TECHNICAL COLLABORATION AGREEMENT
BETWEEN
SHARP CORPORATION
AND
UTSTARCOM INC.
INDEX
ARTICLE
1. Definitions
2. Grant of Right
3. Disclosure of KNOW-HOW and other Technical Information;
Technical Assistance & Services
4. Training of HUTS's Engineers at the FACTORY
5. Despatch of SHARP's Technical Instructor
6. Secrecy
7. Machines, Equipment & Testers
8. Supply Parts
9. Improvements
10. Royalty
11. Records and Auditing
12. Validity and Infringement
13. Approval of Government
14. Duration of Agreement
15. Termination
16. Assignment
17. Notices
18. Entire Agreement
19. Force Majeure
20. Arbitration
21. Governing Law
22. Miscellaneous
EXHIBIT A, B & C
TECHNICAL COLLABORATION AGREEMENT
THIS AGREEMENT made and entered into this 31st day of March, 2000, by and
between:
SHARP CORPORATION, a Japanese corporation, having its principal place of
business at 22-22, Nagaike-cho, Abeno-ku, Osaka 545-8522, Japan (hereinafter
referred to as 'SHARP')
and
UTSTARCOM INC., a Delaware corporation, having its principal place of business
at 1275 Harbor Bay Parkway, Suite 100, Alameda, CA 94502, U.S.A. (hereinafter
referred to as 'UTSTARCOM')
WITNESSETH
WHEREAS, SHARP is now and has for a long time been engaged in the manufacture
and sale of SHARP's brand electric and electronic products and is the owner of
certain technical know-how and intellectual property rights relating to the
PRODUCTS (as hereinafter defined) and manufacture thereof; and
WHEREAS, UTSTARCOM is desirous of obtaining a right (i) to have EASTCOM (as
hereinafter defined), by the good office of HUTS (as hereinafter defined),
assemble and manufacture the PRODUCTS in the TERRITORY (as hereinafter defined)
under said technical know-how and intellectual property rights, and (ii) to have
HUTS sell or distribute the PRODUCTS in the TERRITORY so assembled and
manufactured by EASTCOM; and
WHEREAS, SHARP is willing to grant to UTSTARCOM a right (i) to have EASTCOM, by
the good office of HUTS, assemble and manufacture the PRODUCTS in the TERRITORY
under said technical know-how and intellectual property rights and render to
HUTS technical assistance, which are necessary for the assembly and manufacture
of the PRODUCTS in the TERRITORY for distribution by HUTS of the PRODUCTS in the
TERRITORY, and (ii) to have HUTS sell or distribute the PRODUCTS in the
TERRITORY so assembled and manufactured by EASTCOM.
NOW, THEREFORE, the parties hereto hereby agree as follows:
-continued-
ARTICLE 1. DEFINITIONS
Whenever used in this Agreement, unless otherwise clearly required by the
context, the following terms shall have the meanings set forth in this Article
and no other.
(a) The term 'TERRITORY' means [*]
(b) The term 'PRODUCTS' means only such models of the products, which are:
i) specified in the EXHIBIT-A attached hereto and made a part hereof; and
ii) carrying the trademark 'UTStarcom' or other marks owned by UTSTARCOM
or other marks designated by UTSTARCOM upon prior written consent of
SHARP. SHARP will not refuse the use of such designated marks without
a reasonable reason.
It is expressly agreed that products which do not satisfy both of the above
two conditions shall in no way be included in the meaning of the term
PRODUCTS.
(c) The term 'SUPPLY PARTS' means any or all materials and component parts for
the PRODUCTS supplied in any form from SHARP, its subsidiary, related or
affiliated company or designated factory.
(d) The term 'KNOW-HOW' means any or all secret processes, secret formulae and
confidential technical data, confidential manufacturing procedures and
methods, which SHARP has as of the date of this Agreement and/or may during
the term of this Agreement have as a result of SHARP's scientific research
or practical experience through its assembly and manufacture of the
equivalent model to the PRODUCTS.
(e) The term 'INTELLECTUAL PROPERTY RIGHTS' means any or all rights in the
TERRITORY under patents, utility models, designs, and copyrights, which
SHARP owns as of the date of this Agreement in connection with the
PRODUCTS. For the avoidance of doubt, INTELLECTUAL PROPERTY RIGHTS does not
include any rights of trademark.
(f) The term 'HUTS' means UTSTARCOM (HANGZHOU) TELECOM CO., LTD, a corporation
of People's Republic of China, and a subsidiary of UTSTARCOM, having its
principal place of business at 3 Yile Industrial Park, Bldg. 2/3 19 WenYi
Road, Hangzhou, 310012, People's Republic of China and doing business of
manufacturing, sales or distribution, and after-sales service of the
communication related products.
(g) The term 'EASTCOM' means EASTERN COMMUNICATIONS CO., LTD, a corporation of
People's Republic of China, and having its principal place of business at
No.398. Wen San Road, Hangzhou, Zhe Jiang, People's Republic of China and
doing business of assembly and manufacture of the mobile communication
products.
