Exhibit 10.51
[*] 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.
CONTRACT NUMBER:
20MKK-0320022US
ON
XIAN BROADBAND MULTI-MEDIA BUSINESS SYSTEM
AMONG
CHINA XIAN MACHINERY IMPORT & EXPORT CORPORATION
AND
CHINA TELECOM GROUP, SHANXI TELECOMMUNICATIONS CORPORATION
AND
U.S. UTSTARCOM, INC.
TABLE OF CONTENTS OF PURCHASE CONTRACT
1. Definition
2. Subject Matter of Contract
3. Price
4. Payment and Terms of Payment
5. Terms of Transportation
6. Packing and Shipping Marks
7. Shipment
8. Installation, Testing, Test Run and Final Test
9. Warranty
10. Spare Parts
11. Claims
12. Force Majeure
13. Arbitration
14. Notice
15. Amendment of Contract
16. Customs Duties, Taxes and Other Expenses
17. Miscellaneous
18. Validity of Contract
Signature Page
Appendices
Appendix 1 List of Quotation for Equipment
Appendix 2 Technology Proposal
Appendix 3 Training Plan
Appendix 4 Manual of Products
Appendix 5 Reply to Questions re Quotation
PURCHASE CONTRACT
1. Purchase Contract
(a) This purchase contract of Xian broadband multi-media business
system equipment and other related service contracts (hereinafter referred to as
the "Contract") are made among China Xian Machinery Import & Export Corporation
(hereinafter referred to as the "Buyer"), registered under the laws of the
People's Republic of China and having its legal address at Building No. 4
(East), Jian Hua Hotel, No. 6 East Section, Huan Cheng Road (South), Xian, China
Telecom Group, Shanxi Telecommunications Corporation (hereinafter referred to as
the "End User"), registered under the laws of the People's Republic of China and
having its legal address at No. 1 Gao Xin Road, Xian and U.S. UTStarcom, Inc.
(hereinafter referred to as the "Seller"), having its address at 1275 Harbour
Bay Parkway, Suite 100, Alameda CA 94502 by adhering to the principle of mutual
benefits and friendly cooperation, through discussions and pursuant to the
following terms and conditions:
Chapter 1 Definition
1.1 "Authorized representatives" shall mean people who exercise
the rights on behalf of the parties to this Contract.
1.2 "Contract Equipment" shall mean system equipment, spare parts
and related software listed in Appendix 1 attached to this
Contract.
1.3 "Technical Services" shall mean services provided within the
boundaries of [*] by the Seller to the Buyer and the End User.
1.4 "Site" shall mean the spot where contract equipment is
installed.
1.5 "Readiness for Preparation of the Site" shall mean that prior
to the arrival of the contract equipment at the Site, the Site
provided by the Buyer and the End User is equipped with the
conditions required by the Seller for the installation of the
contract equipment; thus, the work for such installation may
start.
1.6 "Amended Application Forms" shall mean forms on the amendment
of the scope, plan or price of the Contract.
Chapter 2 Subject Matter of Contract
2.1 The Buyer agrees to buy from the Seller the equipment and
technical services provided in accordance with Appendix Nos. 1
and 2 attached to this Contract, and the Seller agrees to sell
such equipment and services. Please refer to Appendix 2
attached to this Contract for detailed explanation of the
equipment and the related technical services pursuant to this
Contract.
Chapter 3 Price
3.1 The Buyer shall pay the Seller a total contract price of [*].
The contract price is [*].
3.2 The contract price listed in 3.1 is based on the provisions of
[*], and the expenses for shipping and insurance are paid up
till to [*].
3.3 The prices listed in 3.1 are fixed. Any amendment of the
relevant contracts shall be unanimously made in writing by the
parties to the Contract.
Chapter 4 Payment and Terms of Payment
4.1 The computation and display of prices listed in the Contract
and the preparation and payment of all the invoices shall be
carried out in [*].
