Document:

Exhibit 10.25

 

[*]

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

 

AMENDMENT

TO OEM AGREEMENT BETWEEN UTSTARCOM, INC. AND INTERWAVE

COMMUNICATIONS INTERNATIONAL, LTD., DATED JULY 14, 2000

 

This Amendment is dated and entered into as of the 27th day

of September 2002 by and between UTStarcom, Inc., a Delaware corporation with

its place of business at 1275 Harbor Bay Parkway, Alameda, CA 94502, USA

(hereinafter referred to as “UTStarcom”) and Interwave Communications

International, Ltd., a Bermuda company having offices at Clarendon House, 2

Church Street, Hamilton HM DX, Bermuda (hereinafter referred to as “Interwave”)

(collectively, the “Parties”).

 

WHEREAS, The Parties entered into a contractual relationship on

July 14, 2000 (referred to herein as the “Original OEM Agreement”) for

UTStarcom to purchase certain products and for resale as defined in the

Original OEM Agreement;

 

WHEREAS, UTStarcom has expressed an interest in making an equity

investment in Interwave in exchange for a) the development and production

by Interwave of certain technology relating to [***] compatible with

UTStarcom’s [***] specifications; and b) incorporation of said technology

into [***], where UTStarcom would purchase said products from Interwave

pursuant to the terms of the Original OEM Agreement and this Amendment;

 

NOW, THEREFORE, in consideration of the premises and of the mutual

covenants and conditions herein contained, the Parties mutually agree as

follows:

 

1.         [***] Purchase Agreement

In consideration of Interwave’s provision of technical

design and product production services as described herein, UTStarcom shall

purchase [***] pursuant to the terms of a [***] Purchase Agreement (attached

hereto as Exhibit A).

 

2.         Technical Design Services

In return for UTStarcom’s equity investment in

Interwave as described in Section 1 of this Amendment, Interwave shall

provide technical design services with respect to [***] being made compatible

with UTStarcom’s [***] specifications. These technical design services shall be

provided pursuant to the specifications attached hereto as Exhibit B, and

shall be completed pursuant to the delivery schedule attached hereto as Exhibit C.

 

 

1

 

 

3.         Product Production Services

In further consideration of [***] as described in

Section 1 of this Amendment, Interwave shall produce, pursuant to the

terms of this Amendment and the Original OEM Agreement, [***] described in

Section 2 of this Amendment. Interwave shall provide these [***] to

UTStarcom at [***]. Interwave acknowledges and agrees that [***].

 

4.         Software Escrow

Interwave acknowledges the importance to UTStarcom of

having access to the technical designs created by Interwave pursuant to

Section 2 of this Amendment in the event that interWAVE goes into

liquidation or ceases business. Accordingly, Interwave agrees that it shall

forthwith upon the completion of the technical designs intended by

Section 2 place all software (including source code), firmware,

documentation, and all other intellectual property necessary for the

manufacture of the [***] into an escrow reasonably acceptable to UTStarcom,

pursuant to terns and conditions expressed in the Software Escrow Agreement

attached hereto as Exhibit D of this Amendment. All items placed into said

escrow shall be used by UTStarcom only for the purpose of manufacturing the

[***] that incorporates such technical designs and for no other purpose.

 

5.         Limited Effect of Amendment

Aside from the modification in this Amendment, the

remaining terms and conditions of the Original OEM Agreement shall remain

unaffected by this Amendment.

 

2

 

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be

executed by their respective duly authorized representatives as of the date

first above written. All copies of this Amendment, signed by both Parties,

shall be deemed originals.

 

Interwave Communications                                                               UTStarcom,

Inc.

International,

Ltd.

 

	

  By:

  	

  /s/ PRISCILLA LU

  	

   

  	

  By:

  	

  /s/ HONG LU

  
	

   

  	

   

  	

   

  
	

  Name: Priscilla Lu

  	

   

  	

  Name: Hong Lu

  
	

  Title: Chief Executive

  Officer

  	

   

  	

  Title: Chief Executive

  Officer

  
	

   

  	

   

  	

   

  
	

  Date:

  September      , 2002

  	

   

  	

  Date:

  September      , 2002

  

 

3

Execution

Copy

 

UTSTARCOM,

INC.

 

AND

 

INTERWAVE

COMMUNICATIONS INTERNATIONAL LTD.

 

STOCK

PURCHASE AGREEMENT

 

SEPTEMBER

27, 2002

 

4

 

STOCK

PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT is made as of the        day of September 2002, by and between UTStarcom, Inc.

(“UTStarcom” or the “Investor”), a corporation organized under the laws of the

State of Delaware, USA, with its principal place of business at 1275 Harbor Bay

Parkway, Alameda, CA 94502 USA and interWAVE Communications International, Ltd.

(the “Company”), a corporation organized under the laws of Bermuda, with its

principal place of business at Clarendon House, 2 Church Street, P.O. Box HM

1022, Hamilton, Bermuda.

 

WHEREAS, the parties have agreed in principle upon the

purchase of shares of Common Stock of the Company by the Investor.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.             Purchase

and Sale of Common Stock.

 

1.1      Sale of the Common Shares. 

At the Closing (as defined below) and subject to the terms and

conditions of this Agreement, Company will issue and sell for [***] the number

of shares of the Company’s Common Stock obtained by dividing the [***] into

[***] (the “Common Stock”) to the Investor, and the Investor will buy the

Common Stock from the Company, at the Closing, for the per share purchase price

determined as set forth above (the “Purchase Price”). The parties agree that

the Investor may assign the right and obligation to purchase the Common Stock

for the Purchase Price, and all of its other rights and obligations under this

Agreement, to an “Affiliate,” in which case the term “Investor” shall refer

herein to such Affiliate.  “Affiliate”

means, with respect to any specified person, any other person that directly or

indirectly through one or more intermediaries, controls, is controlled by, or

is under common control with, such specified person.  In the event that Investor assigns this Agreement to an

Affiliate, UTStarcom shall guarantee and remain liable for the performance of

such Affiliate’s obligations hereunder. 

as reported by the Nasdaq National Market (or, if such market is not the

principal trading market for the Common Stock, as reported by such principal

trading market).

 

1.2      Closing.  The closing

of purchase and sale of the Shares to be sold and purchased hereunder (the

“Closing”) shall occur on September 26, 2002 (the “Closing Date”) at 10:00

a.m. at the offices Wilson, Sonsini, Goodrich and Rosati, 650 Page Mill Road,

Palo Alto, California 94304, USA.  The

per share price is calculated to be [***] US dollars, and the number of shares

to be sold is calculated to be [***] shares, as shown in the attached

calculation in Exhibit A.

 

2.             Closing Date, Delivery.

 

2.1      Closing Date. 

The Closing shall be held on September 26, 2002 or such other date

as the Company and the Investor may agree upon (the “Closing Date”).

 

5

 

2.2      Delivery.  At the

Closing, the Company will deliver to the Investor a stock certificate,

registered in the Investor’s name, representing the Shares, against payment of

the Purchase Price by certified or cashier’s check payable to the Company, or

by wire transfer of immediately available same day funds per the Company’s

wiring instructions.

 

2.3      Further Assurances. 

The Company and the Investor hereby covenant and agree without the

necessity of any further consideration, to execute, acknowledge and deliver any

and all such other documents and take any such other action as may be

reasonably necessary to carry out the intent and purposes of this Agreement.

 

3.             Representations

and Warranties of the Company.  The Company

hereby represents and warrants to the Investor that, except as set forth on the

Schedule of Exceptions (the “Schedule of Exceptions,” attached hereto as

Exhibit A1) furnished to the Investor on the date hereof, which exceptions

shall be deemed to be representations and warranties as if made hereunder and

which shall be identified as exceptions to specific Sections of this Agreement:

 

3.1      Organization, Good Standing and

Qualification.  The Company is a corporation duly organized,

validly existing and in good standing under the laws of Bermuda.  The Company has all requisite corporate

power and corporate authority to own and operate its properties and assets, to

carry on its business as now conducted and as proposed to be conducted, to sell

the Shares, to enter into this Agreement, and to carry out the transactions

contemplated hereunder and thereunder. 

The Company, and each of its subsidiaries, is qualified to transact

business and is in good standing in each jurisdiction in which the failure to

qualify would have, or could reasonably be expected to have, a material adverse

effect on the business, properties, financial condition or results of

operations of the Company and its subsidiaries taken as a whole (a “Material

Adverse Effect”).  The Company has

delivered to the Investor true, correct and complete copies of the Company’s

Certificate of Incorporation (the “Certificate”) and the Company’s By-laws in

effect on the date hereof.

 

3.2      Capitalization

and Voting Rights.

 

(a)   The capital

stock of the Company as of September 5, 2002 consisted of:

 

(i)    100,000,000 authorized

shares of Common Stock, of which 58,130,029 shares are issued and outstanding

 

(ii)   10,000,000 authorized

shares of Preferred Stock, of which zero shares are issued and outstanding

 

(b)   Except as

set forth in the Company’s report on Form 10–K for the fiscal year

ended June 30, 2001, the Company’s proxy statement for its 2001 annual

general meeting of shareholders and the Company’s Quarterly Reports on

Form 10–Q for the periods ended September 30, 2001,

December 31, 2002, and March 31, 2001 (collectively, the “Company’s

Public Filings”) or in Section 3.2 of the Schedule of Exceptions there

are: (i) no outstanding options, warrants, rights (including conversion or

preemptive rights) or agreements pursuant to which the

 

6

 

Company is or may

become obligated to issue, sell or repurchase any shares of its capital stock

or any other securities of the Company; (ii) no restrictions on the

transfer of capital stock of the Company imposed by the Certificate or By-laws

of the Company, or any agreement to which the Company is a party, any order of

any court or any governmental agency to which the Company is subject, or any

statute other than those imposed by relevant state and federal securities laws;

and (iii) no cumulative voting rights for any of the Company’s capital

stock.  The Company has, as of

December 31, 2001, reserved up to Nineteen Million Seven Hundred Thirty

Thousand (19,730,000) shares of its Common Stock for the issuance of Common

Stock pursuant to the exercise of outstanding options and warrants or options

to be granted in the future under its stock option and stock purchase plans

listed on Section 3.2 of the Schedule of Exceptions.

 

(c)   Except as

set forth in the Company’s Public Filings or in Section 3.2 of the

Schedule of Exceptions, the Company is not a party to any agreement or

understanding which affects or relates to, the voting of shares of capital

stock of the Company or the giving of written consents by a shareholder or

director of the Company.

 

3.3      Subsidiaries. 

Except as set forth in the Company’s Public Filings or in

Section 3.3 of the Schedule of Exceptions, the Company has never owned and

does not presently own or control, directly or indirectly, any other

corporation, association, or other business entity and has never owned or

controlled and does not currently own or control, directly or indirectly, any

capital stock or other ownership interest, directly or indirectly, in any

corporation, association, partnership, trust, joint venture or other entity.  Each of the Company’s subsidiaries is duly

organized and existing under the laws of its jurisdiction or organization and

is in good standing under such laws. 

None of the Company’s subsidiaries owns or leases property or engages in

any activity in any jurisdiction that might require its qualification to do

business as a foreign corporation and in which failure to do so would have a

Material Adverse Effect.

 

3.4      Authorization. 

All corporate action on the part of the Company and its stockholders

necessary, for the authorization, execution and delivery of the Transaction

Agreements, the performance of all obligations of the Company hereunder and

thereunder and the authorization, issuance and delivery of the Shares to be

sold hereunder, has been taken or will be taken prior to the Closing.  The Transaction Agreements have been duly

executed and delivered by the Company and constitute valid and legally binding

obligations of the Company, enforceable against the Company in accordance with

their terms (except as such enforceability may be limited by applicable

bankruptcy, insolvency, reorganization, moratorium or other laws of general

application relating to or affecting enforcement of creditors rights).  The execution, delivery and performance of the

Transaction Agreements and compliance with the provisions thereof by the

Company, will not:

 

(a)   violate any

provision of law, statute, ordinance, rule or regulation or any ruling, writ,

injunction, order, judgment or decree of any court, administrative agency or

other governmental body, the violation of which would have a Material Adverse

Effect;

 

(b)   conflict

with or result in any breach of any of the terms, conditions or provisions of,

or constitute (with due notice or lapse of time, or both) a default (or give

rise to any

 

7

 

right of

termination, cancellation or acceleration) under (i) any material

agreement, document, instrument, contract, understanding, arrangement, note,

indenture, mortgage or lease to which the Company is a party or under which the

Company or any of its assets is bound or affected, (ii) the Company’s

Restated Certificate, or (iii) the By-laws of the Company; or

 

(c)   result in

the creation of any lien, security interest, charge or encumbrance upon any of

the properties or assets of the Company.

 

3.5      Valid Issuance

of Common Stock.

 

(a)   When

issued, sold and delivered in accordance with the terms hereof for the

consideration expressed herein, the Shares will be validly issued and

outstanding, fully paid and nonassessable and not subject to any preemptive

rights, rights of first refusal or other similar rights imposed by the Company.

 

(b)   The

outstanding shares of Common Stock are all duly authorized and validly issued,

fully paid and nonassessable.

 

3.6      Governmental Consents.  No consent, approval, order or authorization of, or registration,

qualification, designation, declaration or filing with, any federal, state or

local governmental authority on the part of the Company is required in

connection with the consummation of the transactions contemplated by the

Agreement, except for registration or qualification, or taking such action to

secure exemption from such registration or qualification, of the Shares under

applicable state or federal securities laws, which actions shall be taken, by

and at the expense of the Company, on a timely basis as may be required.

 

3.7      Litigation.  Except as

set forth in Section 3.7 of the Schedule of Exceptions, there is no

action, suit, proceeding or investigation pending or, to the Company’s knowledge,

currently threatened against the Company which questions the validity of the

Transaction Agreements or the right of the Company to enter into such

agreements, or to consummate the transactions contemplated thereby, or which

reasonably would be expected to have, either individually or in the aggregate,

a Material Adverse Effect, nor is the Company aware that there is any basis for

the foregoing.  To the Company’s

knowledge, there are no legal actions or investigations pending or threatened

in writing involving the employment by or with the Company of any of the

Company’s current or former employees, their use in connection with the

Company’s business of any information or techniques allegedly proprietary to

any of their former employers, or their obligations under any agreements with

prior employers or alleging a violation of any federal, state or local statute

or common law relationship with the Company. 

The Company is not a party to any order, writ, injunction; judgment or

decree of any court that has had, or could reasonably be expected to have, a

Material Adverse Effect.

 

3.8      Employees and Consultants. 

Except as set forth in Section 3.8 of the Schedule of Exceptions:

 

8

 

(a)   To the

Company’s knowledge; none of its employees is obligated under any contract

(including licenses, covenants or contracts of any nature) or other agreement,

or subject to any judgment, decree or order of any court or administrative

agency, that would interfere with the use of his best efforts to promote the

interests of the Company or that would conflict with the Company’s business as

proposed to be conducted.  Neither the

execution nor delivery of the Transaction Agreements, nor the carrying on of

the Company’s business by the employees of the Company, nor the conduct of the

Company’s business as proposed, will, to the Company’s knowledge, conflict with

or result in a breach of the terms, conditions or provisions of, or constitute

a default under, any material contract, covenant or instrument under which any

of such employees is now obligated.

 

(b)   Each

employee of, or consultant to, the Company, who has or is proposed to have

access to confidential or proprietary information of the Company, is a

signatory to, and is bound by, an agreement with the Company relating to

nondisclosure, proprietary information and, with respect to employees,

assignment of patent, copyright and other intellectual property rights.

 

(c)   To the

knowledge of the Company, no employee of, or consultant to, the Company is in

violation of any term of any employment contract, patent disclosure agreement

or any other contract or agreement between such individual and the Company

including, but not limited to, those matters relating to (i) the

relationship of any such employee with the Company or to any other party as a

result of the nature of the Company’s business as currently conducted, or

(ii) unfair competition, trade secrets or proprietary information.

 

3.9      Patents and Trademarks. 

The Company owns or possesses all rights to use all patents, patent

rights or licenses, inventions, collaborative research agreements, trade

secrets, know-how, trademarks, service marks, trade names and copyrights which

are necessary to conduct its businesses as described in the Company’s Public

Filings.  Except as set forth in the

Company’s Public Filings or in Section 3.9 of the Schedule of Exceptions,

The Company has not received any written communications alleging that the

Company has violated or, by conducting its business as proposed, would violate

any of the Intellectual Property of any other person or entity.  Compliance with Other Instruments.  The Company is not in violation or default

of any provisions of the Restated Certificate or the Company’s By-laws or of

any instrument, judgment, order, writ or decree.

 

3.10    Agreements;

Action.

 

(a)   Except for

agreements explicitly contemplated hereby and as set forth in the Company’s

Public Filings or in Section 3.10 of the Schedule of Exceptions, there are

no agreements, understandings, transactions or proposed transactions between

the Company and any of its officers, directors, or affiliates, or any affiliate

thereof of a nature required to be disclosed pursuant to the provisions of

Regulation S–K.

 

(b)   Except as

set forth in the Company’s Public Filings or in Section 3.10 of the

Schedule of Exceptions, since December 31, 2001 the Company has not

(i) declared or paid any dividends, or authorized or made any distribution

upon or with respect to any class or series of its

 

9

 

capital stock, or

(ii) sold, exchanged or otherwise disposed of any of its assets or rights,

other than in the ordinary course of business.

