Document:

Exhibit 10.79

[***] CERTAIN INFORMATION IN THIS
EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS

TEAMING AGREEMENT

This Agreement is made
and entered into as of September 10, 2002, by and between Stellar
Holdings, LLC, a Texas Limited Liability Company and UTStarCom, Inc. a Delaware
Corporation for the purpose of pursuing telecommunications wireless local loop
and related projects as described in Exhibit ”A” hereto.

WHEREAS, Stellar Holdings, LLC together with its
affiliate companies, is a company whose management team has substantial
experience and a solid record of success in developing telecommunications
partnerships and consortia.  Stellar is
in the process of [***]. Stellar Holdings, LLC agrees to provide [***] and
other related services for telecommunications opportunities developed by the
Team.

WHEREAS, UTStarCom, Inc. is a publicly traded
company experienced in communications network equipment and product development
of miscellaneous components for wireless telecommunications.  These products can be summarized as
communications equipment for wireless telephony networks.

WHEREAS, Stellar and UTStarCom have identified
certain projects in the telecommunications industry where third parties
(hereinafter called “Partners”) require, pursue, solicit or postulate [***]
and/or other required and related services (hereinafter called “Services”).

WHEREAS, Stellar and UTStarCom believe it to be
mutually advantageous to form a teaming arrangement in order to pursue current
and future opportunities related to selected Partners and related Services, and
if successful, procure and provision Services with respect thereto.

THEREFORE, UTStarCom, Inc. and Stellar Holdings,
LLC agree to work together to form a strong and mutually beneficial team
(heretofore and hereinafter called the “Team”) and to work in cooperation for
the development of Partnerships and Consortia as appropriate for the projects
listed in Exhibit A together with others that may be subsequently
and mutually agreed to fall under this Agreement (heretofore and hereinafter
called “Projects”).  As more fully set
forth below, Stellar and UTStarCom intend to mutually endeavor to facilitate
and participate in the Projects.

ARTICLE 1

 

Submission of Proposals

Stellar Holdings, LLC
shall undertake to accomplish certain tasks in connection with the pursuits and
preparation of the Agreements and proposals to be submitted to the
Partners.  The detailed organization and
function of the Partnerships will be agreed upon specifically for each

 

project after
receipt and evaluation of the individual project requirements.  It is understood that Stellar is responsible
for organizing and managing the proposal efforts.  Additionally, Stellar shall be responsible for the final draft of
all Partnership documents and for submittal of the Proposal to the
Partners.  The parties shall provide all
information at their disposal or reasonably attainable that is relevant to and
helpful to the proposal development, shall directly participate in the proposal
development efforts as required, and review the technical and
business/management Proposals prior to submittal.

 

ARTICLE 2

 

Performance of Contracts

The Team shall provide
such commercially reasonable assistance and support as may be requested for any
and all negotiations for Partnership Contracts and Agreements.  Stellar shall be responsible for overseeing
the Projects and shall serve as the sole interface between the Partnerships and
all Suppliers and Contractors and will be responsible for all liabilities
associated with these contracts, suppliers and contractors.

ARTICLE 3

 

Exclusivity

To preserve the concepts
and ideas of the parties hereto in the competition for the Projects, UTStarCom
and Stellar agree to work exclusively with each other solely with respect to
the projects identified in Exhibit A.  Likewise, Stellar Holdings, LLC shall work exclusively with
UTStarCom, Inc. solely with respect to specific and identified
telecommunications services for the projects. 
UTStarCom, Inc. and Stellar Holdings, LLC each acknowledge that other
teaming partners may be appropriate for specific tasks on specific projects,
but such relationships shall be undertaken with the knowledge and prior written
consent of the other party.

ARTICLE 4

 

Discounts

As outlined and agreed to
in the Reseller’s Agreement attached hereto as Exhibit B, Stellar
Holdings, LLC is entitled to [***] for the term of the Reseller’s Agreement.

ARTICLE 5

 

Commitments

Nothing in this Agreement
shall grant to either party the right to make commitments of any kind for or on
behalf of the other party without the prior written consent of the other party,
nor shall this Agreement be construed as a joint venture or partnership, nor
shall this Agreement be construed as a commitment by either party to enter into
either a partnership or partnership.

 

-2-

 

ARTICLE 6

 

Cooperation and
Assistance

Each party shall
furnish to the other party such cooperation and assistance as may be reasonably
required hereunder, provided, however, that the parties, as between themselves,
shall be deemed to be independent contractors, and the employees of one shall
not be deemed to be employees of the other. 
Additionally the parties agree that they will not initiate efforts aimed
at the hiring of each other’s personnel who may be part of the Proposal or
Contract Team, without prior consent of the other party, for a period of [***]
from the date of this Agreement, whichever shall last occur.

ARTICLE 7

 

Exchange of Technology

During the term of this
Agreement, each party agrees to receive, from the other, technical information
and data (hereinafter called “data”) for the purpose of responding to the
project requirements.  As between the
parties hereto, the provisions of this Article 7 shall supersede the
provisions of any legend which may be affixed to said data by the disclosing
party and the provisions of such legend shall be without any force or effect.

For a term of two (2)
years from the date of this Agreement, each party agrees to keep in confidence
and prevent the disclosure to any person or persons outside its own
organization all data (i) which is designated in writing, by appropriate
stamp (or legend) by the disclosing party, to be of a proprietary or
confidential nature, (ii) which pertains to proprietary or confidential
data regarding the disclosing party’s technological techniques, processes,
inventions, and research and development, provided, however, that
neither party shall be liable for use or disclosure of any such data if the
same:

(a)           Is in the public domain at the time
it is disclosed; or

(b)           Is known as demonstrated by written
documentation, to the party receiving it at the time of disclosure; or

(c)           Is used or disclosed with the prior
written approval of the other party, or

(d)           Becomes known to the receiving party
from a source other than the disclosing party who then possessed the legal
right to disclose the data; or

(e)           Is disclosed under this Agreement to
the Government or an authorized representative thereof, or to fulfill the
obligations of either party under a Government contract or subcontract.

 

-3-

 

ARTICLE 8

 

Term and Termination

The term of this Agreement,
during which data may be received hereunder, shall be for a period of [***]
from the date hereof.  This Agreement
shall also terminate (i) by mutual agreement between the parties; or
(ii) by either party upon the breach of any of the material terms of this
Agreement, where such breach had gone unremedied for a period of thirty (30)
calendar days following the aggrieved party’s dispatch of written notice to the
breaching party Stellar Holdings, LLC

ARTICLE 9

 

Security

To the extent that
obligations of the parties hereunder involve access to classified information,
UTStarCom, Inc. and Stellar Holdings, LLC shall conform to all appropriate
security regulations and requirements of the Partners, and shall be responsible
for safeguarding all classified information that may come into their possession
in connection with the performance of this Agreement.

ARTICLE 10

 

Conflict of Interest

Each party hereby
represents and covenants that neither it nor any of its employees or
representatives has or shall have, directly, or indirectly, any agreement or
arrangement with any official, employee or representative of any customer or
any government or governmental agency or of any political party under which any
such official, employee, representative or political party shall receive either
directly or indirectly anything of value whether monetary or otherwise as a
result of or in connection with any actual or contemplated sale of any product
or service of itself or any of its affiliated companies.  In addition, each party shall disclose to
the other relevant information bearing on the possible existence of any
organizational conflicts of interest. 
In the event that either party has reason to believe that it has, or may
have, a potential or actual organizational conflict of interest with respect to
any of the projects falling under the purview of this Agreement it shall so
notify the other party as soon as reasonably possible.

In the event that either
party reasonably believes that the other has an organizational conflict of
interest with respect to any particular project, the parties hereto will seek
in good faith to resolve the matter in a manner acceptable to themselves and
the Partners.

 

-4-

 

ARTICLE 11

 

Assignment and Subcontracting

This Agreement shall not
be assigned by either party without the prior written approval of the other
party.

ARTICLE 12

 

Disclosure and Publicity

It is understood and
agreed that either Stellar Holdings, LLC and UTStarCom, Inc. may, in its discretion,
disclose the terms and conditions of this Agreement (as it may be amended from
time to time) to the Partners.

No releases shall be made
to the news media or the general public relating to this Agreement by either
party without the prior written approval of the other party of which approval
shall not be unreasonably withheld.  The
parties further agree that news releases made by either of them shall recognize
the participation and contributions of the other party.

ARTICLE 13

 

Development of Opportunities

The Team shall work
jointly and separately to develop telecommunications opportunities in keeping
with the business objectives of the individual team members.

ARTICLE 14

 

Sanctioned Business Exclusions

The parties to this
Agreement shall work exclusively with each other, as hereinbefore stated in
Article 3 with respect to Projects, however either party (including any
officer, director, employee, shareholder, member, partner or other person
holding a legal or beneficial interest in Stellar or UTStarCom) may engage in
or possess an interest in other business ventures of every nature and
description, independently or with others including, but not limited to, any
business venture which competes or may compete with the Projects, Stellar or
UTStarCom.

 

-5-

 

ARTICLE 15

 

Notices

All notices hereunder
shall be given by letter addresses, except as each may change its address
pursuant hereto as follows:

 

	
  Stellar Holdings, LLC

  	
   

  	
  UTStarCom, Inc.

  
	
  190 South Seguin Ave,
  Suite 200

  	
   

  	
   

  
	
  New Braunfels, Texas
  78130

  	
   

  	
   

  
	
  Attention: Mr. N. Lohr
  Bangle, Jr.

  	
   

  	
  Attention:

  	
   

  

ARTICLE
17

 

Applicable Law

This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas
without giving effect to the conflicts of law principles thereof.  The parties agree that a judgment in any
such dispute may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.

Article 18

 

Damages Limitation

In no event shall either
of the parties hereto be liable for consequential, special, or indirect
damages, including lost profits or lost goodwill, whether arising from
contract, negligence, or any other legal cause of action.

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.

 

	
   

  	
  UTStarCom, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Robison

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Stellar Holdings, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Norm Bangle, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  N. Lohr Bangle, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Managing Partner

  

 

-6-

 

EXHIBIT A

Projects

[***]

 

EXHIBIT B

Reseller’s Agreement

 

RESELLER
AGREEMENT

(North America/Single Tier)

	
  UTSTARCOM: 

  	
   

  	
  UTSTARCOM, Inc.

  	
   

  	
  RESELLER: Stellar Holdings, LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Incorporation:

  	
   

  	
  Delaware

  	
   

  	
  Incorporation: Texas (LLC)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  1275 Harbor Bay Parkway

  	
   

  	
  Address:

  	
   

  	
  190 South Seguin Avenue, #200

  
	
   

  	
   

  	
  Alameda, California 94502

  	
   

  	
   

  	
   

  	
  New Braunfels, TX 78130

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attn:

  	
   

  	
  Legal Department

  	
   

  	
  Attn:

  	
   

  	
  Norm Bangle, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
  (510) 864-8800

  	
   

  	
  Telephone

  	
   

  	
  830.626.1193

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fax:

  	
   

  	
  (510) 864-8802

  	
   

  	
  Fax:

  	
   

  	
  830.626.1197

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Territory:

  	
  See Exhibit C (projects with exclusivity)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commitment 

  	
  [***]

  	
   

  
	
   

  	
   

  	
  Effective Date: September 10, 2002

  
										

 

This RESELLER Agreement,
including all exhibits (“Agreement”), is the entire agreement between the
parties concerning Reseller’s resale in the Territory of the Products (as
defined below).  This Agreement
supersedes, and its terms govern, any prior agreements (including without
limitation any nondisclosure agreements), proposals or other communications,
oral or written, between the parties with respect to the Products.  This Agreement may be changed only by mutual
written agreement of authorized representatives of the parties.  This Agreement governs all documents
(e.g., purchase orders) issued by RESELLER with respect to the Products
and any additional or conflicting terms and conditions contained in any such
documents are of no force and effect. 
In consideration of the mutual promises herein, UTSTARCOM and RESELLER
agree to be bound by this Agreement, including the following exhibits:

Exhibit A.               Terms
and Conditions

Exhibit B.               Products And
Discounts

Exhibit C.               Projects

PLEASE REVIEW THE ATTACHED EXHIBITS,
WHICH INCLUDE IMPORTANT

LEGAL TERMS, SUCH AS LIMITATIONS OF WARRANTIES AND REMEDIES.

 

	
  UTSTARCOM

  	
   

  	
  RESELLER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David Robison

  	
   

  	
  /s/ Norm Bangle, Jr.

  
	
  Authorized Signature

  	
   

  	
  Authorized Signature

  
	
   

  	
   

  	
   

  
	
  David Robison

  	
   

  	
  N. Lohr Bangle, Jr.

  
	
  Printed Name

  	
   

  	
  Printed Name

  
	
   

  	
   

  	
   

  
	
  V.P. Sales

  	
   

  	
  Managing Partner

  
	
  Title

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  9/15/02

  	
   

  	
  September 13, 2002

  
	
  Date

  	
   

  	
  Date

  

 

EXHIBIT A—TERMS AND
CONDITIONS

1.             Appointment

UTSTARCOM appoints
RESELLER, and RESELLER accepts such appointment, as a non-exclusive reseller to
end user customers (and not to other distributors or resellers) within the Territory
for the products listed on Exhibit B hereto (“Products”).  UTSTARCOM may unilaterally add products to,
or remove products from, Exhibit B from time to time during the
term of this Agreement, and any such addition or removal shall be effective immediately
upon written notification by UTSTARCOM. 
UTSTARCOM reserves the right to sell directly to any other customer in
the Territory.

2.             Prices

2.1           RESELLER’s purchase price for the
Products shall be: [***].

2.2           [***]

3.             Orders

3.1           RESELLER shall order Products by
written purchase order, which shall reference this Agreement and shall be
deemed governed by this Agreement. 
Orders are subject to acceptance by UTSTARCOM and its assignment of
delivery schedules in accordance with Product availability.  Any inconsistent or additional terms and
conditions contained on RESELLER’s purchase orders shall not be binding on
UTSTARCOM.

3.2           Changes by RESELLER in delivery
schedule (including cancellation) made within [***] days of scheduled
delivery will be subject to a rescheduling charge of [***].

4.             Shipments

Delivery of Products
purchased under this Agreement is F.O.B. [***], such delivery to be made to a
carrier or freight forwarder selected by UTSTARCOM unless otherwise specified
in writing by RESELLER.  Products will
be packaged by UTSTARCOM in accordance with UTSTARCOM’s standard
practices.  Products are deemed accepted
by RESELLER, and title, possession and risk of loss shall pass to RESELLER,
upon delivery of the Products by UTSTARCOM to the designated carrier or freight
forwarder.  [***]

5.             Payment Terms

5.1           All Products sold to RESELLER shall
be invoiced in full [***].  Payment is
[***] from date of invoice.

5.2           [***]

 

 

5.3           UTSTARCOM shall determine RESELLER’s
credit limit from time to time at UTSTARCOM’s discretion RESELLER will provide
to UTSTARCOM such financial information from time to time as may be reasonably
requested by UTSTARCOM.  If any order by
RESELLER exceeds its credit limit, or RESELLER fails to make payments when due
or otherwise defaults or commits a breach hereunder, UTSTARCOM may, effective
immediately upon giving notice to RESELLER, (i) suspend credit and delay
shipment until such terms are met, and/or (ii) alter the terms of payment;
and/or (iii) cancel any order then outstanding and/or (iv) pursue any
other remedies available by law or equity. 
Further, if RESELLER fails to pay any charges when due, UTSTARCOM may
charge RESELLER a late payment charge equal to [***].

6.             Other
Obligations of RESELLER

6.1           RESELLER will use reasonable commercial
efforts to promote the sale of the Products.

6.2           RESELLER will purchase [***].

6.3           RESELLER will purchase Products
having an aggregate invoice price no less than the quota set forth on the
signature page hereof during [***] and during [***].

6.4           RESELLER will have [***] of its
personnel attend, each calendar quarter, at least [***] technical training
courses offered by UTSTARCOM, at [***] expense.

6.5           RESELLER will offer its customers
technical support services consistent with industry practices.  To the extent that UTSTARCOM provides
RESELLER with access to upgrades or new releases of the Products purchased by
RESELLER hereunder, RESELLER will distribute those upgrades or new releases to
its customers.  UTSTARCOM is not
responsible for providing any technical support services to RESELLER’s
customers.

6.6           Within [***] after the end of each
calendar month, RESELLER will provide to UTSTARCOM written reports showing, for
the just completed calendar month, RESELLER’s shipments of Products and current
inventory levels.  Point-of-sale reports
(which will include at a minimum the name of the end user and the ship-to zip
code for all Products sold by RESELLER) and inventory reports shall be in the
formats prescribed by UTSTARCOM.

6.7           RESELLER shall promptly advise UTSTARCOM
of any complaints or claims brought or threatened against RESELLER with respect
to the sale or use of the Products or with respect to any alleged infringement.

6.8           RESELLER acknowledges that it is
familiar with the United States Foreign Corrupt Practices Act, which prohibits
the offering, giving or promising to offer or give, directly or indirectly,
money or anything of value to any official of a government, political party or
instrumentality thereof in order to assist RESELLER or UTSTARCOM in obtaining
or retaining business.  RESELLER shall
not act in any fashion or take any action, in the performance of its
obligations under this Agreement, which violates, or would render UTSTARCOM
liable for a violation of, either the United States Foreign Corrupt Practices
Act or any similar statute or regulation in any jurisdiction in which RESELLER
does business.  RESELLER’s violation of
this

 

 

-2-

 

provision shall be deemed
a material breach of this Agreement, entitling UTSTARCOM to terminate this
Agreement immediately by written notice to RESELLER.  RESELLER agrees to defend, indemnify and hold UTSTARCOM harmless
from all liabilities, claims, losses and damages arising from RESELLER’s breach
of this obligation.

7.             Other
Obligations of UTSTARCOM

7.1           If sales transactions occur that
involve the sale of Products by UTSTARCOM directly to end user purchasers that
were referred to UTSTARCOM by RESELLER, UTSTARCOM will determine in its
complete and sole discretion whether to compensate RESELLER.

7.2           While Products purchased by RESELLER
are under warranty as set forth under Section 8 below, UTSTARCOM will
provide RESELLER with access to all new releases and upgrades specifically
applicable to such Products, subject to the configurations and options that
RESELLER has purchased.

8.             Warranty

8.1           Products Warranty.  UTSTARCOM warrants to RESELLER only that the
Products conform in all material respects to the end user documentation
provided with the Products and that the hardware components of the Products
will be free from defects in materials and workmanship until the date which is
[***] (“Warranty Period”); provided that the Warranty Period shall not
exceed [***].  This limited warranty
does not cover [***].  This warranty
extends only to RESELLER and is not assignable to any other party.

8.2           Warranty Claims.  If RESELLER believes that Products do not
conform to the warranty set forth in Section 8.1, RESELLER shall promptly
notify UTSTARCOM in writing of such nonconformance, but in no event later than
[***] for those Products, and shall provide such details of the nonconformance
as UTSTARCOM reasonably requests. 
RESELLER will, upon the request of UTSTARCOM and in accordance with UTSTARCOM’s
standard return procedures, return such Products to UTSTARCOM at [***] expense
and risk.  The final determination
whether Products fail to satisfy this warranty will be made [***].  If UTSTARCOM determines that returned
Products do conform to this warranty, then UTSTARCOM will return such Products
at [***] expense and risk.  If Products
are deemed to fail to conform to this warranty by UTSTARCOM, RESELLER’s sole
remedy shall be, at [***] option and expense, the repair or replacement and
return of the Products, or a refund (or, at the option of RESELLER, a credit)
of the price or fee paid by RESELLER for the Products.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT
TO THE CONTRARY, THE FOREGOING IS RESELLER’S SOLE AND EXCLUSIVE REMEDY FOR
BREACH OF WARRANTY BY UTSTARCOM WITH RESPECT TO THE PRODUCTS.

8.3           Disclaimer of Warranties.  [***], UTSTARCOM DISCLAIMs ALL WARRANTIES
WITH RESPECT TO THE PRODUCTS, EXPRESS OR IMPLIED, INCLUDING AS TO PERFORMANCE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE.

