EXHIBIT 10.70
Equity Transfer Agreement
[Translation]
Party A: Zhejiang Provincial Telecom. Instruments Factory
Domicile: No.118 Moganshan Road, Hangzhou City
Name of the Legal Representative: Huang Zhaoxing
Title: Director
Nationality: China
Party B: UTStarcom Inc.
Domicile: Harbour Bay Parkway, suite 100 Alameda, CA94502, USA
Name of the Legal Representative: Hong Liang Lu
Title: CEO
Nationality: U.S.A.
Party C: UTStarcom(Hangzhou) Communication Co., Ltd.
Domicile: Building No.3 Yile Industrial Zone, No.129 Wenyi Road, Hangzhou City
Name of the Legal Representative: Wu Ying
Title: Chairman of Board of Directors
Nationality: U.S.A.
WHEREAS:
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1. Party A and Party B are effectively existing company juridical persons
which have been registered and incorporated in accordance with the
currently effective laws and regulations of China; Party B is an
effectively existing company juridical person which has been registered and
incorporated in accordance with the currently effective laws and
regulations of DELAWARE ,U.S.A.
2. Party A and Party B incorporated the Sino-American equity joint venture,
UTStarcom(Hangzhou) Communication Co., Ltd. (hereinafter referred to as
Party C) in Hangzhou in 1993. Until the very day of the conclusion hereof,
the registered capital of this company is US$12,440,000.00, of which Party
A contributes US$1,492,800.00 amounting to 12% of the registered capital of
this company; Party B contributes US$10,947,200.00 amounting to 88% of the
registered capital of this company.
3. The respective competent organs of Party A, Party B and Party C agree on
the equity transfer and the corresponding guarantee issues hereunder.
Hereby Party A and Party B, in accordance with the Law of the P.R.China on
Chinese-Foreign Equity Joint Ventures and the Several Provisions on the Share
Right Variation of Investors of Foreign-Invested Enterprises, under the
principles of Equality and Free Will, Consultation and Consensus, Honesty and
Good Faith and Compensation of Equal Value, conclude this equity transfer
agreement
I. Transfer of Equity:
1. Party A contributes US$1,492,800.00 amounting to 12% of the
registered capital of Party C; Party B contributes
US$10,947,200.00 amounting to 88% of the registered capital of
Party C.
2. Prior to the transfer of Party A's equity( i.e. prior to the
completion of the administrative registration), the rights and
obligations of Party C shall be enjoyed and borne by Party A.
After the transfer of equity from Party A, 100% of Party C's
equity shall be owned by Party B and all the rights and
obligations of Party C shall be enjoyed and borne by Party B.
Party A agrees to transfer to Party B all equity of Party C
held by Party A, i.e. 12% of the total amount of Party C's
equity and Party B agrees to accept the said equity.
3. Neither the total investment amount nor registered capital
shall be changed prior to and during the transfer.
II. Price of Equity transfer and the Payment Thereof:
1. The Price: upon friendly consultation between Party A and Party
B, Party A agrees to transfer 12% of the equity of Party C held
by Party A at the price of RMB(Yen)120,000,000.00 with October
31/st/, 2001 as the datum date; Party B agrees to buy such
equity held by Party A at the above mentioned price.
Note: the transfer price of RMB(Yen)120,000,000.00 has already
included Party A's ownership interest in Party C by October
31/st/, 2001.
2. Payment:
1) Within seven days of the conclusion hereof, Party B pays
Party A RMB(Yen)60,000,000.00, which shall be put into the
account designated by Party A.
2) Within seven days as of the ratification hereof by the
competent authority, Party B pays Party A 30,000,000.00
Yuan, which is 50% of the balance after the first sum of
equity transfer price is deducted. Party B shall pay this
amount to Party A by the method designated by Party A.