4.2 The total contract price set forth in 3.1 shall be paid by the
Buyer by the following means and ratio:
4.2.1 Within [*] upon the official validity of this
Contract, the Buyer shall pay [*] of the total
contract price or [*]. The Buyer shall wire transfer
such payment through the Buyer's bank within [*] upon
receipt of the following documents:
a. Export license issued by the government
authorities of the Seller's country or a
certificate indicating no need of such export
license;
b. Five (5) copies of [*] pro forma invoices;
c. Five (5) copies of [*] commercial invoices;
d. Two (2) copies of [*] sight draft;
e. Original copy of air waybill indication "freight
paid", and notification to China Xian Machinery
Import & Export Corporation;
f. Three (3) copies of a detailed packing list;
g. An original and a copy of the insurance policy
covering all risks for [*] of the contract price;
and
h. Two (2) copies of inspection certificates of
quality and quantity or weight.
4.2.2 2nd Payment: [*] of the Contract Price
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Upon arrival of the goods and after confirming
without error the following documents submitted by
the Seller, the Buyer shall wire transfer [*] of the
total contract price or [*] to the bank designated by
the Seller in accordance with the provisions of the
contractual clauses:
a. Three (3) originals and three (3) copies of
commercial invoices for [*] of the total contract
price indicating the contract number and the
names of the goods.
4.2.3 Final Payment: [*] of the Total Contract Price
The final payment, i.e. [*] of the total
contract price or [*], shall be paid via T/T by the
Buyer to the Seller's designated bank upon arrival of
the goods and against the following documents
presented by the Seller:
a. Three (3) originals and three (3) copies of
commercial invoices for [*] of the total contract
price indicating the contract number and the
names of the goods.
4.3 Any bank expenses in connection with the aforementioned
procedures for such payment occurred inside the People's
Republic of China shall be borne by [*]; and any bank expenses
occurred outside the People's Republic of China shall be borne
by the [*].
Chapter 5 Terms of Transportation
5.1 All the equipment under this Contract shall be shipped to Xian
pursuant to the provisions of [*].
5.2 With [*] upon shipment of the contract equipment, the Seller
shall notify the Buyer and the End User by fax of the contract
number, date, commodities, quantities, value of invoices,
gross weight, flight number and other information.
5.3 The port of destination for the goods is Xianyang
International Airport in Xian, and the [*] shall be
responsible for the domestic transportation and insurance.
Chapter 6 Packing and Shipping Marks
6.1 All the equipment and materials supplied under this Contract
shall be carefully packed in strong cases suitable for
long-distance transportation by air, sea or land and well
protected against changes of weather, dampness, rain, rust,
shook on loading and unloading and erosions. If necessary,
they should be shipped in well-sealed containers.
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6.2 The Seller shall mark packing cases for loose spare parts,
indicating in English the contract number, names of the
equipment and spare parts. In addition, spare parts and tools
shall be marked with letters of "parts" or "tools".
6.3 The Seller shall mark, in conspicuous English, the following
contents on both sides of each packing case:
1) Contract number;
2) Shipping Mark: 20MKK-0320022US;
3) Recipient;
4) Port of Destination: Xian;
5) Case number;
6) Gross weight; and
7) Measurement (length x width x height).
Based on the characteristics and different requirements
of each packing case during the course of transportation, the Seller
shall mark in English such cautions as "Handle with Care", "This Side
Up", "Keep Dry" and any other conspicuous signs customarily used in the
trade.
6.4 The Seller shall enclose a set of packing list inside each
packing case.
Chapter 7 Shipment
7.1 The Seller shall make one-time delivery of all the goods at
the delivery date stipulated in the performance schedule
(within [*] upon execution of the Contract).
7.2 The Seller shall be liable for any delay of the delivery of
the contract goods caused by its own fault.
Chapter 8 Installation, Testing, Test Run and Final Test
8.1 The [*] shall be responsible for the installation of the
contract equipment under the supervision of the [*]
technicians, and the [*] shall be responsible for the
supervisory work of installation and system debugging, whereby
the [*] technicians shall render assistance. The Seller's
technical support shall comply with the integrated technology
standards of engineering system for Xian broadband multi-media
business system.
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8.2 Installation, testing and acceptance of the contract equipment
shall be carried out in accordance with the performance
schedule listed in Appendix 4 to this Contract.
8.3 Upon completion of the contract equipment installation by the
End User and of debugging by the Seller, the Seller should
guarantee the requirements of stability performance for the
contract equipment be met and that preparation be made for a
test run. The Seller shall provide the End User with any
written and related information [*] prior to the test run, and
confirm the date for such test run. Thereafter, the test run
will begin immediately.
8.4 If, due to the Seller's reasons, the equipment does not comply
with the allocation requirements, the Seller will solve the
problem of such contract equipment at its own cost until they
are up to the standards. The corresponding extension of the
period of time for the test run shall be equal to the time
spent by the Seller to solve the problem of such contract
equipment.
Chapter 9 Warranty
9.1 The Seller warrants the equipment supplied hereunder to be
free from defects in workmanship. The Seller's warranty for
the quality of the equipment will commence upon execution of
the certificate of qualification at the final test and
continue for a period of [*]. During the warranty period, the
Seller will, at its option, either repair or replace any parts
not conforming to the above warranty. The Seller shall bear
all the expenses for the return of such parts as well as the
transportation charges for the return of such repaired or
replaced parts to the installation site.
9.2 If any part is determined to be returned by the parties, the
End User shall complete a repair & maintenance form provided
by the Seller and return the part, and the [*] shall bear the
cost of transportation, insurance, loading and unloading of
the faulty party to be returned to the Seller, and also be
responsible for the return of the repaired or replaced part to
the End User.
9.3 The Seller shall make its best efforts to ship a replaced part
within [*] upon identification by the End User of the faulty
essential part affecting the system performance. The End User
shall do its best to return the faulty part within [*] upon
delivery of a replaced part by the Seller to the End User.
9.4 If the Seller determines the need to dispatch its technicians
to assist the End User in inspecting or repairing a faulty
part at the site, any cost occurred during the warranty period
shall be [*]. After the end warranty period, the Seller shall
provide the Buyer with maintenance services, but the fees
shall not exceed [*] of the discount price of the repaired
unit.
Chapter 10 Spare Parts
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10.1 The Seller agrees that it will exert its best efforts to
provide spare parts for [*] upon delivery of the goods. The
Seller warrants that it will notify the Buyer [*] ahead of
time of any decision to suspend the production of certain
parts in order to enable the Buyer to purchase enough parts
for its inventory.
10.2 The Seller agrees not to price any of the spare parts higher
than [*].
Chapter 11 Claims
11.1 Within [*] upon arrival of the goods at the End User's site,
the cases shall be opened by the End User in the presence of
the Seller's representatives, and checked jointly by the
representatives of both the End User and the Seller.
11.2 In case of missing parts or damages due to the inadequate
packing on the part of the Seller, the Buyer and the End User
shall make a detailed record at the site or they may
commission the China Commodity Inspection Bureau for a
re-inspection. The representatives of the Buyer and the Seller
shall draft and sign a proposal with a detailed list of the
goods attached. Such proposal may serve proper evidence for
the replacement or repair of missed or damaged parts. The
replacement of missed parts and the repair of damaged parts
shall be carried out in accordance with the provisions of
Chapter 9, the warranty clause.
11.3 In case of delayed shipment due to the Seller's fault, the
Buyer may seek compensation from the Seller according to the
following ratio: a penalty amounting to [*] of the total value
of the goods plus interest shall be imposed per weak. Any
fractional part of a week is to be considered as a full weak.
The total amount of compensation shall not, however, exceed
[*] of the total value of the goods involved in delayed
shipment. The payment of compensation will not exclude the
Seller from its obligations to execute the Contract. If the
delayed shipment exceeds [*], the Buyer and the End User have
the right to rescind part or whole of the Contract.
11.4 The total amount of the aforementioned penalty shall not
exceed [*] of the total contract price, which will be deducted
at the time of payment due by the Buyer.
Chapter 12 Force Majeure
12.1 The Seller, the End User or the Buyer shall not be liable for
any lass, damage, delay or failure of performance resulting
directly or indirectly from any cause which is beyond their
reasonable control including, but not limited to, the laws,
regulations, acts or failure to act of any governmental
authorities. Under such circumstances, the party affected by
the force majeure event shall notify the other party within
[*] after the occurrence of such event. If the performance of
this Contract is prevented for the aforementioned reasons for
a consecutive period of [*] or a longer time, any party has
the right to terminate this Contract by way of a written
notice.
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Chapter 13 Arbitration
13.1 Any dispute arising out of the performance of this Contract
shall be settled by the parties through friendly
consultations. In case of no settlement through consultations,
the said dispute shall be submitted for an arbitration.
13.2 The place for the arbitration is Xian, China, and the said
arbitration should be carried by Xian Arbitration Commission
in accordance with its rules. This Contract is governed by the
laws of the People's Republic of China.
13.3 The arbitration award issued by the Arbitration Commission
shall be final and binding on the parties. No party shall try
to seek legal or any other channels to amend the arbitration
award.
13.4 The arbitration fees shall be covered by the losing party
unless otherwise stipulated by the Arbitration Commission.
13.5 During the arbitration, the parties shall continue to perform
this Contract except for the part under arbitration.
Chapter 14 Notice
14.1 Any notice hereunder by the parties shall be in writing, and
delivered by fax or similar communication means confirmed by
the parties or registered mail to the following addresses:
The Seller: U.S. UTStarcom, Inc.
Telephone: 001-510-8648800
Fax: 001-510-8648802
The Buyer: China Xian Machinery Import
& Export Corporation
Telephone: 0086-29-2239614
Fax: 0086-29-2230418
The End User: China Telecom Group, Shanxi
Telecommunications Corporation
Telephone: 86-29-8258899
Fax: 86-29-8258809
14.2 Notices sent by fax or similar communications means shall be
deemed as being effectively served on the sending day; notices
sent by guaranteed or registered mail shall be deemed as being
effectively served on the sending day when the prepaid postage
is delivered.
Chapter 15 Amendment of Contract
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15.1 Any amendment or memorandum made by the parties in relation to
this Contract shall be executed by the authorized
representatives of the parties.
15.2 During the performance of this Contract, any increase,
cancellation or amendment relating to the contract price,
schedule and progress of the project may be submitted by the
parties, and shall come into force only after the confirmation
of the parties' approval and signatures.
15.3 If any party fails to carry out its duties during the
performance of this Contract, it shall bear the corresponding
cost associated with such failure.
Chapter 16 Customs Duties, Taxes and Other Expenses
16.1 The [*] shall be responsible for the payment of any taxes or
other financial obligations arising out of this Contract and
levied at abroad.
16.2 The [*] shall be responsible for the payment of any taxes or
other financial obligations levied in China in relation to
this Contract or import of equipment from abroad.
16.3 The Seller shall be responsible for the payment of any taxes
or other financial obligations levied in China in relation to
this Contract or import of equipment from abroad.
Chapter 17 Miscellaneous
17.1 This Contract shall be kept confidential, and can only be
disclosed or submitted to the government authorities pursuant
to the laws.
17.2 This contract from its main body of Chapter 1 to 18 and
appendices 1 to 6 represents the unanimous agreement of the
parties and their common understanding on the relevant
negotiations and agreements, whether in oral or written form,
prior to the execution of this Contract. Unless otherwise
specified in this Contract, no other representations,
understanding or agreements are contained in this Contract.
Any party shall not be liable for anything beyond the terms,
conditions, definitions, warranties, understanding or
representations provided for in this Contract.
17.3 This Contract shall be terminated upon completion of each
party's duties and obligations.
17.4 Technical Services
17.4.1 The Seller is obliged to provide the following
services within [*] after the delivery of the goods:
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a. To provide 24-hour [ILLEGIBLE] online technical
consultations, and warrants timely response to
eliminate or reduce the occurrence of any
breakdown.
b. To send a maintenance team to solve the problem
at the site within [*] upon receipt of a notice.
Chapter 18 Validity of Contract
This Contract is made in three (3) copies, and shall be jointly entered
into and executed by the representatives of the parties.
Buyer: China Xian Machinery Import & Export Corporation
Authorized Representative: (Signature)
Date of Signature: 9/29/00
Seller: U.S. UTStarcom, Inc.
Authorized Representative: (Signature)
Date of Signature: 9/29/00
End User: China Telecom Group, Shanxi Telecommunications Corporation
Authorized Representative: (Signature)
Date of Signature: 9/29/00
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