-3-

 

9.             Confidentiality

No proprietary
information disclosed by either party to the other in connection with this
Agreement shall be disclosed to any person or entity other than the recipient
party’s employees and contractors directly involved with the recipient party’s
use of such information who are bound by a written agreement to protect the
confidentiality of such information, and such information shall otherwise be
protected by the recipient party from disclosure to others with the same degree
of care accorded to its own proprietary information.  To be subject to this provision, information must be delivered in
writing and designated as proprietary or, if oral information, summarized in a
writing delivered to the recipient within [***] after the oral disclosure.  Information will not be subject to this
provision if it is or becomes a matter of public knowledge without the fault of
the recipient party, if it was a matter of written record in the recipient
party’s files prior to disclosure to it by the other party, or if it was or is
received by the recipient party from a third person under circumstances
permitting its

-4-

 

EXHIBIT B—PRODUCTS
AND DISCOUNTSExhibit
10.80

 

[***]
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS

 

 

 

 

JOINT VENTURE CONTRACT

for the Establishment of

UNIVERSAL COMMUNICATION TECHNOLOGY

(HANGZHOU) COMPANY LIMITED

by and among

UTSTARCOM TELECOM CO., LTD.,

MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.

and

MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD.

 

 

	
  Table of Content

  
	
   

  	
   

  
	
  Chapter 1.

  	
  General Provisions

  
	
  Chapter 2.

  	
  Definitions

  
	
  Chapter 3.

  	
  Joint Venture Parties

  
	
  Chapter 4.

  	
  Establishment of the Company

  
	
  Chapter 5.

  	
  Purpose and Business Scope

  
	
  Chapter 6.

  	
  Total Amount of Investment &
  Registered Capital

  
	
  Chapter 7.

  	
  Representation & Warranty

  
	
  Chapter 8.

  	
  Responsibilities of Parties

  
	
  Chapter 9.

  	
  Board of Directors

  
	
  Chapter 10.

  	
  Business Management Organization

  
	
  Chapter 11.

  	
  Labor Management

  
	
  Chapter 12.

  	
  Tax, Financial Affairs and
  Accounting

  
	
  Chapter 13.

  	
  Confidentiality

  
	
  Chapter 14.

  	
  Profit Distribution

  
	
  Chapter 15.

  	
  Insurance

  
	
  Chapter 16.

  	
  Equipment and Materials

  
	
  Chapter 17.

  	
  Sale of Products

  
	
  Chapter 18.

  	
  Duration of the Company

  
	
  Chapter 19.

  	
  Dissolution of the Company

  
	
  Chapter 20.

  	
  Liquidation and Disposal of Assets

  
	
  Chapter 21.

  	
  Liabilities for Breach of Contract;
  Indemnities

  
	
  Chapter 22.

  	
  Force Majeure

  
	
  Chapter 23.

  	
  Intellectual Property

  
	
  Chapter 24.

  	
  Applicable Law

  
	
  Chapter 25.

  	
  Settlement of Disputes

  
	
  Chapter 26.

  	
  Language

  
	
  Chapter 27.

  	
  Notice

  
	
  Chapter 28.

  	
  Trademark

  
	
  Chapter 29.

  	
  Effectiveness of Contract and
  Miscellaneous

  

 

 

Chapter 1              GENERAL
PROVISIONS

 

Article 1

 

THIS JOINT VENTURE CONTRACT (hereinafter referred to as the “Contract”) is signed
in on the fifth day of July in 2002 in Yokohama, Japan, in accordance with the
Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures
(the “Joint Venture Law”) and other applicable Chinese laws, by and among UTStarcom Telecom Co., Ltd. (hereinafter
referred to as “Party A”, or “UTS”), Matsushita
Electric Industrial Co., Ltd. (hereinafter referred to as
“Party B”, or “MEI”) and Matsushita
Communication Industrial Co., Ltd. (hereinafter referred to as
“Party C”, or “MCI”).  The Parties
hereto agree to jointly invest to establish a sino-foreign equity joint venture
company in Hangzhou, Zhejiang Province of the People’s Republic of China based
on the principles of equality and mutual benefit in accordance with the terms
and conditions set forth below.

Chapter 2              DEFINITIONS

 

Article 2

 

For
purposes of this Contract, except as otherwise expressly provided or unless the
content clearly indicates a contrary intent, the following terms shall have the
meanings set forth below:

“Affiliate” of a
Party means any corporation, partnership, joint venture or other entity or
natural person controlling, controlled by, or under common control with, such
Party, excluding the Company; a person or entity shall be deemed to “control”
another person or entity if the former possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of the
latter, through ownership of majority voting securities.

“Articles of
Association” shall mean, the Articles of Association of the Company as executed
by the Parties hereto and amended thereafter from time to time.

“Board of
Directors” shall mean the board of directors of the Company.

 

“Company” shall
mean “Universal Communication Technology
(Hangzhou) Company Limited” in English and [Chinese Characters] in Chinese, the joint
venture company formed by the Parties pursuant to the Joint Venture Law, other
applicable laws and regulations of the PRC and this Contract.

“Contract”, unless
otherwise indicated, shall mean this contract, including appendixes.

“Party” and
“Parties” shall mean each and all of Party A, Party B and
Party C.

“PRC law(s)” shall
mean the national and local laws, regulations and rules of the PRC.

“RMB” shall mean
the legal currency of China.

“Trademark” and
“Business name” shall mean the trademark and/or business name of the
Party A to be licensed to the Company.

“US Dollars” or
“US$” shall mean the legal currency of the United States of America.

Chapter 3              JOINT
VENTURE PARTIES

 

Article 3

 

The
Parties to this Contract are as follows:

UTStarcom Telecom Co., Ltd., registered in Hangzhou, People’s
Republic of China, with its legal address at 2,3 Yile Industrial Park, 129# Wen
Yi Road, Hangzhou, China

 

	
  Legal representative:

  	
  Name: Ying Wu

  
	
   

  	
  Position: Chairman

  
	
   

  	
  Nationality: Chinese

  

Matsushita Electric Industrial Co.,
Ltd., registered
in 1006 Kadoma, Kadoma-shi, Osaka 571-8501, Japan.

 

 

-2-

 

	
  Legal representative:

  	
  Name: Kunio Nakamura

  
	
   

  	
  Position: President

  
	
   

  	
  Nationality: Japanese

  

Matsushita Communication Industrial
Co., Ltd.,
registered in 4-3-1 Tsunashima-higashi, Kohoku-Ku, Yokohama, 223-8939, Japan.

 

	
  Legal representative:

  	
  Name: Yasuo Katsura

  
	
   

  	
  Position: President

  
	
   

  	
  Nationality: Japanese

  

Chapter 4              ESTABLISHMENT
OF THE COMPANY

 

Article 4

 

The
Parties hereto agree to set up a Sino-foreign joint venture company in
accordance with the Joint Venture Law and other applicable PRC laws and this
Contract.  This Contract shall become
effective on the day on which the approval of this Contract by the examination
and approval authority be obtained.

 

Article 5

 

The
name of the Company shall be Universal
Communication Technology (Hangzhou) Company Limited in English and [Chinese Characters]
in Chinese.  The legal address of the
Company shall be 3 Yile Industrial Park, 129# Wen Yi Road, Hangzhou, China.

 

Article
6

 

The
activities of the Company shall be governed by and comply with PRC laws.

 

Article
7

 

The
Company shall be a limited liability company under the laws of the PRC.  The liability of the Parties for the losses,
risks, liabilities and any other obligations whatsoever of the Company shall be
limited and in proportion to the subscribed amount of their respective
contributions to the registered capital of the Company.  No Party shall have any liability to
the Company or to any third Party in connection with the activities of the
Company either jointly or severally other than the requirement

 

 

-3-

 

 

to
make such contribution, unless otherwise agreed to in writing by the
Parties.  In no event shall any
Party be responsible for any losses, risks, liabilities or obligations
whatsoever resulting from any act of the other Parties.

 

Article
8

 

The
production plan covering the period from the signature of this Contract to
commencement of production by the Company shall be in compliance with those
plan confirmed by the Parties upon signature of this Contract by the Parties.  Each Party shall be responsible for
carrying out its obligation as assigned in accordance with such production
plan.

Chapter 5              PURPOSE
AND BUSINESS SCOPE

 

Article
9

 

9.1                                 The purpose of establishment of the
Company is to cause the Company to engage in the business described in
Article 9.2 hereof on the principles of maximizing the profit.

9.2                                 The business scope of the Company shall
be design and development, manufacturing, sales, repair service of
communication products such as [***] (hereinafter referred to as “Products”).

Chapter 6              TOTAL
AMOUNT OF INVESTMENT AND

REGISTERED CAPITAL

 

Article
10

 

The
total amount of investment of the Company shall be [***].

 

Article
11

 

The
registered capital of the Company shall be [***] US Dollars [***].  Party A’s contribution to the
registered capital of the Company shall be RMB in cash which is equivalent to
[***] which accounts for [***] of the total registered capital of the
Company.  Party B’s contribution to
the registered capital of the Company shall be [***] in cash, which accounts
for [***] of the total registered capital of the Company.  Party C’s contribution to the
registered capital of the Company shall be [***] in cash, which accounts for
[***] of the total registered capital of the Company.

 

-4-

 

Article 12

 

The
Parties hereto shall respectively make all of their contributions to the
registered capital of the Company within [***] following the issuance of the
business license of the Company.

 

Article 13

 

After
the Parties have made their respective contributions in accordance with the
foregoing provision, the Company shall, on the basis of a capital contribution
verification report issued by an accounting firm registered in the PRC and
retained by the Company, issue an investment certificate to each Party.  Such investment certificate shall specify
the name of the Company, the date of the establishment of the Company, the name
of the Party and the capital investment contributed thereby, the dates of
each contribution, and the date of the investment certificate.

 

Article 14

 

The
balance between the total amount of investment and registered capital of the
Company may, pursuant to the decision of the Board of Directors in accordance
with the business needs of the Company, be raised by the Company through loans
from domestic and/or foreign financial institutions.

 

Article 15

 

The
Company may increase and reduce its registered capital subject to any necessary
approval of the examination and approval authority.  In case of any increase of the registered capital, each
Party shall have the right to subscribe to the amount of such additional
capital in accordance with its respective proportional equity interest at the
time.  If any Party does not
subscribe to the amount of additional capital in accordance with its
proportional equity interest at the time, the other Parties may subscribe to
it, in which event appropriate adjustments shall be made to the ratio of the
equity interest of the Parties.

 

Article 16

 

16.1                           Except for transfer of any part of its
equity interest from Party C to Party B, no Party may transfer,
sell, assign, give or otherwise dispose of all or any part of its equity
interest in the Company without the express prior written consent of the other
Parties, the approval of the Board of Directors, and the approval of the
original examination and approval authority.

 

-5-

 

In the event a
Party intends to assign and transfer all or part of its equity interest to
any of its Affiliates, however, the other Parties shall grant its consent.

16.2                           The equity interest owned by each
Party shall be free and clear of any and all encumbrances, security and/or
liens of any nature whatsoever.

16.3                           The transfer of its equity interest by
the Party shall become effective upon the approval by the original
examination and approval authority after the resolution of the Board of
Directors and, signature of the agreement for the transfer of equity interest.

16.4                           When one Party to the Company assigns,
or transfers all or part of its equity interest (hereinafter referred to as
“Proposing Party”), the other Parties shall have pre-emptive right to purchase
such equity interest.  If such
pre-emptive right is not exercised within the [***] day period, the Proposing
Party shall have the right, exercisable after the expiry of the [***] day
period or the receipt of the offer to purchase portion of the equity interest
from the other Parties as the case may be, to transfer the equity interest to
the third Party at the price, determined based on the latest audited
financial statements and on terms and conditions not more favorable to such
third Party than those proposed by the Proposing Party for the
exercise of pre-emptive rights.

16.5                           Upon any transfer by a Party of all
or any part of its equity interest in the Company, the transferring
Party shall surrender to the Company for cancellation its investment
certificates issued by the Company, and the Company shall issue a new
investment certificate to the transferee, if necessary.

16.6                           After the approval of the original
examination and approval authority of any increase or reduction of the
registered capital of the Company or of any transfer of any Party’s interest in
the Company, procedures for registration shall be handled by the Company with
the relevant department of administration of industry and commerce.

 

-6-

 

Chapter 7              REPRESENTATION
AND WARRANTY

 

Article 17

 

17.1                           Party A hereby represents and
warrants that:

i.                                          Party A is a limited liability
company duly established, valid and existing in good standing as a legal person
in accordance with PRC laws.

ii.                                       Party A has all requisite power and
authority and all necessary licenses and permits to execute and perform this
Contract, all of the Appendixes attached hereto, the Articles of Associations,
and any agreement and documents referred to in this Contract to which it is a
Party and will be bound by the terms and conditions therein.  The execution, delivery and performance of
this Contract by Party A will not violate any provisions of PRC laws.

iii.                                    Party A’s representative, whose
signature is affixed to this Contract, has been fully authorized to execute
this Contract pursuant to a valid power of attorney.

iv.                                   Party A’s execution, and performance
of this Contract, the Articles of Association and any other agreements and
documents contemplated hereafter will not violate any of its constitution
documents, its any other agreement or obligation, or any currently effective
PRC law that may be applicable to any aspect of the transactions contemplated
hereafter.

17.2                           Party B and Party C hereby
represent that:

i.                                          Party B and Party C are limited
liability companies duly incorporated and valid existing in good standing under
the laws of Japan.

ii.                                       Party B and Party C have all
requisite power and authority and all necessary licenses and permits to execute
and perform this Contract, all of the Appendixes attached hereto, the Articles
of Associations, and any agreement and documents referred to in this Contract
to which it is a Party and will be bound by the terms and conditions
therein.

 

-7-

 

iii.                                    Representatives of Party B and
Party C, whose signatures are affixed to this Contract, have been fully
authorized to execute this Contract pursuant to a valid power of attorney.

iv.                                   Execution, and performance of this
Contract, the Articles of Association and any other agreements and documents
contemplated hereafter by Party B and Party C will not violate any of
its constitution documents, its any other agreement or obligation, or any
currently effective law, regulation or decree of its jurisdiction of
organization or incorporation that may be applicable to any aspect of the
transactions contemplated hereafter.

Chapter 8              RESPONSIBILITIES
OF PARTIES

 

Article 18

 

18.1                           Party A, Party B and
Party C shall respectively be responsible for the following duties and
obligations:

i.                                          Making timely contribution in full to the
registered capital pursuant to Articles 12 herein.

ii.                                       Assisting each other in obtaining
necessary approval and registration from the Chinese authorities.

iii.                                    Assisting the Company in obtaining
availability of foreign currency in the PRC and loans from financial
institutions in the PRC, in purchasing or leasing of parts and office
equipment, in applying for supplies of fuel, water, electricity, gas and for
telephone, telegraph, facsimile, telex and other communication facilities, and
any other necessary for the Purpose of this Agreement.

iv.                                   For the proper operation of the JV, each
party hereto agrees to order the members of the Board of Directors it
assigns to the JV to reach, after the establishment of the JV, a resolution of
the Board of Directors to duly execute the agreements attached hereto as
Appendix I (MCI Technical License Agreement), Appendix II (UTS
Technical

 

-8-

 

License
Agreement), Appendix III (Equipment Purchase Agreement) and
Appendix IV (Personnel Assignment Agreement).

v.                                      Licensing or caused to be licensed to the
Company, pursuant to the terms and conditions of the Technical License
Agreement.

vi.                                   For Party B, entering into Personnel
Assignment; and for Party C, Equipment Purchase Agreement and Personnel
Assignment Agreement.

18.2                           Any expense arising out of the period
from the signature of this Contact by all Parties to the commencement of the
production of the Products shall be appropriated for start-up expenses of the
Company to the extent agreed by the Parties. 
Any expense firstly owed by the Party(s) prior to the signature of this
Contract by all Parties and to be appropriated for start-up expenses shall be
appropriated for start-up expense after written consent of all Parties.

Chapter 9              BOARD
OF DIRECTORS

 

Article 19

 

The
Company shall establish a Board of Directors. 
The date of issuance of the Company business license shall be the date
of the establishment of the Board of Directors of the Company.

 

Article 20

 

The
Board of Directors shall be composed of [***] members including the chairman,
of which [***] shall be appointed by Party A, [***] shall be appointed by
Party B and the [***] by Party C. 
The chairman of the Board of Directors (hereinafter referred to as the
“Chairman”) shall be appointed by [***].

 

Article 21

 

The
term of office for the directors and the Chairman shall be [***]; the term of
office for the directors may be renewed by the appointing Party.  Each Party may, by giving [***] of
prior written notice to the other Parties, remove at any time any director whom
it has appointed.  If a director is
removed during his term of office, the director succeeding him shall serve for
the remaining term of office of such former director.

 

-9-

 

Article 22

 

The
Chairman shall be the legal representative of the Company.  Should the Chairman be unable to perform his
responsibilities for some reasons, he/she may authorize any other director to
represent the Company temporarily.

 

Article 23

 

23.1                           The Board of Directors shall be the
highest authority of the Company and shall have the right to make decisions on
all major and important matters of the Company.

23.2                           Resolutions involving the following
matters shall require the unanimous approval of the directors present, including
any proxies at a duly convened meeting of Board of Directors:

i.                                          any amendment or modification of the
Articles of Association.

ii.                                       increase, assignment or deduction of
registered capital and the adjustment of each Party’s contribution to the
registered capital’s ratio.

iii.                                    merger of the Company with any other
economic organization.

iv.                                   termination, dissolution or liquidation
of the Company.

23.3                           Resolutions involving the following
matters shall require an affirmative vote of at least four fifths (4/5) of the
directors present, including any proxies at a duly convened meeting of Board of
Directors:

i.                                          issuance of any guarantees for the
payment obligations of any person or entity or the making of any other
financing arrangements.

ii.                                       approval of an individual loan
transaction or aggregate loan transactions on behalf Company.

iii.                                    approval of capital expenditures or
capital commitments with a value exceeding [***].

 

-10-

 

iv.                                   assignment, transfer, sale, lease or
other disposition of any business or assets of the Company with a value
exceeding [***] or the taking over or acquisition of any business or assets of
any other person or entity with a value exceeding [***].

v.                                      mortgage, pledge or granting of a security
interest or other types of liens in any building, factory, office space or
other fixed assets or capital equipment of the Company with a value exceeding
[***].

vi.                                   addition of items to or change of the
scope of business of the Company:

vii.                                establishment of any subsidiaries or
related legal persons, including but not limited to representative offices,
branch offices and/or subsidiaries.

viii.                             reorganization of the management
organization of the Company.

ix.                                     appointment, suspension and dismissal of
the general manager, deputy general manager, chief financial officer as well as
his/her scope of authority.

x.                                        formulation of annual operating plan and
marketing policies of the Company.

xi.                                     formulation of pricing policy for
Products

xii.                                  distribution of profits of the Company

xiii.                               execution of any contracts with a
performance term of greater than [***] or involving individually or in the
aggregate more than [***].

xiv.                              licensing of technology or know-how to or
from any third party.

xv.                                 approval of remuneration and benefits of
the general manager, deputy general manager, and chief financial officer.

xv.                                 approval of the annual business plan and
annual budget of the Company

xvii.                           approval of the annual auditing report of
the Company.

 

-11-

 

xviii.                        approval of any insurance to be carried
by the Company.

xix.                                determination of the Company’s employment
plans, employee salary plans, pensions, fringe benefits and bonus plan.

xx.                                   contribution, use or expenditure of the
general reserve fund, the bonus  and
welfare fund and the enterprise expansion fund to be established under the PRC
laws.

xxi.                                establishment or change of the accounting
system of the Company, or appointment or dismissal of Company independent
financial accountants or legal counsel.

xxii.                             other matters submitted to the Board of
Directors.

