AMENDMENT

TO OEM AGREEMENT BETWEEN UTSTARCOM, INC. AND INTERWAVE

COMMUNICATIONS INTERNATIONAL, LTD., DATED JULY 14, 2000

This Amendment is dated and entered into as of the 27^th day of September 2002 by and between UTStarcom, Inc., a Delaware corporation with its place of business at 1275 Harbor Bay Parkway, Alameda, CA 94502, USA (hereinafter referred to as “UTStarcom”) and Interwave Communications International, Ltd., a Bermuda company having offices at Clarendon House, 2 Church Street, Hamilton HM DX, Bermuda (hereinafter referred to as “Interwave”) (collectively, the “Parties”).

WHEREAS, The Parties entered into a contractual relationship on July 14, 2000 (referred to herein as the “Original OEM Agreement”) for UTStarcom to purchase certain products and for resale as defined in the Original OEM Agreement;

WHEREAS, UTStarcom has expressed an interest in making an equity investment in Interwave in exchange for a) the development and production by Interwave of certain technology relating to [***] compatible with UTStarcom’s [***] specifications; and b) incorporation of said technology into [***], where UTStarcom would purchase said products from Interwave pursuant to the terms of the Original OEM Agreement and this Amendment;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and conditions herein contained, the Parties mutually agree as follows:

1.             [***] Purchase Agreement

In consideration of Interwave’s provision of technical design and product production services as described herein, UTStarcom shall purchase [***] pursuant to the terms of a [***] Purchase Agreement (attached hereto as Exhibit A).

 

 

2.             Technical Design Services

In return for UTStarcom’s equity investment in Interwave as described in Section 1 of this Amendment, Interwave shall provide technical design services with respect to [***] being made compatible with UTStarcom’s [***] specifications. These technical design services shall be provided pursuant to the specifications attached hereto as Exhibit B, and shall be completed pursuant to the delivery schedule attached hereto as Exhibit C.

3.             Product Production Services

In further consideration of [***] as described in Section 1 of this Amendment, Interwave shall produce, pursuant to the terms of this Amendment and the Original OEM Agreement, [***] described in Section 2 of this Amendment. Interwave shall provide these [***] to UTStarcom at [***]. Interwave acknowledges and agrees that [***].

4.             Software Escrow

Interwave acknowledges the importance to UTStarcom of having access to the technical designs created by Interwave pursuant to Section 2 of this Amendment in the event that interWAVE goes into liquidation or ceases business. Accordingly, Interwave agrees that it shall forthwith upon the completion of the technical designs intended by Section 2 place all software (including source code), firmware, documentation, and all other intellectual property necessary for the manufacture of the [***] into an escrow reasonably acceptable to UTStarcom, pursuant to terns and conditions expressed in the Software Escrow Agreement attached hereto as Exhibit D of this Amendment. All items placed into said escrow shall be used by UTStarcom only for the purpose of manufacturing the [***] that incorporates such technical designs and for no other purpose.

5.             Limited Effect of Amendment

Aside from the modification in this Amendment, the remaining terms and conditions of the Original OEM Agreement shall remain unaffected by this Amendment.

 

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed by their respective duly authorized representatives as of the date first above written. All copies of this Amendment, signed by both Parties, shall be deemed originals.

 

Interwave Communications			UTStarcom, Inc.
International, Ltd.
By:	/s/ PRISCILLA LU		By:	/s/ HONG LU
Name:	Priscilla Lu		Name:	Hong Lu
Title:	Chief Executive Officer		Title:	Chief Executive Officer
Date:	September __, 2002		Date:	September __, 2002

 

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Execution Copy

 

UTSTARCOM, INC.

AND

INTERWAVE COMMUNICATIONS INTERNATIONAL LTD.

STOCK PURCHASE AGREEMENT

SEPTEMBER 27, 2002

 

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is made as of the ___ day of September 2002, by and between UTStarcom, Inc. (“UTStarcom” or the “Investor”), a corporation organized under the laws of the State of Delaware, USA, with its principal place of business at 1275 Harbor Bay Parkway, Alameda, CA 94502 USA and interWAVE Communications International, Ltd. (the “Company”), a corporation organized under the laws of Bermuda, with its principal place of business at Clarendon House, 2 Church Street, P.O. Box HM 1022, Hamilton, Bermuda.

WHEREAS, the parties have agreed in principle upon the purchase of shares of Common Stock of the Company by the Investor.

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

1.             Purchase and Sale of Common Stock.

1.1          Sale of the Common Shares.  At the Closing (as defined below) and subject to the terms and conditions of this Agreement, Company will issue and sell for [***] the number of shares of the Company’s Common Stock obtained by dividing the [***] into [***] (the “Common Stock”) to the Investor, and the Investor will buy the Common Stock from the Company, at the Closing, for the per share purchase price determined as set forth above (the “Purchase Price”). The parties agree that the Investor may assign the right and obligation to purchase the Common Stock for the Purchase Price, and all of its other rights and obligations under this Agreement, to an “Affiliate,” in which case the term “Investor” shall refer herein to such Affiliate.  “Affiliate” means, with respect to any specified person, any other person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.  In the event that Investor assigns this Agreement to an Affiliate, UTStarcom shall guarantee and remain liable for the performance of such Affiliate’s obligations hereunder.  as reported by the Nasdaq National Market (or, if such market is not the principal trading market for the Common Stock, as reported by such principal trading market).

1.2          Closing.  The closing of purchase and sale of the Shares to be sold and purchased hereunder (the “Closing”) shall occur on September 26, 2002 (the “Closing Date”) at 10:00 a.m. at the offices Wilson, Sonsini, Goodrich and Rosati, 650 Page Mill Road, Palo Alto, California 94304, USA.  The per share price is calculated to be [***] US dollars, and the number of shares to be sold is calculated to be [***] shares, as shown in the attached calculation in Exhibit A.

2.             Closing Date, Delivery.

2.1          Closing Date.  The Closing shall be held on September 26, 2002 or such other date as the Company and the Investor may agree upon (the “Closing Date”).

 

 

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2.2          Delivery.  At the Closing, the Company will deliver to the Investor a stock certificate, registered in the Investor’s name, representing the Shares, against payment of the Purchase Price by certified or cashier’s check payable to the Company, or by wire transfer of immediately available same day funds per the Company’s wiring instructions.

2.3          Further Assurances.  The Company and the Investor hereby covenant and agree without the necessity of any further consideration, to execute, acknowledge and deliver any and all such other documents and take any such other action as may be reasonably necessary to carry out the intent and purposes of this Agreement.

3.             Representations and Warranties of the Company.  The Company hereby represents and warrants to the Investor that, except as set forth on the Schedule of Exceptions (the “Schedule of Exceptions,” attached hereto as Exhibit A1) furnished to the Investor on the date hereof, which exceptions shall be deemed to be representations and warranties as if made hereunder and which shall be identified as exceptions to specific Sections of this Agreement:

3.1          Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of Bermuda.  The Company has all requisite corporate power and corporate authority to own and operate its properties and assets, to carry on its business as now conducted and as proposed to be conducted, to sell the Shares, to enter into this Agreement, and to carry out the transactions contemplated hereunder and thereunder.  The Company, and each of its subsidiaries, is qualified to transact business and is in good standing in each jurisdiction in which the failure to qualify would have, or could reasonably be expected to have, a material adverse effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).  The Company has delivered to the Investor true, correct and complete copies of the Company’s Certificate of Incorporation (the “Certificate”) and the Company’s By-laws in effect on the date hereof.

3.2          Capitalization and Voting Rights.

(a)           The capital stock of the Company as of September 5, 2002 consisted of:

(i)             100,000,000 authorized shares of Common Stock, of which 58,130,029 shares are issued and outstanding

(ii)          10,000,000 authorized shares of Preferred Stock, of which zero shares are issued and outstanding

(b)           Except as set forth in the Company’s report on Form 10-K for the fiscal year ended June 30, 2001, the Company’s proxy statement for its 2001 annual general meeting of shareholders and the Company’s Quarterly Reports on Form 10-Q for the periods ended September 30, 2001, December 31, 2002, and March 31, 2001 (collectively, the “Company’s Public Filings”) or in Section 3.2 of the Schedule of Exceptions there are: (i) no outstanding options, warrants, rights (including conversion or preemptive rights) or agreements pursuant to which the

 

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Company is or may become obligated to issue, sell or repurchase any shares of its capital stock or any other securities of the Company; (ii) no restrictions on the transfer of capital stock of the Company imposed by the Certificate or By-laws of the Company, or any agreement to which the Company is a party, any order of any court or any governmental agency to which the Company is subject, or any statute other than those imposed by relevant state and federal securities laws; and (iii) no cumulative voting rights for any of the Company’s capital stock.  The Company has, as of December 31, 2001, reserved up to Nineteen Million Seven Hundred Thirty Thousand (19,730,000) shares of its Common Stock for the issuance of Common Stock pursuant to the exercise of outstanding options and warrants or options to be granted in the future under its stock option and stock purchase plans listed on Section 3.2 of the Schedule of Exceptions.

(c)           Except as set forth in the Company’s Public Filings or in Section 3.2 of the Schedule of Exceptions, the Company is not a party to any agreement or understanding which affects or relates to, the voting of shares of capital stock of the Company or the giving of written consents by a shareholder or director of the Company.

3.3          Subsidiaries.  Except as set forth in the Company’s Public Filings or in Section 3.3 of the Schedule of Exceptions, the Company has never owned and does not presently own or control, directly or indirectly, any other corporation, association, or other business entity and has never owned or controlled and does not currently own or control, directly or indirectly, any capital stock or other ownership interest, directly or indirectly, in any corporation, association, partnership, trust, joint venture or other entity.  Each of the Company’s subsidiaries is duly organized and existing under the laws of its jurisdiction or organization and is in good standing under such laws.  None of the Company’s subsidiaries owns or leases property or engages in any activity in any jurisdiction that might require its qualification to do business as a foreign corporation and in which failure to do so would have a Material Adverse Effect.

3.4          Authorization.  All corporate action on the part of the Company and its stockholders necessary, for the authorization, execution and delivery of the Transaction Agreements, the performance of all obligations of the Company hereunder and thereunder and the authorization, issuance and delivery of the Shares to be sold hereunder, has been taken or will be taken prior to the Closing.  The Transaction Agreements have been duly executed and delivered by the Company and constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors rights).  The execution, delivery and performance of the Transaction Agreements and compliance with the provisions thereof by the Company, will not:

(a)           violate any provision of law, statute, ordinance, rule or regulation or any ruling, writ, injunction, order, judgment or decree of any court, administrative agency or other governmental body, the violation of which would have a Material Adverse Effect;

(b)           conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or both) a default (or give rise to any

 

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right of termination, cancellation or acceleration) under (i) any material agreement, document, instrument, contract, understanding, arrangement, note, indenture, mortgage or lease to which the Company is a party or under which the Company or any of its assets is bound or affected, (ii) the Company’s Restated Certificate, or (iii) the By-laws of the Company; or

(c)           result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company.

3.5          Valid Issuance of Common Stock.

(a)           When issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, the Shares will be validly issued and outstanding, fully paid and nonassessable and not subject to any preemptive rights, rights of first refusal or other similar rights imposed by the Company.

(b)           The outstanding shares of Common Stock are all duly authorized and validly issued, fully paid and nonassessable.

3.6          Governmental Consents.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by the Agreement, except for registration or qualification, or taking such action to secure exemption from such registration or qualification, of the Shares under applicable state or federal securities laws, which actions shall be taken, by and at the expense of the Company, on a timely basis as may be required.

3.7          Litigation.  Except as set forth in Section 3.7 of the Schedule of Exceptions, there is no action, suit, proceeding or investigation pending or, to the Company’s knowledge, currently threatened against the Company which questions the validity of the Transaction Agreements or the right of the Company to enter into such agreements, or to consummate the transactions contemplated thereby, or which reasonably would be expected to have, either individually or in the aggregate, a Material Adverse Effect, nor is the Company aware that there is any basis for the foregoing.  To the Company’s knowledge, there are no legal actions or investigations pending or threatened in writing involving the employment by or with the Company of any of the Company’s current or former employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers or alleging a violation of any federal, state or local statute or common law relationship with the Company.  The Company is not a party to any order, writ, injunction; judgment or decree of any court that has had, or could reasonably be expected to have, a Material Adverse Effect.

 

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3.8          Employees and Consultants.  Except as set forth in Section 3.8 of the Schedule of Exceptions:

(a)           To the Company’s knowledge; none of its employees is obligated under any contract (including licenses, covenants or contracts of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his best efforts to promote the interests of the Company or that would conflict with the Company’s business as proposed to be conducted.  Neither the execution nor delivery of the Transaction Agreements, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the Company’s business as proposed, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any material contract, covenant or instrument under which any of such employees is now obligated.

(b)           Each employee of, or consultant to, the Company, who has or is proposed to have access to confidential or proprietary information of the Company, is a signatory to, and is bound by, an agreement with the Company relating to nondisclosure, proprietary information and, with respect to employees, assignment of patent, copyright and other intellectual property rights.

(c)           To the knowledge of the Company, no employee of, or consultant to, the Company is in violation of any term of any employment contract, patent disclosure agreement or any other contract or agreement between such individual and the Company including, but not limited to, those matters relating to (i) the relationship of any such employee with the Company or to any other party as a result of the nature of the Company’s business as currently conducted, or (ii) unfair competition, trade secrets or proprietary information.

3.9          Patents and Trademarks.  The Company owns or possesses all rights to use all patents, patent rights or licenses, inventions, collaborative research agreements, trade secrets, know-how, trademarks, service marks, trade names and copyrights which are necessary to conduct its businesses as described in the Company’s Public Filings.  Except as set forth in the Company’s Public Filings or in Section 3.9 of the Schedule of Exceptions, The Company has not received any written communications alleging that the Company has violated or, by conducting its business as proposed, would violate any of the Intellectual Property of any other person or entity.  Compliance with Other Instruments.  The Company is not in violation or default of any provisions of the Restated Certificate or the Company’s By-laws or of any instrument, judgment, order, writ or decree.

3.10        Agreements; Action.

(a)           Except for agreements explicitly contemplated hereby and as set forth in the Company’s Public Filings or in Section 3.10 of the Schedule of Exceptions, there are no agreements, understandings, transactions or proposed transactions between the Company and any of its officers, directors, or affiliates, or any affiliate thereof of a nature required to be disclosed pursuant to the provisions of Regulation S-K.

(b)           Except as set forth in the Company’s Public Filings or in Section 3.10 of the Schedule of Exceptions, since December 31, 2001 the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its

 

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capital stock, or (ii) sold, exchanged or otherwise disposed of any of its assets or rights, other than in the ordinary course of business.

(c)           The Company has not admitted in writing its inability to pay its debts generally as they become due, filed or consented to the filing against it of a petition in bankruptcy or a petition to take advantage of any insolvency act, made an assignment for the benefit of creditors, consented to the appointment of a receiver for itself or for the whole or any substantial part of its property, or had a petition in bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other laws of the United States or any other jurisdiction.

(d)           The Company is in compliance in all material respects with all obligations, agreements and conditions contained in any evidence of indebtedness or any loan agreement or other contract or agreement (whether or not relating to indebtedness) to which the Company is a party or is subject (collectively, the “Obligations”), the lack of compliance with which could afford to any person the right to (i) accelerate any indebtedness or (ii) terminate any right or agreement of the Company, the termination of which would have a Material Adverse Effect.  To the Company’s knowledge, all other parties to such Obligations are in compliance with the terms and conditions of such Obligations.

3.11        Title to Property and Assets.  The Company has good title to all of its assets, including all properties and assets reflected on its December 31, 2001 Balance Sheet, free and clear of all liens, claims, restrictions or encumbrances, except those assets disposed of since the date of such Balance Sheet in the ordinary course of business, none of which either alone or in the aggregate are material, either in nature or amount, to the business of the Company.  All machinery and equipment included in such properties which are material to the business of the Company are in good condition and repair, ordinary wear and tear excepted, and each lease of real or personal property to which the Company is a party is effective, affords the Company peaceful and undisturbed possession of the subject matter of the lease, and such lease is free of any liens, claims restrictions or encumbrances.  Each such lease constitutes a valid and binding obligation of, and is enforceable in accordance with its terms against, the Company and, to the Company’s knowledge, the other respective parties thereto.  Except as provided in the Company’s Public Filings or in Section 3.11 of the Schedule of Exceptions; with respect to the property and assets it leases, the Company is in all respects in compliance with such leases, has not received notice of any allegations that it is in default thereunder in any respect and holds a valid leasehold interest free of any liens, claims or encumbrances.

3.12        Financial Statements.  The Company has delivered to the Investor (i) its report on Form 10-K for the year ended June 30, 2001 containing its audited Balance Sheets at June 30, 2000 and 2001 and its audited Statements of Operations, Statements of Shareholder’s Equity and Statements of Cash Flow for the years ended June 30, 1999, 2000 and 2001 (the “Audited Financial Statements”); and (ii) the unaudited financial statements appearing in the Company’s reports on Form 10-Q for the quarters ended September 30, 2001, December 31, 2001 and March 31, 2002 (the “Unaudited Financial Statements”).  The Audited Financial Statements and the Unaudited Financial

 

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Statements are collectively referred to as the “Financial Statements”.  The Financial Statements have been prepared in accordance with the United States generally accepted accounting principles (“GAAP”) applied on a consistent basis throughout the periods indicated and fairly present the financial condition and consistent operating results of the Company as of the dates, and for the periods, indicated therein, provided that the Unaudited Financial Statements may not contain complete footnote disclosure which would be required by GAAP and are subject to audit adjustments.  Since December 31, 2001, the Company has conducted its business in the ordinary course, and there has not been any material adverse change in the financial condition or operations of the Company.  Except as set forth in the Financial Statements and in the material agreements listed in Section 3.12 of the Schedule of Exceptions, the Company has no material liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to September 30, 2001 and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under GAAP to be reflected in the Financial Statements, which, in both cases, individually or in the aggregate, are not material to the financial condition or operating results of the Company.  Except as disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.  The Company maintains and consistently applies and will continue to maintain and consistently apply a standard system of accounting established and administered in accordance with GAAP.

Since June 30, 2000, the Company has filed all required reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated therein) with the SEC (“Company SEC Documents”).  As of their respective dates, the Company SEC Documents complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents, and no Company SEC Documents when filed contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in Company SEC Documents complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case- of unaudited statements, to normal year-end audit adjustments).

3.13        Employee Benefit Plans.  To the Company’s knowledge, the Company is in compliance with applicable laws governing the Company’s “employee benefit plans” as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, except where such failure to comply would not have a Material Adverse Effect.

 

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3.14        Tax Returns, Payments and Elections.  The Company has filed all tax returns and reports as required, and within the time prescribed, by law, including without limitation, all federal, state and local income, excise or franchise tax returns, real estate and personal property tax returns, sales and use tax returns, payroll tax returns and other tax returns or reports required to be filed by it.  These returns and reports are true and correct in all material respects.  The Company has paid or made provision for the payment of all accrued and unpaid taxes and other charges to which the Company is subject and which are not currently due and payable.  The federal income tax returns of the Company have never been audited by the Internal Revenue Service, and the Company has not agreed to an extension of the statute of limitations with respect to any of its tax years.  Neither the Internal Revenue Service nor any other taxing authority is now asserting, nor is threatening in writing to assert, against the Company any deficiency or claim for additional taxes or interest thereon or penalties in connection therewith; nor does such deficiency or claim or basis for such deficiency or claim exist.  The Company has not made any elections pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) (other than elections which relate solely to methods of accounting, depreciation or amortization) which would have a Material Adverse Effect as the Company’s business is presently conducted or proposed to be conducted.

3.15        Insurance.  The Company has in full force and effect fire, casualty and liability insurance policies, with coverage, in the case of property insurance, sufficient in amount (subject to reasonable deductibles) to allow it to replace any of its material properties or assets that might be damaged or destroyed, and in the case of casualty and liability insurance, in amounts customary and adequate for businesses similar to the business of the Company.

3.16        Labor Agreements and Actions.  The Company does not have any collective bargaining agreements covering any of its employees, nor is the Company bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the knowledge of the Company, has sought to represent any of the employees, representatives or agents of the Company.  There is no strike or other labor dispute involving the Company pending, or to the knowledge of the Company threatened in writing, which could have a Material Adverse Effect (as the Company’s business is presently conducted and as it is proposed to be conducted), nor is the Company aware of any labor organization activity involving its employees.  Offering.  Subject to the accuracy of the Investor’s representations set forth in Section 4 of this Agreement, the offer, sale and issuance of the Shares to be issued in conformity with the terms of this Agreement constitute transactions which are: (i) in compliance with applicable federal and state securities laws; and (ii) exempt from the registration requirements of the Securities Act and from all applicable state registration or qualification requirements, other than those with which the Company has complied or will comply.

3.17        Environmental Matters.

(a)           To the Company’s knowledge, the Company is not in violation of any Environmental Law (as hereinafter defined) and to its knowledge, no material expenditures are or will be required in order to comply with any Environmental Law.  As used in this Agreement,

 

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“Environmental Law” shall mean any applicable federal, state and local law, ordinance, rule or regulation that regulates, fixed liability for, or otherwise relates to, the handling, use (including use in industrial processes, in construction, as building materials, or otherwise), treatment, storage and disposal of hazardous and toxic wastes and substances, and to the discharge, leakage, presence, migration, actual Release (as hereinafter defined) or threatened Release (whether by disposal, a discharge into any water source or system or into the air, or otherwise) of any pollutant or effluent.

(b)           The Company has not used, generated, manufactured, refined, treated, transported, stored, handled, disposed, transferred, produced, processed or released (hereinafter together defined as “Release”) any Hazardous Materials (as hereinafter defined) on, from or affecting any Property (as hereinafter defined) in any manner or by any means in violation of any Environmental Laws and to the best of the Company’s knowledge and belief after due investigation, there is no threat of such Release.  As used herein, the term “Property” shall include, without limitation, land, buildings and laboratory facilities owned or leased by the Company or as to which the Company now has any duties, responsibilities (for cleanup, remedy or otherwise) or liabilities under any Environmental Laws, or as to which the Company or any subsidiary of the Company may have such duties, responsibilities or liabilities because of past acts or omissions of the Company or any such subsidiary or their predecessors, or because the Company or any such subsidiary or their predecessors in the past was such an owner or operator of, or bore some other relationship with, such land, buildings or laboratory facilities.  The term “Hazardous Materials” shall include, without limitation, any flammable explosives, petroleum products, petroleum by-products, radioactive materials, hazardous wastes, hazardous substances, toxic substances or related materials as defined by Environmental Laws.

(c)           The Company has not received written notice that the Company is a party potentially responsible for costs incurred at a cleanup site or corrective action under any Environmental Laws.  The Company has not received any written requests for information in connection with any inquiry by any Governmental Authority (as hereinafter defined) concerning disposal sites or other environmental matters.  As used herein, “Governmental Authority” shall mean any nation or government, any federal, state, municipal, local, provincial, regional or other political subdivision thereof, and any entity or person exercising executive, legislative, judicial regulatory or administrative functions of or pertaining to government.

(d)           The stockholders of the Company have had no control over, or authority with respect to, the waste disposal operations of the Company.

3.18        Permits and Other Rights; Compliance with Laws.  The Company has all franchises, permits, licenses and other rights and privileges necessary to permit it to own its properties and to conduct its business as presently conducted and is in compliance in all material respects thereunder.  The Company is in compliance in all material respects with all laws and governmental rules and regulations applicable to its business, properties and assets, and to the products and services sold by it, including, without limitation, all such rules, laws and regulations relating to fair employment practices, occupational safety and health and public safety, except where the failure to comply would not have a Material Adverse Effect.

 

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3.20        Corporate Records.  The minute books of the Company provided to the Investor contain a complete summary of all meetings of directors and stockholders since the time of incorporation and reflect all material transactions of the Company accurately in all material respects.

3.21        Reliance.  The Company understands that the foregoing representations and warranties shall be deemed material and to have been relied upon by the Investor.  No representation or warranty by the Company in this Agreement, and no written statement contained in any document, certificate or other writing delivered by the Company to the Investor contains any untrue statement of material fact or omits to state any material fact necessary to make the statements herein or therein, in light of the circumstances under which they were made, not misleading.

3.22        Real Property Holding Corporation.  The Company is not a United States real property holding corporation as defined in Section 897 of the Code.

4.             Representations and Warranties of the Investor.  UTStarcom hereby represents and warrants the following:

4.1          Authorization, Governmental Consents and Compliance with Other Instruments.  All corporate action on the part of the Investor necessary for the authorization, execution and delivery of the Transaction Agreements and the performance of all obligations of the Investor thereunder has been taken or will be taken prior to the Closing.  The Transaction Agreements constitute valid and legally binding obligations of the Investor, enforceable in accordance with their terms, except as such enforcement is limited by bankruptcy, insolvency and similar laws affecting creditor rights.  No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of the Investor is required in connection with the consummation of the transactions contemplated by the Transaction Agreements.  The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated thereby will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any provision of the Investor’s corporate charter or By-laws or any instrument, judgment, order, writ, decree or contract to which the Investor is a party or by which it is bound.

4.2          Purchase Entirely for Own Account.  By the Investor’s execution of this Agreement, the Investor hereby confirms that the Shares will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor has no present intention of selling, granting any participation, or otherwise distributing the Shares.  By executing this Agreement, the Investor further represents that the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Shares.

4.3          Disclosure of Information.  The Investor has received all the information from the Company and its management that the Investor considers necessary or appropriate for deciding

 

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whether to purchase the Shares hereunder.  The Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Shares.  The foregoing, however, does not limit or modify the representations and warranties of the Company in Section 3 of this Agreement.

4.4          Investment Experience and Accredited Investor Status.  The Investor either (i) is an accredited investor (as defined in Regulation D promulgated under the Securities Act) or (ii) is not a United States Person as that term is defined in Regulation S of the Securities Act, as amended and is not acquiring the Common Shares for the account or benefit of any United States Person.  The Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, and bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares hereunder.

4.5          Restricted Securities.  The Investor understands that the Shares, when issued, will be restricted securities under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances, including pursuant to Regulation S and Rule 144 under the Securities Act.  In this connection, the Investor represents that it is familiar with Regulation S and Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.  Notwithstanding the provisions of this section, Company hereby agrees to register the subject securities pursuant to the terms and conditions contained in the Securities Registration terms And Conditions, which is attached hereto as Exhibit B, and incorporated into this Stock Purchase Agreement by reference thereto.

4.6          Further Limitations on Disposition.  Without in any way limiting the representations set forth above, the Investor further represents, warrants and agrees that it will not make any disposition of all or any portion of the Shares, except to an Affiliate, unless:

(a)           There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(b)           The disposition is made pursuant to Rule 144 or Regulation S or similar provisions of federal securities laws as in effect from time to time; or

(c)           The Investor shall have notified the Company of the proposed disposition; and if requested by the Company, the Investor shall have furnished the Company with an opinion of counsel; reasonably satisfactory tot the Company, that such disposition will not require registration of such Shares under the Securities Act.

(a)

 

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4.7          Legends.  It is understood that the certificates evidencing the Shares will bear legends to the effect of the following:

“These securities have not been registered under the Securities Act of 1933.  They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel reasonably satisfactory to the Company that such registration is not required or unless sold pursuant to Regulation S or Rule 144 of such Act.”

“The securities evidenced by this certificate are subject to restrictions on transfer set forth in an agreement between the original purchaser thereof and the corporation, a copy of which agreement is on file at the principal executive offices of the corporation.”

5.             Conditions to Closing of Investor.  The Investor’s obligation to purchase the Shares at the Closing is subject to the fulfillment as of the Closing Date of the following conditions:

5.1          Representations and Warranties Correct.  The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date, except that representations and warranties that speak as of a particular date shall be true and correct in all material respects as of such date.

5.2          Covenants.  All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects.  All proceedings to have been taken and all waivers and consents to be obtained in connection with the transactions contemplated by this Agreement shall have been taken or obtained, and all documents incidental thereto shall be satisfactory to the Investor and its counsel, and the Investor and its counsel shall have received copies (executed or certified, as may be appropriate) of all documents which the Investor or its counsel may reasonably have requested in connection with such transactions.

5.3          Compliance Certificate.  The Company shall have delivered to the Investor a certificate of the Company in the form of Exhibit B hereto, executed by the President and Chief Executive Officer of the Company or the Chief Financial Officer of the Company, certifying to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this Agreement.

5.4          Legal Opinion.  All legal matters incident to the purchase of the Shares shall be satisfactory to the Investor’s counsel and the Investor shall have received from Wilson, Sonsini, Goodrich & Rosati, P.C., counsel for the Company, such firm’s opinion addressed to the Investor and dated the date of the Closing, in form and substance satisfactory to counsel to the Investor.

5.5          Certification of Resolutions and Officers.  The Company shall have delivered to the Investor a certificate or certificates, dated the date of the Closing, of the Secretary of the Corporation certifying as to (a) the resolutions of the Company’s Board of Directors authorizing the execution

 

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and delivery of the Transaction Agreements, the issuance to the Investor of the Shares, the execution and delivery of such other documents and instruments as may be required by this Agreement, and the consummation of the transactions contemplated thereby, and certifying that such resolutions were duly adopted and have not been rescinded or amended as of said date and (b) the name and the signature of the officers of the, Company authorized to sign, as appropriate, the Transaction Agreements and the other documents and certificates to be delivered pursuant to this Agreement by either the Company or any of its officers.

5.6          Certification of No Material Adverse Change.  The Company shall have delivered to the Investor a certificate, dated the date of the Closing, of the Chief Financial Officer of the Corporation certifying that since December 31, 2001, there has not been any material adverse change in the financial condition or operations of the Company.

5.7          Stock Certificates.  The Company shall have delivered to the Investor a certificate or certificates representing the Shares purchased by the Investor on the Closing Date.

5.8          Confirmation Letter.  A letter shall have been issued and delivered by the Investor’s counsel that this agreement and other related agreements have been duly executed by the parties concerned in the agreed forms.

6.             Conditions to Closing of the Company.  The Company’s obligation to sell the Shares at the Closing is subject to the fulfillment as of the date of the following condition:

6.1          Representations and Warranties Correct.  The representations and warranties made by the Investor in Section 4 hereof shall be true and correct in all material respects as of the date of the Closing with the same force and effect as though such representations and warranties had been made on the Closing Date.

7.             Mutual Conditions of Closing.  The obligations of each of the Investor and the Company to consummate the Closing are subject to the fulfillment as of the Closing Date of the following conditions:

7.1          Qualifications.  All consents, permits, approvals, qualifications and registrations to be obtained or effected with any governmental authority, including, without limitation, necessary Blue Sky law permits and qualifications required by any state for the offer and sale to the investor of the Shares, shall have been obtained or effected.

7.2          Absence of Litigation.  There shall be no injunction, actions, suits, proceeding or investigations pending or currently threatened against the Company or the Investor which questions the validity of the Transaction Agreements or the right of the Company or the Investor to enter into such agreements, or to consummate the transactions contemplated thereby.

 

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8.             Additional Covenants and Agreements.

8.1          Inspection of Books and Records.  The Company shall permit the Investor from time to time, at the Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Investor; provided, however, that the Company shall not be obligated pursuant to this Section 8.1 to provide access to any information which it reasonably considers to be a trade secret or similar proprietary or confidential information.

8.2          Standstill.  The Investor shall not, at any time from and after the date hereof until the tenth anniversary of the Closing Date (the “Restricted Period”), acquire shares of Common Stock of the Company, or securities convertible into, exchangeable for or exercisable for, Common Stock of the Company such that the Investor would, at any time during the Restricted Period own in excess of 19.9% of the Total Voting Power (as defined below) of the Company’s securities.  For purposes hereof, the percentage of the Total Voting Power of the Company’s securities shall be determined by dividing (x) by (y) and expressing the resulting quotient as a percentage, where

(x) equals the number of shares of Common Stock of the Company held by the Investor and the number of shares of Common Stock of the Company issuable upon conversion, exercise or exchange of securities of the Company held by the Investor which are convertible into, exchangeable for or exercisable for Common Stock of the Company, either directly or indirectly; and

(y) equals the number of issued and outstanding shares of Common Stock of the Company.

In the event that Investor’s ownership at any time exceeds the limits set forth above, Investor shall be deemed, automatically and with no further action on the part of Investor, to have granted the Company’s Chairperson an irrevocable proxy to vote all shares of Company Common Stock held by Investor in excess of the foregoing limits in such manner as may be recommended by the Board of Directors of the Company with respect to any matter for which approval of the Company’s shareholders is sought.  The remedy set forth in the preceding sentence shall not be in lieu of, but shall be in addition to, any other remedies which Company may have at law or pursuant to this Agreement or otherwise for breach of this provision.

9.             Miscellaneous.

9.1          Survival of Warranties.  The warranties and representations of the Company and the Investor contained in this Agreement shall survive the closing until the first anniversary of the Closing Date.

9.2          Remedies.  In case any one or more of the covenants or agreements set forth in this Agreement shall have been breached by any party hereto, the party or parties entitled to the benefit of such covenants or agreements may proceed to protect and enforce their rights either by suit in equity or action at law, including, but not limited to, an action for damages as a result of any such breach or an action for specific performance of any such covenant or agreement contained in this

 

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Agreement.  The rights, powers and remedies of the parties under this Agreement are cumulative and not exclusive of any other right, power or remedy which such parties may have under any other agreement or law.  No single or partial assertion or exercise of any right, power or remedy of a party hereunder shall preclude any other or further assertion or exercise thereof.

9.3          Successors and Assigns.  Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  This Agreement and the rights and duties of the Company set forth herein may be freely assigned, in whole or in part, upon the written consent of the Investor, which consent may not be unreasonably withheld.  Notwithstanding the foregoing sentence, the Company may assign this Agreement, and the rights and the duties of the Company set forth herein, to an entity or person which purchases all or substantially all of its assets or voting securities, so long as the successor agrees in writing to be bound by all of the terms this Agreement.

9.4          Entire Agreement.  This Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire agreement among the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings, whether written or oral, with respect thereto; provided, however, that this Agreement is not intended to supersede the OEM Agreement or any other agreement not related to the purchase and sale of the Company’s securities between the Company and the Investor.

9.5          Governing Law and Consent to Jurisdiction.  This Agreement shall be governed by and construed under the laws of the State of California, U.S.A. (without regard to the conflict of law principles thereof).  Each of the parties irrevocably submits to the exclusive jurisdiction of the state and federal courts within the State of California, U.S.A. for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby.  Each of the parties agrees to commence any action, suit or proceeding relating hereto in the federal courts within the State of California, U.S.A. or if such suit, action or other proceeding may not be brought in such court for jurisdictional purposes, in the state courts within the State of California, U.S.A.

9.6          Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

9.7          Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

9.8          Nouns and Pronouns.  Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice-versa.

9.9          Notices.  Unless otherwise provided, all notices, requests, consents and other communications hereunder to any party shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or duly sent by first class registered or

 

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certified mail, or other courier service, postage prepaid, or telecopied with a confirmation copy by regular mail, and addressed or telecopied to the party to be notified at the address or telecopier number indicated for such party, as the case may be, set forth below or such other address or telecopier number, as the case may be, as may hereafter be designated in writing by the addressees to the addressor listing all parties:

 

To the Company:	Cal Hoagland, Chief Financial Officer
	Interwave Communications International Ltd.
	c/o Interwave Communications, Inc.
	312 Constitution Drive
	Menlo Park, CA 94025
	Fax: 1-650-321-6570
With a copy to:	Robin E. Foor, Esq.
	Vice President and General Counsel
	Interwave Communications, Inc.
	312 Constitution Drive
	Menlo Park, CA 94025
	Fax: 1-650 321-6381
To the Investor:	Michael Sophie
	Vice President and Chief Financial Officer
	UTStarcom, Inc.
	1275 Harbor Bay Parkway
	Alameda, CA 94502
	Fax: 1-510-

All such notices, requests, consents and other communications shall be deemed to have been received: (a) in the case of personal delivery, on the date of such delivery; (b) in the case of sending by international overnight courier service, on the fifth business day following the date of such sending by international overnight courier service fully prepaid; and (c) in the case of facsimile transmission, when confirmed by facsimile machine report.

9.10        Finder’s Fee.  The Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finder’s fee (and the reasonable costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its officers, partners, employees, or representatives is responsible.  The Company agrees to indemnify and hold harmless the Investor from any liability for any commission or compensation in the nature of a finder’s fee (and the reasonable costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible.

9.11        Expenses.  Each party shall pay its own fees and expenses with respect to this Agreement.  If any action at law or in equity is necessary to enforce or interpret the terms of this

 

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Agreement or the Research and Collaboration Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

9.12        Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor.

9.13        Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, in any jurisdiction, such provision shall be ineffective, as to such jurisdiction, and the balance of the Agreement shall be interpreted as if such provision were so excluded, without invalidating the remaining provisions of this Agreement; and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

9.14        Confidentiality and Publicity.  Neither the Company nor the Investor will disclose to any person (other than its attorneys, accountants, employees, officers, and directors) the existence or terms of this Agreement or any of the transactions contemplated hereby without the prior written consent of the other party, except as may, in the reasonable opinion of such party’s counsel, be required by law (in which event the disclosing party will first consult with the other party with respect to such disclosure).  Except to the extent public disclosure is required by law, the Company and the Investor will consult and reach agreement with one another as to the form and substance of any press release or any other public disclosure of the existence or terms of this Agreement or the transactions contemplated hereby prior to issuing any such press release or making any such public disclosure.

 

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

 

	UTSTARCOM, INC.
	By:	/s/ HONG LU
	Name:	Hong Lu
	Title:	Chief Executive Officer
	INTERWAVE COMMUNICATIONS
	INTERNATIONAL LTD.
	By:	/s/ PRISCILLA LU
	Name:	Priscilla Lu
	Title:	Chief Executive Officer

 

 

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Exhibit A

Stock Purchase Agreement

UTStarcom, Inc. and interWAVE Communications

[***]

 

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