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
ARTICLE 2. GRANT OF RIGHT
(a) SHARP hereby agrees to grant to UTSTARCOM [*] right (i) to have EASTCOM, by
the good office of HUTS, assemble and manufacture the PRODUCTS for sale
or distribution thereof in the TERRITORY under the KNOW-HOW and
INTELLECTUAL PROPERTY RIGHTS, and (ii) to have HUTS sell or distribute the
PRODUCTS in the TERRITORY so assembled and manufactured by EASTCOM.
UTSTARCOM agrees that it shall have [*] right (i) to manufacture or
(distribute the PRODUCTS and ii) to sublicense to any third party the
right granted hereby except with the prior written consent of SHARP, and
it shall cause HUTS and EASTCOM to abide by the terms and conditions as
set forth hereunder. In case UTSTARCOM desires to appoint another party to
assemble and manufacture the PRODUCTS, both parties shall discuss and
agree the terms and conditions for such appointments.
(b) The KNOW-HOW and INTELLECTUAL PROPERTY RIGHTS granted to UTSTARCOM
hereunder shall be used by EASTCOM for the sole purpose of the assembly and
manufacture, and by HUTS for the sole purpose of the sale of the PRODUCTS
in the TERRITORY in accordance with the terms and conditions hereof and if
UTSTARCOM, HUTS or EASTCOM uses the KNOW-HOW and/or INTELLECTUAL PROPERTY
RIGHTS for any other purposes, SHARP shall have the right, without
prejudice to SHARP's rights and remedies under this Agreement or applicable
laws, to demand the royalties as specified in the EXHIBIT-B attached hereto
and made a part hereof.
It is specifically understood between the parties hereto that the use
thereof by UTSTARCOM, HUTS or EASTCOM for any other purposes shall be
deemed to be a material breach of this Agreement.
(c) In the event that UTSTARCOM desires to have EASTCOM assemble or manufacture
the PRODUCTS for export from the TERRITORY, it shall submit to SHARP such
information relating to the export as SHARP may reasonably require
including but not limited to the final destination, buyer, quantity, price
and specifications of the PRODUCTS. Both parties shall thereupon mutually
discuss the terms and conditions regarding such export.
(d) No technical assistance relating to the assembly and manufacture of any
component parts of the PRODUCTS is rendered by SHARP hereunder.
(e) SHARP hereby only warrants to UTSTARCOM that the KNOW-HOW and other
technical information disclosed and furnished to HUTS by SHARP hereunder
shall be sufficient to permit competent persons utilizing the appropriate
parts, materials, equipment and skills to assemble and manufacture the
PRODUCTS intended hereunder; SHARP shall not be responsible for the
PRODUCTS thus assembled and manufactured hereunder, nor shall SHARP be
liable for damages arising out of or resulting from anything made available
hereunder or the use thereof or SHARP's approval, consent, certification or
confirmation given to UTSTARCOM (and/or HUTS through UTSTARCOM, as the case
may be)
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
hereunder nor shall SHARP be liable to UTSTARCOM, HUTS and/or EASTCOM for a
loss of profit or any consequential damages under any circumstances.
(f) If SHARP determines to discontinue the assembly, manufacture or
distribution of any equivalent models of the PRODUCTS in Japan or elsewhere
for any reason whatsoever, or if UTSTARCOM fails to (i) have EASTCOM
assemble and manufacture or (ii) have HUTS sell or distribute any models of
the PRODUCTS in the TERRITORY for three months or more, SHARP may, in its
sole discretion and by giving [*] prior written notice to UTSTARCOM,
exclude such models of the PRODUCTS from among the PRODUCTS.
Article 3. DISCLOSURE OF KNOW-HOW AND OTHER TECHNICAL INFORMATION: TECHNICAL
ASSISTANCE & SERVICES
Upon the written request of UTSTARCOM or HUTS and to the extent then available
at SHARP and SHARP thinks fit, SHARP shall disclose and furnish to HUTS the
KNOW-HOW and other technical information as specified in sub-paragraph i)
through iii) below and HUTS shall, at its own costs and responsibility, disclose
and furnish to EASTCOM said KNOW-HOW and other technical information so
disclosed and furnished by SHARP. SHARP shall also render to HUTS, technical
assistance and services as specified in sub-paragraph iv) below.