 

Article 24

 

24.1                           The Board of Directors shall meet at
least once each year.  The First meeting
of Board of Directors shall be held within thirty (30) days from the date of
the issuance of the business license of the Company.  The Chairman shall set the agenda of meetings of Board of
Directors and shall be responsible for convening and presiding over meetings of
the Board of Directors.

24.2                           The Chairman shall call a special or interim
meeting of the Board of Directors under a request of at least two (2) directors
specifying the matters to be discussed, and shall notify all directors in
writing of the agenda .

24.3                           The Chairman shall notify each director
in writing of the time, date, place and agenda of any meeting of Board of
Directors thirty (30) days prior to a regular meeting and twenty (20) days
prior to a special or interim meeting. 
However, upon the request of at least three fifths (3/5) of all the
directors, any special or interim meeting of the Board of Directors may be held
without going through such advance notification procedure, but reasonable time
and writing notice shall be given to all the directors for their attending.

24.4                           Unless otherwise agreed to by the Board
of Directors, all meetings of the Board of Directors shall be held at the
Company’s legal address.

 

-12-

 

24.5                           Meetings of the Board of Directors may be
held by telephone or other electronic audio means such that all persons
participating in the meeting are able to hear, be heard and communicate with
each other at all times, and participation by a director or his proxy in a
meeting by such means shall constitute presence of such director or his proxy
in person at the meeting.

24.6                           Any action to be taken at any meeting of
the Board of Directors may be taken without a meeting of Board of Directors if
all directors consent to such action in writing, and such written consent shall
be filed in the minute book.

24.7                           If the Chairman gets sick or injured and
becomes unable to preside over regular meeting of Board of Directors, another
director specifically authorized by the Chairman shall call upon the aforesaid
meeting and take over the rights and powers of the Chairman.

24.8                           Any director who is unable to attend a
meeting of Board of Directors for any reason may appoint a proxy in writing, to
attend and vote on his/her behalf.  The
proxy shall have the same rights and powers as the director who entrusted him.

24.9                           Majority of the Board of Directors shall
be present in person or by proxy at any meetings of the Board of Directors to
form a quorum.

24.10                     Detailed minutes shall be made for each
meeting of the Board of Directors and be signed by all directors and proxies
present at the meeting.  The minutes
shall be written in both Chinese and English, but only the English text shall
be authentic and have legal force. 
Minutes shall be kept by the Company during its term of existence and be
made freely available to all directors and each Party at any time.

24.11                     The traveling expenses, accommodation and
other costs and expenses directly incurred by a director or a proxy in
performing its duties as a director of the Company shall be borne by the
Company.

24.12                     Meetings of the Board of Directors shall
proceed in accordance with the agenda determined pursuant to the provisions
herein, and each matter on the agenda shall be discussed appropriately and, if
necessary, put to a decision by way of resolutions.  Any resolutions

 

-13-

 

made at a meeting
conducted by telephone or other means of communication shall be confirmed in
writing by all the persons participating in the meeting no later than seven (7)
days after the meeting and filed in the minute books of the Company.

24.13                     All information discussed at meetings of
the Board of Directors shall be treated as confidential and shall not be
disclosed to any third Party other than Parties without the approval of
the Board of Directors, unless otherwise required by law.

Chapter 10            BUSINESS
MANAGEMENT ORGANIZATION

 

Article 25

 

The
Company shall establish a management office under the Board of Directors to be
responsible for the daily operation and management of the Company.  The management office shall have one (1)
general manager and one (1) deputy general manager.  The general manager shall be nominated by Party A and
appointed by the Board of Directors, while the deputy general manager shall be
nominated by Party C and appointed by the Board of Directors.  The deputy general manager shall assist the
general manager in the daily operation and management of the Company, and the
general manager and the deputy general manager shall jointly organize and lead
the daily operation and the management of the Company.  The Company may set up various departments
to be responsible for such matters as technology, manufacturing, finance,
customer services, and administration.

 

Article 26

 

The
management office shall directly report to the Board of Directors, and shall
carry out the decisions of the Board of Directors, and shall organize and lead
the daily operation and management of the Company.  The specific rights and powers of the management office are
prescribed below:

(a)                                  implement this Contract and its appendixes,
the Articles of Association and the resolutions made by the Board of Directors.

(b)                                 formulate the annual operating plan and
submit to the Board of Directors for review and approval.

(c)                                  organize and manage the daily operation
of the Company.

 

-14-

 

(d)                                 submit regularly to the Board of
Directors written reports on the revenue and expenses of the Company.

(e)                                  formulate and implement the rules and
regulations on the operation and management of the Company.

(f)                                    appoint and dismiss the department
managers

(g)                                 determine the specific duties and
responsibilities of the deputy general manager and the department managers.

(h)                                 determine the employment and dismissal of
employees other than those to be determined by the Board of Directors, the
policies regarding rewards and punishment, promotion and salaries of employees
and personnel training programs.

(i)                                     approve capital expenditures or capital
commitments or such commitment in the aggregate of less than [***] in any
fiscal year.

(j)                                     formulation of marketing policies of the
Company subject to approval of the Board of Directors.

(k)                                  establishment of policies and procedures
for the management of the Company and change of the structure of the management
organization of the Company subject to approval of the Board of Directors.

(l)                                     formulation of the Company’s employment
plans, employee salary plans, pensions, fringe benefits, and bonus plans
subject to approval of the Board of Directors.

(m)                               Formulation of contribution, use or
expenditure of the general reserve fund, the bonus and welfare fund and the
enterprise expansion fund to be established in accordance with PRC law, subject
to approval of the Board of Directors.

(n)                                 approval of any insurance to be carried
by the Company, subject to approval of the Board of Directors.

 

-15-

 

(o)                                 refer matters of importance to the
Company to the Board of Directors for its consideration.

(p)                                 handle other matters within the scope of
authorization granted by the Board of Directors.

 

Article 27

 

The
term of office of the general manager and the deputy general manager shall be
[***] and their term of office may be renewed by the Board of Directors if they
are continuously nominated and recommended by the nominating and recommending
Party.

Chapter 11            LABOUR
MANAGEMENT

 

Article 28

 

The
recruitment and employment of employees of the Company shall be made in
accordance with the provisions of the Contract and the guidelines adopted by
the Board of Directors and based on the merits of the candidates and shall be
supervised and approved by the general manager, subject to the consultation of
the deputy general manager.  However,
the Company shall accept employees dispatched by Party A, Party B or
Party C as long as necessary for the purpose of this Contract in
accordance with Personnel Assignment Agreement attached hereto as
Appendix IV for Party C. 
Dispatched employees from Party A, Party B and Party C
(except the general manager, the deputy general manager, chief financial
officer and deputy department manager of design and development department)
shall be decided by the General Manager based on business needs.

 

Article 29

 

The
Company shall sign labor contracts with its employees, which contracts shall
cover dismissal and resignation, wages, insurance, welfare benefits, rewards,
disciplines, penalties and other matters, in accordance with applicable PRC
laws.

 

Article 30

 

30.1                           Without the consent of the general
manager subject to the consultation of the deputy general manager, no employees
of the Company except those dispatched by either Party B or Party C,
shall maintain any employment relationship, whether contractual or otherwise,
with

 

-16-

 

any third
Party during their employment with the Company.  In the event any such employee is found to be maintaining an
employment relationship with any third party, the Company shall have the right
to terminate the employment of such employee at any time without any liability.

30.2                           All personnel of the Company shall be
subject to confidentiality obligations concerning information obtained from the
Company and all Parties and shall be strictly forbidden from disclosing any of
such information to any third Party without the prior authorization and
approval of the general manager and the deputy general manager.

Chapter 12            TAX,
FINANCIAL AFFAIRS AND ACCOUNTING

 

Article 31

 

The
Company shall pay taxes and make proper withholding of income taxes from
payments made to its employees in accordance with the requirements of PRC laws.

 

Article 32

 

The
Company shall establish a financial and accounting system in accordance with
PRC laws and this Contract.  Such
financial and accounting system and any major change thereof shall be subject
to the approval of the Board of Directors.

 

Article 33

 

The
fiscal year of the Company shall coincide with the calendar year, i.e. from
January 1 to December 31 of each year.  The first fiscal year shall begin from the date of the
establishment of the Company and end on December 31 of that year and the
last fiscal year shall end on the date of the dissolution of the Company.

 

Article 34

 

34.1                           The accounting of the Company shall be
subject to the International Uniform Regime of Rights and Liabilities and the
International Uniform Accounting System of Debit and Credit.  All accounting records, vouchers, books and
statements of the Company shall be made and

 

-17-

 

kept in both
Chinese and English.  All financial
statements and reports of the Company shall be made and kept in both Chinese
and English.

34.2                           Any Party may, at its own expense
and at any time, appoint an accountant for its own audit (the “Accountant”), who may be either an
accountant registered abroad or registered in the PRC.  Auditing results by the Accountant shall not
be deemed as an official report issued by the Company, provided, however, that
the Company shall fully cooperate with the Accountant in its auditing and
provided, further, that the auditing results by the Accountant shall be
properly reflected to the Company, to the extent permitted by applicable laws
and regulations.

 

Article 35

 

The
Company shall have its account denominated in RMB, but may, if necessary, also
adopt US Dollars or other foreign currencies as supplementary bookkeeping
currencies.  Where RMB is converted to
other currencies, the conversion coefficient shall [***].

 

Article 36

 

Allocations
for reserve funds and enterprise expansion funds of the Company and bonuses and
welfare funds for staff and workers shall be set aside in accordance with
applicable laws.  The annual proportion
of allocations shall be decided by the Board of Directors according to the
financial conditions of the Company and applicable PRC laws.  The target annual proportion of allocations
shall be [***] subject to changes, of after-tax profit as determined in
Article 45.1.

 

Article 37

 

The
Company shall open RMB and foreign currency accounts with banks registered in
China in accordance with PRC laws.  The
foreign exchange matters of the Company shall be handled in accordance with the
provisions of the PRC foreign exchange laws.

 

Article 38

 

The
Company shall pay the reasonable costs of preparing regular financial
statements as may be needed by Party A, Party B or Party C.

 

-18-

Chapter 13            CONFIDENTIALITY

Article 39

Each Party shall maintain the secrecy
and confidentiality of and not disclose to any third person or party, directly
or indirectly, any proprietary information or any secret or confidential
information which is disclosed by the Company or the other Parties, except
where the information properly comes into public domain.

Article 40

The Parties hereto shall cause their
directors, senior staff and other employees to comply with the confidentiality
obligations set forth in Article 39.

Article 41

Without the approval of the Board of
Directors, the Company shall not disclose proprietary information concerning
the Company to any persons or entities except to Party A, Party B and
Party C during the valid term of this Contract (excluding information
which is required to be reported to officials or departments of the Chinese
government), unless such information is already in the public domain.  For business purpose, the Company may
disclose proprietary information to any third Party company under a
non-disclosure agreement with this third Party company.

Article 42

This Chapter shall survive for ten (10) years
after the expiration or termination of this Contract and the termination or
dissolution of the Company.

Article 43

Both Parties to this Contract shall cause
their appointed directors to the Company to require the Company personnel to
execute appropriate contracts or agreements to maintain the secrecy of
proprietary and confidential information of the Company.

Article 44

The Party Breaching the obligations of
confidentiality shall be liable for damages suffered by the other Parties.

 

-19-

 

Chapter 14            PROFIT
DISTRIBUTION

Article 45

The Company shall distribute profits to the
Parties as follows:

45.1                           Within [***] from the end of each fiscal
year, the Board of Directors shall determine the amount of after-tax profit of
the Company to be reserved for production and operation and the amount of
profits to be distributed to the Parties [***].  Distribution of profits to the Parties B and C shall be made
in Japanese Yen.

45.2                           Losses from previous years must be made
up before any profits from the current year shall be distributed to the
Parties.  The undistributed profits of
the past year(s) may be distributed together with this years’ profits.

Chapter 15            INSURANCE

Article 46

Insurance of the Company against all risks
shall be from the insurance companies registered within China.  The cover, amount, period, etc of the
insurance shall be proposed by the general manager and the deputy general
manager in accordance with the needs of the Company, subject to approval by the
Board of Directors.

Chapter 16            EQUIPMENT
AND MATERIALS

Article 47

The Company shall purchase equipment from
Party A, Party B, Party C and any third Party in accordance with
Equipment Purchase Agreement attached hereto as Appendix III for purchase
from Party C.  Other equipment,
materials and parts of the Products necessary for the operation and business of
the Company shall be procured in or outside the PRC in accordance with the
operation plan and the business plan authorized by the Board of Directors.

 

Party A shall assist the Company in
procuring equipment and parts and materials necessary for the Products in PRC
by introducing sellers, negotiation for purchase agreements for such equipment
and parts and materials.

 

-20-

 

Chapter 17            SALE
OF PRODUCTS

Article 48

The sale of Products shall be in accordance
with the business operation authorized by the Board of Directors.

Chapter 18            DURATION
OF THE COMPANY

Article 49

The duration of the Company shall be [***]
commencing from the date on which the business license of the Company is
issued.  An application for the
extension of duration, proposed by one Party and unanimously approved by the
Board of Directors, shall be submitted to the examination and approval
authority six months prior to the expiration date of the term of the Company.

Chapter 19            DISSOLUTION
OF THE COMPANY

Article 50

50.1                           The Company shall be dissolved and this
Contract shall be terminated in case any of the following situations or
accidents occurs

i.                                          the term of this Contract expires and is
not extended.

ii.                                       any Party delays to perform its
obligations to contribute in full its subscription of the registered capital
pursuant to this Contract and fails to perform the said obligations within
[***] commencing from the date specified in this Contract.

iii.                                    the Company does not generate, as
reported by its audited financial statements, a net profit for [***] after
consultation, the Parties fail to agree on how to improve satisfactorily the
financial situation of the Company.

iv.                                   due to an event of force majeure as
stipulated herein, the Company is unable to continue to carry out operations
for [***] consecutive days from the day the event of force majeure occurs and
the Parties fail to agree on how to improve the situation.

 

-21-

 

v.                                      the Company is ordered to close in
accordance with PRC laws because of serious violations of PRC laws.

vi.                                   the operation and business as approved by
the relevant departments of Chinese government are prohibited or significantly
restricted by any government authority.

50.2                           In the event any of the conditions set
forth in (ii) above occurs, any non-breaching Party shall have the right to
unilaterally apply to the examination and approval authority to terminate this
Contract and dissolve the Company.

50.3                           In the event any of the conditions set
forth in any of (iii) through (vi) above occurs, either Party shall have the
right to notify the other Parties in writing and request that this Contract be
terminated and the Company be dissolved. 
Upon such request, the Board of Directors shall within thirty (30) days
of such written request, adopt resolutions for such termination, and the
Company shall apply to the relevant PRC authorities for approval of such
termination and dissolution.  Each Party
shall cause the directors it has appointed to vote in favor of such termination
resolutions.

50.4                           In case of termination of this Contract,
the following agreements shall terminate forthwith.

 

Appendix I:           Technical License Agreement by MCI

 

Appendix II:          Technical License Agreement by UTS

 

Appendix III:         Equipment Purchase Agreement

 

Appendix IV:         Personnel Assignment Agreement

Chapter 20            LIQUIDATION
AND DISPOSAL OF ASSETS

Article 51

The Company shall carry out liquidation in a
timely manner in accordance with PRC laws upon expiration or termination of
this Contract and dissolution of the Company in accordance with the provisions
herein.

 

-22-

 

Article 52

The Company shall organize a liquidation
committee in accordance with the resolutions of the Board of Directors and
formulate rules for the disposition of properties in accordance with applicable
laws.  In the event of the dissolution
described in Article 50 hereof, upon payment of the obligations of the
Company, the remaining assets shall be distributed in accordance with [***].

Chapter 21            LIABILITIES
FOR BREACH OF CONTRACT;

Article 53

Failure by any Party to make the full capital
contributions subscribed for pursuant to this Contract shall be liable for
breach of this Contract. 
In such event the breaching Party shall pay to the non–breaching
Party an amount equal to [***] of its unpaid contribution per day from the
first month after the time limit.

Article 54

Any Party who otherwise breaches this
Contract shall be liable to the other Parties for all losses suffered by the
other Parties as a result of such breach. 
Should all or part of this Contract be unable to be performed owing to
the fault of one Party hereto, the Party at fault shall be liable to
the other Parties for losses thus caused to such other Parties.

Article 55

Notwithstanding any contrary provision in
this Contract, except any breach of obligations stated in Chapter 13,
neither Party A, Party B nor Party C shall be liable to the
other, or to the Company, for any indirect, special or consequential damages,
as may be based upon any legal theory whatsoever.

Chapter 22            FORCE
MAJEURE

Article 56

“Force Majeure” shall mean all events which are
beyond the control of the Parties to this Contract and which are unforeseen or
if foreseen are unavoidable and which arise after the date of execution
of this Contract and which prevent total or partial performance by either
Party.  Force Majeure may include but is
not limited to explosions, fires, floods, earthquakes and other natural
disasters, acts of

 

-23-

 

war or civil disturbances, acts of any
government in its sovereign capacity, sabotage, condemnation or expropriation.

Article 57

In the event of an Force Majeure, the
Party whose performance is hindered or is absolutely impossible shall
notify the other Parties by most expedient means without delay and within [***]
thereafter provide to the other Parties written report detailing the
events.  The Party experiencing the
Force Majeure event shall exercise all reasonable endeavors to terminate the
Force Majeure condition and to minimize all loss to the Company and to the
other Parties.  Parties shall then,
through consultation, decide whether or not to terminate or postpone the
performance of this Contract or to exempt the part of obligations of the
prevented Party according to the effects of the event on the performance
of this Contract.

Article 58

If the Company is unable to operate or this
Contract is impossible to be performed due to an event of Force Majeure, the
obligations of the Parties hereto (except obligations pertaining to Chapters 6
and 13) shall be suspended during the period of delay caused by the Force
Majeure and shall automatically be extended, without penalty, for a period
equal to such suspension.

Chapter 23            INTELLECTUAL
PROPERTY

Article 59

The Parties shall cause the Company to enter
into the Technical License Agreements with Party C and Party A
respectively.  The Parties agree the
following:

(a)                                  Party A will grant to the Company a
[***] right to use technology regarding [***] in accordance with Technical
License Agreement by UTS attached hereto as Appendix 11;

(b)                                 Party C will grant to the Company, a
[***] right to use technology regarding [***] in accordance with Technical
License Agreement by MCI attached hereto as Appendix I;

 

-24-

 

(c)                                  Any patents, patent applications,
copyrights, trade secrets, mask works, industrial design rights, know-how,
design processes, techniques and methodologies and any and all other legal rights
protecting intangible confidential information (collectively “IPR”) developed by the Company shall be
jointly owned by the Company, Party A and Party C in equal share, if
such IPR derives from, based on or in connection with the LICENSED TECHNOLOGY,
except that any IPR relating to [***] shall be jointly owned by the Company and
Party C and that any IPR relating to [***] shall be jointly owned by the
Company and Party A;

(d)                                 Each joint owner of IPR set forth in
above section (c) shall be free to practice and use such jointly owned IPR on
non-exclusive basis without accounting to and royalty-free to the other
party.  UTS and MCI may sublicense such
jointly owned IPR to its subsidiaries, affiliates, parent company or any direct
or indirect subsidiary of parent company, without the consent of the other
joint owners.

Article 60

In case of termination of this Contract or
dissolution of the Company, IPR owned by the Company (in case the Company owns
certain portion hereof, such portion) shall be transferred to Party C, for
IPR relating to [***] to Party A, for IPR relating to [***], and to
Party A and Party C in proportion to the share of ownership, for any
other IPR.  The transfer price shall be
determined upon agreement between the Company and such Parties.

Chapter 24            APPLICABLE
LAW

Article 61

It is mutually understood that this is a
contract for which the entering, effects, construction, performance and
resolution of disputes are all subject to PRC laws.

 

-25-

 

Chapter 25            SETTLEMENT
OF DISPUTES

Article 62

62.1                           In the event a dispute arises out of or
in connection with the interpretation or implementation of this Contract, the
Parties shall attempt in the first instance to resolve such dispute through
friendly consultations.