 

(c)   The Company

has not admitted in writing its inability to pay its debts generally as they

become due, filed or consented to the filing against it of a petition in

bankruptcy or a petition to take advantage of any insolvency act, made an

assignment for the benefit of creditors, consented to the appointment of a

receiver for itself or for the whole or any substantial part of its property,

or had a petition in bankruptcy filed against it, been adjudicated a bankrupt,

or filed a petition or answer seeking reorganization or arrangement under the

federal bankruptcy laws or any other laws of the United States or any other

jurisdiction.

 

(d)   The Company

is in compliance in all material respects with all obligations, agreements and

conditions contained in any evidence of indebtedness or any loan agreement or

other contract or agreement (whether or not relating to indebtedness) to which

the Company is a party or is subject (collectively, the “Obligations”), the

lack of compliance with which could afford to any person the right to

(i) accelerate any indebtedness or (ii) terminate any right or

agreement of the Company, the termination of which would have a Material

Adverse Effect.  To the Company’s

knowledge, all other parties to such Obligations are in compliance with the

terms and conditions of such Obligations.

 

3.11    Title to Property and Assets. 

The Company has good title to all of its assets, including all

properties and assets reflected on its December 31, 2001 Balance Sheet,

free and clear of all liens, claims, restrictions or encumbrances, except those

assets disposed of since the date of such Balance Sheet in the ordinary course

of business, none of which either alone or in the aggregate are material,

either in nature or amount, to the business of the Company.  All machinery and equipment included in such

properties which are material to the business of the Company are in good

condition and repair, ordinary wear and tear excepted, and each lease of real

or personal property to which the Company is a party is effective, affords the

Company peaceful and undisturbed possession of the subject matter of the lease,

and such lease is free of any liens, claims restrictions or encumbrances.  Each such lease constitutes a valid and

binding obligation of, and is enforceable in accordance with its terms against,

the Company and, to the Company’s knowledge, the other respective parties

thereto.  Except as provided in the

Company’s Public Filings or in Section 3.11 of the Schedule of Exceptions;

with respect to the property and assets it leases, the Company is in all

respects in compliance with such leases, has not received notice of any

allegations that it is in default thereunder in any respect and holds a valid

leasehold interest free of any liens, claims or encumbrances.

 

3.12    Financial Statements. 

The Company has delivered to the Investor (i) its report on

Form 10–K for the year ended June 30, 2001 containing its

audited Balance Sheets at June 30, 2000 and 2001 and its audited

Statements of Operations, Statements of Shareholder’s Equity and Statements of

Cash Flow for the years ended June 30, 1999, 2000 and 2001 (the “Audited

Financial Statements”); and (ii) the unaudited financial statements

appearing in the Company’s reports on Form 10–Q for the quarters

ended September 30, 2001, December 31, 2001 and March 31, 2002

(the “Unaudited Financial Statements”). 

The Audited Financial Statements and the Unaudited Financial

 

10

 

Statements are

collectively referred to as the “Financial Statements”.  The Financial Statements have been prepared

in accordance with the United States generally accepted accounting principles

(“GAAP”) applied on a consistent basis throughout the periods indicated and

fairly present the financial condition and consistent operating results of the

Company as of the dates, and for the periods, indicated therein, provided that

the Unaudited Financial Statements may not contain complete footnote disclosure

which would be required by GAAP and are subject to audit adjustments.  Since December 31, 2001, the Company

has conducted its business in the ordinary course, and there has not been any

material adverse change in the financial condition or operations of the

Company.  Except as set forth in the

Financial Statements and in the material agreements listed in Section 3.12

of the Schedule of Exceptions, the Company has no material liabilities,

contingent or otherwise, other than (i) liabilities incurred in the

ordinary course of business subsequent to September 30, 2001 and

(ii) obligations under contracts and commitments incurred in the ordinary

course of business and not required under GAAP to be reflected in the Financial

Statements, which, in both cases, individually or in the aggregate, are not

material to the financial condition or operating results of the Company.  Except as disclosed in the Financial

Statements, the Company is not a guarantor or indemnitor of any indebtedness of

any other person, firm or corporation. 

The Company maintains and consistently applies and will continue to

maintain and consistently apply a standard system of accounting established and

administered in accordance with GAAP.

 

Since June 30, 2000, the Company has filed all

required reports, schedules, forms, statements and other documents (including

exhibits and all other information incorporated therein) with the SEC (“Company

SEC Documents”).  As of their respective

dates, the Company SEC Documents complied in all material respects with the

requirements of the Securities Act or the Securities Exchange Act, as the case

may be, and the rules and regulations of the SEC promulgated thereunder

applicable to such Company SEC Documents, and no Company SEC Documents when

filed contained any untrue statement of a material fact or omitted to state a

material fact required to be stated therein or necessary in order to make the statements

therein, in light of the circumstances under which they were made, not

misleading.  The financial statements of

the Company included in Company SEC Documents complied as to form, as of their

respective dates of filing with the SEC, in all material respects with

applicable accounting requirements and the published rules and regulations of

the SEC with respect thereto, have been prepared in accordance with GAAP

(except, in the case of unaudited statements, as permitted by Form 10–Q

of the SEC) applied on a consistent basis during the periods involved (except

as may be indicated in the notes thereto) and fairly present the consolidated

financial position of the Company and its consolidated subsidiaries as of the

dates thereof and the consolidated results of their operations and cash flows

for the periods then ended (subject, in the case- of unaudited statements, to

normal year-end audit adjustments).

 

3.13    Employee Benefit Plans. 

To the Company’s knowledge, the Company is in compliance with applicable

laws governing the Company’s “employee benefit plans” as such term is defined

in Section 3(3) of the Employee Retirement Income Security Act of 1974,

except where such failure to comply would not have a Material Adverse Effect.

 

11

 

3.14    Tax Returns, Payments and Elections. 

The Company has filed all tax returns and reports as required, and

within the time prescribed, by law, including without limitation, all federal,

state and local income, excise or franchise tax returns, real estate and

personal property tax returns, sales and use tax returns, payroll tax returns

and other tax returns or reports required to be filed by it.  These returns and reports are true and correct

in all material respects.  The Company

has paid or made provision for the payment of all accrued and unpaid taxes and

other charges to which the Company is subject and which are not currently due

and payable.  The federal income tax

returns of the Company have never been audited by the Internal Revenue Service,

and the Company has not agreed to an extension of the statute of limitations

with respect to any of its tax years. 

Neither the Internal Revenue Service nor any other taxing authority is

now asserting, nor is threatening in writing to assert, against the Company any

deficiency or claim for additional taxes or interest thereon or penalties in

connection therewith; nor does such deficiency or claim or basis for such

deficiency or claim exist.  The Company

has not made any elections pursuant to the Internal Revenue Code of 1986, as

amended (the “Code”) (other than elections which relate solely to methods of

accounting, depreciation or amortization) which would have a Material Adverse

Effect as the Company’s business is presently conducted or proposed to be

conducted.

 

3.15    Insurance.  The Company

has in full force and effect fire, casualty and liability insurance policies,

with coverage, in the case of property insurance, sufficient in amount (subject

to reasonable deductibles) to allow it to replace any of its material

properties or assets that might be damaged or destroyed, and in the case of

casualty and liability insurance, in amounts customary and adequate for

businesses similar to the business of the Company.

 

3.16    Labor Agreements and Actions. 

The Company does not have any collective bargaining agreements covering

any of its employees, nor is the Company bound by or subject to (and none of

its assets or properties is bound by or subject to) any written or oral,

express or implied, contract, commitment or arrangement with any labor union,

and no labor union has requested or, to the knowledge of the Company, has

sought to represent any of the employees, representatives or agents of the

Company.  There is no strike or other

labor dispute involving the Company pending, or to the knowledge of the Company

threatened in writing, which could have a Material Adverse Effect (as the

Company’s business is presently conducted and as it is proposed to be

conducted), nor is the Company aware of any labor organization activity

involving its employees.  Offering.  Subject to the accuracy of the Investor’s

representations set forth in Section 4 of this Agreement, the offer, sale

and issuance of the Shares to be issued in conformity with the terms of this Agreement

constitute transactions which are: (i) in compliance with applicable

federal and state securities laws; and (ii) exempt from the registration

requirements of the Securities Act and from all applicable state registration

or qualification requirements, other than those with which the Company has

complied or will comply.

 

3.17    Environmental

Matters.

 

(a)   To the

Company’s knowledge, the Company is not in violation of any Environmental Law

(as hereinafter defined) and to its knowledge, no material expenditures are or

will be required in order to comply with any Environmental Law.  As used in this Agreement,

 

12

 

“Environmental

Law” shall mean any applicable federal, state and local law, ordinance, rule or

regulation that regulates, fixed liability for, or otherwise relates to, the

handling, use (including use in industrial processes, in construction, as

building materials, or otherwise), treatment, storage and disposal of hazardous

and toxic wastes and substances, and to the discharge, leakage, presence,

migration, actual Release (as hereinafter defined) or threatened Release

(whether by disposal, a discharge into any water source or system or into the

air, or otherwise) of any pollutant or effluent.

 

(b)   The Company

has not used, generated, manufactured, refined, treated, transported, stored,

handled, disposed, transferred, produced, processed or released (hereinafter

together defined as “Release”) any Hazardous Materials (as hereinafter defined)

on, from or affecting any Property (as hereinafter defined) in any manner or by

any means in violation of any Environmental Laws and to the best of the

Company’s knowledge and belief after due investigation, there is no threat of

such Release.  As used herein, the term

“Property” shall include, without limitation, land, buildings and laboratory

facilities owned or leased by the Company or as to which the Company now has

any duties, responsibilities (for cleanup, remedy or otherwise) or liabilities

under any Environmental Laws, or as to which the Company or any subsidiary of

the Company may have such duties, responsibilities or liabilities because of

past acts or omissions of the Company or any such subsidiary or their

predecessors, or because the Company or any such subsidiary or their

predecessors in the past was such an owner or operator of, or bore some other

relationship with, such land, buildings or laboratory facilities.  The term “Hazardous Materials” shall

include, without limitation, any flammable explosives, petroleum products,

petroleum by-products, radioactive materials, hazardous wastes, hazardous

substances, toxic substances or related materials as defined by Environmental

Laws.

 

(c)   The Company

has not received written notice that the Company is a party potentially

responsible for costs incurred at a cleanup site or corrective action under any

Environmental Laws.  The Company has not

received any written requests for information in connection with any inquiry by

any Governmental Authority (as hereinafter defined) concerning disposal sites

or other environmental matters.  As used

herein, “Governmental Authority” shall mean any nation or government, any

federal, state, municipal, local, provincial, regional or other political

subdivision thereof, and any entity or person exercising executive,

legislative, judicial regulatory or administrative functions of or pertaining

to government.

 

(d)   The

stockholders of the Company have had no control over, or authority with respect

to, the waste disposal operations of the Company.

 

3.18    Permits and Other Rights; Compliance with

Laws.  The Company has all franchises, permits,

licenses and other rights and privileges necessary to permit it to own its

properties and to conduct its business as presently conducted and is in compliance

in all material respects thereunder. 

The Company is in compliance in all material respects with all laws and

governmental rules and regulations applicable to its business, properties and

assets, and to the products and services sold by it, including, without

limitation, all such rules, laws and regulations relating to fair employment

practices, occupational safety and health and public safety, except where the

failure to comply would not have a Material Adverse Effect.

 

13

 

3.20    Corporate Records. 

The minute books of the Company provided to the Investor contain a

complete summary of all meetings of directors and stockholders since the time

of incorporation and reflect all material transactions of the Company

accurately in all material respects.

 

3.21    Reliance.  The Company

understands that the foregoing representations and warranties shall be deemed

material and to have been relied upon by the Investor.  No representation or warranty by the Company

in this Agreement, and no written statement contained in any document,

certificate or other writing delivered by the Company to the Investor contains

any untrue statement of material fact or omits to state any material fact

necessary to make the statements herein or therein, in light of the

circumstances under which they were made, not misleading.

 

3.22    Real Property Holding Corporation. 

The Company is not a United States real property holding corporation as

defined in Section 897 of the Code.

 

4.             Representations

and Warranties of the Investor.  UTStarcom

hereby represents and warrants the following:

 

4.1      Authorization, Governmental Consents and

Compliance with Other Instruments.  All

corporate action on the part of the Investor necessary for the authorization,

execution and delivery of the Transaction Agreements and the performance of all

obligations of the Investor thereunder has been taken or will be taken prior to

the Closing.  The Transaction Agreements

constitute valid and legally binding obligations of the Investor, enforceable

in accordance with their terms, except as such enforcement is limited by

bankruptcy, insolvency and similar laws affecting creditor rights.  No consent, approval, order or authorization

of, or registration, qualification, designation, declaration or filing with,

any federal, state or local governmental authority on the part of the Investor

is required in connection with the consummation of the transactions

contemplated by the Transaction Agreements. 

The execution, delivery and performance of the Transaction Agreements

and the consummation of the transactions contemplated thereby will not result

in any violation or be in conflict with or constitute, with or without the

passage of time and giving of notice, either a default under any provision of

the Investor’s corporate charter or By-laws or any instrument, judgment, order,

writ, decree or contract to which the Investor is a party or by which it is

bound.

 

4.2      Purchase Entirely for Own Account. 

By the Investor’s execution of this Agreement, the Investor hereby

confirms that the Shares will be acquired for investment for the Investor’s own

account, not as a nominee or agent, and not with a view to the resale or

distribution of any part thereof, and the Investor has no present intention of

selling, granting any participation, or otherwise distributing the Shares.  By executing this Agreement, the Investor

further represents that the Investor does not have any contract, undertaking,

agreement or arrangement with any person to sell, transfer or grant

participation to such person or to any third person, with respect to any of the

Shares.

 

4.3      Disclosure of Information. 

The Investor has received all the information from the Company and its

management that the Investor considers necessary or appropriate for deciding

 

14

 

whether to

purchase the Shares hereunder.  The

Investor further represents that it has had an opportunity to ask questions and

receive answers from the Company regarding the terms and conditions of the

offering of the Shares.  The foregoing,

however, does not limit or modify the representations and warranties of the

Company in Section 3 of this Agreement.

 

4.4      Investment Experience and Accredited

Investor Status.  The Investor either (i) is an

accredited investor (as defined in Regulation D promulgated under the

Securities Act) or (ii) is not a United States Person as that term is

defined in Regulation S of the Securities Act, as amended and is not

acquiring the Common Shares for the account or benefit of any United States

Person.  The Investor is an investor in

securities of companies in the development stage and acknowledges that it is

able to fend for itself, and bear the economic risk of its investment and has

such knowledge and experience in financial or business matters that it is

capable of evaluating the merits and risks of the investment in the Shares

hereunder.

 

4.5      Restricted Securities. 

The Investor understands that the Shares, when issued, will be

restricted securities under the federal securities laws inasmuch as they are

being acquired from the Company in a transaction not involving a public

offering and that under such laws and applicable regulations such securities

may be resold without registration under the Securities Act only in certain

limited circumstances, including pursuant to Regulation S and

Rule 144 under the Securities Act. 

In this connection, the Investor represents that it is familiar with

Regulation S and Rule 144 under the Securities Act, as presently in

effect, and understands the resale limitations imposed thereby and by the

Securities Act.  Notwithstanding the

provisions of this section, Company hereby agrees to register the subject

securities pursuant to the terms and conditions contained in the Securities

Registration terms And Conditions, which is attached hereto as Exhibit B,

and incorporated into this Stock Purchase Agreement by reference thereto.

 

4.6      Further Limitations on Disposition. 

Without in any way limiting the representations set forth above, the

Investor further represents, warrants and agrees that it will not make any

disposition of all or any portion of the Shares, except to an Affiliate,

unless:

 

(a)   There is

then in effect a registration statement under the Securities Act covering such

proposed disposition and such disposition is made in accordance with such

registration statement; or

 

(b)   The

disposition is made pursuant to Rule 144 or Regulation S or similar

provisions of federal securities laws as in effect from time to time; or

 

(c)   The

Investor shall have notified the Company of the proposed disposition; and if

requested by the Company, the Investor shall have furnished the Company with an

opinion of counsel; reasonably satisfactory tot the Company, that such

disposition will not require registration of such Shares under the Securities

Act.

 

(a)

 

15

 

4.7      Legends.  It is

understood that the certificates evidencing the Shares will bear legends to the

effect of the following:

 

“These securities have

not been registered under the Securities Act of 1933.  They may not be sold, offered for sale, pledged or hypothecated

in the absence of a registration statement in effect with respect to the securities

under such Act or an opinion of counsel reasonably satisfactory to the Company

that such registration is not required or unless sold pursuant to

Regulation S or Rule 144 of such Act.”

 

“The securities evidenced

by this certificate are subject to restrictions on transfer set forth in an

agreement between the original purchaser thereof and the corporation, a copy of

which agreement is on file at the principal executive offices of the

corporation.”