i) For the setting-up of EASTCOM's plant:
a- Layout drawings for each process in the plant;
b- Advice on the process layout of EASTCOM's plant (if
necessary) and advice on procurement of the machines,
equipment, testers and tools required for the assembly and
manufacture of the PRODUCTS;
c- Layout drawings for the installation of the machines and
equipment;
d- Advice on total required electricity, gas and/or water in the
plant;
e- Plans of required number of personnel;
ii) For each model of the PRODUCTS to be newly introduced by UTSTARCOM
from SHARP from time to time:
a- Specifications of the PRODUCTS;
b- List for the SUPPLY PARTS (including kit price list), and
component parts list for studying the local procurement
(including the information of name of parts supplier, parts
name, and parts specifications if available)
c- Material on required standard production time by each
production process and working instruction manual;
d- Schematic diagrams;
e- Draft of instruction manual (written in Japanese);
f- Advice on method and/or standard of quality control (key
point and standard)
g- Process flow chart;
h- Proposal or idea of inspection procedure of the PRODUCTS
i- Advice on procurement and/or use of exclusive testers and
tools
j- Advice on the after-sales service for the PRODUCTS (if
necessary)
k- Assistance for field test of the PRODUCTS (if necessary)
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
l- LCD artwork (the cost shall be separately borne by UTSTARCOM.)
m- Floppy disk including the software (data, program, etc.) to be
written into EEPROM for the PRODUCTS
iii) For the continuous assembly and manufacture of each model of the
PRODUCTS:
a- Advice on production engineering
b- Advice on improvement of production method;
c- Advice and/or guidance on quality control; and
iv) Despatch of SHARP's technical instructor to HUTS and/or EASTCOM,
and/or training of HUTS's engineers at SHARP's factory or its
designated factory (hereinafter collectively called the 'FACTORY')
pursuant to Articles 4 and 5 hereof to facilitate the disclosure and
provision of the KNOW-HOW and other technical information.
ARTICLE 4 TRAINING OF HUTS'S ENGINEERS AT THE FACTORY
(a) Upon UTSTARCOM's prior written request and to the extent then available at
SHARP and as SHARP thinks fit, SHARP agrees to give a reasonable number of
HUTS's engineers (hereinafter called the 'TRAINEE') such technical training
as SHARP thinks appropriate at the FACTORY for a reasonable period of time
in relation to the assembly and manufacture of the PRODUCTS.
(b) [*] expenses [*] to be incurred in this connection shall, unless otherwise
specifically agreed upon between the parties hereto in writing, be for the
account of UTSTARCOM. It is expressly agreed that SHARP shall be under no
liability to the TRAINEE, UTSTARCOM and/or HUTS for any injuries and
damages to the TRAINEE's health in mind and body and property which he may
suffer regardless of whether he is in the premises of SHARP or not.
(c) UTSTARCOM shall give SHARP at least [*] prior notice before the TRAINEE
leaves the TERRITORY for the FACTORY, stating: the name, number, position,
brief curriculum vitae, leader of the TRAINEE in case of plural TRAINEE
being sent; subject of training; time of TRAINEE's arrival; and the period
of stay desired of each TRAINEE.
(d) Training hours, holidays and other conditions and regulations of work for
the TRAINEE to be trained by SHARP at the FACTORY shall be based on such
FACTORY's working conditions and regulations. No TRAINEE shall be
considered for any purpose to be an employee of SHARP or FACTORY.
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
ARTICLE 5. DESPATCH OF SHARP'S TECHNICAL INSTRUCTOR
(a) Upon UTSTARCOM's prior written request or SHARP's written recommendation
made from time to time during the term of this Agreement and where both
parties concurrently deem it appropriate and necessary, SHARP agrees to
despatch to HUTS and/or EASTCOM (by the good office of HUTS) designated by
UTSTARCOM and SHARP agrees, for a reasonable period of time a reasonable
number of engineer(s) and/or specialist(s) (hereinafter called the
'INSTRUCTOR') to more effectively and efficiently disclose and furnish the
KNOW-HOW and other technical information and to give technical guidance and
instructions to HUTS in relation to the assembly and manufacture of the
PRODUCTS hereunder. The time and period of despatch of the INSTRUCTOR shall
be decided by mutual consultation of the parties hereto.
(b) All necessary costs and expenses incurred in connection with the despatch
of the INSTRUCTOR [*] shall be borne and paid by UTSTARCOM.
(c) UTSTARCOM shall cause HUTS to take necessary steps to obtain (or help to
obtain as the case may be) from the authorities concerned the entrance visa
into the TERRITORY of the INSTRUCTOR and UTSTARCOM shall cause HUTS to use
its best efforts to help the INSTRUCTOR in carrying out all customs
clearance procedures for entry into and departure from the TERRITORY of the
INSTRUCTOR and to give all necessary facilities and assistances to the
INSTRUCTOR in the TERRITORY.
(d) All the detailed terms and conditions in connection with all the preceding
paragraphs of this Article and other necessary matters (including a
guarantee of status by UTSTARCOM of the INSTRUCTOR) in relation to the
despatch of the INSTRUCTOR shall be in accordance with a separate agreement
to be executed between the parties hereto.
(e) UTSTARCOM shall obtain from EASTCOM the permission for SHARP or its
representatives to inspect the processes and equipment employed by EASTCOM
in the assembly or manufacture of the PRODUCTS, if SHARP deems it necessary
from time to time.
