Document:

Exhibit 10.2

 

 

UTSTARCOM,
INC.

 

COMMON
STOCK PURCHASE AGREEMENT

 

February
1, 2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Purchase and Sale of
  the Purchase Shares

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Purchase and Sale

  	
  6

  
	
   

  	
  2.2

  	
  Closing

  	
  6

  
	
   

  	
  2.3

  	
  Deliveries

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations and
  Warranties of the Company

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Organization; Good
  Standing; Qualification

  	
  7

  
	
   

  	
  3.2

  	
  Capitalization

  	
  7

  
	
   

  	
  3.3

  	
  Authorization;
  Non-Contravention

  	
  8

  
	
   

  	
  3.4

  	
  SEC Filings; Financial
  Statements; Internal Controls

  	
  8

  
	
   

  	
  3.5

  	
  Governmental Consents

  	
  10

  
	
   

  	
  3.6

  	
  Brokers or Finders

  	
  10

  
	
   

  	
  3.7

  	
  Nasdaq

  	
  10

  
	
   

  	
  3.8

  	
  Valid Issuance of the
  Purchase Shares

  	
  10

  
	
   

  	
  3.9

  	
  Offering

  	
  10

  
	
   

  	
  3.10

  	
  No Material Adverse
  Effect

  	
  11

  
	
   

  	
  3.11

  	
  Intellectual Property

  	
  11

  
	
   

  	
  3.12

  	
  Compliance; Permits

  	
  11

  
	
   

  	
  3.13

  	
  Litigation

  	
  12

  
	
   

  	
  3.14

  	
  Ownership of Assets

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations,
  Warranties and Covenants of the Purchasers

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Authorization

  	
  12

  
	
   

  	
  4.2

  	
  Purchase Entirely for
  Own Account

  	
  12

  
	
   

  	
  4.3

  	
  Receipt of Information

  	
  13

  
	
   

  	
  4.4

  	
  Accredited Investor

  	
  13

  
	
   

  	
  4.5

  	
  Investment Experience

  	
  13

  
	
   

  	
  4.6

  	
  Rule 144

  	
  13

  
	
   

  	
  4.7

  	
  Reliance on Purchaser’s
  Representations

  	
  13

  
	
   

  	
  4.8

  	
  Legends

  	
  14

  
	
   

  	
  4.9

  	
  Investment
  Representations, Warranties and Covenants by Non-U.S. Persons

  	
  15

  
	
   

  	
  4.10

  	
  Governmental Consents

  	
  17

  
	
   

  	
  4.11

  	
  Financing

  	
  17

  
	
   

  	
  4.12

  	
  No Other
  Representations and Warranties

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Conditions Precedent to
  Closing

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Conditions to the
  Obligation of the Purchasers to Consummate the Closing

  	
  18

  
	
   

  	
  5.2

  	
  Conditions to the
  Obligation of the Company to Consummate the Closing

  	
  19

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Miscellaneous Provisions

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1 

  	
  Public Statements or Releases

  	
  19

  
	
   

  	
  6.2 

  	
  Further Assurances; Exclusivity and Superior Offer;
  Covenants

  	
  20

  
	
   

  	
  6.3 

  	
  Rights Cumulative

  	
  22

  
	
   

  	
  6.4 

  	
  Notices

  	
  23

  
	
   

  	
  6.5 

  	
  Captions

  	
  23

  
	
   

  	
  6.6 

  	
  Severability

  	
  23

  
	
   

  	
  6.7 

  	
  Governing Law; Arbitration; Injunctive Relief

  	
  24

  
	
   

  	
  6.8 

  	
  Amendment

  	
  24

  
	
   

  	
  6.9 

  	
  Expenses

  	
  24

  
	
   

  	
  6.10 

  	
  Assignment

  	
  24

  
	
   

  	
  6.11 

  	
  Survival

  	
  25

  
	
   

  	
  6.12 

  	
  Entire Agreement

  	
  25

  
	
   

  	
  6.13 

  	
  Counterparts; Reproductions

  	
  25

  
	
   

  	
  6.14 

  	
  Termination

  	
  25

  

 

ii

 

Schedules

 

	
  Schedule 4.10

  	
  —

  	
  PRC Approvals

  
	
  Schedule A

  	
  —

  	
  Schedule of Purchasers

  

 

Exhibits

 

	
  Exhibit A

  	
  —

  	
  Stockholders Rights Agreement

  

 

iii

 

COMMON
STOCK PURCHASE AGREEMENT

 

This COMMON STOCK
PURCHASE AGREEMENT (the “Agreement”)
is made as of February 1, 2010 by and among UTStarcom, Inc., a Delaware
corporation (the “Company”), and
the purchasers listed on Schedule A hereto (the “Schedule of Purchasers”), each of which is
herein referred to as a “Purchaser”
and collectively, the “Purchasers.”

 

WHEREAS, the parties
desire that the Purchasers make an equity investment in the Company pursuant to
the terms and conditions of this Agreement;

 

WHEREAS, the Company and
the Purchasers are executing and delivering this Agreement (i) in reliance
upon the exemption from securities registration afforded by the rules and
regulations as promulgated by the SEC (as defined below) under Section 4(2) of
the Securities Act (as defined below), or (ii) pursuant to Regulation S
promulgated under the Securities Act (“Regulation
S”); and

 

WHEREAS, the shares of
Common Stock (as defined below) issued to the Purchasers pursuant to this
Agreement shall have the registration and other rights as evidenced by the
Stockholders Rights Agreement in the form attached hereto as Exhibit A,
dated as of the date hereof and entered into among the Company and the
Purchasers (the “Stockholders Rights
Agreement”).

 

NOW THEREFORE, in consideration
of the mutual agreements, representations, warranties and covenants herein
contained, as well as other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, and intending to be
legally bound hereby, the parties hereto agree as follows:

 

1.             Definitions.

 

1.1           As used in this Agreement, the following
terms shall have the following respective meanings:

 

(a)           “CFIUS”
shall mean the Committee on Foreign Investment in the United States.

 

(b)           “Common
Stock” shall mean the common stock of the Company, par value
US$0.00125 per share.

 

(c)           “Company
Intellectual Property” shall mean all of the Intellectual Property
owned by the Company or any of its Subsidiaries.

 

(d)           “Company
Intellectual Property Agreements” shall mean the contracts in effect
as of the date of this Agreement: (i) under which the Company or any of
its Subsidiaries is granted a right to any third party’s Intellectual Property
that is material to the operation of the Company’s business as a whole, other
than licenses and related services agreements for commercially available
technology or Intellectual Property, or (ii) under which the Company or
any of its Subsidiaries has licensed to third parties rights under any material
Company Intellectual Property, other than customer, developer and reseller
licenses and other agreements entered into in

 

 

the ordinary course of business or in connection with
the sale or licensing of Company products or services.

 

(e)           “Company
Options” shall mean options to purchase Common Stock under any of
the Company Options Plans.

 

(f)            “Company
Purchase Plan” shall mean the Company Employee Stock Purchase Plan.

 

(g)           “Company
Restricted Stock Unit” shall mean restricted stock units,
performance units, performance shares and restricted shares of Common Stock
under any of the Company Option Plans.

 

(h)           “Company
Stock Option Plan” shall mean each stock option plan, stock award
plan, stock appreciation right plan, phantom stock plan, stock option, other
equity or equity-based compensation plan, equity or other equity based award to
any employee, whether payable in cash, shares or otherwise, (to the extent not
issued pursuant to any of the foregoing plans) or other plan or contract of any
nature with any employee pursuant to which any stock, option, warrant or other
right to purchase or acquire capital stock of the Company or right to payment
based on the value of Company capital stock has been granted or otherwise
issued, but, in any case excluding the Company Purchase Plans.

 

(i)            “Exchange
Act” shall mean the U.S. Securities Exchange Act of 1934, as
amended.

 

(j)            “GAAP”
shall mean United States generally accepted accounting principles.

 

(k)           “Governmental
Entity” shall mean any national, provincial, state, municipal, local
government, any instrumentality, subdivision, court, administrative agency or
commission or other governmental authority or instrumentality, or any
quasi-governmental or private body exercising any regulatory, taxing, importing
or other governmental or quasi-governmental authority.

 

(l)            “Intellectual
Property” shall mean the rights associated with or arising under any
of the following anywhere in the world: (i) patents and applications
therefor; (ii) copyrights, copyrights registrations and applications
therefor, and all other rights corresponding rights in works of authorship,
however denominated; (iii) rights in industrial designs and any
registrations and applications therefor; (iv) trademark rights and
corresponding rights in trade names, logos and service marks, trademark or
service mark, and registrations and applications therefor; (v) trade
secrets rights and corresponding rights in confidential business and technical
information and know-how (“Trade Secrets”);
and (vi) any similar or equivalent rights to any of the foregoing anywhere
in the world (as applicable).

 

(m)          “Knowledge”
shall mean, with respect to a party hereto, with respect to any matter in
question, that any of the Chief Executive Officer, Chief Financial Officer or
General

 

2

 

Counsel of such party, has actual knowledge (and not
constructive or imputed knowledge) of such matter.

 

(n)           “Legal
Requirements” shall mean any national, provincial, state, municipal,
local or other law, statute, constitution, principle of common law, resolution,
ordinance, code, order, edict, decree, rule, regulation, ruling or requirement
issued, enacted, adopted, promulgated, implemented or otherwise put into effect
by or under the authority of any Governmental Entity.

 

(o)           “Lien”
shall mean any pledge, claim, lien, charge, encumbrance, option and security
interest of any kind or nature whatsoever.

 

(p)           “Material
Adverse Effect” shall mean, when used in connection with an entity,
any change, event, violation, inaccuracy, circumstance or effect (any such
item, an “Effect”), that is
materially adverse to the business, assets, financial condition or results of
operations of such entity taken as a whole with its Subsidiaries; provided,
however, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, a Material Adverse Effect
on any entity:

 

(i)         any Effect resulting from compliance with
the terms and conditions of this Agreement;

 

(ii)        any change in such entity’s stock price
or trading volume;

 

(iii)       any Effect resulting from any failure to
meet any published analyst estimates or expectations of revenue, earnings or
other financial performance or results of operations for any period, in and of
itself, or any failure to meet internal budgets, plans or forecasts of its
revenues, earnings or other financial performance or results of operations, in
and of itself (it being understood that the facts or occurrences giving rise or
contributing to such failure that are not otherwise excluded from the
definition of a Material Adverse Effect may be deemed to constitute, or be
taken into account in determining whether there has been, is or would be a
Material Adverse Effect);

 

(iv)       any Effect that results from changes
affecting any of the industries in which such entity operates generally or the
economies of the United States or the PRC, or any other region in the world
(only to the extent such Effect does not have a substantially disproportionate
impact on the entity relative to other companies of comparable size or larger
operating in the same industries and geographies in which the entity operates);

 

(v)        any Effect that results from changes in
political conditions in the United States or the PRC, or any other region in
the world (only to the extent such Effect does not have a substantially
disproportionate impact on the entity relative to other companies of comparable
size or larger operating in the same industries and geographies in the world);

 

(vi)       any Effect that results from an act of
war, sabotage or terrorism (including any escalation or general worsening of
any such acts of war, sabotage or terrorism) in the

 

3

 

United States or the PRC,
or any other region in the world (only to the extent such Effect does not have
a substantially disproportionate impact on the entity relative to other
companies of comparable size or larger operating in the same industries and
geographies in the world);

 

(vii)      any Effect that results from an
earthquake, hurricane, tsunami, tornado, flood, mudslide, wild fire or other
natural disaster, weather condition or other force majeure event in the United
States or the PRC, or any other region in the world (only to the extent such
Effect does not have a substantially disproportionate impact on the entity
relative to other companies of comparable size or larger operating in the same
industries and geographies in the world);

 

(viii)     any Effect that results from changes
affecting general worldwide economic or capital market conditions;

 

(ix)       the availability or cost of equity, debt
or other financing;

 

(x)        any Effect related to the announcement or
pendency of this Agreement and actions announced concurrent with the
announcement of this Agreement, including (A) actions by competitors,
(B) actions taken by or losses of executives, employees, customer and
suppliers, (C) delays or cancellations of orders for products or services,
or (D) any litigation;

 

(xi)       any Effect arising out of or related to
any legal claims or other proceedings made by any of the Company’s stockholders
arising out of or related to this Agreement;

 

(xii)      any action required to be taken under
applicable Legal Requirements;

 

(xiii)     any changes in applicable Legal
Requirements or in GAAP (or in the interpretations thereof); or

 

(xiv)     any matters expressly set forth in the
Disclosure Schedule.

 

(q)           “MOFCOM”
shall mean the Ministry of Commerce of the PRC.

 

(r)            “Nasdaq”
shall mean the Nasdaq Global Select Market.

 

(s)           “NDRC”
shall mean the National Development and Reform Commission of the PRC.

 

(t)            “Permits”
shall mean all permits, licenses, variances, exemptions, orders and approvals
from Governmental Entities.

 

(u)           “Permitted
Liens” shall mean (i) statutory liens for Taxes that are not
yet due and payable, (ii) statutory liens to secure obligations to
landlords, lessors or renters under leases or rental agreements,
(iii) deposits or pledges made in connection with, or to secure payment
of, workers’ compensation, unemployment insurance or similar programs mandated
by applicable Law, (iv) statutory liens in favor of carriers,
warehousemen, mechanics and materialmen, to secure claims for labor, materials
or supplies and other like liens, (v) liens in the ordinary course of

 

4

 

business, and (vi) liens in favor of customs and
revenue authorities arising as a matter of an applicable Legal Requirement to
secure payments of customs duties in connection with the importation of goods.

 

(v)           “Person” shall mean any individual, corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity.

 

(w)          “PRC” shall mean the People’s Republic of
China.

 

(x)            “SAFE” shall mean the State Administration
of Foreign Exchange of the PRC.

 

(y)           “SEC” shall mean the U.S. Securities and
Exchange Commission.

 

(z)            “Securities Act” shall mean the Securities
Act of 1933, as amended.

 

(aa)         “Subsidiaries” shall mean, when used with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, at least a majority of the securities or other
interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries.

 

1.2           The following
capitalized terms shall have the respective meanings ascribed thereto in the
respective sections of this Agreement set forth opposite each of the
capitalized terms below:

 

	
  Term

  	
   

  	
  Section where
  Defined

  
	
   

  	
   

  	
   

  
	
  Accredited Investor

  	
   

  	
  4.4

  
	
  Acquisition Proposal

  	
   

  	
  6.2(b)(ii)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  BEIID SPA

  	
   

  	
  3.2(c)

  
	
  Board

  	
   

  	
  3.4(c)

  
	
  Closing

  	
   

  	
  2.2

  
	
  Commitment Letter

  	
   

  	
  4.11(a)

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company Balance Sheet

  	
   

  	
  3.4(b)

  
	
  Company Financials

  	
   

  	
  3.4(b)

  
	
  Company Permits

  	
   

  	
  3.12(b)

  
	
  Company SEC Reports

  	
   

  	
  3.4(a)

  
	
  correspondence

  	
   

  	
  6.4(a)

  
	
  Disclosure Schedule

  	
   

  	
  3

  
	
  Exchange Act

  	
   

  	
  6.2(b)(i)

  
	
  Financing

  	
   

  	
  4.11(a)

  

 

5

 

	
  Term

  	
   

  	
  Section where
  Defined

  
	
   

  	
   

  	
   

  
	
  Irreparable Breach

  	
   

  	
  6.7(c)

  
	
  Non-U.S. Person

  	
   

  	
  4.9(d)

  
	
  PRC Approvals

  	
   

  	
  4.10

  
	
  Preferred Stock

  	
   

  	
  3.2(a)

  
	
  Purchase Shares

  	
   

  	
  2.1

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Purchasers

  	
   

  	
  Preamble

  
	
  Ram Max Parent

  	
   

  	
  4.11(a)

  
	
  Ram Max Purchaser

  	
   

  	
  4.11(a)

  
	
  Regulation S

  	
   

  	
  Recitals

  
	
  Restricted Period

  	
   

  	
  4.9(b)(iv)

  
	
  Schedule of Purchasers

  	
   

  	
  Preamble

  
	
  Stockholders Rights
  Agreement

  	
   

  	
  Recitals

  
	
  Superior Offer

  	
   

  	
  6.2(b)(ii)(3)

  
	
  Trade Secrets

  	
   

  	
  1(l)

  
	
  U.S. Person

  	
   

  	
  4.9(c)

  
	
  United States

  	
   

  	
  4.9(c)

  

 

2.             Purchase and Sale
of the Purchase Shares.

 

2.1           Purchase and Sale. 
At the Closing, the Company hereby agrees to sell to the Purchasers, and the
Purchasers hereby agree to purchase, for a purchase price of US$2.20 per share,
shares of Common Stock in the amounts listed on the Schedule of Purchasers (the
“Purchase Shares”).

 

2.2           Closing.  As soon as practicable following satisfaction
or waiver (to the extent permitted hereunder) of all the conditions precedent
set forth in Section 5.1 and Section 5.2 below (other than those
conditions that by their terms are to be satisfied at the Closing, but subject
to the satisfaction or waiver (to the extent permitted hereunder) of such
conditions), at the closing (the “Closing”),
the Company shall issue and sell the Purchase Shares to the Purchasers as
indicated on the Schedule of Purchasers. 
The Closing shall take place remotely through the exchange of signature pages and
documents electronically or by facsimile.

 

2.3           Deliveries.  At the Closing, each Purchaser shall pay to
the Company the purchase price for the Purchase Shares it is purchasing as
indicated in the Schedule of Purchasers. 
Such payments shall be made by wire transfer of U.S Dollars to a bank
account of the Company in accordance with the Company’s wire instructions.  The Company shall, at the Closing, issue and
deliver to each Purchaser a certificate representing the Purchased Shares being
purchased by such Purchaser at the Closing, as set forth opposite such
Purchaser’s name in the Schedule of Purchasers, registered in the name of such
Purchaser.

 

3.             Representations
and Warranties of the Company.  Except as set forth in (i) the
Company SEC Reports (excluding disclosures of non-specific risks faced by the
Company included in any forward-looking statement, disclaimer, risk factor
disclosure or other similarly non-specific statements that are similarly
predictive or forward-looking in nature; provided, however that (1) any

 

6

 

historical facts related to the Company and
(2) any specific exposure or effect faced by the Company emanating from
specifically disclosed facts contained within any such disclosure shall be
deemed disclosed for purposes of the representations and warranties set forth
in this Section 3), and (ii) in the Disclosure Schedule delivered in
connection with this Agreement (the “Disclosure
Schedule”), which qualify the following representations and
warranties in their entirety, the Company hereby represents and warrants to the
Purchasers as follows:

 

3.1           Organization; Good
Standing; Qualification.  The Company
and each of its Subsidiaries is a corporation or other organization duly
organized, validly existing and in good standing (when such concept is
applicable) under the laws of the jurisdiction of its incorporation or organization,
has the requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.  The Company is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to be so
qualified and in good standing, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.

 

3.2           Capitalization.

 

(a)           Capital Stock.  The authorized capital stock of the Company
consists of 750,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $0.00125 per share (“Preferred Stock”).  At
the close of business on December 31, 2009: (i) 130,094,989 shares of
Common Stock were issued and outstanding; (ii) no shares of Common Stock
were issued and held by the Company in its treasury; and (iii) no shares
of Preferred Stock were issued and outstanding. 
All of the outstanding shares of capital stock of Company are duly
authorized and validly issued, fully paid and nonassessable and not subject to
any preemptive rights.

 

(b)           Stock Options; Restricted Stock Units.  As of the close of business on December 31,
2009: (i) 9,779,242 shares of Common Stock are subject to issuance or have
been issued and subject to release pursuant to Company Options and Company
Restricted Stock Units; and (ii) 906,440 shares of Common Stock are
reserved for future issuance under the Company Purchase Plan.  All shares of Common Stock subject to
issuance under the Company Stock Option Plans and the Company Purchase Plan,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, would be duly authorized and validly issued, fully
paid and nonassessable.  Except for
outstanding Company Options and Company Restricted Stock Units, there are no
outstanding or authorized stock appreciation, phantom stock, profit participation
or other similar rights with respect to Company.

 

(c)           Other Securities.  Except as otherwise set forth in this Section 3.2
and pursuant to a Common Stock Purchase Agreement between the Company and
Beijing E-town International Investment and Development Co., Ltd. dated as of
the date hereof (the “BEIID SPA”),
as of December 31, 2009, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries is a party or by which any
of them is bound obligating the Company or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of the Company or any of its
Subsidiaries, or obligating the

 

7

 

Company or any of its Subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. All outstanding shares of
Common Stock, all outstanding Company Options, all Company Restricted Stock
Units and all outstanding shares of capital stock of each Subsidiary of the
Company have been issued and granted in compliance in all material respects with
all applicable securities laws and other material Legal Requirements.

 

3.3           Authorization;
Non-Contravention.

 

(a)           Authorization.  All corporate action on the part of the
Company necessary for the authorization, execution and delivery of this
Agreement and the Stockholders Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance, sale and delivery of the Purchase Shares has been taken prior to the
date hereof, and each of this Agreement and the Stockholders Rights Agreement,
when validly executed by each of the Purchasers, constitutes a valid and
legally binding obligation of the Company, enforceable in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Stockholders Rights Agreement may be limited by
applicable federal or state securities laws.

 

(b)           Non-Contravention.  The execution, delivery and performance of
this Agreement and the Stockholders Rights Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Purchase Shares) will not (i) result
in a violation of the Company’s Certificate of Incorporation or Bylaws (each as
amended to date), (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any Subsidiary is a party, or (iii) subject to the consents set forth in Section 3.5,
result in a violation of any Legal Requirement applicable to the Company or by
which any property or asset of the Company or any Subsidiary is bound or
affected, except in the case of clauses (ii) and (iii) above, for
such conflicts, defaults, rights or violations which would not reasonably be
expected to result in a Material Adverse Effect on the Company.

 

3.4           SEC Filings;
Financial Statements; Internal Controls.

 

(a)           SEC Filings.  As of the date hereof, the Company has filed
all required registration statements, prospectuses, reports, schedules, forms,
statements and other documents (including exhibits and all other information
incorporated by reference) required to be filed by it with the SEC since December 31,
2007.  All such registration statements,
prospectuses, reports, schedules, forms, statements and other documents in the
form filed with the SEC have been made available to the Purchasers or are
publicly available in the Interactive Data Electronic Applications database of
the SEC.  All such required registration
statements, prospectuses, reports, schedules, forms, statements and other
documents, as amended, are referred to herein as the “Company SEC Reports.”  As of their respective dates (or if
subsequently amended or supplemented, on the date of

 

8

 

such amendment or supplement), the Company SEC Reports
(i) were prepared in accordance and complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Company SEC Reports, and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  None of the Company’s Subsidiaries is
required to file any forms, reports or other documents with the SEC.  No executive officer of the Company has
failed to make the certifications required of him or her under Section 302
or 906 of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations promulgated thereunder, with respect to any Company SEC Report,
except as disclosed in certifications filed with the Company SEC Reports.  Neither the Company nor any of its executive
officers has received notice from any Governmental Entity challenging or
questioning the accuracy, completeness, form or manner of filing of such
certifications.

 

(b)           Financial Statements.  Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the “Company Financials”):
(i) complied in all material respects with the published rules and
regulations of the SEC with respect thereto; (ii) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, for normal and recurring year-end
adjustments and as may be permitted by the SEC on Form 10-Q, 8-K or any
successor or like form under the Exchange Act); and (iii) fairly presented
in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as at the respective dates thereof and the
consolidated results of the Company’s operations and cash flows for the periods
indicated.  The balance sheet of the
Company as of September 30, 2009 contained in the Company SEC Reports is
hereinafter referred to as the “Company
Balance Sheet.”  Except as
disclosed in the Company Financials, since the date of the Company Balance
Sheet and through the date hereof, neither the Company nor any of its
Subsidiaries has any liabilities required under GAAP to be set forth on a
consolidated balance sheet which, individually or in the aggregate, would have
a Material Adverse Effect on the Company, except for (A) liabilities set
forth, recognized or disclosed on the Company Balance Sheet, (B) liabilities
incurred since the date of the Company Balance Sheet in the ordinary course of business,
and (C) liabilities incurred pursuant to this Agreement.

 

(c)           Internal Controls.  The Company has established and maintains,
adheres to and enforces a system of internal accounting controls which are
effective in providing reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements in accordance
with GAAP, including policies and procedures that (i) require the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company and its
Subsidiaries, (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of the Company and its
Subsidiaries are being made only in accordance with appropriate authorizations
of management and the board of directors of the Company (the “Board”), and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the assets of the Company and its Subsidiaries.  Neither the Company nor, to the Knowledge of
the Company, the Company’s independent auditors, has identified or been made
aware of (A) any significant deficiency or material

 

9

 

weakness, in each case which has not been subsequently
remediated, in the system of internal accounting controls utilized by the
Company and its Subsidiaries, taken as a whole, or (B) any fraud that
involves the Company’s management or other employees who have a role in the
preparation of financial statements or the internal accounting controls
utilized by the Company.

 

3.5           Governmental
Consents.  No consent, approval,
order or authorization of, or registration, declaration or filing with any
Governmental Entity is required to be obtained or made by the Company in
connection with the execution and delivery of this Agreement and the
transactions contemplated hereby, except for: (i) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable U.S. federal and state securities; (ii) such
clearance and approvals as may be required from CFIUS with respect to the
transaction, such clearance and approval obtained as of the date hereof; (iii) such
filings, registrations and qualifications as may be required by Nasdaq in
connection with the issuance of the Purchase Shares; and (iv) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made (A) would not reasonably be expected have a Material
Adverse Effect on the Company, or (B) would not prevent consummation of
the transactions contemplated hereunder or otherwise substantially impair the parties
hereto from performing their respective obligations hereunder.

 

3.6           Brokers or Finders. 
The Company has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders’ fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby other than with respect to arrangements with Merrill Lynch,
Pierce, Fenner & Smith Incorporated relating to services provided in
connection with the financing of the Company consummated by this Agreement.

 

3.7           Nasdaq. 
The Common Stock is listed on Nasdaq, there are no proceedings to revoke or
suspend such listing and the Company has not received any notice from Nasdaq,
nor does the Company have Knowledge of any reason that the Company does not
meet the listing or maintenance requirements for continuing listing on such
exchange.

 

3.8           Valid Issuance of
the Purchase Shares.  The Purchase Shares, when issued, sold and
delivered in accordance with the terms of this Agreement and upon payment of
the purchase price therefor, will be duly authorized and validly issued, fully
paid and nonassessable, and free and clear of all Liens (other than
restrictions on transfer imposed by U.S. law (both state and federal) or other
applicable securities laws and as set forth in the Stockholders Rights
Agreement).

 

3.9           Offering. 
Provided that the representations and warranties made by the Purchasers herein
are complete, true and accurate, then the offer, issuance and sale of the
Purchase Shares pursuant hereto will be exempt from the registration
requirements of Section 5 of the Securities Act, and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
U.S. state securities laws.  Neither the
Company nor any agent on its behalf has solicited any offers to sell or has
offered to sell all or any part of the Purchase Shares to any person or persons
so as to bring the sale of such securities within the registration and/or
qualification provisions of the Securities Act or any applicable U.S. state
securities laws.

 

10

 

3.10         No Material Adverse
Effect.  Since September 30,
2009, no event or circumstance has occurred that, individually or in the
aggregate, has had or could reasonably be expected to have a Material Adverse
Effect on the Company.

 

3.11         Intellectual Property.

 

(a)               The Company
Intellectual Property is owned by the Company or its Subsidiaries free and
clear of Liens, other than (i) Permitted Liens, (ii) encumbrances,
restriction or other obligations arising under any6 of the Company Intellectual
Property Agreements, or (iii) Liens that would not have a Material Adverse
Effect on the Company.

 

(b)               The Company and
each of its Subsidiaries has taken reasonable steps consistent with applicable
industry practice to protect and preserve the confidentiality of material
confidential information that they wish to, or are obligated by third parties to,
protect as Trade Secrets, and, to the Knowledge of the Company, there is no
misappropriation from the Company of such Trade Secrets by any Person, except
where such misappropriation would not have a Material Adverse Effect on the
Company.

 

(c)               To the Knowledge of
the Company, none of the Company or any of its Subsidiaries or any of its or
their current products or services is infringing upon or otherwise violating
the Intellectual Property of any third party, except where such infringement
would not have a Material Adverse Effect on the Company.

 

(d)               As of the date of
this Agreement, the Company has not received notice of any suit, claim, action,
investigation or proceeding made, conducted or brought by a third party that
has been served upon or, to the Knowledge of the Company, filed or threatened
in writing with respect to any alleged infringement or other violation in any
material respect by the Company or any of its Subsidiaries or any of its or
their current products or services or other operation of the Company’s or its
Subsidiaries’ business of the Intellectual Property of such third party.  As of the date of this Agreement, to the
Knowledge of the Company, there is no pending or threatened claim challenging the
validity or enforceability of, or contesting the Company’s or any of its
Subsidiaries’ rights with respect to, any of the material Company Intellectual
Property.

 

(e)               The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in (i) the Company or its Subsidiaries
granting to any third party any rights or licenses to any Company Intellectual
Property, (ii) any right of termination or cancellation under any Company
Intellectual Property Agreement, or (iii) the imposition of any Lien on
any Company Intellectual Property, except where any of the foregoing (in
clauses (i) through (iii)) would not have a Company Material Adverse
Effect.

 

3.12         Compliance; Permits.

 

(a)               Compliance.  Neither the Company nor any of its
Subsidiaries is in conflict with, or in default or in violation of any Legal
Requirement applicable to the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries or any of their respective businesses or
properties is bound or affected, except for conflicts, violations and defaults
that would not have a Material Adverse Effect on the Company.  As of the date hereof, no material

 

11

 

investigation or review by any Governmental Entity is
pending or, to the Knowledge of the Company, has been threatened in a writing
delivered to the Company or any of its Subsidiaries, against the Company or any
of its Subsidiaries.  There is no
material judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries which has or would reasonably be expected to have a
Material Adverse Effect on the Company.

 

(b)               Permits. 
The Company and its Subsidiaries hold, to the extent legally required,
all Permits that are required for the operation of the business of the Company,
as currently conducted, the failure to hold which would reasonably be expected
to have a Material Adverse Effect on the Company (collectively, “Company  Permits”).  As of the date hereof, no suspension or
cancellation of any of the Company Permits is pending or, to the Knowledge of
Company, threatened.  The Company and its
Subsidiaries are in compliance in all material respects with the terms of the
Company Permits.

 

3.13         Litigation. 
As of the date hereof, there are no claims, suits, actions or proceedings or,
to the Knowledge of the Company, pending or overtly threatened in writing
against the Company or any of its Subsidiaries, before any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
that seeks to restrain or enjoin the consummation of the transactions
contemplated hereby or which would reasonably be expected, either singularly or
in the aggregate with all such claims, actions or proceedings, to have a
Material Adverse Effect on the Company.

 

3.14         Ownership of Assets.  Other than Permitted Liens and other than
with respect to any Company Intellectual Property, to the Knowledge of the
Company, there are no Liens over or affecting the whole or any part of the
material assets of the Company.

 

4.             Representations,
Warranties and Covenants of the Purchasers.  Each of the Purchasers,
severally and not jointly, represents and warrants to the Company as follows:

 

4.1           Authorization. 
All corporate action on the part of the Purchaser necessary for the
authorization, execution and delivery of this Agreement and the Stockholders
Rights Agreement, the performance of all obligations of the Purchaser hereunder
and thereunder has been taken prior to the date hereof, and each of this
Agreement and the Stockholders Rights Agreement, when validly executed by the
Company, constitutes a valid and legally binding obligation of the Purchaser,
enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Stockholders Rights Agreement may
be limited by applicable federal or state securities laws.

 

4.2           Purchase Entirely
for Own Account.  The Purchase Shares to be purchased by the Purchaser
will be acquired for investment for the Purchaser’s own account, and not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same.  The

 

12

 

Purchaser is not a party
to any contract, understanding, agreement or arrangement with any person to
sell, transfer or otherwise dispose of any of the Purchase Shares purchased by
it.

 

4.3           Receipt of
Information.  The Purchaser has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
issuance and sale of the Purchase Shares and the business, properties,
prospects and financial condition of the Company and obtain additional
information (to the extent the Company possessed such information or could
acquire such information without unreasonable effort or expense) necessary to
verify the accuracy of any information furnished to it or to which it had
access.  The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 3
of this Agreement or the right of the Purchaser to rely thereon.  The Purchaser acknowledges and understands
that no Person other than the Company has been authorized to give any
representations not contained in this Agreement in connection with the issuance
and sale of the Purchase Shares and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Company.

 

4.4           Accredited Investor. 
Unless otherwise indicated on the Schedule of Purchasers, (a) the
Purchaser is an “accredited investor” as such term is defined in Rule 501
of Regulation D promulgated under the Securities Act (an “Accredited Investor)”, or (b) if the
Purchaser was formed for the specific purpose of acquiring the Purchaser
Shares, then each shareholder or member of such Purchaser is an Accredited
Investor.

 

4.5           Investment
Experience.  The Purchaser is experienced in evaluating and investing
in securities of companies and acknowledges that it is able to fend for itself,
can bear the economic risk of its investment, and has such knowledge and
experience in financial and business matters that is capable of evaluating the
merits and risks of the investment in the Purchase Shares.

 

4.6           Rule 144. 
The Purchaser understands that the Purchase Shares may not be sold, transferred
or otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering the Purchase Shares or on an available exemption from
registration under the Securities Act, the Purchase Shares must be held
indefinitely.  In particular, the
Purchaser is aware that the Purchase Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that rule are
met.  Among the conditions for use of Rule 144
is the availability of current information to the public about the Company.

 

4.7           Reliance on
Purchaser’s Representations.  The Purchaser understands that the
Purchase Shares being offered and sold to it will not be registered under the
Securities Act or any other applicable securities laws on the ground that such
issuance will be exempt from the registration requirements of U.S. federal,
state and other applicable securities laws, and that the Company is relying
upon the truth and accuracy of, and the Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Purchaser set forth herein in order to determine the availability of such
exemptions and the eligibility of the Purchaser to acquire the Purchase Shares.

 

13

 

4.8           Legends. 
Each certificate representing any of the Purchase Shares shall be endorsed with
the applicable legend set forth below and any other legends required by
applicable law, and the Purchaser covenants that, except to the extent such
restrictions are waived in writing by the Company, it shall not transfer the
shares represented by any such certificate without complying with the
restrictions on transfer described in this Agreement and the legends endorsed
on such certificate:

 

THE SHARES OF COMMON STOCK REPRESENTED BY
THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNLESS (I) THERE
IS AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH OFFER, SALE OR TRANSFER OR
(II) THERE IS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO UTSTARCOM,
INC., THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAWS FOR SUCH OFFER, SALE OR TRANSFER IS
AVAILABLE. HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY NOT
BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.  THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR
ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION
OR ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE.

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE
SHARES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH
THE SECURITIES ACT. THIS CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS
TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR
ANY OTHER TRANSFER OF ANY INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE.

 

14

 

4.9           Investment
Representations, Warranties and Covenants by Non-U.S. Persons.  Each
Purchaser which has indicated that it is not an Accredited Investor on the
Schedule of Purchasers hereby represents and warrants to the Company as
follows:

 

(a)           This
Agreement is made by the Company with the Purchaser, who is a Non-U.S. Person,
in reliance upon such Non-U.S. Person’s representations, warranties and
covenants made in this Section 4.9.

 

(b)           Such Non-U.S. Person has been advised
and acknowledges that:

 

(i)        the Purchase Shares have not been
registered under the Securities Act, the securities laws of any state of the
United States or the securities laws of any other country;

 

(ii)       in issuing and selling the Purchase
Shares to such Non-U.S. Person pursuant hereto, the Company is relying upon the
“safe harbor” provided by Regulation S and/or on Section 4(2) under
the Securities Act;

 

(iii)      it is a condition to the availability of
the Regulation S “safe harbor” that the Purchase Shares not be offered or
sold in the United States or to a U.S. Person until the expiration of a
one-year “distribution compliance period” (or a six-month “distribution
compliance period,” if the issuer is a “reporting issuer,” as defined in
Regulation S) following the date of the applicable Closing; and

 

(iv)     notwithstanding the foregoing, prior to the
expiration of the one-year “distribution compliance period” after the
applicable Closing (the “Restricted Period”),
the Purchase Shares may be offered and sold by the holder thereof only if such
offer and sale is made in compliance with the terms of this Agreement and
either: (A) if the offer or sale is within the United States or to or for
the account of a U.S. Person (as such terms are defined in Regulation S),
the securities are offered and sold pursuant to an effective registration statement
or pursuant to Rule 144 under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act; or (B) the
offer and sale is outside the United States and to other than a U.S. Person.

 

(c)           As used herein, the term “United States” means the United States of America, its
territories and possessions, any State of the United States, and the District
of Columbia, and the term “U.S. Person”
(as defined in Regulation S) means:

 

(i)        a natural person resident in the United
States;

 

(ii)       any partnership or corporation organized
or incorporated under the laws of the United States;

 

(iii)      any estate of which any executor or
administrator is a U.S. Person;

 

(iv)      any trust of which any trustee is a U.S.
Person;

 

15

 

(v)      any agency or branch of a foreign entity
located in the United States;

 

(vi)     any nondiscretionary account or similar
account (other than an estate or trust) held by a dealer or other fiduciary for
the benefit or account of a U.S. Person;

 

(vii)    any discretionary account or similar account
(other than an estate or trust) held by a dealer or other fiduciary organized,
incorporated and (if an individual) resident in the United States; and

 

(viii)   a corporation or partnership organized under
the laws of any foreign jurisdiction and formed by a U.S. Person principally
for the purpose of investing in securities not registered under the Securities
Act, unless it is organized or incorporated, and owned, by accredited investors
(as defined in Rule 501(a) under the Securities Act) who are not
natural persons, estates or trusts.

 

(d)           As
used herein, the term “Non-U.S. Person”
means any person who is not a U.S. Person or is deemed not to be a U.S. Person
under Rule 902(k)(2) of the Securities Act.

 

(e)           Such Non-U.S. Person agrees that with
respect to the Purchase Shares, until the expiration of the Restricted Period:

 

(i)        such Non-U.S. Person, its agents or its
representatives have not and will not solicit offers to buy, offer for sale or
sell any of the Purchase Shares, or any beneficial interest therein in the
United States or to or for the account of a U.S. Person;

 

(ii)       notwithstanding the foregoing, the
Purchase Shares may be offered and sold by the holder thereof only if such
offer and sale is made in compliance with the terms of this Agreement and
either: (A) if the offer or sale is within the United States or to or for
the account of a U.S. Person (as such terms are defined in Regulation S),
the securities are offered and sold pursuant to an effective registration
statement or pursuant to Rule 144 under the Securities Act or pursuant to
an exemption from the registration requirements of the Securities Act; or (B) the
offer and sale is outside the United States and to other than a U.S. Person;
and

 

(iii)      such Non-U.S. Person shall not engage in
hedging transactions with regard to the Purchase Shares unless in compliance
with the Securities Act.

 

The foregoing restrictions
are binding upon subsequent transferees of the Purchase Share, except for
transferees pursuant to an effective registration statement. Such Non-U.S.
Person agrees that after the Restricted Period, the Purchase Shares may be
offered or sold within the United States or to or for the account of a U.S.
Person only pursuant to applicable securities laws.

 

(f)            Such
Non-U.S. Person has not engaged, nor is it aware that any party has engaged,
and such Non-U.S. Person will not engage or cause any third party to engage, in
any directed selling efforts (as such term is defined in Regulation S) in
the United States with respect to the Purchase Shares.

 

16

 

(g)           Such
Non-U.S. Person: (i) is domiciled and has its principal place of business
outside the United States; (ii) certifies it is not a U.S. Person and is
not acquiring the Purchase Shares for the account or benefit of any U.S.
Person; and (iii) at the time of the applicable Closing, the Non-U.S.
Person or persons acting on Non-U.S. Person’s behalf in connection therewith will
be located outside the United States.

 

(h)           At
the time of offering to such Non-U.S. Person and communication of such Non-U.S.
Person’s order to purchase the Purchase Shares and at the time of such Non-U.S.
Person’s execution of this Agreement, the Non-U.S. Person or persons acting on
Non-U.S. Person’s behalf in connection therewith were located outside the
United States.

 

(i)            Such
Non-U.S. Person is not a “distributor” (as defined in Regulation S) or a “dealer”
(as defined in the Securities Act).

 

(j)            Such
Non-U.S. Person acknowledges that the Company shall make a notation in its
stock books regarding the restrictions on transfer set forth in this Section 4.9
and shall transfer such shares on the books of the Company only to the extent
consistent therewith. In particular, such Non-U.S. Person acknowledges that the
Company shall refuse to register any transfer of the Purchase Shares not made
in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act or pursuant to an available exemption
from registration.

 

4.10         Governmental Consents.  Other than the
approvals as set forth in Schedule 4.10 attached hereto (the “PRC Approvals”), no consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required to
be obtained or made by the Purchaser in connection with the execution and
delivery of this Agreement and the transactions contemplated hereby.

 

4.11         Financing.

 

(a)           The
Company has been provided a complete and accurate copy of an executed
commitment letter (the “Commitment Letter”)
from Ram Max Group Limited, a British Virgin Islands company (“Ram Max Parent”), pursuant to which Ram Max Parent has
committed, on the terms and subject solely and exclusively to the conditions
set forth therein, to invest prior to the Closing US$12,500,000 in Elite Noble
Limited, a British Virgin Islands company and one of the Purchasers (“Ram Max Purchaser”), so as to fund Ram Max Purchaser’s
purchase of Purchase Shares as provided for herein (the “Financing”).

 

(b)        The Commitment Letter has not been
amended or modified, and the commitment set forth therein has not been
withdrawn or rescinded in any respect. 
The Commitment Letter, in the form so delivered to the Company, is in full
force and effect and is a legal, valid and binding obligation of Ram Max Parent
and Ram Max Purchaser.  There are no
conditions precedent or other contingencies related to the funding of the full
amount of the Financing, other than as expressly set forth in the Commitment
Letter.  Subject solely and exclusively
to the conditions set forth in the Commitment Letter, the aggregate proceeds of
the Financing will be sufficient to enable Ram Max Purchaser to purchase its
Purchase Shares upon the terms contemplated by this Agreement and to pay all
fees and expenses associated therewith.

 

17

 

(c)           As
of the date hereof, each of the Purchasers other than Ram Max Purchaser, has,
and will have at all times until the Closing, sufficient accessible funds to
purchase its Purchase Shares upon the terms contemplated by this Agreement and
to pay all fees and expenses associated therewith.

 

4.12         No
Other Representations and Warranties.  Except for the representations and
warranties contained in Article III, each Purchaser acknowledges
and agrees that the Company makes no other express or implied representation or
warranty with respect to the Company, its business or the transaction
contemplated hereby.

 

5.             Conditions Precedent to Closing.

 

5.1           Conditions
to the Obligation of the Purchasers to Consummate the Closing.  The
obligation of each of the Purchasers to consummate the Closing and to purchase
and pay for the Purchase Shares being purchased by it pursuant to this
Agreement is subject to the satisfaction of the following conditions precedent:

 

(a)           Representations and Warranties; Covenants.

 

(i)        Each of the representations and
warranties of the Company in Section 3 shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct to such extent) as of the date of this Agreement and as of the date of
the Closing as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such specified date).

 

(ii)       The Company shall have performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by this Agreement prior to the date of Closing.

 

(b)           Qualifications.  All
authorizations, approvals or permits, if any, of any Governmental Entity,
including, but not limited to, the PRC Approvals, that are required in
connection with the lawful issuance, sale and purchase of the Purchase Shares,
and the purchase and the procurement of foreign exchange for payment of the
Purchase Price, pursuant to this Agreement shall have been duly obtained and
effective as of the Closing.

 

(c)           Stockholders Rights Agreement.  The Stockholders Rights Agreement shall
remain in full force and effect.

 

(d)           Board Composition. 
Effective as of the Closing, the Board shall include (but not be limited
to) the following individuals (unless any such individual is unable or unwilling
to serve on the Board):  Peter Blackmore,
Baichuan Du, Xiaoping Li, Hong Liang Lu, Bruce J. Ryan, Thomas J. Toy and
William Wong.

 

(e)           Investment by BEIID.  All of the
conditions to the consummation of the investment in the Company by Beijing E-town
International Investment and Development Co., Ltd. set forth in the BEIID SPA
shall have been satisfied.

 

18

 

(f)            Chief Executive Officer.  The
Board shall have approved the appointment of Jack Lu as Chief Executive Officer
of the Company pursuant to the terms of the offer letter between Mr. Lu
and the Company, dated as of the date of this Agreement, offering him the
position of Chief Executive Officer of the Company and such appointment and
offer letter shall not have been revoked, amended or superseded.

 

5.2           Conditions to the Obligation
of the Company to Consummate the Closing.  The obligation of
the Company to consummate the Closing and to issue and sell the Purchase Shares
to the Purchasers at the Closing is subject to the satisfaction of the
following conditions precedent:

 

(a)           Representations and
Warranties; Covenants.

 

(i)        Each of the representations and
warranties of each Purchaser in Section 4 shall be true and correct as of
the date of this Agreement and as of the date of the Closing as though made at
that time.

 

(ii)       Each of the Purchasers shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement prior to the date of Closing.

 

(b)           Qualifications.  All authorizations, approvals or permits, if
any, of any Governmental Entity that are required in connection with the lawful
issuance and sale of the Purchase Shares pursuant to this Agreement shall be
duly obtained and effective as of the Closing.

 

(c)           Payment.  Each
Purchaser shall have paid the purchase price to the Company as set forth in the
Section 2.3(a).

 

(d)           Stockholders Rights Agreement.  The Stockholders Rights Agreement shall
remain in full force and effect.

 

6.             Miscellaneous Provisions.

 

6.1           Public
Statements or Releases.  None of the parties to this Agreement
shall make, issue, or release any announcement, whether to the public
generally, or to any of its suppliers or customers, with respect to this
Agreement or the transactions provided for herein, or make any statement or
acknowledgment of the existence of, or reveal the status of, this Agreement or
the transactions provided for herein, without the prior consent of the other
parties, which shall not be unreasonably withheld or delayed, provided,
that nothing in this Section 6.1 shall prevent any of the parties hereto
from making such public announcements as it may consider necessary in order to
satisfy any Legal Requirements applicable to it, but to the extent not inconsistent
with such Legal Requirements, it shall provide the other parties with an
opportunity to review and comment on any proposed public announcement before it
is made.  Notwithstanding the foregoing,
prior written consent of the other parties will not be required for the Company
to issue press releases or make governmental filings relating to the sale and
issuance of the Purchase Shares pursuant to this Agreement and the Company
hereby agrees to make public announcement of such sale and issuance upon the
signing of this Agreement.

 

19

 

6.2           Further
Assurances; Exclusivity and Superior Offer; Covenants.

 

(a)           Further Assurances. 
Each party agrees to act in good faith and use commercially reasonable
efforts to cooperate fully with the other parties and to execute such further
instruments, documents and agreements and to give such further written
assurances, as may be reasonably requested by the other parties to better
evidence and reflect the transactions described herein and contemplated hereby,
and to carry into effect the intents and purposes of this Agreement.

 

(b)           Exclusivity and Superior Offer.

 

(i)        Exclusivity.
From the date hereof until the Closing, and unless this Agreement is terminated
in accordance with Section 6.14, the Company, its subsidiaries and their
respective directors, officers and representatives shall not, directly or
indirectly, enter into, or commence, any discussions with any third party for
the sale and issue of a material number of shares of Common Stock or a material
portion of the business of the Company. 
Nothing in this Agreement shall prohibit the Company from issuing a “stop-look-listen”
communication pursuant to Rule 14d-9(f) promulgated under the United
States Securities Exchange Act of 1934, as amended (the “Exchange Act”),
or taking and disclosing to its stockholders a position as required by Rule 14d-9
or 14e-12 promulgated under the Exchange Act.

 

(ii)       Superior Offers.
 Notwithstanding anything to the contrary contained in Section 6.2(b)(i), in the event that the Company
receives an unsolicited, bona fide offer for the acquisition of 100% of the
equity or assets of the Company (an “Acquisition Proposal”)
from a third party that the Board has in good faith concluded (following the
receipt of the advice of its outside legal counsel and its financial advisor)
is, or is reasonably likely to result in, a Superior Offer (as defined below),
the Company may then take the following actions provided that the Board
concludes in good faith (after consultation with their outside legal advisors)
that failure to do so could be inconsistent with their fiduciary duties under
applicable law:

 

(1)        Furnish
nonpublic information to the third party making such Acquisition Proposal, provided
that (a) (1) concurrently with furnishing any such nonpublic
information to such party, the Company gives the Purchaser written notice of
its intention to furnish such nonpublic information and (2) the Company
receives from the third party an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such third party on the Company’s behalf and (b) contemporaneously
with furnishing any such nonpublic information to such third party, the Company
furnishes such nonpublic information to the Purchasers (to the extent such
nonpublic information has not been previously so furnished).

 

(2)        Engage
in negotiations with the third party with respect to the Acquisition Proposal, provided
that concurrently with entering into negotiations with such third party, the
Company gives the Purchasers written notice of the Company’s intention to enter
into negotiations with such third party and during such negotiations provides
Purchasers with copies of all written proposals delivered by such third party,
keeps Purchasers updated regarding negotiations and discussions in a reasonably
timely manner and provides the Purchasers the opportunity to fully participate
as observers in all such negotiations and discussions.

 

20

 

(3)        In the
case of a Superior Offer that is a tender or exchange offer made directly to
the stockholders of the Company, may recommend that the stockholders of the
Company accept the tender or exchange offer.

 

For purposes of this Agreement, “Superior Offer,”
shall mean an Acquisition Proposal by a third party with terms that the Board
has in good faith concluded (following the receipt of advice of its outside
legal counsel and its financial adviser), taking into account, among other
things, all legal, financial, regulatory and other aspects of the offer and the
Person making the Acquisition Proposal, including without limitation any
proposed conditions to consummation, to be more favorable, from a financial
point of view, to the Company’s stockholders (in their capacities as
stockholders) than the terms of the transaction contemplated hereunder, is
reasonably likely to be consummated and for which financing, to the extent
required, is then fully committed or reasonably determined to be available by
the Board.

 

(c)           Government Consents. Notwithstanding the generality of Section 6.2(a) above,
to the extent applicable, each Purchaser covenants to use its commercially
reasonable efforts to obtain all necessary government approvals, including
without limitation, the PRC Approvals, required for it to complete the
transactions contemplated by this Agreement and, as promptly as practicable
after the date hereof, such Purchaser shall make all filings, notices,
petitions, statements, registrations, submissions of information, application
or submission of other documents required by any Governmental Entity  required in connection with this Agreement and the
transactions contemplated hereby.  Each
Purchaser will notify the Company promptly upon the receipt of (i) any
comments from any officials of any Governmental Entity in connection with any
filings made pursuant hereto, and (ii) any requests by any officials of
any Governmental Entity for amendments or supplements to, or additional
information in connection with, any filings made pursuant hereto.  In addition, 
each Purchaser shall use best endeavors to furnish such information,
supply such documents, give such undertakings and do all such acts and things
may be reasonably required by any other Governmental Entity in relation to or
arising out of the transactions contemplated hereby.

 

(d)           Financing.

 

(i)        Ram Max Purchaser shall take (or cause
to be taken) all actions, and do (or cause to be done) all things, necessary,
proper or advisable to obtain the Financing, including (i) satisfying on a
timely basis all conditions applicable to Ram Max Purchaser in the Commitment
Letter that are within its control, (ii) consummating the Financing at or
prior to the Closing, and (iii) subject to the immediately following
sentence, fully enforcing Ram Max Parent’s obligations (and the rights of Ram
Max Purchaser) under the Commitment Letter, including (at the request of the
Company) by filing one or more lawsuits against Ram Max Parent to fully enforce
Ram Max Parent’s obligations (and the rights of Ram Max Purchaser)
thereunder.  In the event that the
Company shall file one or more lawsuits or take any other actions against Ram
Max Parent in order to fully enforce Ram Max Parent’s obligations (and the
rights of Ram Max Purchaser) under the Commitment Letter, then at all times
thereafter during the pendency of any such lawsuits or other actions, Ram Max
Parent shall consult, cooperate and coordinate with the Company (and take any
action reasonably requested by the Company in respect thereof) regarding any
lawsuits or other actions that the Company may file or take against Ram Max
Parent arising out

 

21

 

of this Agreement, the Commitment Letter, the
transactions contemplated hereby or thereby and/or any related matter, and
shall not take any action (or fail to take any action) that is intended to or
has (or would reasonably be expected to have) the effect of either (A) preventing,
impairing or otherwise adversely affecting any Company lawsuit or other action
against Ram Max Parent arising out of this Agreement, the Commitment Letter,
the transactions contemplated hereby or thereby and/or any related matter, or
any other efforts by the Company to fully enforce Ram Max Parent’s obligations
(and the rights of Ram Max Purchaser) under the Commitment Letter, or (B) preventing,
impairing or adversely affecting the consummation of the transactions
contemplated hereby.

 

(ii)       Ram Max Purchaser shall not amend, alter,
or waive, or agree to amend, alter or waive (in any case whether by action or
inaction), any term of the Commitment Letter without the prior written consent
of the Company.  Ram Max Purchaser shall
promptly (and in any event within one business day) notify the Company of (i) the
expiration or termination (or attempted or purported termination, whether or
not valid) of the Commitment Letter, or (ii) any refusal by Ram Max Parent
to provide, any stated intent by Ram Max Parent to refuse to provide, or any
expression of concern or reservation by Ram Max Parent regarding its obligation
and/or ability to provide, the full financing contemplated by the Commitment
Letter.

 

(e)           Conduct of Business by the Company.  During the period from the date hereof and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Closing, the Company and each of its Subsidiaries shall,
except as otherwise expressly contemplated by this Agreement, as disclosed in
the Disclosure Schedule or required to consummate the transaction contemplated
hereunder, or to the extent that the Purchasers representing 75% of the
Purchase Shares purchasable hereunder shall otherwise consent in writing, (i) carry on
its business in the usual, regular and ordinary course, in substantially the
same manner as heretofore conducted and consistent with the Company’s plan’s  for managing its business and other
operations and in material compliance with all applicable laws and regulations,
(ii) pay its debts and Taxes when due, pay or perform other material
obligations when due, (iii) make no material change to the compensation
arrangement or agreement with the Chief Executive Officer and other key
employees of the Company, (iv) not sell, assign or transfer any material
Company Intellectual
Property other than in the ordinary course of business, (iv) not initiate
and shall use commercially reasonable efforts to not allow, any material change
or amendment to, or termination of, a material contract to which the Company or
a Subsidiary is a party (other than termination through ordinary course
expiration of its terms), (v) not declare or pay any dividends, and (vi) use
commercially reasonable efforts consistent with past practices and policies and
its existing restructuring plans to (x) preserve substantially intact its
present business organization, (y) keep available the services of its
present executive officers and employees, and (z) preserve its
relationships with customers, suppliers, licensors, licensees, and others with
which it has significant business dealings. 
In addition, the Company shall promptly notify in writing the Purchasers
of any event that it believes could reasonably be expected to lead to a Material
Adverse Effect on the Company.

 

6.3           Rights
Cumulative.  Each and all of the various rights, powers
and remedies of the parties shall be considered to be cumulative with and in
addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement.  The exercise of any right,
power or remedy shall neither constitute the exclusive election thereof nor the
waiver of any other right, power or remedy available to such party.

 

22

 

6.4           Notices.

 

(a)           Any
notices, reports or other correspondence (hereinafter collectively referred to
as “correspondence”) required or permitted
to be given hereunder shall be sent by international courier, facsimile,
electronic mail or delivered by hand to the party to whom such correspondence
is required or permitted to be given hereunder. 
Where a notice is sent by overnight courier, service of the notice
shall be deemed to be effected by properly addressing, and sending such notice
through an internationally recognized express courier service, delivery fees
pre-paid, and to have been effected three (3) business days following the
day the same is sent as aforesaid.  Where
a notice is delivered by facsimile, electronic mail, by hand or by messenger,
service of the notice shall be deemed to be effected upon delivery; provided
that facsimile or electronic mail alone does not constitute an effective
notice.

 

(b)           All correspondence to the Company
shall be addressed as follows:

 

UTStarcom, Inc.

1275
Harbor Bay Parkway

Alameda,
CA 94502

Facsimile:
(510) 864-8802

Email:
legal.notice@utstar.com

Attention:
General Counsel

 

with
a copy to:

 

Wilson
Sonsini Goodrich & Rosati

650
Page Mill Road

Palo
Alto, California  94304

Facsimile: (650)
493-6811

Attention: Carmen
Chang and Scott Anthony

 

(c)           All
correspondence to any Purchaser shall be sent to such Purchaser at the address
set forth under such Purchaser’s name on the Schedule of Purchasers.

 

(d)           Any
entity may change the address to which correspondence to it is to be addressed
by notification as provided for herein.

 

6.5           Captions.  The
captions and paragraph headings of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.

 

6.6           Severability.  Should
any part or provision of this Agreement be held unenforceable or in conflict
with the applicable laws or regulations of any jurisdiction, the invalid or
unenforceable part or provisions shall be replaced with a provision which
accomplishes, to the extent possible, the original business purpose of such
part or provision in a valid and enforceable manner, and the remainder of this
Agreement shall remain binding upon the parties hereto.

 

23

 

6.7          Governing Law;
Arbitration; Injunctive Relief.

 

(a)           This
Agreement shall be governed by and construed in accordance with the internal
and substantive laws of the State of California and without regard to any
conflicts of laws concepts which would apply the substantive law of some other
jurisdiction.

 

(b)           Other than as set forth in Section 6.7(c), each of the parties hereto irrevocably (i) agrees
that any dispute or controversy arising out of, relating to, or concerning any
interpretation, construction, performance or breach of this Agreement, may be
settled by arbitration to be held in County of Santa Clara, State of
California, in accordance with the rules then in effect of the American
Arbitration Association, (ii) waives, to the fullest extent it may
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such arbitration, and (iii) submits to the
non-exclusive jurisdiction of the State of California in any such arbitration
or to the jurisdiction of state of federal courts in the state of California in
any of the legal actions or claims.  If
submitted to arbitration in any jurisdiction, the decision of the arbitrator
shall be final, conclusive and binding on the parties to the arbitration.  Judgment may be entered on the arbitrator’s
decision in any court having jurisdiction. 
The parties to the arbitration shall each pay an equal share of the
costs and expenses of such arbitration, and each party shall separately pay for
its respective counsel fees and expenses; provided, however, that
the prevailing party in any such arbitration shall be entitled to recover from
the non-prevailing party its reasonable costs and attorney fees.

 

(c)           Each
of the parties hereto acknowledges and agrees that damages will not be an adequate
remedy for any material breach or violation of this Agreement if such material
breach or violation would cause immediate and irreparable harm (an “Irreparable Breach”). 
Accordingly, in the event of a threatened or ongoing Irreparable Breach,
each party hereto shall be entitled to seek, in any court of law of competent
jurisdiction, equitable relief of a kind appropriate in light of the nature of
the ongoing or threatened Irreparable Breach, which relief may include, without
limitation, specific performance or injunctive relief; provided, however,
that if the party bringing such action is unsuccessful in obtaining the relief
sought, the moving party shall pay the non-moving party’s reasonable costs,
including attorney’s fees, incurred in connection with defending such
action.  Such remedies shall not be the
parties’ exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.

 

6.8          Amendment.  This
Agreement may not be amended, modified or terminated, and no rights or provisions
may be waived, except with the written consent of the Company and Purchasers
representing 75% of the Purchase Shares purchasable hereunder.

 

6.9          Expenses.  Each
party will bear its own costs and expenses in connection with the drafting and
negotiation of this Agreement and the Stockholders Rights Agreement.

 

6.10       Assignment.  No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties.  Any
purported assignment in violation of this Section 6.10 shall be void.  Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

 

24

 

6.11       Survival.  The
respective representations and warranties given by the parties hereto shall
terminate upon the earlier of (i) the first anniversary of the Closing,
and (ii) the date on which this Agreement is terminated in accordance with
Section 6.14 of this Agreement. 
Notwithstanding any applicable statute of limitations, any claim with respect to the failure of a
representation or warranty to be true and correct (other than as a result of
fraud or willful misconduct) that is not asserted within such timeframes may
not be pursued and is hereby irrevocably waived after such time.  Notwithstanding the preceding, the
representations and warranties given by the Company shall terminate immediately
with respect to any Purchaser that has sold all the Purchased Shares it
purchased hereunder and with respect to any Purchased Shares that have been
sold by any Purchaser.  Each party hereby
agrees that, before bringing any claim with respect to the failure of a
representation or warranty to be true and correct, it shall give the other
party or parties reasonable notice of such failure and reasonable time to cure
such failure.

 

6.12       Entire
Agreement.  This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or
oral.  No modification, alteration,
waiver or change in any of the terms of this Agreement shall be valid or
binding upon the parties hereto unless made in writing and in accordance with
the provisions of Section 6.8 hereof.

 

6.13       Counterparts;
Reproductions.  This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.  A
facsimile, portable document file (PDF) or other reproduction of this Agreement
may be executed by one or more parties and delivered by such party by facsimile,
electronic mail or any similar electronic transmission pursuant to which the
signature of or on behalf of such party can be seen.  Such execution and delivery shall be
considered valid, binding and effective for all purposes.

 

6.14       Termination.

 

(a)           This Agreement may be terminated and the transactions
contemplated hereby abandoned as follows:

 

(i)            at any time by mutual consent of the Company and Purchasers
representing 75% of the Purchase Shares purchasable hereunder; or

 

(ii)           by either the Company or Purchasers representing 75% of
the Purchase Shares purchasable hereunder if the Closing has not occurred
within 90 days of the date hereof; provided, however, that the right to
terminate this Agreement under this Section 6.14(a)(ii) shall not be
available to any party whose (in the case of the Purchasers, any Purchaser’s)
action or failure to act has been a principal cause of or resulted in the
failure of the Closing to occur on or before such date and such action or
failure or failure to act constitutes a material breach of this Agreement.

 

(b)           If
terminated, this Agreement shall become void and there shall be no liability or
obligation on the part of any party hereto or their respective officers,
directors or 

 

25

 

affiliates; provided, however, that (1) each
party shall remain liable for any breach of this Agreement prior to its
termination (subject to the limitations set forth herein, including, without
limitation, Section 6.11), and (2) the provisions of this Section 6
(other than Section 6.2) shall remain in full force and effect and survive
any termination.

 

(Remainder of Page Intentionally
Blank)

 

26

 

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

 

 

	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UTSTARCOM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER BLACKMORE

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Peter Blackmore

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
				

 

SIGNATURE PAGE TO COMMON STOCK PURCHASE
AGREEMENT

 

 

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

 

 

	
   

  	
  PURCHASERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAH CAPITAL OPPORTUNITY
  FUND LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ HIMANSHU H. SHAH

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Himanshu H. Shah

  
	
   

  	
  Title:

  	
  General Partner

  
				

 

SIGNATURE PAGE TO COMMON STOCK PURCHASE
AGREEMENT

 

 

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

 

 

	
   

  	
  PURCHASERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ELITE NOBLE LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JINGCHUN SUN

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jingchun Sun

  
	
   

  	
  Title:

  	
  Director

  
				

 

SIGNATURE
PAGE TO COMMON STOCK PURCHASE AGREEMENT

 

 

Schedule 4.10

PRC APPROVALS

 

1.                                      Confirmation  letter issued by the National Development
Reform Commission (“NDRC”) for the
project information report;

 

2.                                      Approval issued
by the relevant State-owned Assets Supervision and Management Commission;

 

3.                                      Verification
and approval issued by NDRC Beijing Branch for the outbound investment project;

 

4.                                      Verification
and approval issued by NDRC for the outbound investment project;

 

5.                                      Approval issued
by the State Administration of Foreign Exchange (“SAFE”)
Beijing Branch for the prior phase report form regarding outbound investment;

 

6.                                      Verification
and approval issued by the Ministry of Commerce Beijing Branch for the
application form for outbound investment; and

 

7.                                      Foreign exchange
registration certificate of the outbound direct investment issued by the SAFE
Beijing Branch for foreign exchange registration application form of the
outbound direct investment.

 

 

Schedule A

 

SCHEDULE OF PURCHASERS

 

	
  Name and Address

  	
   

  	
  Investment Amount (US$)

  	
   

  	
  Number of Purchase
  Shares

  	
   

  
	
  Elite Noble Limited

  Address:

  Room 512, 5/F., Tower 1

  Silvercord, 30 Canton Road

  Tsimshatsui, Kowloon

  Hong Kong

  Facsimile: +852 2114 0183

  Attn: Lee Kit Wah

  	
   

  	
  12,499,999.60

  	
   

  	
  5,681,818

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Shah Capital Opportunity Fund

  LP

  Address:

  8601 Six Forks Road, Suite 630

  Raleigh, NC  27615

  USA

  Facsimile: +1 (919) 719-6370

  Attn: Himanshu H. Shah

  	
   

  	
  11,000,000.00

  	
   

  	
  5,000,000

  	
   

  

 

 

Exhibit A

 

STOCKHOLDERS RIGHTS AGREEMENTExhibit 10.3

 

Agreement of Entry into the Zone

 

No.: 09BDA/SDK-R075

 

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

 

Section 1 Parties to the Agreement

 

The
Parties to this Agreement are:

 

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

Address:
Boda Building, No.15 Ronghuazhong Road

Beijing
Economic and Technology Development Zone

Legal
representative: Zhang Boxu

Title:
Chief Officer of the Committee

Nationality:
PRC

 

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

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

Legal
representative: Thomas Toy

Title:
Chairman of the Board

Nationality:
United States

 

Section 2
Contents of the Agreement

 

I.    Project contents:

 

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

 

1

 

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

 

II.  Party A’s support to Party B.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

III.
Party B’s Commitments

 

Party
B agrees to make the following commitments:

 

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

 

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

 

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

 

Section 3 Special Agreement Between the Parties

 

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

 

Section 4 Liability for Breach

 

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

 

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

 

	
  (i)

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

  
	
  (ii)

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

  

 

3

 

	
  (iii)

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

  
	
  (iv)

  	
  intentionally
  and illegally withdraws the registered capital; and

  
	
  (v)

  	
  commits
  other breaches of the Agreement.

  

 

Section 5 Confidentiality

 

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

 

Section 6 Dispute Resolution

 

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

 

Section 7 Language and Effectiveness

 

1.
This Agreement is written in Chinese.

 

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

 

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

 

Section 8 Miscellaneous

 

Contact
Persons of the Parties

 

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

Contact
Phone No.: 86-10-67887323

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

 

Party
B: KP Lim     Dept.:  Administrative Department

 

4

 

Contact
Phone No.: 0571-81926649

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

 

 

	
  Party
  A (Stamp):

  	
  Party
  B (Stamp):

  
	
  Management
  Committee of

  	
  UTStarcom, Inc.

  
	
  Beijing
  Economic and Technology

  	
   

  
	
  Development
  Zone

  	
   

  
	
  Signature:

  	
  /s/
  XINXIN ZHAO

  	
   

  	
  Signature:

  	
  /s/ THOMAS J.
  TOY

  
	
  Title:

  	
  Vice
  Chief Officer of the Committee

  	
  Title:

  	
  Chairman
  of the Board

  
	
  Date:

  	
  February
  1, 2010

  	
  Date:

  	
  February
  1, 2010

  
							

 

5

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