 

5.             Conditions

to Closing of Investor.  The Investor’s obligation to

purchase the Shares at the Closing is subject to the fulfillment as of the

Closing Date of the following conditions:

 

5.1      Representations and Warranties Correct. 

The representations and warranties made by the Company in Section 3

hereof shall be true and correct in all material respects as of the Closing

Date with the same force and effect as though such representations and

warranties had been made on the Closing Date, except that representations and

warranties that speak as of a particular date shall be true and correct in all

material respects as of such date.

 

5.2      Covenants.  All

covenants, agreements and conditions contained in this Agreement to be

performed by the Company on or prior to the Closing Date shall have been

performed or complied with in all material respects.  All proceedings to have been taken and all waivers and consents

to be obtained in connection with the transactions contemplated by this

Agreement shall have been taken or obtained, and all documents incidental

thereto shall be satisfactory to the Investor and its counsel, and the Investor

and its counsel shall have received copies (executed or certified, as may be

appropriate) of all documents which the Investor or its counsel may reasonably

have requested in connection with such transactions.

 

5.3      Compliance Certificate. 

The Company shall have delivered to the Investor a certificate of the

Company in the form of Exhibit B hereto, executed by the President and

Chief Executive Officer of the Company or the Chief Financial Officer of the

Company, certifying to the fulfillment of the conditions specified in

Sections 5.1 and 5.2 of this Agreement.

 

5.4      Legal Opinion. 

All legal matters incident to the purchase of the Shares shall be

satisfactory to the Investor’s counsel and the Investor shall have received

from Wilson, Sonsini, Goodrich & Rosati, P.C., counsel for the Company,

such firm’s opinion addressed to the Investor and dated the date of the

Closing, in form and substance satisfactory to counsel to the Investor.

 

5.5      Certification of Resolutions and Officers. 

The Company shall have delivered to the Investor a certificate or

certificates, dated the date of the Closing, of the Secretary of the

Corporation certifying as to (a) the resolutions of the Company’s Board of

Directors authorizing the execution

 

16

 

and delivery of

the Transaction Agreements, the issuance to the Investor of the Shares, the

execution and delivery of such other documents and instruments as may be

required by this Agreement, and the consummation of the transactions

contemplated thereby, and certifying that such resolutions were duly adopted

and have not been rescinded or amended as of said date and (b) the name

and the signature of the officers of the, Company authorized to sign, as

appropriate, the Transaction Agreements and the other documents and

certificates to be delivered pursuant to this Agreement by either the Company

or any of its officers.

 

5.6      Certification of No Material Adverse

Change.  The Company shall have delivered to the

Investor a certificate, dated the date of the Closing, of the Chief Financial

Officer of the Corporation certifying that since December 31, 2001, there

has not been any material adverse change in the financial condition or

operations of the Company.

 

5.7      Stock Certificates. 

The Company shall have delivered to the Investor a certificate or

certificates representing the Shares purchased by the Investor on the Closing

Date.

 

5.8      Confirmation Letter. 

A letter shall have been issued and delivered by the Investor’s counsel

that this agreement and other related agreements have been duly executed by the

parties concerned in the agreed forms.

 

6.             Conditions

to Closing of the Company.  The Company’s obligation to

sell the Shares at the Closing is subject to the fulfillment as of the date of

the following condition:

 

6.1      Representations and Warranties Correct. 

The representations and warranties made by the Investor in

Section 4 hereof shall be true and correct in all material respects as of

the date of the Closing with the same force and effect as though such

representations and warranties had been made on the Closing Date.

 

7.             Mutual

Conditions of Closing.  The obligations of each of

the Investor and the Company to consummate the Closing are subject to the

fulfillment as of the Closing Date of the following conditions:

 

7.1      Qualifications. 

All consents, permits, approvals, qualifications and registrations to be

obtained or effected with any governmental authority, including, without

limitation, necessary Blue Sky law permits and qualifications required by any

state for the offer and sale to the investor of the Shares, shall have been

obtained or effected.

 

7.2      Absence of Litigation. 

There shall be no injunction, actions, suits, proceeding or

investigations pending or currently threatened against the Company or the

Investor which questions the validity of the Transaction Agreements or the

right of the Company or the Investor to enter into such agreements, or to

consummate the transactions contemplated thereby.

 

17

 

8.             Additional Covenants and Agreements.

 

8.1      Inspection of Books and Records. 

The Company shall permit the Investor from time to time, at the

Investor’s expense, to visit and inspect the Company’s properties, to examine

its books of account and records and to discuss the Company’s affairs, finances

and accounts with its officers, all at such reasonable times as may be

requested by the Investor; provided, however, that the Company shall not be

obligated pursuant to this Section 8.1 to provide access to any

information which it reasonably considers to be a trade secret or similar

proprietary or confidential information.

 

8.2      Standstill.  The Investor

shall not, at any time from and after the date hereof until the tenth anniversary

of the Closing Date (the “Restricted Period”), acquire shares of Common Stock

of the Company, or securities convertible into, exchangeable for or exercisable

for, Common Stock of the Company such that the Investor would, at any time

during the Restricted Period own in excess of 19.9% of the Total Voting Power

(as defined below) of the Company’s securities.  For purposes hereof, the percentage of the Total Voting Power of

the Company’s securities shall be determined by dividing (x) by (y) and expressing

the resulting quotient as a percentage, where

 

(x) equals the number of shares of Common Stock

of the Company held by the Investor and the number of shares of Common Stock of

the Company issuable upon conversion, exercise or exchange of securities of the

Company held by the Investor which are convertible into, exchangeable for or

exercisable for Common Stock of the Company, either directly or indirectly; and

 

(y) equals the number of issued and outstanding

shares of Common Stock of the Company.

 

In the event that

Investor’s ownership at any time exceeds the limits set forth above, Investor

shall be deemed, automatically and with no further action on the part of

Investor, to have granted the Company’s Chairperson an irrevocable proxy to

vote all shares of Company Common Stock held by Investor in excess of the

foregoing limits in such manner as may be recommended by the Board of Directors

of the Company with respect to any matter for which approval of the Company’s

shareholders is sought.  The remedy set

forth in the preceding sentence shall not be in lieu of, but shall be in

addition to, any other remedies which Company may have at law or pursuant to

this Agreement or otherwise for breach of this provision.

 

9.             Miscellaneous.

 

9.1      Survival of Warranties. 

The warranties and representations of the Company and the Investor

contained in this Agreement shall survive the closing until the first

anniversary of the Closing Date.

 

9.2      Remedies.  In case any

one or more of the covenants or agreements set forth in this Agreement shall

have been breached by any party hereto, the party or parties entitled to the

benefit of such covenants or agreements may proceed to protect and enforce

their rights either by suit in equity or action at law, including, but not

limited to, an action for damages as a result of any such breach or an action

for specific performance of any such covenant or agreement contained in this

 

18

 

Agreement.  The rights, powers and remedies of the

parties under this Agreement are cumulative and not exclusive of any other

right, power or remedy which such parties may have under any other agreement or

law.  No single or partial assertion or

exercise of any right, power or remedy of a party hereunder shall preclude any

other or further assertion or exercise thereof.

 

9.3      Successors and Assigns. 

Except as otherwise expressly provided herein, the terms and conditions

of this Agreement shall inure to the benefit of and be binding upon the

respective successors and assigns of the parties.  This Agreement and the rights and duties of the Company set forth

herein may be freely assigned, in whole or in part, upon the written consent of

the Investor, which consent may not be unreasonably withheld.  Notwithstanding the foregoing sentence, the

Company may assign this Agreement, and the rights and the duties of the Company

set forth herein, to an entity or person which purchases all or substantially

all of its assets or voting securities, so long as the successor agrees in

writing to be bound by all of the terms this Agreement.

 

9.4      Entire Agreement. 

This Agreement and the other writings referred to herein or delivered

pursuant hereto which form a part hereof contain the entire agreement among the

parties with respect to the subject matter hereof and supersede all prior and

contemporaneous arrangements or understandings, whether written or oral, with

respect thereto; provided, however, that this Agreement is not intended to

supersede the OEM Agreement or any other agreement not related to the purchase

and sale of the Company’s securities between the Company and the Investor.

 

9.5      Governing Law and Consent to Jurisdiction. 

This Agreement shall be governed by and construed under the laws of the

State of California, U.S.A. (without regard to the conflict of law principles

thereof).  Each of the parties

irrevocably submits to the exclusive jurisdiction of the state and federal

courts within the State of California, U.S.A. for the purposes of any suit,

action or other proceeding arising out of this Agreement or any transaction

contemplated hereby.  Each of the

parties agrees to commence any action, suit or proceeding relating hereto in

the federal courts within the State of California, U.S.A. or if such suit,

action or other proceeding may not be brought in such court for jurisdictional

purposes, in the state courts within the State of California, U.S.A.

 

9.6      Counterparts. 

This Agreement may be executed in two or more counterparts, each of

which shall be deemed an original, but all of which together shall constitute

one and the same instrument.

 

9.7      Titles and Subtitles. 

The titles and subtitles used in this Agreement are used for convenience

only and are not to be considered in construing or interpreting this Agreement.

 

9.8      Nouns and Pronouns. 

Whenever the context may require, any pronouns used herein shall include

the corresponding masculine, feminine or neuter forms, and the singular form of

names and pronouns shall include the plural and vice-versa.

 

9.9      Notices.  Unless otherwise

provided, all notices, requests, consents and other communications hereunder to

any party shall be given in writing and shall be deemed effectively given upon

personal delivery to the party to be notified or duly sent by first class

registered or

 

19

 

certified mail, or

other courier service, postage prepaid, or telecopied with a confirmation copy

by regular mail, and addressed or telecopied to the party to be notified at the

address or telecopier number indicated for such party, as the case may be, set

forth below or such other address or telecopier number, as the case may be, as

may hereafter be designated in writing by the addressees to the addressor

listing all parties:

 

	

  To the Company:

  	

   

  	

  Cal Hoagland, Chief Financial Officer

  
	

   

  	

   

  	

  Interwave Communications International Ltd.

  
	

   

  	

   

  	

  c/o Interwave Communications, Inc.

  
	

   

  	

   

  	

  312 Constitution Drive

  
	

   

  	

   

  	

  Menlo Park, CA 94025

  
	

   

  	

   

  	

  Fax: 1-650-321-6570

  
	

   

  	

   

  	

   

  
	

  With a copy to:

  	

   

  	

  Robin E. Foor, Esq.

  
	

   

  	

   

  	

  Vice President and General Counsel

  
	

   

  	

   

  	

  Interwave Communications, Inc.

  
	

   

  	

   

  	

  312 Constitution Drive

  
	

   

  	

   

  	

  Menlo Park, CA 94025

  
	

   

  	

   

  	

  Fax: 1-650-321-6381

  
	

   

  	

   

  	

   

  
	

  To the Investor:

  	

   

  	

  Michael Sophie

  
	

   

  	

   

  	

  Vice President and Chief Financial Officer

  
	

   

  	

   

  	

  UTStarcom, Inc.

  
	

   

  	

   

  	

  1275 Harbor Bay Parkway

  
	

   

  	

   

  	

  Alameda, CA 94502

  
	

   

  	

   

  	

  Fax: 1-510-

  

 

All such notices, requests, consents and other

communications shall be deemed to have been received: (a) in the case of

personal delivery, on the date of such delivery; (b) in the case of

sending by international overnight courier service, on the fifth business day

following the date of such sending by international overnight courier service

fully prepaid; and (c) in the case of facsimile transmission, when

confirmed by facsimile machine report.

 

9.10    Finder’s Fee.  The Investor

agrees to indemnify and to hold harmless the Company from any liability for any

commission or compensation in the nature of a finder’s fee (and the reasonable

costs and expenses of defending against such liability or asserted liability)

for which the Investor or any of its officers, partners, employees, or

representatives is responsible.  The

Company agrees to indemnify and hold harmless the Investor from any liability

for any commission or compensation in the nature of a finder’s fee (and the

reasonable costs and expenses of defending against such liability or asserted

liability) for which the Company or any of its officers, employees or

representatives is responsible.

 

9.11    Expenses.  Each party

shall pay its own fees and expenses with respect to this Agreement.  If any action at law or in equity is

necessary to enforce or interpret the terms of this

 

20

 

Agreement or the

Research and Collaboration Agreement, the prevailing party shall be entitled to

reasonable attorney’s fees, costs and necessary disbursements in addition to

any other relief to which such party may be entitled.

 

9.12    Amendments and Waivers. 

Any term of this Agreement may be amended and the observance of any term

of this Agreement may be waived (either generally or in a particular instance

and either retroactively or prospectively), only with the written consent of

the Company and the Investor.

 

9.13    Severability.  If one or

more provisions of this Agreement are held to be unenforceable under applicable

law, in any jurisdiction, such provision shall be ineffective, as to such

jurisdiction, and the balance of the Agreement shall be interpreted as if such

provision were so excluded, without invalidating the remaining provisions of

this Agreement; and any such prohibition or unenforceability in any

jurisdiction shall not invalidate or render unenforceable such provision in any

other jurisdiction.

 

9.14    Confidentiality and Publicity. 

Neither the Company nor the Investor will disclose to any person (other

than its attorneys, accountants, employees, officers, and directors) the

existence or terms of this Agreement or any of the transactions contemplated

hereby without the prior written consent of the other party, except as may, in

the reasonable opinion of such party’s counsel, be required by law (in which

event the disclosing party will first consult with the other party with respect

to such disclosure).  Except to the

extent public disclosure is required by law, the Company and the Investor will

consult and reach agreement with one another as to the form and substance of

any press release or any other public disclosure of the existence or terms of

this Agreement or the transactions contemplated hereby prior to issuing any

such press release or making any such public disclosure.

 

21

 

IN WITNESS WHEREOF, the parties have executed and

delivered this Agreement as of the date first above Written.

 

UTSTARCOM, INC.

 

	

  By:

  	

   

  
	

  Name:

  	

  Hong Lu

  
	

  Title:

  	

  Chief Executive Officer

  
	

   

  	

   

  
	

  INTERWAVE

  COMMUNICATIONS

  
	

  INTERNATIONAL

  LTD.

  
	

   

  	

   

  
	

  By:

  	

   

  
	

  Name:

  	

  Priscilla Lu

  
	

  Title:

  	

  Chief Executive Officer

  
			

 

 

22

 

IN WITNESS WHEREOF, the parties have executed and

delivered this Agreement as of the date first above Written.

 

UTSTARCOM, INC.

 

	

  By:

  	

  /s/ HONG LU

  
	

  Name:

  	

  Hong Lu

  
	

  Title:

  	

  Chief Executive Officer

  
	

   

  	

   

  
	

  INTERWAVE

  COMMUNICATIONS

  
	

  INTERNATIONAL

  LTD.

  
	

   

  	

   

  
	

  By:

  	

  /s/ PRISCILLA LU

  
	

  Name:

  	

  Priscilla Lu

  
	

   

  	

   

  
	

  Title:

  	

  Chief Executive Officer

  
				

 

 

23

 

Exhibit A

 

Stock Purchase Agreement

 

UTStarcom, Inc. and interWAVE Communications

 

[*]

 

24

 

 

Schedule of Exceptions

UTStarcom, Inc. and

interWAVE Communications International, Ltd.

Stock Purchase Agreement

September 27, 2002

[***]

 

25

 

 

EXHIBIT

B - SECURITIES REGISTRATION TERMS AND CONDITIONS

 

1.     Form D Filing; Registration; Compliance

with the Securities Act, Covenants.

 

1.1.1        Registration Statement; Expenses.  The Company shall:

 

(a)   file in a timely manner a Form D relating to

the sale of the Shares under this Agreement, pursuant to Securities and

Exchange Commission Regulation D.

 

(b)   as soon as practicable after the Closing

Date, but in no event later than the [***] day following the Closing Date,

prepare and file with the Commission a Registration Statement on Form F-3

relating to the sale of the Shares by the Purchaser from time to time on the

Nasdaq National Market (or the facilities of any national securities exchange

on which the Company’s Common Stock is then traded) or in privately negotiated

transactions (the “Registration Statement”);

 

(c)   provide to the Purchaser any information

required to permit the sale of the Shares under rule 144A of the Securities

Act;

 

(d)   subject to receipt of necessary information

from the Purchaser, use its best efforts to cause the Commission to notify the

Company of the Commission’s willingness to declare the Registration Statement effective

on or before 90 days after the Closing Date;

 

(e)   notify Purchaser promptly upon the

Registration Statement, or any post-effective amendment thereto, being declared

effective by the Commission;

 

(f)    prepare and file with the Commission such,

amendments and supplements to the Registration Statement and the Prospectus (as

defined in Section 1.3.1 below) and take such other action, if any, as may

be necessary to keep the Registration Statement effective until the earlier of

(i) one year after the effective date of the Registration Statement,

(ii) the date on which the Shares may be resold by the Purchaser without

registration or without regard to any volume limitations by reason of

Rule 144(k) under the Securities Act or any other rule of similar effect

or (iii) all of the Shares have been sold pursuant to the Registration

Statement or Rule 144(k) under the Securities Act or any other rule of

similar effect;

 

(g)   promptly furnish to the Purchaser with

respect to the Shares registered under the Registration Statement such

reasonable number of copies of the Prospectus, including any supplements to or

amendments of the Prospectus, in order to facilitate the public sale or other

disposition of all or any of the Shares by the Purchaser;

 

(h)   during the period when copies of the

Prospectus are required to be delivered under the Securities Act or the

Exchange Act, will file all documents required to be filed with the Commission

pursuant to Section 13, 14 or 15 of the Exchange Act, to the extent such

 

26

 

requirements are

applicable to the Company, within the time periods required by the Exchange Act

and the rules and regulations promulgated thereunder;

 

(i)    file documents required of the Company for

customary Blue Sky clearance in all states requiring Blue Sky clearance; provided,

however, that the Company shall not be required to qualify to do

business or consent to service of process in any jurisdiction in which it is

not now so qualified or has not so consented; and

 

(j)    bear [***] expenses in connection with the

procedures in paragraphs (a) through (f) of this Section 1.1.1 and

the registration of the Shares pursuant to the Registration Statement,

including fees and expenses (whether external or internal) of up to [***] of

the Purchaser, but not including any fees and expenses of any other advisers to

the Purchaser or brokerage fees and commissions incurred by the Purchaser.