ARTICLE 6. SECRECY
UTSTARCOM shall, and shall cause HUTS and EASTCOM to, keep strictly confidential
all the KNOW-HOW and all other information furnished or made available by SHARP,
whether in written, oral or any other form or forms, under this Agreement (or
any previous agreement, if any, similar thereto), both during the term hereof
and thereafter. UTSTARCOM agrees that it shall not without the prior written
consent of SHARP cause HUTS and EASTCOM to disclose them in any manner to anyone
other than their own employees who will be using them in the assembly,
manufacture and distribution of the PRODUCTS.
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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Notwithstanding the foregoing provisions, SHARP agrees that UTSTARCOM may
disclose the contents of this Agreement as may be required by law, including but
not limited to the disclosure of this Agreement as may be required by the United
States Securities and Exchange Commission.
ARTICLE 7. MACHINES, EQUIPMENT & TESTERS
SHARP will upon the request of UTSTARCOM made from time to time, furnish to
UTSTARCOM (or HUTS, if UTSTARCOM requests so) a list of machines, equipment,
testers and tools (hereinafter collectively or individually, as the case may be,
called the 'MACHINES' in this Article) appropriate to the assembly and
manufacture by EASTCOM of the PRODUCTS in the TERRITORY and will be ready to
supply with the MACHINES for the use of EASTCOM under the terms and conditions
agreeable to both parties.
In case UTSTARCOM (or HUTS, as the case may be) wishes to purchase any of the
MACHINES specified by SHARP from sources other than SHARP, UTSTARCOM shall
submit to SHARP in advance full information, and obtain SHARP's confirmation,
with respect to such purchase so that SHARP may make sure that such MACHINES
shall be appropriate to the assembly and manufacture of the PRODUCTS; provided,
however, that such SHARP's confirmation shall in no way be regarded as SHARP's
assumption of any responsibility for the MACHINES. Should troubles with respect
to such MACHINES arise, SHARP will give technical advice to HUTS to the extent
possible.
ARTICLE 8. SUPPLY PARTS
UTSTARCOM wishes to continuously purchase from SHARP all the materials and/or
component parts necessary for the assembly, manufacture and servicing of the
PRODUCTS according to the Parts Supply Agreement separately concluded between
the parties hereto. However, SHARP acknowledges that UTSTARCOM reserves the
right to purchase such materials and/or component parts from other sources,
including but not limited to local sources within the TERRITORY.
ARTICLE 9. IMPROVEMENTS
All the technical information on ordinary improvements in or in connection with
the PRODUCTS made by either party shall be furnished to the other party
(including HUTS [*] during the term of this Agreement.
The foregoing provisions of this Article shall not to any, [*] which shall be
subject to separate good faith negotiation and agreement between the parties to
this Agreement.
Both parties (including HUTS) will make a best effort including every possible
advice or support by SHARP in maintaining the competitiveness of the PRODUCTS on
the market in the TERRITORY. Notwithstanding the items 1 and 2 specified in the
EXHIBIT-C, if HUTS makes certain modifications to the then existing model(s) of
the PRODUCTS
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
8
based on SHARP's advice and support, then the parties to this Agreement will
negotiate in good faith as to a separate agreement relating to such
modifications, which may include the establishment of additional royalties that
may be directly derived from such modifications.
ARTICLE 10. ROYALTY
In consideration of the INTELLECTUAL PROPERTY RIGHTS, the KNOW-HOW and other
technical information granted to UTSTARCOM hereunder, UTSTARCOM shall pay to
SHARP the following royalties in the amount and in the manner specified below.
(a) UTSTARCOM shall pay to SHARP an Initial Payment in such an amount as
specified in the EXHIBIT-B within [*] after the effective date set forth in
Article 14 of this Agreement.
(b) UTSTARCOM shall pay to SHARP a Model Fee in such amounts as specified in
the EXHIBIT-B within [*] following the disclosure of the substantial part
of the KNOW-HOW and/or other technical information relating to the models
specified in the EXHIBIT-B and any new or modified model of the PRODUCTS.
Said disclosure shall be made subject to the written confirmation of
UTSTARCOM to pay the relevant Model Fee. Classification of the new model
or the modified model shall be determined by designation of SHARP on the
basis set forth in the EXHIBIT-C attached hereto and made a part hereof.
(c) Running Royalty
i) UTSTARCOM shall pay to SHARP a Running Royalty at such
rates as are specified in the EXHIBIT-B against the Net Selling
Price (as defined below) of all the PRODUCTS Sold (as defined below)
by HUTS during the term of this Agreement. For the purpose of this
Article, 'Net Selling Price' means the gross selling price of the
PRODUCTS sold by HUTS to the sales subsidiaries in the TERRITORY of
UTSTARCOM less only accepted returns from the customers of said
sales subsidiaries hereinabove. The PRODUCTS shall be considered
'Sold' hereunder when billed (or invoiced) out to said sales
subsidiaries, or if not billed out, then when delivered or when paid
for if paid for before delivery.
ii) Running Royalty shall be computed for [*] period terminating on the
[*] UTSTARCOM shall send its statement of royalty due for the
immediately preceding [*] period, together with full evidence which
SHARP may require, to reach SHARP not later than the [*] and
UTSTARCOM shall make payment to SHARP not later than [*] after
receipt by UTSTARCOM of SHARP's telefax acceptance of UTSTARCOM's
royalty statement mentioned above or within [*] after the expiration
of the immediately preceding [*] whichever is the earlier, provided
always that payments made to SHARP before SHARP accepts such royalty
statement shall be on account only.
