or the Business have been
timely paid; (c) all such Tax Returns (insofar as they relate to the
Seller, the Purchased Assets or the Business) are true, correct and complete in
all material respects; (d) no adjustment relating to such Tax Returns has
been proposed formally or informally by any Governmental Authority (insofar as either
relates to the Seller, the Purchased Assets or the Business or could result in
liability of the Seller on the basis of joint and/or several liability) and, to
the knowledge of the Seller, no basis exists for any such adjustment;
(e) there are no pending or, to the knowledge of the Seller, threatened
actions or proceedings for the assessment or collection of Taxes against the
Seller, BTI, the Purchased Assets or the Business or any Person that was
included in the filing of a Tax Return with the Seller on a consolidated,
combined or unitary basis; (f) there
are no Tax liens on any of the Purchased Assets; (g)  the Seller has not
received any notice or inquiry from any jurisdiction where the Seller does not
currently file Tax Returns to the effect that such filings may be required with
respect to the Business or that the Business may otherwise be subject to
taxation by such jurisdiction; (h) the Seller has properly and timely
withheld, collected or deposited all amounts required to be withheld, collected
or deposited in respect of Taxes; (i) there
are no Tax investigations, inquiries or audits by any Tax authority in progress
relating to the Purchased Assets or the Business, nor has the Seller received
any written notice indicating


 


23

















 


that a Governmental Authority intends to conduct such an audit or
investigation; and (j)  the Seller has not been audited by any relevant Tax
authority or any other Governmental Authority, domestic or foreign, with
respect to any Taxes or Tax Returns.


 


SECTION 3.19.  Insurance.  All material assets, properties and risks of the Seller,
including the Purchased Assets, are, and for the past three years have been,
covered by valid and, except for insurance policies that have expired under
their terms in the ordinary course, currently effective insurance policies or
binders of insurance (including general liability insurance, property insurance
and workers’ compensation insurance) issued in favor of the Seller with
responsible insurance companies, in such types and amounts and covering such
risks as are consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of the Seller.


 


SECTION 3.20.  Full Disclosure.  (a) 
The Seller is not aware of any facts pertaining to (i) the Seller which
is reasonably likely to have a Material Adverse Effect or (ii) the Purchased
Assets which could have a Material Adverse Effect, and which have not been
disclosed in this Agreement or the Disclosure Schedule or otherwise
disclosed to the Purchaser by the Seller in writing.


 


(b)           No representation or
warranty of the Seller in this Agreement, nor any certificate furnished or to
be furnished to the Purchaser pursuant to this Agreement, or in connection with
the transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.


 


SECTION 3.21.  Brokers.  No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements based
upon arrangements made by or on behalf of the Seller.


 


SECTION 3.22.  Preferences; Solvency.  (a) 
The consummation of the transactions contemplated herein are not and
will not be subject to any challenge under any Insolvency Statute or similar
Law, whether as preference, fraudulent conveyance or otherwise; and (b) no
Insolvency Event has occurred to the Seller, and the Seller is not aware of any
reason to believe that any Insolvency Event is reasonably likely to occur to
the Seller (i) due to the execution and performance of this Agreement or
the consummation of the transactions contemplated herein; (ii) at or prior
to the Closing Date; or (iii) for a period of two years after the Closing
Date.  For the purposes of this
Section 3.22, “Insolvency Event” means with respect to any Person
(A) a commencement of a voluntary case concerning such Person under an
Insolvency Statute; (B) a commencement of an involuntary case against such
Person under an Insolvency Statute; (C) an appointment of a custodian
under any applicable Insolvency Statute for, or such custodian is put in charge
of, all or any substantial part of the property of such Person; (D) a
commencement of any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution or similar Law of any jurisdiction,
whether now or hereafter in effect relating to such Person is commenced by such
Person or by any other Person; (E) a Government Order whereby such Person
is adjudicated insolvent or bankrupt; (F) any order of relief or other
Government Order approving any case or proceeding under


 


24

















 


Insolvency
Statute; (G) a general assignment by such Person for the benefit of
creditors or otherwise a general arrangement by such Person for the
restructuring of its liabilities with creditors; (H) a determination that
the total amount of liabilities of such Person exceeds the total amount of its
assets; (I) a suspension of payment by such Person of its liabilities
generally; or (J) a determination that such Person is unable to pay, or
shall be unable to pay, its debts, generally as they become due.  For the purposes of this Section 3.22,
“Insolvency Statute” means the Bankruptcy Act of Korea, the Corporate
Reorganization Act of Korea, the Composition Act of Korea, and the Corporate
Restructuring Promotion Act of Korea, or any national, provincial, local,
foreign or other insolvency, liquidation, rehabilitation or similar statute or
any successor statutes thereto, as in effect from time to time.


 


SECTION 3.23.  Principal Creditors.  Other than the Principal Creditors, there is
no other holder of Indebtedness of the Seller that is owed more than
100,000,000 Korean Won.


 


SECTION 3.24.  Accounts Receivable.  Except as disclosed in Section 3.24 of
the Disclosure Schedule, all accounts receivable of the Seller represent sales
actually made or services actually performed by the Seller in the ordinary
course of business, subject to any exceptions as would not, in the aggregate,
have a Material Adverse Effect.  All
accounts receivable have been adequately reserved against bad debts, except
where the failure to so reserve would not have a Material Adverse Effect.  There has been no Material Adverse Effect in
the composition of the accounts receivable in terms of aging.


 


SECTION 3.25.  Accounts Payable.  All accounts payable of the Seller represent
purchases of goods actually made or services actually received by the Seller in
the ordinary course of business, subject to any exceptions as would not, in the
aggregate, have a Material Adverse Effect.


 


SECTION 3.26.  Competition.  The Seller is not subject to any order of,
or any investigation or proceeding pending or, to the best knowledge of the
Seller after due inquiry, threatened before, the Korean Fair Trade Commission
(the ”KFTC”) or the equivalent Governmental Authority of any other
jurisdiction made under the Monopoly Regulation and Fair Trade Act of
Korea (the ”FTL”) or the equivalent legal requirement of any other
jurisdiction in connection with the Business or any of the Purchased Assets.  The Seller has not received any
communication or request for information relating to any aspect of the Business
or any of the Purchased Assets, including any official or unofficial request or
recommendation with respect to the pricing of any product manufactured or sold
by the Business from the KFTC or any other Governmental Authority.  The Seller is not bound by any restrictive
covenant or other non-competition restriction with respect to any aspect of the
Business.  No agreement, arrangement or
conduct (by omission or otherwise) of the Seller or BTI in connection with the
Business or any of the Purchased Assets has been, to the best knowledge of the
Seller after due inquiry, the subject of any investigation, report or decision
by the KFTC or any other Governmental Authority within a three-year period
prior to the date hereof.


 


SECTION 3.27.  Fair Price.  The Seller has conducted a fair and extensive valuation of the
Purchased Assets in which it has determined the Purchase Price to be fair and
commercially reasonable.


 


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SECTION 3.28.  Board Approval.  The Seller’s Board of Directors, by
resolution duly adopted by a unanimous vote at a meeting duly called and held
and at which all members were present and voted and not subsequently rescinded
or modified in any way, has duly (i) determined that this Agreement and
the transactions contemplated hereby are fair to and in the best interests of
the Seller, its shareholders and its creditors; (ii) approved this Agreement
and the transactions contemplated hereby; and (iii) resolved to recommend
that the shareholders of the Seller approve and adopt this Agreement and
approve the transactions contemplated hereby.


 


SECTION 3.29.  Past Due Obligations.  Section 3.29 of the Disclosure
Schedule sets forth all liabilities under Korean GAAP of the Seller that
are past due as of February 15, 2004 and the number of days such
obligations have been past due.


 


SECTION 3.30.  Availability of Documents.  The Seller has delivered, or caused to be
delivered, to the Purchaser copies of all documents listed in the Disclosure
Schedule or otherwise referred to herein. 
Such copies are true and complete and include all amendments,
supplements and modifications thereto or waivers currently in effect
thereunder.


 


SECTION 3.31.  Disclaimer of the Seller.  Except for the representations and
warranties expressly set forth in this Article III or in certificates
delivered to the Purchaser pursuant to this Agreement, (i) the Seller
makes no representations or warranties as to the Purchased Assets, ALL OTHER
WARRANTIES, INCLUDING ANY IMPLIED OR OTHER WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE BEING HEREBY EXPRESSLY DISCLAIMED and
(ii) the Purchased Assets will be transferred AS IS, WITH ALL FAULTS.


 


ARTICLE IV



REPRESENTATIONS AND WARRANTIES

OF THE PURCHASER


 


As an inducement to the Seller, 3R and Dr. Jang to
enter into this Agreement, the Purchaser hereby represents and warrants to the
Seller, 3R and Dr. Jang as follows:


 


SECTION 4.01.  Organization and Authority of the
Purchaser.  The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all necessary corporate
power and authority to enter into this Agreement and the Ancillary Agreements
to which it is a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby.  Subject to the approval of the Purchaser’s
Board of Directors contemplated in Section 8.02(m), the execution and
delivery by the Purchaser of this Agreement and the Ancillary Agreements to
which it is a party, the performance by the Purchaser of its obligations
hereunder and thereunder and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of the Purchaser.  This Agreement has been, and upon their
execution the Ancillary Agreements to which the Purchaser is a party shall have
been, duly executed and delivered by the Purchaser, and (assuming due
authorization, execution and delivery by the Seller) this Agreement
constitutes, and upon their execution the Ancillary Agreements to which the
Purchaser is a party shall constitute, legal, valid


 


26

















 


and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance
with their respective terms.


 


SECTION 4.02.  No Conflict.  Assuming the making and obtaining of all
filings, notifications, consents, approvals, authorizations and other actions
referred to in Sections 4.03, 8.02(e) and 8.02(m), except as may result
from any facts or circumstances relating solely to the Seller, the execution,
delivery and performance by the Purchaser of this Agreement and the Ancillary
Agreements to which it is a party do not and will not (a) violate,
conflict with or result in the breach of any provision of the certificate of
incorporation or by-laws of the Purchaser, (b) conflict with or
violate any Law or Governmental Order applicable to the Purchaser, which
conflict or violation would have a material adverse effect on the Purchaser or
its ability to perform its obligations under this Agreement or any of the Ancillary
Agreements to which it is a party, or (c) conflict with, or result in any
breach of, constitute a default (or event which with the giving of notice or
lapse of time, or both, would become a default) under, require any consent
under, or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which the Purchaser is a party, which would
adversely affect the ability of the Purchaser to carry out its obligations
under, and to consummate the transactions contemplated by, this Agreement or
the Ancillary Agreements.


 


SECTION 4.03.  Governmental Consents and Approvals.  The execution, delivery and performance by
the Purchaser of this Agreement and each Ancillary Agreement to which the
Purchaser is a party do not and will not require any consent, approval,
authorization or other order of, action by, filing with, or notification to any
Governmental Authority, other than such consent, approval, authorization,
order, action, filing or notification that would not adversely affect the
ability of the Purchaser to carry out its obligations under, and to consummate
the transactions contemplated by, this Agreement or the Ancillary Agreements
and except for (i) the approval from the Korean Fair Trade Commission for
the purchase of the Purchased Assets and (ii) a foreign investment report
under the Foreign Investment Promotion Law for incorporation of an Affiliate of
the Purchaser in Korea.


 


SECTION 4.04.  Brokers.  Except for Credit Suisse First Boston LLC, no broker, finder
or investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Purchaser.  The Purchaser shall be solely responsible
for payment of the fees and expenses of Credit Suisse First Boston LLC.


 


SECTION 4.05.  Funds.  On the Closing Date, the Purchaser shall have sufficient cash
funds to pay the Purchase Price due on the Closing Date.


 


ARTICLE V



ADDITIONAL AGREEMENTS


 


SECTION 5.01.  Conduct of Business.  (a) 
The Seller (A) shall, from the date hereof to the Closing Date,
(i) use its best efforts to keep available to the Purchaser the services


 


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of the employees
of the Seller and (ii) not engage in any practice, take any action, fail
to take any action or enter into any transaction which could cause any
representation or warranty of the Seller to be materially untrue at and as of
the Closing Date or result in a breach of any covenant made by the Seller in
this Agreement; (B) shall, from the date hereof to the date two years from
the Closing Date, use its best efforts to use its available cash generated in
the ordinary course of business to pay and discharge the amounts owed by the
Seller; and (C) shall not, from the date hereof to the date two years from
the Closing Date, (i) declare or pay any cash dividend on its stock or
repurchase or redeem shares of its stock (other than in exchange for stock of
the Seller); (ii) make payments, directly or indirectly, to any Affiliates
of the Seller with respect to debt existing on the date hereof or on the
Closing Date in an aggregate amount exceeding U.S. $100,000; or
(iii) engage in business other than the Business if doing so would
materially adversely affect the Seller’s ability to perform its obligations
under this Agreement or the Ancillary Agreements.


 


(b)           Except
as described in Section 5.01(b) of the Disclosure Schedule, the Seller
covenants and agrees that, between the date hereof and the Closing Date,
without the prior written consent of the Purchaser, the Seller will not do any
of the things enumerated in the second sentence of Section 3.07 (including
clauses (a) through (t)
thereof).


