Document:

EXHIBIT 10.1

 

FIRST AMENDMENT TO MODIFICATION AGREEMENT

 

This
FIRST  AMENDMENT TO
MODIFICATION AGREEMENT (this “Amendment”), made and entered
into as of October 20, 2010, is by and among Winmark Corporation, a
Minnesota corporation (“Winmark”) and BridgeFunds LLC, a Nevada Limited
liability company (“BridgeFunds”).

 

RECITALS

 

1.                                       Winmark and
BridgeFunds are parties to: (i) that certain Securities Purchase
Agreement, dated as of October 13, 2004, as amended and assigned (the “Purchase
Agreement”), pursuant to which Winmark holds four promissory notes
representing aggregate indebtedness totaling $2.0 million, exclusive of unpaid
interest, due from BridgeFunds (each note individually referred to herein as a “Note”
and collectively as the “Notes”);  and (ii) that
certain Modification Agreement, dated as of October 22, 2009 (the “Modification
Agreement”).

 

2.                                       Winmark and
BridgeFunds desire to amend certain provisions of the Modification Agreement,
subject to the terms and conditions set forth in this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby covenant and agree to be bound as follows:

 

Section 1.                                            Capitalized
Terms.  Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to them in the Purchase Agreement, each Note and the Modification
Agreement, unless the context shall otherwise require.

 

Section 2.                                            Amendment.  Each Note and the
Modification Agreement is hereby amended as follows:

 

Section 2.1                                      Maturity
Date.  The
maturity date in clause (i) of the first paragraph of each Note will be
changed to June 30, 2011.

 

Section 2.2                                      Available
Cash Flow.  The
definition of Available Cash Flow in the fifth sentence of Section 4 of
the Modification Agreement is hereby deleted and replaced in its entirety by
the following:

 

“Available
Cash Flow” means, for any month, all payments and distributions received by
BridgeFunds from its subsidiaries during such month after payment of (i) the
monthly fixed fees and reimbursable out-of-pocket expenses payable to Rewind
under the Sub-Servicing Agreement during such month (including any past due
amounts from any prior month) and (ii) other ordinary and necessary
operating expenses of BridgeFunds for such month (including any past due 

 

 

amounts
from any prior month); however, to the extent that amounts for either (i) or
(ii) above exceed 33.3% of all payments and distributions received by
BridgeFunds during such month, Available Cash Flow cannot be less than 33.3% of
all payments and distributions received by BridgeFunds for such month.  Furthermore, to the extent that either (i) or
(ii) above are less than 33.3% of all payments and distributions received
by BridgeFunds during such month, such excess shall be considered as additional
Available Cash Flow on a pro rata basis.

 

Section 3.                                            Other Agreements Remain in Force.  Except
as set forth in this Agreement, all obligations, covenants and agreements of
the parties under each of the Notes, the Purchase Agreement and the
Modification Agreement remain in full force and effect.

 

[The remainder of this page is
intentionally left blank.]

 

2

 

IN WITNESS WHEREOF, each of Winmark and
BridgeFunds has caused this Amendment to be executed as of the date and year
first above written.

 

 

	
   

  	
   

  	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Anthony D. Ishaug

  
	
   

  	
  Name:

  	
   

  	
  Anthony
  D. Ishaug 

  
	
   

  	
  Title:

  	
   

  	
  Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  BRIDGEFUNDS,
  LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/
  Kenneth Klein

  
	
   

  	
  Name:

  	
   

  	
  Kenneth
  Klein

  
	
   

  	
  Title:

  	
   

  	
  Manager

  

 

 [Signature Page to First Amendment to
Modification Agreement]Exhibit 10.1

 

STAGE SMART LIMITED

 

ORDINARY SHARES PURCHASE AGREEMENT

 

This Ordinary Shares
Purchase Agreement is made and entered into as of October 16, 2010 (the “Agreement”) by and among Stage Smart
Limited, a company incorporated under the laws of British Virgin Islands (the “Company”), Smart Frontier Holdings
Limited, the sole shareholder of the Company (the “Shareholder”),
and UTStarcom, Inc., a Delaware company (the “Investor”),
with reference to the following facts:

 

The Investor desires to
purchase from the Shareholder, and the Shareholder desires to sell to the
Investor, 5,100,000 ordinary shares of the Company (the “Ordinary
Shares”) for an aggregate purchase price of $10,000,000 (the “Purchased Shares”), which purchase
price shall be paid in form of the shares of Investor’s common stock (the “Investor Shares”). The number of the
Investor Shares to be issued shall be calculated by dividing $10,000,000 by the
average closing price per share of the Investor Shares quoted on the NASDAQ
stock market for the thirty day period immediately preceding the date of
Closing (as defined below). The Investor will pay cash in lieu of any
fractional shares that would otherwise be issued.

 

Accordingly, the undersigned
agree as follows:

 

1.             Share Purchase. At the Closing
(as defined below), the Shareholder shall sell to the Investor, and the
Investor shall purchase from the Shareholder the Shareholder’s right to and
interests in the Purchased Shares free and clear of any and all liens, charges,
pledges, covenants, restrictions or other encumbrances or adverse claims, for
an aggregate purchase price of $10,000,000 (the “Purchase
Price”). Provided the Closing occurs, the foregoing commitment
of the Shareholder to so sell its Purchased Shares is binding and irrevocable and
may not be modified or rescinded by the Shareholder without the Investor’s
written consent (which it may withhold in its sole discretion).

 

2.             Closing.

 

a.             Closing Date. Subject to
the satisfaction or waiver of the conditions set forth below, the transactions
contemplated by this Agreement shall occur at a closing (the “Closing”). The Closing shall take
place remotely via the exchange of documents and signatures or at such other
place as shall be designated by the parties.

 

b.             Deliveries at the Closing. At the
Closing, (i) the Shareholder shall deliver to the Investor the certificate
representing the Purchased Shares included on the Shareholder’s signature pages below
that are being purchased at the Closing duly endorsed in blank and with
appropriate stock power certificate, (ii) the Company shall deliver to the
Investor share certificate(s) representing the Purchased Shares purchased
by the Investor at the Closing, (iii) the Investor shall provide an
irrevocable instruction to its transfer agent to issue the Investor Shares to
the Shareholder and (iv) the Company shall deliver to the Investor a
certified copy of the 

 

1

 

Register of Members of the
Company updated to reflect the Investor’s ownership of the Purchased Shares.

 

c.             Conditions to Closing. The
obligation of the Investor to purchase the Shareholder’s Purchased Shares shall
be conditioned upon the satisfaction of the following conditions (provided,
however, that the Investor may waive any of the following conditions in its
sole discretion): (i) the representations and warranties of the
Shareholder being true and correct in all respects as of the Closing with
respect to the Purchased Shares purchased at the Closing; (ii) the
Shareholder shall have properly completed and duly executed the Shareholder’s
Signature Pages attached to this Agreement; (iii) the receipt by the
Investor of the Company Certificates and (iv) there shall be no active,
pending or threatened legal proceedings adverse to the Investor and its
affiliates (in the Investor’s sole discretion) relating to the purchase or
ownership of the Purchased Shares or otherwise related to the transaction
contemplated hereby; (v) there is no material adverse change to the assets
and liabilities, financial condition, results of operations and prospects of
the Company since the incorporation of the Company; (vi) the Investor
shall have completed, to its satisfaction, business, legal and financial due
diligence review of the Company; (vii) the Company shall have effected a 1
to 10,000 share split of the Ordinary Shares (the “Share
Split”) prior to the Closing and issued to the Shareholder
9,990,000 more Ordinary Shares after the Share Split (the “Additional
Share Issuance”); (viii) all conditions to the closing of
the Series A Preference Shares Purchase Agreement (the “Series A Agreement”) shall have
been satisfied; (ix) the Company shall have adopted the Amended and
Restated Memorandum of Association and Amended and Restated Articles of
Association in substantially the forms attached hereto as Exhibit A;
(x) the Schedule of Exceptions (as defined below) has been delivered to
the Investor, and (xi) the additional list application of the Investor
Shares, if applicable, has been accepted.

 

3.             Representations; Warranties and
Covenants.

 

a.             Representations; Warranties and
Covenants of the Shareholder.  A Schedule of Exceptions attached hereto (the
“Schedule of Exceptions”) shall be
delivered to the Investor in connection with the execution of the Agreement.
Except as set forth on the Schedule of Exceptions, the Shareholder represents,
warrants and covenants to the Investor as follows:

 

i.              Title to the Shares. The
Shareholder is the sole legal and beneficial owner of the applicable Purchased
Shares and has good and valid title thereto, free and clear of all liens,
charges, pledges, covenants, restrictions or other encumbrances or adverse
claims or rights of others (collectively, “Liens”).  Immediately prior to the Closing and giving
effect to the Share Split and Additional Share Issuance, the Shareholder owns
10,000,000 Ordinary Shares.

 

ii.             Authority. The
Shareholder has the full right, power and authority to enter into this
Agreement and to sell, transfer and convey the Purchased Shares to the
Investor, and upon consummation of the purchase contemplated hereby, the
Investor will acquire sole title to the Purchased Shares being purchased by
Investor hereunder, free and clear of any Liens. This Agreement has been duly
executed and delivered by the Shareholder and, assuming due authorization,
execution and delivery by the Investor and the Company, constitutes a legal,
valid 

 

2

 

and binding obligation of
the Shareholder, enforceable against such shareholder in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application now or
hereafter in effect relating to or affecting creditors’ rights, and by general
principles of equity, whether considered in a proceeding in law or equity. The
execution and delivery of this Agreement by the Shareholder does not, and the
Shareholder’s performance of its obligations under this Agreement will not
conflict with or result in any violation or default under such Shareholder’s charter, bylaws, partnership agreement, operating
agreement or similar organizational documents and any law, regulation, rule,
order, decree or judgment applicable to the Shareholder or by which the
Shareholder is bound. No consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required by or with respect to the sale by the Shareholder of its Purchased
Shares hereunder.

 

iii.            Disclosure. The
Shareholder has reviewed the terms of the transaction contemplated hereby and
has had a reasonable opportunity to ask questions of and receive answers from
the Company concerning the business and financial condition of the Company. The
Shareholder has received such information as it considers necessary for
deciding whether or not to enter into this Agreement and to consummate the
transactions contemplated hereby. The Shareholder acknowledges that neither the
Investor nor the Company have made any representations or warranties to the
Shareholder with respect to the transactions contemplated hereby, including
without limitation the fair market value of the Purchased Shares, except as
expressly set forth in Section 3(b) below. The Shareholder hereby
acknowledges that now or in the future, the Purchased Shares could be valued
and/or sold at prices higher or lower than the Purchase Price.

 

iv.            Advisors.  The Shareholder understands that both the
Investor and the Company have recommended that the Shareholder consult with its
own financial, legal, tax and/or accounting advisors with respect to the
transactions contemplated hereby, and has had an opportunity to consult such
advisors to the Shareholder’s satisfaction prior to entering into this
Agreement. The Shareholder acknowledges that neither the Investor nor the
Company have made any representations with respect to the transaction
contemplated hereby except as expressly set forth in this Agreement. The
Shareholder further acknowledges that neither the Investor nor the Company have
provided any legal, financial, accounting, tax or other advice with respect to
the transaction contemplated hereby.

 

v.             Further Assurances.  After the Closing, the Shareholder shall
cooperate (and shall cause any of its affiliates or representatives to
cooperate) with the Investor, and shall cause to be executed and delivered such
document and to cause such other actions to be taken as the Investor may
reasonably request as necessary or desirable so that the Investor acquire good,
marketable and unencumbered title to the Purchased Shares being purchased by
each such Investor, free and clear of all Liens.

 

vi.            Receipt of Information.  The Shareholder has had an opportunity to ask
questions and receive answers from the Investor regarding the terms and conditions
of the issuance of the Investor Shares and the business, properties, prospects
and financial condition of the Investor and obtain additional information (to
the extent the Investor possessed such 

 

3

 

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 Shareholder acknowledges and understands
that no person other than the Investor has been authorized to give any
representations not contained in this Agreement in connection with the issuance
of the Investor Shares and, if given or made, such information or
representation must not be relied upon as having been authorized by the
Investor.

 

vii.           Accredited Investor. 
Unless otherwise expressly indicated to the Investor, (a) the
Shareholder 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 Shareholder was formed for the specific purpose of acquiring
the Investor Shares, then each shareholder or member of the Shareholder is an
Accredited Investor.

 

viii.          Investment Experience.  The
Shareholder 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 Investor Shares.

 

ix.            Rule 144.  The Shareholder understands
that the Investor 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 Investor Shares must be held indefinitely.  In particular, the Purchaser is aware that
the Investor 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 Investor.

 

x.             Reliance on Investor’s Representations.  The
Shareholder understands that the Investor Shares being offered and issued 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 Investor is relying upon the truth and accuracy
of, and the Shareholder’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Shareholder set forth
herein in order to determine the availability of such exemptions and the
eligibility of the Shareholder to acquire the Investor Shares.

 

xi.            Legends.  Each certificate representing any of the
Investor Shares shall be endorsed with the applicable legend set forth below
and any other legends required by applicable law, and the Shareholder covenants
that, except to the extent such restrictions are waived in writing by the
Investor, 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 

 

4

 

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.

 

b.             Representations and Warranties of
the Investor. The Investor represents and warrants to the
Shareholder as follows:

 

i.              Authority.  The Investor has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization. The Investor has the full right, power and authority to enter
into this Agreement and to purchase the Purchased Shares from the Shareholder
and to issue the Investor Shares to the Shareholder. This Agreement has been
duly executed and delivered by the Investor and, assuming due authorization,
execution 

 

5

 

and delivery by the
Shareholder and the Company, constitutes a legal, valid and binding obligation
of the Investor, enforceable against the Investor in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws of general application now or
hereafter in effect relating to or affecting creditors’ rights, and by general
principles of equity, whether considered in a proceeding in law or equity. The
execution and delivery of this Agreement by the Investor does not, and the
Investor’s performance of its obligations under this Agreement will not
conflict with or result in any violation or default under (a) the Investor’s
charters, bylaws, partnership agreements, operating agreements or similar
organizational documents, (b) any law, regulation, rule, order, decree or
judgment applicable to the Investor or by which the Investor is bound, or (c) any
contract to which the Investor is a party or by which the Investor is bound,
except in the case of clause (b) and (c), as would not have a material
adverse effect on the Investor and its affiliates taken as a whole.

 

ii.                 Disclosure.  The Investor has had a reasonable opportunity
to ask questions of and receive answers from the Company concerning the
business and financial condition of the Company.  The Investor has received such information as
it considers necessary for deciding whether or not to enter into this Agreement
and consummating the transaction contemplated hereby.

 

iii.                Securities
Laws. The Investor understands and acknowledges that the
Purchased Shares are not being registered with the Securities and Exchange
Commission (“SEC”) under the U.S.
Securities Act of 1933, as amended (the “Act”) or
being qualified under applicable state securities laws and that the Purchased
Shares are instead being transferred outside the registration and qualification
requirements of the Act and applicable state securities laws. The Investor
understands that the Investor may not transfer any Purchased Shares unless such
Purchased Shares are registered under the Act or qualified under applicable
state securities laws or unless, in the opinion of counsel to the Company,
exemptions from such registration and qualification requirements are available.

 

iv.                Accredited
Investor.  The
Investor is an “accredited investor” within the meaning of Regulation D, Rule 501(a),
promulgated by the Securities and Exchange Commission under the Securities Act.

 

v.                 Legends.            Each certificate
representing any of the Purchased Shares shall be endorsed with the applicable
legend set forth below and any other legends required by applicable law, and
the Investor 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 

 

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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.

 

c.             Representations and Warranties
Regarding the Company. Except as set forth on the Schedule of Exceptions,
the Company and the Shareholder, jointly and severally, represent, warrant and
covenant to the Investor as follows:

 

i.              Capitalization.  Immediately
prior to the Closing and giving effect to the Share Split and Additional Share
Issuance, the Company has 10,000,000 Ordinary Shares issued and outstanding,
all of which are registered in the name of the Shareholder. The outstanding
Ordinary Shares have been (1) duly authorized and validly issued, and are
fully paid and nonassessable, and (2) were issued in compliance with all
applicable non-U.S. and U.S. state and federal laws concerning the issuance of
securities.

 

7

 

ii.             Additional Representations and Warranties.  The
representations and warranties in Section 3 of the Series A Agreement
regarding the Group Companies (as defined in the Series A Agreement) are
hereby incorporated herein in their entirety and shall apply to this Agreement
and the Purchased Shares, mutatis mutandis.

 

d.             Post Closing Covenants.

 

i.              Repurchase
of Investor Shares.  The Investor shall have the right
to repurchase the Investor Shares held by the Shareholder for the consideration
of the Purchased Shares held by the Investor (the “Repurchase”) if, by the one year anniversary date of
this Agreement, the regulatory approval(s) set forth in Section 3(d)(i) of
the Schedule of Exceptions has not been obtained in a form satisfactory to the
Investor (the “Approval”).  The Investor may exercise such right by
delivering a notice to the Company and the Shareholder and the share
certificate evidencing the Purchased Shares to the Company.  After receiving such notice and share
certificate and upon return of the Investor Shares (with appropriate stock powers
executed in blank) to the Investor, the Company shall promptly update the
registry of members of the Company to reflect the Shareholder’s ownership of
the Purchased Shares. The Shareholder shall promptly return the share
certificate (or any other instrument) evidencing the Investor Shares (with
appropriate stock powers executed in blank) to the Investor after receiving
such notice of Repurchase.

 

ii.             Lockup
of Investor
Shares.  Until the Approval is obtained,  the Shareholder shall not offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer, distribute or dispose of,
directly or indirectly (including, without limitation any of the foregoing with
respect to any holding company with recent ownership of the Investor Shares,
any Investor Shares or enter into any swap, hedging or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of
ownership of any of the Investor Shares without the prior written consent of
the Investor.  The Investor may impose
stop transfer orders on the Investor Shares until such time as the Approval is
obtained.

 

iii.            Tax
Filing.  The
Shareholder hereby agrees and covenants that, within thirty (30) days of the
date hereof, the Shareholder will make, or will cause its Affiliates to make,
the appropriate filing to the appropriate PRC tax authorities regarding the
transaction contemplated hereby, including without limitation any applicable
filings required under Circular 698 issued by the State Administration of
Taxation of the PRC, and pay any applicable tax required under the applicable
law when such tax is due.

 

4.             Miscellaneous.

 

a.             Governing Law.  This Agreement shall be governed by and
construed in accordance with substantive laws of the State of New York, as such
are applied to agreements between New York residents entered into and to be
performed within New York.

 

8

 

b.             Indemnity.

 

i.              In the event of (1) any breach or violation of, or inaccuracy or
misrepresentation in, any representation or warranty made by the Shareholder or
the Company contained herein or any of the other Transaction Agreements (as
defined in the Series A Agreement) (for purposes of determining the amount
of the damages and costs, no effect will be given to any qualification as to “materiality”
or “material adverse effect” contained therein), or (2) any breach or
violation of any covenant or agreement contained herein or any of the other
Transaction Agreements by any Group Company, (each of (1) and (2), a “Breach”), the Company and the
Shareholder shall use best efforts to cure such Breach (to the extent that such
Breach is curable) to the reasonable satisfaction of the Investor.  Notwithstanding the foregoing, the Company
and the Shareholder shall also jointly indemnify the Investor and its
Affiliates, limited partners, members, stockholders, employees, agents and
representatives (each, an “Indemnitee”)
for any and all losses, liabilities, damages, liens,  claims, obligations, penalties, settlements,
deficiencies, costs and expenses, including without limitation reasonable
advisor’s fees and other reasonable expenses of investigation, defense and
resolution of any Breach or alleged Breach paid, suffered, sustained or
incurred by the Indemnitees (each, an “Indemnifiable
Loss”) resulting from, or arising out of, or due to, directly or
indirectly, any Breach or alleged Breach.

 

ii.             Without limiting the generality of the preceding paragraph, in the event
that any Indemnitee is found or held to be liable for paying any tax or
penalties resulting from, or arising out of, or due to, directly or indirectly,
the Shareholder’s failure to make any applicable tax filings on time or pay any
applicable tax in full in any applicable jurisdiction (including without
limitation, the PRC) in connection with the transaction contemplated hereby,
the Shareholder shall indemnify such Indemnitee for any and all Indemnifiable
Losses in connection therewith.  The
Shareholder hereby agrees to pledge its rights and interests in the remaining
4,900,000 Ordinary Shares it will hold after the Closing to the Investor to
secure its indemnification obligation under this paragraph.  The Company and the Shareholder hereby agree
to promptly enter into any instrument, agreement or document and to make any
appropriate filings as may be reasonably requested by the Investor or required
under the applicable law to document and effectuate such share pledge.

 

c.             Dispute Resolution.

 

i.              Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
first be subject to resolution through consultation of the parties to such
dispute, controversy or claim.  Such
consultation shall begin within seven (7) days after one party hereto has
delivered to the other parties involved a written request for such
consultation.  If within thirty (30) days
following the commencement of such consultation the dispute cannot be resolved,
the dispute shall be submitted to arbitration upon the request of any party
with notice to the other parties.

 

ii.             The arbitration shall be conducted in Hong Kong under the auspices of the
Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the UNCITRAL Arbitration Rules (“UNCITRAL Rules”) in effect,
which rules are deemed to be incorporated by reference into this Section 4(c).  There shall be three (3) arbitrators.  The complainant and the respondent to such
dispute shall each select one arbitrator within thirty (30) 

 

9

 

days after giving or
receiving the demand for arbitration. 
Such arbitrators shall be freely selected, and the parties shall not be
limited in their selection to any prescribed list.  The Chairman of the HKIAC shall select the
third arbitrator, who shall be qualified to practice law in New York. If either
party to the arbitration does not appoint an arbitrator who has consented to
participate within thirty (30) days after selection of the first arbitrator,
the relevant appointment shall be made by the Chairman of the HKIAC.

 

iii.            The arbitration proceedings shall be conducted in English.  The arbitration tribunal shall apply the
UNCITRAL Rules in effect at the time of the arbitration.  However, if such rules are in conflict
with the provisions of this Section 4(c), including the provisions
concerning the appointment of arbitrators, the provisions of this Section 4(c) shall
prevail.

 

iv.            The arbitrators shall decide any dispute submitted by the parties to the
arbitration strictly in accordance with the substantive law of New York, and
shall not apply any other substantive law.

 

v.             Each Party hereto shall cooperate with any party to the dispute in making
full disclosure of and providing complete access to all information and
documents requested by such party in connection with such arbitration
proceedings, subject only to any confidentiality obligations binding on the
Party receiving the request.

 

vi.            The award of the arbitration tribunal shall be final and binding upon the
disputing parties, and any party to the dispute may apply to a court of
competent jurisdiction for enforcement of such award.

 

vii.           Any party to the dispute shall be entitled to seek preliminary injunctive
relief, if possible, from any court of competent jurisdiction pending the
constitution of the arbitral tribunal.

 

d.             Specific Enforcement.  The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that,
notwithstanding Section 4(c), the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.

 

e.             Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. This Agreement and any other
agreement or instrument contemplated by or related to this Agreement may also
be executed and delivered by facsimile or other electronic delivery of
signature.

 

f.              Successors and Assigns.  The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties.

 

10

 

 

 

g.             Survival.  The warranties, representations and covenants
of the parties contained in or made pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the Closing and shall in no
way be affected or limited by any investigation of the subject matter thereof
made by or on behalf the parties or knowledge of such subject matter.

 

h.             Notices.  All notices or other communications required
or permitted hereunder shall be in writing and faxed, emailed, mailed or
delivered to the Company’s executive offices (attention General Counsel) in the
case of the Company, or to the Investor at the address, facsimile number or
email address indicated for each of the respective Investor on the signature pages to
the Agreement, or to the Shareholder at the address, facsimile number or email
address indicated for the Shareholder on the signature pages to this
Agreement. All notices and communications will be deemed effectively given the
earlier of (i) when received, (ii) when delivered personally, (iii) one
business day after being delivered by facsimile or email (with receipt of
appropriate confirmation), or (iv) one business day after being deposited
with an overnight courier service of recognized standing.

 

i.              Expenses.  Each party shall pay its own expenses in
connection with the transactions contemplated hereby and the Shareholder shall
pay the expenses of the Company incurred in connection with the transaction
contemplated hereby; provided, however that if any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney’s fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

 

j.              Amendments and Waivers.
Any material term of this Agreement may be amended or waived only with the
written consent of the Investor and the Shareholder. Any amendment or waiver
effected in accordance with this section shall be binding upon the Company, Investor
and the Shareholder.

 

k.             Severability.  If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision shall be
deemed automatically adjusted to the minimum extent necessary to conform to the
requirements for validity as declared at such time and, as so adjusted, shall
be deemed a provision of this Agreement as though originally included herein.
In the event that the provision invalidated is of such a nature that it cannot
be so adjusted, the provision shall be deemed deleted from this Agreement and
the remaining provisions of this Agreement shall remain in effect.

 

l.              Delays or Omissions.  No delay or omission to exercise any right,
power or remedy accruing to any party under this Agreement, upon any breach or
default of any other party under this Agreement, shall impair any such right,
power or remedy of such non-breaching or non-defaulting party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. All remedies,
either under this Agreement or by law or otherwise afforded to any party, shall
be cumulative and not alternative.

 

11

 

m.            Entire Agreement.  This Agreement, and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

[Signature
Pages Follow]

 

12

 

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

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  STAGE SMART LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lin Song

  
	
   

  	
   

  	
  Lin Song, Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
  Mailing Address:

  
	
   

  	
   

  
	
   

  	
  Room 512, 5/F

  
	
   

  	
  Tower 1 Silvercord, 30
  Canton Road

  
	
   

  	
  Tsimshatsui, Kowloon

  
	
   

  	
  Hong Kong

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHAREHOLDER:

  
	
   

  	
   

  
	
   

  	
  SMART FRONTIER HOLDINGS LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zhang Mingliang

  
	
   

  	
   

  	
  Zhang Mingliang, Director

  
	
   

  	
   

  
	
   

  	
  Mailing Address:

  
	
   

  	
   

  
	
   

  	
  Room 512, 5/F

  
	
   

  	
  Tower 1 Silvercord, 30
  Canton Road

  
	
   

  	
  Tsimshatsui, Kowloon

  
	
   

  	
  Hong Kong

  

 

SIGNATURE
PAGE TO

ORDINARY
SHARES PURCHASE AGREEMENT

 

 

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

 

 

	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
  UTSTARCOM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jack Lu

  
	
   

  	
   

  	
  Jack Lu, Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mailing Address:

  
	
   

  	
  20F, Tower E1, The Towers,
  Oriental Plaza

  
	
   

  	
  No. 1 East Chang An
  Avenue

  
	
   

  	
  Dong Cheng District

  
	
   

  	
  Beijing 100738 P.R. China

  

 

SIGNATURE PAGE TO

ORDINARY SHARES PURCHASE
AGREEMENT

 

 

Exhibit A

 

Amended Memorandum and Amended Articles

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