62.2                           If the dispute is not resolved through
friendly consultations within sixty (60) days after the commencement of
discussions, or such longer period as the Parties agree in writing at that
time, then notwithstanding any other provision of this Contract, any
Party may submit the dispute for arbitration.

62.3                           Any disputes initiated by Party A,
arising out of or in connection with this Contract shall be finally settled by
an arbitration in Tokyo, Japan by the Japan Commercial Arbitration Association
(“JCAA”) in accordance with JCAA’s arbitration rules in effect at the time of
arbitration.  Any disputes initiated by
Party B or Party C, arising out of or in connection with this
Contract shall be finally settled by an arbitration in Shanghai, PRC by the
China International Economic and Trade Arbitration Commission (“CIETAC”) in
accordance with CIETAC’s arbitration rules in effect at the time of
arbitration.  The award rendered by the
arbitrators shall be final and binding upon the Parties.  The Parties hereto agree to honor such
award.  Any competent court may enforce
such award.  All arbitration costs,
including costs, for the enforcement of any arbitration award, shall be borne
by the losing Party.

62.4                           The Parties agree that during the
arbitration proceedings, they shall continue to observe and perform this
Contract except for the provisions subject to or involved in arbitration.

Chapter 26            LANGUAGE

Article 63

This Contract shall be signed in the Chinese
language in six (6) originals and in the English language in six (6)
originals.  Both language versions shall
be equally authentic.  Each
Party shall retain one (1) of each original English and Chinese copies,
and the remaining originals shall be submitted to the related authorities for
approval.

 

-26-

 

Chapter 27            NOTICE

Article 64

Notices or other communications required to
be given to any Party pursuant to this Contract shall be written in
English and delivered in person or sent by mail, courier or facsimile to the
address of the Party set forth below, or to such other addresses as may
from time to time be designated by the Party through notification to the
other Parties, and if to the Company, delivered to its legal address as in
effect from time to time.  The dates on
which notices shall be deemed to have been effectively given shall be
determined as follows:

i.                                          Notices delivered by person shall be
deemed as being effectively given on the date of personal delivery.

ii.                                       Notices delivered by mail shall be deemed
as being effectively given on the seventh day after the date mailed (as
indicated by the postmark) by registered airmail, postage prepaid, or on the
fourth day after delivery to any internationally recognized courier service.

iii.                                    Notices delivered by facsimile shall be
deemed as being effectively given on the first business day following the date
of transmission, as indicated on the transmission confirmation slip of the
document in question.

 

	
  Party A:

  	
  UTStarcom
  Telecom Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  Address:
  3, Yile Industrial Park, 129 Wenyi Road,

  
	
   

  	
   

  
	
   

  	
  Hangzhou, PRC

  
	
   

  	
   

  
	
   

  	
  Zip
  Code: 310012

  
	
   

  	
   

  
	
   

  	
  Attention:
  Mr. Johnny Chou, General Manager

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (86571)-8886-2336

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (86571)-8886-2349

  

 

 

-27-

 

	
  Party B:

  	
  Matsushita
  Electric Industrial Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  Address:
  2-1-61, Shiromi, Chuo-ku, Osaka, Japan

  
	
   

  	
   

  
	
   

  	
  Zip
  Code: 540-6255

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Mr.
  Etsuto Okamoto, General Manager of

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Accounting
  & Business Support Group,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Corporate
  Management Division for China &

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Northeast
  Asia

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (816)-6937-7253

  
	
   

  	
   

  
	
   

  	
  Facsimile: (816)-6937-7249

  
	
   

  	
   

  
	
  Party C:

  	
  Matsushita
  Communication Industrial Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  Address:
  4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama,

  
	
   

  	
   

  
	
   

  	
  Japan

  
	
   

  	
   

  
	
   

  	
  Zip
  Code: 223-8639

  
	
   

  	
   

  
	
   

  	
  Attention:
  Mr. Nobuyoshi Itoh, Director of

  
	
   

  	
   

  
	
   

  	
  Mobile
  Network Division

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (8145)-540-5250

  
	
   

  	
   

  
	
   

  	
  Facsimile: (8145)-544-3620

  

Chapter 28            TRADEMARK

Article 65

The Company shall manufacture Products to be
sold in the PRC under the Trademark and Business name to be licensed to the
Company by Party A or the customer. 
For Products to be sold outside the PRC, Parties shall discuss to
determine trademark and business name of the Products.

Chapter 29            EFFECTIVENESS
OF CONTRACT AND MISCELLANEOUS

Article 66

All appendices (Appendix I: Technical
License Agreement by MCI, Appendix II: Technical License Agreement by UTS,
Appendix III: Equipment Purchase Agreement, Appendix IV: Personnel
Assignment Agreement) to this Contract shall be integral parts hereof.  This Contract and any

 

-28-

 

appendices hereto shall become effective and
come into force from the date of their approval by the examination and approval
authority.

Article 67

Any amendment to this Contract shall come
into force only by written agreement duly executed by the Parties hereto and
approved by the original examination and approval authority.

Article 68

A Party that in a particular situation waives
its rights in respect of a breach of contract by another Party shall not
be deemed to have waived its rights against the other Parties for a similar
breach of contract in other situations.

Article 69

This Contract constitutes the complete and
exclusive agreement between the Parties on the establishment of the Company,
and this Contract supersedes all previous oral or written agreements,
contracts, undertakings and communications of the Parties with respect of the
establishment of the Company.

Article 70

Chapters 7, 13, 20, 21, 23, 24, 25 and
28 shall survive the termination of the Contract until they are fulfilled.

 

-29-

 

IN WITNESS WHEREOF, the Parties hereto caused
their authorized representatives to execute this Agreement on the date first
above written.

 

	
  UTStarcom Telecom Co., Ltd.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Johnny Chou

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Johnny Chou

  	
   

  	
   

  	
   

  
	
  Position:

  	
  General Manager

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Witnessed by:

  	
  /s/ Hong Liang Lu

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Hong Liang Lu

  
	
   

  	
   

  	
   

  	
  Position: 

  	
  President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
  UTStarcom, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Matsushita Electric Industrial Co., Ltd.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yukio Shohtoku

  	
   

  	
   

  	
   

  
	
  Name: 

  	
  Yukio Shohtoku

  	
   

  	
   

  	
   

  
	
  Position:

  	
  Managing Director

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Matsushita Communication Industrial Co., Ltd.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yasuo Katsura

  	
   

  	
   

  	
   

  
	
  Name: 

  	
  Yasuo Katsura

  	
   

  	
   

  	
   

  
	
  Position: 

  	
  President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
								

 

-30-

Appendix I

Technical License Agreement

between

Universal Communication Technology (Hangzhou)

Company Limited

and

Matsushita
Communication Industrial Co., Ltd.

 

 

 

THIS AGREEMENT, dated as of __________, is
made and entered into by and between Universal Communication Technology
(Hangzhou) Company Limited ( hereinafter referred to as “JV”) , and Matsushita
Communication Industrial Co., Ltd. ( hereinafter referred to as “MCI”)

WITNESSETH

 

WHEREAS, MCI owns technologies with respect
to [***] (hereinafter referred to as [***]) as a part of infrastructure of the
advanced mobile terminal communications; and

 

WHEREAS, JV desires to acquire licenses to
utilize MCI’s technical information and know-how so that JV may develop and
manufacture [***] and

 

WHEREAS, MCI is willing to grant such
licenses to JV

 

NOW, THEREFORE, in consideration of the
mutual covenants and premises contained herein, the parties hereto agree as
follows:

Article 1                DEFINITIONS

 

For purpose of this Agreement, and in
addition to certain terms defined on first use herein and in any attachments
and exhibits attached hereto, the following terms shall have the following
meanings.

1.1                                 “LICENSED TECHNOLOGY” shall mean the
following items, as specifically described in Attachment I hereto:

 

                [***]

1.2                                 “TECHNICAL INFORMATION” shall mean
certain MCI technical information, circuit diagram , data, formulas, knowledge,
processes and/or know-how developed or acquired by MCI during the term hereof
relating to the LICENSED TECHNOLOGY.

1.3                                 “SELLING PRICE” shall mean the price on
the JV’s sales invoice to customers for the portion of PRODUCTS , including
hardware and software.

 

 

1.4                                 “CONFIDENTIAL INFORMATION” shall mean
(1) TECHNICAL INFORMATION (2) all ideas and information of any kind,
including, without limitation, technology, know-how, technical data, products,
software, works of authorship, business plans or any other aspect of MCI’s
business, in written, other tangible or electronic form provided by MCI to JV
(3) software in any form (including, without limitation, related
documentation), whether or not labeled in accordance with the preceding; and
(4) information orally disclosed and identified as confidential at the
time of such disclosure.  Confidential
Information shall not, however, include any information that (a) lawfully
in the JV’s possession, with no restriction on use or disclosure, prior to its
acquisition from MCI (b) received in good faith by JV, with no
restrictions on use or disclosure, from a third Party not subject to any
confidential obligation to MCI (c) now or later becomes publicly known
through no breach of confidential obligation by JV (d) independently
developed by JV without any reliance on or use of CONFIDENTIAL INFORMATION of
the disclosing party.  The foregoing
exceptions shall not apply to software in any form.

1.5                                 “EFFECTIVE DATE” shall mean the date on
which this Agreement is duly executed by both parties hereto.

1.6                                 “PRODUCTS” shall mean [***].

Article 2                GRANT OF LICENSES

 

MCI hereby grants for the term of this
Agreement to JV [***] right and license to utilize LICENSED TECHNOLOGY only for
the purpose of development, manufacture and sale of the PRODUCTS within the
territory of [***].  The rights granted
under this Article does not include rights under patents, utility models
and designs held or to be held by MCI.

Article 3                LICENSE FEE

 

In consideration of the license set forth in
Article 2 above, JV shall pay MCI a royalty of [***] of SELLING PRICE of
the PRODUCT which are manufactured by JV.

 

 

-2-

 

Article 4                PAYMENTS, REPORTS, RECORDS AND
TAX

4.1                                 The royalty set forth in Section 3.1
above shall be computed and paid to MCI by JV within [***] after the end of
each quarter ending on March 31st, June 30th,
September 30th, and December 31st.

4.2                                 JV shall, at the time of each payment of
the royalty under Section 4.1 above, furnish to MCI a royalty report in
suitable form prepared by chief financial officer of JV, which shall describe
sales quantity, type number and gross SELLING PRICE, any deduction from and/or
adjustment to the gross SELLING PRICE. 
JV shall, within [***] after the end of each calendar year, also furnish
to MCI a royalty compliance report certified by an outside certified public
accountant, for the period of the year.

4.3                                 Payment hereunder shall be made
[***].  However, income taxes or taxes
of similar nature imposed on by the Government of PRC or any other political
subdivision thereof and paid by JV for the account of MCI shall be [***].  To assist [***], JV shall furnish MCI with
such evidence as may be required by taxing authorities of the Government of
Japan to establish that any such taxes have been paid.

4.4                                 If JV fails to make any payment
stipulated in this Agreement within the time specified herein, JV shall pay an
interest of [***] per year on the unpaid balance payable from the due date
until fully paid.

4.5                                 Any payment from JV to MCI hereunder
shall be made by means of telegraphic transfer remittance in U.S. Dollars, at
selling rate of exchange [***] to the bank account of as designated by MCI, and
notice of the payment shall be sent by JV to MCI’s address set forth below:

Article 5                ACCOUNTING AND AUDIT

 

With respect to the royalty set forth in
Article 3 above, JV shall keep full, clear and accurate records and accounts
for PRODUCTS subject to royalty for a period of [***].  MCI shall have the right through a person(s)
appointed by MCI to audit, not more than [***] in each calendar year and during

 

 

-3-

 

normal business hours, all such records and
accounts to the extent necessary to verify that no underpayment has made by JV
hereunder.  Such audit shall be
conducted at MCI’s own expense, provided that if any discrepancy or error
exceeding [***] of the money actually due is found through the audit, the cost
of the audit shall be born by JV.

Article 6                MAINTENANCE OF QUALITY &
SAFETY STANDARDS

6.1                                 JV hereby agrees to strictly comply with
quality standards of the PRODUCTS in manufacturing the PRODUCTS hereunder.  At the request of MCI, JV agrees to submit
to MCI its quality control and inspection data for MCI’s inspection.  JV shall reimburse to MCI in Japanese Yen or
United States Dollars the actual expenses of inspection or test of such
PRODUCTS.  MCI shall give JV pertinent
advice or instruction, if MCI deems necessary after studying such reports of
quality control and inspection data, with which advice or instruction JV shall
always and strictly comply.

6.2                                 In case JV purchase components or
materials of the PRODUCTS in PRC, JV shall check duality of such components or
materials so that such components or materials may not harm duality standards
of the PRODUCTS.  If such components or
materials are found to be defective or insufficient, JV shall procure
substituting components or materials.

6.3                                 JV further agrees to promptly furnish MCI
with information in connection with claims, if any, from customers of the
PRODUCTS, their nature and disposition thereof by JV, and MCI will give JV
pertinent advice after checking the information so furnished hereunder.  The preceding provision shall not be
interpreted to obligate MCI to be responsible for any such claims.

6.4                                 Manufacture and sale, use or other
disposition of the PRODUCTS as well as duality guarantee to customers,
responsibility for product liability, advertising and servicing of the
PRODUCTS, obtaining approval(s) for the PRODUCTS pursuant to any standard,
legal or otherwise applicable to the PRODUCTS shall be made by JV entirely at
JV’s own account and responsibility, and MCI, its parent company, subsidiaries
and/or affiliates shall not be responsible therefor to JV or any third
party.  JV shall indemnify MCI (or its
parent company, subsidiaries) for and hold MCI (or its parent company,
subsidiaries) harmless from 

 

 

-4-

 

                                                any liabilities, damages and costs and
expenses arising out of or in connection with Ws operations.

Article 7                TRAINING

 

MCI shall provide JV necessary training only
for the purpose of using LICENSED TECHNOLOGY at location and/or on a date to be
determined by MCI.  MCI has the sole
discretion to determine the duration and program of such necessary
training.  The cost of such training shall
be determined later.  [***].

Article 8                TERM AND TERMINATION

8.1                                 This Agreement shall become effective on
EFFECTIVE DATE and shall , continue until terminated pursuant to
Article 8.2 or 8.3 below.

8.2                                 In event of a breach of this Agreement by
JV hereto, and if such breach is not corrected [***] after written notice
complaining thereof is received by JV, MCI may terminate this Agreement
forthwith by written notice to that effect to JV.

8.3                                 MCI shall also have the right to
terminate this Agreement forthwith by giving written notice of termination to
JV at any time, upon or after:

(a)                                  the termination or expiration of the
Joint Venture Contract by and between UTStarcom Telecom Co., Ltd., Matsushita
Electric Industrial Co., Ltd, and MCI;

(b)                                 the making by JV of any assignment for
the benefit of creditors;

(c)                                  the institution of any proceedings for
the liquidation or winding up of JV’s business or for the termination of its
corporate charter;

(d)                                 the assignment to third Party of all
or substantially all of the assets of JV;

(e)                                  important change in controlling ownership
of JV; or

(f)                                    any activity or assistance by JV of
challenging the validity of any LICENSED TECHNOLOGY or restricting the scope
thereof.

8.4                                 In the event of expiration or termination
of this Agreement by MCI pursuant to Article 8.2 or 8.3 above, the
licenses granted hereunder to JV shall automatically terminate when JV 

 

 

-5-

 

                                                receives or deems to receives such
termination notice hereunder, except those in stock.  JV shall pay the amount of the royalty accrued on or before the date
of termination within [***] thereafter.

8.5                                 Upon expiration or termination of this’
Agreement, JV shall immediately return LICENSED TECHNOLOGY to MCI.

Article 9                IMPROVEMENT OF LICENSED
TECHNOLOGY

 

Any new intellectual property rights
(hereinafter referred to as “IPR”) derived from, based on or in connection with
the LICENSED TECHNOLOGY shall be owned jointly by MCI and JV in equal share, if
such IPR is for or related to [***], and derived from, based on, or in
connection with the LICENSED TECHNOLOGY of MCI.  Each Party shall be free to practice and use such jointly
owned IPR on non-exclusive basis without accounting to and royalty-free to the
other party.  However, licenses to third
parties may be granted only upon the other party’s prior consent, which may not
be unreasonably withheld, except that MCI may sublicense such jointly owned IPR
to its subsidiaries, affiliates, the parent company or the subsidiaries and the
affiliates of the parent company, without the consent of the other joint
owners.

Article 10             CONFIDENTIAL INFORMATION

10.1                           Restrictions.  JV understands that LICENSED TECHNOLOGY, and TECHNICAL
INFORMATION provided from MCI to JV for the purpose of this Agreement is the
CONFIDENTIAL INFORMATION of MCI and any unauthorized disclosure of CONFIDENTIAL
INFORMATION causes unrepairable harm to MCI, and MCI shall have the right to
take all necessary proceedings to prevent and restrain such unauthorized
disclosure Further, JV shall not disclose CONFIDENTIAL INFORMATION to any third
Party and shall not use CONFIDENTIAL INFORMATION for any other purposes
than authorized under this Agreement. 
JV shall instruct all of employees of JV who engage in work under this
Agreement that they shall keep CONFIDENTIAL INFORMATION confidential regardless
of whether their relationship with JV is terminated at some future time.

 

 

-6-

 

10.2                           Continuing Obligation.  The obligation of nondisclosure and nonuse
with respect to Confidential Information of the disclosing Party shall
survive the expiration or termination of this Agreement

Article 11             LIMITATION OF LIABILITY

 

[***] neither party be entitled to
recover from the other Party any incidental, consequential, indirect,
special damages (including, without limitation, damages for loss of business,
loss of profits or loss of use), whether based on contract, tort (including,
without limitation, negligence), or any other cause of action relating to
intellectual property rights assigned or licensed hereunder or confidential
information, or otherwise relating to this Agreement, even if the other
Party has been informed of or should have known the possibility of such
damages.

Article 12             REPRESENTATIONS AND WARRANTIES

12.1                           OWNERSHIP.  MCI has the full power and right to enter into this Agreement.

12.2                           NO ENCUMBRANCE.  To the best of MCI’s knowledge, the MCI rights in relation to the
LICENSED TECHNOLOGY hereunder are free and clear of any and all encumbrances
and /or liens of any nature whatsoever, other than those identified by MCI
pursuant to this Agreement, and other than non-exclusive licenses granted by
MCI to others to use the MCI rights.

12.3                           NO CONFLICTS.  To the best of MCI’s knowledge, MCI’s performance of this
Agreement does not conflict with any other agreement to which MCI is bound and,
while performing this Agreement, MCI will not knowingly enter into any other
agreement in conflict with this Agreement or which would impair the ability of
MCI to perform this Agreement.

12.4                           NO HARMFUL CODE.  In the event that any of the LICENSED
TECHNOLOGY and TECHNICAL INFORMATION are software or include software of any
type, to the best of MCI’s knowledge, to be free of any known viruses and or
known bugs.

12.5                           LIMITATION OF WARRANTIES.  Except as stated above, MCI disclaims all
warranties, either express or implied, with respect to the LICENSED TECHNOLOGY
and 

 

-7-

 

                                                TECHNICAL INFORMATION,, including but not
limited to the implied warranties of merchantability and fitness for a
particular purpose..

Article 13             GENERAL

13.1                           Notice. 
Any written notice either Party may give the other concerning the
subject matter of this Agreement shall be in writing and given or made by means
that obtain a written acknowledgment of receipt.  Notices shall be sent to the parties at the following addresses,
which maybe changed by written notice:

 

To MCI:

Address:4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama,

Japan

Zip Code:223-8639

Attention: Mr. Nobuyoshi Itoh, Director of

Mobile Network Division

Telephone: (8145)-540-5250

Facsimile: (8145)-544-3620

 

To JV:

Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou,

PRC

Zip Code:310012

Attention: Mr. John Yang, General Manager

Telephone: (86571)-8886-2336

Facsimile: (86571)-8886-2349

 

Notice shall be deemed to have been given or
made when actually received, as evidenced by written acknowledgment of receipt.