 

1.1.2        Delay in Effectiveness of

Registration Statement.  [***]

 

1.2   Transfer of Shares After Registration.  The Purchaser agrees that it will not effect

any disposition of the Shares or its right to purchase the Shares that would

constitute a sale within the meaning of the Securities Act, except as

contemplated in the Registration Statement referred to in Section 1.1 or

as otherwise permitted by law, and that it will promptly notify the Company of

any changes in the information set forth in the Registration Statement

regarding the Purchaser or its plan of distribution.

 

1.3   Indemnification.  For the purpose of this Section 1.3,

the term “Registration Statement” shall include any preliminary or final

prospectus, exhibit, supplement or amendment included in or relating to the

Registration Statement referred to in Section 1.1.

 

1.3.1        Indemnification by the Company.  The Company agrees to indemnify and hold

harmless the Purchaser and each person, if any, who controls the Purchaser

within the meaning of the Securities Act, against any losses, claims, damages,

liabilities or expenses, joint or several, to which the Purchaser or such

controlling person may become subject, under the Securities Act, the Exchange

Act, or any other federal or state statutory law or regulation, or at common

law or otherwise (including in settlement of any litigation, if such settlement

is effected with the written consent of the Company, which consent shall not be

unreasonably withheld), insofar as such losses, claims, damages, liabilities or

expenses (or actions in respect thereof as contemplated below) arise out of or

are based upon any untrue statement or alleged untrue statement of any material

fact contained in the Registration Statement, including the Prospectus,

financial statements and schedules, and all other documents filed as a part

thereof, as amended at the time of effectiveness of the Registration Statement,

including any information deemed to be a part thereof as of the time of

effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to

Rule 434, of the Rules and Regulations, or the Prospectus, in the form

first filed with the Commission pursuant to Rule 424(b) of the

Regulations, or filed as part of the Registration Statement at the time of

effectiveness if no Rule 424(b) filing is required (the “Prospectus”), or

any amendment or supplement thereto, or arise out of or are based upon the

omission or alleged omission to state in any of them a material fact required

to be stated therein or necessary to make the statements in any of them, in

light of the

 

27

 

circumstances under which

they were made, not misleading, or arise out of or are based in whole or in

part on any inaccuracy in the representations and warranties of the Company

contained in this Agreement, or any failure of the Company to perform its obligations

under this Agreement or under law, and will reimburse the Purchaser and each

such controlling person for any legal and other expenses as such expenses are

reasonably incurred by the Purchaser or such controlling person in connection

with investigating, defending, settling, compromising or paying any such loss,

claim, damage, liability, expense or action; provided, however, that the

Company will not be liable in any such case to the extent that any such loss,

claim, damage, liability or expense arises out of or is based upon (i) an

untrue statement or alleged untrue statement or omission or alleged omission

made in the Registration Statement, the Prospectus or any amendment or

supplement of the Registration Statement or Prospectus in reliance upon and in

conformity with written information furnished to the Company by or on behalf of

the Purchaser expressly for use in the Registration Statement or the

Prospectus, or (ii) the failure of the Purchaser to comply with the

covenants and agreements contained in Section 1.2 of this Agreement

respecting resale of the Shares, or (iii) the inaccuracy of any

representations made by the Purchaser in this Agreement or (iv) any untrue

statement or omission of a material fact required to make such statement not

misleading in any Prospectus that is corrected in any subsequent Prospectus

that was delivered to the Purchaser before the pertinent sale or sales by the

Purchaser.

 

1.3.2        Indemnification by the Purchaser.  The Purchaser will indemnify and hold

harmless the Company, each of its directors, each of its officers who signed

the Registration Statement and each person, if any, who controls the Company

within the meaning of the Securities Act, against any losses, claims, damages,

liabilities or expenses to which the Company, each of its directors, each of

its officers who signed the Registration Statement or controlling persona may

become subject, under the Securities Act, the Exchange Act, or any other

federal or state statutory law or regulation, or at common law or otherwise

(including in settlement of any litigation, if such settlement is effected with

the written consent of the Purchaser, which consent shall not be unreasonably

withheld) insofar as such losses, claims, damages, liabilities or expenses (or

actions in respect thereof as contemplated below) arise out of or are based

upon (i) any failure on the part of the Purchaser to comply with the

covenants and agreements contained in Section 1.2 of this Agreement

respecting the sale of the Shares or (ii) the inaccuracy of any

representation made by the Purchaser in this Agreement or (iii) any untrue

or alleged untrue statement of any material fact contained in the Registration

Statement, the Prospectus, or any amendment or supplement to the Registration

Statement or Prospectus, or arise out of or are based upon the omission or

alleged omission to state therein a material fact required to be stated therein

or necessary to make the statements therein not misleading, in each case to the

extent, but only to the extent, that such untrue statement or alleged untrue

statement or omission or alleged omission was made in the Registration

Statement, the Prospectus, or any amendment or supplement thereto, in reliance

upon, and in conformity with written information furnished to the Company by or

on behalf of the Purchaser expressly for use therein; provided, however, that

the Purchaser shall not be liable for any such untrue or alleged untrue

statement or omission or alleged omission of which the Purchaser has delivered

to the Company in writing a correction before the occurrence of the transaction

from which such loss was incurred, and the Purchaser will reimburse the

Company, each of its directors, each of its officers who signed the

Registration Statement or controlling person for any legal and

 

28

 

other expense reasonably

incurred by the Company, each of its directors, each of its officers who signed

the Registration Statement or controlling person in connection with

investigating, defending, settling, compromising or paying any such loss,

claim, damage, liability, expense or action.

 

1.3.3        Indemnification Procedure.

 

(a)   Promptly after receipt by an indemnified

party under this Section 1.3 of notice of the threat or commencement of any

action, such indemnified party will, if a claim in respect thereof is to be

made against an indemnifying party under this Section 1.3, promptly notify

the indemnifying party in writing of the claim; but the omission so to notify

the indemnifying party will not relieve it from any liability which it may have

to any indemnified party for contribution or otherwise under the indemnity

agreement contained in this Section 1.3 or to the extent it is not

prejudiced as a result of such failure:

 

(b)   In case any such action is brought against

any indemnified party and such indemnified party seeks or intends to seek

indemnity from an indemnifying party, the indemnifying party will be entitled

to participate in, and, to the extent that it may wish, jointly with all other

indemnifying parties similarly notified, to assume the defense thereof with

counsel reasonably satisfactory to such indemnified party; provided, however, if the

defendants in any such action include both the indemnified party and the

indemnifying party and the indemnified party shall have reasonably concluded

that there may be a conflict between the positions of the indemnifying party

and the indemnified party in conducting the defense of any such action or that

there may be legal defenses available to it or other indemnified parties that

are different from or additional to those available to the indemnifying party,

the indemnified party or parties shall have the right to select separate

counsel to assume such legal defenses and to otherwise participate in the

defense of such action on behalf of such indemnified party or parties. Upon

receipt of notice from the indemnifying party to such indemnified party of its

election so to assume the defense of such action and approval by the

indemnified party of counsel, the indemnifying party will not be liable to such

indemnified party under this Section 1.3 for any legal or other expenses

subsequently incurred by such indemnified party in connection with the defense

thereof unless;

 

(i)    the indemnified party shall have employed

such counsel in connection with the assumption of legal defenses in accordance

with the proviso to the preceding sentence (it being understood, however, that

the indemnifying party shall not be liable for the expenses of more than one

separate counsel, approved by such indemnifying party representing all of the

indemnified parties who are parties to such action) or

 

(ii)   the indemnifying party shall not have

employed counsel reasonably satisfactory to the indemnified party to represent

the indemnified party within a reasonable time after notice of commencement of

action, in each of which cases the reasonable fees and expenses of counsel

shall be at the expense of the indemnifying party. Notwithstanding the

provisions of this Section 1.3, the Purchaser shall not be liable for any

indemnification obligation under this Agreement in excess of the amount of

gross proceeds received by the Purchaser from the sale of the Shares.

 

29

 

1.3.4        Contribution.  If the indemnification provided for in this

Section 1.3 is required by its terms but is for any reason held to be

unavailable to or otherwise insufficient to hold harmless an indemnified party

under this Section 1.3 in respect to any losses, claims, damages,

liabilities or expenses referred to in this Agreement, then each applicable

indemnifying party shall contribute to the amount paid or payable by such

indemnified party as a result of any losses, claims, damages, liabilities or

expenses referred to in this Agreement

 

(a)   in such proportion as is appropriate to

reflect the relative benefits received by the Company and the Purchaser from

the placement of Common Stock or

 

(b)   if the allocation provided by clause (a)

above is not permitted by applicable law, in such proportion as is appropriate

to reflect not only the relative benefits referred to in clause (a) above

but the relative fault of the Company and the Purchaser in connection with the

statements or omissions or. inaccuracies in the representations and warranties

in this Agreement that resulted in such losses, claims, damages, liabilities or

expenses, as well as any other relevant equitable considerations. The

respective relative benefits received by the Company on, the one hand and the

Purchaser on the other shall be deemed to be in the same proportion as the

amount paid by the Purchaser to the Company pursuant to this Agreement for the

Shares purchased by the Purchaser that were sold pursuant to the Registration

Statement bears to the difference (the “Difference”) between the amount the

Purchaser paid for the Shares that were sold pursuant to’ the Registration

Statement and the amount received by the Purchaser from such sale. The relative

fault of the Company and the Purchaser shall be determined by reference to,

among other things, whether the untrue or alleged statement of a material fact

or the omission or alleged omission to state a material fact or the inaccurate

or the alleged inaccurate representation or warranty relates to information

supplied by the Company or by the Purchaser and the parties’ relative intent,

knowledge, access to information and opportunity to correct or prevent such

statement or omission. The amount paid or payable by a party as a result of the

losses, claims, damages, liabilities and expenses referred to above shall be

deemed to include, subject to the limitations set forth in Section 1.3.3,

any legal or other fees or expenses reasonably incurred by such party in

connection with investigating or defending any action or claim,. The provisions

set forth in Section 1.3.3 with respect to the notice of the threat or

commencement of any threat or action shall apply if a claim for contribution is

to be made under this Section 1.3.4; provided, however, that no additional

notice shall be required with respect to any threat or action for which notice

has been given under Section 1.3 for purposes of indemnification. The

Company and the Purchaser agree that it would not be just and equitable if

contribution pursuant to this Section 1.3 were determined solely by pro

rata allocation (even if the Purchaser were treated as one entity for such

purpose) or by any other method of allocation which does not take account of

the equitable considerations referred to in this paragraph. Notwithstanding the

provisions of this Section 1.3, no Purchaser shall be required to

contribute any amount in excess of the amount by which the Difference exceeds

the amount of any damages that the Purchaser has otherwise been required to pay

by reason of such untrue or alleged untrue statement or omission or alleged

omission. No person guilty of fraudulent misrepresentation (within the meaning

of Section 11(f) of the Securities Act) shall be entitled to contribution

from any person who was not guilty of such fraudulent misrepresentation. The

Purchaser’ obligations to contribute pursuant to this Section 1.3 are

several and not joint.

 

30

 

1.4   Termination of Conditions and Obligations.  The restrictions imposed by this Section 1

upon the transferability of the Shares shall cease and terminate as to any

particular number of the Shares upon [***] or at such time as an opinion of

counsel satisfactory in form and substance to the Company shall have been

rendered to the effect that such conditions are not necessary in order to

comply with the Securities Act.

 

1.5   Information Available.  So long as the Registration Statement is

effective covering the resale of Shares owned by the Purchaser, the Company

will furnish to the Purchaser;

 

(a)   as soon as practicable after available (but

in the case of the Company’s Annual Report to Stockholders, within [***] after

the end of each fiscal year of the Company), one copy of

 

(i)    its Annual Report to Stockholders (which

Annual Report shall contain financial statements audited in accordance with

generally accepted accounting principles by a national firm of certified public

accountants);

 

(ii)   if not included in substance in the Annual

Report to Stockholders, its Annual Report on Form 10–K;

 

(iii)  if not included in substance in its Quarterly

Reports to Stockholders, its quarterly reports on Form 10-Q; and

 

(iv)  a full copy of the particular Registration

Statement covering the Shares (the foregoing, in each case, excluding

exhibits);

 

(v)   upon the request of the Purchaser, a

reasonable number of copies of the Prospectus to supply to any other party

requiring the Prospectus.

 

1.6   Rule 144 Information.  For two years after the date of this

Agreement, the Company shall file all reports required to be filed by it under

the Securities Act, the Rules and Regulations and the Exchange Act and shall

take such further action to the extent required to enable the Purchaser to sell

the Shares pursuant to Rule 144 under the Securities Act (as such rule may

be amended from time to time).

 

1.7   Consultation Prior to the Issuance of

Certain Securities.  The Company

shall not sell or issue shares of Common Stock or any other security of the

Company convertible, exercisable or exchangeable into shares of Common Stock,

for a purchase, conversion, exercise or exchange price per share which is

subject to adjustment based on the market price of the Common Stock at the time

of conversion, exercise or exchange of such security into Common Stock, without

first consulting the Purchaser immediately prior to the approval by the

Company’s Board of Directors of such sale or issuance; provided, however, that

(i) the Company’s obligation to enter into such consultations with the

Purchaser shall be subject to the Purchaser entering into a nondisclosure

agreement in form and substance appropriate for transactions of this nature,

(ii) nothing in this Section 1.7 shall prohibit the Company from

consummating any such transaction provided that it has

 

31

 

complied with the

consultation provisions hereof and (iii) the provisions of this

Section 1.7 shall not be applicable to transactions that are not effected

for the purpose of raising capital.

 

32

 

Compliance Certificate

UTStarcom, Inc. and

interWAVE Communications International, Ltd.

Stock Purchase Agreement

September 27, 2002

 

                                                                                                                                                September 27,

2002

I, Priscilla Lu, Chief Executive Officer of interWAVE Communications

International, Ltd. (“interWAVE”), certify as follows, as to the Stock Purchase

Agreement of September 27, 2002 between UTStarcom, Inc. and interWAVE:

 

1.             Representations

and Warranties Correct.  The representations and

warranties made by the Company in Section 3 of the Agreement are true and

correct in all material respects as of the Closing Date with the same force and

effect as though such representations and warranties had been made on the

Closing Date, except that representations and warranties that speak as of a

particular date are true and correct in all material respects as of such date.

 

2.             Covenants. 

All covenants, agreements and conditions contained in the Agreement to

be performed by the Company on or prior to the Closing Date have been performed

or complied with in all material respects. All proceedings to have been taken

and all waivers. and consents to be obtained in connection with the

transactions contemplated by this Agreement have been taken. or obtained.

 

I certify that the foregoing is true and correct.

INTERWAVE COMMUNICATIONS

INTERNATIONAL,

LTD.

 

 

	

  /s/ PRISCILLA LU

  
	

  Priscilla Lu

  
	

  Chief Executive Officer

  

 

 

33

 

Section 5.4

Certification of Resolutions and Officers

UTStarcom, Inc.

September 27,

2002

I, Robin E. Foor, Secretary of interWAVE

Communications International, Ltd. (the “Company”), certify that:

 

(a) the Board of Directors of the Company has adopted

resolutions duly authorizing the execution and delivery of the Agreement, the

issuance to the Investor of the Shares, the execution and delivery of such

other documents and instruments as may be required by the Agreement, and the

consummation of the transactions contemplated thereby, and such resolutions

were duly adopted and have not been rescinded or amended as of this date, and

 

(b) Priscilla Lu, Chief Executive Officer, is

authorized to sign, as appropriate, the Agreement and the other documents and

certificates to be delivered pursuant to this Agreement by either the Company

or any of its officers, and her signature appears on the Agreement.

 

I certify that the foregoing is true and correct.

INTERWAVE

COMMUNICATIONS

INTERNATIONAL,

LTD.

 

 

	

  /s/ ROBIN E. FOOR

  
	

  Robin E. Foor

  
	

  Secretary

  

 

 

 

34

 

Section 5.6

Certification of No Material Adverse Change

UTStarcom - interWAVE Amendment to OEM Agreement

September 27,

2002

I, Cal Hoagland, Chief Financial Officer of interWAVE

Communications International, Ltd. (the “Company”) represent, to the best of my

knowledge and belief, that since June 30, 2002, there has not been any

material adverse change in the financial position or results of operations of

the Company other than that described in Section 3.12 of the Stock

Purchase Agreement and in the Schedule of Exceptions.

