Document:

Exhibit 10.105

 

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

 

ASSET PURCHASE AGREEMENT

 

This is an ASSET PURCHASE AGREEMENT (this ”Agreement”),
dated October 29, 2004 by and between UTStarcom CDMA Technologies
Korea Limited, a limited liability company (yuhan hoesa) organized
under the laws of Korea (“Purchaser”) and Giga Telecom, Inc., a
corporation organized under the laws of Korea (“Seller”). Purchaser and Seller
shall sometimes each be referred to as a “Party” and collectively as the ”Parties”.

 

RECITALS:

 

WHEREAS, Seller is the owner of certain assets relating to the
research and development of CDMA wireless products;

 

WHEREAS, Purchaser wishes to establish a research and
development center in Korea to provide certain design services for its overseas
subsidiaries and Affiliates to manufacture and sell CDMA wireless products;

 

WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the Transferred Assets (as defined below) upon terms and conditions
set forth herein (“Asset Transfer”);

 

WHEREAS, as a separate arrangement, Seller and UTStarcom Inc. (“UTSI”)
have entered into an agreement dated March 8, 2004 whereby UTSI has
engaged Seller to design three (3) products (i.e., C2000, C3000 and
C5000) (“Existing Projects”) for which UTSI has fully paid the amount of the
contract price of United States Dollars [***]. 
The amount and timing of the payment by Purchaser of a portion of the
purchase price for the Asset Transfer shall depend upon the completion of the
Existing Projects as set forth herein;

 

WHEREAS, as a separate arrangement, Seller and UTSI have entered
into certain agreements dated August 6, 2004 whereby UTSI has engaged
Seller to design certain entry-level handsets using [***] for which UTSI has
fully paid the amount of the contract price of United States Dollars [***].

 

WHEREAS, as a separate arrangement, Seller and UTSI have entered
into certain agreements dated September 17, 2004 whereby UTSI has
engaged Seller to design three (3) products (i.e., C12000, C1200B and
CI 100B) for which UTSI has paid the amount of US$800,000 out of the total
amount of US$[***].

 

NOW THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained herein, and in reliance thereon,
Purchaser and Seller hereby agree as follows:

 

DEFINITIONS:

 

“Affiliate” or “Affiliates” means any Person(s)
directly or indirectly controlling, controlled by or under common control with
such Person. As used in this definition, “controlling” (including, with its 

 

1

 

correlative meanings, “controlled
by” and “under common control with”) means possession, directly or indirectly,
of power to direct or cause the direction of management or policies, whether
through ownership of securities, partnership or other ownership interests, by
contract or otherwise.

 

“Asset List” has the meaning as described in Section 1.1.

 

“Asset Transfer” has the meaning as described in the
Recitals Section.

 

“Authority” means any national or local or foreign
governmental or regulatory entity, or any department, agency, authority or
political subdivision thereof.

 

“Balance Sheet” has the meaning as described in Section 2.4.
“Balance Sheet Date” has the meaning as described in Section 2.4.

 

“Business Day” shall mean Monday through Friday,
except those days on which commercial banks are authorized or required by law
to close in either the United States of America or Korea.

 

“Calendar Day” shall mean all days of the week,
including national holidays. “CDMA” shall mean Code Division Multiple Access
digital wireless technology. “Closing” and “Closing Date” have the meanings as
described in Section 1.12.

 

“Complete”, “Completed” and “Completion” mean results
satisfactory to Purchaser with respect to (i) CDG approval fro Stages 1, 2
and 3, (ii) customer acceptance by at least one carrier, (iii) manufacturing
engineering acceptance test and (iv) qualification test.

 

“Confidential Information” has the meaning as
described in Section 1.14(g).

 

“C2000” means the tri-mode (CDMA 1x / AMPS / GPS)
handsets with features of [***] which Seller has agreed to develop for Purchaser
pursuant to an agreement therefor dated March 8, 2004.

 

“C3000” means the tri-mode (CDMA lx / AMPS / GPS)
handsets with features of [***] which Seller has agreed to develop for
Purchaser pursuant to an agreement therefor dated March 8, 2004.

 

“C5000” means the tri-mode (CDMA Ix / AMPS / GPS)
handsets with features of [***] which Seller has agreed to develop for
Purchaser pursuant to an agreement therefor dated March 8, 2004.

 

“Damages” means the aggregate amount of all damages,
claims, losses, obligations, liabilities (including any governmental penalty,
fines or punitive damages), deficiencies, interest, costs and expenses arising
out of or relating to a matter and any actions, judgments, costs and expenses
(including reasonable attorneys’ fees and all other expenses incurred in
investigating, preparing or defending any litigation or proceeding, commenced
or threatened) incident to such matter or to the enforcement of this Agreement
and any ancillary agreements thereto, including, but not limited to, reasonable
legal fees incurred by the Party entitled to indemnification under this
Agreement and any ancillary agreements thereto.

 

“Employee Releases” has the meaning as described in Section 1.11(f).
“Environmental Laws” has the meaning as described in Section 2.12(a).

 

“Environmental Liabilities” means any liabilities
(including costs of re-mediation) known or unknown, foreseen or unforeseen,
whether contingent or otherwise, fixed or absolute, present or future, asserted
against or incurred by Purchaser arising out of or relating to (i) environmental
conditions first occurring or existing prior to the Closing (whether disclosed
or undisclosed) including, without limitation, the presence, Release, threat of
Release, Management or exposure of or to Hazardous Substances (each as defined
herein) at, on, in or under any property relating to or connected with the
R&D now or previously owned, operated or leased by Seller or any of its
Affiliates or predecessors (whether into the air, soil, ground or surface waters
on-site or off-site); (ii) the off site transportation, storage,
treatment, recycling or 

 

2

 

disposal of Hazardous
Substances Managed, Released or generated related to or connected with the
R&D prior to the, Closing by Seller or any of its Affiliates or
predecessors or generated in connection with any of their operations; or (iii) any
violation of any Environmental Law in relation to or connected with the R&D
first occurring or existing prior to the Closing (including, without
limitation, costs and expenses for pollution control equipment required to
bring the R&D into compliance with Environmental Laws and fines, penalties
and defense costs incurred for such reasonable time after the Closing as it
takes Purchaser to come into compliance).

 

“Environmental Permits” has the meaning as described
in Section 2.12(b). “Excluded Assets” has the meaning as described in Section 1.2.

 

“Existing Projects” has the meaning as described in
the Recitals Section.

 

“Financial Institution” has the same meaning as
ascribed to “creditor financial institution” in Article 2, Item 1 of
the Corporate Restructuring Promotion Act (Act No. 6991, established on August 14, 2001
as last amended as of December 11, 2003).

 

“Financial Statements” has the meaning as described in
Section 2.4.

 

“Hazardous Substances” means any hazardous, toxic or
polluting materials, substances, wastes, pollutants or contaminants (including,
without limitation, petroleum and petroleum products, PCBs, radioactive materials,
asbestos or asbestos-containing materials).

 

“Holdback Amount” has the meaning as described in Section 1.4(a).

 

“Indemnified Party” and “Indemnifying Party” have the
meanings as described in Section 4.5(b)(iv).

 

“Initial Payment” has the meaning as described in Section 1.4(a).
“Installments” has the meaning as described in

Section 1.4(c).

 

“Intellectual Property” means any or all of the
following and all rights relating to or otherwise necessary to the operation of
the R&D, whether owned by, licensed to or otherwise used by Seller, in,
arising out of, or associated therewith: (i) all United States, Korean and
foreign patents and utility models and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and continuations-in-part
thereof, and equivalent or similar rights anywhere in the world in inventions
and discoveries; (ii) all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data, tools and product designs, and all
documentation embodying or evidencing any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor and all other
rights corresponding thereto throughout the world; (iv) all industrial
designs and any registrations and applications therefor throughout the world; (v) all
databases and data collections and all rights therein throughout the world; (vi) all
computer software including all source code, object code, firmware, development
tools, files, records and data, all media on which any of the foregoing is
recorded; and (vii) any similar, corresponding or equivalent rights to any
of the foregoing anywhere in the world.

 

[***] has the meaning as described in the Recitals
Section.

 

[***] has the meaning as described in the Recitals
Section.

 

“Key Employees” has the meaning as described in Section 1.1(g).

 

“Knowledge” and words of similar import mean, with
respect to any Party, actual knowledge of a particular fact or other matter
being possessed by any officer or other individual now or formerly having
principal responsibility for a business or administrative function of such
Party, 

 

3

 

including individuals
servicing in such a capacity in or for the R&D, and the knowledge that
reasonably could be expected to be obtained in the course of conducting a
reasonably comprehensive investigation concerning the subject matter.

 

“Korea” means the Republic of Korea.

 

“Labor Standards Act” means the Labor Standards Act of
Korea.

 

“Law” means all laws, statutes, ordinances,
regulations, and other pronouncements having the effect of law of the Republic
of Korea or any other country or territory, commonwealth, city, county,
municipality, protectorate, possession, court, tribunal, agency, government,
department, commission, arbitrator, board, bureau, or instrumentality thereof.

 

“Liability” means all debt, liabilities, losses,
claims, damages, costs, expenses and obligations of every kind, whether fixed
or contingent, mature or unmatured, or liquidated or unliquidated, including,
without limitation, those arising under any law and those arising under any
contract, commitment or undertaking.

 

“Licensed Intellectual Property” has the meanings as
described in Section 2.16(d).

 

“Lien” or “Liens” means any lien, charge, claim,
pledge, security interest, conditional sale agreement or other title retention
agreement, lease, tenancy, ground rent, license, mortgage, security agreement,
covenant, condition, restriction, right-of-way, easement, encroachment, option,
judgment or of other encumbrance of matter of title.

 

“Loss” or “losses” means any and all deficiencies,
judgments, settlements, demands, claims, actions, assessments, liabilities,
losses, damages (other than consequential damages), interest, fines, penalties,
costs and expenses, including without limitation, reasonable legal, accounting
and other costs and expenses incurred in connection with investigating,
defending, settling or satisfying any and all demands, claims, actions, causes
of action, suit, proceedings, assessment, judgments or appeals.

 

“Management” has the meaning as described in Section 2.12(d).
“Managed” has a similar meaning appropriate for the context.

 

“Material Adverse Effect” means an effect that is
materially adverse (i) to the properties, business, operations, earnings,
assets, liabilities or financial condition, or prospects of Seller taken as a
whole, (ii) the ability of Seller to perform its obligations under this
Agreement, or (iii) the enforceability of this Agreement, as the case may
be.

 

“National Tax Basic Law” means the statute (Act No. 2679),
established on December 27, 1974, as last amended by Act No. 7008 on December 30, 2003.

 

“Person” means any individual, a corporation, a
partnership, an association, a trust or other entity or organization, including
an Authority.

 

“Personal Property Permitted Encumbrances” has the
meaning as described in Section 2.14. “Purchase Price” has the meaning as
described in Section 1.3. “Purchase Price Balance” has the meaning as
described in Section 1.4(c). “Purchase Price Escrow Agreement” has the
meaning as described in the Section 1.8.

 

“Raw Materials” means the raw materials being used for
or which are substantially related to the R&D for development of all the
models that are under development as of the Closing Date, including but not
limited to the following models: C2000, C3000, C5000, C1 100A, C1100B; C1200B,
C12000 and GSH-810. Those raw materials will include, but will not be limited
to, parts, PCBs, moldings, assemblies, tools, and samples that are mobilized
for and/or resulted from R&D activities for each stage of 

 

4

 

development for mock-up
samples, prototype samples, engineering samples, mechanical samples, pre-production
samples, and mass production samples.

 

“R&D” means the research and development
activities of Seller in respect of CDMA wireless products, including but not
limited to all registered rights, copyrights, trade secrets, and manufacturing
processes related thereto.

 

“R&D Employees” has the meaning as described in Section 1.1(g).

 

“Released” means released, spilled, leaked, pumped,
poured, emitted, emptied, discharged, injected, escaped, leached, disposed, or dumped
and other similar terms. “Release” when used as a verb, has the same meaning,
but in the present tense, and when used as a noun, has a similar meaning
appropriate for the context.

 

“Schedules to be-Prepared” has the meaning of such
schedules to this Agreement which have not yet been attached hereto as of the
date of this Agreement, but which shall be prepared to Purchaser’s satisfaction
and delivered by Seller within a reasonable time after the date hereof.

 

“Taxes” and “Tax” have the meanings as described in Section 2.7.
“Third Party Claim” has the meaning as described in Section 4.5(b)(i). “Transferred
Assets” has the meaning as described in Section 1.1.

 

“United States Dollars” and “US$” means the official
currency of the United States of America.

 

“Walk Away Date” has the meaning as described in Section 5.12(b).
“Won” means the official currency of the Republic of Korea.