(d) All the payments due under this Article shall be made in Japanese currency
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
9
strictly in accordance with this Article, converted from Chinese RMB at
the official T.T.S. (Telegraphic Transfer Selling) closed rate of
exchange prevailing in New York Foreign Exchange market on the expiry
date of the immediately preceding [*] period for the calculation of the
royalties hereunder.
(e) All payments made to SHARP hereunder shall be by means of official
telegraphic transfer remittance or mail transfer remittance.
(f) [*] and all payment specified herein shall represent the net amount to be
received by SHARP. However, if UTSTARCOM shall be required under the laws
of the U.S.A. to deduct any income taxes which may be levied against SHARP
from any payments made to SHARP hereunder, then UTSTARCOM shall be entitled
to deduct, subject to prior notification to SHARP and confirmation by SHARP
thereof, such income taxes from the payments to be made, provided that
UTSTARCOM promptly furnishes to SHARP tax receipts or other satisfactory
evidence in a form acceptable to the Japanese Government and its local
government tax administration certifying the fact that such taxes have been
duly paid.
(g) In the event of delay by UTSTARCOM in the making of any payment due under
this Article, all payments overdue to SHARP shall be subject to interest,
which shall accrue on a daily basis, at the rate of [*] per annum until
such payments are made.
(h) In the event new model of the PHS Terminal is agreed in writing by both
parties to be additionally included in the PRODUCTS, each such new model
shall be subject to the separate Model Fee and Running Royalty in such an
amount and at such rates as may be agreed upon by the parties hereto which
shall be payable, unless otherwise agreed upon, in the same manner and upon
the same conditions as set forth in this Article.
ARTICLE 11. RECORDS AND AUDITING
During the term of this Agreement and thereafter for [*] UTSTARCOM shall
cause HUTS to keep true and accurate records, files and books of account
showing all information necessary for the preparation of the royalty
statements stated in paragraph (c) ii) of Article 10 hereof and UTSTARCOM
shall, upon SHARP's request, submit at its own cost and expense to SHARP an
auditor's certificate or report of royalty statement issued by an independent
certified public accountant acceptable to and/or as appointed by SHARP, and
shall cause HUTS to disclose these books to SHARP, its representative or its
agents during its ordinary working hours and shall cause HUTS to make all
explanations thereof requested by SHARP, its representative or its agents for
the sole purpose of checking the accuracy of the royalty statements.
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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10
ARTICLE 12. VALIDITY AND INFRINGEMENT
(a) SHARP represents and warrants to UTSTARCOM and HUTS that the KNOW-HOW and
INTELLECTUAL PROPERTY RIGHTS are the original work of SHARP in each and all
aspects.
(b) UTSTARCOM shall have no right to apply for registration of any intellectual
property rights in the TERRITORY or any other country with regard to the
KNOW-HOW and other technical information made available or furnished by
SHARP hereunder, or to apply itself as the registered licensee or user of
any of the INTELLECTUAL PROPERTY RIGHTS.
UTSTARCOM shall cause HUTS and EASTCOM to abide by same obligation above
of UTSTARCOM.
(c) UTSTARCOM shall cause HUTS and EASTCOM to promptly notify UTSTARCOM and
accordingly UTSTARCOM shall promptly notify SHARP in addition to its own
awareness, of any and all infringements, imitations or illegal use of the
INTELLECTUAL PROPERTY RIGHTS and of any statements or action made or done
by any person, firm or corporation disputing or impairing SHARP's interest
in and title to any of the INTELLECTUAL PROPERTY RIGHTS.
(d) Whenever in the opinion of SHARP, any action is necessary or advisable to
insure the protection or prevention against such infringements, imitations
or illegal use of any INTELLECTUAL PROPERTY RIGHTS, (i) SHARP may take any
action in the courts, administrative agencies or otherwise, and (ii) upon
the request of SHARP and subject to and within the scope of SHARP's
agreement to reimburse UTSTARCOM for any expenses to be incurred by
UTSTARCOM, UTSTARCOM shall or shall cause HUTS to take whatever action is
deemed necessary by SHARP to insure such protection or prevention.
SHARP shall not be obligated to take any action against such infringements,
imitations or illegal use and shall have no liability to UTSTARCOM, HUTS
and EASTCOM for failure to do so. UTSTARCOM shall or shall cause HUTS to
take no action with respect to any infringement, imitation or illegal use
of any INTELLECTUAL PROPERTY RIGHTS unless requested by SHARP to do so.