 

INTERWAVE COMMUNICATIONS

INTERNATIONAL,

LTD.

 

 

	

  /s/ CAL HOAGLAND

  
	

  Cal Hoagland

  
	

  Chief Financial Officer

  

 

35

 

Exhibit B

 

Specifications - Statement of Work

UTStarcom - interWAVE Amendment to OEM Agreement

September 27, 2002

 

The parties will meet upon signing of the Amendment to

OEM Agreement to develop a detailed written Statement of Work (“SOW”), and a

written Product Specification from the SOW. 

The SOW shall include the following:

 

[***]

 

The parties will send people from [***] and from [***]

to develop the written SOW.

 

Each party will appoint a project manager as the

single point of contact for the project.

 

[***] will be the project manager for interWAVE.

 

A preliminary SOW is attached and will be superceded

by the SOW created.

 

 

36

 

Exhibit C

 

Delivery Schedule

UTStarcom - interWAVE Amendment to OEM Agreement

September 27,

2002 (= Amendment Effective Date)

The parties shall complete the Statement of Work and

interWAVE shall develop the interface between the UTSI iPAS, using a third

party media gateway, as follows:

 

Development

Milestones

 

	

  [***] — Milestones

  	

  Completion Date

  
	

  [***]

  	

   

  
	

   

  	

   

  

 

UTStarcom must provide [***] to work [***] on the project.

 

interWAVE/GBase will staff the project with [***].

 

UTStarcom must provide [***] for the project by [***].

 

Development will begin, and all completion dates are

measured from [***]

 

Development will proceed in parallel to the preparation of the detailed

written Statement of Work and the written Product Specification, to be

completed by [***].

 

The development schedule for an alternative path shall be defined by

the Statement Work.

 

37

 

PREFERRED

ESCROW AGREEMENT

 

Account Number        

                                

 

This agreement (“Agreement”) is effective September 27, 2002 among

DSI Technology Escrow Services, Inc. (“DSI”), Interwave Communications

International, Ltd. (“Depositor”) and UTStarcom, Inc. (“Preferred

Beneficiary”), who collectively may be referred to in this Agreement as the

parties (“Parties”).

 

A.            Depositor and

Preferred Beneficiary have entered or will enter into a license agreement,

development agreement, and/or other agreement regarding certain proprietary

technology of Depositor (referred to in this Agreement as “the License

Agreement”).

 

B.            Depositor desires to

avoid disclosure of its proprietary technology except under certain limited

circumstances.

 

C.            The availability of

the proprietary technology of Depositor is critical to Preferred Beneficiary in

the conduct of its business and, therefore, Preferred Beneficiary needs access

to the proprietary technology under certain limited circumstances.

 

D.            Depositor and

Preferred Beneficiary desire to establish an escrow with DSI to provide for the

retention, administration and controlled access of the proprietary technology

materials of Depositor.

 

E.             The parties desire

this Agreement to be supplementary to the License Agreement pursuant to 11

United States [Bankruptcy] Code, Section 365(n).

 

ARTICLE 1 — DEPOSITS

 

1.1       Obligation to Make

Deposit. Upon the completion of the development agreed to by the parities

in the September 27, 2002 Amendment to the OEM Agreement between UTStarcom

and Interwave Communications International, Ltd. (the “License Agreement”),

Depositor shall deliver to DSI the proprietary technology and other materials

(“Deposit Materials”) required to be deposited pursuant to the terms and

conditions of the License Agreement or, if the License Agreement does not

identify the materials to be deposited with DSI, then such materials will be

identified on Exhibit A. If Exhibit A is applicable, it is to be

prepared and signed by Depositor and Preferred Beneficiary. DSI shall have no

obligation with respect to the preparation, signing or delivery of

Exhibit A.

 

1.2       Identification of

Tangible Media. Prior to the delivery of the Deposit Materials to DSI,

Depositor shall conspicuously label for identification each document, magnetic

tape, disk, or other tangible media upon which the Deposit Materials are

written or stored. Additionally, Depositor shall complete Exhibit B to

this Agreement by listing each such tangible media by the item label

description, the type of media and the quantity. Exhibit B shall be signed

by Depositor and delivered to DSI with the Deposit Materials. Unless and until

Depositor makes the initial deposit with DSI, DSI shall have no obligation with

respect to this Agreement, except the obligation to notify the parties

regarding the status of the account as required in Section 2.2 below.

 

38

 

 

1.3       Deposit Inspection.

When DSI receives the Deposit Materials and Exhibit B, DSI will conduct a

deposit inspection by visually matching the labeling of the tangible media

containing the Deposit Materials to the item descriptions and quantity listed

on Exhibit B.  In addition to the

deposit inspection, Preferred Beneficiary may elect to cause a verification of

the Deposit Materials in accordance with Section 1.6 below.

 

1.4       Acceptance of Deposit.

At completion of the deposit inspection, if DSI determines that the labeling of

the tangible media matches the item descriptions and quantity on

Exhibit B, DSI will date and sign Exhibit B and mail a copy thereof

to Depositor and Preferred Beneficiary. If DSI determines that the labeling

does not match the item descriptions or quantity on Exhibit B, DSI will

(a) note the discrepancies in writing on Exhibit B; (b) date and

sign Exhibit B with the exceptions noted; and (c) mail a copy of

Exhibit B to Depositor and Preferred Beneficiary. DSI’s acceptance of the

deposit occurs upon the signing of Exhibit B by DSI. Delivery of the

signed Exhibit B to Preferred Beneficiary is Preferred Beneficiary’s

notice that the Deposit Materials have been received and accepted by DSI.

 

1.5       Depositor’s

Representations. Depositor represents as follows:

 

a.             Depositor

lawfully possesses all of the Deposit Materials deposited with DSI;

 

b.             With

respect to all of the Deposit Materials, Depositor has the right and authority

to grant to DSI and Preferred Beneficiary the rights as provided in this

Agreement;

 

c.             The

Deposit Materials are not subject to any lien or other encumbrance;

 

d.             The

Deposit Materials consist of the proprietary technology and other materials

identified either in the License Agreement or Exhibit A, as the case may

be; and

 

e.             The

Deposit Materials are readable and useable in their current form or, if any

portion of the Deposit Materials is encrypted, the decryption tools and decryption

keys have also been deposited.

 

1.6       Verification.

Preferred Beneficiary shall have the right, at Preferred Beneficiary’s expense,

to cause a verification of any Deposit Materials. Preferred Beneficiary shall

notify Depositor and DSI of Preferred Beneficiary’s request for verification.

Depositor shall have the right to be present at the verification. A

verification determines, in different levels of detail, the accuracy,

completeness, sufficiency and quality of the Deposit Materials. If a

verification is elected after the Deposit Materials have been delivered to DSI,

then only DSI, or at DSI’s election an independent person or company selected

and supervised by DSI, may perform the verification.

 

1.7       Deposit Updates.

Unless otherwise provided by the License Agreement, Depositor shall update the

Deposit Materials within [***] of each release of a new version of the product

which is subject to the License Agreement. Such updates will be added to the

existing deposit. All deposit updates shall be listed on a new Exhibit B

and Depositor shall sign the new Exhibit B. Each Exhibit B will be

held and maintained separately within the escrow account. An independent record

will be created which will document the activity for each Exhibit B. The

processing of all deposit updates shall be in accordance with Sections 1.2

through 1.6 above. All references in this Agreement to the Deposit Materials

shall include the initial Deposit Materials and any updates.

 

39

 

1.8       Removal of Deposit

Materials. The Deposit Materials may be removed and/or exchanged only on

written instructions signed by Depositor and Preferred Beneficiary, or as

otherwise provided in this Agreement.

 

ARTICLE 2 — CONFIDENTIALITY

AND RECORD KEEPING

 

2.1       Confidentiality.

DSI shall maintain the Deposit Materials in a secure, environmentally safe,

locked facility which is accessible only to authorized representatives of DSI.

DSI shall have the obligation to reasonably protect the confidentiality of the

Deposit Materials. Except as provided in this Agreement, DSI shall not

disclose, transfer, make available, or use the Deposit Materials. DSI and

Preferred Beneficiary shall not disclose the content or existence of this

Agreement to any third party unless having been agreed to by all parties in

writing. If DSI receives a subpoena or any other order from a court or other

judicial tribunal pertaining to the disclosure or release of the Deposit

Materials, DSI will immediately notify the parties to this Agreement unless prohibited

by law. It shall be the responsibility of Depositor and/or Preferred

Beneficiary to challenge any such order; provided, however, that DSI does not

waive its rights to present its position with respect to any such order. DSI

will not be required to disobey any order from a court or other judicial

tribunal. (See Section 7.5 below for notices of requested orders.)

 

2.2       Status Reports.

DSI will issue to Depositor and Preferred Beneficiary a report profiling the

account history [***]. DSI may provide copies of the account history pertaining

to this Agreement upon the request of any party to this Agreement.

 

2.3       Audit Rights.

During the term of this Agreement, Depositor and Preferred Beneficiary shall

each have the right to inspect the written records of DSI pertaining to this

Agreement. Any inspection shall be held during normal business hours and

following reasonable prior notice.

 

ARTICLE 3 — GRANT OF

RIGHTS TO DSI

 

3.1       Title to Media.

Depositor hereby transfers to DSI the title to the media upon which the

proprietary technology and materials are written or stored. However, this

transfer does not include the ownership of the proprietary technology and

materials contained on the media such as any copyright, trade secret, patent or

other intellectual property rights.

 

3.2       Right to Make Copies.

DSI shall have the right to make copies of the Deposit Materials as reasonably

necessary to perform this Agreement. DSI shall copy all copyright,

nondisclosure, and other proprietary notices and titles contained on the

Deposit Materials onto any copies made by DSI. With all Deposit Materials

submitted to DSI, Depositor shall provide any and all instructions as may be

necessary to duplicate the Deposit Materials including but not limited to the

hardware and/or software needed.

 

3.3       Right to Transfer

Upon Release. Depositor hereby grants to DSI the right to transfer the

Deposit Materials to Preferred Beneficiary upon any release of the Deposit

Materials for use by Preferred Beneficiary in accordance with Section 4.5.

Except upon such a release or as otherwise provided in this Agreement, DSI

shall not transfer the Deposit Materials.

 

40

 

ARTICLE 4 — RELEASE OF

DEPOSIT

 

4.1       Release Conditions.

As used in this Agreement, “Release Condition” shall mean the following:

 

a.             Depositor’s

failure to carry out a material obligation imposed on it pursuant to the

License Agreement, after [***] written notice and opportunity to cure; or

 

b.             Depositor’s

appointment of a receiver, execution of an assignment for the benefit of

creditors, going into liquidation in bankruptcy, or ceasing to operate its

business for a period of [***].

 

Where any dispute arises over the meaning and

interpretation of the term “Release Condition” as applied to the terms and

conditions of the License Agreement, the matter shall be submitted to

arbitration before a retired judge at Judicial Arbitration and Mediation

Service (“JAMS”) in San Francisco, California under the JAMS Rules.

 

4.2       Filing For Release.

If Preferred Beneficiary believes in good faith that a Release Condition has

occurred, Preferred Beneficiary may provide to DSI written notice of the

occurrence of the Release Condition and a request for the release of the

Deposit Materials. Upon receipt of such notice, DSI shall provide a copy of the

notice to Depositor by commercial express mail.

 

4.3       Contrary Instructions.

From the date DSI mails the notice requesting release of the Deposit Materials,

Depositor shall have [***] to deliver to DSI contrary instructions (“Contrary

Instructions”). Contrary Instructions shall mean the written representation by

Depositor that a Release Condition has not occurred or has been cured. Upon

receipt of Contrary Instructions; DSI shall send a copy to Preferred

Beneficiary by commercial express mail. Additionally, DSI shall notify both

Depositor and Preferred Beneficiary that there is a dispute to be resolved

pursuant to Section 7.3 of this Agreement. Subject to Section 5.2 of

this Agreement, DSI will continue to store the Deposit Materials without

release pending (a) joint instructions from Depositor and Preferred

Beneficiary; (b) dispute resolution pursuant to Section 7.3; or

(c) order of a court.

 

4.4       Release of Deposit.

If DSI does not receive Contrary Instructions from the Depositor, DSI is

authorized to release the Deposit Materials to the Preferred Beneficiary or, if

more than one beneficiary is registered to the deposit, to release a copy of

the Deposit Materials to the Preferred Beneficiary. However, DSI is entitled to

receive any fees due DSI before making the release. Any copying expense in

excess of $300 will be chargeable to Preferred Beneficiary. This Agreement will

terminate upon the release of the Deposit Materials held by DSI.

 

4.5       Right to Use

Following Release. Unless otherwise provided in the License Agreement, upon

release of the Deposit Materials in accordance with this Article 4, Preferred

Beneficiary shall have the right to use the Deposit Materials for the sole

purpose of continuing the benefits afforded to Preferred Beneficiary by the

License Agreement. Preferred Beneficiary shall be obligated to maintain the

confidentiality of the released Deposit Materials.

 

41

 

ARTICLE

5 — TERM

AND TERMINATION

 

5.1       Term of Agreement.

The initial term of this Agreement is for a period of [***]. Thereafter, this

Agreement shall automatically renew from year-to-year unless (a) Depositor

and Preferred Beneficiary jointly instruct DSI in writing that the Agreement is

terminated; or (b) DSI instructs Depositor and Preferred Beneficiary in

writing that the Agreement is terminated for nonpayment in accordance with

Section 5.2 or by resignation in accordance with Section 5.3. If the

Deposit Materials are subject to another escrow agreement with DSI, DSI

reserves the right, [***] to adjust the anniversary date of this Agreement to

match the then prevailing anniversary date of such other escrow arrangements.

 

5.2       Termination for

Nonpayment. In the event of the nonpayment of fees owed to DSI, DSI shall

provide written notice of delinquency to all parties to this Agreement. Any

party to this Agreement shall have the right to make the payment to DSI to cure

the default. If the past due payment is not received in full by DSI within one

month of the date of such notice, then DSI shall have the right to terminate

this Agreement at any time thereafter by sending written notice of termination

to all parties. DSI shall have no obligation to take any action under this

Agreement so long as any payment due to DSI remains unpaid.

 

5.3       Termination by

Resignation. DSI reserves the right to terminate this Agreement, for any

reason, by providing Depositor and Preferred Beneficiary with [***] written

notice of its intent to terminate this Agreement. Within the [***], the

Depositor and Preferred Beneficiary may provide DSI with joint written

instructions authorizing DSI to forward the Deposit Materials to another escrow

company and/or agent or other designated recipient. If DSI does not receive

said joint written instructions within [***] of the date of DSI’s written

termination notice, then DSI shall destroy, return or otherwise deliver the

Deposit Materials in accordance with Section 5.4.

 

5.4       Disposition of

Deposit Materials Upon Termination. Subject to the foregoing termination

provisions, and upon termination of this Agreement, DSI shall destroy, return,

or otherwise deliver the Deposit Materials in accordance with Depositor’s

instructions. If there are no instructions, DSI may, at its sole discretion,

destroy the Deposit Materials or return them to Depositor. DSI shall have no

obligation to destroy or return the Deposit Materials if the Deposit Materials

are subject to another escrow agreement with DSI or have been released to the

Preferred Beneficiary in accordance with Section 4.4.

 

5.5       Survival of Terms

Following Termination. Upon termination of this Agreement, the following

provisions of this Agreement shall survive:

 

a.             Depositor’s

Representations (Section 1.5);

 

b.             The

obligations of confidentiality with respect to the Deposit Materials;

 

c.             The

rights granted in the sections entitled Right to Transfer Upon Release

(Section 3.3) and Right to Use Following Release (Section 4.5), if a

release of the Deposit Materials has occurred prior to termination;

 

d.             The

obligation to pay DSI any fees and expenses due;

 

42

 

e.             The

provisions of Article 7; and

 

f.              Any

provisions in this Agreement which specifically state they survive the

termination of this Agreement.

 

ARTICLE

6 — DSI’S

FEES

 

6.1       Fee Schedule. DSI

is entitled to be paid its standard fees and expenses applicable to the

services provided. DSI shall notify the party responsible for payment of DSI’s

fees [***] prior to any increase in fees. For any service not listed on DSI’s

standard fee schedule, DSI will provide a quote prior to rendering the service,

if requested.

 

6.2       Payment Terms.

DSI shall not be required to perform any service unless the payment for such

service and any outstanding balances owed to DSI are paid in full. Fees are due

upon receipt of a signed contract or receipt of the Deposit Materials whichever

is earliest. If invoiced fees are not paid, DSI may terminate this Agreement in

accordance with Section 5.2.

 

ARTICLE

7 — LIABILITY

AND DISPUTES

 

7.1       Right to Rely on

Instructions. DSI may act in reliance upon any instruction, instrument, or

signature reasonably believed by DSI to be genuine. DSI may assume that any

employee of a party to this Agreement who gives any written notice, request, or

instruction has the authority to do so. DSI will not be required to inquire

into the truth or evaluate the merit of any statement or representation

contained in any notice or document. DSI shall not be responsible for failure

to act as a result of causes beyond the reasonable control of DSI.