3) Within ten days after the completion of the administrative
registration of equity transfer with competent authority,
Party B pays the equity transfer price of 30,000,000.00
Yuan to Party A only one time. Party B shall pay this
amount to Party A by the method designated by Party A.
3. Party C provides warranty for Party B's payment of the price.
Provide that Party B failed to perform its obligations
hereunder, Party C should bear the warrantor's responsibility
of joint and several payment.
III. Rights and obligations of Both Parties in the Equity Transfer:
1. Within one month of the conclusion hereof, both Parties shall
provide the corresponding documents and Party C shall handle the
specific issues of ratification application and registration with
competent authority.
2. Party A, Party B and Party C shall pay their respective taxes and
fees corresponding thereto according to the laws and regulations
concerned.
IV. Rights and Obligations of Both Parties After the Completion of the Equity
transfer
1. Party C shall be run solely by Party B. Party B enjoys the
shareholder's rights and bears the shareholder's obligations,
while Party A will no longer participate in the running of the
company, nor enjoy the rights or bear the obligations.
2. After such transfer, Party C's all property , creditor's rights
and debts shall be undertaken by Party B, thus they have nothing
to do with Party A.
V. Default
Both Party A and Party B shall perform this agreement after it goes into
effect; where either party breaches the agreement, the defaulting party
shall bear the corresponding liabilities; where the default imposes losses
upon the other party, the defaulting party shall indemnify the losses.
Where Party B fails to pay Party A the price of equity transfer within the
time stipulated herein, Party B agrees to increase the price to
RMB130,000,000.00 Yuan, which is treated as the default damages.
VI. Guarantee
1. Party A guarantees that the equity transferred to Party B in
accordance with the stipulations hereof are held legally by
Party A in Party C and that Party A has completely effective
right to dispose of the said equity.
2. Party B guarantees to pay Party A the price of equity transfer
in accordance with the stipulations hereof.
3. Party A's transfer of the equity has been approved by the
competent authorities, the Provincial Telecom Industrial Group
Co. Ltd. and the Provincial Telecom Co. Ltd.
4. Party C guarantees that its guarantee issue herein has been
approved by its competent departments.
VII. Dispute Settlement
Party A and Party B shall by friendly consultation resolve the disputes
concerning the validity, performance, default, rescission, indemnity and
so on hereof. Where the disputes fail to be resolved within sixty days
after the disputes occur, both Parties agree to submit the disputes to the
arbitration of Hangzhou City Arbitration Committee and the arbitration
shall be conducted in Hangzhou in accordance with the arbitration
procedures of the said Committee. The arbitral awards shall be final and
binding upon both Parties. During the arbitration, the other clauses
hereof shall continue to be performed except the disputed parts hereof.
VIII. Application of Law
This Equity Transfer Agreement shall be governed by the laws and regulations
of P.R.China.
IX. Supplementary Provisions
1. Only upon the formation of a written agreement thereon after the
approval of Party A, Party B and Party C, can this Agreement be
modified, amended or rescinded.
2. This Agreement shall be executed only after it is signed and
sealed by the representatives authorized by Party A, Party B and
Party C and after the first sum of 60,000,000.00 Yuan is paid to
the account designated by Party A; this Agreement shall go into
effect upon the approval of the competent authority.
3. This Agreement shall have nine copies of originals; Party A,
Party B and Party C shall hold one copy respectively and the
other copies shall be presented to the competent authorities for
approval or records. All the copies have equal legal effect.
Party A: Zhejiang Province Telecom. Instruments Factory Party B: UTStarcom Inc.
Representative: Representative:
Date: January 21, 2002 Date: January 21, 2002
Party C: UTStarcom (Hangzhou) Co., Ltd.
Representative:
Date:
Place of signature:
Translation Certification
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I hereby certify that the foregoing represents a fair and accurate
English translation of the original Chinese document.
Dated: February 5, 2002
By: /s/ Michael J. Sophie
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Michael J. Sophie
Chief Financial Officer