 


SECTION 5.02.  Access to Information.  (a) 
From the date hereof until the Closing, upon reasonable notice, the
Seller shall cause its officers, directors, employees, agents, representatives,
accountants and counsel to: 
(i) afford the officers, employees, agents, accountants, counsel,
financing sources and representatives of the Purchaser reasonable access,
during normal business hours and by prearrangement through the Sellers’
representative, Baxon Kim, to the offices, properties, plants, other facilities
and books and records of the Seller and to those officers, directors,
employees, agents, accountants and counsel of the Seller and (ii) furnish
to the officers, employees, agents, accountants, counsel, financing sources and
representatives of the Purchaser such additional financial and operating data
and other information regarding the assets, properties, liabilities and
goodwill of the Seller (or legible copies thereof) as the Purchaser may from
time to time reasonably request.


 


(b)           In order to
facilitate the resolution of any claims made by or against or incurred by the
Purchaser in connection with the Purchased Assets after the Closing or for any
other reasonable purpose, for a period of seven years following the Closing,
the Seller shall (i) retain the books and records which relate to the
Business and its operations for periods prior to the Closing and which shall
not otherwise have been delivered to the Purchaser and (ii) upon
reasonable notice, afford the officers, employees, agents and representatives
of the Purchaser reasonable access (including the right to make photocopies, at
the Purchaser’s expense), during normal business hours, to such books and records.


 


SECTION 5.03.  Confidentiality.  (a) 
Each of Dr. Jang, 3R and the Seller agrees to, and shall cause its
agents, representatives, Affiliates, employees, officers and directors to:  (i) treat and hold as confidential (and
not disclose or provide access to any Person to) all information relating to
trade secrets, processes, patent applications, product development, price,
customer and supplier lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, new personnel
acquisition plans and all other confidential or proprietary


 


28

















 


information with
respect to the Purchased Assets, (ii) in the event that Dr. Jang, 3R or
the Seller or any such agent, representative, Affiliate, employee, officer or
director becomes legally compelled to disclose any such information, provide
the Purchaser with prompt written notice of such requirement so that the
Purchaser may seek a protective order or other remedy or waive compliance with
this Section 5.03, (iii) in the event that such protective order or
other remedy is not obtained, or the Purchaser waives compliance with this
Section 5.03, furnish only that portion of such confidential information
which is legally required to be provided and exercise its best efforts to
obtain assurances that confidential treatment will be accorded such
information, and (iv) promptly furnish (prior to, at, or as soon as practicable
following, the Closing) to the Purchaser any and all copies (in whatever form
or medium) of all such confidential information then in the possession of Dr.
Jang, 3R or the Seller or any of its agents, representatives, Affiliates,
employees, officers and directors and, except as otherwise required by Section
5.02(b), destroy any and all additional copies then in the possession of Dr.
Jang, 3R or the Seller or any of its agents, representatives, Affiliates,
employees, officers and directors of such information and of any analyses,
compilations, studies or other documents prepared, in whole or in part, on the
basis thereof; provided, however, that this sentence shall not
apply to (i) any information that, at the time of disclosure, is available
publicly and was not disclosed in breach of this Agreement by Dr. Jang, 3R, the
Seller, or their agents, representatives, Affiliates, employees, officers or
directors or (ii), with respect to the Seller, such information that is allowed
to be disclosed pursuant to Section 5 of the Intellectual Property License
Agreement if and only if the Intellectual Property License Agreement has not
been terminated at the time of such disclosure; and provided  further
that, with respect to Intellectual Property, specific information shall not be
deemed to be within the foregoing exception merely because it is embraced in
general disclosures in the public domain. 
In addition, with respect to Intellectual Property, any combination of features
shall not be deemed to be within the foregoing exception merely because the
individual features are in the public domain unless the combination itself and
its principle of operation are in the public domain.  Each of Dr. Jang, 3R and the Seller agrees and acknowledges that
remedies at law for any breach of its obligations under this Section 5.03 are
inadequate and that in addition thereto the Purchaser shall be entitled to seek
equitable relief, including injunction and specific performance, in the event
of any such breach.


 


(b)           Effective as of
Closing, the obligations of the Purchaser or any of its Affiliates pursuant to
any non-disclosure or confidentiality agreement between the Seller, Dr.
Jang, 3R on one hand and the Purchaser or any of its Affiliates on the other
hand shall terminate with respect to the Purchased Assets.


 


SECTION 5.04.  Regulatory and Other Authorizations;
Notices and Consents. 
(a)  Each of the Purchaser and the Seller shall use all
reasonable efforts to obtain all authorizations, consents, orders and approvals
of all third parties, including all Governmental Authorities and officials,
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement and the Ancillary
Agreements to which it is a party and will cooperate fully with each other in
promptly seeking to obtain all such authorizations, consents, orders and
approvals.


 


(b)           The Seller shall
give promptly such notices to third parties and use its best efforts to obtain
such third party consents as the Purchaser may in its sole discretion deem
necessary or desirable in connection with the transactions contemplated by this
Agreement.


 


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(c)           Except as disclosed
in Section 5.04(c) of the Disclosure Schedule, the Seller knows of no reason
why all the consents, approvals and authorizations necessary for the
consummation of the transactions contemplated by this Agreement will not be
received, other than as a result of effects arising solely from actions or
inactions of the Purchaser or its Affiliates.


 


(d)           Notwithstanding
anything to the contrary contained herein, the Seller shall use its best
efforts to obtain the Creditor Consent from each Principal Creditor.  The Seller shall use its best efforts to obtain
the Creditor Consent from any other holder of its Indebtedness that is owed
more than 100,000,000 Korean Won on the Closing Date.


 


SECTION 5.05.  Notice of Developments.  Prior to the Closing, each of Dr. Jang, 3R
and the Seller shall promptly notify the Purchaser in writing of (a) all
events, circumstances, facts and occurrences known to the Seller, Dr. Jang or
3R, as the case may be, arising subsequent to the date hereof which could
result in any breach of a representation or warranty (if made at and as of such
time subsequent to the date hereof) or covenant of the Seller, Dr. Jang or 3R
in this Agreement or which could have the effect of making any representation
or warranty of the Seller, Dr. Jang or 3R in this Agreement untrue or incorrect
in any respect (if made at and as of such time subsequent to the date hereof)
and (b) all other material developments affecting the Purchased Assets or
creditor relations or employee relations of the Seller.


 


SECTION 5.06.  No Solicitation or Negotiation.  Each of the Seller, 3R and Dr. Jang agrees
that between the date hereof and the earlier of (a) the Closing and
(b) the termination of this Agreement, neither the Seller nor any of its
Affiliates, officers, directors, representatives or agents will (i) solicit,
initiate, consider, encourage or accept any other proposals or offers from any
Person (A) relating to any acquisition or purchase of all or a controlling
portion of the capital stock of the Seller or any Purchased Assets, (B) to
enter into any merger, consolidation or other business combination with the
Seller or (C) to enter into a recapitalization, reorganization or any
other extraordinary business transaction involving or otherwise relating to the
Seller without the approval of the Purchaser, which approval shall not be
unreasonably withheld or delayed, or (ii) participate in any discussions,
conversations, negotiations and other communications regarding, or furnish to
any other Person any information with respect to, or otherwise cooperate in any
way, assist or participate in, facilitate or encourage any effort or attempt by
any other Person to seek to do any of the foregoing.  Each of the Seller, 3R and Dr. Jang immediately shall cease and
cause to be terminated all existing discussions, conversations, negotiations
and other communications with any Persons conducted heretofore with respect to
any of the foregoing.  Each of the
Seller, 3R and Dr. Jang shall notify the Purchaser promptly if any such
proposal or offer, or any inquiry or other contact with any Person with respect
thereto, is made and shall, in any such notice to the Purchaser, indicate in
reasonable detail the identity of the Person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer,
inquiry or other contact.  The Seller
agrees not to, without the prior written consent of the Purchaser, release any
Person from, or waive any provision of, any confidentiality or standstill
agreement to which the Seller is a party.


 


SECTION 5.07.  Use of Intellectual Property.  Except as set forth in the Intellectual
Property License Agreement, from and after the Closing, neither the Seller nor
any of


 


30

















 


its Affiliates
shall use any of the Owned Intellectual Property or any of the Licensed
Intellectual Property.


 


SECTION 5.08.  Non-ompetition.  (a) 
For a period of four years after the Closing (the ”Restricted
Period”), none of the Seller, 3R and Dr. Jang shall engage, directly or
indirectly, in any business anywhere in the world that manufactures, produces
or supplies products or services of the kind manufactured, produced or supplied
by the Business as of the Closing or, without the prior written consent of the
Purchaser, directly or indirectly, own an interest in, manage, operate, join,
control, lend money or render financial or other assistance to or participate
in or be connected with, as an officer, employee, partner, stockholder,
consultant or otherwise, any Person that competes with the Purchaser in
manufacturing, producing or supplying products or services of the kind
manufactured, produced or supplied by the Business as of the Closing; provided,
however, that the Seller, 3R, Dr. Jang, and any of their respective
subsidiaries or successors from time to time shall be allowed to engage in such
business in Korea to manufacture, produce or supply such products or services
solely for use within Korea using the license transferred to the Seller
pursuant to the Intellectual Property License Agreement; and provided, further,
that this Section 5.08(a) shall not restrict the Seller, 3R or Dr. Jang
from owning up to 5% of the voting power of any publicly-traded
company.  For avoidance of doubt,
products that are manufactured in Korea but used outside of Korea shall not
qualify as products for “use within Korea,” and where a product is used shall
be determined by the site of the original installation of such product; and provided,
further that this Section 5.08(a) shall not restrict the Seller or
3R from complying with and enforcing contractual obligations to and of
customers outside of Korea pursuant to agreements in effect on the date hereof
and listed on Section 5.08(a) of the Disclosure Schedule (provided that
such agreements may not be amended, modified or extended without the
Purchaser’s consent).


 


(b)           During the
Restricted Period, the Purchaser, its Affiliates or any Person that licenses or
sublicenses the Purchased Assets described in Section 2.01(a)(i) from the
Purchaser, its Affiliates or such licensor or sublicensor after the Closing
(other than any licensees or sublicensees referred to in the Intellectual
Property License Agreement) shall not engage, directly or indirectly, in
manufacturing, producing or supplying products or services solely for use
within Korea of the kind manufactured, produced or supplied using such
Purchased Assets that are licensed to the Seller pursuant to the Intellectual
Property License Agreement.  For
avoidance of doubt, products that are manufactured in Korea but used outside of
Korea shall not qualify as products for “use within Korea,” and where a product
is used shall be determined by the site of the original installation of such
product.


 


(c)           The Restricted
Period shall be extended by the length of any period during which the Seller,
3R, Dr. Jang or the Purchaser, as the case may be, is in breach of the terms of
this Section 5.08.


 


(d)           Each of the Seller,
3R and Dr. Jang acknowledges that the covenants of the Seller, 3R and Dr. Jang
set forth in this Section 5.08 are an essential element of this Agreement and
that, but for the agreement of the Seller, 3R and Dr. Jang to comply with these
covenants, the Purchaser would not have entered into this Agreement or the
Intellectual Property License Agreement. 
Each of the Seller, 3R and Dr. Jang acknowledges that this
Section 5.08 constitutes an independent covenant that shall not be
affected by performance or nonperformance of any


 


31

















 


other provision of this Agreement by the
Purchaser.  Each of the Seller, 3R and
Dr. Jang has independently consulted with its counsel and after such
consultation agrees that the covenants set forth in this Section 5.08 are
reasonable and proper.


 


SECTION 5.09.  Training Services.  Following the Closing, the Seller shall provide,
or cause to be provided, to the Purchaser certain services, all as more fully
set forth in a transition services agreement in the form and substance to be
mutually agreed upon by the Seller and the Purchaser prior to the Closing and
executed at the Closing (the ”Training Agreement”), which agreement
shall provide, among other things, (i) for the payment of an aggregate of
U.S. $[***], subject to adjustment, based upon the Seller’s achievement of
milestones to be agreed upon by the Purchaser and the Seller; and
(ii) that the entire amount of any such payments shall be used promptly to
pay obligations owed to creditors of the Seller and that prior to any such
payments the Seller shall present to the Purchaser for approval, which approval
shall not be unreasonably withheld or delayed, a list of such creditors and the
amounts to be paid to each such creditor; provided, further, that
the Purchaser may pay such creditors directly instead of making any such
payments to the Seller and any and all such payments to such creditors will be
credited towards the payment referenced in Section 5.09(i).


 


SECTION 5.10.  Manufacturing Agreement.  Following the Closing, the Seller shall
provide, or cause to be provided, to the Purchaser certain manufacturing
services, all as more fully set forth in a manufacturing agreement in form and
substance to be mutually agreed upon by the Seller and the Purchaser prior to
the Closing and executed at the Closing (the ”Manufacturing Agreement”),
which agreement shall provide, among other things, payment by the Purchaser of
the Seller’s [***]; provided that such cost shall be calculated in accordance
with Korean GAAP.


 


SECTION 5.11.  Distributorship Agreement.  Following the Closing, the Purchaser shall
appoint the Seller as the Purchaser’s exclusive distributor for [***] from the
Closing Date and as the Purchaser’s non-exclusive distributor thereafter
in Korea for all of the Purchaser’s products, all as more fully set forth in a
distributorship agreement in form and substance to be mutually agreed upon by
the Seller and the Purchaser prior to the Closing and executed at the Closing
(the ”Distributorship Agreement”), which agreement shall provide,
among other things, for [***].


 


SECTION 5.12.  Further Action with Respect to Purchased
Assets.  (a)  As soon as reasonably practical after the
date hereof, the Seller shall provide the Purchaser with a complete and entire
list of all actions that must be taken with respect to any of the Purchased
Assets by the Seller or any other Person within sixty (60) days of the
Closing Date, including the payment of any registration, maintenance or renewal
fees or the filing of any documents, applications or certificates for the
purpose of maintaining, perfecting or preserving or renewing any rights in any
Purchased Assets.