 

SECTION 1

 

THE TRANSACTION

 

1.1                                 Sale
and Purchase of Assets.  Subject to
the terms and conditions hereof, at Closing referred to in Section 1.12
below, Seller will sell, transfer, convey and assign to Purchaser, free and
clear of all Liens of every kind, nature and description, except for the
Excluded Assets (as defined in Section 1.2) or as otherwise disclosed and
agreed in this Agreement, and Purchaser will purchase from Seller, all of the
assets as shall be listed on Schedule 1.1(a) through
(g) (the ”Asset List”) and any other assets that are
being used for or are substantially related to the R&D on the date hereof
or as of Closing, wherever such assets are located and whether real, personal
or mixed, tangible or intangible, and whether or not any of such assets have
any value for accounting purposes or are carried or reflected on or
specifically referred to in its books or Financial Statement (collectively,
the ”Transferred Assets”). The Transferred Assets shall include, without
limitation, all of Seller’s right, title and interest in and to the following,
as the same may exist on the Closing Date (as defined in Section 1.12):

 

(a)          all of the Seller’s right, title and interest in, to and
under the Intellectual Property related to the R&D including without
limitation the Intellectual Property listed on Schedule (a) to the Asset List, copies and tangible embodiments thereof
in whatever form or medium, and all rights to sue and recover damages for past,
present and future infringements, dilution, misappropriate, violation, unlawful
imitation or breach thereof;

 

(b)         the Raw Materials and all of Seller’s machinery, equipment,
and tools being used for or substantially related to the R&D, including
without limitation, the items listed on Schedule 1.1(b) to the Asset List;

 

(c)          all of Seller’s other tangible assets being used for or
substantially related to the R&D, including office equipment and supplies,
computer hardware and software, including without 

 

5

 

limitation, the items
listed on Schedule (c) to the
Asset List;

 

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

 

(e)          the rights and interest to the lease agreements with respect
to certain equipment as listed on
Schedule 1.1(e) to the Asset List;

 

(f)            all of Seller’s interest in
governmental permits, licenses, registrations, orders and approval
substantially relating to the R&D and Transferred Assets to the extent such
permits, licenses, registrations, orders and approvals are separately
transferable to Purchaser; and

 

(g)         the relevant employees of the Seller listed on Schedule (g) to the Asset List (which list maybe modified one (1) week
prior to Closing as provided under Section 4.2), who have been identified
as working for the R&D and may be hired by Purchaser as of Closing (“R&D
Employees”), including those employees who are identified as key employees to
the R&D (“Key Employees”).

 

To the
extent that there are any tangible or intangible assets used by Seller in
connection with or otherwise necessary to the operation of the R&D that are
not included in this Section 1.1 and are not specifically designated as
Excluded Assets in Section 1.2, the Transferred Assets shall include an
irrevocable, nonexclusive, perpetual, paid-up, royalty-free, transferable license,
contract or lease to utilize such assets in connection with the operation of
the R&D after the Closing Date, To the extent that any such assets may not
be licensed, contracted or leased, Seller shall take all steps required to
assure that Purchaser obtains the benefit of such assets.

 

For the
avoidance of doubt, any and all rights and interest in the products relating to
the Existing Projects, [***],
whether or not such products have been fully Completed, shall be part of the
Transferred Assets and transferred to Purchaser.

 

1.2                                 Excluded
Assets. Notwithstanding any other provision of this Agreement, Seller shall
retain all property of any nature, kind and description other than the
Transferred Assets and for the avoidance of doubt, the Transferred Assets shall
not include the following assets of the R&D (collectively, the ”Excluded
Assets”):

 

(a)          all of Seller’s existing agreements with third parties
(including its customers and venders) (other than license agreements of the
Licensed Intellectual Property included as part of the Transferred Assets) for
the design and production of CDMA wireless products specific to certain
customers which were entered into prior to Closing;

 

(b)         all inventory or other raw materials relating to the R&D
in existence prior to Closing except for certain raw materials as set forth in Section 1.1(c) hereof;

 

(c)          all notes and accounts receivables owing to Seller on the
Closing Date;

 

(d)         all key money deposits for the lease of the building
occupied by Seller as of the date hereof;

 

(e)          any account payables and third party claims related to the
R&D;

 

(f)            all trademarks and trade names
of Seller; and

 

(g)         all assets listed in Schedule 1.2.

 

1.3                                 Purchase
Price. The total aggregate purchase price for the Transferred Assets,
exclusive of VAT, shall be US$18,600,000 (the ”Purchase Price”).

 

6

 

1.4                                 Payment
of Purchase Price. The Purchase Price shall be paid by Purchaser to Seller as follows:

 

(a)          The amount of US$13,000,000
shall be paid by Purchaser at Closing by wire transfer in accordance with the
instructions of Seller (the ”Initial Payment”), provided that,
the amount of US$2,000,000 out of US$13,000,000 above shall be held-back in
escrow pursuant to Section 1.8 below (the ”Holdback Amount”) and, provided further that, the
amount of the Purchase Price maybe reduced as set forth in Section 1.11(i) below;

 

(b)         The amount of US$1,600,000 out of [***], which was paid by
Purchaser in respect of the [***]
shall be applied against the Purchase Price; and

 

(c)          The amount of US$4,000,000 (“Purchase Price Balance”) shall
be paid in three (3) separate installments (“Installments”), subject
to adjustments, upon Completion of each of the Existing Projects as provided in
Section 1.6 below.

 

1.5                                 Allocation
of Purchase Price. Purchaser and Seller agree that the Purchase Price shall
be allocated among the Transferred Assets in accordance with the principles of
allocation which shall be set forth in Schedule 1.5, provided that, the Parties shall, on or prior to Closing, update Schedule 1.5 to show the
respective amounts allocated to each asset and liabilities (if any). Purchaser
and Seller agree that each will report all Tax consequences of the purchase and
sale contemplated hereby in a manner consistent with such allocation.

 

1.6                                 Payment
and Adjustment to Purchase Price Balance. 
Each Installment of the Purchase Price Balance may be reduced by [***] or [***]
as the case may be, if the Existing Projects are not Completed to Purchaser’s
satisfaction as follows:

 

(a)          First
installment. If the C2000 MP is Completed by December 29, 2004,
Purchaser shall pay Seller the amount of US$2,000,000 within two (2) Business
Days after such Completion or at Closing, whichever is later. If the C2000 MP
is Completed between December 30, 2004 to January 31, 2005
and the reason for such delay is due to causes primarily attributable to
Seller, the amount of the First Installment shall be reduced by [***] and
Purchaser shall pay the Seller the amount of [***] within two (2) Business
Days after such Completion or at Closing, whichever
is later. If the C2000 MP is Completed after January 31, 2005 and the
reason for such delay is due to causes primarily attributable to Seller, the
amount of the First Installment shall be reduced by [***] and the Purchaser [***].  Notwithstanding the preceding sentences, if
the C2000 MP is not Completed due to causes which are primarily attributable to
Purchaser, Purchaser shall pay the appropriate amount on the relevant milestone
date as set forth in this Section.

 

(b)         Second
installment. If the C3000 MP is Completed by January 30, 2005,
Purchaser shall pay Seller the amount of US$1,000,000 within two (2) Business
Days after such Completion or at Closing, whichever is later. If the C3000 MP
is Completed between January 31, 2005 to February 28, 2005
and the reason for such delay is due to causes primarily attributable to
Seller, the amount of the Second Installment shall be reduced by [***] and
the Purchaser shall pay the Seller the amount of [***] within two (2) Business
Days after such Completion or at Closing, whichever is later. If the C3000 MP
is Completed after February 28, 2005 and the reason for such delay is
due to causes primarily attributable to Seller, the amount of the Second
Installment shall be reduced by [***] and the Purchaser [***]. Notwithstanding the preceding
sentences, if the C3000 MP is not Completed due to causes which are primarily
attributable to Purchaser, Purchaser shall pay the appropriate amount on the
relevant milestone date as set forth in this Section.

 

(c)          Third
installment. If the C5000 MP is Completed by February 24, 2005,
Purchaser shall pay Seller the amount of US$1,000,000 within two (2) Business
Days after such Completion or at Closing, whichever is later. If the C5000 MP
is Completed between February 25, 2005 to March 25, 2005
and the reason for such delay is due to causes primarily attributable to
Seller, the amount of the Third Installment shall be reduced by [***] and
the Purchaser shall pay the Seller the amount of [***] within 

 

7

 

two (2) Business
Days after such Completion or at Closing, whichever is later. If the C5000 MP
is Completed after March 25, 2005 and the reason for such delay is
due to causes primarily attributable to Seller, the amount of the Third
Installment shall be reduced by [***] and the Purchaser [***].
Notwithstanding the preceding sentences, if the C5000 MP is not Completed due
to causes which are primarily attributable to Purchaser, Purchaser shall pay
the appropriate amount on the relevant milestone date as set forth in this
Section.

 

1.7                                 Seller’s
Liabilities. Purchaser is not assuming any liabilities of Seller in
connection with or related to the Transferred Assets (except for the
obligations under the lease agreements that have been assigned to Purchaser
under Section 1.1(e)). Seller shall retain, and shall be responsible for
paying, performing and discharging all of Seller’s liabilities when due,
including without limitation, any obligation under existing agreements with
Seller’s customers, any debt or liability owed to creditors of Seller and any
liability owed to the R&D Employees.

 

1.8                                 Purchase
Price Escrow. Among the Purchase Price amount to be paid at the Closing,
the amount of US$2,000,000 shall be placed into escrow by, and in the name of,
Purchaser with a third party escrow agent mutually agreed by the Parties for a
period of six (6) months after Closing to secure Seller’s obligations
to indemnify Purchaser under this Agreement. The escrow shall be established by
execution of an escrow agreement substantially in the form attached hereto as Schedule 1.8  (“Purchase Price
Escrow Agreement”).

 

1.9                                 Conditions
to Each Party’s Obligations. The obligations of both Purchaser and Seller
to consummate the transactions contemplated hereby are subject to the
fulfillment of each of the following conditions on or before the Closing Date.

 

(a)          No provisions of any applicable law of Korea, and no
judgment, injunction, writ, preliminary restraining order or any other order or
decree of any nature issued by a court of competent jurisdiction or any
governmental body shall (i) prohibit the consummation of the transactions
contemplated hereby or (ii) restrain, prohibit or otherwise interfere with
the effective operation or enjoyment by Purchaser of all or any material
portion of the Transferred Assets.

 

(b)         Purchaser and Seller shall have each received all material
consents, authorizations or approvals from their respective boards of
directors, shareholders, governmental agencies (including but not limited to an
approval by the Fair Trade Commission of Korea), and third parties that are a
pre-requisite to the Closing as a matter of law, in form and substance
satisfactory to the other Party, and no such consent, authorization or approval
shall have been revoked.

 

(c)          Purchaser, Seller and the relevant escrow agent shall have
executed the Purchase Price Escrow Agreement on or prior to Closing.

 

1.10                           Conditions
to Seller’s Obligations. The obligations of Seller to consummate the
transaction contemplated hereby are subject to fulfillment of all of the
following conditions on or prior to the Closing Date.

 

(a)          Each and every representation and warranty made by Purchaser
contained in this Agreement shall have been true in all material respects as of
the date when made and shall be true in all material respects at and as of the
Closing Date as if originally made on and as of the Closing Date.

 

(b)         All obligations of Purchaser to be performed on or before
the Closing Date shall have been performed in all material respects.

 

(c)          No action shall be threatened or pending before any court or
governmental agency the probable outcome of which would result in the restraint
or prohibition of the consummation of the 

 

8

 

transactions contemplated
hereby.

 

(d)         On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued by a
court of competent jurisdiction directing that the transactions contemplated
hereby, or any of them, not be consummated as herein provided and no suit,
action, investigation, inquiry or other legal or administrative proceeding by
any governmental body or other Person shall have been instituted which questions
of validity or legality of the transactions contemplated hereby or which if
successfully asserted might otherwise have a Material Adverse Effect on the
Transferred Assets.

 

(e)          Purchaser shall have obtained the approval from Purchaser’s
board of directors approving the purchase of the Transferred Assets on the
terms of this Agreement and authorizing any one of its directors or officers to
execute this Agreement for and on behalf of Purchaser.

 

(f)            Purchaser shall have obtained
the approvals and/or clearance for the transactions contemplated hereby from
the Fair Trade Commission of Korea.

 

(g)         Seller shall have received to its satisfaction the favorable
legal opinion of the counsel for Purchaser substantially in the form attached
hereto as Schedule 1.10(g).

 

1.11                           Conditions
to Purchaser’s Obligations. The obligations of Purchaser to consummate the
transactions contemplated hereby are subject to the fulfillment of all of the
following conditions on or prior to the Closing Date (or other date as specified
hereunder).

 

(a)          Each and every representation and warranty made by Seller
contained in this Agreement and in any certificate or other writing delivered
by Seller pursuant hereto shall be true in all material respects as of the date
when made and shall be true in all material respects at and as of the Closing
Date as if originally made on and as of the Closing Date.

 

(b)         All obligations of Seller to be performed hereunder on or
before the Closing Date shall have been performed in all material respects.

 

(c)          No action shall be threatened or pending before any court or
governmental agency as of the Closing Date the probable outcome of which would
result in (i) the restraint or prohibition of the consummation of the
transactions contemplated hereby or (ii) the restraint or prohibition of,
or interference with, the effective operation of enjoyment by Purchaser of all
or any material portion of the Transferred Assets. Among others, no creditor to
which Seller has a minimum indebtedness of three hundred million (300,000,000)
Won shall have any claims against the assets or business of Purchaser as a
result of the Asset Transfer, and the Asset Transfer shall not be subject to
the application of fraudulent conveyance by such creditors, avoidance
principles and other similar laws.