In any circumstances all the proceeds or recovery of any damages awarded
in such action shall accrue to SHARP.
(e) In the event, however, that UTSTARCOM (or HUTS or EASTCOM, as the case may
be) is threatened or involved in any infringement or other like litigation
in the TERRITORY, by reason of its exercise of rights acquired under this
Agreement, SHARP will render to UTSTARCOM (or HUTS or EASTCOM, as the case
may be) such assistance as SHARP, in its sole discretion, deems appropriate
in defending such litigation or threatened litigation at the expense of
UTSTARCOM. SHARP shall, in view of that the amounts of Royalties mentioned
in Article 10 is a consideration only for the INTELLECTUAL PROPERTY RIGHTS,
the KNOW-HOW and other technical information necessary for the assembly
and manufacture of the PRODUCTS, not be held responsible by UTSTARCOM (or
HUTS or EASTCOM, as the case may be) (i) for infringement of any patent,
utility
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11
model right, design, copyright or other intellectual property rights of
third parties, or damages or cost involved in any proceeding based on such
infringements, (ii) for the validity of any INTELLECTUAL PROPERTY RIGHTS
granted hereunder, or the inability of HUTS (or EASTCOM, as the case may
be) to use such INTELLECTUAL PROPERTY RIGHTS or KNOW-HOW because of any
patent, utility model right, design, copyright or other intellectual
property rights of third parties or (iii) for any additional royalties or
obligations incurred by UTSTARCOM (or HUTS or EASTCOM, as the case may be)
because of any patent, utility model right, design, copyright or other
intellectual property rights of third parties.
(f) In the event that SHARP becomes or is made, whether by judicial
declaration, settlement, agreement of the relevant parties or in any other
manner, responsible for or liable to pay damages, costs, royalties or any
other compensation or consideration or to perform any other obligation,
whether in respect of past, present or future acts or circumstances (the
'Obligation'), to a third party with respect to or arising out of an
infringement or alleged infringement of any patent, utility model right,
design, copyright or any other intellectual property right of the third
party in the TERRITORY resulting from the assembly and manufacture by
EASTCOM or sale or distribution by HUTS of the PRODUCTS hereunder,
UTSTARCOM shall or shall cause HUTS and EASTCOM to indemnify and hold
harmless SHARP in full, or in part as may be determined by SHARP in its
sole discretion, with respect to the Obligation to be paid to or performed
for the benefit of the third party. SHARP may, in its sole discretion,
determine the manner in which such indemnification by UTSTARCOM (or HUTS or
EASTCOM, as the case may be) shall be made. In exercising its discretion
pursuant to this paragraph, SHARP shall give due consideration to the
contribution of each party (including HUTS and EASTCOM, as the case may
be), the particular circumstances of the Obligation and the profit and
other benefits received by each party (including HUTS and EASTCOM, as the
case may be) hereto in respect of the subject matter of this Agreement.
ARTICLE 13. APPROVAL OF GOVERNMENT
Each party shall obtain the official approval of its government on this
Agreement, if such approval is necessary to perform this Agreement. Each party
shall inform the other party of the date of approval of the government together
with a copy of such approval (accompanied by English translation if not provided
in English) immediately after it is obtained.
ARTICLE 14. DURATION OF AGREEMENT
This Agreement shall be deemed to have been come into force on the 1st day of
December, 1999 retroactively, and unless earlier terminated in accordance with
the provisions hereof, shall continue in force and effect for [*] until and
including the [*]. It is understood by the parties hereto that this Agreement
shall be, either automatically or with amendment or modification (if any) and
subject to any necessary government approval, renewed thereafter on a [*]
basis, unless either of the parties hereto gives the other party at least [*]
prior written notice to terminate this Agreement before the expiration of the
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
-continued-
initial term or any extended term of this Agreement. If such prior written
notice is made by either party, then this Agreement shall terminate on the
initial or as the case may be, duly extended expiration date of this Agreement.