 


(b)           The Seller shall use
its best efforts to have any security interest in the Purchased Assets
described in Section 2.01(a)(iv) promptly removed, but in any event prior to
Closing.


 


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(c)           The Seller shall use
its best efforts to promptly obtain (i) the consents referred to in
Section 8.01(f) and (ii) consents of third parties to transfer the
Transferred IP Agreements to the Purchaser.


 


(d)           The Seller shall use
its best efforts to (i) obtain all consents and approvals specified in
Section 3.03 of the Disclosure Schedule and (ii) complete the recording of
assignments to certain patents as specified in Item 7 to
Section 3.12(c) of the Disclosure Schedule.


 


SECTION 5.13.  Intellectual Property License Agreement.  Concurrently with the Closing, the Purchaser
and/or one or more of its Affiliates and the Seller shall enter into the
Intellectual Property License Agreement.


 


SECTION 5.14.  Transition Services.  Following the Closing, the Seller shall
provide, or cause to be provided, to the Purchaser certain services related to
the Business that may be reasonably requested by the Purchaser at a reasonable
service fee, all as more fully set forth in a transition services agreement in
form and substance to be mutually agreed upon by the Seller and the Purchaser
prior to the Closing and executed at the Closing (the ”Transition
Services Agreement”).


 


SECTION 5.15.  Further Action.  (a) 
If, after the Closing Date, the Seller becomes aware of, or the Purchaser
brings to the attention of the Seller, any assets of the Seller or BTI that
should have been transferred as of the Closing Date but were not so
transferred, then such assets shall be transferred, or caused to be
transferred, to the Purchaser (or to one or more Affiliates of the Purchaser
designated by the Purchaser) as soon as possible.  This provision, however, shall not limit, in any way, the rights
and remedies of the Purchaser under this Agreement.


 


(b)           Each of the parties
hereto shall use all reasonable efforts to take, or cause to be taken, all
appropriate action, do or cause to be done all things necessary, proper or
advisable under applicable Law, and to execute and deliver such documents and
other papers, as may be required to carry out the provisions of this Agreement
and consummate and make effective the transactions contemplated by this
Agreement.


 


(c)           The Seller shall
promptly notify the Purchaser regarding any resignation of any Key Employees.


 


(d)           Each of the Seller,
Dr. Jang and 3R shall not disclose to any other Person, including any of its or
his customers or employees, any information regarding the transactions
contemplated herein, including the signing of this Agreement, without the
written consent of the Purchaser; provided, however, that such
disclosure may be made to such Principal Creditor which has signed a
non-disclosure agreement with the Seller stating, among other things, that such
Principal Creditor shall keep confidential the information regarding the
transactions contemplated herein, including the signing of this Agreement.  The Purchaser acknowledges that (i) the
Seller has provided prior to the date hereof certain limited information, which
does not include the identity of the Purchaser, regarding this transaction to
certain of its employees and


 


33

















 


(ii) certain employees of the Purchaser have
had limited interaction with certain employees of the Seller.


 


(e)           The Seller shall,
within five Business Days from the date the Purchaser provides to the Seller a
list of IP Agreements that will not be part of the Transferred IP Agreements,
confirm in writing to the Purchaser that it is not in breach of, or default
under, any Transferred IP Agreement and no event has occurred that, with notice
or lapse of time, would constitute a breach or default or permit termination or
modification of such Transferred IP Agreement, or if there is any such breach,
default, termination or modification, shall provide details of such breach,
default, termination or modification in writing to the Purchaser.


 


SECTION 5.16.  2003 Audited Financial Statements.  As soon as practicable upon completion
thereof, but in no event later than March 31, 2004, the Seller shall
deliver to the Purchaser a true and complete copy of the audited balance sheet
of the Seller for the fiscal year ended December 31, 2003, and the
related audited statements of income, retained earnings, stockholders’ equity
and changes in financial position of the Seller, together with all related notes
and schedules thereto, accompanied by the reports thereon of the Seller’s
independent accountants.


 


ARTICLE VI



EMPLOYEE MATTERS


 


SECTION 6.01.  Key Employees.  (a) 
The Seller shall use its best efforts to continue to employ, or cause to
be employed, through the Closing Date the employees of the Seller set forth in
Section 6.01(a) of the Disclosure Schedule (the ”Key Employees”)
on substantially the same terms and conditions as they were employed as of the
date of this Agreement.


 


(b)           Section 6.01(b)
of the Disclosure Schedule sets forth the employee benefit package for the Key
Employees, including the current annual salary rates, bonuses, deferred or
contingent compensation, pension and other like benefits paid or payable (in
cash or otherwise) in 2002 and 2003, the date of employment and a description
of the position and job function for each of the Key Employees.


 


(c)           From the Purchaser’s
designation of the Key Employees to the Closing Date, the Seller shall use its
best efforts to facilitate the hiring of the Key Employees.  Notwithstanding anything to the contrary,
neither the Purchaser nor any of its Affiliates shall have any obligation to
make any offer of employment to any such employees.  It is the intention of the Purchaser that as of the date hereof,
subject to among other things, Section 8.02, the Purchaser expects to extend
offers of employment to a majority of the Key Employees.


 


SECTION 6.02.  Required Filings.  Prior to the Closing Date, the Seller shall
make any filing and shall deliver any notices required in connection with the
transaction contemplated herein under any collective bargaining agreement
involving the Seller or any relevant Laws of Korea, so that the Purchaser shall
have no liability under (a) such Laws of


 


34

















 


Korea with respect
to any events occurring at or prior to the Closing Date or (b) such
collective bargaining agreement.


 


ARTICLE VII



TAX MATTERS


 


SECTION 7.01.  Tax Cooperation and Exchange of
Information.  The Seller and the
Purchaser shall provide each other with such cooperation and information as
either of them reasonably may request of the other in filing any Tax Return,
amended Tax Return or claim for refund, determining a liability for Taxes or a
right to a refund of Taxes, participating in or conducting any audit or other
proceeding in respect of Taxes or making representations to or furnishing
information to parties subsequently desiring to purchase any part of the
Purchased Assets from the Purchaser. 
Such cooperation and information shall include providing copies of
relevant Tax Returns or portions thereof, together with accompanying schedules,
related work papers and documents in their possession relating to rulings or
other determinations by Tax authorities.  The Seller and the Purchaser shall make themselves (and their
respective employees) available on a basis mutually convenient to both parties
to provide explanations of any documents or information provided under this
Section 7.01.  Each of the Seller
and the Purchaser shall retain all Tax Returns, schedules and work papers,
records and other documents in its possession (or in the possession of its
Affiliates) relating to Tax matters relevant to the Purchased Assets for each
taxable period first ending after the Closing and for all prior taxable periods
until the later of (a) the expiration of the statute of limitations of the
taxable periods to which such Tax Returns and other documents relate, without
regard to extensions except to the extent notified by the other party in
writing of such extensions for the respective Tax periods, or (b) six
years following the due date (without extension) for such Tax Returns.  After such time, before the Seller or the
Purchaser shall dispose of any such documents in its possession (or in the
possession of its Affiliates), the other party shall be given the opportunity,
after 90 days’ prior written notice, to remove and retain all or any part of
such documents as such other party may select (at such other party’s expense).  Any information obtained under this
Section 7.01 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of Tax Returns or claims for refund or
in conducting an audit or other proceeding.


 


SECTION 7.02.  Conveyance Taxes.  (a) 
The Seller shall be liable for and shall hold the Purchaser harmless
against any Conveyance Taxes which become payable in connection with the
transactions contemplated by this Agreement; provided that the Purchaser
shall deliver to the Seller by wire transfer to an account designated by the
Seller any amount received by the Purchaser from any tax authorities in
connection with the payment of any such Conveyance Taxes by the Seller within
five Business Days from such receipt. 
The Purchaser and the Seller shall promptly cooperate in the filing of
all necessary documents and all Tax Returns with respect to all such Taxes,
including any available pre-sale filing procedures.  For purposes of clarity, notwithstanding any
shortfall between the amount of any Conveyances Taxes paid by the Seller and
any amount the Purchaser receives from the tax authorities and delivers to the
Seller, the Seller shall have no recourse to the Purchaser or any of its
Affiliates for any such shortfall.


 


35

















 


(b)           The Purchaser and
the Seller will use their respective commercially reasonable efforts to
minimize any Taxes payable in connection with the assignment, transfer or
conveyance of the Purchased Assets hereunder.


 


ARTICLE VIII



CONDITIONS TO CLOSING


 


SECTION 8.01.  Conditions to Obligations of the Seller.  The obligations of the Seller to consummate
the transactions contemplated by this Agreement shall be subject to the
fulfillment or written waiver, at or prior to the Closing, of each of the
following conditions:


 


(a)           Representations
and Warranties.  The representations
and warranties of the Purchaser contained in this Agreement (i) that are
not qualified by “materiality” or “Material Adverse Effect” shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the Closing Date with the same force and
effect as if made as of the Closing Date and (ii) that are qualified by
“materiality” or “Material Adverse Effect” shall have been true and correct
when made and shall be true and correct as of the Closing Date with the same
force and effect as if made as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of that date, and
the Seller shall have received a certificate from the Purchaser to such effect
signed by a duly authorized officer thereof;


 


(b)           Covenants.  The covenants and agreements contained in
this Agreement to be complied with by the Purchaser on or before the Closing
Date shall have been complied with in all material respects, and the Seller
shall have received a certificate from the Purchaser to such effect signed by a
duly authorized officer thereof;


 


(c)           No Proceeding or
Litigation.  No Action shall have
been commenced by or before any Governmental Authority against either the
Seller or the Purchaser, seeking to restrain or materially and adversely alter
the transactions contemplated by this Agreement which is likely to render it
impossible or unlawful to consummate such transactions; provided, however,
that the provisions of this Section 8.01(c) shall not apply if the Seller
has directly or indirectly solicited or encouraged any such Action;


 


(d)           Ancillary
Agreements.  The Purchaser shall
have executed and delivered to the Seller each of the Ancillary Agreements to
which it is a party;


 


(e)           Regulatory
Approval.  If the Person designated
by the Purchaser to purchase the Purchased Assets is not an entity organized
and existing under the laws of Korea, the regulatory authorities of Korea shall
have approved the transfer of the Owned Intellectual Property and Transferred
IP Agreements to such Person;


 


(f)            Consent of
Certain Patent Owners.  The Seller
shall have received written consents from co-owners of patents set forth in
Section 3.12(c) to the Disclosure Schedule to transfer rights of the
Seller in such patents to the Purchaser unless the


 


36

















 


Purchaser decides not to include such patents for which written
consents have not been received among the Purchased Assets described in
Section 2.01(a)(i); and


 


(g)           Opinion of
Counsel.  The Purchaser shall have
delivered to the Seller an opinion of counsel for the Purchaser in form and
substance reasonably satisfactory to the Seller with respect to enforceability
of this Agreement and due authorization on the part of the Purchaser to enter
into this Agreement and the Ancillary Agreements to which it is a party and
perform its obligations under this Agreement and the Ancillary Agreements to
which it is a party, with typical qualifications pertaining to such opinion.


 


SECTION 8.02.  Conditions to Obligations of the
Purchaser.  The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:


 


(a)           Representations
and Warranties.  The representations
and warranties of the Seller, 3R and Dr. Jang contained in this Agreement
(i) that are not qualified by “materiality” or “Material Adverse Effect”
shall have been true and correct in all material respects when made and shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if made as of the Closing Date and (ii) that are
qualified by “materiality” or “Material Adverse Effect” shall have been true
and correct when made and shall be true and correct as of the Closing Date with
the same force and effect as if made as of the Closing Date, except, in each
case, to the extent such representations and warranties are as of another date,
in which case, such representations and warranties shall be true and correct as
of that date, and the Purchaser shall have received a certificate of the Seller
to such effect signed by duly authorized officers thereof;


 


(b)           Covenants.  The covenants and agreements contained in
this Agreement to be complied with by the Seller on or before the Closing Date
shall have been complied with in all material respects, and the Purchaser shall
have received a certificate from the Seller to such effect signed by a duly
authorized officer thereof;


 


(c)           No Proceeding or
Litigation.  No Action shall have
been commenced or threatened by or before any Governmental Authority against
either the Seller or the Purchaser, seeking to restrain or materially and
adversely alter the transactions contemplated by this Agreement which is likely
to render it impossible or unlawful to consummate such transactions or which
could have a Material Adverse Effect; provided, however, that the
provisions of this Section 8.02(c) shall not apply if the Purchaser has
directly or indirectly solicited or encouraged any such Action;


 


(d)           Ancillary
Agreements.  The Seller shall have
executed and delivered to the Purchaser each of the Ancillary Agreements to
which it is a party;


 


(e)           Consents and
Approvals.  The Purchaser and the
Seller shall have received, each in form and substance satisfactory to the
Purchaser, all authorizations, consents, orders and approvals of all
Governmental Authorities and officials (including those described in
Section 3.03 of the Disclosure Schedule and Section 4.03) and all
third


 


37

















 


party consents (including those in connection with the transfer of the
Transferred IP Agreements to the Purchaser) necessary for the consummation of
the transactions contemplated by this Agreement and the Ancillary Agreements,
including all third party consents required under (A) any Purchased Assets
or (B) any relevant labor Laws in Korea;


 


(f)            Due Diligence.  The Purchaser shall have completed all of
its legal, accounting, financial, employee and creditor due diligence with respect
to the Seller and its Affiliates and shall in its reasonable business judgment
have decided that the results of such due diligence from the date hereof to the
Closing, together with such due diligence completed on or prior to the date
hereof, do not and will not lead to a frustration of its purpose of the
transactions contemplated in this Agreement and the Ancillary Agreements;