13.2                           Any disputes initiated by JV, arising out
of or in connection with this Agreement shall be finally settled by an
arbitration in Tokyo, Japan by the Japan Commercial Arbitration 

 

 

-8-

 

                                                Association (“JCAA’) in accordance with
JCAA’s arbitration rules in effect at the time of arbitration.  Any disputes initiated by MCI, arising out
of or in connection with this Agreement shall be finally settled by an
arbitration in Shanghai, PRC by the China International Economic and Trade
Arbitration Commission (“CIETAC”) in accordance with CIETAC’s arbitration rules
in effect at the time of arbitration. 
The award rendered by the arbitrators shall be final and binding upon
the Parties.  The Parties hereto agree
to honor such award.  Any competent
court may enforce such award.  All
arbitration costs, including costs for the enforcement of any arbitration
award, shall be borne by the losing Party.

13.3                           Compliance.  MCI and JV shall each comply with the provisions of all
applicable laws, ordinances, regulations and codes (including, without
limitation, procurement of required permits or certificates) in fulfillment of
their obligations under this Agreement. 
All Intellectual Property Rights held by either Party are subject
to PRC export and import technology control regulations.  Each Party undertakes that it shall
neither export, nor cause nor permit to be exported, without the other party’s
prior written consent and without compliance with applicable law and
regulation.  Each Party agrees to
comply with all applicable laws and regulations relating to the exportation of
technical information, as they currently exist and as they may be amended from
time to time.

13.4                           Assignment, Subcontracting.  Neither this Agreement nor any rights or
obligations hereunder shall be assignable or subcontracted by JV without MCI’s
prior written consent.  ; Any attempted
or purported assignment in violation of the foregoing shall be void.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of each Party hereto.

13.5                           Waiver of Terms and Conditions.  Failure to enforce any of the terms or
conditions of this Agreement shall not constitute a waiver of any such terms or
conditions, or of any other terms or conditions.

13.6                           Severability.  Where any provision of this Agreement is declared invalid,
illegal, void or unenforceable, or any changes or modifications are required by
regulatory or judicial action, and any such invalid, illegal, void or
unenforceable provision, or such change or 

 

 

-9-

 

 

                                                modification, substantially affects any
material obligation of a Party hereto, the remaining provisions of this
Agreement shall remain in effect and the parties shall mutually agree upon a
course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.

13.7                           Governing Law.  This Agreement, and the rights and obligations contained in it,
shall be governed by and construed in accordance with the laws of PRC, without
regard to any conflicts of law principles that would require the application of
the laws of any other jurisdiction.

13.8                           No Unreasonable Delay or
Withholding.  Where agreement, approval,
acceptance, consent or similar action by MCI or JV is required, such action
shall not be unreasonably delayed or withheld.

13.9                           Force Majeure.  If performance of any obligations by either Party under this
Agreement is prevented, restricted or interfered with by reason of acts of God,
wars, revolution, civil commotion, acts of public enemy, embargo, acts of
government in its sovereign capacity, labor difficulties, including, without
limitation, strikes, slowdowns, picketing or boycotts, communication line
failures, power failures, or any other circumstances beyond the reasonable
control and not involving any fault or negligence of the Party affected,
the Party affected, upon giving prompt notice to the other party, shall be
excused from such performance on a day-to-day basis during the continuance of
such prevention, restriction or interference (and the other Party shall
likewise be excused, on a day-to-day basis during the same period, from
performance of its obligations which are dependent upon or affected by such
nonperformance); provided, however, that the Party so affected shall use
its best reasonable efforts to avoid or remove such causes of nonperformance
and both parties shall proceed immediately with the performance of their
obligations under this Agreement whenever such causes are removed or cease.

13.10                     Entire Agreement. 
This Agreement represents the entire understanding between the parties
with the respect to its provisions and cancels and supersedes all prior
agreements or understandings, whether written or oral, with respect to the
subject matter.  This Agreement 

 

 

-10-

 

 

                                                may only be modified or amended by an
instrument in writing signed by duly authorized representatives of the
parties.  This Agreement shall be deemed
to include all attachments and exhibits, if any attached hereto.

13.11                     This Agreement is made in Chinese and English, each
Party retaining one copy.  Both Chinese
and English versions are equally authentic.

 

 

-11-

 

IN WITNESS WHEREOF, the Parties hereto cause
their authorized representatives to execute this Agreement on the date first
above written.

 

	
  Universal Communication Technology (Hangzhou)
  Company Limited.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  
	
   

  	
   

  
	
  Matsushita Communication Industrial Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  

 

 

 

-12-

 

Attachment
I

 

The detail
of LICENSED TECHNOLOGY shall be as follows:

 

[***]

 

 

Appendix II

Technical License Agreement

by and between

Universal Communication Technology (Hangzhou)

Company Limited.,

and

UTStarcom Telecom Co., Ltd.

 

 

 

THIS AGREEMENT, dated as of ________ is made
and entered into by and between Universal Communication Technology (Hangzhou)
Company Limited (hereinafter referred to as “JV”), and UTStarcom Telecom Co.,
Ltd. ( hereinafter referred to as “UTS”)

WITNESSETH

 

WHEREAS, UTS owns technologies with respect
to [***] (hereinafter referred to as [***]) as a part of infrastructure of the
advanced mobile communications; and

 

WHEREAS, JV desires to acquire licenses to
utilize UTS’s technical information and know-how so that JV may develop and
manufacture [***] and

 

WHEREAS, UTS is willing to grant such
licenses to JV.

 

NOW, THEREFORE, in consideration of the
mutual covenants and premises contained herein, the parties hereto agree as
follows:

Article 1                DEFINITIONS

 

For purpose of this Agreement, and in
addition to certain terms defined on first use herein and in any attachments
and exhibits attached hereto, the following terms shall have the following
meanings.

1.1                                 “LICENSED TECHNOLOGY” shall mean the
following items, as specifically described in Attachment I hereto:

 

                [***]

1.2                                  “TECHNICAL INFORMATION” shall mean
certain UTS any and all technical information, circuit diagram, data, formulas,
knowledge, processes and/or know-how developed or acquired by UTS during the
term hereof relating to the LICENSED TECHNOLOGY

1.3                                 “SELLING PRICE” shall mean the price on
the JV’s sales invoice to customers for the portion of PRODUCTS, including
hardware and software.

 

1.4                                 “CONFIDENTIAL INFORMATION” shall mean
(1) TECHNICAL INFORMATION (2) all ideas and information of any kind,
including, without limitation, technology, know-how, technical data, products,
software, works of authorship, business plans or any other aspect of UTS’s
business, in written, other tangible or electronic form provided by UTS to JV
(3) software in any form (including, without limitation, related
documentation), whether or not labeled in accordance with the preceding; and
(4) information orally disclosed and identified as confidential at the
time of such disclosure .  Confidential
Information shall not, `however, include any information that (a) lawfully
in the JV’s possession, with no restriction on use or disclosure, prior to its
acquisition from UTS (b) received in good faith by JV with no restrictions
on use or disclosure, from a third Party not subject to any confidential
obligation to UTS (c) now or later becomes publicly known through no
breach of confidential obligation by JV (d) independently developed by JV
without any reliance on or use of CONFIDENTIAL INFORMATION of the disclosing
party.  The foregoing exceptions shall
not apply to software in any form.

1.5                                 “EFFECTIVE DATE” shall mean the date on
which this Agreement is duly executed by both parties hereto.

1.6                                 “PRODUCTS” shall mean [***].

Article 2                GRANT OF LICENSES

 

UTS hereby grants for the term of this
Agreement to JV a [***] right and license to utilize LICENSED TECHNOLOGY only
for the purpose of development, manufacture and sale of the PRODUCTS within the
territory of [***].  The rights granted
under this Article does not include rights under patents, utility models
and designs held or to be held by UTS.

Article 3                LICENSE FEE

 

In consideration of the license set forth in
Article 2 above, JV shall pay UTS, a royalty of [***] of SELLING PRICE of
the PRODUCT which are manufactured by JV.

 

 

-2-

 

Article 4                PAYMENTS, REPORTS, RECORDS AND
TAX

4.1                                 The royalty set forth in Section 3.1
above shall be computed and paid to UTS by JV within [***] after the end of
each quarter ending on March 31st, June 30th,
September 30th, and December 31st.

4.2                                 JV shall, at the time of each payment of
the royalty under Section 4.1 above, furnish to UTS a royalty report in
suitable form prepared by chief financial officer of JV, which shall describe
sales quantity, type number and gross SELLING PRICE, any deduction from and/or
adjustment to the gross SELLING PRICE. 
JV shall, within [***] after the end of each calendar year, also furnish
to UTS a royalty compliance report certified by an outside certified public
accountant, for the period of the year.

4.3                                 Payment hereunder shall be made [***].

4.4                                 If JV fails to make any payment
stipulated in this Agreement within the time specified herein, JV shall pay an
interest of [***] per year on the unpaid balance payable from the due date
until fully paid.

4.5                                 Any payment from JV to UTS hereunder
shall be made by means of telegraphic transfer remittance in U.S. Dollars, at
selling rate of exchange [***] to the bank account of as designated by UTS, and
notice of the payment shall be sent by JV to UTS’s address set forth below:

Article 5                ACCOUNTING AND AUDIT

 

With respect to the royalty set forth in
Article 3 above, JV shall keep full, clear and accurate records and
accounts for PRODUCTS subject to royalty for a period of [***].  UTS shall have the right through a person(s)
appointed by UTS to audit, not more than [***] in each calendar year and during
normal business hours, all such records and accounts to the extent necessary to
verify that no underpayment has made by JV hereunder.  Such audit shall be conducted at UTS’s own expense, provided that
if any discrepancy or error exceeding [***] of the money actually due is found
through the audit, the cost of the audit shall be born by JV.

 

 

 

-3-

 

Article 6                MAINTENANCE OF QUALITY &
SAFETY STANDARDS

6.1                                 JV hereby agrees to strictly comply with
quality standards of the PRODUCTS in manufacturing the PRODUCTS hereunder.  At the request of UTS, JV agrees to submit
to UTS its quality control and inspection data for UTS inspection.  JV shall reimburse to UTS in Chinese
currency the actual expenses of inspection or test of such PRODUCTS.  UTS shall give JV pertinent advice or
instruction, if UTS deems necessary after studying such reports of quality
control and inspection data, with which advice or instruction JV shall always
and strictly comply.

6.2                                 In case JV purchase components or
materials of the PRODUCTS in PRC, JV shall check quality of such components or
materials so that such components or materials may not harm quality standards
of the PRODUCTS.  If such components or
materials are found to be defective or insufficient, JV shall procure
substituting components or materials.

6.3                                 JV further agrees to promptly furnish UTS
with information in connection with claims, if any, from customers of the
PRODUCTS, their nature and disposition thereof by JV, and UTS will give JV
pertinent advice after checking the information so furnished hereunder.  The preceding provision shall not be
interpreted to obligate UTS to be responsible for any such claims.

6.4                                 Manufacture and sale, use or other
disposition of the PRODUCTS as well as quality guarantee to customers,
responsibility for product liability, advertising and servicing of the
PRODUCTS, obtaining approval(s) for the PRODUCTS pursuant to any standard,
legal or otherwise applicable to the PRODUCTS shall be made by JV entirely at
JV’s own account and responsibility, and UTS, its parent company, subsidiaries
and/or affiliates shall not be responsible therefor to JV or any third
party.  JV shall indemnify UTS (or its
parent company, subsidiaries) for and hold UTS (or its parent company,
subsidiaries) harmless from any liabilities, damages and costs and expenses
arising out of or in connection with JV’s operations.

 

 

-4-

 

Article 7                TRAINING

 

UTS shall provide JV necessary training only
for the purpose of using LICENSED TECHNOLOGY at location and/or on a date to be
determined by UTS.  UTS has the sole
discretion to determine the duration and program of such necessary
training.  The cost of such training
shall be determined later.  [***].

Article 8                TERM AND TERMINATION

8.1                                 This Agreement shall become effective on
EFFECTIVE DATE and shall continue until terminated pursuant to Article 8.2
or 8.3 below.

8.2                                 In event of a breach of this Agreement by
JV hereto, and if such breach is not corrected within [***] after written
notice complaining thereof is received by JV, UTS may terminate this Agreement
forthwith by written notice to that effect to JV.

8.3                                 UTS shall also have the right to terminate
this Agreement forthwith by giving written notice of termination to JV at any
time, upon or after:

(a)                                  the termination or expiration of the
Joint Venture Contract by and between Matsushita Communications Industrial Co.,
Ltd., Matsushita Electric Industrial Co., Ltd, and UTS

(b)                                 the making by JV of any assignment for
the benefit of creditors;

(c)                                  the institution of any proceedings for
the liquidation or winding up of JV’s business or for the termination of its
corporate charter;

(d)                                 the assignment to third Party of all
or substantially all of the assets of JV;

(e)                                  important change in controlling ownership
of JV; or

(f)                                    any activity or assistance by JV of
challenging the validity of any LICENSED TECHNOLOGY or restricting the scope
thereof.

8.4                                 In the event of expiration or termination
of this Agreement by UTS pursuant to Article 8.2 or 8.3 above, the
licenses granted hereunder to JV shall automatically terminate when JV receives
or deems to receives such termination notice hereunder, except those in stock.  JV

 

 

-5-

 

                                                shall pay the amount of the royalty
accrued on or before the date of termination within [***] days thereafter.

8.5                                 Upon expiration or termination of this
Agreement, JV shall immediately return LICENSED TECHNOLOGY to UTS.

Article 9                IMPROVEMENT OF LICENSED
TECHNOLOGY

 

Any new intellectual property rights
(hereinafter referred to as “IPR”) derived from, based on or in connection with
the LICENSED TECHNOLOGY shall be owned jointly by UTS and JV in equal share, if
such IPR is for or related to [***], and derived from, based on, or in
connection with the LICENSED TECHNOLOGY of UTS.  Each Party shall be free to practice and use such jointly
owned IPR on non-exclusive basis without accounting to and royalty-free to the
other party.  However, licenses to third
parties may be granted only upon the other party’s prior consent, which may not
be unreasonably withheld, except that UTS may sublicense such jointly owned IPR
to its subsidiaries, affiliates, the parent company or the subsidiaries and the
affiliates of the parent company, without the consent of the other joint
owners.

Article 10             CONFIDENTIAL INFORMATION

10.1                           Restrictions.  JV understands that LICENSED TECHNOLOGY, and TECHNICAL
INFORMATION provided from UTS to JV for the purpose of this Agreement is the
CONFIDENTIAL INFORMATION of UTS and any unauthorized disclosure of CONFIDENTIAL
INFORMATION causes unrepairable harm to UTS, and UTS shall have the right to
take all necessary proceedings to prevent and restrain such unauthorized
disclosure.  Further, JV shall not
disclose CONFIDENTIAL INFORMATION’ to any third Party and shall not use
CONFIDENTIAL INFORMATION for any other purposes than authorized under this
Agreement.  JV shall instruct all of
employees of JV who engage in work under this Agreement that they shall keep
CONFIDENTIAL INFORMATION confidential regardless of whether their relationship
with JV is terminated at some future time.

 

 

-6-

 

 

10.2                           Continuing Obligation.  The obligation of nondisclosure and nonuse
with respect to Confidential Information of the disclosing Party shall
survive the expiration or termination of this Agreement.

Article 11             LIMITATION OF LIABILITY

 

[***] neither Party Be entitled to
recover from the other Party any incidental, consequential, indirect,
special damages (including, without limitation, damages for loss of business,
loss of profits or loss of use), whether based on contract, toil (including,
without limitation, negligence), or any other cause of action relating to
intellectual property rights assigned or licensed hereunder or confidential
information, or otherwise relating to this Agreement, even if the other
Party has been informed of or should have known the possibility of such
damages.

Article 12             REPRESENTATIONS AND WARRANTIES

12.1                           OWNERSHIP.  UTS has the full power and right to enter into this Agreement.

12.2                           NO ENCUMBRANCE.  To the best of UTS’s knowledge, the UTS rights in relation to the
LICENSED TECHNOLOGY hereunder are free and clear of any and all encumbrances
and /or liens of any nature whatsoever, other than those identified by UTS
pursuant to this Agreement, and other than non-exclusive licenses granted by
UTS to others to use the UTS rights.

12.3                           NO CONFLICTS.  To the best of UTS’s knowledge, UTS’s performance of this
Agreement does not conflict with any other agreement to which UTS is bound and,
while performing this Agreement, UTS will not knowingly enter into any other
agreement in conflict with this Agreement or which would impair the ability of
UTS to perform this Agreement.

12.4                           NO HARMFUL CODE.  In the event that any of the LICENSED
TECHNOLOGY and TECHNICAL INFORMATION are software or include software of any
type, to the best of UTS’s knowledge, to be free of any known viruses and or
known bugs.

12.5                           LIMITATION OF WARRANTIES.  Except as stated above, UTS disclaims all
warranties, either express or implied, with respect to the LICENSED TECHNOLOGY
and 

 

 

-7-

 

                                                TECHNICAL INFORMATION, including but not
limited to the implied warranties of merchantability and fitness for a
particular purpose.

Article 13             GENERAL

13.1                           Notice. 
Any written notice either Party may give the other concerning the
subject matter of this Agreement shall be in writing and given or made by means
that obtain a written acknowledgment of receipt.  Notices shall be sent to the parties at the following addresses,
which may be changed by written notice:

 

To UTS:

Address:2,3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC

Zip Code:310012

Attention: Mr. Johnny Chou, General Manager

Telephone:(86571)-8886-2336

Facsimile:(86571)-8886-2349

 

To JV:

Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC

Zip Code:310012

Attention: Mr. John Yang, General Manager

Telephone:(86571)-8886-2336

Facsimile: (86571)-8886-2349

 

Notice shall be deemed to have been given or
made when actually received, as evidenced by written acknowledgment of receipt.

13.2                           The parties hereto shall use their best
efforts to resolve by mutual agreement any disputes, controversies or
differences which may arise from, under, out of or in connection with this
Agreement.  If any such disputes,
controversies or differences can not be settled between the parties hereto,
they shall be finally submitted to China International Economic and Trade
Arbitration Commission for arbitration. 
The award rendered by the arbitrators shall be final and binding upon
the parties hereto.

 

 

-8-

 

 

13.3                           Compliance.  UTS and JV shall each comply with the provisions of all
applicable laws, ordinances, regulations and codes (including, without
limitation, procurement of required permits or certificates) in fulfillment of
their obligations under this Agreement. 
All Intellectual Property Rights held by either Party are subject
to PRC export and import technology control regulations.  Each Party undertakes that it shall
neither export, nor cause nor permit to be exported, without the other party’s
prior written consent and without compliance with applicable law and
regulation.  Each Party agrees to
comply with all applicable laws and regulations relating to the exportation of
technical information, as they currently exist and as they may be amended from
time to time.

13.4                           Assignment, Subcontracting.  Neither this Agreement nor any rights or
obligations hereunder shall be assignable or subcontracted by JV without UTS’s
prior written consent.  Any attempted or
purported assignment in violation of the foregoing shall be void.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of each Party hereto.

13.5                           Waiver of Terms and Conditions.  Failure to enforce any of the terms or
conditions of this Agreement shall not constitute a waiver of any such terms or
conditions, or of any other terms or conditions.

13.6                           Severability.  Where any provision of this Agreement is declared invalid,
illegal, void or unenforceable, or any changes or modifications are required by
regulatory or judicial action, and any such invalid, illegal, void or
unenforceable provision, or such change or modification, substantially affects
any material obligation of a Party hereto, the remaining provisions of
this Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.

13.7                           Governing Law.  This Agreement, and the rights and obligations contained in it,
shall be governed by and construed in accordance with the laws of PRC, without
regard to any conflicts of law principles that would require the application of
the laws of any other jurisdiction.

 

 

-9-

 

 

13.8                           No Unreasonable Delay or
Withholding.  Where agreement, approval,
acceptance, consent or similar action by UTS or JV is required, such action
shall not be unreasonably delayed or withheld.

13.9                           Force Majeure.  1f performance of any obligations by either Party under this
Agreement is prevented, restricted or interfered with by reason of acts of God,
wars, revolution, civil commotion, acts of public enemy, embargo, acts of
government in its sovereign capacity, labor difficulties, including, without
limitation, strikes, slowdowns, picketing or boycotts, communication line
failures, power failures, or any other circumstances beyond the reasonable
control and not involving any fault or negligence of the Party affected,
the Party affected, upon giving prompt notice to the other party, shall be
excused from such performance on a day-to-day basis during the continuance of
such prevention, restriction or interference (and the other Party shall
likewise be excused, on a day-to-day basis during the same period, from
performance of its obligations which are dependent upon or affected by such
nonperformance); provided, however, that the Party so affected shall use
its best reasonable efforts to avoid or remove such causes of nonperformance
and both parties shall proceed immediately with the performance of their
obligations under this Agreement whenever such causes are removed or cease.

13.10                     Entire Agreement. 
This Agreement represents the entire understanding between the parties
with the respect to its provisions and cancels and supersedes all prior
agreements or understandings, whether written or oral, with respect to the
subject matter.  This Agreement may only
be modified or amended by an instrument in writing signed by duly authorized
representatives of the parties.  This
Agreement shall be deemed to include all attachments and exhibits, if any
attached hereto.

13.11                     This Agreement is made in Chinese and English, each
Party retaining one copy.  Both
Chinese and English versions are equally authentic.

 

-10-

 

 

IN WITNESS WHEREOF, the Parties hereto cause
their authorized representatives to execute this Agreement on the date first
above written:

 

 

	
  Universal Communication Technology (Hangzhou)
  Company Limited.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  UTStarcom Telecom Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  

 

 

-11-

 

 

Attachment l

The detail of LICENSED TECHNOLOGY shall be as follows:

 

[***]

 

Appendix III

Equipment Purchase Agreement

by
and between

Universal
Communication Technology (Hangzhou)

Company Limited.,

and

Matsushita
Communication Industrial Co., Ltd.

 

 

 

THIS AGREEMENT, dated as of ________, is made
and entered into by and between Universal Communication Technology (Hangzhou)
Company Limited (hereinafter referred to as “JV”), and Matsushita Communication
Industrial Co., Ltd. (hereinafter referred to as “MCI”).

WITNESSETH

 

WHEREAS, MCI owns technologies with respect
to [***] (hereinafter referred to as [***] as a part of infrastructure of the
[***]; and

 

WHEREAS, MCI desires to sell equipment to JV
and JV desires to acquire such equipment from MCI to modulate and test [***]
developed and manufactured by JV, and

 

NOW, THEREFORE, in consideration of the
mutual covenants and premises contained herein, the parties hereto agree as
follows:

Article
1                Basic Agreement

 

In accordance with the terms and conditions
set forth herein, MCI agrees to supply to JV the Equipment defined in
Article 2 hereof and JV agrees to purchase such Equipment from the MCI.

Article
2                Equipment

2.1                                 JV desires to purchase from MCI the
following equipment (hereinafter referred to as the “Equipment”) necessary for
the production of BTS:

                [***]

2.2                                 The detailed list of Equipment shall be
designated by MCI and attached hereto as Attachment 1 hereof.

2.3                                 Both parties may discuss otherwise to
change the subject matter hereof in case of any changes in JV’s production and
business.

 

 

2.4                                 Spare parts of Equipment shall be delivered
from MCI to JV together with the Equipment contemplated in this Agreement.  The detailed list of the spare parts shall
be determined later.

2.5                                 Due to the necessity of the production
and operation of JV’s plant, the Equipment shall include new products as well
as second-hand products that have been used in MCI’s plan or that are procured
otherwise.

2.6                                 Any machine, instruments and related
goods consisting of the Equipment may be procured [***].  Such machine, instruments and related goods
procured [***] shall not be included in the subject matter of this Contract as
defined in Article 1 hereto.  The
detail of such procurement in PRC shall be determined later.

Article
3                Orders

3.1                                 MCI shall determine the specifications of
the Equipment of MCI and any other necessary conditions for the purpose of this
Agreement, and submit quotation(s) to JV

3.2                                 After receipt of quotation(s), JV subject
to confirmation of both general manager and deputy general manager of JV shall
issue individual purchase order(s) of the Equipment (hereinafter referred to as
“Individual Purchase Order”) to MCI. 
Individual Purchase Order shall become effective upon acceptance by MCI,
and in that event, the terms and conditions of this Agreement shall be applied
to such Individual Purchase Orders.

3.3                                 Order number, model number of the
Equipment, quantity, date of shipment and delivery, price and other matters
necessary for the delivery of the Equipment shall be described in each
Individual Purchase Order subject to the approval by the general manager.

3.4                                 As long as the Individual Purchase Order
of Equipment fulfills the terms and conditions of this Agreement, or unless
there is any reason justifiable to refuse, JV shall issue the Individual
Purchase Order.

3.5                                 In the event of any conflict or
contradiction between the terms of this Agreement and any of the Individual
Purchase Orders, the terms of this Agreement shall govern and prevail.

 

 

-2-

 

3.6                                 The price of the Equipment shall be
established in Japanese Yen or US Dollars in terms of CIF Hangzhou via
Shanghai.

Article
4                Payment

 

JV shall, [***] before the shipment of the
Equipment by MCI, open an irrevocable, unalterable and non-transferable letter
of credit, issued by the bank in PRC which is internationally recognized, at
sight with MCI as beneficiary, the value of which shall be [***] of the total
contract value.  The letter of credit
shall be payable at sight.

Article
5                Packaging

 

MCI may prepare packing materials (including
carton box, labels and printing) for the Equipment.  The detail of packing shall be determined later.

Article
6                Loading sand Delivery
Date of Equipment

6.1                                 The Equipment shall be delivered by MCI
to JV in accordance with progress of localization of production in which such
progress consists of phases as follows:

(1)                                  The first phase shall begin from the
start of operation of JV and end by the end of [***], and subsequently, the
second phase shall end by the end of [***].

(2)                                  In case of the third or fourth phases,
period of each phase is [***] thereafter.

6.2                                 The delivery of Equipment for phases
above shall be made upon the Acceptance of Equipment according to
Article 7.1.4 subject to the adjustment based on the business needs.

Article
7                Installation, Testing
Operation, Trial Production and Acceptance of Equipment

7.1                                 Definitions:

 

7.1.1                        “Installation”
means assembling the Equipment and installing them in the plant of JV subject
to the adjustment based on the business needs.

 

7.1.2                        “Testing
Operation” means, after the Installation of Equipment, checking the operation
of the Equipment under unloaded and loaded conditions and also checking whether
it satisfies the 

 

 

-3-

 

 

                                                performances
provided in the specifications of the Equipment subject to the adjustment based
on the business needs.

 

7.1.3                        “Trial
Production” means, prior to the pre-production in the plant of JV, trial
production directed by JV’s technical personnel of a testing nature by using
the materials procured by JV and the Equipment which passes Testing Operation.

 

7.1.4                        “Acceptance”
means acceptance of the delivery of Equipment of JV after going through Testing
Operation and Trial Production, by checking the performances of the Equipment
in accordance with the specifications of Equipment prepared at the time of
quotation of the Equipment, and checking whether the Equipment properly
operates in the plant of JV for production.

7.2                                 MCI shall assist JV to complete the
Installation, Testing Operation, Trial Production and Acceptance of the
Equipment.  If necessary, MCI shall
assist JV by using the materials procured by JV for Testing Operation.

7.3                                 In case problems arise out of the
procedure of Acceptance of the Equipment, both JV and MCI shall discuss with
each other and determine the share of responsibilities after reviewing the
cause of such problems in order to satisfactorily solve the problems and
complete the procedure of Acceptance.

7.4                                 Any expenses in relation to the business
trip(s) made by MCI to JV’s plant necessary for the Installation, Testing
Operation, Trial Production, and Acceptance of Equipment shall be borne by JV.

Article
8                Repair Warranty

8.1                                 MCI warrants that Equipment, whether new
product or not, provided by MCI meets the requirement of the performance necessary
for production of the Equipment in the plant of MCI as well as JV’s plant for
the period provided in Article 8.2.

8.2                                 Warranty period

 

 

-4-

 

 

8.2.1        Warranty for Equipment that is new
product

 

During the warranty period,
for defects not attributable to JV, MCI shall use its best effort to repair
such defect at no cost to JV.  The
warranty period shall be [***] commencing on the date of Acceptance of
Equipment.

 

8.2.2        Warranty for Equipment that is second
hand

 

During the warranty period,
for defects not attributable to JV MCI shall use its best effort to repair such
defect at no cost to JV.  The warranty
period shall be [***] commencing on the date of Acceptance of Equipment.

8.3                                 After the warranty period expires, MCI
shall, with its reasonable efforts, assist JV to repair or fix any breakdown in
utilizing Equipment, and provide necessary parts for such repair at
preferential prices to be determined by MCI. 
However, all the costs in relation to dispatching engineers of MCI to JV
including air fare, transportation and accommodation, shall be borne by JV.

Article
9                Technical Information

 

MCI shall use its best efforts to provide JV
with specifications and instruction manuals in two (2) copies for each Equipment.  The methods of delivery of such
specifications, manuals and instructions shall be determined by MCI.

Article
10             Technical Support

10.1                           MCI shall dispatch its engineers to JV’s
plant for training engineers of JV in relation to Installation, operation and
maintenance of the Equipment, in accordance with the necessity of such
training.

10.2                           MCI may provide training in relation to
Installation, operation and maintenance of the Equipment, in both Japan and
China, at JV’s costs; including air fare, transportation and
accommodation.  The training period
shall be decided by both JV and MCI considering the time necessary for the JV’s
engineers to independently operate Equipment for production.

 

 

-5-

 

10.3                           The training shall be, if provided in the
plant of MCI, held by accepting JV’s engineers or if provided in the plant of
JV held by dispatching MCI’s engineers.

Article
11             Modification

 

MCI may make any modifications and keep JV
informed of the modifications and explain reasons of modifications to the
specifications of the Equipment without the prior written consent of JV.

Article
12             Export Control Regulation

 

In the event that the Equipment and the
components, parts and materials thereof are the object of export regulations of
Japan, MCI use its best effort to obtain the license necessary for JV’s export
of such Equipment and the components, parts and materials.  JV shall furnish, without delay, any
information to MCI as requested by MCI in the event that MCI requires such
information from JV for the purpose of conforming to the Foreign Exchange and
Foreign Trade Control Act and the Export Trade Control Order and the Foreign
Exchange Control Ordinance of Japan.

Article
13             Term

 

This Agreement shall become effective on the
date of signature of this Agreement by both parties and shall continue until
terminated pursuant to Article 14.

Article
14             Termination

 

This Agreement and any Individual Purchase
Oder may be immediately terminated by either Party upon written notice to
the other:

(1)                                  in the event of a default not
attributable to Force Majeure or a breach by the other Party of any
obligation of this Agreement and/or any Individual Purchase Order hereunder and
the failure to cure such breach within [***]; or

(2)                                  in the event that the performance of this
Agreement and/or any Individual Purchase Order by other Party is wholly
suspended for a period of [***] or more, due to Force Majeure, and thereafter
such suspension is not cured within [***] after notice; or

(3)                                  in the event of insolvency or ceasing its
business of the other party; or

 

 

-6-

 

(4)                                  in the event that the other
Party shall be dissolved, liquidated, declared bankrupt or has commenced
proceedings relating to bankruptcy, creditor composition or reorganization of
company, either voluntarily or otherwise, or any other similar event occurs in
the other party.

 

In the event of the termination or expiration
of this Agreement, any Individual Purchase Order which exists prior to such
termination or expiration shall be deemed to be terminated and both parties
shall not perform the respective obligations thereunder.

Article
15             Indemnity

 

[***]

Article
16             Confidential Information

 

All drawings, technical information, data,
and other information, and industrial property rights in Equipment and any
other equipment with related components, parts materials, supplied to JV by MCI
in relation to this Agreement (hereinafter called “Information”) are the
property of MCI.  JV shall keep the
Information confidential and shall return all Information (including any copies
thereof) to MCI when requested by MCI.

 

JV shall use the Information only for the
purpose of this Agreement.

 

JV shall not allow any third party to use the
Information without MCI’s prior written consent nor allow in any circumstances
such third party to use the Information not for the purpose of this Agreement.

Article
17             Insurance

 

JV shall maintain at its own expense
insurance for product liability in the reasonable amount in US Dollars or
equivalents in Chinese currency for bodily injury and death liability and
property damage liability.

 

Such insurance shall be carried during the
term of this Agreement, including extension, [***].  (Coverage should cover injury or damage during the year, even
though claim may be filed at a later date, up to the time limit established by
the applicable statute of limitation laws.)

 

 

-7-

 

Article
18             Force Majeure

 

Neither MCI nor JV shall be liable for
failure in the performance of this Agreement and/or individual purchase orders
under this Agreement arising from war, sabotage, rebellion, riots, hostile
activities, accident of transportation, acts of governmental or
quasi-governmental authorities, regulations or restrictions imposed by law or
by court action, fires, explosions, floods, storms or other catastrophes, or
any other cause beyond the control of either party.

Article
19             Settlement of Disputes

19.1                           In the event a dispute arises in
connection with the interpretation or implementation of this Agreement, both
parties shall attempt in the first instance to resolve such dispute through
friendly consultations.

19.2                           If the dispute is not resolved through
friendly consultations within sixty (60) days after the commencement of
discussions, or such longer period as the parties agree in writing at that
time, then notwithstanding any other provision of this Agreement, any
Party may submit the dispute for arbitration.

 

Any disputes initiated by JV, arising out of
or in connection with this Agreement shall be finally settled by an arbitration
in Tokyo, Japan by the Japan Commercial Arbitration Association (“JCAA”) in
accordance with JCAA’s arbitration rules in effect at the time of arbitration.  Any disputes initiated by MCI, arising out
of or in connection with this Agreement shall be finally settled by an
arbitration in Shanghai, PRC by the China International Economic and Trade
Arbitration Commission (“CIETAC”) in accordance with CIETAC’s arbitration rules
in effect at the time of arbitration. 
The award rendered by the arbitrators shall be final and binding upon
the Parties.  The Parties hereto agree
to honor such award.  Any competent
court may enforce such award.  All
arbitration costs, including costs for the enforcement of any arbitration
award, shall be borne by the losing Party.

Article
20             Languages

 

This Agreement is made in Chinese and
English, each Party retaining one copy. 
Both Chinese and English versions are equally authentic.

 

 

-8-

 

Article
21             GENERAL

21.1                           Notice. 
Any written notice either Party may give the other concerning the
subject matter of this Agreement shall be in writing and given or made by means
that obtain a written acknowledgment of receipt.  Notices shall be sent to the parties at the following addresses,
which may be changed by written notice:

 

To
MCI:

Address:4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama, Japan

Zip Code:223-8639

Attention: Mr. Nobuyoshi Itoh, Director of

Mobile Network Division

Telephone: (8145)-540-5250

Facsimile: (8145)-544-3620

 

To
JV:

Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC

Zip Code:310012

Attention: Mr. John Yang, General Manager

Telephone: (86571)-8886-2336

Facsimile: (86571)-8886-2349

 

Notice shall be deemed to have been given or
made when actually received, as evidenced by written acknowledgment of receipt.

21.2                           Assignment, Subcontracting.  Neither this Agreement nor any rights or
obligations hereunder shall be assignable or subcontracted by JV without MCI’s
prior written consent.  Any attempted or
purported assignment in violation of the foregoing shall be void.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of each party hereto.

 

 

-9-

 

21.3                           Waiver of Terms and Conditions.  Failure to enforce any of the terms or
conditions of this Agreement shall not constitute a waiver of any such terms or
conditions, or of any other terms or conditions.

21.4                           Severability.  Where any provision of this Agreement is declared invalid,
illegal, void or unenforceable, or any changes or modifications are required by
regulatory or judicial action, and any such invalid, illegal, void or
unenforceable provision, or such change or modification, substantially affects
any material obligation of a party hereto, the remaining provisions of
this Agreement shall remain in effect and the parties shall mutually agree upon
a course of action with respect to such invalid provision or such change or
modification to the end that the purposes of this Agreement are carried out.

21.5                           Survival.  After the expiration or termination of this Agreement and any
Individual Purchase Order for any reason, the provisions of Article 15,
Article 16, Article 17, Article 19 and Article 21 of this
Agreement shall remain in effect.

21.6                           Governing Law.  This Agreement, and the rights and obligations contained in it,
shall be governed by and construed in accordance with the laws of China,
without regard to any conflicts of law principles that would require tile
application of the laws of any other jurisdiction.

21.7                           No Unreasonable Delay or
Withholding.  Where agreement, approval,
acceptance, consent or similar action by MCI or JV is required, such action
shall not be unreasonably delayed or withheld.

Article
22             Entire Agreement

 

This Agreement represents the entire
understanding between the parties with the respect to its provisions and
cancels and supercedes all prior agreements or understandings, whether written
or oral, with respect to the subject matter. 
This Agreement may only be modified or amended by an instrument in
writing signed by duly authorized representatives of the parties.  This Agreement shall be deemed to include
all individual purchase orders.

 

 

-10-

 

 

IN WITNESS WHEREOF, the Parties hereto cause
their authorized representatives to execute this Agreement on the date first
above written.

 

 

	
  Universal Communication Technology (Hangzhou)
  Company Limited.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Matsushita Communication Industrial Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  

 

 

 

 

-11-

Appendix IV

Personnel Assignment Agreement

by and among

UNIVERSAL
COMMUNICATION TECHNOLOGY

(HANGZHOU) COMPANY LIMITED,

MATSUSHITA
ELECTRIC INDUSTRIAL CO., LTD.

and

MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD.

 

 

Table
of Contents

 

	
  General

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Dispatch of
  MATSUSHITA employees

  
	
  2.

  	
   

  	
  Safety

  
	
  3.

  	
   

  	
  Compensation

  
	
  4.

  	
   

  	
  The salary paid in
  PRC

  
	
  5.

  	
   

  	
  Remittance to Japan

  
	
  6.

  	
   

  	
  Income
  tax

  
	
  7.

  	
   

  	
  Business
  trip

  
	
  8.

  	
   

  	
  Dwelling

  
	
  9.

  	
   

  	
  Transportation

  
	
  10.

  	
   

  	
  Language Study

  
	
  11.

  	
   

  	
  Holidays

  
	
  12.

  	
   

  	
  Medical
  Care

  
	
  13.

  	
   

  	
  Other
  Welfares

  
	
  14.

  	
   

  	
  Other Expenses

  
	
  15.

  	
   

  	
  Modification

  
	
  16.

  	
   

  	
  Effectiveness

  
	
  17.

  	
   

  	
  Miscellaneous

  

 

 

 

Personnel Assignment Agreement

 

This Agreement is made as of _________, 2002,
by and among UNIVERSAL COMMUNICATION TECHNOLOGY (HANGZHOU) COMPANY LIMITED
(hereinafter referred to as the “JV”), MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
and MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD. (hereinafter collectively
referred to as “MATSUSHITA”)

 

Whereas, upon the terms and subject to
conditions of this Agreement and in accordance with Article 28 of the
JOINT VANTURE CONTRACT (hereinafter referred to as “JV CONTRACT”), MATSUSHITA
desires to provide and dispatch their employees to the People’s Republic of
China (hereinafter referred to as “PRC”) and JV desires to accept employees provided
and dispatched by MATSUSHITA;

 

Whereas during the term of employment in JV
the dispatched employee and his/her family members shall be entitled to receive
the treatments and benefits contained in the “Rules on Overseas Work of
MATSUSHITA Employees”;

 

Now, THEREFORE, Parties agree as follows:

Article
1.               Dispatch of MATSUSHITA
employees

(1)          In accordance with the JV CONTRACT and
the discussions among the parties of the JV MATSUSHITA shall dispatch to the JV
employees competent for the posts that they shall hold in the JV for the
relevant work, and those employees are referred to as “Dispatched MATSUSHITA
Employee” (hereinafter referred to as “DIME”).

(2)          The term of dispatch shall be set forth
in accordance with the JV CONTRACT (upon conferring with JV)

(3)          JV shall get the prior consent from
MATSUSHITA before requesting DME to perform work assignments out of the scope
set forth in the JV CONTRACT or Technical License Agreement attached to JV
CONTRACT as Appendix II.

 

 

Article
2.               Safety

 

During the term of employment in the JV, DME
and his/her family members shall abide by the Laws and Regulations of PRC.  JV shall do its best efforts to guarantee
the safety of the DME and his/her family members.

Article
3.               Compensation

(1)          For compensations for DME during their
term of employment in JV, JV shall be responsible for the salaries (including
applicable taxes) to be paid in PRC and the remittance to Japan and in
accordance with the agreement between JV and MATSUSHITA.

(2)          The compensation for the DME shall be
counted from the date when DME receive the work assignment after arriving in
PRC.  In case that such DME does not
work for a full month, his/her salary shall be calculated at a daily rate,
which is one thirtieth (30th) of his/her one month salary per day.

Article
4.               The salary laid in PRC

(1)          The salary of DME in PRC shall consist of
the following items, and the net standard amount paid shall be subject to
[***].

 

                [***]

(2)          The Payment of net standard amount
received shall be made in U.S dollars on a monthly basis by JV and such
standard amount as of September l of each year shall be submitted to the board
of directors of JV.

(3)          In case of significant changes with
respect to the living expenses in PRC, JV and the board of directors of JV
shall have the right to alter the part of DME’s salary to be paid in PRC.

(4)          JV shall make salary payments to DME on
the specified date of each month in the currency of RMB or U.S. dollar.  The exchange rate shall be [***].

(5)          During the term of dispatch, DME shall be
entitled to receive the normal salary payment when he/she is out for business
trips and on holidays.

 

 

-2-

 

(6)          JV shall guarantee to make net salary
payments in accordance with the amount notified by MATSUSHITA.

Article 5.               Remittance to Japan

 

Of the compensations for DME, the remittance
to Japan shall be requested in Japanese Yen in accordance with the amount
actually paid in Japan.The requested amount, based on actual payment made by
MATSUSHITA in Japan, will be billed to JV at the end of June and December of
each year.  JV shall remit the required
amounts to MATSUSHITA in Japanese Yen. 
JV shall bear all the fees and expenses occurring in PRC and in relation
to such remittance.

Article 6.               Income tax

 

The income tax imposed on DUE, the amount of
which shall comply with the relevant tax laws and regulations of PRC, shall be
borne by [***] and paid in full amount. 
(the expenses associated therewith shall be included in compensations)

Article 7.               Business
trip

 

In case that DME takes business trip (in PRE
or outside PRC) for JV’s business, the transportation fee, accommodation
expenses, business allowances and any cost and expenses associated with such
business trips, shall be paid or reimbursed by JV in accordance with the Rules
for Business Trip stipulated by JV.

Article 8.               Dwelling

(1)          JV shall provide dwelling with furniture
furnished for DME to living at JV’s cost. 
The furniture shall include the following:

Bed,
desk, book cabinet, three sets of two sofas and a table for the living room,
dinner table, cupboard, clothes closet, carpet, curtains, lighting apparatus,
refrigerator, vacuum cleaner, washing machine, color TV, video (DVD) player,
air-conditioner (warm and cold) and microwave oven.

(2)          The fees for electricity, water, and gas
shall be paid by the dweller.  The
standard of the aforementioned fees shall be calculated in accordance with that
of Hangzhou City.

 

 

-3-

 

(3)          JV shall bear all the accommodation expenses
and taxes caused by DME in four-star hotels, before JV provides him/her with
dwellings.

Article 9.               Transportation

 

During the term of a DME working in JV, JV
shall furnish gratuitously vehicles necessary for work and shall endeavor to
offer transportation convenience to DME and his family members.

Article 10.            Language Training

(1)          If the general manager and the deputy
general manager of JV deems it necessary for a DME to learn Chinese for work
purpose, JV shall bear all fees pertinent to such employee’s training.

(2)          If it is necessary for the family of a
DME to learn Chinese, [***] shall be offered to each person until one year
elapses, commencing on the date of receiving training.  If Japanese is not the language used in the
school, JV shall offer [***] to each person with respect to each language.  However, JV shall not bear fees for training
if JV provides DME and his family with gratuitous language training.

Article 11.            Holidays

(1)          Under one of the following circumstances,
DME and his/her family, after joint permission of the general manager and the
deputy general manager, may enjoy a furlough back to Japan as long as [***] and
[***] shall bear any traveling fees incurred for round trip and the necessary
accommodation fees.

 

i.                                          When the DME’s wife, parents, son and/or
daughter, sister and/or brother pass(es) away or falls into critical condition.

 

ii.                                       When a DME supposed to work in JV more
than two years is preparing for marriage in Japan.

 

iii.                                    When the son and/or daughter of a DME
is/are preparing for marriage in Japan.

 

iv.                                   When the sister and/or brother of a DME
or his/her spouse is/are preparing for marriage.

 

 

-4-

 

 

(2)          The DME and his/her family may enjoy
[***] furloughs back to Japan each year as long as [***] and JV shall bear any
traveling fees incurred for round trip and the necessary accommodation fees.

(3)          Before the DNE’s return to Japan, if
his/her son and/or daughter should come back to Japan to attend examinations
held by a secondary school or by a school at a higher level, his/her son and/or
daughter may return to Japan, accompanied by one guardian, upon the joint
approval of the general manager and the deputy general manager.  JV shall bear any the traveling fee incurred
for round trip.

(4)          For circumstances other than those
mentioned above, the general manager and the deputy general manager may
negotiate and determine rewards during furlough for DME.

Article 12.            Medical Care

(1)          JV shall be responsible for, at its
expense, health examination conducted once a year for DME and his/her family.

(2)          JV shall promptly take measures to
provide proper medical care, at its expense, for DME who is sick or injured
during work.  DME may enjoy sick leave
according to the doctor’s diagnosis.

(3)          JV shall offer assistance in language and
the selection of doctors when the family of a DME is sick or injured.

(4)          JV shall bear any traveling fee incurred
for round trip, if the family member of a DNIE sick or injured during work,
after the permission of the general manager and the’ deputy general manager,
comes back to Japan for medical treatment in accordance with the doctor’s
advice.

(5)          JV shall bear the following fees, when
the wife of a DME who stays in PRC for more than one year gets childbirth.

 

              •    Normal childbirth: 70% of hospitalization
and medical treatment

 

              •    Abnormal childbirth: 90% of hospitalization
and medical treatment

 

 

-5-

 

Article
13.            Other Welfare

 

JV shall reimburse DNIE and his/her family
the following fees:

(1)          Allowance for Arrival

 

DME and his/her family who are supposed to
work in JV in PRC for more than one year may enjoy the following allowances
when they arrive in PRC.

 

                [***]

(2)          Allowances for Return to Japan

 

The DME and his/her
family who have worked in JV in PRC for more than one year may enjoy the
following allowances when they return to Japan for work.

[***]

(3)          Delivery charges for Personal Belongings

 

JV shall bear delivery
charges for personal belongings in accordance with the following items when the
DME and his/her family return to Japan.

[***]

Article
14.            Other Expenses

(1)          MATSUSHITA shall bear the air fare from
Japan to PRC for DME and his/her family’s coming to PRC while JV shall bear the
air fare from PRC to Japan for their return to Japan.

(2)          JV shall make effort to assist DME and
his/her family in applying for the entry & exit procedure, residency
procedure and in movement of personal belongings.  JV shall bear airport construction charges.

(3)          Membership Fees for Japanese.

Both
parties understand that he Japanese club is an organization established for
promotion of friendship and assistance among Japanese residing outside
Japan.  If a DME wishes to join in the 

 

-6-

 

club,
JV shall bear the membership fee for legal person while the individual DIVE
shall bear his/her personal membership fee.

(4)          Local social insurance

If
such social insurance as health insurance is available in PRC, Party A
shall effect, at its own cost, health insurance for DME with the permission of
the general manager and the deputy general manager.

Article 15.            Modification

 

This Agreement after consultation may be
modified with the consent of Parties hereto in writing.

Article 16.            Effectiveness

 

This Agreement is valid until the Joint
Venture Contract is expired or terminated.

Article 17.            Miscellaneous

 

This Agreement is made in Chinese and English
with three copies, each Party retaining one copy.  Both Chinese and English versions are
equally authentic.

 

 

-7-

 

 

IN WITNESS WHEREOF, the Parties hereto cause
their authorized representatives to execute this Agreement on the date first
above written.

 

 

	
  Universal Communication Technology
  (Hangzhou) Company Limited.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Matsushita Electric Industrial Co.,
  Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Matsushita Communication Industrial
  Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Position:

  	
   

  

 

 

ARTICLES OF ASSOCIATION

OF

UNIVERSAL COMMUNICATION

TECHNOLOGY (HANGZHOU COMPANY)

LIMITED

 

 

Table of Contents

	
  CHAPTER 1

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
   

  
	
  CHAPTER
  2

  	
   

  	
  PURPOSE, SCOPE AND SCALE OF BUSINESS

  	
   

  	
   

  
	
  CHAPTER
  3

  	
   

  	
  TOTAL AMOUNT OF INVESTMENT AND THE
  REGISTERED CAPITAL

  	
   

  	
   

  
	
  CHAPTER 4

  	
   

  	
  BOARD OF DIRECTORS

  	
   

  	
   

  
	
  CHAPTER 5

  	
   

  	
  MANAGEMENT OFFICE

  	
   

  	
   

  
	
  CHAPTER 6

  	
   

  	
  FINANCIAL AFFAIRS AND AUDITING

  	
   

  	
   

  
	
  CHAPTER 7

  	
   

  	
  TAXATION

  	
   

  	
   

  
	
  CHAPTER 8

  	
   

  	
  PROFIT DISTRIBUTION

  	
   

  	
   

  
	
  CHAPTER 9

  	
   

  	
  EMPLOYEES AND LABOR MANAGEMENT

  	
   

  	
   

  
	
  CHAPTER
  10

  	
   

  	
  TRADE UNION

  	
   

  	
   

  
	
  CHAPTER
  11.

  	
   

  	
  INSURANCE

  	
   

  	
   

  
	
  CHAPTER
  12.

  	
   

  	
  TERM, TERMINATION, DISSOLUTION AND
  LIQUIDATION

  	
   

  	
   

  
	
  CHAPTER  13

  	
   

  	
  RULES AND REGULATIONS

  	
   

  	
   

  
	
  CHAPTER
  14

  	
   

  	
  APPLICABLE LAW

  	
   

  	
   

  
	
  CHAPTER 15

  	
   

  	
  SETTLEMENT OF DISPUTES

  	
   

  	
   

  
	
  CHAPTER 16

  	
   

  	
  MISCELLANEOUS

  	
   

  	
   

  

 

 

Articles
of Association

Chapter
1              General Provisions

These
Articles of Association are made on the fifth day of July in 2002 in Yokohama, Japan, in
accordance with the Law of the People’s Republic of China on Sino-Foreign
Equity Joint Ventures (the “Joint Venture Law”),
the Regulations for the Implementation of the Law of the People’s Republic of
China on Sino-Foreign Equity Joint Ventures (the “Joint Venture Regulations”) and other relevant officially
published laws and regulations, and the provisions of the Joint Venture Contact
on the Establishment of UNIVERSAL
COMMUNICATION TECHNOLOGY (HANGZHOU) COMPANY LIMITED (hereinafter
referred to as the “Company”) made
on the fifth day of July in 2002 in Yokohama, Japan, among UTStarcom Telcom Co., Ltd. (hereinafter
referred to as “Party A” or “UTS”), and Matsushita Electric Industrial Co., Ltd. (hereinafter referred
to as “Party B” or “MEI”), and Matsushita Communication Industrial Co., Ltd. (hereinafter
referred to as “Party C” or “MCI”).

MEI, MCI and UTS
hereunder are collectively called “Parties”
and each a “Party”.  The Joint Venture Contract on the
Establishment of UNIVERSAL COMMUNICATION
(HANGZHOU) TECHNOLOGY COMPANY LIMITED are called “JVC Contract”.

Unless a provision
of these Articles of Associations otherwise provides, terms defined in the JVC
Contract shall have the same meanings when used herein.

Article 1

The name of the
Company shall be Universal Communication
Technology (Hangzhou) Company Limited in English and [Chinese Characters] in Chinese.  The legal address of the Company shall be 3
Yile Industrial Park, 129# Wen Yi Road, Hangzhou,, China.

 

Article 2

The names and addresses of the investors of COMPANY
areas follows:

 

	
   

  	
  (1) UTStarcom Telecom Co., Ltd., registered in Hangzhou, People’s
  Republic of China, with its legal address at 2,3 Yile Industrial Park,
  129# Wen Yi Road, Hangzhou, China

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Legal representative:

  	
   

  	
  Name: Ying Wu

  
	
   

  	
   

  	
   

  	
  Position: Chairman

  
	
   

  	
   

  	
   

  	
  Nationality: Chinese

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (2)Matsushita Electric Industrial
  Co., Ltd.,
  registered in 1006 Kadoma, Kadoma-shi, Osaka 571-8501, Japan.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Legal representative:

  	
   

  	
  Name:Kunio Nakamura

  
	
   

  	
   

  	
   

  	
  Position:President

  
	
   

  	
   

  	
   

  	
  Nationality:Japanese

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (3)Matsushita Communication
  Industrial Co., Ltd., registered in 4-3-1 Tsunashima-higashi, Kohoku-Ku, Yokohama,
  223-8939, Japan.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Legal representative:

  	
   

  	
  Name:Yasuo Katsura

  
	
   

  	
   

  	
   

  	
  Position:President

  
	
   

  	
   

  	
   

  	
  Nationality:Japanese

  

 

Article 3

 

The
Company shall be a limited liability company. 
The liability of each party to the Company shall be limited to the
amount subscribed and paid into the registered capital (as defined in
Article 8).

 

Article 4

 

The
Company is a Chinese corporation and is subject to the jurisdiction and
protection of Chinese law.  Any and all
activities engaged in by the Company shall comply with the laws, rules and
regulations of China.

 

-2-

 

Chapter 2              Purpose, Scope and Scale of
Business

Article 5

The purpose of
establishment of the Company is to cause the Company to engage in the business
described in Article 6 hereof on the principles of maximizing the profit.

Article 6

The business scope
of the Company shall be design and development, manufacturing, sales, repair
service of communication products such as [***].

Chapter
3              Total Amount of Investment
and the Registered Capital

Article 7

The total amount of investment of the Company shall
be  [***].

Article 8

The registered
capital of the Company shall be [***].

Party A’s
contribution to the registered capital of the Company shall be RMB in cash
which is equivalent to [***] which accounts for [***] of the total registered
capital of the Company.

Party B’s
contribution to the registered capital of the Company shall be [***] in cash,
which accounts for [***] of the total registered capital of the Company:

Party C’s
contribution to the registered capital of the Company shall be [***] in cash,
which accounts for [***] of the total registered capital of the Company:

Article 9

The Parties hereto
shall respectively make all of their contributions to the registered capital of
the Company within [***] following the issuance of the business license of the
Company.

 

-3-

 

Article 10

After the parties
have made their respective contributions in accordance with the foregoing
provision, the Company shall, on the basis of a capital contribution
verification report issued by an accounting firm registered in the PRC and
retained by the Company, issue an investment certificate to each Party.  Such investment certificate shall specify
the name of the Company, the date of the establishment of the Company, the name
of the Party and the capital investment contributed thereby, the dates of each
contribution, and the date of the investment certificate.

Article 11

The balance
between the total amount of investment and registered capital of the Company
may, pursuant to the decision of the Board of Directors in accordance with the
business needs of the Company, be raised by the Company through loans from
domestic and/or foreign financial institutions.

Article 12

The Company may
increase and reduce its registered capital subject to any necessary approval of
the examination and approval authority. 
In case of any increase of the registered capital, each Party shall have
the right to subscribe to the amount of such additional capital in accordance
with its respective proportional equity interest at the time.  If any Party does not subscribe to the
amount of additional capital in accordance with its proportional equity
interest at the time, the other Party may subscribe to it, in which event
appropriate adjustments shall be made to the ratio of the equity interest of
the Parties.

Article 13

13.1                           Except for transfer of any part of its
equity interest from Party C to Party B, no party may transfer, sell,
assign, give or otherwise dispose of all or any part of its equity interest in
the Company without the express prior written consent of the other Party, the approval
of the Board of Directors, and the approval of the original examination and
approval authority.  In the event a
Party intends to assign and transfer all or part of its investment to any of
its affiliated companies affiliates, however, the other Parties shall grant
their consent.

 

-4-

 

13.2                           When one Party to the Company assigns, or
transfers all or part of its equity interest (hereinafter referred to as
“Proposing Party”), the other Parties shall have pre-emptive right to purchase
such equity interest.  If such
pre-emptive right is not exercised within the [***] period, the Proposing Party
shall have the right, exercisable after the expiry of the [***] period or the
receipt of the offer to purchase portion of the equity interest from the other
Parties as the case may be, to transfer the equity interest to the third party
at the price, determined based on the latest audited financial statements and
on terms and conditions not more favorable to such third party than those
proposed by the Proposing Party for the exercise of pre-emptive rights.

13.3                           Upon any transfer by a Party of all or
any part of its equity interest in the Company, the transferring Party shall
surrender to the Company for cancellation its investment certificates issued by
the Company, and the Company shall issue a new investment certificate to the
transferee, if necessary.

13.4                           After the approval of the original
examination and approval authority of any increase or reduction of the registered
capital of the Company or of any transfer of any Party’s interest in the
Company, procedures for registration shall be handled by the Company with the
relevant department of administration for industry and commerce.

Chapter
4              Board of Directors

Article 14

The Board of
Directors is established for the Company which represents the supreme authority
thereof.  The date of issuance of the
Company business license shall be the date of the establishment of the Board of
Directors of the Company.

Article 15

The Board of
Directors shall be composed of [***] members including the chairman, of which
[***] shall be appointed by Party A, [***] shall be appointed by
Party B and the other [***] by Party C.  The chairman of the Board of Directors (hereinafter referred to
as “Chairman”) shall be appointed by [***].

 

-5-

 

Article 16

The term of office
for the directors and the Chairman shall be [***] years; the term of office for
the directors may be renewed by the appointing Party.  Each Party may, by giving [***] of prior written notice to the
other Parties, remove at any time any director whom it has appointed.  If a director is removed during his term of
office, the director succeeding him shall serve for the remaining term of
office of such former director.

Article 17

The Chairman shall
be the legal representative of the Company. 
Should the chairman be unable to perform his responsibilities for any
reasons, he/she may authorize any other director to represent the Company temporarily.

Article 18

18.1                           The Board of Directors shall be the
highest authority of the Company and shall have the right to make decisions on
all major and important matters of the Company.

18.2                           Resolutions involving the following
matters shall require the unanimous approval of the directors present,
including any proxies at a duly convened meeting of Board of Directors:

i.                  any amendment or modification of the
Articles of Association.

ii.               increase, assignment or deduction of
registered capital and the adjustment of each Party’s contribution to the
registered capital’s ratio.

iii.            merger of the Company with any other
economic organization.

iv.           termination, dissolution or liquidation
of the Company.

Resolutions
involving the following matters shall require an affirmative vote of at least
four fifths (4/5) of the directors present, including any proxies at a duly
convened meeting of Board of Directors:

 

i.                  issuance of any guarantees for the payment obligations
of any person or entity or the making of any other financing arrangements.

 

 

-6-

 

	
   

  	
  ii.

  	
   

  	
  approval of an individual loan transaction or
  aggregate loan transactions on behalf of the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  iii.

  	
   

  	
  approval of capital expenditures or capital
  commitments with a value exceeding [***].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  iv.

  	
   

  	
  assignment, transfer, sale, lease or other
  disposition of any business or assets of the Company with a value exceeding
  [***] or the taking over or acquisition of any business or assets of any
  other person or entity with a value exceeding [***].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  v.

  	
   

  	
  mortgage, pledge or granting of a security interest
  or other types of liens in any building, factory, office space or other fixed
  assets or capital equipment of the Company with a value exceeding [***].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  vi.

  	
   

  	
  addition of items to or change of the scope of
  business of the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  vii.

  	
   

  	
  establishment of any subsidiaries or related legal
  persons, including but not limited to representative offices, branch offices
  and/or subsidiaries.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  viii.

  	
   

  	
  reorganization of the management organization of the
  Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ix.

  	
   

  	
  appointment, suspension and dismissal of the general
  manager, deputy general manager, chief financial officer as well as his/her
  scope of authority.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  x.

  	
   

  	
  formulation of annual operating plan and marketing
  policies of the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xi.

  	
   

  	
  formulation of pricing policy for Products

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xii.

  	
   

  	
  distribution of profits of the Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xiii.

  	
   

  	
  execution of any contracts with a performance term
  of greater than [***] or involving individually or in the aggregate more than
  [***].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xiv.

  	
   

  	
  licensing of technology or know-how to or from any
  third party.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xv.

  	
   

  	
  approval of remuneration and benefits of the general
  manager, deputy general manager, and chief financial officer.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xvi.

  	
   

  	
  approval of the annual business plan and annual
  budget of the Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xvii.

  	
   

  	
  approval of the annual auditing report of the
  Company.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xviii.

  	
   

  	
  approval of any insurance to be carried by the
  Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  xix.

  	
   

  	
  determination of the Company’s employment plans,
  employee salary plans, pensions, fringe benefits and bonus plan.

  

 

 

 

-7-

 

 

 

xx.           contribution, use or expenditure of the general
reserve fund, the bonus and welfare fund and the enterprise expansion fund to
be established under the PRC laws.

 

xxi.        establishment or change of the accounting system of
the Company, or appointment or dismissal of Company independent financial
accountants or legal counsel.

 

xxii.     other matters submitted to the Board of Directors

Article 19

19.1                           The Board of Directors shall meet at
least once each year.  The First meeting
of Board of Directors shall be held within thirty (30) days from the date of
the issuance of the business license of the Company.  The Chairman shall set the agenda of meetings of the Board of
Directors and shall be responsible for convening and presiding over meetings of
the Board of Directors.

19.2                           The Chairman shall call an interim
meeting of the Board of Directors under a request of at least two (2) directors
specifying the matters to be discussed, and shall notify all directors in
writing of the agenda.

19.3                           The Chairman shall notify each director
in writing of the time, date, place and agenda of any meeting of the Board of
Directors thirty (30) days prior to a regular meeting and twenty (20) days
prior to a special or interim meeting. 
However, upon the request of at least three fifths (3/5) of all the
directors, any special or interim meeting of the Board of Directors may be held
without going through such advance notification procedure, but reasonable time
and writing notice shall be given to all the directors for their attending.

19.4                           Unless otherwise agreed to by the Board
of Directors, all meetings of the Board of Directors shall be held at the
Company’s legal address.

19.5                           Meetings of the Board of Directors may be
held by telephone or other electronic audio means such that all persons
participating in the meeting are able to hear, be heard and communicate with
each other at all times, and participation by a director or his proxy in a
meeting by such means shall constitute presence of such director or his proxy
in person at the meeting.

 

-8-

 

19.6                           Any action to be taken at any meeting of
the Board of Directors may be taken without a meeting of Board of Directors if
all directors consent to such action in writing, and such written consent shall
be filed in the minute book.

19.7                           If the Chairman gets sick or injured and
becomes unable to preside over regular meeting of Board of Directors, another
director specifically authorized by the Chairman shall call upon the aforesaid
meeting and take over the rights and powers of the Chairman.

19.8                           Any director who is unable to attend a
meeting of the Board of Directors for any reason may appoint a proxy in
writing, the proxy may be a director or not, to attend and vote on his/her
behalf.  The proxy shall have the same
rights and powers as the director who entrusted him.

19.9                           Majority of the Board of Directors shall
be present in person or by proxy at any meetings of the Board of Directors to
form a quorum.

19.10                     Detailed minutes shall be made for each meeting of the
Board of Directors and be signed by all directors and proxies present at the
meeting.  The minutes shall be written
in both Chinese and English, but only the English text shall be authentic and
have legal force.  Minutes shall be kept
by the Company during its term of existence and be made freely available to all
directors and each Party at any time.

19.11                     The traveling expenses, accommodation and other costs
and expenses directly incurred by a director or a proxy in performing its
duties as a director of the Company shall be borne by the Company.

19.12                     Meetings of the Board of Directors shall proceed in
accordance with the agenda determined pursuant to the provisions herein, and
each matter on the agenda shall be discussed appropriately and, if necessary,
put to a decision by way of resolutions. 
Any resolutions made at a meeting conducted by telephone or other means
of communication shall be confirmed in writing by all the persons participating
in the meeting no later than seven (7) days after the meeting and filed in the
minute books of the Company.

 

-9-

 

19.13                     All information discussed at meetings of the Board of
Directors shall be treated as confidential and shall not be disclosed to any
third party without the approval of the Board of Directors, unless otherwise
required by law.

Chapter
5              Business Management
Organization

Article 20

The Company shall
establish a management office under the Board of Directors to be responsible
for the daily operation and management of the Company.  The management office shall have one (1)
general manager and one (1) deputy general manager.  The general manager shall be nominated by Party A and
appointed by the Board of Directors, while the deputy general manager shall be
nominated by Party C and appointed by the Board of Directors.  The deputy general manager shall assist the
general manager in the daily operation and management of the Company, and the
general manager and deputy general manager shall jointly organize and lead the
daily operation and the management of the Company.  The Company may set up various departments to be responsible for
such matters as technology, manufacturing, finance, customer services, and
administration.

Article 21

The management
office shall directly report to the Board of Directors, shall carry out the
decisions of the Board of Directors, and shall organize and lead the daily
operation and management of the Company. 
The specific rights and powers of the management office are prescribed
below:

(a)                                  implement JVC Contract and its
appendixes, the Articles of Association and the resolutions made by the Board
of Directors.

(b)                                 formulate the annual operating plan and
submit to the Board of Directors for review and approval,

(c)                                  organize and manage the daily operation
of the Company.

(d)                                 submit regularly to the Board of
Directors written reports on the revenue and expenses of the Company.

 

-10-

 

(e)                                  formulate and implement the rules and
regulations on the operation and management of the Company.

(f)                                    appoint and dismiss the department
managers

(g)                                 determine the specific duties and
responsibilities of the deputy general manager and the department managers.

(h)                                 determine the employment and dismissal of
employees other than those to be determined by the Board of Directors, the
policies regarding rewards and punishment, promotion and salaries of employees
and personnel training programs.

(i)                                     approve capital expenditures or capital
commitments or such commitment in the aggregate of less than [***] in any
fiscal year.

(j)                                     formulation of marketing policies of the
Company subject to approval of the Board of Directors;

(k)                                  establishment of policies and procedures
for the management of the Company and change of the structure of the management
organization of the Company subject to approval of the Board of Directors

(l)                                     formulation of the Company’s employment
plans, employee salary plans, pensions, fringe benefits, and bonus plans
subject to approval of the Board of Directors

(m)                               Formulation of contribution, use or
expenditure of the general reserve fund, the bonus and welfare fund and the
enterprise expansion fund to be established under PRC law, subject to approval
of the Board of Directors

(n)                                 approval of any insurance to be carried
by the Company, subject to approval of the Board of Directors

(o)                                 refer matters of importance to the
Company to the Board of Directors for its consideration.

 

-11-

 

(p)                                 handle other matters within the scope of
authorization granted by the Board of Directors.

Article 22

The term of office
of the general manager and the deputy general managers shall be [***], and
their term of office may be renewed by the Board of Directors if they are
continuously nominated and recommended by the nominating and recommending
Party.

Chapter
6              Financial Affairs and
Auditing

Article 23

The Company shall
establish a financial and accounting system in accordance with PRC laws and the
JVC Contract.  Such financial and
accounting system and any major changes thereof shall be subject to the
approval of the Board of Directors.

Article 24

The fiscal year of
the Company shall coincide with the calendar year, i.e. from January 1 to
December 31 of each year.  The
first fiscal year shall begin from the date of the establishment of the Company
and end on December 31 of that year and the last fiscal year shall end on
the date of the dissolution of the Company.

Article 25

The accounting of
the Company shall be subject to the International Uniform Regime of Rights and
Liabilities and the International Uniform Accounting System of Debit and
Credit.  All accounting records,
vouches, books and statements of the Company shall be made and kept in both
Chinese and English.  All financial
statements and reports of the Company shall be made and kept in both Chinese
and English.

Article 26

The Company shall
have its account denominated in RMB, but may, if necessary, also adopt US
Dollars or other foreign currencies as supplementary bookkeeping
currencies.  Where RMB is converted to
other currencies, the conversion coefficient [***].

 

-12-

 

Article 27

Allocations for
reserve funds and enterprise expansion funds of the Company and bonuses and
welfare funds for staff and workers shall be set aside in accordance with
applicable laws.  The annual proportion
of allocations shall be decided by the Board of Directors according to the
financial conditions of the Company and applicable PRC laws.  The target annual proportion of allocations
shall be [***], subject to change of after-tax profits as determined in
Article 32.1

Article 28

The Company shall
open RMB and foreign currency accounts with banks registered in China in
accordance with PRC laws.  The foreign
exchange matters of the Company shall be handled in accordance with the
provisions of the PRC foreign exchange laws.

Article 29

The Company shall
pay the reasonable costs of preparing regular financial statements as may be
needed by Party A, Party B or Party C.

Chapter
7              Taxation

Article 30

(1)                                  The Company shall pay taxes in accordance
with the laws and regulations of the PRC in relation to taxes of foreign
investment enterprise.

(2)                                  The parties shall apply to obtain the
benefits for the Company, the parties hereto and all of their personnel, for
all of the applicable tax exemptions, reductions, privileges and preferences
which are now or in the future become obtainable under the laws and regulations
of the PRC and under any applicable treaties or international agreements to
which the PRC may now be or may hereafter become a party.

Article 31

The employees of
the Company shall pay individual income tax in accordance with the Individual
Income Tax Law of the PRC.  Party A
and the Company shall assist the members of the 

 

-13-

 

Management Office
and employees dispatched to the Company by Party B or Party C in
relation to the procedure for payment of individual income tax.

Chapter
8              Profit Distribution

Article 32

The Company shall
distribute profits to the Parties as follows:

32.1                           Within [***] from the end of each fiscal
year, the Board of Directors shall determine the amount of after-tax profit of
the Company to be reserved for production and operation and the amount of
profits to be distributed to the Parties [***].  Distribution of profits to the Parties B and C shall be made
in Japanese Yen.

32.2                           Losses from previous years must be made
up before any profits from the current year are distributed to the
Parties.  The undistributed profits of
the past year(s) may be distributed together with this year’s profits.

Chapter
9              Employees and Labor
Management

Article 33

The recruitment
and employment of employees of the Company shall be made in accordance with the
provisions of the Contract and the guidelines adopted by the Board of Directors
and based on the merits of the candidates and shall be supervised and approved
by the general manager subject to the consultation of the deputy general
manager.  However, the Company shall
accept employees dispatched by Party A, Party B or Party C as
long as necessary for the purpose of the JVC Contract in accordance with
Personnel Assignment Agreement attached hereto as Appendix IV.  Dispatched employees from Party A,
Party B and Party C (except the general manager, the deputy general
manager, chief financial officer and deputy department manager of design and
development department ) shall be decided by the general manager based on
business needs.

 

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Article 34

The Company shall
sign labor contracts with its employees, which contracts shall cover dismissal
and resignation, wages, insurance, welfare benefits, rewards, disciplines,
penalties and other matters, in accordance with applicable PRC laws

Article 35

35.1                           Without the consent of the general
manager subject to the consultation of the deputy general manager, no employees
of the Company except those dispatched by either Party B or Party C,
shall maintain any employment relationship, whether contractual or otherwise,
with any third party during their employment with the Company.  In the event any such employee is found to
be maintaining an employment relationship with any third party, the Company
shall have the right to terminate the employment of such employee at any time
without any liability.

35.2                           All personnel of the Company shall be
subject to confidentiality obligations concerning information obtained from the
Company and all the Parties and shall be strictly forbidden from disclosing any
of such information to any third party without the prior authorization and
approval of the general manager and the deputy general manager.

Chapter
10            Trade Union

Article 36

The PRC employees
of the Company shall have the right to establish a trade union and to
participate in the activities of such trade union in accordance with the Trade
Union Law of the People’s Republic of China, Articles of Association of Chinese
Trade Union and other relevant regulations applicable to foreign investment
enterprises.

Article 37

The trade union
established pursuant to Article 34 hereof has the right to represent the
interests of the employees in signing labor contracts with the Company and to
supervise the execution of labor contracts. 
It shall also have the right to protect the legal rights and material
benefits of the employees of the Company. 
The trade union will assist the mediation of disputes arising between 

 

-15-

 

the Company and
the employees thereof, and may negotiate such disputes with the Company if
entrusted by the relevant employee.

Chapter
11.           Insurance

Article 38

Insurance of the
Company against all risks shall be from the insurance companies registered
within China.  The cover, amount,
period, etc of the insurance shall be proposed by the general manager and the
deputy general manager in accordance with the needs of the Company, subject to
approval by the Board of Directors.

Chapter
12.           Term, Termination,
Dissolution and Liquidation

Article 39

The duration of
the Company shall be [***] commencing from the date on which the business
license of the Company is issued.  An
application for the extension of duration, proposed by one Party and
unanimously approved by the Board of Directors, shall be submitted to the
examination and approval authority six months prior to the expiration date of
the term of the Company.

Article 40

40.1                           The Company shall be dissolved and the
JVC Contract shall be terminated in case any of the following situations or
accidents occurs:

(1)                                  the term of JVC Contract expires and is
not extended.

(2)                                  any Party delays to perform its
obligations to contribute in full its subscription of the registered capital
pursuant to JVC Contract and fails to perform the said obligations within [***]
commencing from the date specified in the JVC Contract.

(3)                                  the Company does not generate, as
reported by its audited financial statements, a net profit for [***], after
consultation, the Parties fail to agree on how to improve satisfactorily the
financial situation of the Company.

 

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(4)                                  due to an event of force majeure as
stipulated herein, the Company is unable to continue to carry out operations
for [***] from the day the event of force majeure occurs and the Parties fail
to agree on how to improve the situation.

(5)                                  the Company is ordered to close in
accordance with PRC laws because of serious violations of PRC laws.

(6)                                  the operation and business as approved by
the relevant departments of Chinese government are prohibited or significantly
restricted by any government authority.

40.2                           In the event any of the conditions set
forth in (ii) above occurs, any non-breaching Party shall have the right to
unilaterally apply to the examination and approval authority to terminate the
JVC Contract and dissolve the Company.

40.3                           In the event any of the conditions set
forth in any of (iii) through (vi) above occurs, either Party shall have the
right to notify the other Parties in writing and request that the JVC Contract
be terminated and the Company be dissolved. 
Upon such request, the Board of Directors shall within thirty (30) days
of such written request, adopt resolutions for such termination, and the
Company shall apply to the relevant PRC authorities for approval of such
termination and dissolution.  Each Party
shall cause the directors it has appointed to vote in favor of such termination
resolutions.

40.4                           In case of termination of the JVC
Contract, the following appendixes shall terminate forthwith.

 

Appendix I: Technical License Agreement by MCI

Appendix II: Technical License Agreement by UTS

Appendix III: Equipment Purchase Agreement

Appendix IV: Personnel Assignment Agreement

Chapter 
13           Rules and Regulations

Article 41

The rules and
regulations made by the Board of Directors and Management Office include:

 

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(a)                                  Business administration regulations,
including those in respect of the functions and powers of all sub-sections and
the work procedures;

 

(b)                                 Employees regulations;

 

(c)                                  Manpower and payment regulations;

 

(d)                                 Employees’ attendance, promotion, reward,
and punishment regulations;

 

(e)                                  Employees’ welfare regulations;

 

(f)                                    Finance rules;

 

(g)                                 Liquidation procedures where the COMPANY
dissolves;

 

(h)                                 Other rules and regulations where
necessary.

Chapter
14            Applicable Law

Article 42

The conclusion,
validity, interpretation and implementation of these Articles of Association
and resolution of disputes thereunder shall be governed by the laws of the PRC.

Chapter
15            Settlement of Disputes

Article 43

43.1                           In the event a dispute arises in
connection with the interpretation or implementation of these Articles, the
Parties shall attempt in the first instance to resolve such dispute through
friendly consultations.

43.2                           If the dispute is not resolved through
friendly consultations within sixty (60) days after the commencement of
discussions, or such longer period as the Parties agree in writing at that
time, then notwithstanding any other provision of these Articles, any Party may
submit the dispute for arbitration.

43.3                           Any disputes initiated by Party A, arising
out of or in connection with these Articles, shall be finally settled by an
arbitration in Tokyo, Japan by the Japan Commercial Arbitration Association
(“JCAA”) in accordance with JCAA’s arbitration rules in effect at the time of
arbitration.  Any disputes initiated by
Party B or Party C, arising out of or in connection with 

 

-18-

 

                                                these Articles shall be finally settled
by an arbitration in Shanghai, PRC by the China International Economic and
Trade Arbitration Commission (“CIETAC”) in accordance with CIETAC’s arbitration
rules in effect at the time of arbitration. 
The award rendered by the arbitrators shall be final and binding upon
the Parties.  The Parties hereto agree
to honor such award.  Any competent
court may enforce such award.  All
arbitration costs, including costs for the enforcement of any arbitration
award, shall be borne by the losing Party.

43.4                           The Parties agree that during the
arbitration proceedings, they shall continue to observe and perform these
Articles except for the provisions subject to or involved in arbitration.

Chapter 16            Miscellaneous

Article 44

Any modification
of these Articles of Association shall be adopted by the Board of Directors by
unanimous consent of the directors present including any proxies, at the
meeting, and shall be reported to and ratified by the original Approval
Authority.

Article 45

These Articles of
Association have been concluded by execution of six original copies each in
Chinese and English.  Both of the
language versions shall be equally authentic.

Article 46

These Articles of
Association shall not take effect unless they win the approval of the Approval
Authority.

Article 47

In case of any
inconsistency or conflict between any of the provisions of these Articles of
Association and the provisions of the JVC Contract, the provisions of the JVC
Contract shall prevail.

Article 48

Unless otherwise
agreed by the parties the Company shall bear all the costs incurred in
connection with these Articles of Association and all the costs of the business
license application.

 

-19-

 

These Articles of
Association are signed in the Chinese language in six (6) originals and in
English language in six (6) originals by the legal or authorized
representatives of the parties on the date first set forth above.

 

	
  UTStarcom Telecom Co., Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Johnny Chou

  	
   

  	
   

  
	
  Name: Johnny Chou

  	
   

  	
   

  
	
  Position: General Manager

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Witnessed by:

  	
  /s/ Hong Liang Lu

  
	
   

  	
   

  	
   

  	
  Name: Hong Liang Lu

  
	
   

  	
   

  	
   

  	
  Position: President
  & CEO

  
	
   

  	
   

  	
   

  	
  UTStarcom, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Matsushita Communication Industrial Co., Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yukio Shohtoku

  	
   

  	
   

  
	
  Name: Yukio Shohtoku

  	
   

  	
   

  
	
  Position: Managing Director

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Matsushita
  Communication Industrial Co., Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Yasuo Katsura

  	
   

  	
   

  
	
  Name. Yasuo Katsura

  	
   

  	
   

  
	
  Position: President

  	
   

  	
   

  

 

 

-20-

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