 

(d)         On the Closing Date, there shall be no injunction, writ,
preliminary restraining order or any order of any nature in effect issued by a
court of competent .jurisdiction directing that the transactions contemplated
hereby, or any of them, not be consummated as herein provided and no suit,
action, investigation, inquiry or other legal or administrative proceeding by
any governmental body or other Person shall have been instituted which
questions of validity or legality of the transactions contemplated hereby or
which if successfully asserted might otherwise have a Material Adverse Effect
on the Transferred Assets.

 

(e)          Between the date hereof and the Closing Date, there shall
have been no change which could have a Material Adverse Effect on the
Transferred Assets.

 

(f)            Any and all notices to R&D
Employees, as required under applicable employment laws, shall have been
provided by Seller. At least (i) 77 engineers out of the total 105 R&D
Employees and (ii) 100% of the Key Employees, shall have accepted new
employment with Purchaser and such employees 

 

9

 

shall have confirmed in
writing that all obligations of Seller have been fully satisfied or discharged
at or prior to Closing in the form provided in Schedule 1.11(f) (“Employee
Release”), and Purchaser shall have entered into arrangements with Key
Employees based on terms and conditions as set forth in Section 4.2(d) satisfactory
to Purchaser in its sole discretion. If the number of R&D Employees is less
than 105, Seller shall hire such additional personnel prior to Closing with
sufficient experience and competence as may be approved by Purchaser in advance
so that the number of R&D Employees shall be at least 105.

 

(g)         Seller shall have obtained the approvals and/or clearances
for the transactions contemplated hereby from any governmental agencies
(including but not limited to (i) the necessary approvals/clearances from
the Ministry of Commerce, Industry and Energy (“MOCIE”) aid the Ministry of Science
and Technology (“MOST”) under the Foreign Trade Law (Act No. 6977,
established on December 31, 1986 as last amended as of September 29, 2003)
and the Technology Development Promotion Law (Act No. 715, established on December 28,
1972 as last amended as of January 29, 2004), respectively, for
transfer of the Transferred Assets overseas and (ii) the necessary filings
with the Financial Supervisory Commission and Korea Securities Dealers’
Association), such that no further approval, clearance or filing with any
governmental authority under applicable laws is required for the transfer of
the Transferred Assets overseas as contemplated in Purchaser’s business plan
set forth in Schedule 1.11(g), provided that, Seller shall obtain further approval/clearance from the
MOCIE and MOST with respect to the transfer of the project models GDB 570, GDM-100,
GDM-101, GDM-530, GDM-550, GSD-551, GSD-560, GSD-556, GSD-570, GDB-558, Goias,
G-PCS, GSP-556, GSD-430, GSD-456, GDB-M700, CM-800, GPM-200, GPM-3000 and CM-1900A
overseas as contemplated in Purchaser’s business plan set forth in Schedule 1.11(g) prior to the
Seller’s shareholders’ meeting to approve the transaction contemplated herein.
Seller hereby agrees not to convene the shareholders’ meeting until such
further approval/clearance from the MOCIE and MOST as provided in the preceding
sentence have been obtained, and the Parties shall discuss in good faith
whether such further approval/clearance from the MOCIE and MOST are
satisfactory to the Purchaser, and if not satisfactory to the Purchaser,
whether Purchaser shall terminate this Agreement pursuant to Section 5.12
below. The Purchaser shall determine within five (5) Business Days of
receipt of the approval/clearance from MOCIE and MOST whether such
approval/clearance are satisfactory to the Purchaser. Further, Purchaser shall
have obtained assurance to its reasonable satisfaction that any contemplated
change of existing laws or adoption of new laws in connection with the export
and/or use of the concerned CDMA technology will not have a Material Adverse
Effect as of the Closing on Purchaser’s business in Korea as contemplated in
Purchaser’s business plan in respect of the Transferred Assets set forth in Schedule 1.11(g); provided that Purchaser
shall determine by five (5) days prior to the date of the Seller’s
shareholders’ meeting whether Purchaser obtained such assurance. In addition,
Seller shall have obtained its shareholders’ approval for the transactions
contemplated herein.

 

(h)         Seller shall have obtained consent from its creditors, and
such consenting creditors shall comprise (i) not less than 70% of the
aggregate debt amount of Seller (exclusive of the advance payment from
Purchaser) prior to the shareholders’ meeting of Seller approving the Asset
Transfer and (ii) not less than 80% of the aggregate debt amount, which amount
should include not less than 100% of the aggregate debt amount of the Financial
Institutions listed in Schedule 1.11(h)(3),
no later than two (2) Business Days prior to Closing. Each of the
consenting creditors shall submit to Seller and Purchaser the consent in the
form provided in Schedule 1.11(h)(1).
Attached hereto as Schedule 1.11(h)(2) is
a complete list of all creditors of Seller and the amounts owed to each
creditor as of the date hereof. The list of creditors and amount owed provided
in Schedule 1.11(h)(2) shall
be updated, as necessary, as of Closing.

 

(i)             Seller shall have obtained
consent from any licensor or co-owners of any Intellectual Property, or
Licensed Intellectual Property, (excluding software relating to non-developmental
tools) in the form satisfactory to Purchaser with respect to the assignment or
transfer of such Intellectual Property or Licensed Intellectual Property from
Seller to Purchaser. For those Licensed Intellectual Property listed in Schedule 1.11(i), Seller shall use
its best efforts to obtain the necessary consent from appropriate licensors or
co-owners on or prior to the Closing. In the event such consent is not obtained
on or prior to the Closing, and the value of the relevant Intellectual
Property, or Licensed Intellectual Property, (excluding software relating to
non-developmental tools) for which consent has not been obtained exceeds
US$400,000, the Purchase Price shall be deducted by the amount equal to (a) the
total value of the relevant Intellectual 

 

10

 

Property or Licensed
Intellectual Property for which consent has not been obtained minus (b) US$400,000.

 

(j)             Purchaser shall have received to
its satisfaction the favorable legal opinion of the counsel for Seller
substantially in the form attached hereto as Schedule 1.11(j).

 

(k)          Purchaser shall have completed all of its legal, accounting,
financial, employee, and creditor due diligence with respect to Seller and
shall in its reasonable business judgment have decided that the results of such
due diligence from the date hereof until Seller’s shareholders’ meeting for the
Asset Transfer, together which such due diligence completed on or prior to the
date hereof, do not and will not lead to a frustration of its purposes of the
transactions contemplated in this Agreement.

 

(l)             Purchaser shall have received
from Seller, to its reasonable satisfaction, evidence that the investment
agreements entered into with (i) Kibo Capital Co., Ltd. dated September 11,
1999 and (ii) Saewon Telecom Co., Ltd., dated October 12,1999, February 23, 2000
and July 10, 2001 have been terminated.

 

(m)       Seller shall have obtained a waiver from KTB Network Co.,
Ltd. (“KTB”) with respect to KTB’s rights under the investment agreement
between Seller and KTB, dated March 10, 2000, arising with respect to
the restrictions under such investment agreement on the transfer of
technologies to third parties by Seller and its guarantors. Such waiver shall
be in a form substantially similar to the form provided in Schedule 1.11(m).

 

(n)         Seller shall have provided notice of the transactions to be
performed under this Agreement to each of its lenders and, if applicable,
consulted with each of such lenders, in each case that such notice or
consultation is required under the relevant loan or similar credit document
with respect to any changes in the Seller’s property or any sale or transfer of
the business or any material assets of Seller.

 

(o)         Seller shall have given notice to Daehan Investment Trust
Co., Ltd. (“Daehan”) under the subscription agreement entered into between
Seller and Daehan on September 3, 2003 of the transactions to be
performed under this Agreement.

 

(p)         Seller shall provide the updated Schedule 1.5 as set forth in Section 1.5
to Purchaser’s satisfaction.

 

(q)         The board of directors of Purchaser shall have approved the
transaction contemplated under this Agreement.

 

1.12                           Closing.
The closing under this Agreement will take place twenty two (22) days
after the shareholders meeting to approve the Asset Transfer at the time and
place as the Parties shall mutually agree or at such other time, date or place
as the Parties shall mutually agree (the ”Closing”), provided that,
such date shall be no later than January 31, 2005, which date maybe
extended by mutual agreement between the Parties. The date on which Closing
occurs is sometimes referred to herein as the ”Closing Date.”

 

1.13                           Deliveries
and Proceedings at Closing. At the Closing:

 

(a)          Deliveries by Seller. Seller shall deliver or cause
to be delivered to Purchaser:

 

(i)                                       In
case of Transferred Assets (including Intellectual Properties) that are owned
by Seller and are subject to registration with the relevant governmental
authorities, the duly executed applications and documentation required to be
filed by Seller to duly transfer title to such Transferred Assets;

 

(ii)                                    In
case of Transferred Assets (including Intellectual Properties) that are 

 

11

 

owned by Seller and are
not subject to registration, actual possession of such Transferred Assets
(including title certificates and any other documents necessary to effectively
transfer title and ownership of such Transferred Assets to the Purchaser);

 

(iii)                                 In
case of Transferred Assets (including Licensed Intellectual Property, excluding
software relating to non-developmental tools) that are licensed or leased to
Seller and are subject to registration with the relevant governmental
authorities, the duly executed applications and documentation required to be
filed by Seller to duly transfer title to such Transferred Assets, together
with any other documents necessary to effectively transfer such Transferred
Assets to the Purchaser, including without limitations, the consent of
assignment of such Transferred Assets to Purchaser from the relevant licensor,
lessor, etc.;

 

(iv)                                In
case of Transferred Assets (including Licensed Intellectual Property, excluding
software relating to non-developmental tools) that are licensed to Seller and
are not subject to registration, the consent of assignment of such Transferred
Assets to Purchaser from the relevant licensor, lessor, etc.;

 

(v)                                   copies
of the Employee Releases and the employment contracts with respect to the
R&D Employees (including the Key Employees);

 

(vi)                                consent
letters from creditors of Seller substantially in the form as provided in

Schedule 1.11(h)(1), which
shall include a waiver by the creditor of any claim against the Asset Transfer
with respect to the application of fraudulent conveyance, avoidance principles
and other similar laws;

 

(vii)                             certified
copies of resolutions of Seller’s board of directors and shareholders meeting,
both approving the sale of the Transferred Assets and authorizing any one of
its officers to execute this Agreement for and on behalf of Seller;

 

(viii)                          such
other instruments of conveyance as shall be necessary to vest in Purchaser
good, valid and marketable title to the Transferred Assets;

 

(ix)                                  a
certificate dated the Closing Date, from the Representative Director of Seller
to the effect that Seller has fulfilled the conditions set forth in Section 1.11;

 

(x)                                     a
certificate dated the Closing Date, from the Representative Director of Seller
to the effect that Seller has cleared all Liens or other types of encumbrances
on the Transferred Assets, except as otherwise expressly provided herein;

 

(xi)                                  a
receipt for the Initial Payment less the Holdback Amount;

 

(xii)                               copies
of the government approvals/clearances as set forth by Section 1.11(g);
and

 

(xiii)                            a
fairness opinion from a reputable accounting firm in Korea that the Purchase
Price agreed to herein by the Parties is no less than the fair value of the
Transferred Assets.

 

(b)         Deliveries by Purchaser. At the Closing, Purchaser will
deliver to Seller:

 

(i)                                     the
Initial Payment less the Holdback Amount to the bank account designated by
Seller three (3) days prior to Closing by wire transfer;

 

(ii)                                  a
certificate evidencing the deposit of
the Holdback Amount with the Purchase Price Escrow;

 

12

 

(iii)                               a
certified copy of a resolution of Purchaser’s board of directors approving the
purchase of the Transferred Assets on the terms of this Agreement and
authorizing any one of its directors or officers to execute this Agreement for
and on behalf of Seller;

 

(iv)                              a
certificate dated the Closing Date, from an authorized officer of Purchaser to
the effect that Purchaser has fulfilled the conditions set forth in Section 1.10;
and

 

(v)                                 a
document evidencing approval and/or clearance for the transactions contemplated
hereby from the Fair Trade Commission of Korea,

 

(c)          Other Deliveries. Any other documents or
agreements required to be executed and/or delivered pursuant to this Agreement
or otherwise necessary for the consummation of the transaction contemplated
hereby will be exchanged.

 

1.14                           Covenants
of Seller. From and after the date hereof and until the Closing Date,
Seller hereby covenants and agrees that:

 

(a)          Business in Ordinary Course. Seller will carry on the
R&D in the ordinary and normal . course and in substantially the same
manner as heretofore, except as otherwise expressly provided herein, and shall
notify Purchaser immediately in writing of any changes or deviations from the
ordinary and normal course of business.

 

(b)         Maintain Properties. Seller will maintain and keep
the Transferred Assets in as good repair, working order and condition as at
present, except for depreciation due to ordinary wear and tear.