 


(g)           No Material
Adverse Effect.  No event or events
shall have occurred, or be reasonably likely to occur, which, individually or
in the aggregate, have, or could have, a Material Adverse Effect;


 


(h)           Employees.  (i) At least 80% of the Key Employees to
whom the Purchaser has made offers of employment with compensation packages
(including benefits) which are comparable to such Key Employee’s current
compensation packages with the Seller, on or prior to the Closing shall have
accepted the Purchaser’s offer of employment and each of the Key Employees who
accepts the Purchaser’s offer of employment shall have entered into the Purchaser’s
standard confidentiality and assignment of intellectual property rights
agreements with the Purchaser and (ii) the composition of such Key Employees
accepting the Purchaser’s offer of employment shall be completely satisfactory
to the Purchaser;


 


(i)            Release of
Encumbrances.  Any and all
Encumbrances on the Purchased Assets shall have been have been released;


 


(j)            Creditors
Approval.  Each of the Principal
Creditors and any other holder of Indebtedness of the Seller that is owed more
than 100,000,000 Korean Won on the Closing Date shall have executed and
delivered the Creditor Consent to each of the Seller and the Purchaser and such
Creditor Consent shall be effective;


 


(k)           Opinion of
Counsel.  The Seller shall have
delivered to the Purchaser the opinion of counsel for the Seller in form and
substance reasonably acceptable to the Purchaser, with typical qualifications
pertaining to such opinion;


 


(l)            BTI Assets.  Simultaneously with the Closing, BTI shall
have transferred the BTI Assets, if any, to the Purchaser;


 


(m)          The Purchaser’s
Board Approval.  This Agreement and
the transactions contemplated by this Agreement shall have been duly approved
by the Board of Directors of the Purchaser; and


 


38



















(n)                                 Recording
Assignments.  The Seller shall have
completed the recording of assignments to certain patents as specified in
Item 7 to Section 3.12(c) of the Disclosure Schedule other than the
recording of assignment to one patent (Patent No. 74614) in Taiwan.


 


ARTICLE IX



INDEMNIFICATION


 


SECTION 9.01.  Survival of Representations and
Warranties.  (a)  The representations and warranties of the
Seller, 3R and Dr. Jang contained in this Agreement and the Ancillary
Agreements shall survive the Closing until the second anniversary of the
Closing; provided, however, that the representations and
warranties made pursuant to Section 3.14 shall survive indefinitely.  Neither the period of survival nor the
liability of the Seller, 3R and Dr. Jang with respect to the Seller’s, 3R’s and
Dr. Jang’s representations and warranties shall be reduced by any investigation
made at any time by or on behalf of the Purchaser.  If written notice of a claim has been given prior to the expiration
of the applicable representations and warranties by the Purchaser to the
Seller, 3R and Dr. Jang, then the relevant representations and warranties shall
survive as to such claim, until such claim has been finally resolved.


 


(b)                                 The
representations and warranties of the Purchaser contained in this Agreement and
the Ancillary Agreements shall survive the Closing until the second anniversary
of the Closing.  Neither the period of
survival nor the liability of the Purchaser with respect to the Purchaser’s representations
and warranties shall be reduced by any investigation made at any time by or on
behalf of the Seller.  If written notice
of a claim has been given prior to the expiration of the applicable
representations and warranties by the Seller to the Purchaser, then the
relevant representations and warranties shall survive as to such claim, until
such claim has been finally resolved.


 


SECTION 9.02.  Indemnification by the Seller, 3R and Dr.
Jang.  The Purchaser and its
Affiliates, officers, directors, employees, agents, successors and assigns (each
a ”Purchaser Indemnified Party”) shall be indemnified and held
harmless by the Seller, 3R and Dr. Jang, on a joint and several basis, for and
against any and all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including attorneys’ and
consultants’ fees and expenses) actually suffered or incurred by them
(including any Action brought or otherwise initiated by any of them)
(hereinafter a ”Loss”), arising out of or resulting from:


 


(a)                                  the
breach of any representation or warranty made by the Seller, 3R and Dr. Jang
contained in the Acquisition Documents;


 


(b)                                 the
breach of any covenant or agreement by the Seller, 3R and Dr. Jang contained in
the Acquisition Documents;


 


(c)                                  any
and all Losses suffered or incurred by the Purchaser by reason of or in
connection with any claim or cause of action of any third party, including
Motorola, Inc., to the extent arising out of any action, inaction, event,
condition, liability or obligation of


 


39

















 


the Seller occurring or existing on or prior to the Closing (other than
the Assumed Liabilities) and any and all Losses suffered or incurred by the
Purchaser by reason of or in connection with any claim or cause of action of
Motorola Inc. arising out of the Seller’s 
use of any of the Purchased Assets pursuant to the Intellectual Property
License Agreement on or after the Closing; or


 


(d)                                 any
Claim for the benefit of the Seller’s creditors and relating to this Agreement
or the transactions contemplated hereby, or arising out of any insolvency of
the Seller.


 


To the extent that the Seller’s, 3R’s or Dr. Jang’s
undertakings set forth in this Section 9.02 may be unenforceable, the
Seller, 3R or Dr. Jang, as the case may be, shall contribute the maximum amount
that it is permitted to contribute under applicable Law to the payment and
satisfaction of all Losses incurred by the Purchaser Indemnified Parties.  To the extent the Purchaser offsets any of
the Holdback Amount to cover any Losses pursuant to Section 2.07, 3R, Dr.
Jang or the Seller shall not be required to indemnify the Purchaser Indemnified
Party pursuant to this Section 9.02 for such Losses previously covered by
such offset of the Holdback Amount.


 


SECTION 9.03.  Indemnification by the Purchaser.  The Seller and its Affiliates, officers,
directors, employees, agents, successors and assigns (each a ”Seller
Indemnified Party”) shall be indemnified and held harmless by the Purchaser
for and against any and all Losses, arising out of or resulting from:


 


(a)                                  the
breach of any representation or warranty made by the Purchaser contained in the
Acquisition Documents;


 


(b)                                 the
breach of any covenant or agreement by the Purchaser contained in the
Acquisition Documents; or


 


(c)                                  any
and all Losses suffered or incurred by the Seller or its Affiliates after the
Closing by reason of or in connection with any claim or cause of action of
Motorola Inc. arising out of the Purchaser’s use of the Purchased Assets after
the Closing.


 


To the extent that the Purchaser’s undertakings set
forth in this Section 9.03 may be unenforceable, the Purchaser shall
contribute the maximum amount that it is permitted to contribute under
applicable Law to the payment and satisfaction of all Losses incurred by the
Seller Indemnified Parties.


 


SECTION 9.04.  Notice of Loss; Third Party Claims.  (a)  An Indemnified Party shall
give the Indemnifying Party notice of any matter which an Indemnified Party has
determined has given or could give rise to a right of indemnification under
this Agreement, within 60 days of such determination stating the amount of the
Loss, if known, and method of computation thereof, and containing a reference
to the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises; provided that with respect to any
indemnification arising out of Section 9.02(a) or 9.03(a), other than such
indemnification arising out of breach of representations and warranties made
pursuant to Section 3.14, such notice shall be given no later than 30 days
after the second anniversary of the Closing Date.


 


40

















 


(b)                                 If
an Indemnified Party shall receive notice of any Action, audit, demand or
assessment (each, a ”Third Party Claim”) against it or which may
give rise to a claim for Loss under this Article IX, within 30 days of the
receipt of such notice, the Indemnified Party shall give the Indemnifying Party
notice of such Third Party Claim; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from
any of its obligations under this Article IX except to the extent that the
Indemnifying Party is materially prejudiced by such failure and shall not
relieve the Indemnifying Party from any other obligation or Liability that it
may have to any Indemnified Party otherwise than under this
Article IX.  If the Indemnifying
Party demonstrates, to the reasonable satisfaction of the Indemnified Party,
the financial capability of the Indemnifying Party to indemnify the Indemnified
Party hereunder against any Losses that may result from such Third Party Claim,
then the Indemnifying Party shall be entitled to assume and control the defense
of such Third Party Claim at its expense and through counsel of its choice if
it gives notice of its intention to do so to the Indemnified Party within five
days of the receipt of such notice from the Indemnified Party; provided,
however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the reasonable
judgment of the Indemnified Party for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel in each jurisdiction for which the
Indemnified Party determines counsel is required, at the expense of the
Indemnifying Party; provided, further, that if (i) the
Indemnified Party and the Indemnifying Party cannot come to an agreement as to
the obligation of the Indemnifying Party to indemnify the Indemnified Party
against any and all Losses that may result from such Third Party Claim within 6
months from the date the Indemnifying Party assumes the defense of such Third
Party Claim or (ii) the Indemnified Party reasonably believes that the
Indemnifying Party is not diligently defending such Third Party Claim, then the
Indemnified Party shall be entitled to assume and control the defense of such
Third Party Claim.  In the event that
the Indemnifying Party exercises the right to undertake any such defense
against any such Third Party Claim as provided above, the Indemnified Party
shall cooperate with the Indemnifying Party in such defense and make available
to the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses,
pertinent records, materials and information in the Indemnified Party’s
possession or under the Indemnified Party’s control relating thereto as is
reasonably required by the Indemnifying Party. 
Similarly, in the event the Indemnified Party is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnifying Party shall cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party’s
expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably required by the Indemnified Party.  No such Third Party Claim may be settled by
the Indemnifying Party without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed.


 


SECTION 9.05.  Limitations on Liability.  (a) 
In no event will any party be liable to the other, pursuant to this
Article IX or otherwise, for [***].


 


(b)                                 In
no event will the aggregate liability of the Seller, 3R and Dr. Jang, on the
one hand, and the Purchaser, on the other hand, pursuant to this
Article IX, with respect to its or their, as the case may be,
representations and warranties exceed U.S. $[***].


 


41

















 


(c)                                  Notwithstanding
anything in this Agreement to the contrary, in no event shall any Indemnified
Party recover, by claim for indemnification or otherwise, any Losses until the aggregate
of all Losses recoverable by any Indemnified Party exceeds U.S. $[***], in
which event the full amount of all Losses shall be recoverable by any
Indemnified Party in accordance with the terms of this Agreement.


 


SECTION 9.06.  Exclusivity.  The remedies set forth in Section 2.07
and this Article IX are the exclusive remedies, pursuant to this Agreement
or otherwise, for any breach of any representation or warranty by any party in
or pursuant to this Agreement.


 


SECTION 9.07.  Knowing Fraud.  Nothing in Section 9.05 or 9.06 shall
be a defense to any claim otherwise assertable against any Person for such
Person’s own knowing fraud.


 


SECTION 9.08.  Tax Treatment.  (a) 
The Seller and the Purchaser agree that all payments made by any of the
Seller, 3R and Dr. Jang on the one hand and the Purchaser on the other hand to
or for the benefit of the other under this Article IX, under other
indemnity provisions of this Agreement and for any misrepresentations or
breaches of warranties or covenants shall be treated as adjustments to the
Purchase Price for Tax purposes and that such treatment shall govern for
purposes hereof except to the extent that the Laws of a particular jurisdiction
provide otherwise, in which case such payments shall be made in an amount sufficient
to indemnify the relevant party on an after-Tax basis.


 


ARTICLE X



TERMINATION, AMENDMENT AND WAIVER


 


SECTION 10.01.  Termination.  This Agreement may be terminated at any time
prior to the Closing:


 


(a)                                  by
the Purchaser if, between the date hereof and the Closing:  (i) an event or condition occurs that
has resulted in a Material Adverse Effect, (ii) any representations and
warranties of the Seller contained in this Agreement (A) that are not qualified
by “materiality” or “Material Adverse Effect” shall not have been true and
correct in all material respects when made or (B) that are qualified by
“materiality” or “Material Adverse Effect” shall not have been true and correct
when made, (iii) the Seller shall not have complied in all material
respects with the covenants or agreements contained in this Agreement to be
complied with by it or (iv) the Seller makes a general assignment for the
benefit of creditors, or any proceeding shall be instituted by or against the
Seller seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization;


 


(b)                                 by
the Seller if, between the date hereof and the Closing:  (i) any representations and warranties of
the Purchaser contained in this Agreement (A) that are not qualified by
“materiality” or “Material Adverse Effect” shall not have been true and


 


42

















 


correct in all material respects when made or (B) that are qualified by
“materiality” or “Material Adverse Effect” shall not have been true and correct
when made, (ii) the Purchaser shall not have complied in all material respects
with the covenants or agreements contained in this Agreement to be complied
with by it or (iii) the Purchaser makes a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the Purchaser
seeking to adjudicate any of them a bankrupt or insolvent, or seeking
liquidation, winding up or reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization;


 


(c)                                  by
either the Seller or the Purchaser if the Closing shall not have occurred within 90 days from the date hereof;
provided, however, that the right to terminate this Agreement
under this Section 10.01(c) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to occur on or
prior to such date;


 


(d)                                 by
either the Seller or the Purchaser in the event that any Governmental Authority
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; or


 


(e)                                  by
the mutual written consent of the Seller and the Purchaser.


 


SECTION 10.02.  Effect of Termination.  In the event of termination of this
Agreement as provided in Section 10.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except (a) as set forth in Sections 5.03 and 11.01 and (b) that
nothing herein shall relieve any party from liability for any breach of this
Agreement.