 

7.2       Indemnification.

Depositor and Preferred Beneficiary each agree to indemnify, defend and hold

harmless DSI from any and all claims, actions, damages, arbitration fees and

expenses, costs, attorney’s fees and other liabilities (“Liabilities”) incurred

by DSI relating in any way to this escrow arrangement unless such Liabilities

were caused solely by the negligence or willful misconduct of DSI.

 

7.3       Dispute Resolution.

Any dispute relating to or arising from this Agreement shall be resolved by

arbitration under the Commercial Rules of the American Arbitration Association.

Three arbitrators shall be selected. The Depositor and Preferred Beneficiary

shall each select one arbitrator and the two chosen arbitrators shall select

the third arbitrator, or failing agreement on the selection of the third

arbitrator, the American Arbitration Association shall select the third

arbitrator. However, if DSI is a party to the arbitration, DSI shall select the

third arbitrator. Unless otherwise agreed by Depositor and Preferred

Beneficiary, arbitration will take place in San Diego, California, U.S.A. Any

court having jurisdiction over the matter may enter judgment on the award of

the arbitrator(s). Service of a petition to confirm the arbitration award may

be made by First Class mail or by commercial express mail, to the attorney for

the party or, if unrepresented, to the party at the last known business

address.

 

7.4       Controlling Law.

This Agreement is to be governed and construed in accordance with the laws of

the State of California, without regard to its conflict of law provisions.

 

43

 

7.5       Notice of Requested

Order. If any party intends to obtain an order from the arbitrator or any

court of competent jurisdiction which may direct DSI to take, or refrain from

taking any action, that party shall:

 

a.             Give

DSI at least [***] prior notice of the hearing;

 

b.             Include

in any such order that, as a precondition to DSI’s obligation, DSI be paid in full

for any past due fees and be paid for the reasonable value of the services to

be rendered pursuant to such order; and

 

c.             Ensure

that DSI not be required to deliver the original (as opposed to a copy) of the

Deposit Materials if DSI may need to retain the original in its possession to

fulfill any of its other duties.

 

ARTICLE 8 — GENERAL

PROVISIONS

 

8.1       Entire Agreement.

This Agreement, which includes Exhibits described herein, embodies the entire

understanding among the parties with respect to its subject matter and

supersedes all previous communications, representations or understandings,

either oral or written. DSI is not a party to the License Agreement between

Depositor and Preferred Beneficiary and has no knowledge of any of the terms or

provisions of any such License Agreement. DSI’s only obligations to Depositor

or Preferred Beneficiary are as set forth in this Agreement. No amendment or

modification of this Agreement shall be valid or binding unless signed by all

the parties hereto, except that Exhibit A need not be signed by DSI,

Exhibit B need not be signed by Preferred Beneficiary and Exhibit C

need not be signed.

 

8.2       Notices. All

notices, invoices, payments, deposits and other documents and communications

shall be given to the parties at the addresses specified in the attached

Exhibit C. It shall be the responsibility of the parties to notify each

other as provided in this Section in the event of a change of address. The

parties shall have the right to rely on the last known address of the other

parties. Unless otherwise provided in this Agreement, all documents and

communications may be delivered by First Class mail.

 

8.3       Severability. In

the event any provision of this Agreement is found to be invalid, voidable or

unenforceable, the parties agree that unless it materially affects the entire

intent and purpose of this Agreement, such invalidity, voidability or

unenforceability shall affect neither the validity of this Agreement nor the

remaining provisions herein, and the provision in question shall be deemed to

be replaced with a valid and enforceable provision most closely reflecting the

intent and purpose of the original provision.

 

8.4       Successors. This

Agreement shall be binding upon and shall inure to the benefit of the

successors and assigns of the parties. However, DSI shall have no obligation in

performing this Agreement to recognize any successor or assign of Depositor or

Preferred Beneficiary unless DSI receives clear, authoritative and conclusive

written evidence of the change of parties.

 

44

 

8.5       Regulations.

Depositor and Preferred Beneficiary are responsible for and warrant compliance

with all applicable laws, rules and regulations, including but not limited to

customs laws, import, export, and re-export laws and government regulations of

any country from or to which the Deposit Materials may be delivered in

accordance with the provisions of this Agreement,

 

	

  Interwave

  Communications International, Ltd.

  	

  UTStarcom, Inc.

  
	

  Depositor

  	

  Preferred Beneficiary

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ PRISCILA LU

  	

   

  	

  By:

  	

  /S/ HONG LU

  
	

   

  	

   

  
	

  Name: Priscilla Lu

  	

  Name: Hong Lu

  
	

   

  	

   

  
	

  Title: Chief Executive

  Officer

  	

  Title: Chief Executive

  Officer

  
	

   

  	

   

  
	

  Date:

  September 27, 2002

  	

  Date:

  September 27, 2002

  

 

 

 

 

DSI Technology Escrow Services, Inc.

	

   

  	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

   

  
	

  Date:

  	

   

  

 

 

45

 

EXHIBIT A

MATERIALS

TO BE DEPOSITED

 

Account Number                               

 

Depositor represents to Preferred Beneficiary that Deposit Materials

delivered to DSI shall consist of the following:

 

[***]

 

 

 

 

 

 

 

 

 

	

  Interwave

  Communications International, Ltd.

  	

  UTStarcom, Inc.

  
	

  Depositor

  	

  Preferred Beneficiary

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /S/ PRISCILLA LU

  	

   

  	

  By:

  	

   

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	 

	

  Name: Priscilla Lu

  	

  Name: Hong Lu

  	 

	

   

  	

   

  	 

	

  Title: Chief Executive

  Officer

  	

  Title: Chief Executive

  Officer

  	 

	

   

  	

   

  	 

	

  Date:

  September 27, 2002

  	

  Date:

  September 27, 2002

  	 

 

 

46

 

EXHIBIT B

 

DESCRIPTION

OF DEPOSIT MATERIALS

 

Depositor Company Name: interWAVE Communications International, Ltd.

 

Account Number                                                                                                                                                        

 

 

Product Name:              [***]

(Product

Name will appear as the Exhibit B Name on Account History report)

 

DEPOSIT

MATERIAL DESCRIPTION:

	

  Quantity 

  	

  Media Type & Size

  	

  Label Description of Each Separate Item

  
	

   

  	

   

  	

  Disk 3.5” or            

  	

   

  
	

   

  	

   

  	

  DAT tape

           mm 

  	

   

  
	

   

  	

   

  	

  CD-ROM

  	

   

  
	

   

  	

   

  	

  Data cartridge tape                

  	

   

  
	

   

  	

   

  	

  TK 70 or

           tape 

  	

   

  
	

   

  	

   

  	

  Magnetic tape              

  	

   

  
	

   

  	

   

  	

  Documentation 

  	

   

  
	

   

  	

   

  	

  Other                                       

  	

   

  

 

PRODUCT DESCRIPTION: 

Environment

 

DEPOSIT MATERIAL INFORMATION:

Is the media or

are any of the files encrypted? Yes / No If yes, please include any passwords and

the decryption tools.

Encryption tool name

                                                                                

Version

Hardware required

Software required

Other required information

 

	

  I certify for Depositor

  that the above described

  	

  DSI has inspected and accepted the above

  
	

  Deposit Materials have

  been transmitted to DSI:

  	

  materials (any

  exceptions are noted above):

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Signature

  	

   

  	

   

  	

  Signature

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Print Name

  	

   

  	

   

  	

  Print Name

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Date

  	

   

  	

   

  	

  Date Accepted

  	

   

  
	

   

  	

   

  	

  Exhibit B#

  	

   

  
								

 

Send materials to: [***]

 

 

47

 

EXHIBIT C

DESIGNATED

CONTACT

 

Account Number

                           

 

	

  Notices, deposit

  material returns and communications to Depositor should be addressed to:

  	

   

  	

  Invoices to Depositor

  should be addressed to:

  
	

   

  	

   

  	

   

  
	

  Company Name: Interwave

  Advanced 

  	

   

  	

  Robin Foor

  
	

  Communications, Inc.

  	

   

  	

  Vice President and

  General Counsel

  
	

  Address:

  	

  420 Widget Lane

  	

   

  	

  Interwave

  Communications, Inc. 

  
	

   

  	

  Walnut Creek,CA 94598

  	

   

  	

  312 Constitution Drive,

  
	

   

  	

   

  	

  Menlo Park, CA 94025

  
	

  Designated Contact:

  Kiomars Anvari

  	

   

  	

  Tel 650-838-2168

  
	

  Telephone: 925-287-4441

  	

   

  	

  Contact: Febi Herrera

  650-838-2212 

  
	

  Facsimile: 925-935-8597

  	

   

  	

  P.O.#, if required

  
	

  E-mail:

  anvarik@gbasecom.com

  	

   

  	

  E-mail:

  rfoor@iwv.com  faquino@iwv.com

  
	

  Verification

  Contact:  Bob Nakata 650-838-2054

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Notices and

  communications to Preferred Beneficiary should be addressed to:

  	

   

  	

  Invoices to Preferred

  Beneficiary should be addressed to:

  
	

   

  	

   

  	

   

  
	

  Company Name:

  UTStarcom, Inc.

  	

   

  	

  Same

  
	

  Address:1275 Harbor Bay

  Parkway

  	

   

  	

   

  
	

  Alameda, CA  94502

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Designated Contact:

  Russell Boltwood 

  	

   

  	

  Contact:

  
	

  Telephone: (510)

  864-8800

  	

   

  	

   

  
	

  Facsimile: (510)

  864-8802

  	

   

  	

  P.O.#, if required:

  
	

  E-mail:

  Russell@utstar.com

  	

   

  	

  E-mail:

  

 

Requests from Depositor or Preferred Beneficiary to change the

designated contact should be given in writing by the designated contact or an

authorized employee of Depositor or Preferred Beneficiary.

 

	

  Contracts, Deposit

  Materials and notices to

  DSI should be addressed to:

  	

  Invoice inquiries and

  fee remittances

  to DSI should be addressed to:

  
	

   

  	

   

  
	

   

  	

   

  
	

  DSI Technology Escrow

  Services, Inc.

  	

  DSI Technology Escrow

  Services, Inc.

  
	

  Contract Administration

  	

  PO Box 45156

  
	

  9265 Sky Park Court,

  Suite 202

  	

  San Francisco, CA  94145-0156

  
	

  San Diego, CA  92123

  	

   

  
	

  Telephone: (858)

  499-1600

  	

  (858) 499-1636

  
	

  Facsimile: (858)

  694-1919

  	

  (848) 499-1637

  
	

  E-mail:

  ca@dsiescrow.com

  	

   

  
	

   

  Date:

  	

   

  

 

48EXHIBIT 10.1

 

TERMINATION

AGREEMENT AND MUTUAL RELEASE

 

THIS TERMINATION

AGREEMENT AND MUTUAL RELEASE (this “Agreement”) is entered into as of the

Effective Date (as defined below) by and among SSP Solutions, Inc., a Delaware

corporation (“SSP”), and BIZ Interactive Zone, Inc., a Delaware corporation

(“BIZ”), on the one hand, and Wave Systems Corp. (“Wave”), on the other. This

Agreement is entered into with reference to the following facts:

 

RECITALS

 

A.            On October 2, 2000, BIZ and Wave

entered into a Purchase, Development, and Deployment Agreement (“Original

Agreement”). BIZ and Wave amended the Original Agreement on May 10, 2001

(“Amended Agreement”). On August 24, 2001, BIZ became a wholly-owned subsidiary

of SSP.

B.            SSP, BIZ and Wave desire to

terminate the Original Agreement, as amended by the Amended Agreement (Original

Agreement and Amended Agreement together, the “Existing Agreement”), on the

terms set forth in this Agreement and to settle all claims and obligations that

arise out of or that in any way are connected with or related to the Existing

Agreement.

C.            The discussions between SSP, BIZ and

Wave that lead to this Agreement began in late August 2002. Based upon the

average 20-day trading price of the common stock of SSP (“Common Stock”) during

the period of discussions, SSP and Wave have agreed to use $1.35 as the

conclusive value of a share of SSP Common Stock for purposes of this Agreement.

D.            As of August 31, 2002, Wave owned

3,083,083 shares of SSP Common Stock (“Investment Shares”). The shares of

Common Stock to be issued pursuant to this Agreement are exclusive of Wave’s

Investment Shares.

E.             In consideration of the mutual

covenants, agreements and promises set forth in this Agreement, and other good

and valuable consideration, each party to this Agreement agrees as follows:

 

TERMS

 

1.             The foregoing Recitals shall be

part of this Agreement.

 

2.             The Existing Agreement (including

any post termination covenants contained therein) is hereby canceled and

terminated. Any and all obligations of SSP and BIZ to Wave for payment under

the Existing Agreement are canceled, extinguished and forgiven by Wave. Any and

all obligations of Wave to SSP or BIZ for services under the Existing Agreement

are canceled, extinguished and forgiven by SSP and BIZ. All amounts previously

paid by SSP or BIZ to Wave pursuant to the terms of the Existing Agreement are

deemed validly paid and not subject to any adjustment or forfeiture.

 

1

 

3.             Within fifteen business days following

the execution of this Agreement, Wave will provide to SSP copies of the work

developed to date on the Linux project.

 

4.             Within ten business days following

the execution of this Agreement, SSP shall deliver or cause to be delivered to

Wave a certificate representing 1,600,000 shares (“Issued Shares”) of Common

Stock.

 

5.             Within five business days following

the execution of this Agreement, SSP shall deliver to Wave a convertible

subordinated unsecured promissory note (“Note”) dated as of September 30, 2002

in the principal amount of $270,000 in the form attached to this Agreement as Exhibit

A, which note shall not bear interest and, subject to the limitations

contained in the Note and this Agreement, shall be immediately convertible from

time to time, at the option of Wave or SSP, into shares of Common Stock (“Note

Shares”) at the Rate (as defined below) then in effect.

 

6.             For purposes of this section 6, the

initial rate (“Rate”) shall be $1.00. Following each adjustment, if any, of the

Rate, SSP shall give prompt written notice to Wave setting forth in reasonable

detail the calculation of the adjustment to the Rate and the calculation of the

number of Adjustment Shares (as defined below), if any, issuable as of the

Adjustment Date (as defined below). Within ten business days following each

Adjustment Date, SSP shall deliver or cause to be delivered to Wave a

certificate representing the Adjustment Shares, if any, issuable as of the

Adjustment Date.

 

a.           If and whenever after the date of this

Agreement but before April 16, 2003, SSP issues or sells, or is deemed to have

issued or sold, any shares of Common Stock (including the issuance or sale of

shares of Common Stock owned or held by or for the account of SSP, but

excluding shares of Common Stock issued or deemed pursuant to subsection 6(c)

below to have been issued by SSP (i) upon exercise or conversion of exercisable

or convertible securities issued or outstanding on or prior to the date of this

Agreement or (ii) pursuant to transactions described in Section 8.5 of the

Note) for a consideration per share less than the Rate in effect immediately

prior to such issuance or sale (each an “Adjustment Date”), then the Rate shall

be reduced to a price equal to the consideration per share paid for such Common

Stock, and Wave shall be entitled to receive an additional number of shares of

Common Stock (“Adjustment Shares”) calculated as set forth in the following

subsection 6(b).

 

b.   The number

of Adjustment Shares issuable upon an adjustment of the Rate made pursuant to

subsection 6(a) above shall be equal to the Dilution Percentage (as defined

below) multiplied by the sum of (i) the Issued Shares plus (ii) the Adjustment

Shares, if any, issued prior to the Adjustment Date plus (iii) the Note Shares,

if any, issued prior to the Adjustment Date. “Dilution Percentage” shall mean

the percentage by which the Rate in effect immediately prior to the adjustment

in question is reduced on the Adjustment Date. For example, if the Rate on

October 31, 2002 is $1.00 and SSP issues shares of Common Stock on

November 1, 2002 for $0.80 per share in a transaction not excluded from

the applicability of subsection 6(a) above, then the Adjustment Date would be

November 1, 2002, the Rate would be adjusted to $0.80 per share, the Dilution Percentage

would be 20% (i.e., the difference between $1.00 and $0.80, divided by

 

2

 

$1.00), and the

number of Adjustment Shares issuable to Wave, assuming no Note Shares have yet

been issued, would be 320,000 shares of Common Stock (i.e., 20% of 1,600,000).

As a further example, if SSP also issued shares of Common Stock on November 2,

2002 for $0.75 per share in a transaction not excluded from the applicability

of subsection 6(a) above, then the additional Adjustment Date would be November

2, 2002, the Rate would adjust from $0.80 to $0.75, the Dilution Percentage

would be 6.25% (i.e., the difference between $0.80 and $0.75, divided by $0.80)

and the number of Adjustment Shares issuable to Wave, assuming no Note Shares

have yet been issued, would be 120,000 shares of Common Stock (i.e., 6.25% of

the sum of 1,600,000 and 320,000).

 

c.    For

purposes of determining the adjusted Rate, the following shall apply:

 

i)              “Options”

means any rights, warrants or options to subscribe for or purchase Common Stock

or Convertible Securities (excluding rights, warrants or options granted

pursuant to any SSP stock option and stock purchase plans), which rights,

warrants or options are issued after the date of this Agreement. “Convertible

Securities” means any stock or securities (other than Options) directly or

indirectly convertible into or exchangeable or exercisable for Common Stock,

which stock or securities are issued after the date of this Agreement.