 

(c)          Insurance. Seller will keep in full force
and effect insurance and bonds comparable in amount and scope of coverage to
what is now covering the R&D and all assets related thereto.

 

(d)         Perform Contracts. Seller will perform in all
material respects the obligations to be performed under all the contracts and
documents of or relating to the R&D. Furthermore, Seller shall devote
reasonable effort and resources towards the completion of the Existing
Projects, [***]
until the Closing. Seller shall place all output from the Existing Projects, [***] into escrow in the name of
Purchaser with a third-party escrow agent mutually agreed by the Parties for
ultimate release to the Purchaser upon the earlier of Completion of each
Project or the commencement of bankruptcy proceedings in respect of the Seller.
The escrow shall be established by execution of an escrow agreement
substantially in the form attached hereto as Schedule 1.14(d)(1). For the avoidance of doubt, if
the Closing does not occur and this Agreement is thus terminated, Seller shall
remain obligated to complete the Existing Projects, [***] as provided in their respective
agreements. Seller shall provide a letter of guarantee to Purchaser whereby, in
the event Seller has failed to fulfill its obligations under the Existing
Projects, [***], Seller shall transfer to Purchaser without consideration and
with no cost to the Purchaser all necessary intellectual property rights
(the ”Designs”) so as to allow Purchaser to manufacture, use and sell CDMA
450Mhz products, (Model Nos. GSD-430, GSD-456) and PCMCIA Card (Model No. GPM
200). For the purpose of this letter of guarantee, upon the execution of this
Agreement or as soon as practicable but no later than five (5) Business
Days from the execution of this Agreement, Seller agrees to transfer the titles
to the Designs to a third-party escrow agent chosen by Purchaser as collateral,
and Purchaser shall then grant or shall cause the escrow agent to grant to
Seller without consideration and with no cost to Seller an exclusive,
transferable (such transfer is subject to Purchaser’s consent which shall not
be unreasonably withheld or delayed), and royalty-free license to use the
Designs without any restrictions unless and until Seller fails to Complete the
Existing Projects, [***]
by the due date under the relevant agreement for each product, at which time,
subject to the terms and conditions of the escrow agreement, the escrow agent
shall transfer the titles to the Designs to Purchaser; provided,
however, that Purchaser shall transfer or shall cause the escrow
agent to transfer the title to the Designs back to Seller upon the Completion
of the Existing Projects, [***].
The foregoing escrow shall be established by execution of an escrow agreement
mutually agreed upon by the Parties no later than five (5) Business
Days from the execution of this Agreement.

 

13

 

(e)          Approvals and Consents. As soon as practicable after
the execution of this Agreement, Seller shall take all reasonable action
required to obtain all waivers, consents, approvals, including but not limited
to (i) an approval from the shareholders meeting and Authorities and (ii) all
consents and approvals from co-owners and licensors of the Intellectual
Property, and Licensed Intellectual Property (excluding software relating to
non-developmental tools), respectively, as provided in Section 1.11(i);
and promptly to give all notices, effect all registrations pursuant to and make
all other filings with or submissions to, any third parties, including governmental
authorities, necessary or advisable to authorize, approve or permit the
transactions contemplated hereby.

 

(f)            Confidentiality. Seller hereby covenants and
agrees that, except as may be required by law, rule or regulation or court
order, unless this Agreement is terminated, it will not at any time reveal,
divulge or make known to any Person (other than (i) the creditors of
Seller to the extent necessary to obtain such creditor’s consent pursuant to Section 1.11(h),
(ii) to KTB to the extent necessary to obtain KTB’s waiver pursuant to Section 1.11(m),
(iii) Seller’s employees, officers, directors and outside advisors who
need to know the Confidential Information and (iv) Purchaser, their
Affiliates or their agents) any information that relates to this Agreement, the
transactions contemplated hereby or the R&D (whether now possessed by
Seller or furnished by Purchaser after the Closing Date), including, but not
limited to, customer lists or other customer information, trade secrets or
formulae, marketing plans or proposals, financial information or any data,
written material, records or documents used by or relating to the R&D that
are of a confidential nature (collectively, the ”Confidential Information”).

 

(g)         Advice of Changes. Seller hereby covenants and
agrees that it will advise Purchaser promptly in writing of any fact that, if
previously known, would have been required to be set forth or disclosed in or
pursuant to this Agreement, or which would result in breach in any material
respect by Seller of any of its representations and warranties, covenants or
agreements hereunder or which would have a Material Adverse Effect on the
Transferred Assets or the transactions contemplated hereby.

 

(h)         All Necessary Filings. Seller hereby covenants that
it has made and will make all necessary filings with the relevant government
agencies which are required for the completion of the transactions contemplated
in this Agreement.

 

(i)             Access to Information;
Cooperation.
Seller hereby covenants and agrees that it shall give Purchaser and their
representatives, counsel, accountants and consultants reasonable access, during
normal business hours, to such of the properties, books, accounts, contracts
and records of Seller as Purchaser deem relevant to the Transferred Assets and
the R&D, and furnish or otherwise make available to Purchaser all such
information concerning the Transferred Assets and the R&D as Purchaser may
request.

 

(j)             Intentional Misrepresentations. Without express written
consent of Purchaser, Seller shall not take or omit any action with the
intention to cause any of its representations and warranties under this
Agreement to be inaccurate in material respect at, or any time prior to, the
Closing.

 

(k)          Vacating Premises. On or prior to the Closing
Date, Seller shall vacate the office space currently used by Seller as of the
date hereof and shall leave the premises in the same condition as currently
used by Seller as of the date hereof except for Removal of the Excluded Assets.
Seller will take all necessary action to effect the assignment of the current
lease agreement with respect to the office space to Purchaser including
obtaining the consent from the lessor of the office space with respect to such
assignment, provided that, Purchaser shall have paid
the key money deposit for such assignment to Seller on the Closing Date; provided further that
if the key money deposit with the lessor of the office space above is not
returned to Purchaser upon the expiration/termination of such assignment
agreement due to causes primarily attributable to Seller prior to Closing,
Seller shall refund such amount within five (5) Business Days from
the date of Purchaser’s written notice thereof to Seller.

 

(l)             Fair Value. Prior to the Closing Date
Seller shall have obtained a fairness opinion from a reputable accounting firm
in Korea that the Purchase Price agreed to herein by the Parties is no less
than the fair value of the Transferred Assets.

 

14

 

1.15                           Covenants
of PurchaserFrom and after the date hereof and until the Closing Date,
Purchaser hereby covenants and agrees that it shall in good faith cooperate
with Seller and provide Seller with reasonable resources necessary for
Completion of the Existing Projects, [***].

 

1.16                           Adjustment
and Apportionment. All utilities, service charges, fees and other expenses
relating to the Transferred Assets for all periods up to but excluding the
Closing Date shall be the obligation of Seller and for all other periods
including and following the Closing Date shall be the obligation of Purchaser.
All utilities, service charges, fees and other expenses relating to the
Transferred Assets, whether prepaid or due after the Closing Date, shall be
adjusted ratably as of the Closing Date and, if and to the extent that it is
not possible to do so at the Closing, Purchaser and Seller shall continue to
work together in good faith and to make any remaining adjustments as soon as
practicable after the Closing Date. Any such prorated utilities, service charges,
fees and other expenses shall be paid directly to a Party entitled to such
reimbursement by wire transfer in immediately available funds to the account
designated by such Party, within five (5) days after the
determination thereof in accordance with this Section.

 

SECTION 2

 

REPRESENTATIONS AND
WARRANTIES OF SELLER

 

Seller hereby represents and warrants to and with
Purchaser as follows, which representation and warranties are, as of the date
of this Agreement, and will be, as of the Closing Date, true and correct,
except for those representations and warranties which speak as to a certain
date (as far as any of the following representations and warranties are
conditioned upon the preparation of the Schedules to-be Prepared,
such representations and warranties shall be deemed to have been made as of the
date when the relevant Schedules to be Prepared are delivered to Purchaser, and
obtained their written consents thereto):

 

2.1                                 Organization.
Seller is a corporation duly incorporated and validly existing under the laws
of Korea. Seller has all requisite corporate power and authority to own or
lease its properties and assets as now owned or leased, to carry on its
businesses as and where now being conducted and to enter into this Agreement,
and perform its obligations hereunder. The copies of Seller’s articles of
incorporation and bylaws, as amended to date, which have been delivered to
Purchaser, are correct and complete and are in full force and effect.

 

2.2                                 Authorization
and Enforceability. The execution, delivery and performance of this
Agreement has been, and all other agreements, documents and instruments to
which Seller is a party or otherwise obligated which are to be executed,
delivered or performed pursuant to this Agreement have been duly authorized by
all necessary corporate action on the part of Seller, including the approvals
by the board of directors (other than the shareholders approval which Seller
shall obtain before the Closing). This Agreement has been, and at Closing any
and all ancillary agreements thereto shall have been duly executed and
delivered by Seller, and this Agreement constitutes, and at Closing any
ancillary agreements thereto will constitute, the legal, valid and binding
obligations of Seller, enforceable in accordance with their respective terms.

 

2.3                                 No
Violation of Laws or Agreements. Except as set forth on Schedule 2.3, the execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the compliance with the terms, conditions
and provisions of this Agreement by Seller, will not (a) contravene any
provision of Seller’s articles of incorporation; (b) conflict with or
result in a breach of or constitute a default (or an event which might, with
the passage of time or the giving of notice or both, constitute a default)
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument to which Seller
is a party or by which it or any of its assets may be bound or affected, or any
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law, rule or
regulation, or (c) result in the termination of or loss of any right (or
give others the right to cause such a termination or loss) under any contracts
to be assigned to Purchaser.

 

2.4                                 Financial
Statements. The books of account and related records of Seller fairly
reflect in 

 

15

 

reasonable detail the
assets, liabilities and transactions related to Seller and are in adequate
condition for the preparation of the Financial Statement (as defined below and
which shall be limited only to a balance sheet and a statement of profits and
losses) in accordance with Korean GAAP applied on a consistent basis. Seller
has delivered to Purchaser its audited financial statements for the fiscal
years as of 2001, 2002, 2003, respectively, and shall provide the
unaudited financial statements for the past three (3) quarters for
the year 2004 (the ”Financial Statements”). The Financial Statements: (a) fairly
presents and will present the financial condition, assets and liabilities of
Seller as of the dates thereof; and (b) has been and will be prepared in
accordance with Korean GAAP consistently applied. All references in this
Agreement to the ”Balance Sheet” shall mean the balance sheet of Seller as
of December 31, 2003 included in the Financial Statement and all
references to the ”Balance Sheet Date” shall mean December 31, 2003.

 

2.5                                 Undisclosed
Liabilities. Seller has no liability or obligation of any nature, whether
due or to become due, absolute, contingent or otherwise, including liabilities
for or in respect of national, local or foreign Taxes, customs duties and any
interest or penalties related hereto, except for liabilities that are (a) fully
reflected on the Balance Sheet or (b) incurred in the ordinary course of
business since the Balance Sheet Date and fully reflected as liabilities on Seller’s
books of account, none of which individually or in the aggregate, has been
materially adverse.

 

2.6                                 No
Changes. Except as disclosed on Schedule 2.6,
since the Balance Sheet Date and until the Closing, Seller has conducted its
business only in the ordinary course. Except as otherwise disclosed on Schedule 2.6, there has not
been:

 

(a)          any change in the financial condition, assets, liabilities,
net worth of Seller, except changes in the ordinary course of business, none of
which, individually or in the aggregate has been or could materially affect the
Purchaser’s ability to fully utilize the Transferred Assets;

 

(b)         any damage, destruction or loss, whether or not covered by
insurance, which could materially affect the Purchaser’s ability to fully utilize
the Transferred Assets;

 

(c)          any mortgage, pledge or subjection to Lien, charge or
encumbrance of any kind on the Transferred Assets;

 

(d)         any strike, walkout, labor trouble or any other new or
continued event, development or condition of any character which has or could
have a Material Adverse Effect;

 

(e)          any increase in the salaries or other compensation
(excluding increases in the ordinary course of business and consistent with
past practice) payable or to become payable to, or any advance (excluding
advances for ordinary business expenses) or loan to, any R&D Employees, or
any increase in, or any addition to, other benefits (including without
limitation any bonus, profit-sharing, pension or other plan) to which any of
the R&D Employees maybe entitled, or. any payments to any pension,
retirement, profit-sharing, bonus or similar plan except payments in the
ordinary course of business and consistent with past practice made pursuant to
any employee benefit plan, or any other. payment of any kind to (or on behalf
of) any such R&D Employee other than payment of base compensation and
reimbursement for reasonable business expenses in the ordinary course of
business;

 

(f)            any making or authorization of
any capital expenditures which are not in the ordinary course of business or in
excess of 10 million Won to the R&D;

 

(g)         any cancellation or waiver of any right material to the
operation of Seller’s business or any cancellation or waiver of any debts or
claims of substantial value or any cancellation or waiver of any debts or
claims against any Affiliate;

 

(h)         any sale, transfer or other disposition of any of the
Transferred Assets,

 

(i)             any payment, discharge or
satisfaction of any liability or obligation (whether 

 

16

 

accrued, absolute, contingent or otherwise) by Seller other than the
payment, discharge or satisfaction, in the ordinary course of business, of
liabilities or obligations shown or reflected on the Balance Sheet or incurred
in the ordinary course of business since the Balance Sheet Date;

 

(j)             any adverse change or any threat
of any adverse change in Seller’s relations with, or any loss or threat of loss
of, Seller’s suppliers, clients or customers, which change or loss could have a
Material Adverse Effect on the Transferred Assets;

 

(k)          any write-offs as uncorrectable of any notes receivable of
Seller or write-downs of the value of any of the Transferred Assets or other
than in immaterial amounts or in the ordinary course of business consistent
with past practice and at a rate no greater than during the twelve months ended
on the Balance Sheet Date;

 

(l)             any change by Seller in any
method of accounting or keeping its books of account or accounting practices;

 

(m)       any creation, incurrence, assumption or guarantee by Seller
of any obligations or liabilities that would have a Material Adverse Effect on
the Transferred Assets (whether absolute, accrued, contingent or otherwise and
whether due or to become due), or any creation, incurrence, assumption or guarantee
by Seller of any indebtedness for money borrowed;

 

(n)         any payment, loan or advance of any amount to or in respect
of, or the sale, transfer or lease of any properties or assets (whether real,
personal or mixed, tangible or intangible) to, or entering into of any
agreement, arrangement or transaction with, any Affiliate, except for (i) compensation
to its officers and employees at rates not exceeding the rates of compensation
disclosed on Schedule 2.6(n)
hereto, (ii) reimbursements of or advances for expenses incurred for
business-related purposes not exceeding 10 million Won outstanding in the
aggregate at any given time and (iii) payment, in the ordinary course of
business, of liabilities or obligations shown or reflected on the Balance Sheet
or incurred in the ordinary course of business since the Balance Sheet Date.

 

(o)         any disposition of or failure to keep in effect any rights
in, to or for the use of Intellectual Property included in the Transferred
Assets, or any disclosure to any person not an employee or other disposal of
any trade secret, process or know-how relating to the R&D.

 

(p)         any transaction, agreement or event to which Seller is a
party or a participant outside the ordinary course of the R&D or
inconsistent with past practice.

 

(q)         Seller has become subject to any newly enacted or adopted
law of Korea which may reasonably be expected to materially affect the
Purchaser’s ability to fully utilize the Transferred Assets.

 

2.7                                 Taxes.
Seller has (a) timely filed all national or local, payroll, withholding,
VAT, excise, sales, use, customs duties, personal property, use and occupancy,
business and occupation, mercantile, real estate, capital stock and franchise
or other tax returns of any kind whatsoever (all the foregoing taxes, including
interest and penalties thereon and including estimated taxes, being hereinafter
collectively called “Taxes” and individually a “Tax”), (b) has paid all
Taxes which are due pursuant to such returns and (c) paid all other Taxes
for which a notice of assessment or demand for payment has been received. All
such returns have been prepared in accordance with all applicable laws and
requirements of Korea and accurately reflect the taxable income (or other
measure of Tax) of the Party filing the same. The accruals for Taxes contained
in the Balance Sheet are adequate to cover all liabilities for Taxes of Seller
for all periods ending on or before the Balance Sheet Date and nothing has
occurred subsequent to that date to make any of such accruals inadequate as of
the Balance Sheet Date. All Taxes for periods beginning after the Balance Sheet
Date have been paid or are adequately reserved against on the books of Seller.
Seller has timely filed all information returns or reports which are required
to be filed and has accurately reported all information required to be included
on such returns or reports. To Seller’s Knowledge, there are no proposed
assessments of Tax against Seller or proposed adjustments to any Tax returns
filed, pending 

 

17

 

against Seller. Seller
has not received notice that any Tax return is under examination by any taxing
authority. Seller has not executed a waiver or consent extending any statute of
limitation for any Tax liability which remains outstanding. Seller has not (a) joined
in or been required to join in filing a consolidated income Tax return, or (b) entered
into a closing agreement with any taxing authority.

 

2.8                                 Lease
Agreements. All lease agreements that are subject to the Asset Transfer
pursuant to Section 1.1(c) are in full force and effect and no party
to such lease agreement is in default under any of the terms thereof; and no
event has occurred that with the passage of time or the giving of notice or
both would constitute a default by any party under any provision thereof.
Seller has obtain all necessary consents from the relevant lessors in respect
of assignment of the rights, interests and obligations under the lease
agreement to the Purchaser pursuant to this Agreement.

 

2.9                                 No
Pending Litigation or Proceedings. Except as set forth on Schedule 2.9 hereto, there are
no actions, suits, investigations, proceedings or claims pending or affecting,
or to Seller’s Knowledge, threatened against Seller or Seller’s agents or their
assets, by or before any court or governmental department, agency or
instrumentality, and to Seller’s Knowledge, there is no basis for any such
action, suit, investigation, proceeding or claim. There are presently no
outstanding judgments, decrees or orders of any court or any governmental or
administrative agency, against the Seller.

 

2.10                           Contracts,
Compliance.  Schedule 2.10
hereto is a true, correct and complete list of all contracts or commitments
with the contract amount in excess of 100 million Won, oral or written,
formal or informal. All such contracts and other commitments are in full force
and effect; all parties to such contracts and other commitments have complied
with the provisions thereof; no such party is in default under any of the terms
thereof; and no event has occurred that with the passage of time or the giving
of notice or both would constitute a default by any party under any provision
thereof.

 

2.11                           Compliance
with Laws.  Schedule 2.11
hereto sets forth a list of all material permits, certificates, licenses,
orders, registrations, franchises, authorizations and other approvals from all
national, local and foreign governmental and regulatory bodies held by Seller.
Seller holds and is in compliance with all material permits, certificates,
licenses, orders, approvals, registrations, franchises and authorizations
required under all laws of Korea, and, to Seller’s Knowledge, all of such
permits, certificates, licenses, orders, approvals, registrations, franchises
and authorizations are in full force and effect. Seller has complied with all
applicable statutes, rules, and regulations of Korea, and orders, national and
local, which, if not complied with, would have a Material Adverse Effect on the
Transferred Assets. No notice, citation, summons or order has been issued, no
complaint has been filed, no penalty has been assessed and, to Seller’s
Knowledge, no investigation or review is pending or threatened by any
governmental or other entity (a) with respect to any alleged violation by
Seller of any law of Korea of any governmental entity or (b) with respect
to any alleged failure by Seller to have any permit, certificate, license,
approval, registration or authorization required in connection with its
business operation which have a Material Adverse Effect on the Transferred
Assets.

 

2.12                           Environmental
Matters. Except where the failure of a representation contained herein
would not have a Material Adverse Effect:

 

(a)          Seller is in compliance with all applicable national or
local statutory or regulation, rule, order, ordinance, guideline, direction, or
notice, relating to the environment, public health and safety, and employee
health and safety, including those relating to hazardous substances (“Environmental
Laws”).

 

(b)         Seller holds and is in compliance with all necessary or
required environmental permits, certificates, consent or other settlement
agreements, licenses, approvals, registrations and authorizations required
under all Environmental Laws (“Environmental Permits”) as being used as of the
date of this Agreement, and all of such Environmental Permits are valid and in
full force and effect. All such Environmental Permits held by Seller are listed
on Schedule 2.12 hereto and any that are not
transferable are so designated. Seller has made or will make before the Closing
timely application for renewals of all such Environmental Permits for which
Environmental Laws require that applications must be filed on or before the
Closing to maintain the Environmental Permits in full force and effect after
the 

 

18

 

Closing Date. Purchaser shall bear any fees, cost or other expenses
incurred in making such filings or applications to the extent to which
Purchaser receives a benefit from the Environmental Permit obtained as a result
of such filing or application.

 

(c)          No consent, approval or authorization of, or registration or
filing with any Person, including any environmental governmental Authority or
regulatory agency, is required in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.

 

(d)         No notice, citation, summons or order has been issued or
served upon, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending or to Seller’s Knowledge, threatened by any
Authority or Person: (a) with respect to any alleged violation by Seller
of any Environmental Law; or (b) with respect to any alleged failure by
Seller to have any Environmental Permit; or (c) with respect to any use,
possession, generation, treatment, storage, recycling, transportation or
disposal (collectively “Management”) of any Hazardous Substances by or on
behalf of Seller or, to Seller’s Knowledge, its predecessors.

 

(e)          Seller has not received any request for information, notice
of claim, demand, order or notification for which it or any of its predecessors
are or may be potentially responsible with respect to any investigation or
clean-up of any threatened or actual Release of any Hazardous Substance.

 

(f)            There are no environmental Liens
on the Transferred Assets which would materially impair Purchaser’s ability to
lawfully operate the R&D as such R&D was operated prior to the Closing
Date and, to Seller’s Knowledge, no government actions have been taken or are
in process or pending which could subject any of such properties to such Liens.

 

(g)         To Seller’s Knowledge, there are no facts or circumstances
related to environmental matters concerning the Transferred Assets that could
reasonably be expected to lead to any future environmental claims against
Seller, or Purchaser under current law.

 

2.13                           Consents.
Except as set forth on Schedule 2.13,
no consent, approval or authorization of, or registration or filing with, any
Person, is required in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.

 

2.14                           Personal
Property. Seller owns all of its tangible personal property and assets
substantially relating to or affecting the R&D, including the properties
and assets reflected in the Balance Sheet (except those disposed of in the
ordinary course of business since the Balance Sheet Date); and at Closing none
of such properties or assets will be subject to any mortgage, pledge, lien,
restriction, encumbrance, claim, security interest, charge or any other matter
affecting title, except, (a) minor imperfections of title, none of which,
individually or in the aggregate, materially detracts from the value of or
impairs the use of the affected properties or impairs any operations of Seller,
(b) liens for current Taxes not yet due and payable, or (c) as
disclosed on Schedule 2.14 hereto
(the ”Personal Property Permitted Encumbrances”). All tangible personal
property, assets, equipment or other personal property consigned or leased to
Seller which are used in the operation of the R&D are listed on Schedule 1.14.

 

2.15                           CDMA
Handset Models.  Schedule 2.15
sets forth all of the CDMA handset models and PCMCIA cards (including without
limitation W-CDMA and CDMA 2000) that have been developed and sold by Seller
for the past three (3) years, including the identity of the
customer(s), number of units sold to such customer(s) and the total amount of
sales.

 

2.16                           Intellectual
Properties

 

(a)          Attached hereto as Schedule 2.16(a) is a correct and complete list
of all Intellectual Property owned by or licensed to Seller. Schedule 2.16(a) includes all of the Intellectual
Property used in the ordinary day-to-day operation of the R&D, and there
are no other items of Intellectual Property that are regularly used in the
ordinary day-to-day operation of the R&D. Seller does not use any
Intellectual 

 

19

 

Property owned or licensed by any Affiliates of Seller.

 

(b)         Except as set forth on Schedule 2.16(b),
neither the manufacture, sale, use of any products now or heretofore
manufactured or sold by Seller nor the operation of the R&D did and does
infringe (nor has any claim been made that any such action infringes) the
patents or other Intellectual Property rights of others.

 

(c)          With respect to the portion of the Intellectual Property
that is owned by Seller (“Owned Intellectual Property”), except as disclosed in
Schedule 2.16(c),
Seller is the exclusive owner of the entire and unencumbered right, title and
interest in and to the Owned Intellectual Property, and to the Knowledge of
Seller, Seller has a valid right to use the Owned Intellectual Property as
necessary to conduct the R&D as now conducted or as contemplated to be
conducted. Except as disclosed in Schedule 2.16(c),
Seller is the applicant or assignee of record in all applications and owner
of record in all registrations set forth in Schedule 2.16(a), and no opposition, extension of
time to oppose, interference, rejection, or refusal to register has been
received by Seller in connection with any such applications.

 

(d)         With respect to the portion of the Intellectual Property
that is not owned by Seller (“Licensed Intellectual Property”), Seller owns or
possesses adequate licenses or other rights to use the same as necessary to
conduct the R&D as now conducted. Except as set forth on Schedule 2.16(d), there is no
agreement to which Seller is a party or to which Seller is legally bound and no
restriction or Liens, materially and adversely affecting the use by Seller and,
after the Closing, the use by Purchaser, of any of the Licensed Intellectual
Properties.

 

(e)          There is no pending litigation or other legal action with
respect to any of the Intellectual Properties, and no order, holding, decision
or judgment has been rendered by any Authority, and no agreement, consent or
stipulation exists to which, in any such event, Seller is a party or of which
Seller has Knowledge, which would prevent Seller, or after the Closing,
Purchaser, from using any of the Intellectual Properties. The Intellectual
Property, to the Knowledge of Seller, are subsisting, valid and enforceable,
and have not been adjudged invalid or unenforceable in whole or part.

 

(f)            The acquisition of the
Transferred Assets by Purchaser will not result in Purchaser being required
either (i) to pay any royalties, other payments or consideration, or (ii) to
grant any right, to any third parties, either directly or indirectly or through
Seller, with respect to the Intellectual Property rights of such third parties.

 

(g)         Schedule 2.16(g) lists all actions that must be
taken by Purchaser within sixty (60) days of the Closing Date, including
the payment of any registration, maintenance or renewal fees or the filing of
any documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any of the Intellectual Property.

 

(h)         To the Knowledge of Seller, no Person is engaging in any
activity that infringes the Intellectual Property of Seller. Except as
disclosed in Schedule 2.16(h), Seller has not granted any
license or other right to any third party with respect to Intellectual
Property.

 

(i)             Seller has taken reasonable
measures in accordance with normal industry practice to maintain the confidentiality
of the trade secrets and other confidential Intellectual Property.

 

(j)             Each employee, contractor and
consultant of Seller who contributed to or participated in the creation or
development of any intellectual Property on behalf of Seller: (i) is a
party to a “work-for-hire” agreement under which the Company is deemed to be
the original owner/author of all property rights therein; or (ii) has
executed an assignment or an agreement to assign in favor of Seller (or such
predecessor in interest, as applicable) of all right, title and interest in
such material. Each such agreement and assignment complies with, and is legally
valid, effective and enforceable under, applicable Law, and such employee,
contractor or consultant would not have any basis for any claim with respect to
such Intellectual Property.

 

20

 

2.17                           Transactions
with Related Parties. Except as disclosed on Schedule 2.17,
no Affiliate has, in excess of 10 million Won,:

 

(a)          borrowed money or loaned money to Seller which remains
outstanding against Seller;

 

(b)         any contractual or other claims, express or implied, of any
kind whatsoever

 

(c)          any interest in any property or assets used by Seller; or

 

(d)         is engaged in any other transaction with Seller.

 

2.18                           Condition
of Assets. The Transferred Assets used in or related to or affecting the
R&D, including those reflected in the Balance Sheet, are adequate for the
operation of the R&D as it has been previously conducted by Seller.

 

2.19                           Compensation
Arrangements. Schedule 2.19
hereto sets forth the following information:

 

(a)          The names and current annual salary, including any bonus, if
applicable, of all R&D Employees together with a statement of the full
amount of all remuneration paid by Seller to each such person during the 12
month period preceding the date hereof.

 

(b)         Schedule 2.19 hereto contains a true and complete list of all current
R&D Employees of Seller that Seller asserts are necessary to the operation
of the R&D, together with their respective job titles and current annual
compensation and bonuses or bonus eligibility (if any), as of the date hereof. Schedule 2.19 shall have been updated as of the Closing, if necessary.
Except for those individuals identified on Schedule 2.19, there are no employees hired
by and currently working for Seller who has devoted a material part of his/her
time with the Seller in the operation of the R&D.

 

2.20                           Labor
Relations.

 

(a)          Schedule 2.20 contains a list of all written
employment policies, practices, manuals, handbooks, procedures, and terms and
conditions of employment of Seller, including wages, pension benefit plan, an
employee welfare benefit plan or any bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, health,
cafeteria, flexible benefit, medical expense reimbursement, dependent care,
stock option, stock purchase, stock appreciation rights, savings, deferred
compensation, consulting, severance pay or termination pay, vacation pay, life
insurance, welfare or other employee benefit or fringe benefit plan, program or
arrangement, or any other similar things that are applicable to employees of
Seller. Except as listed on Schedule 2.20, there are no employment policies, practices, manuals,
handbooks, procedures or terms or conditions of employment that are applicable
to employees of Seller.

 

(b)         Schedule 2.20 contains a list of all current,
or if expired and not renewed, the most recent, employment, labor or collective
bargaining agreements with any of the R&D Employees. Except as listed on Schedule 2.20, there is no employment, labor
or collective bargaining agreement, or governmental or administrative charges,
affecting or concerning the R&D Employees, pending or to Seller’s knowledge
threatened against Seller.

 

(c)          Except as set forth on Schedule 2.20, there are no consulting,
contracting or independent contracting agreements with any person retained or
employed in connection with the Transferred Assets.

 

(d)         The overall relations of Seller with its employees are good.
There are no unfair labor practice complaints against Seller pending or, to
Seller’s best Knowledge, threatened, There is no labor strike, dispute, slow
down or stoppage actually pending or, to Seller’s best Knowledge,
threatened against 

 

21

 

or involving Seller. No employee grievance which might to Seller’s
Knowledge have an adverse effect on Seller is pending. No private agreement
restricts Seller from relocating, closing or terminating any of its operations
or facilities. Except as disclosed in Schedule 2.20, Seller has not in the past
twelve (12) months experienced any work stoppage or slow down or, to
the best of Seller’s Knowledge committed any unfair labor practice.

 

(e)          As of Closing, all actual or to Seller’s Knowledge,
potential liabilities of Seller in respect of the R&D Employees have been
fully satisfied and discharged, including any accrued severance obligations.

 

2.21                           Products
Liability. There are no (a) liabilities of Seller, fixed or
contingent, asserted or, to Seller’s Knowledge, unasserted, with respect to any
product liability or any similar claim that relates to any product manufactured
and sold by Seller to others, or (b) liabilities of Seller, fixed or
contingent, asserted or, to Seller’s Knowledge, unasserted, with respect to any
claim for the breach of any express or implied product warranty or any other
similar claim with respect to any product manufactured and sold by Seller to
others other than standard warranty obligations (to replace, repair or refund)
made by Seller in the ordinary course of business to Purchasers of its
products.

 

2.22                           Insurance.
Attached hereto as Schedule 2.22
is a complete and correct list of all policies of insurance relating to the
Transferred Assets of which Seller is the owner, insured or beneficiary, or
covering any of the Transferred Assets, true, correct and complete copies of
which have been delivered to Purchaser, indicating for each policy the carrier,
the insured, type of coverage, the amounts of coverage, deductible, premium
rate, cash value if any, expiration date and any pending claims thereunder. All
such policies are in full force and effect. The coverage provided by such
policies is reasonable and consistent with the CDMA industry standard in Korea.
Seller has paid-in-full all premiums due on such policies as of the Closing
Date. There is no default with respect to any provision contained in any such
policy, nor has there been any failure to give any notice or present any claim
under any such policy in a timely fashion or in the manner or detail required
by the policy. There are no outstanding unpaid premiums or claims under such
policies. No notice of cancellation or non-renewal with respect to, or
disallowance of any claim under, any such policy has been received by Seller.
Seller has not been refused any insurance, nor has its coverage been limited by
any insurance carrier to which it has applied for insurance or with which it
has carried insurance during the last five years.

 

2.23                           Brokerage.
Except as disclosed in Schedule 2.23,
Seller has not made any agreement or taken any other action which might cause
anyone to become entitled to a broker’s fee or commission as a result of the
transaction contemplated hereunder.

 

2.24                           Disclosure.
No representation or warranty by Seller in this Agreement, and no exhibit,
certificate or schedule furnished or to be furnished to Purchaser pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading or necessary to provide Purchaser with proper
information as to Seller and the Transferred Assets. Seller shall disclose to
Purchaser at Closing any information then in the possession of Seller that
indicates that Purchaser is in breach of this Agreement or which may provide
the basis for a claim by Seller that Purchaser has breached this Agreement.

 

2.25                           Mitigation.
The Parties acknowledge that the representations and warranties set forth above
shall, in any case not be interpreted as limiting or restricting Purchaser’s
general obligation at law, if any, to prevent and/or mitigate any loss or
damages which it may incur after the Closing in connection with or involving
the transfer of the R&D or the Transferred Assets.

 

2.26                           Solvency.
Seller warrants and represents that, between the date of this Agreement and the
Closing Date that Seller has not been unable and is not unable to pay its debts
as they become due.

 

2.27                           Kibo
Capital Co., Ltd. and Saewon Telecom Co., Ltd.Seller warrants and
represents that the investment agreements entered into with (i) Kibo
Capital Co., Ltd. dated September 11, 1999 and 

 

22

 

(ii) Saewon Telecom
Co., Ltd., dated October 12, 1999, February 23, 2000 and July 10, 2001
have been terminated by the Closing Date.

 

2.28                           Financial
Creditors of Seller.  Schedule 2.28 is a complete
list of all of the Financial Institutions to which Seller is indebted.

 

SECTION 3

 

REPRESENTATIONS AND
WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to Seller as
follows, which representations and warranties are, as of the date of this
Agreement, and will be, of the Closing Date, true and correct, except for those
representations and warranties which speak as to a certain date:

 

3.1                                 Organization
and Good Standing. Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of Korea.

 

3.2                                 Corporate
Power and Authority. Purchaser has all requisite corporate power and
authority to make, execute, deliver and perform this Agreement and all other
agreements, documents and instruments to which it is a party or is otherwise
obligated which are executed, delivered or performed pursuant to this
Agreement.

 

3.3                                 Due
Authorization. The execution, delivery and performance of this Agreement
and all other agreements, documents and instruments to which Purchaser is a
party or is otherwise obligated which are to be executed, delivered or
performed pursuant to this Agreement have been duly authorized by all necessary
corporate action on the part of Purchaser, and this Agreement constitutes and
any other instruments to be delivered by Purchaser at Closing, when executed
and delivered at Closing, will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against it in accordance with their
respective terms.

 

3.4                                 No
Violations of Laws or Agreements. The execution, delivery and performance
of this Agreement and the other agreements contemplated by this Agreement and
the consummation of the transactions contemplated by this Agreement do not and
will not result in any breach or acceleration of any of the terms or conditions
of its articles of incorporation or bylaws, or of any mortgage, bond,
indenture, contract, agreement, license or other instrument or obligation to
which Purchaser is a party. The execution, delivery and performance of this
Agreement or the other agreements contemplated by this Agreement will not
result in the material violation of any law, statute, regulation, judgment,
writ, injunction or decree of any court, threatened or entered in a proceeding
or action in which Purchaser is, was or may be bound.

 

3.5                                 Disclosure.
No representation or warranty by Purchaser in this Agreement, and no exhibit,
certificate or schedule furnished or to be furnished to Seller pursuant
hereto, or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained
herein or therein not misleading or necessary to provide Seller with proper
information as to Purchaser and the Purchase Assets. Purchaser shall disclose
to Seller at Closing any information then in the possession of Purchaser that
indicates that Seller is in breach of this Agreement or which may provide the
basis for a claim by Purchaser that Seller has breached this Agreement.

 

3.6                                 Mitigatin.
The Parties acknowledge that the representations and warranties set forth above
shall, in any case not be interpreted as limiting or restricting Seller’s
general obligation at law, if any, to prevent and/or mitigate any loss or
damages which it may incur after the Closing in connection with or involving
the transfer of the R&D or the Transferred Assets.

 

3.7                                 Brokerage.
Except as set forth on Schedule 3.7,
Purchaser has not made any agreement or taken any other action which might
cause anyone to become entitled to a broker’s fee or commission as a result of
the transaction contemplated hereunder.

 

23

 

SECTION 4

 

CERTAIN ADDITIONAL.
COVENANTS

 

4.1                                 Costs,
Expenses and Taxes Unless otherwise provided for herein, Purchaser and
Seller will each pay all their own expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including (a) all
costs, expenses and Taxes to the extent levied to each Party, and (b) all
accounting, legal and appraisal fees and settlement charges, provided that, Seller shall be liable for and shall hold
Purchaser harmless against any Value Added Tax (“VAT”) which become payable in
connection with the transactions contemplated by this Agreement, provided further that, Purchaser shall deliver to Seller by
wire transfer to an account designated by Seller any amount received from any
tax authorities in connection with payment of such VAT by the Seller within five
(5) Business Days from receipt and if the amount returned to Seller by
Purchaser is less than the amount of VAT actually paid by Seller to the’
relevant tax authorities, Purchaser shall pay Seller the amount of such
shortfall within five (5) Business Days from receipt of any payment from any
tax authorities in connection with VAT. For the avoidance of doubt, Purchaser
shall have no obligation to deliver to Seller any amounts refunded by the tax
authorities until such time as Seller has fully paid the VAT to the relevant
tax authorities. Purchaser and Seller shall each bear [***] of all costs and expenses associated with the transfer and/or
assignment of the Intellectual Property to Purchaser, including any
registration fees payable in connection thereto.

 

4.2                                 R&D
Employees. Not later than one (1) week prior to the Closing, the
Parties shall finalize a list of R&D Employees (including Key Employees)
(as listed in the Asset List) to be hired by Purchaser. The hire by Purchaser
of the R&D Employees shall be subject to the following basic principles:

 

(a)          All of the R&D Employees shall elect to be formally
terminated as employees of Seller and commence new employment relation with
Purchaser. Seller shall pay, in a timely manner in accordance with the
requirements of the Labor Standards Act and current company practices, all
salary, bonuses, allowances, severance, unused leave (including the pro rata
portion of accrued but unused leave attributable to the portion of the 2004
calendar year prior to the Closing) and any other monetary obligations or
claims relating to the R&D Employees’ employment with Seller that may have
accrued to those personnel prior to their separation. Seller represents and
warrants that the amount paid by it to such personnel will be adequate to fully
atisfy all of their claims relating to each of their terms of employment at
Seller or any Affiliate of Seller.

 

(b)         Prior to the Closing, Seller shall obtain the Employee
Releases from the R&D Employees confirming their election to terminate
their employment with Seller to the effect that they will waive any right, if
any, against Purchaser regarding any severance, unused leave and other
obligations or claims arising from their employment relation with Seller before
the Closing

 

(c)          Prior to or on the Closing, each the R&D Employees to be
hired by Purchaser shall have executed an employment agreement with Purchaser,
to the satisfaction of Purchaser and effective as of the Closing Date, whereby
such R&D Employee agrees to continue his/her employment with Purchaser for a
period of at least 1.5 years from his/her commencement of new employment with
Purchaser. Purchaser shall negotiate in good faith the terms and conditions of
the employment agreement with each R&D Employee to be hired by Purchaser
and shall promptly commence such negotiations with each R&D Employee as
soon as practicable after the execution of this Agreement.

 

(d)         Purchaser shall favorably consider the implementation of
schemes to encourage the R&D Employees to remain with Purchaser following
the Closing, such as [***].

 

(e)          For a period of [***] after Closing, Seller shall not solicit the employment of,
or employ, any of the R&D Employees that have been hired by Purchaser
pursuant to this Agreement or any other employees of Purchaser.

 

4.3                                 Non-Competition.
For a period of [***] following the
Closing, Seller shall not engage in R&D, except that Seller may sell
certain CDMA products which have been Completed prior to Closing in 

 

24

 

each of the following
cases:

 

(a)          With respect to the CDMA 450 products, in case of
contractual obligations which were in existence at the time of signing of this
Agreement, Seller may satisfy such obligations provided that such obligations
will be Completed no later than June 30, 2005;

 

(b)         With respect to the CDMA 450 and CDMA 800/1900 products
Completed prior to Closing, in case of contractual obligations with third
parties entered into between signing of this Agreement and Closing and the
aggregate amount of such contract(s) is equal to or less than [***], Seller may enter into such
contractual obligations, provided that
such products will be shipped no later than June 30, 2005.

 

(c)          With respect to the CDMA 450 and CDMA 800/1900 products
Completed prior to Closing, in case of contractual obligations with third
parties entered into between signing of this Agreement and Closing in excess of
 US$[***] Seller may only enter into such contractual obligations
with the prior written consent of Purchaser, which consent shall not be
unreasonably withheld or delayed by Purchaser, and so long as such products
will be shipped no later than June 30, 2005.

 

(d)         With respect to the PCMCIA card products to be sold, Seller
may sell such products up to [***] provided that (i) the relevant
agreement with the third party is executed prior to the Closing and (ii) such
products will be delivered to the customer no later than June 30, 2005.
Seller has no obligation to provide technical support with respect to the
PCMCIA products.

 

(e)          With respect to existing contractual obligations with
Inquam, Seller shall seek the termination of such obligations prior to Closing
and allow Purchaser to discuss with Inquam the possibility of establishing a
new business relationship.

 

4.4                                 Technical
Support.  Recognizing that Seller
will not be able to provide technical support to its existing and past
customers to whom it previously sold the CDMA products as a result of the Asset
Transfer, Purchaser shall agree to provide technical support (limited to labor
support) to Seller for a period of [***]
following the earlier of (a) the last shipment with respect to CDMA 450
products only or (b) June 30, 2005, and Purchaser shall be
reimbursed for such support at [***]. For
the avoidance of doubt, Purchaser shall have no obligation to provide materials
or repair services in connection with the foregoing technical support.

 

4.5                                 Indemnification.

 

(i)                                       Indemnification
by Seller. Seller hereby agrees to indemnify and hold harmless Purchaser
from and against:

 

(1)          any and all Damages
arising out of or resulting from any misrepresentation, breach of warranty or
non-fulfillment of any agreement on the part of Seller contained in this
Agreement or in any certificate, instrument, agreement or other document
furnished or to be furnished to Purchaser pursuant hereto or in connection with
the transactions contemplated hereby;

 

(2)          any
and all Damages arising out of or resulting from any liabilities of Seller of
any nature, whether due or to become due, whether accrued, absolute, contingent
or otherwise existing on the Closing Date or arising out of any transactions
entered into, or any state of facts existing,
prior to such date;

 

(3)          any and all Damages arising from claims brought by
R&D Employees with respect to (x) the termination or resignation of
their employment with Seller in relation to these employees’ terms of
employment with Seller or any Affiliate of Seller, including but not limited to
claims resulting from the increase in any employee’s wage during his or her
period of employment with Seller, (y) any unpaid compensation for work
during overtime, days off and nighttime, and (z) any compensation for
unused day(s) of annual and/or monthly leave; and

 

25

 

(4)          any secondary Tax liability of Purchaser under the
National Tax Basic Law and the Local Tax Law for the Taxes of Seller that have
accrued prior to the Closing Date.

 

(ii)                                    Indemnification
by Purchaser. Purchaser hereby agrees to indemnify and hold harmless Seller
from and against any Damages arising out of or resulting from any
misrepresentation, breach of warranty or non-fulfillment of any agreement on
the part of Purchaser contained in this Agreement or in any certificate,
instrument, agreement or other document furnished or to be furnished to Seller
in connection with the transactions contemplated hereby.

 

(b)         General Indemnification
Procedures.

 

(i)                                       Purchaser
and Seller shall cooperate in the defense or prosecution of any claim, action,
suit or proceeding asserted against either of them by a party other than a
Party hereto or an Affiliate of any Party hereto in respect of which indemnity
may be sought hereunder (a “Third Party Claim”) and shall furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested in connection
therewith.

 

(ii)                                    Except
as otherwise provided in this Agreement, no action or claim for Damages
resulting from breaches of the representations and warranties of Seller or
Purchaser shall be brought or made after one (1) year following the Closing,
except that such time limitation shall not apply to (1) claims for
misrepresentations or breaches of warranty relating to Section 2.7
(relating to Taxes) which may be asserted until 90 days after the running of
the applicable statute of limitations with respect to the taxable period to
which the particular claims relates and Section 2.20 (relating to Labor
Relations) which may be asserted until 90 days after the running of the
applicable statute of limitations with respect to any claims that may be
brought by a R&D Employee, (2) claims relating to Environmental
Liabilities that have been brought against Purchaser by third parties within five
(5) years following the Closing Date and (3) any claims which have been
the subject of a written notice from Purchaser to Seller prior to the
expiration of the applicable period under this Section 4.5(b)(vi), which
notice specifies in reasonable detail the nature of the claim.

 

(iii)                                 Notwithstanding
anything to the contrary in this Section 4.4, no limitation or condition
of liability provided in this Section shall apply to the breach of any of
the representations and warranties contained herein if such representation or
warranty was made with actual knowledge that it contained an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements or facts contained therein not misleading.

 

(iv)                                If
there shall be a judicial determination that any Party (the ”Indemnified
Party”) seeking indemnification from another Party (the ”Indemnifying
Party”) under this Agreement is not entitled to such indemnification in the
amount originally claimed by a third party, then the Indemnifying Party shall
be entitled to reimbursement from the Indemnified Party for its costs and
expenses, including reasonable attorneys’ fees, incurred in the defense of the
claim for such indemnity pro rata, to the extent that the amount awarded is
less than the amount originally claimed.

 

(v)                                   Following
the receipt by either Party of a complaint initiating a lawsuit in respect of a
Third Party Claim in respect of which indemnity may be sought from either Party
hereunder, within a reasonable time after such receipt, the receiving Party
shall give the other Party notice of such Third Party Claim.

 

(vi)                                Purchaser
shall notify Seller and Seller shall notify Purchaser of any claim for Damages.
Such notice shall describe, to the extent reasonably available, the nature of
the claim, the proposed remedy and the cost to remedy or to satisfy the claim.
Purchaser and Seller shall, in good faith, consult with the other Party and
give the other Party a reasonable opportunity to propose an alternative method
to remedy or satisfy the claim. Provided, however, that if the nature of the
claim is such that, in Purchaser and Seller’s judgment, the above notice and
opportunity provisions could reasonably be expected to cause further Damages or
would otherwise not be appropriate under the circumstances, then the prior
notice and opportunity shall not be required. Neither Purchaser nor Seller
shall be required in any 

 

26

 

event to adopt the method
proposed by the other Party. Purchaser and Seller’s failure to give the other
Party the prior notice and opportunity or to adopt the method proposed, shall
not bar in any event either Party from asserting an indemnification claim
against the other under and subject to the terms and conditions described in
this Section 4.5, but, in any such claim, the failure of either Party to
give prior notice and opportunity, or to adopt the method proposed shall be
admissible evidence if either Party shall contest the reasonableness of the
amount of the Damages that it may recover from the other Party.

 

(vii)                             Any
amounts due to Purchaser as a result of Seller’s indemnification obligations
under this Agreement, arising from the transactions contemplated hereby,
arising from any breach of any representation or warranty of Seller or
otherwise may be drawn by Purchaser from the Purchase Price Escrow. If the
amount of the Purchase Price Escrow is not sufficient to pay the amounts due to
Purchaser, Purchaser may set off such amount from any amounts owed at any time
to Seller or its affiliates to the extent permissible under Korean law.

 

4.6                                 Confidentiality.              From
and after the Closing, Seller shall, and shall cause its Affiliates and
representatives to, keep confidential and not disclose to any other Person or
use for his or its own benefit or the benefit of
any other Person any trade secrets or other confidential proprietary
information in its possession or control relating to the Transferred Assets.
The obligations of Seller under this Section 4.6 shall not apply to
information which (a) is or becomes generally available to the public
without breach of the commitment provided for in this Section; or (b) is
required to be disclosed by law, order or regulation of a court or tribunal or
governmental authority; provided, however, that,
in any such case, Seller shall notify Purchaser as early as reasonably
practicable prior to disclosure to allow Purchaser to take appropriate measures
to preserve the confidentiality of such information.

 

4.7                                 Access

 

(a)                                  Information. Seller and Purchaser shall
reasonably cooperate with each other after the Closing so that (subject to any
limitations that are reasonably required to preserve any applicable attorney-client
privilege) each Party has access without causing excessive hardship to normal
operations to the business records, contracts and other information existing at
the Closing Date and relating to Seller (whether in the possession of Seller or
Purchaser) (including copies thereof) as is reasonably necessary for the (i) preparation for or
the prosecution or defense of any suit, action, litigation or administrative,
arbitration or other proceeding or investigation (other-than one by or on behalf of a Party to this Agreement) by or against
Purchaser or Seller (ii) preparation and filing of any Tax return or
election relating to Seller and any audit by any taxing authority of any
returns of Purchaser or Seller relating thereto, (iii) preparation and
filing of any other documents required by governmental or regulatory bodies, (iv) transfer
of data to Purchaser relating to Seller and (v) the preparation of any
reports necessary for their financial reporting purposes including that
required in connection with any registration statement or report filed by
Purchaser with any governmental agency, The Party requesting such information
and assistance shall reimburse the other Party for all out-of-pocket costs and
expenses incurred by such Party in providing such information and in rendering
such assistance. The access to files, books and records contemplated by this Section 4.7
shall be during normal business hours and upon not less than two (2) Business
Days prior written request, and shall identify the scope of the information to
be reviewed and shall be subject to such further reasonable limitations as the
Party having custody or control thereof may impose to preserve the
confidentiality of information contained therein, and shall not extend to
material subject to a claim of privilege unless expressly waived by the Party
entitled to claim the same. The Parties mutually agree to use their
commercially reasonable efforts to cause their independent public accountants
to provide each other with any necessary or required consents in connection
with audit of Seller.

 

(b)                                 Facility. For Completion of the Existing
Projects, [***]
after the Closing, Seller shall be allowed to oversee the design and production
of the Existing Projects, [***].
In this regard, Mr. Ho Young Kim, President of Seller or any one
designated by him shall have reasonable access, during normal business hours,
to the research and development department of Purchaser, provided that,
(i) such access shall be limited to only the work related to the Existing
Projects, [***]
and (ii) such access shall not interfere with the normal business
operation of Purchaser.

 

27

 

4.8                                 Repayment
of Debt. If any acceleration clause in any -of the agreements
between Seller and Financial Institutions listed in Schedule 2.28 is triggered by the consummation of the transaction
contemplated by the Parties herein, Seller covenants to use that portion of the
Purchase Price set forth in Section 1.3 hereto or any of its funds to
repay in full such obligations unless such Financial Institution(s) that seeks
acceleration and Seller enters into a new agreement for the payment of the
underlying debt, in which event Seller agrees to make payment based on the new
agreement. Schedule 4.8 lists all
payment due to creditors of Seller six (6) month after the Closing
(assuming the Closing Date of December 7, 2004), which Schedule will
be updated as of the Closing Date. Seller covenants to make timely payment to
those creditors listed in Schedule 4.8,
unless Seller and creditor(s) agree to change the payment term, in which event
Seller covenants to make payment based on the new payment term.

 

4.9                                 Assignment.
This Agreement may not be assigned by operation of law or otherwise without the
express written consent of Seller and Purchaser (which consent may be granted
or withheld in the sole discretion of Seller or Purchaser), provided, however, that with a prior written notice to
Seller, Purchaser may assign this Agreement (including any ancillary agreements
thereto) or any of its rights and obligations hereunder to one or more
Affiliates of Purchaser without the consent of Seller. In the event of such
consented or permitted assignment, Purchaser shall continue to remain liable
under this Agreement.

 

4.10                           Notices
of Certain Events. Following the Closing, Seller shall promptly notify
Purchaser of (a) any notice or other communication from any person
alleging that the consent of such person is or may be required in connection
with the transactions contemplated by this Agreement and any ancillary
agreements thereto, (b) any notice or other communication from any
governmental agency in connection with the transactions contemplated by this
Agreement and any ancillary agreements thereto, and (c) any claims
commenced or, to Seller’s best Knowledge, threatened against, relating to or
involving or otherwise affecting the R&D or the Transferred Assets that, if
pending on the ‘date of this Agreement, would have been required to have been
disclosed pursuant to this Agreement or that relate to the consummation of the
transactions contemplated by this Agreement and any ancillary agreements
thereto.

 

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

 

4.12                           Good
Faith Obligations. The Parties agree to use their best efforts to take, or
cause to be taken, diligently and in good faith all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate the
contemplated transaction under this Agreement.

 

SECTION 5

 

MISCELLANEOUS

 

5.1                                 Further
Assurances; Cooperation. At and after the Closing, Seller will execute and
deliver such further instruments of conveyance and transfer as Purchaser may
reasonably request to convey and transfer effectively to Purchaser the
Transferred Assets or to put Purchaser in actual possession and control of the
R&D.

 

5.2                                 Nature-
and Survival of Representations. The representations, warranties, covenants
and agreements of Purchaser and Seller contained in this Agreement, and all
statements contained in this Agreement or any Exhibit or Schedule hereto
or any certificate delivered pursuant to this Agreement or in connection with
the transactions contemplated hereby, shall be deemed to constitute
representations, warranties, covenants and agreements of the respective Party
delivering the same. Subject to Sections 4.2(e), 4.3 and 4.5, all such
representations, warranties, covenants and agreements shall survive the Closing
for [***]. Except for the representation
and warranties expressly contained in this Agreement, the Parties make no other
representations or warranties and no additional representations and warranties 

 

28

 

may be implied.

 

5.3                                 Notices.
All notices, requests, demands elections and other communications which either
Party to this Agreement may desire or be required to give hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally, by
a reputable courier service which requires a signature upon delivery, by
mailing the same by registered or certified first class mail, postage prepaid,
return receipt requested, or by telecopying with receipt confirmation (followed
by a first class mailing of the same) to the Party to whom the same is so given
or made. Such notice, request, demand, waiver, election or other communication
will be deemed to have been given as of the date so delivered or electronically
transmitted or seven days after mailing thereof.

 

If to Seller, to:                                                                      Giga Telecom, Inc.

5th Floor, Sewha Building

156-3 Samsung-Dong, Gangnam-Gu

Seoul, Korea 135-091

Attn: H.Y. Kim, President

Facsimile: 822-558-3196

 

If to Purchaser, to:                                              UTStarcom, Inc.

1275 Harbor Bay Parkway

Alameda, CA 94502

Telecopy: 510-864-8802

Attn: Russell L Boltwood Esq., General Counsel

Facsimile: 510-864-8802

 

or to
such other address as such Party shall have specified by notice to the other
Party hereto.

 

5.4                                 Successors
and Assigns. This Agreement, and all rights and powers granted hereby, will
bind and inure to the benefit of the Parties hereto and their respective
successors and assigns.

 

5.5                                 Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of Korea, without regard to its conflict of law provisions.

 

5.6                                 Heading.
The headings preceding the text of the sections and subsections hereof are
inserted solely for convenience of reference, and shall not constitute a part
of this Agreement, nor shall they affect its meaning, construction or effect.

 

5.7                                 Amendment
and Waiver. The Parties may by mutual agreement amend this Agreement in any
respect, and any Party, as to such Party, may (a) extend the time for the
performance of any of the obligations of any other Party, (b) waive any
inaccuracies in representations by any other Party, (c) waive compliance
by any other Party with any of the agreements contained herein and performance
of any obligations by such other Party, and (d) waive the fulfillment of
any condition that is precedent to the performance by such Party of any of its
obligations under this Agreement. To be effective, any such amendment or waiver
must be in writing and be signed by the Party against whom enforcement of the
same is sought.

 

5.8                                 Entire
Agreement. This Agreement and the Schedules hereto, each of which is hereby
incorporated herein, set forth all of the promises, covenants, agreements,
conditions and undertakings between the Parties hereto with respect to the
subject matter hereof, and supersede all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written.

 

5.9                                 Counterparts.
This Agreement may be executed (including by facsimile transmission) in two or
more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.

 

29

 

5.10                           Governing
Language. The English language text of the Agreement shall prevail over any
translation thereof.

 

5.11                           Dispute
Resolution. For any dispute arising under this Agreement which is not
settled after good faith attempts by the Parties to amicably resolve such
dispute, Seoul Central District Court shall have exclusive jurisdiction over
such matters.

 

5.12                           Termination.
This Agreement may be terminated upon the occurrence of any of the following events:

 

(a)          The mutual agreement of all the Parties to terminate the
Agreement;

 

(b)         By Purchaser in its sole discretion at any time, with or
without cause, from the date of this Agreement until [***] before Seller’s shareholders’
meeting to approve the Asset Transfer (“Walk Away Date”). Immediately following
Seller’s board of directors meeting for convening the shareholders’ meeting,
Seller shall inform Purchaser of the scheduled date of the shareholders’
meeting. Prior to the Walk Away Date, Purchaser shall not incur any penalty for
terminating the Agreement. For the avoidance of doubt, Seller agrees not to
give to the shareholders the notice for convening the shareholders’ meeting
until further approvals/clearance from the MOCIE and MOST (including project
models GDB 570, GPM-3000, GDM-100, GDM-101 and GDM-530) have been obtained as
provided under Section 1.11(g).

 

(c)          By Purchaser in its sole discretion (i) at any time
prior to the date of the Seller’s shareholders’ meeting to approve the Asset
Transfer if Purchaser determines that the MOCIE and MOST approvals/clearance
(as provided in Section 1.11(g) above) is not satisfactory or (ii) by
[***] prior to the date of the Seller’s
shareholders’ meeting if Purchaser determine that it has not obtained assurance
to its reasonable satisfaction that any contemplated change of existing laws or
adoption of new laws in connection with the export and/or use of the concerned
CDMA technology (as provided in Section 1.11(g) above). Such
termination by Purchaser shall be deemed to be termination with cause, but
shall not be deemed to be (i) a breach by Seller or Purchaser and (ii) cause
attributable to Seller. Neither Purchaser nor Seller shall be obligated to pay
any amount or reimburse the other Party for any loss incurred by it as a result
of such termination. If Purchaser fails to notify Seller of the termination of
the Agreement under this Section 5.12(c) prior to the date of such Seller’s
shareholders’ meeting, Purchaser shall be deemed to have accepted the
approvals/clearance obtained from the MOCIE and MOST and shall not terminate
this Agreement pursuant to this Section 5.12(c). Regardless of whether or
not Purchaser exercises its right to terminate this Agreement pursuant to this Section 5.12(c),
it shall not in any way affect its right to terminate this Agreement under any
other provisions of this Section 5.12.

 

(d)         By Purchaser, without cause, after the Walk Away Date until
the date of the shareholders’ meeting for approving this transaction, provided that, Purchaser shall pay Seller reasonable costs
and expenses incurred by Seller as a result of terminating the Agreement in an
amount not to exceed [***]
and provided further that, if Purchaser terminates the Agreement with cause
during this period, Purchaser shall have no obligation to pay Seller the costs
and expenses.

 

(e)          By Purchaser, without cause, after the date of the
shareholder’s meeting for approving this transaction until [***] prior to Closing, provided that, Purchaser shall pay Seller reasonable costs
and expenses incurred by Seller as a result of terminating the Agreement in an
amount not to exceed [***]
and provided further that, if Purchaser terminates the Agreement with cause
during this period, Purchaser shall have no obligation to pay Seller the costs
and expenses. Purchaser may not terminate this Agreement without cause after [***] prior to the Closing except
where Closing does not occur by January 31, 2005, in which case,
Purchaser may at its discretion terminate this Agreement as provided under Section 5.12(f) below
unless the Parties mutually agree to extend such date.

 

(f)            Prior to the shareholders
meeting to approve the Asset Transfer, Seller may terminate this transaction
without penalty in the event that [***] or more of the total outstanding shares of Seller notify
Seller of its dissent to the Asset Transfer. Seller shall use its best efforts
to minimize the number of shareholders who dissent to the Asset Transfer.
Except -as provided above, Seller has no right to terminate 

 

30

 

this transaction prior to Closing except if Purchaser has failed to
meet a condition precedent under Section 1.10 prior to the Closing. If
this Agreement is terminated by Purchaser due to a material breach by Seller of
this Agreement or if Closing does not occur by January 31, 2005 due
to causes primarily attributable to Seller (in which case, Purchaser may
terminate this Agreement at its sole discretion), Seller shall pay Purchaser a
break-up fee of [***].

 

5.13                           Severability.
If at anytime subsequent to the date hereof, any term or provision of this
Agreement shall be determined by any court of competent jurisdiction to be
partially or wholly illegal, void or unenforceable, such provision shall be of
no force and effect to the extent so determined, but the illegality or
unenforceability of such term or provision shall have no effect upon and shall
not impair the legality or enforceability of any other term or provision of
this Agreement.

 

5.14                           Construction.
The Parties acknowledge that each Party and its counsel have reviewed and
revised this Agreement and that any rule of construction to the effect
that any ambiguities are to be resolved against the drafting Party shall not be
employed in the interpretation of this Agreement or any amendments, schedules
or exhibits hereto.

 

5.15                           Force
Majeure. Neither Party shall be considered in default or liable for any
delay or failure to perform under this Agreement due to causes beyond its
reasonable control. Such causes may include, but not be limited to, an act of
nature, acts of the public enemy, labor disputes, strikes, unusually severe weather conditions, insurrection,
riot, war (whether an actual declaration is made or not), civil commotion and
other causes beyond the Party’s reasonable control. Without prejudice to Section 5.12,
if force majeure prevents or delays the obligation under this Agreement, then
the Party claiming force majeure shall promptly notify the other Party in
writing and shall use reasonable efforts and due diligence to resume
performance of its obligations.

 

[THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

31

 

IN WITNESS WHEREOF,
the Parties have caused this
Agreement to be signed in their respective names by an officer thereof duly
authorized as of the date first above written.

 

 

	
  UTSTARCOM
  CDMA TECHNOLOGIES KOREA LIMITED

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  GIGA
  TELECOM, INC.

  
	
   

  
	
  By:

  	
  /s/ Hoyoung
  Kem

  	
   

  
	
  Name:Hoyoung
  Kem

  
	
  Title:
  CEO and President

  

 

 

[SIGNATURE PAGE FOR ASSET
PURCHASE AGREEMENT]Exhibit 10.36

 

Tom Korbas

11 Medbury Road

N. Attleboro, Mass.  02760

 

 

Dear Tom:

 

This letter agreement will serve to memorialize our discussions with
respect to severance arrangements in the event your employment with Samsonite
Corporation (“Samsonite”) is terminated.

 

1.               The severance
payment arrangement contained in paragraph number two of the letter agreement
dated February 16, 2001 between you and Samsonite (the “Prior Letter”) is
hereby terminated and has no further force or effect.  All other terms and conditions contained in
the Prior Letter expired August 31, 2003.

2.               In the event your
employment is terminated either (a) by Samsonite for cause or (b) as
a result of your voluntary resignation, Samsonite will not be obligated to pay
you any severance payments.

3.               In the event
Samsonite elects to terminate your employment other than for cause, Samsonite
shall provide you a written notice thereof (“Termination Notice”).

4.               Samsonite will
maintain your status as an active employee in its payroll system and employee
benefit plans for a period of six (6) months from the date of the
Termination Notice (the “Notice Period”).

5.               During the Notice
Period, you will provide such services as may be reasonably requested by
Samsonite.

6.               Upon expiration of
the Notice Period and your execution of Samsonite’s standard waiver and release
of claims (and the expiration of any applicable rescission period), Samsonite
will pay you a lump sum severance payment in an amount equal to twelve (12)
months of your then current base salary, but not less than today’s annual
salary of $279,000 per year.  Said
payment is specifically conditioned upon expiration of the Notice Period and
execution, without rescission, of the waiver and release.

7.               If necessary, this
agreement shall be amended to comply with Internal Revenue Code Section 409A
and any rules or regulations adopted thereunder.

 

Please acknowledge your understanding of and agreement to the above
terms and conditions by signing below.

 

Sincerely,

 

	
  /s/ Marcello Bottoli

  	
   

  	
   

  	
   

  
	
  Marcello Bottoli

  	
   

  	
  Agreed to:

  	
  /s/ Thomas
  Korbas

  	
   

  
	
   

  	
   

  	
  Tom Korbas

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  cc: 
  Larry Ross

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Tom LeBlanc

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 21, 2005

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]