 


SECTION 10.03.  Amendment.  This Agreement may not be amended or modified except (a) by
an instrument in writing signed by, or on behalf of, the Seller, 3R, Dr. Jang
and the Purchaser or (b) by a waiver in accordance with
Section 10.04.


 


SECTION 10.04.  Waiver.  Any term or condition to this agreement may be waived, or the
time for the performance of any of the obligations may be extended, at any time
by the party that is entitled to the benefit thereof.  Any such extension or waiver shall be valid only if set forth in
an instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shall
not be construed as a waiver of any subsequent breach or a subsequent waiver of
the same term or condition, or a waiver of any other term or condition of this
Agreement.  The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
any of such rights.  Other than as
specified in Sections 9.06 and 9.07, all rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.


 


43

















 


ARTICLE XI


 


GENERAL PROVISIONS


 


SECTION 11.01.  Expenses.  Except as otherwise specified in this Agreement, all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such costs
and expenses, whether or not the Closing shall have occurred.


 


SECTION 11.02.  Notices.  All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed
to have been duly given or made upon receipt) by delivery in person, by an
internationally recognized overnight courier service, by facsimile or
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties hereto at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this Section 11.02):


 


(a)                                                                                  if
to the Seller:



Hyundai Syscomm, Inc.

San 136-1
Ami-ri, Bubal-eub
Ichon-si, Kyongki-do

467-701 Korea

Telecopy:  (8231) 639-8198

Attention:  Dr. Seong Ik Jang


 


 


with a copy to:


 


Bingham McCutchen LLP

1900 University Avenue

East Palo Alto, CA 94303

USA

Telecopy: (650) 849-4800

Attention: Bart Deamer, Esq.


 


and


 


Shin & Kim

Ace Tower 7th Floor, 1-170 Soonhwa-dong,

Chung-ku, Seoul 100-712

Korea

Telecopy: (822) 756-6226

Attention: Hwon Jeong, Esq.


 


44

















 


(b)                                                                                 if
to 3R or Dr. Jang:



4fl Boramae Academy Tower

395-69 Shindaebang-Dong

Tongjak-Gu, Seoul 156-010

Korea

Telecopy:  (822) 840-3614

Attention:  Dr. Seong Ik Jang


 


(c)                                                                                  if
to the Purchaser:



UTStarcom, Inc.

1275 Harbor Bay Parkway

Alameda, CA  94502

USA

Telecopy:  (510) 864-8802

Attention:  General Counsel


 


with a copy to:


 


Shearman & Sterling LLP


1080 Marsh Road


Menlo Park, CA  94025


USA


Telecopy:  (650) 838-3699


Attention: 
Carmen Chang, Esq.


 


and


 


Kim & Chang


223 Naeja – Dong


Chongro-Ku, Seoul


110-720 Korea


Telecopy:  (822) 3703-1590


Attention: 
Young Jay Ro, Esq.


 


SECTION 11.03.  Public Announcements.  Unless otherwise required by Law or
securities exchange rule or regulation, none of the parties hereto shall make,
or cause to be made, any press release or public announcement in respect of the
Acquisition Documents, including this Agreement and the Ancillary Agreements,
or the transactions contemplated hereby and thereby or otherwise communicate
with any news media without prior written consent of (i) the Seller, in the
case of the Purchaser, and (ii) the Purchaser, in the case of the Seller, 3R or
Dr. Jang, and the parties hereto shall cooperate as to the timing and contents
of any such press release, public announcement or communication.  Notwithstanding the foregoing, none of the
Seller, 3R and Dr. Jang shall make, or cause to be made, any such press release
or public


 


45

















 


announcement
without the prior written consent of the Purchaser.  The parties hereto shall cooperate as to the mutually agreeable
time to make such press release or public announcement.


 


SECTION 11.04.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect for so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to each party hereto.  Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.


 


SECTION 11.05.  Entire Agreement.  This Agreement and the Ancillary Agreements
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.


 


SECTION 11.06.  Assignment.  This Agreement may not be assigned by operation of law or
otherwise without the express written consent of the Seller and the Purchaser
(which consent may be granted or withheld in the sole discretion of the Seller
or the Purchaser); provided, however, that the Purchaser may
assign this Agreement or any of its rights and obligations hereunder to one or
more Affiliates of the Purchaser without the consent of the Seller, in which
case the Purchaser shall enter into an express written guarantee in favor of
the Seller of the performance of all covenants and obligations under or
pursuant to this Agreement undertaken by such assignee.


 


SECTION 11.07.  No Third Party Beneficiaries.  Except for the provisions of Article IX
relating to indemnified parties, this Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors and
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, including any union or any employee or
former employee of the Seller, any legal or equitable right, benefit or remedy
of any nature whatsoever, including any rights of employment for any specified
period, under or by reason of this Agreement.


 


SECTION 11.08.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.


 


SECTION 11.09.  Dispute Resolution.  Any dispute, controversy or claim arising
out of or in connection with this Agreement shall be finally settled by
arbitration under the Rules of Arbitration of the International Chamber of
Commerce by three arbitrators appointed in accordance with the Rules of
Arbitration of the International Chamber of Commerce.  The venue of the arbitration shall be San Francisco, California,
USA.  The language of the proceedings
shall be English.


 


46

















 


SECTION 11.10.  Headings.  The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement.


 


SECTION 11.11.  Counterparts.  This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.


 


SECTION 11.12.  Interpretation and Rules of
Construction.  In this Agreement,
except to the extent otherwise provided or that the context otherwise requires:


 


(a)                                  whenever
the words “include,” “includes” or “including” are used in this Agreement, they
are deemed to be followed by the words “without limitation”;


 


(b)                                 the
words “hereof,” “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement;


 


(c)                                  the
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms;


 


(d)                                 any
Law defined or referred to herein or in any agreement or instrument that is
referred to herein means such Law or statute as from time to time amended,
modified or supplemented, including by succession of comparable successor Laws;


 


(e)                                  references
to a Person are also to its successors and permitted assigns; and


 


(f)                                    the
use of “or” is not intended to be exclusive unless expressly indicated
otherwise.


 


47

















 


IN WITNESS WHEREOF, the Seller, 3R, Dr. Jang and the
Purchaser have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.


 


	
   

  	
  HYUNDAI
  SYSCOMM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3R
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DR.
  SEONG-IK JANG

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Seong Ik-Jang

  	
   

  
	
   

  	
   

  	
  Name:  SeongIk-Jang

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UTSTARCOM,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael J. Sophie

  	
   

  
	
   

  	
   

  	
  Name:  Michael J. Sophie

  



 


48

















 


Exhibit A


 


List of Principal
Creditors


 


 


Kookmin Bank


 


Korea Development Bank


 


Korea Exchange Bank


 


Hana Bank


 


J-1 Bank


 


Hynix Semiconductor Inc.


 


Jo Yon


 


3R


 


BTI


 


A-1

















 


Exhibit B


 


Form of Creditor
Consent


 


 


               ,
2004


 


Hyundai Syscomm, Inc.


San 136-1


Ami-ri, Bubal-eub


Ichon-si, Kyongki-do


467-701 Korea


 


UTStarcom, Inc.


1275 Harbor Bay Parkway


Alameda, CA 94502


USA


 


Re:                               Creditor
Consent


 


We write this
letter agreement to Hyundai Syscomm, Inc. (“HSI”) and UTStarcom, Inc. (“UTSI”)
in respect of all of the outstanding loans and obligations owed by HSI to the
undersigned creditor and to provide to HSI and UTSI our consent to the terms of
the transactions contemplated by the APA (as defined below).  Reference is made hereby to the Asset
Purchase Agreement (the “APA”) dated as of February 26, 2004 by and among HSI,
UTSI, 3R Inc. and Dr. Seong-Ik Jang and to the previously-executed
Non-Disclosure and Confidentiality Agreement (the “NDA”) by and between HSI and
the undersigned creditor.  All
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the APA and the NDA.


 


We understand the following to be true:


 


1.                                       UTSI
and HSI have entered into the APA and the APA contemplates that certain
intellectual property of HSI (the “Assets”), including but not limited to
patents, software license agreements, copyrights, etc., will be sold by HSI to
UTSI or a subsidiary of UTSI.  The
purchase price for the Assets will be approximately U.S. $[***] plus a
contingent additional U.S. $[***] (the “Purchase Price”); the APA also provides
for a training agreement under which HSI can earn an additional U.S.$[***]
following the closing.


 


2.                                       The
undersigned creditor and HSI have entered into the NDA; and


 


3.                                       A
representative of HSI has given a presentation (the “Presentation”) to the
undersigned creditor regarding the APA, the transactions contemplated by the
APA (including but not limited to the sale and purchase of the Assets, the
license back arrangement by and between UTSI and HSI subsequent to the
completion of the sale and purchase of the Assets (the “License Agreement”) and
the training services arrangement and payment for such services as provided in
Section 5.09 of the APA), the Purchase Price, the condition


 


B-1

















 


(financial, liquidity and
otherwise) and prospects of HSI (the “Financial Condition”) and the use of the
proceeds (including but not limited to the repayment of HSI’s creditors) of the
sale of the Assets by HSI as set forth in Section 2.03(a) and (d) of the APA
(the “Use of Proceeds”).


 


We, in connection with
the foregoing, hereby acknowledge and agree as follows:


 


1.                                       The
undersigned creditor has informed itself to the extent it deems necessary and
advisable for the purpose of this letter agreement, the contents of the APA,
the transactions contemplated by the APA, the Presentation, the License
Agreement, the Purchase Price, the Financial Condition and the Use of Proceeds;


 


2.                                       The
undersigned creditor hereby grants to HSI consent with respect to the matters
set forth in section 1 above; and


 


3.                                       The
undersigned creditor will not any raise any objections or claims with respect
to the matters set forth in section 1 above.


 


B-2

















 


Please acknowledge
your acceptance of the terms of this letter agreement by signing in the space
provided below.


 


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (name
  of creditor)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 


 


Agreed and Accepted this


 


         
day of
                               ,
2004:


 


	
  HYUNDAI SYSCOMM, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed and Accepted this

  	
   

  
	
   

  	
   

  
	
            
  day of
                               ,
  2004:

  	
   

  
	
   

  	
   

  
	
  UTSTARCOM, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
						



 


B-3

















 


Exhibit C


 


Form of Intellectual
Property License Agreement


 


This Intellectual Property License Agreement
(this ”Agreement”) is made and entered into this
              
day of [                  ], 2004
(the ”Effective Date”), by and between
[            ],
each a corporation organized under the laws of [                                            ],
with offices at                                                            
(collectively, ”Licensor”), and Hyundai Syscomm, Inc., a corporation
organized under the laws of the Republic of Korea, with offices at
                                                       
(“HSI”).  Either Licensor or HSI may be
referred to herein as a ”Party” or together as the ”Parties,” as the
case may require.


 


RECITALS


 


WHEREAS, UTStarcom, Inc., Licensor’s parent (“UTSI”),
and HSI have entered into certain Asset Purchase Agreement, dated as of
February 26, 2004 (the ”Asset Purchase Agreement”) pursuant to
which UTSI will acquire all of the Purchased Assets (as defined in the Asset
Purchase Agreement), including but not limited to intellectual property, upon
the terms and conditions set forth in the Asset Purchase Agreement;


 


WHEREAS, pursuant to the Asset Purchase Agreement, HSI
will sell, assign, transfer, deliver and convey to UTSI or an affiliate
designated by UTSI before the Closing Date the Purchased Assets that include
the Licensed Intellectual Property (as defined below in Section 1 of this
Agreement);


 


WHEREAS, UTSI or an affiliate designated by UTSI
before the Closing Date will assign, transfer, deliver and convey to Licensor
(and thereafter Licensor shall own) all of the intellectual property included
in the Purchased Assets;


 


WHEREAS, HSI desires to have the right to use the
intellectual property transferred to Licensor pursuant to the Asset Purchase
Agreement; and


 


WHEREAS, Licensor hereto wishes to license to HSI such
intellectual property in accordance with the terms and conditions contained in
this Agreement.


 


NOW, THEREFORE, in consideration of the promises and
the mutual covenants and undertakings contained herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto, intending to be legally bound hereby, do
agree as follows:


 


1.                                                                                                               DEFINITIONS


 


Capitalized terms used herein shall have the meanings
ascribed to such terms in the Asset Purchase Agreement unless otherwise defined
herein or as set forth below.


 


1.1                                 “Business”
means the business of manufacturing and selling wireless telecommunication
equipment, software, systems and related products.


 


C-1

















 


1.2                                 “Confidential
Information” means (i) all information and proprietary materials,
including without limitation trade secrets and/or know-how, of HSI (after
giving effect to the transactions contemplated by the Asset Purchase Agreement)
which is not publicly known and is in the possession of, or disclosed by HSI to
Licensor or a representative of Licensor, in regard to HSI’s business or
products, including but not limited to HSI’s Intellectual Property and proprietary
business information, including but not limited to information relating to
Section 6 of this Agreement, other than the Purchased Assets, and
(ii) all information and proprietary materials, including without
limitation trade secrets and/or know-how and any Confidential Information
which is the Purchased Asset transferred pursuant to the Asset Purchase
Agreement, of UTSI and/or Licensor, as the case may be, (after giving effect to
the transactions contemplated by the Asset Purchase Agreement) which is not
publicly known and is in the possession of, or disclosed by UTSI and/or
Licensor, as the case may be, to HSI or a representative of HSI in regard to
UTSI’s and/or Licensor’s business or products, including but not limited to
UTSI’s Intellectual Property and/or Licensor’s Intellectual Property and
proprietary business information, including but not limited to information
relating to Section 6 of this Agreement. 
Notwithstanding the foregoing, Confidential Information does not include
information that (i) the receiving Party can prove was in its possession
prior to the receipt thereof from the other Party (other than, in the case of
HSI, the Licensed Intellectual Property); (ii) the receiving Party can
prove was independently developed by the receiving Party without the use of any
Confidential Information of the other Party; (iii) now is in or hereafter
comes into the public domain through no act or failure to act by the receiving
Party or by any of its officers, directors, employees, contractors, consultants
or agents; or (iv) the receiving Party can prove was lawfully received,
after receipt from the other Party, from a third party on a non-confidential
basis who did not itself acquire the same directly or indirectly from the other
Party.