ARTICLE 15. TERMINATION
(a) In the event of the occurrence of any of the following events to either
party (including HUTS and EASTCOM, as the case may be, for the purpose of
this Article), the other party may forthwith terminate this Agreement
and/or any other agreement concluded under or in connection with this
Agreement by sending a written notice to the first party by registered air
mall:
i) If either party hereto continues in default of any material obligation
imposed on it herein and/or therein for more than two(2) months after
written notice has been despatched by registered airmail by the other
party requesting the party in default to remedy such default;
ii) If either party hereto is subjected to compulsory execution, public
auction, coercive collection for its arrearage of taxes or public
imposts, or suspension of business by public authorities, or
appointment of any receiver or trustee of itself or any substantial
portion of its property, or if an application or petition is submitted
against either party for bankruptcy, corporate arrangement or
commencement of corporate reorganization, or if either party hereto
files voluntarily against it an application or petition for
bankruptcy, corporate arrangement or commencement of corporate
reorganization or composition, or if either party hereto adopts a
resolution for discontinuance of its business or for a substantial
decrease of its capital or for dissolution or merger into another
company, or makes general assignment for the benefit of creditors, or
if either party hereto becomes unable to pay debts, or if either party
hereto is declared default of any material contract between it and any
third party and such contract is cancelled or its payment obligation
under such contract is accelerated;
iii) If, due to any substantial change in ownership, management or
effective control of either party or in the objects of the company
stated in the Memorandum of Association or Articles of Incorporation
or a similar document of either party, (1) there exist, or in the
reasonable opinion of the other party there is any ground to suspect
the existence of, any obstacles to the effective continuance of this
Agreement, or (2) there occurs a situation which in the reasonable
opinion of the other party would be detrimental to its interests; or
iv) If there is any other material cause justifying either party to
terminate this Agreement, such as material and irreparable injury to
goodwill or reputation by the other party, commission by other party
of a fraud on or betrayal of confidence in or criminal act against the
first party, disclosure or divulgence by the other party of the first
party's confidential information.
-continued-
(b) In the event of termination of this Agreement for any reason whatsoever:
i) UTSTARCOM shall promptly cause HUTS and EASTCOM to return to SHARP all
specified documents and tangible property supplied by or belonging to
SHARP in connection with this Agreement and shall cause HUTS and
EASTCOM to keep confidential all information received from SHARP
hereunder.
ii) UTSTARCOM shall cause HUTS and EASTCOM to promptly discontinue the use
of the KNOW-HOW and other confidential information and the
INTELLECTUAL PROPERTY RIGHTS and shall cause HUTS to promptly
discontinue the sale of the PRODUCTS assembled and manufactured by
EASTCOM.
iii) All sums including those accrued pursuant to Articles 4, 5 and 10
hereof shall become immediately due and payable. Notwithstanding the
provisions of paragraph (c) of Article 10 hereof, all PRODUCTS the
assembly and manufacture of which have been completed at the date of
the termination of this Agreement shall be deemed Sold, and UTSTARCOM
shall pay the Running Royalty thereof calculated by applying the
average Net Selling Price of the relevant models of the PRODUCTS (or
similar models thereof) during the current royalty period in which the
termination of this Agreement occurs.
(c) Notwithstanding the provisions specified in paragraph (b) ii) of this
Article, unless this Agreement is terminated by a cause or causes which
SHARP deems attributable to UTSTARCOM (or HUTS or EASTCOM, as the case
may be), UTSTARCOM may cause HUTS and EASTCOM to dispose of the PRODUCTS
and the SUPPLY PARTS in the TERRITORY which HUTS and/or EASTCOM have on
hand at the time of termination of this Agreement within such a reasonable
period of time as may be agreed upon by the parties provided that such
sales are made without impairing SHARP's reputation.
(d) In the event that either party (including HUTS and EASTCOM, as the case
may be) defaults in the due performance of its obligations hereunder or
under any agreement made pursuant hereto or in respect hereto, or in the
event that this Agreement is terminated pursuant to paragraph (a) of this
Article, then the other party or the party despatching a notice of
termination pursuant to paragraph (a) of this Article (collectively the
'Affected Party') may demand compensation from the first party for the
losses and damages incurred or suffered by the Affected Party as a result
of any such default or termination.
(e) Except as otherwise provided elsewhere in this Agreement any termination of
this Agreement shall be without prejudice to any right and remedy which
shall have accrued to either party under or in connection with this
Agreement prior to such termination.
-continued-
ARTICLE 16. ASSIGNMENT
Neither party (including HUTS as the case may be) shall assign, transfer or
otherwise dispose of this Agreement in whole or in part or any right or
obligation hereunder to any individual, firm or corporation without the prior
written consent of the other party.
ARTICLE 17. NOTICES
(a) Except as otherwise provided herein all notices to be given or made under
this Agreement shall be in writing and sent by registered airmail and
addressed to the principal office of the parties indicated hereinabove or
to such other address as either party may hereafter furnish to the other
party in writing.
(b) All notices shall be deemed to have been given or made on the day of
despatch.
ARTICLE 18. ENTIRE AGREEMENT
This Agreement constitutes the entire and only agreement between the parties
hereto as to the subject matter contained herein and supersedes all previous
understandings, commitments and agreements whether oral or written relating to
the subject matter hereof, and no modification, amendment or supplement of this
Agreement shall be binding upon the parties hereto except by mutual express
written consent of subsequent date signed by an authorized representative or
officer of each of the parties hereto.
ARTICLE 19. FORCE MAJEURE
Except with respect to any and all payments which are to be made to SHARP
pursuant to Articles 4, 5 and 10 hereof, neither party (including HUTS and
EASTCOM, as the case may be) shall be liable for failure to perform any part of
this Agreement when such failure is due to fire, flood, strikes, labor troubles
or other industrial disturbances, inevitable accidents, war (declared or
undeclared), embargoes, blockades, legal restrictions, governmental regulations,
riots, insurrections, or any cause beyond the control of the parties but this
Agreement shall not be regarded as terminated or frustrated as a result of such
failure of performance and the parties shall continue once more with its
performance when the causes of such non-performance have ceased or have been
eliminated.
ARTICLE 20. ARBITRATION
Any dispute arising from the execution of, or in connection with, this Agreement
shall be settled through friendly consultation between the parties. If the
dispute cannot be settled within sixty (60) days from the first date of
consultation, the dispute shall be settled by arbitration consisting of three
(3) arbitrators. Arbitration shall be held in San Francisco, California under
the International Arbitration Rules of the American Arbitration
-continued-
Association if initiated by SHARP, and shall be held in Osaka, Japan under the
Commercial Arbitration Rules of the Japan Commercial Arbitration Association if
initiated by UTSTARCOM. The award rendered by the arbitration shall be final and
binding upon the parties and may be entered by any court having jurisdiction.
ARTICLE 21. GOVERNING LAW
It is mutually agreed that the terms of this Agreement and the performance
hereunder shall in all respects be governed, construed and interpreted in
accordance with the laws of Japan, excluding its provisions regarding conflict
of laws.
ARTICLE 22 MISCELLANEOUS
(a) SEPARABILITY: The parties hereto agree that, in the event of one or more of
the provisions hereof being subsequently declared invalid or unenforceable
by court or administrative decisions, such invalidity or unenforceability
shall not in any way affect the validity or enforceability of any other
provisions hereof except those which the invalidated or unenforceable
provisions comprise an integral part of or are otherwise clearly
inseparable from such other provisions.
(b) WAIVER: A waiver by a party hereto of any particular provision hereof shall
not be deemed to constitute a waiver in the future of the same or any other
provision of this Agreement.
(c) EXPENSES: Unless otherwise expressly agreed herein or otherwise in writing
by the parties hereto, each party shall bear all losses, damages, expenses,
disbursements and liabilities incurred or made by itself or any other
investment made by itself in connection with or in pursuance of this
Agreement, and neither party shall be entitled to compensation or remedy of
any kind whatsoever from the other party for the said losses, damages,
expenses, disbursements, liabilities or investment whether on termination
of this Agreement for any reason whatsoever or otherwise unless otherwise
expressly agreed upon in writing by the other party.
(d) INDEMNITY: UTSTARCOM shall defend, indemnify and hold harmless SHARP from
and against any and all actions, claims, demands, suits, losses, damages,
costs, expenses and judgements (including attorney's fee thereof) by
whomever made, brought or prosecuted and in any manner based upon, arising
out of, related to, occasioned by or attributable to any breach by
UTSTARCOM (including HUTS and EASTCOM, as the case may be) of any
provisions of this Agreement or any act or omission by UTSTARCOM (including
HUTS and EASTCOM, as the case may be), its employees or agents in the
performance thereof.
(e) RESTRICTED OBLIGATION: SHARP assumes, by implication or otherwise, no
obligation, liability or responsibility other than those expressly set
forth in this Agreement
-continued-
(f) OTHER CONDITION: If, after the effective date set forth in Article 14
hereof, any Japanese government approval is further required for SHARP to
perform its obligations under Articles 3, 4, 5, 7, and 8, the performance
of such obligations shall be subject to such government approval.
(g) TITLE: The titles of Articles in this Agreement have been inserted for
convenience only and shall in no way be used in the interpretation hereof.
(h) GUARANTEE OF HUTS AND EASTCOM: UTSTARCOM hereby unconditionally guarantees
to SHARP the due and punctual performance by HUTS and/or EASTCOM of all the
material terms and conditions of this Agreement to be performed by HUTS
and/or EASTCOM hereunder, and indemnifies and holds SHARP harmless from and
against any damages, costs, expenses and other liabilities incurred by
SHARP by reason of failure of HUTS and/or EASTCOM to fully perform and
comply with the material terms and conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their respective representatives or officers duly authorized thereunto as of
the date first noted above.
SHARP CORPORATION UTSTARCOM INC
By: By: /s/ HONG LIANG LU
--------------------------------------- ---------------------------------
Name: Sueyuki Hirooka Name: Hong Liang Lu
Title: Corporate Senior Executive Director Title: President
& Group General Manager, & Chief Executive Officer
International Business Group
Above agreed and accepted:
UTSTARCOM (HANGZHOU) TELECOM CO., LTD
By: /s/ JOHNNY CHOU
----------------------------------
Name: Johnny Chou
Title: Executive Vice President
& Chief Operating Officer
China Operations
EXHIBIT-A DEFINITION OF THE PRODUCTS Date: 31st March, 2000
[*]
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
EXHIBIT-B ROYALTY SCHEDULE Date: 31st March, 2000
[*]
[*] * CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
Technical Collaboration Agreement - Sharp Corp. and UTStarcom Inc.
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