 

ii)             If,

after the date of this Agreement, SSP in any manner grants any Options and the

lowest price per share for which one share of Common Stock is issuable upon the

exercise of any such Option or upon conversion, exchange or exercise of any

Convertible Securities issuable upon exercise of any such Option is less than

the then applicable Rate, then such share of Common Stock shall be deemed to be

outstanding and to have been issued and sold by SSP at the time of the granting

or sale of such Option for such price per share. For purposes of this

subsection 6(c)(ii), the “lowest price per share for which one share of Common

Stock is issuable upon exercise of such Options or upon conversion, exchange or

exercise of such Convertible Securities” shall be equal to the sum of the lowest

amounts of consideration (if any) received or receivable by SSP with respect to

any one share of Common Stock upon the granting or sale of the Option, upon

exercise of the Option and upon conversion, exchange or exercise of any

Convertible Security issuable upon exercise of such Option. No further

adjustment of the Rate shall be made upon the actual issuance of such Common

Stock or of such Convertible Securities upon the exercise of such Options or

upon the actual issuance of such Common Stock upon conversion, exchange or

exercise of such Convertible Securities.

 

iii)            If,

after the date of this Agreement, SSP in any manner issues or sells any

Convertible Securities and the lowest price per share for which one share of

Common Stock is issuable upon such conversion, exchange or exercise thereof is

less than the then applicable Rate, then such share of Common Stock shall be

deemed to be outstanding and to have been issued and sold by SSP at the time of

the issuance or sale of such Convertible Securities for such price per share.

For the purposes of this subsection 6(c)(iii), the “lowest price per share for

which one share of Common Stock is

 

3

 

issuable upon such

conversion, exchange or exercise” shall be equal to the sum of the lowest

amounts of consideration (if any) received or receivable by SSP with respect to

one share of Common Stock upon the issuance or sale of the Convertible Security

and upon conversion, exchange or exercise of such Convertible Security. No

further adjustment of the Rate shall be made upon the actual issuance of such

Common Stock upon conversion or exchange of such Convertible Securities, and if

any such issue or sale of such Convertible Securities is made upon exercise of

any Options for which adjustment of the Rate had been or are to be made

pursuant to other provisions of this section, no further adjustment of the Rate

shall be made by reason of such issue or sale.

 

iv)           If

the purchase price provided for in any Options, the additional consideration,

if any, payable upon the issue, conversion or exchange of any Convertible

Securities, or the rate at which any Convertible Securities are convertible

into or exchangeable for Common Stock changes at any time, the Rate in effect

at the time of such change shall be adjusted to the Rate that would have been

in effect at such time had such Options or Convertible Securities provided for

such changed purchase price, additional consideration or changed conversion

rate, as the case may be, at the time initially granted, issued or sold. No

adjustment shall be made if such adjustment would result in an increase of the

Rate then in effect.

 

v)            In

case any Option is issued in connection with the issue or sale of other

securities of SSP, together comprising one integrated transaction in which no

specific consideration is allocated to such Options by the parties thereto, the

Options will be deemed to have been issued for a consideration of $0.01. If any

Common Stock, Options or Convertible Securities are issued or sold or deemed to

have been issued or sold for cash, the consideration received therefor will be

deemed to be the net amount received by SSP therefor. If any Common Stock,

Options or Convertible Securities are issued or sold for a consideration other

than cash, the amount of such consideration received by SSP will be the fair

value of such consideration, except where such consideration consists of

marketable securities, in which case the amount of consideration received by

SSP will be the Closing Sale Price (as defined below) of such securities on the

date of receipt of such securities. If any Common Stock, Options or Convertible

Securities are issued to the owners of the non-surviving entity in connection

with any merger in which SSP is the surviving entity, the amount of

consideration therefor will be deemed to be the fair value of such portion of

the net assets and business of the non-surviving entity as is attributable to

such Common Stock, Options or Convertible Securities, as the case may be. The fair

value of any consideration other than cash or securities will be determined

jointly by SSP and Wave. If such parties are unable to reach agreement within

ten days after the occurrence of an event requiring valuation (the “Valuation

Event”), the fair value of such consideration will be determined within five

business days after the tenth day following the Valuation Event by an

independent, reputable appraiser jointly selected by SSP and Wave. The

determination of such appraiser shall be final and binding upon all parties

absent error, and the fees and expenses of such appraiser shall be borne

equally by SSP and Wave.

 

vi)           “Principal

Market” means The Nasdaq National Market, or, if the Common Stock is not traded

on The Nasdaq National Market, then the principal

 

4

 

securities

exchange or trading market for the Common Stock. “Closing Sale Price” means,

for any security as of any date, the last closing trade price for such security

on the Principal Market as reported by Bloomberg Financial Markets

(“Bloomberg”), or, if the Principal Market begins to operate on an extended

hours basis and does not designate the closing trade price, then the last trade

price at 4:00 p.m., New York City Time (or such other time as the Principal

Market publicly announces is the official close of trading), as reported by

Bloomberg, or, if the foregoing do not apply, the last closing trade price of

such security in the over-the-counter market on the electronic bulletin board

for such security as reported by Bloomberg, or, if no closing trade price is

reported for such security by Bloomberg, the last closing ask price for such

security as reported by Bloomberg, or, if no last closing ask price is reported

for such security by Bloomberg, the average of the highest bid price and the

lowest ask price of any market makers for such security as reported in the

“pink sheets” by the National Quotation Bureau, Inc. If the Closing Sale Price

cannot be calculated for that security on that date on any of the foregoing

bases, the Closing Sale Price of such security on such date shall be the fair

market value as mutually determined by SSP and Wave. If SSP and Wave are unable

to agree upon the fair market value of the Common Stock, then SSP shall immediately

submit via facsimile the disputed determination of the fair market value to an

independent, reputable investment banking firm. SSP shall cause the investment

banking firm to perform the determinations or calculations and notify SSP and

Wave of the results no later than 48 hours from the time it receives the

disputed determinations or calculations. The investment banking firm’s

determination or calculation, as the case may be, shall be deemed conclusive

absent manifest error, and the fees and expenses of such investment banking

firm shall be borne equally by SSP and Wave.

 

vii)          To

the extent that any Options or Convertible Securities expire unexercised, the

Rate then in effect shall be readjusted to the Rate that then would be in

effect if such rights, options, warrants or convertible securities had not been

issued, but such readjustment shall not affect the number of shares of Common

Stock delivered upon any conversion or Rate adjustment prior to the date such

readjustment is made.

 

d.   Notwithstanding

anything in this Agreement or the Note to the contrary, adjustments of the Rate

and the issuance of the Issued Shares, Adjustment Shares and Note Shares shall

be subject to the following limitations:

 

i)              The

parties acknowledge and agree that SSP is subject to Nasdaq rules that, among

other things, restrict SSP from entering into transactions in which SSP may

potentially issue shares of Common Stock without first obtaining stockholder

approval and/or without first providing Nasdaq with notification and an opportunity

to comment upon and/or approve the transactions. The parties further

acknowledge that because of the inclusion of the anti-dilution provisions

contained in Section 6 of this Agreement and in the Note: (A) SSP is required

under Nasdaq rules to provide Nasdaq with 15 calendar days’ prior written

notification and an opportunity to comment upon and/or approve the transactions

contemplated by this Agreement and the Note, and that such notification has not

yet occurred; and (B) SSP may in the future be required to provide additional

notifications to and/or obtain Nasdaq and/or stockholder approval of issuances

of Common Stock under this Agreement or the Note. SSP agrees

 

5

 

that SSP shall, as

soon as practicable following the execution of this Agreement, provide

notification to Nasdaq regarding SSP’s entry into this transaction. To the

extent SSP determines in the future that additional notifications to and/or

approvals of Nasdaq and/or SSP’s stockholders are required, SSP shall endeavor

to make the notifications and/or obtain the approvals. The parties agree that

to the extent that Nasdaq may from time to time require the modification or

rescission of all or part of the terms of this Agreement and the Note, the

parties shall negotiate in good faith with one another with the goal of

arriving at revised terms that satisfy Nasdaq rules and put the parties in as

close a position as possible to the positions intended by the original terms of

this Agreement, including without limitation, the issuance of the greatest

portion possible of the Issued Shares, Adjustment Shares and Note Shares that

are or may become due in connection with this Agreement.

 

ii)             SSP

shall not issue to Wave under this Agreement and the Note an aggregate number

of Issued Shares, Adjustment Shares and Note Shares that would result in Wave,

together with its affiliates, beneficially owning (as determined in accordance

with Section 13(d) of the Securities Exchange Act of 1934, as amended (“Exchange

Act”), and the rules promulgated thereunder) in excess of 19.9999% of the then

issued and outstanding shares of Common Stock, including the Investment Shares,

any other shares of SSP Common Stock that Wave then beneficially owns, and any

shares issuable upon conversion or exercise of any instrument of SSP (including

the Note) that Wave then beneficially owns after the application of this

subsection 6(d)(ii) (“Maximum Aggregate Share Amount”). Wave will have the

authority and obligation to determine whether the restriction contained in this

subsection 6(d)(ii) will limit any particular issuance hereunder, and to the

extent that Wave determines that the limitation contained in this subsection

6(d)(ii) applies, the determination of the amount of Adjustment Shares and/or

Note Shares permitted to be issued shall be the responsibility and obligation

of Wave. The provisions of this subsection (ii) may be waived by Wave in whole

or in part upon not less than 61 days’ prior written notice to SSP. If Wave has

not delivered prior written notice of its waiver of this subsection 6(d)(ii)

but has delivered a request that, without regard to any other shares that Wave

or its affiliates may beneficially own, would result in the issuance in excess

of the Maximum Aggregate Per Share Amount, SSP shall notify Wave of this fact

and shall honor the request for the maximum amount permitted to be issued in

accordance with this subsection 6(d)(ii) and the other provisions of this

subsection 6(d)(ii).

 

iii)            In

no event shall an adjustment pursuant to this Section 6 reduce the Rate below

the then par value, if any, of the shares of Common Stock issuable pursuant to

the terms of this Agreement and the Note.

 

7.             Wave shall, with respect to the

Issued Shares, the Adjustment Shares and the Note Shares (collectively, the

“Registrable Securities”), have registration rights as follows:

 

a.    If SSP

determines to file with the Securities and Exchange Commission (“SEC”) a

registration statement relating to an offering for the account of others under the

Securities Act of 1933, as amended (“Securities Act”), of any of its

 

6

 

equity securities

(other than on Form S-4 or Form S-8 or their then equivalents relating to

equity securities to be issued solely in connection with any acquisition of any

entity or business or equity securities issuable in connection with stock

option or other employee benefit plans and other than in connection with an

offering for the account of others pursuant to which SSP is prohibited by

agreement with those others from including the Registrable Securities in the

registration statement), SSP shall send to Wave written notice of such

determination and, if within five business days after the effective date of

such notice, Wave shall so request in writing, SSP shall include in such

registration statement, if and when filed, all or any part of the Registrable

Securities that Wave requests to be registered and that are not then included

on a registration statement, except that if, in connection with any

underwritten public offering the managing underwriter(s) thereof shall impose a

limitation on the number of shares of Common Stock that may be included in the

registration statement because, in such underwriter(s)’ judgment, marketing or

other factors dictate such limitation is necessary to facilitate public

distribution, then SSP shall be obligated to include in the registration

statement only such limited portion of the Registrable Securities with respect

to which Wave has requested inclusion hereunder as the underwriter shall

permit. Any exclusion of Registrable Securities shall be made pro rata with

holders of other securities having the right to include such securities in the

registration statement other than holders of securities entitled to inclusion

of their securities in the registration statement by reason of demand

registration rights. If an offering in connection with which Wave elects to

participate in registration under this section is an underwritten offering,

then Wave shall, unless otherwise agreed by SSP, offer and sell such

Registrable Securities in an underwritten offering using the same underwriter

or underwriters and on the same terms and conditions as other shares of Common

Stock included in such underwritten offering. Wave shall have two opportunities

to have the Registrable Securities registered under this subsection 7(a).

 

b.   If on or

before April 1, 2003, SSP shall not have filed with the SEC a registration

statement upon which Wave was offered an opportunity to exercise Wave’s

incidental registration rights contained in the preceding paragraph, then Wave

may, on any one occasion, send a written request to SSP to file under the

Securities Act a registration statement covering the resale of not less than a

majority of the Registrable Securities. SSP shall, as soon as practicable

following receipt of the written request, prepare and file a registration

statement covering the Registrable Securities requested to be registered and

diligently pursue effectiveness of the registration statement. SSP shall use

reasonable efforts to maintain the effectiveness of the registration statement

until the Registrable Securities cease to be Registrable Securities.

 

c.    All

reasonable expenses (excluding underwriting discounts and commissions, transfer

taxes and fees and disbursements of counsel for Wave) incurred by SSP in

connection with registration of the Registrable Securities, including without

limitation all registration, filing, listing, qualification, printers’ and

accounting fees, and fees and disbursements of counsel for SSP, shall be borne

by SSP.

 

d.   The shares

of Common stock issued or issuable under this Agreement shall cease to be

Registrable Securities when (i) such shares shall have been registered

 

7

 

under the

Securities Act, the registration statement with respect to the sale of such

shares shall have become effective under the Securities Act and such shares

shall have been disposed of pursuant to such effective registration statement,

(ii) such shares shall have been sold or shall have become eligible for resale

pursuant to Rule 144 (or any similar provision relating to the disposition of

securities then in force) under the Securities Act, (iii) such shares shall

have been otherwise transferred, new certificates or other evidences of

ownership for them not bearing a legend restricting further transfer and not

subject to any stop-transfer order or other restrictions on transfer shall have

been delivered by SSP and subsequent disposition of such shares shall not

require registration or qualification of such shares under the Securities Act

or any state securities laws then in force, (iv) such shares shall cease to be

outstanding, or (v) Wave shall have twice declined the opportunity under

subsection 7(a) to include in a registration statement shares issued or

issuable under this Agreement.

 

e.    Wave

promptly shall furnish in writing to SSP or its counsel such information as SSP

or its counsel shall reasonably require in connection with a registration

statement.

 

f.    Indemnification.

 

i)              SSP

shall, notwithstanding any termination of this Agreement, indemnify and hold

harmless Wave, and the agents, brokers and investment advisors of Wave, to the

fullest extent permitted by applicable law, from and against any and all

losses, claims, damages, liabilities, costs (including, without limitation,

costs of preparation and attorneys’ fees) and expenses (collectively, “Losses”)

(as determined by a court of competent jurisdiction in a final judgment not

subject to appeal or review), as incurred, arising solely out of or based

solely upon any untrue or alleged untrue statement of a material fact contained

in the registration statement, any prospectus or any form of prospectus or in

any amendment or supplement thereto or in any preliminary prospectus, or

arising solely out of or based solely upon any omission or alleged omission of

a material fact required to be stated therein or necessary to make the

statements therein (in the case of any prospectus or form of prospectus or

supplement thereto, in the light of the circumstances under which they were

made) not misleading, except to the extent, but only to the extent, that such

untrue statements or omissions or alleged untrue statements or omissions are

based upon information regarding Wave or such other Indemnified Party (as

defined below) furnished in writing to SSP by Wave or such other Indemnified

Party for use therein, or to the extent that such information relates to Wave

or Wave’s proposed method of distribution of Registrable Securities and was

reviewed and approved by Wave for use in the registration statement, such

prospectus or such form of prospectus or in any amendment or supplement

thereto.

 

ii)             Wave

shall indemnify and hold harmless SSP, the directors, officers, agents and

employees, each person who controls SSP (within the meaning of Section 15 of

the Securities Act and Section 20 of the Exchange Act, and the directors,

officers, agents or employees of such controlling persons, to the fullest

extent permitted by applicable law, from and against all Losses (as determined

by a court of competent jurisdiction in a final judgment not subject to appeal

or review), as incurred, arising

 

8

 

solely out of or

based solely upon any untrue statement or alleged untrue statement of a

material fact contained in the registration statement, any prospectus, or any

form of prospectus or form of prospectus or in any amendment or supplement

thereto or in any preliminary prospectus, or arising solely out of or based

solely upon any omission or alleged omission of a material fact required to be

stated therein or necessary to make the statements therein (in the case of any

prospectus or supplement thereto, in the light of the circumstances under which

they were made) not misleading, to the extent, but only to the extent, that

such untrue statement or omission or alleged untrue statement or omission is

contained in any information so furnished in writing by Wave or other

Indemnified Party to SSP for inclusion in the registration statement or such

prospectus or to the extent that such information relates to Wave or Wave’s

proposed method of distribution of Registrable Securities and was reviewed and

approved by Wave for use in the registration statement, such prospectus or such

form of prospectus or in any amendment or supplement thereto.

 

iii)            If

any proceeding shall be brought or asserted against any person entitled to

indemnity hereunder (an “Indemnified Party”), such Indemnified Party promptly

shall notify the person from whom indemnity is sought (the “Indemnifying

Party”) in writing, and the Indemnifying Party shall assume the defense

thereof, including the employment of counsel reasonably satisfactory to the

Indemnified Party and the payment of all fees and expenses incurred in

connection with defense thereof; provided, that the failure of any Indemnified

Party to give such notice shall not relieve the Indemnifying Party of its

obligations or liabilities pursuant to this Agreement, except (and only) to the

extent that it shall be finally determined by a court of competent jurisdiction

(which determination is not subject to appeal or further review) that such

failure shall have proximately and materially adversely prejudiced the

Indemnifying Party.

 

iv)           An

Indemnified Party shall have the right to employ separate counsel in any such

proceeding and to participate in the defense thereof, but the fees and expenses

of such counsel shall be at the expense of such Indemnified Party or Parties

unless: (1) the Indemnifying Party has agreed in writing to pay such fees and

expenses; or (2) the Indemnifying Party shall have failed promptly to assume

the defense of such proceeding and to employ counsel reasonably satisfactory to

such Indemnified Party in any such proceeding; or (3) the named parties to any

such proceeding (including any impleaded parties) include both such Indemnified

Party and the Indemnifying Party, and such Indemnified Party shall have been

advised by counsel (which counsel shall be reasonably acceptable to the

Indemnifying Party) that a conflict of interest is likely to exist if the same

counsel were to represent such Indemnified Party and the Indemnifying Party (in

which case, if such Indemnified Party notifies the Indemnifying Party in

writing that it elects to employ separate counsel at the expense of the

Indemnifying Party, the Indemnifying Party shall not have the right to assume

the defense thereof and such counsel shall be at the expense of the Indemnifying

Party). The Indemnifying Party shall not be liable for any settlement of any

such proceeding effected without its written consent, which consent shall not

be unreasonably withheld or delayed. No Indemnifying Party shall, without the

prior written consent of the Indemnified Party, effect any settlement of any

pending proceeding in respect of which any Indemnified Party is a

 

9

 

party, unless such

settlement includes an unconditional release of such Indemnified Party from all

liability on claims that are the subject matter of such proceeding.

 

v)            All

fees and expenses of the Indemnified Party (including reasonable fees and

expenses to the extent incurred in connection with investigating or preparing

to defend such proceeding in a manner not inconsistent with this section) shall

be paid to the Indemnified Party, as incurred, within ten (10) business days of

written notice thereof to the Indemnifying Party (regardless of whether it is

ultimately determined that an Indemnified Party is not entitled to

indemnification hereunder; provided, that the Indemnifying Party may require

such Indemnified Party to undertake to reimburse all such fees and expenses to

the extent it is finally judicially determined that such Indemnified Party is

not entitled to indemnification hereunder).

 

vi)           If

a claim for indemnification under this section is unavailable to an Indemnified

Party because of a failure or refusal of a governmental authority to enforce

such indemnification in accordance with its terms (by reason of public policy

or otherwise), then each Indemnifying Party, in lieu of indemnifying such

Indemnified Party, shall contribute to the amount paid or payable by such

Indemnified Party as a result of such Losses, in such proportion as is

appropriate to reflect the relative fault of the Indemnifying Party and

Indemnified Party in connection with the actions, statements or omissions that

resulted in such Losses as well as any other relevant equitable considerations.

The relative fault of such Indemnifying Party and Indemnified Party shall be

determined by reference to, among other things, whether any action in question,

including any untrue or alleged untrue statement of a material fact or omission

or alleged omission of a material fact, has been taken or made by, or relates

to information supplied by, such Indemnifying, Party or Indemnified Party, and

the parties’ relative intent, knowledge, access to information and opportunity

to correct or prevent such action, statement or omission. The amount paid or

payable by a party as a result of any Losses shall be deemed to include,

subject to the limitations set forth in this section, any reasonable attorneys’

or other reasonable fees or expenses incurred by such party in connection with

any proceeding to the extent such party would have been indemnified for such

fees or expenses if the indemnification provided for in this section was

available to such party in accordance with its terms.

 

vii)          The

parties hereto agree that it would not be just and equitable if contribution

pursuant to this section were determined by pro rata allocation or by any other

method of allocation that does not take into account the equitable

considerations referred to in the immediately preceding paragraph. No person

guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of

the Securities Act) shall be entitled to contribution from any person who was

not guilty of such fraudulent misrepresentation.

 

viii)         The

indemnity and contribution agreements contained in this section are in addition

to any liability that the Indemnifying Parties may have to the Indemnified

Parties.

 

10

 

8.             SSP, BIZ and Wave intend that the

Issued Shares, the Adjustment Shares, the Note Shares and the Note

(collectively the “Offered Securities”), are being issued in a private

transaction intended to be exempt from the registration requirements of the

Securities Act. Wave hereby represents and warrants to SSP and BIZ as follows:

 

a.    Wave is an

accredited investor (as defined in Rule 501 of Regulation D promulgated under

the Securities Act) and is acquiring the Offered Securities for Wave’s own

account, for investment purposes only and not with a view to or for

distributing or reselling such Offered Securities or any part thereof or

interest therein, without prejudice, however, to Wave’s right, subject to the

provisions of this Agreement, at all times to sell or otherwise dispose of all

or any part of such Offered Securities in compliance with applicable federal

and state securities laws.

 

b.   Wave has

significant investment experience, including investment in non-listed and

non-registered securities, and Wave, either alone or together with Wave’s

representatives, has such knowledge, sophistication and experience in business

and financial matters so as to be capable of evaluating the merits and risks of

the prospective investment in the Offered Securities, and has so evaluated the

merits and risks of such investment.

 

c.    Wave has

received and had an opportunity to review SSP’s Form 10-K for the year ended

December 31, 2001, as amended, SSP’s Form 10-Qs for the quarters ended

March 31, 2002 and June 30, 2002, SSP’s definitive proxy statement for its

2002 annual meeting of stockholders, and SSP’s other filings made during 2002

under the Exchange Act.

 

d.   Wave is able

to bear the economic risk of an investment in the Offered Securities and, at

the present time, is able to afford a complete loss of such investment.

 

e.    Wave is not

obtaining the Offered Securities as a result of or subsequent to any

advertisement, article, notice or other communication regarding the Offered

Securities published in any newspaper, magazine or similar media or broadcast

over television or radio or presented at any seminar or any other general

solicitation or general advertisement.

 

f.    Wave

understands and acknowledges that (i) the Offered Securities are being offered

and sold to Wave without registration under the Securities Act in a private

placement that is exempt from the registration provisions of the Securities

Act, and (ii) the availability of such exemption depends in part on, and SSP

will rely upon the accuracy and truthfulness of, the representations contained

in this section, and Wave hereby consents to such reliance.

 

g.   Wave

consents to the placement of a legend on any certificates or other documents

evidencing the Offered Securities stating that the issuance of the Offered

Securities has not been registered under the Securities Act and under

applicable state securities laws and setting forth or referring to the

restrictions on transferability and sale thereof.

 

11

 

h.   Waves

understands that as a condition to the issuance of the Offered Securities, SSP

may require him and any designee who is to receive Offered Securities to

execute an investment representation letter or letters containing the

representations in the preceding subsections of this section.

 

9.             Except for any obligations imposed

by this Agreement, SSP and BIZ, on the one hand, and Wave, on the other, and,

as applicable, each of their respective agents, successors, predecessors,

parent companies, affiliated companies, related companies, partners, officers,

directors, shareholders, representatives, employees, attorneys, insurance

companies, assigns and heirs, and each of them, past and present, hereby

release and forever discharge each other party and each of his or its

respective agents, successors, predecessors, parent companies, affiliated companies,

related companies, partners, officers, directors, shareholders,

representatives, employees, attorneys, insurance companies, assigns and heirs,

and each of them, past and present, with respect to any and all claims,

demands, liabilities, obligations, debts, attorneys’ fees, costs, accounts,

actions, or causes of action which any of the parties have or claim to have as

of the date of this Agreement, in law or equity, whether known or unknown,

which pertain to or which arise out of the facts, circumstances, and/or events

which are asserted, in the Existing Agreement.

 

10.           As a condition of this Agreement and

in furtherance of the release provisions set forth in this Agreement, the

parties expressly waive any and all rights and benefits conferred upon them by

the provisions of section 1542 of the Civil Code of the State of California

with respect to any of the matters described or set forth in this Agreement.

Section 1542 of the Civil Code of the State of California states:

 

A general release does not extend to

claims which the creditor does not know or

suspect to exist in his favor at the

time of executing the release, which if known by him

must have materially affected his

settlement with the debtor.

 

The parties acknowledge that except for matters expressly represented

or recited in this Agreement, the facts and law in relation to this matter and

the claims released by the terms of this Agreement may turn out to be different

from the facts or law as now known to each party and/or its agents and/or

representatives, including its counsel. Each party expressly assumes the risk

of the existence of different or presently unknown facts or law and agrees that

this Agreement shall in all respects be effective and binding as to each party

despite the possibility of the existence of different or new facts or law.

 

11.           Each of the parties represents and

warrants that it has not heretofore assigned, transferred or subrogated, or

purported to assign, transfer or subrogate, to any person or entity, any of the

claims released in this Agreement. Each of the parties agrees that it shall

indemnify each of the other parties, including with respect to any attorneys’

fees and costs, and hold each of the other parties harmless from and against

any claims

 

12

 

based on or arising from any such assignment, transfer or subrogation,

or any attempted assignment, transfer or subrogation, of any of the claims

released in this Agreement.

 

12.           Each of the parties agrees to execute

and deliver to each other party all necessary documents and to take such

additional action as may be necessary or reasonably required to effectuate the

terms, conditions, provisions, and intent of this Agreement.

 

13.           Each party executing this Agreement

and/or any other documents related to the settlement between the parties

represents and warrants that it has the legal capacity and/or has been duly

authorized to execute this Agreement and any such other related documents.

 

14.           Each of the parties acknowledges that

it has carefully read this Agreement and knows and understands the contents and

effect of this Agreement, and each of the parties further acknowledges that it

is signing this Agreement based on its own free act.

 

15.           Each of the parties acknowledges that

it has been advised to seek legal counsel in connection with this matter and

the provisions and execution of this Agreement, and each of the parties

acknowledges that it either has consulted with its own legal counsel or has had

a full opportunity to consult with its own legal counsel in connection with the

settlement between the parties, the terms, conditions, and provisions of this

Agreement, and the execution of this Agreement.

 

16.           All of the terms, conditions and

provisions of this Agreement shall be governed by and construed and enforced in

accordance with the laws of the State of California, without regard to choice

of law principles. Any disputes arising under this Agreement shall be resolved

in the federal or state courts located in the County of Orange, State of

California.

 

17.           If any term, condition or provision

of this Agreement is held to be invalid, void or unenforceable, the remaining

terms, conditions and provisions of this Agreement nevertheless shall remain in

full force and effect and shall in no way be affected, impaired or invalidated.

 

18.           This Agreement and all of its terms,

conditions and provisions shall be binding upon and shall inure to the benefit

of each of the parties and each of the parties’ respective heirs, successors

and assigns.

 

19.           The prevailing party in any

proceeding to enforce the provisions of this Agreement shall be entitled to

recover all costs, including reasonable attorneys’ fees, from the

non-prevailing party.

 

20.           Each of the parties shall bear and be

responsible for his or its own attorneys’ fees and costs incurred in connection

with all aspects of the Existing Agreement and such party’s negotiation,

execution and performance of this Agreement.

 

13

 

21.           This Agreement, together with the

Note, contains the entire agreement and understanding concerning the settlement

between the parties and replaces any prior or contemporaneous negotiations or

agreements between the parties, whether written and/or oral.

 

22.           Each of the parties agrees that no

particular party or parties to this Agreement shall be deemed to be the author

of this Agreement or any particular term, provision or condition of this

Agreement. Each of the parties further agrees that any ambiguities in this

Agreement shall be resolved, and the terms, provisions and conditions of this

Agreement shall be construed and interpreted, without regard to which party or

parties may have suggested, drafted, revised, or otherwise authored this

Agreement or any of its particular terms, provisions or conditions. Each of the

parties further agrees that this Agreement shall be construed and interpreted

as if drafted jointly by all of the parties.

 

23.           It is understood that this Agreement

is entered into in compromise of disputed claims and that neither the

settlement between the parties nor the performance of any of the terms,

provisions, or conditions of this Agreement shall be construed or interpreted

as an admission of liability on the part of any of the parties to this Agreement.

 

24.           This Agreement may not be changed,

altered or modified except in a writing signed by each of the parties and/or

duly authorized representatives of each of the parties.

 

25.           This Agreement may be executed in

counterparts, including facsimile counterparts, and all such executed

counterparts, including with facsimile signatures, together shall constitute

one original Agreement which shall be binding on all of the parties to this

Agreement notwithstanding that all of the parties are not signatory to the original

or the same counterparts.

 

26.           If the release granted to any

released party by any releasing party in this Agreement is held by a court of

competent jurisdiction to be void or unenforceable, then the release given by

that released party to that releasing party shall also be deemed void and

unenforceable.

 

27.           Any notice, demand, request, waiver

or other communication required or permitted to be given under this Agreement

shall be in writing and shall be effective (a) upon hand delivery by telecopy or

facsimile at the address or number designated below (if delivered on a business

day during normal business hours where such notice is to be received), or the

first business day following such delivery (if delivered other than on a

business day during normal business hours where such notice is to be received)

or (b) on the second business day following the date of mailing by express

courier service, fully prepaid, addressed to such address, or upon actual

receipt of such mailing, whichever shall first occur. The addresses for such

communications shall be:

 

	

  If to SSP:

  	

  SSP Solutions,

  Inc.

  
	

   

  	

  17861 Cartwright Road

  
	

   

  	

  Irvine, California

  92614

  

 

14

 

	

   

  	

  Attention: Chief

  Financial Officer

  
	

   

  	

  Telecopier: (949)

  851-8588

  
	

   

  	

  Telephone: (949)

  851-1085

  
	

   

  	

   

  
	

  with a copy (which copy

  
	

  shall not constitute

  notice

  
	

  to SSP) to:

  	

  Rutan & Tucker, LLP

  
	

   

  	

  611 Anton Boulevard,

  Suite 1400

  
	

   

  	

  Costa Mesa, California

  92626

  
	

   

  	

  Attention: Gregg Amber,

  Esq.

  
	

   

  	

  Telecopier: (714)

  546-9035

  
	

   

  	

  Telephone: (714)

  641-5100

  
	

   

  	

   

  
	

  If to BIZ:

  	

  BIZ Interactive Zone,

  Inc.

  
	

   

  	

  17861 Cartwright Road

  
	

   

  	

  Irvine, California

  92614

  
	

   

  	

  Attention: Chief

  Financial Officer

  
	

   

  	

  Telecopier: (949)

  851-8588

  
	

   

  	

  Telephone: (949)

  851-1085

  
	

   

  	

   

  
	

  with a copy (which copy

  
	

  shall not

  constitute notice

  
	

  to BIZ) to:

  	

  Rutan &

  Tucker, LLP

  
	

   

  	

  611 Anton

  Boulevard, Suite 1400

  
	

   

  	

  Costa Mesa,

  California 92626

  
	

   

  	

  Attention: Gregg

  Amber, Esq.

  
	

   

  	

  Telecopier:

  (714) 546-9035

  
	

   

  	

  Telephone: (714)

  641-5100

  
	

   

  	

   

  
	

  If to Wave:

  	

  Wave Systems

  Corp.

  
	

   

  	

  480 Pleasant

  Street

  
	

   

  	

  Lee, Massachusetts

  01238

  
	

   

  	

  Attention:

  President

  
	

   

  	

  Telecopier:

  (413) 243-0045

  
	

   

  	

  Telephone: (413)

  243-7011

  
	

   

  	

   

  
	

  with a copy

  (which copy

  
	

  shall not

  constitute notice

  
	

  to Wave) to:

  	

  Bingham Dana

  
	

   

  	

  399 Park Avenue

  
	

   

  	

  New York, New

  York 10022

  
	

   

  	

  Attention: Neil

  Townsend

  
	

   

  	

  Telecopier:

  (212) 752-5378

  
	

   

  	

  Telephone: (212)

  318-7722

  

 

15

 

Any party hereto may from time to time change its

address for notices by giving at least ten (10) days’ written notice of such

changed address to the other parties hereto.

 

16

 

28.           At such time as this Agreement has

been signed by all of the parties to this Agreement and executed copies of this

Agreement with all of the parties’ signatures have been delivered to each of

the other parties and/or their counsel, this Agreement shall be deemed to be

effective as of August 31, 2002 (the “Effective Date”).

 

	

  Dated: As of

  September 30, 2002

  	

  SSP SOLUTIONS,

  INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Thomas E.

  Schiff, Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated: As of

  September 30, 2002

  	

  BIZ INTERACTIVE

  ZONE, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Thomas E.

  Schiff, Chief Financial Officer

  
	

   

  	

   

  
	

   

  	

   

  
	

  Dated: As of

  September 30, 2002

  	

  WAVE SYSTEMS

  CORP.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Steven Sprague,

  President and

  
	

   

  	

   

  	

  Chief Executive

  Officer

  
					

 

17

 

	

  APPROVED AS

  TO FORM:

  
	

   

  
	

  RUTAN &

  TUCKER, LLP

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Gregg Amber

  
	

  Attorneys for

  SSP Solutions, Inc. and BIZ Interactive Zone, Inc.

  
	

   

  
	

   

  
	

  BINGHAM DANA

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  	

  Neil Townsend

  
	

  Attorneys for

  Wave Systems Corp.

  
				

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]