 


1.3                                 “HSI
Affiliate” means any other person, entity or organization controlling,
controlled by or under common control with, at any time HSI on or after the
Closing Date, with “control” for such purpose meaning the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such person, entity or organization, whether through the
ownership of voting securities or voting interests, by contract or otherwise.


 


1.4                                 “HSI
Revenues” means any and all revenues, calculated on the same basis as revenues
are calculated as presented in HSI’s audited financial statements in accordance
with Korean GAAP, derived by HSI from sale, lease, supply, manufacture, use or
other disposal of products or services directly or indirectly using the Licensed
Intellectual Property.


 


1.5                                 “Improvements”
means inventions, additions, modifications, formulations, variations,
enhancements, refinements or derivative works of or based on the Licensed
Intellectual Property or on other Improvements.


 


C-2

















 


1.6                                 “Intellectual
Property” means (a) Patents, (b) Copyrights, (c) Trade Secrets
and (d) Software (other than Trademarks and the Retained Trade Secrets).


 


1.7                                 “Licensor
Affiliate” means any other person, entity or organization controlling,
controlled by or under common control with, at any time Licensor on or after
the Closing Date, with “control” for such purpose meaning the possession,
directly or indirectly, of the power to direct or cause the direction of the management
and policies of such person, entity or organization, whether through the
ownership of voting securities or voting interests, by contract or otherwise.


 


1.8                                 “Licensed
Intellectual Property” means all Licensor Owned Intellectual Property, as
listed in the attached Exhibit A; provided, however that Licensor shall
have the right to delete, from time to time, from the definition of Licensed
Intellectual Property, any Patents which Licensor chooses in its sole
discretion to abandon.  In the case that
Licensor abandons any Patent(s) as permitted pursuant to the foregoing
sentence, the license granted under this Agreement for such Patent shall
immediately terminate, Licensor shall have no further obligation to HSI with
respect to such Patent(s) and Licensor will give notice and HSI will have the
rights to take ownership of such Patent as set forth in Section 2.3.


 


1.9                                 “Licensor
Owned Intellectual Property” means those of the Purchased Assets which are
Intellectual Property.


 


1.10                           “Territory”
means the Republic of Korea.


 


2.                                                                                                               LICENSE
GRANT TO HSI


 


2.1                                 LICENSE
GRANT


 


As of the Closing Date and subject to the terms and
conditions of this Agreement, Licensor hereby grants to HSI:


 


(a)                                  for
the period of four (4) years from the Closing Date (“Initial Term”),
exclusive (including to the exclusion of Licensor) within the Territory, non-transferable
(except as permitted under Section 10.12 of this Agreement), right and
license under and to the Licensed Intellectual Property to copy and use any
such Licensed Intellectual Property to make, have made, use, sell, lease and
otherwise dispose of or commercially exploit products or services in the
Business using or containing the Licensed Intellectual Property, provided that
such products or services are solely used within the Territory (as such phrase
is hereinafter defined).  For purpose of
clarity, during the Initial Term, products that are made with the Licensed
Intellectual Property cannot be sold or distributed (i) by HSI (or any of
its successors or licensees or HSI Affiliates) outside the Territory or
(ii) by Licensor (or any of its successors or licensees or Licensor
Affiliate) inside the Territory.  For
avoidance of doubt, products that are manufactured in Korea but used outside of
Korea shall not qualify


 


C-3

















 


as products “used within
the Territory,” and where a product is used shall be determined by the site of
the original installation of the product. 
Notwithstanding the foregoing, nothing in this Section 2 shall be
interpreted to allow HSI and/or any HSI Affiliate(s) to directly or indirectly,
compete with Licensor or Licensor Affiliates in violation of the covenant not
to compete outside the Territory in Section 5.08 of the Asset Purchase
Agreement or to allow Licensor and/or any Licensor Affiliate(s) to directly or
indirectly compete with HSI or HSI Affiliates in violation of the covenant not
to compete within the Territory in such Section;


 


(b)                                 for
the Initial Term, non-exclusive, non-transferable (except as
permitted under Section 10.12 of this Agreement), worldwide right and
license under and to the Licensed Intellectual Property, to copy and use any
such Licensed Intellectual Property to make, have made, use, sell, lease and
otherwise dispose of or commercially exploit products or services in the
Business using or containing the Licensed Intellectual Property to the extent
(and only to the extent) reasonably required in connection with complying with
and enforcing contractual obligations to and of customers outside the Territory
pursuant to agreements listed in Section 5.08(a) of the Disclosure
Schedule to the Asset Purchase Agreement in effect on the date of the
Asset Purchase Agreement; and


 


(c)                                  after
the Initial Term, perpetual, non-exclusive, non-transferable (except
as permitted under Section 10.12 of this Agreement), worldwide right and
license under and to the Licensed Intellectual Property, to copy and use any
such Licensed Intellectual Property to make, have made, use, sell, lease and
otherwise dispose of or commercially exploit products or services in the
Business using or containing the Licensed Intellectual Property.


 


2.2                                 SUBLICENSE


 


HSI may sublicense its rights and license under this
Agreement to the extent (and only to the extent) reasonably required in connection
with the following activities subject to the following conditions and terms:


 


(a)                                  grant
of sublicense to third parties or HSI Affiliates for the sole purpose of having
them manufacture or supply to HSI products and/or services using or containing
the Licensed Intellectual Property for entire consumption of such products
and/or services by HSI or HSI’s customers to the extent satisfying furnishing
contractual obligations from HSI to its customers;


 


(b)                                 grant
of sublicense to HSI’s customers only to the extent that rights granted by such
sublicense are necessary to allow such customers to use products and/or
services provided by or on behalf of HSI using or containing the Licensed
Intellectual Property;


 


C-4

















 


(c)                                  grant
of sublicense to HSI Affiliates, upon approval of Licensor, which will not be
unreasonably withheld or delayed, for the sole purpose of having HSI Affiliates
continue the operation of the HSI business activities in the event that HSI
ceases, and transfers to HSI Affiliates, such business activities, which
sublicenses may authorize such HSI Affiliates to exercise any or all of the
rights of HSI set forth in this Agreement; and


 


(d)                                 grant
of sublicense to third parties, upon approval of Licensor, for defense and/or
settlement of claims or actions arising in connection with any agreements or
the conduct, activities, products or services in the Business prior to the
Closing Date; provided that, in no event, may HSI enter into any settlement or take
any action which limits or otherwise compromises the right, title and interests
of Licensor, Licensor Affiliates or any transferee or assignee of the Purchased
Assets or rights of Licensor or any assignee of Licensor to the Purchased
Assets or under any licenses transferred by HSI to Licensor.  For avoidance of doubts, HSI may not grant a
sublicense to Motorola to the extent that the sublicense extends after the
Closing Date.


 


2.3                                 ABANDONMENT
OF PATENTS


 


In the event that Licensor determines that it shall
cease to maintain any or all of the Patents which are licensed to HSI
hereunder, it shall provide written notice to HSI of such determination at
least thirty (30) days prior to the date on which the Patent is due to
lapse or become abandoned.  Upon HSI’s
request provided in writing at least twenty (20) days prior to the date
the Patent(s) lapse(s) or become(s) abandoned (or for an otherwise reasonable
period of time, in the event Licensor fails to provide notice of its intent to
abandon a Patent at least thirty (30) days prior to the date on which the
Patent is due to lapse or become abandoned), and at HSI’s sole cost, Licensor
will then assign, convey and transfer to HSI all of Licensor’s then existing
rights, title and interest in and to such Patent(s) subject to Licensor’s
retaining an unrestricted, sublicenseable, non-exclusive, world-wide,
irrevocable, fully-paid license under the applicable Patent(s) (bound by
territorial limitations under Section 2.1 of this Agreement).  Upon such transfer, each such Patent shall
cease to be Licensed Intellectual Property. 
The right reserved by HSI under this section shall not be assignable to
third parties (except in connection with a transfer of HSI’s business).


 


3.                                       NO
IMPLIED LICENSES; INTELLECTUAL PROPERTY RIGHTS NOTICES


 


3.1                                 NO
IMPLIED LICENSE


 


Except for the licenses expressly granted in this
Agreement, neither Party grants to the other Party by implication, estoppel or
otherwise any license or other right to any of its Intellectual Property.  In addition, neither Party grants any
license, release or other right expressly, by implication, by estoppel or
otherwise to any third party, including without limitation any Affiliate(s) of
the other Party.


 


C-5

















 


4.                                       FEES
AND PAYMENTS


 


4.1                                 LICENSE
FEES


 


In consideration of the licenses granted to HSI
hereunder, HSI shall pay Licensor semiyearly License Fees in the amount of
[***] accrued during each fiscal half-year for [***] after the Closing
Date.  Thereafter, the licenses granted
to HSI hereunder shall be royalty-free and fully paid-up.  During the above-referenced 15-year
period, HSI shall submit quarterly reports of License Fees accrued for each
fiscal quarter after the Closing Date within thirty (30) calendar days
after the end of the relevant fiscal quarter.


 


4.2                                 TAX


 


Responsibility for withholding taxes levied by the
Korean government authority on Licensor with respect to the License Fees shall
be determined in mutually agreeable terms to each Party prior to the Closing.  All of the License Fees payable by HSI to
Licensor shall be paid without any deduction or reduction for any other taxes
or charges imposed in the Territory.  In
all other respects, HSI is solely responsible for all the taxes levied by any
Korean government authority on HSI with respect to its operations, income and
transactions under this Agreement.  Each
party agrees to deliver to the other Party an official proof of any taxes
withheld or paid on behalf of the other party upon request of the other party.


 


4.3                                 LICENSE
FEE PAYMENT


 


All License Fee payments shall be made by wire
transfer to the following account:


 


[Licensor Account
Information]


 


HSI shall pay to Licensor the License Fee due with
respect to [***].  All License Fee
payments made pursuant to this Agreement are non-refundable unless there
is a miscalculation and overpayment.


 


4.4                                 AUDIT


 


HSI agrees to keep and maintain accurate books and
records of all its activities in sufficient detail to enable the License Fees
due to Licensor to be determined.  HSI
shall keep such books and records for two (2) years from the date of
relevant payment due.  HSI shall also
grant Licensor, upon Licensor’s reasonable request, the right to have an
independent auditor audit the books and records of HSI, during HSI’s regular
business hours and no more frequently than once per calendar year with a 30 day
prior written notice, solely for the purpose of, and to the extent necessary
to, verify the correctness of the License Fees paid by HSI to Licensor.  Any such audit shall be conducted in a
manner that minimizes the interference with HSI’s business activities.  The costs of such audit shall be borne by
Licensor; provided that HSI shall bear the costs of such audit in the event the
discrepancy is more than 10% of the License Fees due.  The status of the records being audited shall be considered as
Confidential Information of HSI subject to confidentiality obligations of
Section 5.


 


C-6

















 


5.                                       CONFIDENTIALITY


 


Each Party shall protect the other’s Confidential
Information from unauthorized dissemination and use with the same degree of
care that such Party uses to protect its own like information, but not less
than reasonable care.  Each Party agrees
that the Confidential Information of the other Party may be made available only
to those officers, directors, employees, contractors, consultants or agents who
agree to be bound to the receiving Party by confidentiality obligations at
least as protective as the provisions of this paragraph.  Neither Party will use the other’s
Confidential Information except as permitted by the licenses hereunder or for
purposes other than those necessary to directly further the purposes of this
Agreement. Trade secrets and know-how of HSI that were transferred to
UTSI or UTSI Affiliate designated by UTSI under the Asset Purchase Agreement
are the Confidential Information of UTSI, UTSI Affiliate or Licensor (even if
such trade secrets and know-how relates to those of the former or current
employees of HSI), and HSI shall not use them, except in accordance with the
licenses granted under this Agreement. 
Except as permitted by the licenses hereunder or other provisions
hereof, neither Party will disclose to any third parties the other’s
Confidential Information without the prior written consent of the other Party.
Except as expressly provided in this Agreement, no ownership or license right
is granted in any Confidential Information. 
The Parties’ obligations of confidentiality under this Agreement shall
not be construed to limit either Party’s right to independently develop or
acquire products without use of, or reference to, the other Party’s
Confidential Information.  Neither Party
shall be liable to the other Party for disclosure of any information received
hereunder if such disclosure is made pursuant to a governmental or judicial
mandate, provided that the receiving Party shall have given the other Party
notice of such mandate immediately upon its knowledge thereof and prior to any
disclosure in compliance therewith, and, provided further, that the receiving
Party shall fully cooperate (at the other Party’s sole cost and expense) with
any efforts the other Party may take to intervene in any such proceeding or to
otherwise prevent such disclosure.


 


6.                                       IMPROVEMENTS


 


6.1                                 Joint
Ownership of Improvements


 


In the event that the Parties agree to jointly develop
Improvement(s), the Parties will negotiate with each other in good faith and
enter into a separate agreement with respect to rights, title and ownership of
such Improvement conceived, discovered or reduced to practice jointly by both
Parties.


 


6.2                                 New
Improvements by Either Party.


 


Each Party shall retain all right, title and interest
in any and all Intellectual Property in and to Improvements, conceived, discovered
or reduced to practice solely by that Party.


 


C-7

















 


7.                                       INFRINGEMENT


 


7.1                                 INFRINGEMENT
AND UNLAWFUL USE BY THIRD PARTIES


 


HSI shall notify Licensor promptly and fully of any
infringement, unauthorized or unlawful use of the Licensed Intellectual
Property that comes to its notice or is made aware.  With respect to infringement occurring in the Territory during
the Initial Term, upon request by HSI, Licensor shall either (with the
selection being in Licensor’s entire discretion):


 


(i)                                     at
HSI’s expenses, bring a lawsuit against any party that is or is alleged to be
infringing, using without authorization or using unlawfully any of the Licensed
Intellectual Property.  When requested
to do so by Licensor, HSI shall fully cooperate in connection with such
lawsuit, including but not limited to joining such lawsuit as a party; or


 


(ii)                                  make
a good faith determination, taking into account the interests of both HSI and
Licensor, as to whether the benefits of allowing HSI to pursue a lawsuit or
other proceeding against any such party with respect to the (alleged)
infringement notified by HSI outweigh the risks and/or harms.  If Licensor thus determines that they do,
HSI may bring a lawsuit or other proceeding against such party in its own name
at HSI’s own expenses, without any prejudice to Licensor, provided that HSI
shall indemnify and/or hold harmless Licensor or License Affiliate from any
losses that Licensor or Licensor Affiliate incurs from such lawsuit or proceeding
brought by HSI.  If Licensor thus
determines that they do not, Licensor will negotiate in good faith with HSI an
adjustment to the royalty charged hereunder during the Initial Term to account
for actual damage caused to HSI from any infringement of the Licensed
Intellectual Property; provided, however, Licensor shall have no obligation to
negotiate in good faith a royalty adjustment if Licensor (x) reasonably
believes that there is no infringement of the Licensed Intellectual Property or
(y) would have allowed HSI to bring a lawsuit or proceeding but Licensor
reasonably determined that HSI did not have the financial means to indemnify
Licensor and Licensor Affiliates from any losses arising out of such lawsuit or
proceeding, and that, upon request by Licensor, HSI failed to prove its
capacity of such financial means.


 


Subject to the foregoing indemnification obligations
and any other agreement by Licensor and HSI, in any such lawsuit or proceeding
brought by HSI at HSI’s expense, HSI shall be entitled to retain all damages
and other relief awarded.


 


7.2                                 INFRINGEMENT
AND UNLAWFUL USE BY THE PARTIES


 


If any third party brings a lawsuit or other
proceeding against a Party alleging infringement of or alleging unlawful use of
any Intellectual Property, including but not limited to patents or trade
secrets, arising from the Party’s use of the Licensed Intellectual Property or
otherwise, the Party shall have the sole responsibility to take whatever steps
it deems advisable


 


C-8

















 


to answer such
allegation and to defend itself in such lawsuit or proceeding and the other
Party shall not be responsible for the costs of defending such lawsuit or
proceeding, for any resulting judgment in law or equity or for the payment of
any award of damages or arbitral award. 
For avoidance of doubts, HSI shall be responsible for any and all claims
made by Motorola against HSI or HSI Affiliate’s activities on or before the
Closing and thereafter.  Licensor shall
be responsible for any and all claims made by Motorola against Licensor or
Licensor Affiliate’s activities after the Closing.  In the event that any third party brings a lawsuit or other
proceeding against HSI or HSI Affiliate as to products or services Licensor or
Licensor Affiliates make, have made, use, sell, lease or otherwise dispose of
or commercially exploit using or containing the Licensed Intellectual Property
after the Closing, upon notice by HSI to Licensor, Licensor shall defend HSI or
HSI Affiliate in such lawsuit or proceeding or indemnify and/or hold harmless
HSI or HSI Affiliate from loss that HSI or HSI Affiliate incurs from such
lawsuit or proceeding. In the event that any third party brings a lawsuit or
other proceeding against Licensor or Licensor Affiliate as to products or
services HSI or HSI Affiliates make, use, sell, lease or otherwise dispose of
or commercially exploit using or containing the Licensed Intellectual Property
after the Closing, upon notice by Licensor to HSI, HSI shall defend Licensor or
Licensor Affiliate in such lawsuit or proceeding or indemnify and/or hold
harmless Licensor or Licensor Affiliate from loss that Licensor or Licensor
Affiliate incurs from such lawsuit or proceeding.


 


8.                                       REPRESENTATIONS
& WARRANTIES; DISCLAIMERS


 


8.1                                 REPRESENTATIONS
& WARRANTIES


 


(a)                                  HSI
hereby represents and warrants that (i) it has the full power and
authority to enter into this Agreement, and (ii) this Agreement has been
duly executed and delivered by HSI and, assuming the due execution hereof by
Licensor, this Agreement constitutes the legal, valid and binding obligation of
HSI, enforceable in accordance with its terms.


 


(b)                                 Licensor
represents and warrants that (i) it has the full power and authority to
enter into this Agreement and (ii) this Agreement has been duly executed
and delivered by Licensor and, assuming the due execution hereof by HSI, this
Agreement constitutes the legal, valid and binding obligation of Licensor,
enforceable in accordance with its terms.


 


8.2                                 DISCLAIMERS


 


EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1 ABOVE OR
THE ASSET PURCHASE AGREEMENT, EACH PARTY MAKES NO, AND EXPRESSLY DISCLAIMS ANY
AND ALL, FURTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED OR
STATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT.


 


C-9

















 


9.                                       TERM
AND TERMINATION


 


9.1                                 This
Agreement shall commence on the Effective Date and shall continue unless
terminated earlier in accordance with provisions of this Agreement.


 


9.2                                 This
Agreement shall be terminable immediately upon the sending of a written
termination notice upon the occurrence of one or more of the following events:


 


(a)                                  by
either Party hereto, if the other Party shall commit a material breach of any
of its obligations under this Agreement, and, except as provided in subsection
(b) below, the breach is not remedied or cured within thirty (30) calendar
days from the giving of written notice requiring such breach to be
remedied.  For purposes of clarity, the
non-payment of the License Fee by HSI to Licensor pursuant to
Section 4.3 of this Agreement shall constitute a material breach;


 


(b)                                 by
either Party hereto, if at any time the other Party ceases performing all of
its obligations pursuant to this Agreement due to any event of Force Majeure
for a period of at least sixty (60) consecutive calendar days from the
giving of written notice requiring that performance be resumed, unless any period
of such cessation is attributable in whole or in part to any breach by the
other party of any of its obligations pursuant to this Agreement;


 


(c)                                  by
Licensor, if HSI or its creditors or any other eligible party shall file for
HSI’s liquidation, bankruptcy, reorganization, compulsory composition, or
dissolution, unless a court of competent jurisdiction dismisses such filing or
the filing is dismissed by the filing party within thirty (30) calendar
days following the date of filing, or if HSI is unable to pay its debts as they
become due, has explicitly or implicitly suspended payment of its debts as they
became due (except debts contested in good faith), or if the creditors of HSI
have taken over its management, or if the relevant financial institutions have
suspended HSI’s clearing house privileges, or if any material or significant
part of HSI’s undertaking, property, or assets shall be intervened in,
expropriated, or confiscated by action of any governmental authority;


 


(d)                                 by
Licensor, if any of the following should occur without its consent, in such a
way that Licensor reasonably determines is detrimental to its interests:
(i) there is a merger or corporate reorganization of HSI,  (ii) there is any change in the
ownership of HSI or the persons having principal authority for the management
of HSI, or (iii) there is a sale or transfer of all or substantially all
of the assets of HSI.  For avoidance of
doubts, if the foregoing should occur in such a way that Licensor reasonably
determines is not detrimental to its interests, Licensor will not unreasonably
withheld or delay its consent.


 


C-10

















 


(e)                                  by
Licensor, if the following should occur without its consent: another person or
entity engaged in CDMA infrastructure equipment, cordless base station or
subscriber unit business acquires direct or indirect control of HSI; or


 


(f)                                    by
Licensor, if HSI or any person or entity that has direct or indirect control of
HSI makes and/or files a claim against Licensor and/or any of Licensor
Affiliates contesting Licensor’s ownership or the validity of the Licensed
Intellectual Property.


 


Notwithstanding the foregoing provisions, solely for
purposes of exercising the termination rights under this Section 9, HSI
shall not be deemed to be in breach of this Agreement for its failure to pay
disputed License Fees, provided that it has paid the undisputed amount of
License Fees.


 


9.3                                 EFFECTS
OF TERMINATION


 


Upon termination or expiration of this Agreement, all
of the rights and license granted to each Party by the other Party under this
Agreement shall immediately terminate and revert to the granting Party.  Upon termination of this Agreement, all
accrued License Fees shall be immediately due.


 


9.4                                 EFFECTS
OF INSOLVENCY


 


The Parties hereby agree that, if any proceeding shall
be instituted by or against either Party seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization, or relief of debtors, or
seeking an entry of an order of relief or the appointment of a receiver,
trustee or other similar official for it or any substantial part of its property
or the Party shall take any action to authorize any of the foregoing actions,
the other Party shall have and continue to have the right to retain and enforce
its rights under this Agreement, including but not limited to the right to
continue to use the Licensed Intellectual Property (in case the other Party is
HSI) or the Intellectual Property pursuant to Section 2.3 of this
Agreement (in case the other Party is Licensor) in accordance with the terms
and conditions of this Agreement, to the extent permissible under the relevant
law.  The Parties agree that HSI (in
case the other Party is HSI), as a licensee of the Licensed Intellectual
Property, or Licensor (in case the other Party is Licensor), as a licensee of
the Intellectual Property pursuant to Section 2.3 of this Agreement, shall
retain and may fully exercise all of the rights and elections to the full
extent permitted under Section 365(n) of the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.) or any similar law of the Republic of
Korea.  All rights and licenses granted
under or pursuant to this Agreement by Licensor to HSI are, and shall otherwise
be deemed to be, licenses of rights to “intellectual property” as defined in
Section 365(n) of the United States Bankruptcy Code.


 


C-11

















 


10.                                 GENERAL


 


10.1                           RELATIONSHIP
OF THE PARTIES


 


This Agreement does not create a fiduciary or agency
relationship between HSI and Licensor, each of which shall be and at all times
remain independent companies for all purposes. 
Nothing in this Agreement is intended to make either Party a general or
special agent, joint venturer, partner or employee of the other for any
purpose.


 


10.2                           COUNTERPARTS


 


This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the Parties and delivered to the other Party.


 


10.3                           GOVERNING
LAW; CONSENT TO JURISDICTION


 


This Agreement shall be governed by and construed in
accordance with the laws of the Republic of Korea without giving effect to the
rules of conflict of laws of the Republic of Korea that would require
application of any other law.  Licensor
and HSI each consent to and hereby submit to the non-exclusive
jurisdiction of the Seoul District Court located in the Republic of Korea in
connection with any action, suit or proceeding arising out of or relating to
this Agreement, and each of the Parties hereto irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.


 


10.4                           ENTIRE
AGREEMENT


 


This Agreement and the Exhibits hereto (including
agreements incorporated herein) and the Asset Purchase Agreement contain the
entire agreement between the Parties with respect to the subject matter hereof
and there are no agreements, understandings, representations or warranties
between the Parties other than those set forth or referred to herein.


 


10.5                           NO
THIRD-PARTY BENEFICIARIES


 


Nothing in this Agreement, express or implied, is
intended to or shall confer on any Person other than the Parties hereto and
their respective successors or assigns any rights (including third-party
beneficiary rights), remedies, obligations or liabilities under or by reason of
this Agreement.  This Agreement shall
not provide third parties with any remedy, claim, liability, reimbursement,
cause of action or other right in excess of those existing without reference to
the terms of this Agreement.


 


10.6                           INTERPRETATION;
ABSENCE OF PRESUMPTION


 


(a)                                  For
the purposes hereof, (i) words in the singular shall be held to include
the plural and vice versa and words of one gender shall be held to include


 


C-12

















 


the other gender as the
context requires, (ii) the terms “hereof,” “herein,” and “herewith” and
words of similar import shall, unless otherwise stated, be construed to refer
to this Agreement as a whole (including all of the Exhibits hereto) and not to
any particular provision of this Agreement, and Article, Section, paragraph and
Exhibit references are to the Articles, Sections, paragraphs and Exhibits
to this Agreement unless otherwise specified, (iii) the word “including”
and words of similar import when used in this Agreement means “including,
without limitation,” unless the context otherwise requires or unless otherwise
specified, (iv) the word “or” shall not be exclusive, (v) provisions
shall apply, when appropriate, to successive events and transactions, and
(vi) all references to any period of days shall be deemed to be to the
relevant number of calendar days.


 


(b)                                 This
Agreement shall be construed without regard to any presumption or rule
requiring construction or interpretation against the Party drafting or causing
any instrument to be drafted.


 


10.7                           FORCE
MAJEURE


 


A Party shall not be liable for a failure or delay in
the performance of any of its obligations under this Agreement where such
failure or delay is the result of conditions beyond the control of said Party,
such as fire, flood, or other natural disaster, act of God, war, embargo, riot,
or the intervention of any government authority, providing that the Party
failing in or delaying its performance immediately notifies the other Party of
its inability to perform and states the reason for such inability.


 


10.8                           PUBLICITY


 


Neither Party shall, without the approval of the other
Party, make any press release or other public announcements concerning the
terms of the transactions contemplated by this Agreement, except as and to the
extent that any such Party shall be so obligated by judicial order, law or securities
exchange rule or regulation or pursuant to a lawful request of a government
agency, provided that the Party shall notify the other Party of any such
obligation by or lawful request of a government agency prior to any
submission/publication of press release or other public announcements.


 


10.9                           FURTHER
ASSURANCES


 


Each Party shall cooperate and take such action as may
be reasonably requested by another Party in order to carry out the provisions
and purposes of this Agreement and the transactions contemplated hereby.


 


10.10                     EXPORT
CONTROL


 


The Parties shall comply with any and all export
regulations and rules now in effect or as may be issued from time to time by
the Korean governmental authority, or any other governmental authority which
has jurisdiction relating to the export of technology.


 


C-13

















 


10.11                     NOTICES


 


Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted to be given to any Party
hereunder shall be in writing and shall be deemed duly given only upon delivery
to the Party personally (including by reputable overnight courier service),
when telecopied (with confirmation of transmission having been received) during
normal business hours or three business days after being mailed by registered
or certified mail (return receipt requested), with postage and registration or
certification fees thereon prepaid, addressed to the Party at its address set
forth below (or at such other address for a Party as shall be specified by such
Party by like notice):


 


If to Licensor:


 


[Licensor]


 


c/o
[         ]


[               ]


Fax:
[       ]


Attention: 
[        ]


 


If to HSI:


 


Hyundai Syscomm, Inc.


San 136-1


Ami-ri, Bubal-eub


Ichon-si, Kongki-do


467-701 Korea


Fax: [      ]


Attention:
[        ]


 


10.12                     ASSIGNMENT


 


This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective successors and permitted
assigns; provided, however, subject to Section 9.2, HSI shall not assign
its rights or delegate its obligations under this Agreement without the express
prior written consent of Licensor.


 


10.13                     HEADINGS;
DEFINITIONS


 


The section and article headings contained in this
Agreement are inserted for convenience of reference only and will not affect
the meaning or interpretation of this Agreement.


 


10.14                     AMENDMENT


 


This Agreement may not be amended, modified,
superseded, canceled, renewed or extended except by a written instrument signed
by the Party to be charged therewith.


 


C-14

















 


10.15                     WAIVER;
EFFECT OF WAIVER


 


No provision of this Agreement may be waived except by
a written instrument signed by the Party waiving compliance.  No waiver by any Party hereto of any of the
requirements hereof or of any of such Party’s rights hereunder shall release
the other Parties from full performance of their remaining obligations stated
herein.  No failure to exercise or delay
in exercising on the part of any Party hereto any right, power or privilege of such
Party shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege by such
Party.


 


10.16                     SPECIFIC PERFORMANCE;
INJUNCTIVE RELIEF


 


The Parties hereto each acknowledge that, in view of
the uniqueness of the subject matter hereof, the Parties hereto would not have
an adequate remedy at law for money damages in the event that this Agreement
were not performed in accordance with its terms, and therefore agree that the
Parties hereto shall have the right to a claim for injunctive relief and be
entitled to specific enforcement of the terms hereof in addition to any other
remedy to which the Parties hereto may be entitled at law or in equity.


 


10.17                     SURVIVAL


 


The respective rights and obligations of the Parties
under Sections 5, 8 and 9.3, and, with respect to such surviving rights
and obligations,
Sections 10.2, 10.3, 10.4, 10.11, 10.13, 10.16
and 10.17 shall survive the termination of this Agreement.


 


C-15

















 


IN WITNESS WHEREOF, the Parties hereto have caused
this Agreement to be duly executed on their behalf as of the date first written
above.


 


	
   

  	
  HYUNDAI SYSCOMM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [LICENSOR]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


C-16

















 


EXHIBIT A


 


1.                                                                                       All
of the right, title and interest in, to and under the Owned Intellectual
Property (including any Patents claiming Trade Secrets existing as of the
Closing Date) acquired by Licensor pursuant to the Asset Purchase Agreement,
including without limitation, the patents, patents pending, utility models,
utility models pending and programs listed in Schedule 3.12(a)(1) attached
hereto, and including copies and tangible embodiments thereof in whatever form
or medium.


 


2.                                                                                       All
of the right, title and interest in, to and under the Transferred IP Agreements
acquired by Licensor pursuant to the Asset Purchase Agreement, limited to those
specifically listed in Schedule 2 attached hereto, and including copies
and tangible embodiments thereof in whatever form or medium.


 


3.                                                                                       All
literature and graphical or written expressions, in whatever form, related to
the Owned Intellectual Property acquired by Licensor pursuant to the Asset
Purchase Agreement.


 


[Attach Schedule 3.12(a) and Schedule 2.]


 


C-17

















 


Exhibit 2.05(a)(i)


 


Form of Bill of Sale
and Assignment


 


BILL OF SALE AND
ASSIGNMENT


 


BILL OF SALE AND ASSIGNMENT, dated as of
[             ], 2004
(this ”Bill of Sale and Assignment”), from HYUNDAI SYSCOMM, INC., a
corporation organized and existing under the Laws of Korea (the ”Seller”),
to UTSTARCOM, INC., a Delaware corporation (the ”Purchaser”).


 


WHEREAS, the Seller, 3R Inc., a corporation organized
and existing under the laws of Korea, Dr. Seong-Ik Jang and the Purchaser have
entered into an Asset Purchase Agreement, dated as of February 26, 2004
(the ”Asset Purchase Agreement”; unless otherwise defined herein,
capitalized terms shall be used herein as defined in the Asset Purchase
Agreement); and


 


WHEREAS, the execution and delivery of this Bill of
Sale and Assignment by the Seller is a condition to the obligations of the
Purchaser to consummate the transactions contemplated by the Asset Purchase
Agreement;


 


NOW, THEREFORE, in consideration of the promises and
mutual agreements set forth in the Asset Purchase Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Seller hereby agrees as follows:


 


1.                                       Sale
and Assignment of Assets and Properties. 
The Seller hereby sells, assigns, transfers, conveys, grants, bargains,
sets over, releases, delivers, vests and confirms unto the Purchaser and its
successors and assigns, forever, the entire right, title and interest of the
Seller free and clear of all Encumbrances (other than Permitted Encumbrances)
in and to any and all of the Purchased Assets, subject to (i) co-ownership
or cross-licensing rights of third parties existing on the date of the Asset
Purchase Agreement pursuant to agreements specified in Section 3.12(c) of
the Disclosure Schedule and (ii) Section 3.31 of the Asset Purchase
Agreement.


 


2.                                       Obligations
and Liabilities Not Assumed. 
Nothing expressed or implied in this Bill of Sale and Assignment shall
be deemed to be an assumption by the Purchaser or its subsidiaries of any
Liabilities of the Seller.  Other than
the Assumed Liabilities, neither the Purchaser nor its subsidiaries by this
Bill of Sale and Assignment, agree to assume or agree to pay, perform or
discharge any liabilities of the Seller of any nature, kind or description
whatsoever.


 


3.                                       Further
Assurances.  The Seller hereby
covenants and agrees that, at any time and from time to time after the date of
this Bill of Sale and Assignment, at the Purchaser’s request, the Seller will
do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, any and all further acts, conveyances, transfers,
assignments, and assurances as necessary to grant, sell, convey, assign,
transfer, set over to or vest in the Purchaser any of the Purchased Assets.


 


C-18

















 


4.                                       Power
of Attorney.  The Seller hereby
constitutes and appoints the Purchaser, its successors and assigns, the true
and lawful attorney and attorneys of the Seller with full power of
substitution, in the name of the Purchaser or in the name and stead of the Seller
but on behalf of and for the benefit of the Purchaser, its successors and
assigns (and at the expense of the Seller):


 


(a)                                  to
collect, demand and receive any and all Purchased Assets transferred hereunder
and to give receipts and releases for and in respect of the same;


 


(b)                                 to
institute and prosecute in the name of the Seller, or otherwise, at the expense
and for the benefit of the Purchaser any and all actions, suits or proceedings,
at law, in equity or otherwise, which the Purchaser may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Purchased Assets hereby sold and assigned to the Purchaser or intended so to
be, to defend or compromise any and all such actions, suits or proceedings in
respect of any of such Purchaser Assets, and to do all such acts and things in
relation thereto as the Purchaser shall deem advisable for the collection or
reduction to possession of any of such Purchased Assets;


 


(c)                                  to
take any and all other reasonable action designed to vest more fully in the
Purchaser the Purchased Assets hereby sold and assigned to the Purchaser or
intended so to be and in order to provide for the Purchaser the benefit, use,
enjoyment and possession of such Assets; and


 


(d)                                 to
do all reasonable acts and things in relation to the Purchased Assets sold and
assigned hereunder.


 


The Seller acknowledges that the foregoing powers are
coupled with an interest and shall be irrevocable by it or upon its subsequent
dissolution or in any manner or for any reason.  The Purchaser shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any amounts
payable as interest with respect thereto. 
The Seller shall from time to time pay to the Purchaser, when received,
any amounts that shall be received directly or indirectly by the Seller
(including amounts received as interest) in respect of any Purchased Assets
sold, assigned or transferred to the Purchaser pursuant hereto.


 


5.                                       No
Third Party Beneficiaries.  This
Bill of Sale and Assignment shall be binding upon and inure solely to the
benefit of the Purchaser and its permitted assigns and nothing herein, express
or implied, is intended to or shall confer upon any other Person, any legal or
equitable right, benefit or remedy of any nature whatsoever, under or by reason
of this Bill of Sale and Assignment.


 


6.                                       Severability.  If any term or other provision of this Bill
of Sale and Assignment is invalid, illegal or incapable of being enforced by
any Law or public policy, all other terms and provisions of this Bill of Sale
and Assignment shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to either the Seller or the
Purchaser.


 


C-19

















 


7.                                       Governing
Law.  This Bill of Sale and
Assignment shall be governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and to be performed
in that State.


 


8.                                       Dispute
Resolution.  Any dispute,
controversy or claim arising out of or in connection with this Bill of Sale and
Assignment shall be finally settled by arbitration under the Rules of
Arbitration of the International Chamber of Commerce by three arbitrators
appointed in accordance with the Rules of Arbitration of the International
Chamber of Commerce.  The venue of the
arbitration shall be San Francisco, California, USA.  The language of the proceedings shall be English.


 

















 


IN WITNESS WHEREOF, this Bill of Sale and Assignment
has been executed by the Seller as of the date first above written.


 


 


	
   

  	
  HYUNDAI
  SYSCOMM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


Exhibit 2.05(a)(ii)


 


Form of Assignment
of Owned Intellectual Property


 


ASSIGNMENT OF
OWNED INTELLECTUAL PROPERTY


 


This ASSIGNMENT OF OWNED
INTELLECTUAL PROPERTY (this ”Assignment”), effective the
[      ] day of
[             ], 2004,
is made and entered into by and between HYUNDAI SYSCOMM, INC., a corporation
organized and existing under the Laws of Korea (the “Assignor”), and
UTSTARCOM, INC., a Delaware corporation 
(“Assignee”) (each a ”Party,” and collectively,
the ”Parties”).  Capitalized
terms used herein but not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement (as defined below).


 


WHEREAS, Assignor is the
owner of each of (i) the patents and patent applications set forth on
Schedule A hereto (the ”Patents”); and (ii) the copyright
registrations and copyright applications set forth on Schedule B hereto
(the ”Copyrights”) ((i)-(ii), collectively, the ”Purchased
Registered Intellectual Property”);


 


WHEREAS, Assignor,
Assignee, 3R Inc., a corporation organized and existing under the laws of
Korea, and Dr. Seong-Ik Jang entered into that certain Asset Purchase
Agreement, dated as of February 26, 2004 (the ”Purchase Agreement”),
pursuant to which Assignee agreed to purchase the Purchased Assets from
Assignor, including all of Assignor’s right, title and interest in, to and
under the Owned Intellectual Property, including, but not limited to, the
Purchased Registered Intellectual Property; and


 


WHEREAS, the execution
and delivery of this Assignment is a condition to Closing.


 


NOW THEREFORE, for the
consideration set forth in the Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:


 


1.  Assignment.  Effective upon Closing, Assignor hereby assigns to Assignee all
of Assignor’s right, title and interest in and to the Purchased Registered
Intellectual Property, including all rights therein provided by international
conventions and treaties, and the right to sue for past, present and future
infringement thereof , subject to (i) co-ownership or cross-licensing
rights of third parties existing on the date of the Purchase Agreement pursuant
to agreements specified in Section 3.12(c) of the Disclosure Schedule and
(ii) Section 3.31 of the Purchase Agreement.


 


2.  No Warranties.  Except as expressly provided in the Purchase
Agreement, Assignor makes no warranties, express or implied, with respect to
the Purchased Registered Intellectual Property.


 


3.  Further Assurances.  Assignor shall, at the cost and expense of
Assignee, timely execute and deliver any additional documents and perform such
additional acts necessary


 

















 


or desirable to record and perfect the interest of Assignee in and to
the Purchased Registered Intellectual Property, and shall not enter into any
agreement in conflict with this Assignment.


 


4.  Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.


 


5.  Counterparts.  This Assignment may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same agreement.


 


6.  Power of Attorney.  The Seller shall execute a power of attorney
substantially in the form attached hereto as Attachments A and C and the
Purchaser shall execute a power of attorney substantially in the form attached
hereto as Attachments B and C.


 


C-20

















 


IN WITNESS WHEREOF, each
Party has caused this Assignment to be executed by its duly authorized
representative.


 


 


	
   

  	
  HYUNDAI SYSCOMM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  UTSTARCOM, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: