{"id":42223,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/development-agreement-utstarcom-inc-and-matsushita.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"development-agreement-utstarcom-inc-and-matsushita","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/development-agreement-utstarcom-inc-and-matsushita.html","title":{"rendered":"Development Agreement – UTStarcom Inc. and Matsushita Communication Industrial Co. Ltd."},"content":{"rendered":" DEVELOPMENT AGREEMENT\n\n This development agreement (the \"Agreement\") effective as of March 1,\n2000 (the \"Effective Date\") is made and entered into by and between:\n\n UTStarcom Inc., a Delaware corporation having its principal place of\nbusiness at 1275 Harbor Bay Parkway, Suit 100, Alameda, California 94502, U.S.A.\n(hereinafter called \"UTS\"), and Matsushita Communication Industrial Co., Ltd., a\nJapanese corporation having its place of business at 3-1 Tsunashima-higashi\n4-chome, Kohoku-ku, Yokohama 223-8639, Japan, acting through its Communication\nSystems Division (hereinafter called \"MCI\")\n\n WITNESSETH\n\n Whereas, both MCI and UTS are engaged in the sale and distribution \nof telephone systems;\n\n Whereas, UTS is engaged in the development and manufacture of the next\ngeneration PBX system called Internet Protocol Telephony Switch (\"IPTS\"); and\n\n Whereas, the parties hereto desire that UTS perform, and UTS is willing\nto undertake, development of the Product (as hereinafter defined) for commercial\nresale.\n\n Now, therefore, in consideration of the mutual premises and covenants\nset forth herein, the parties hereto agree as follows:\n\n 1. DEFINITIONS\n\n 1.1 \"Affiliate\" shall mean any company or other entity\ncontrolling, controlled by, or under common control with either MCI or UTS. As\nused in this provision, \"control\" means the direct or indirect ownership or\ncontrol of the majority of the outstanding shares representing the right to vote\nfor election of directors or other managing authority or ownership interest of a\ncompany or other entity.\n\n 1.2 \"Deliverables\" shall mean the samples, prototypes, source\ncode, test report, Product Documentation (as hereinafter defined), and all other\nmaterials, and any part or copy of the foregoing, to be provided by UTS to MCI\nin any form, method or media, as set forth in the Milestone Schedule (as\nhereinafter defined).\n\n 1.3 \"Intellectual Property Rights\" shall mean any and all\nrights under any patents, utility models, designs, copyrights, moral rights,\ntradedress, trademarks, tradenames, trade secrets, know-how, mask works,\nconfidential information and any other intellectual property or proprietary\n\nrights owned by either of the parties hereto.\n\n 1.4 \"Milestone Schedule\" shall mean the schedule attached\nhereto as Appendix A setting forth the milestones for the development\ncontemplated herein, including, but not limited to descriptions of all\nDevelopment Services (as hereinafter defined), the scheduled completion dates\nthereof, descriptions of each Deliverable and delivery dates therefor.\n\n\n\n 1.5 \"Product\" shall mean the Internet Protocol Telephony\nSwitch called [***] that satisfies the Requirement Specification (as defined\nbelow) in all respects.\n\n 1.6 \"Product Documentation\" shall mean any and all material\nthat describes the design, functions, operation or use of the Deliverables and\nProduct, including, but not limited to the specifications, flow charts,\nschematics, and other information and data that is reasonably necessary for the\nuse and understanding of the Product by MCI as contemplated by MCI, and mutually\nagreed to by the parties hereto.\n\n 1.7 \"Requirement Specification\" shall mean the design,\nquality, reliability, specifications, functions, features, operations, operation\nenvironment and\/or all other requirements of the Product and Deliverables as\nmutually agreed to by the parties hereto as set forth in Appendix B, and as may\nbe amended from time to time pursuant to Section 3.\n\n 1.8 \"Business Regulations\" shall mean MCI's business\nregulations on the new product development, which is attached hereto as Appendix\nC.\n\n 1.9 \"Development Plan\" shall mean the structure, staffing,\nskill set, location and quality plan (including staged test case specification\nand system test operation planning), that has been mutually agreed to by the\nparties hereto, which is attached hereto as Appendix D.\n\n 1.10 \"Materials\" shall mean the software provided by MCI to\nUTS for use in developing, operating or testing the Product.\n\n 2. DEVELOPMENT\n\n 2.1 For the purpose of the development of the Products, and\nsubject to the provision of Materials by MCI pursuant to the Milestone Schedule,\nUTS shall perform the following services (the \"Development Services\"), for the\nconsideration set forth in the Payment Schedule attached as Appendix E:\n\n (a) to develop Deliverables conforming with \nthe applicable Requirement Specification, and delivery, testing, evaluation \nand correction of the Deliverables in accordance with the Milestone Schedule, \nBusiness Regulations, Development Plan, and Section 4 hereof; and\n\n (b) to test and evaluate the Deliverables in \naccordance with the standard practices of the industry (including standard \ndiagnostic practices), to the maximum extent reasonably possible to insure \nthat the Deliverables conform to the Requirement Specification, Business \nRegulations, and Development Plan without exhibiting errors, under a wide \nvariety of testing conditions that reasonably reflect the actual environments \nin which the Product is likely to be used.\n\n (c) to facilitate timeliness and cooperation \nwith respect to Product Development, providing MCI with [***] written reports \nspecifying the progress achieved in the development of the Deliverables in \neach [***] period within [***] after such [***] period, which report shall \ninclude, without limitation, information regarding (i) the Development \nServices and\/or delivery of each Deliverable completed or remaining to be \ncompleted at the end of such calendar [***], (ii) actual or potential delay \nin meeting the Milestone Schedule with the reason for any such \n\n\n -2-\n\n\ndelay, measures to be taken to resolve the delay, (iii) an estimated date of \ncompletion of each Development Service and\/or delivery of each Deliverable, \nand (iv) information that would assist MCI in tracing or determining the \ncause or source of technical problems in the Deliverables.\n\n 2.2 The parties agree to discuss and determine before [***]\nthe subset of the MCI Business Requirement for Product Reliability Durability as\nBusiness Regulation that apply to the Product, and to which UTS shall comply in\nthe development, testing and evaluation of the Product.\n\n 2.3 In the event UTS desires to incorporate into any third\nparty software into the Deliverables or otherwise use any third party software\nin connection with the Deliverables, UTS shall obtain the prior written approval\nof MCI. MCI shall provide such approval within [***] of the request for approval\nmade by UTS. In any case, the absence of such approval or disapproval shall not\nunreasonably withhold progress of Product development Notwithstanding the\nprovisions of this Section 2.3, the third party software listed in Appendix F\nhas, as of the Effective Date of this Development Agreement, been already\napproved by MCI for use by UTS for the Deliverables.\n\n 2.4 MCI shall provide to UTS Materials as described in\nAppendix H. Materials provided hereunder, the software approved hereunder, and\nthe software and hardware reimbursed hereunder is only for use for the\nDeliverables or the Product to be supplied to MCI, and no other use is permitted\nor licensed hereunder.\n\n 3. MODIFICATION OF DEVELOPMENT SERVICES\n\n 3.1 Each party recognizes and acknowledges that changes or\nmodifications to the Development Services, Milestone Schedule, Requirement\nSpecification, Business Regulations, Development Plan, and\/or any other\nactivities hereunder (a \"Change\") may be necessary. In the event that either MCI\nor UTS determines that a Change is necessary, the determining party shall issue\na written order specifying such Change (a \"Change Order\"). UTS and MCI shall\nnegotiate in good faith with respect to each Change Order (including without\nlimitation completion dates and additional or reduced costs resulting from such\nChange Order), and, upon agreeing to the Change Order, amend this Agreement to\nreflect such agreed upon Change Order.\n\n 3.2 If the Change Order is rejected by the receiving party,\nboth UTS and MCI shall negotiate in good faith for a period of no longer than\n[***] immediately following the determining party's receipt of the written\nrejection of the Change Order, with respect to the proposed Change Order\n(including without limitation completion dates and additional or reduced costs\nresulting from such Change Order). If the parties fail to reach agreement on the\nChange Order, the disagreement shall be submitted to an executive panel\nconsisting of 2 senior executives of MCI, and 2 senior executives of UTS for\nfurther negotiation, and, upon agreeing to the Change Order, UTS and MCI shall\namend this Agreement to reflect such agreed upon Change Order.\n\n 3.3 If the disagreement cannot be resolved by the executive\npanel within [***] of the date of the written rejection of the proposed Change\nOrder, MCI determines whether the relevant Change Order (\"Disputed Change\nOrder\") should be made or not, and UTS shall provide the Development Services\naccording to such MCI's determination. UTS shall, as applicable, (a) notify MCI\nin writing of any additional or reduced costs and revised completion dates for\nthe Development \n\n\n -3-\n\n\nServices and\/or other issues it believes in good faith should reasonably be \nreflected in the Disputed Change Order; and (b) maintain itemized records of \nthe times, labor, expense and other cots factors it spends relating to the \nDevelopment Services performed under the Disputed Change Order. The parties \nshall continue good faith negotiation with respect to appropriate additional \nor reduced costs under the Disputed Change Order. If no agreement is reached \nbetween the parties hereto with respect to the Disputed Change Order within \n[***] after the date on which the Disputed Change Order is issued, the \nparties may resort to the dispute resolution mechanism set forth in Section \n17 herein.\n\n 4. TESTING AND ACCEPTANCE\n\n 4.1 UTS shall deliver to MCI an initial proposal of the\nacceptance criteria of each of the Deliverables at least [***] prior to the\nrelevant Deliverables, and MCI shall then respond in writing to the proposed\nacceptance criteria within [***] of receipt of UTS' initial acceptance criteria\nproposal. MCI may, upon negotiation in good faith with UTS, define acceptance\ncriteria (\"Acceptance Criteria\").\n\n 4.2 UTS shall deliver to MCI each of the Deliverables in\naccordance with the Milestone Schedule and Development Plan, such that testing\nand acceptance by MCI may be completed on a timely basis consistent with the\nMilestone Schedule and Development Plan.\n\n 4.3 MCI shall test and evaluate each Deliverable delivered by\nUTS in accordance with the applicable Acceptance Criteria, and issue to UTS a\nnotice of acceptance or rejection of such Deliverable within [***] after MCI's\nreceipt of such Deliverable.\n\n 4.4 If MCI determines that any Deliverable (or any portion\nthereof) fails to satisfy the applicable Acceptance Criteria (a\n\"Non-Conformity\"), MCI shall provide UTS with a written notice of such\nNon-Conformity (a \"Non-Conformity Notice\"), identifying such Non-Conformity in\ndetail reasonably sufficient to enable UTS to duplicate or observe such\nNon-Conformity.\n\n 4.5 Upon receiving a Non-Conformity Notice, UTS shall provide\nto MCI a report describing the cause of such Non-Conformity and the correction\nthereto within [***] after the date of receipt of the Non-Conformity Notice, and\nshall correct the Non-Conformity and deliver the corrected Deliverable to MCI\nwithin [***] after the date of receipt of the Non-Conformity Notice. Such notice\nshall be acceptable in either written or e-mail form.\n\n 4.6 If, after receipt of a corrected Deliverable under Section\n4.5, MCI determines that the Non-Conformity reported by MCI in the applicable\nNon-Conformity Notice has not been corrected, or discovers other\nNon-Conformities in such Deliverable, MCI may, at its option:\n\n (a) reject such corrected Deliverables, and \nrepeat the procedure described in Sections 4.3, 4.4, 4.5 and 4.6 of this \nAgreement, in which case UTS will deliver a revised Deliverable to MCI for \nevaluation under Section 4.3 no later than [***]after the date of receipt of \nsuch rejection by UTS; or\n\n (b) correct such Non-Conformity itself or \nhave its designee correct such Non-Conformity, charging to UTS or deducting \nfrom any payment due to the UTS an amount equal to the reasonable cost of \ncorrecting such Non-Conformity.\n\n\n -4-\n\n\n 5. OWNERSHIP\n\n 5.1 All inventions, designs, works of authorship and other\nworks made or created by either party, whether or not incorporated into the\nRequirement Specification, and all associated Intellectual Property Rights, both\nbefore and after the Effective Date of this Agreement, and whether or not\npertaining to the activities contemplated in this Agreement, shall remain the\nexclusive property of the party making or creating the same. Those inventions,\ndesigns, works of authorship and other works made or created by the parties\nbefore the Effective Date of this Agreement are memorialized in Appendix G to\nthis Agreement (\"Prior Intellectual Property Inventory\"), and such appendix is\nhereby incorporated into this Agreement by reference.\n\n 5.2 All inventions, designs, works of authorship and other\nworks made or created jointly by the parties pertaining to the activities\ncontemplated in this Agreement (\"Joint Property\"), whether or not incorporated\ninto the Requirement Specification, and all associated Intellectual Property\nRights, shall be jointly owned by the parties hereto. Any application for the\nIntellectual Property Right of Joint Property, and any associated costs for such\napplication shall be mutually agreed upon by the parties in the form of a\nseparate written agreement in advance of attempt of the application. Each party\nhereto and its Affiliate may use such Joint Property and all associated\nIntellectual Property Rights for the purpose of its own use, and each party may\nassign and transfer such Joint Property and all associated Intellectual Property\nRights to its Affiliate, without the consent of the other party and without any\ncompensation or accounting to the other party, provided that such assignment and\ntransfer shall be made subject to this Section 5.2. The having-used, license,\nand assignment of Joint Property to any third party other than its Affiliate\nshall be the subject of a separate licensing agreement that is mutually agreed\nto by the parties.\n\n 6. SALES AND PURCHASE OF THE PRODUCT\n\n 6.1 Subject to MCI's written acceptance of all the\nDeliverables, UTS agrees to supply to MCI (and\/or its Affiliate) the Product for\nat least [***], the detailed terms and conditions of which shall be specified in\na separate agreement (the \"Purchase Agreement\") to be negotiated by UTS and MCI\n(and\/or its Affiliate) in good faith. Such Purchase Agreement is expected to\ninclude terms and conditions including, without limitation, provisions regarding\nthe following issues:\n\n (a) ordering, lead time, shipping, delivery, \npayment, and pricing (including royalties, if any, exchange fluctuation);\n\n (b) warranties concerning quality, \nperformance, product liability, Intellectual Property Rights, and the \nremedies and indemnification related thereto;\n\n (c) maintenance and support of the Products;\n\n (d) notification and other procedure in the \nevent of the proposed discontinuance of the manufacture or supply of the \nProduct;\n\n (e) the parties negotiate in good faith to \nreach agreement on a marketing agreement by no later than [***]; and\n\n\n -5-\n\n\n (f) when UTS discontinues the manufacture of \nthe Products, UTS shall, at the option of MCI (and\/or its Affiliate), grant \nto MCI (and\/or its Affiliate) a [***] license under all Intellectual Property \nRights of the UTS to manufacture or have manufactured the Product and to use, \noffer for sale, sell, distribute, import, lease, transfer, service, support, \nmaintain and\/or otherwise dispose of the Product. The parties agree to \ndiscuss and document possible royalty payment, if any, by MCI to UTS under \nthe abovementioned circumstances.\n\n 6.2 Subject to the prior written approval of MCI, UTS may sell\nthe Product to a third party, provided that such sale is at the UTS's sole risk\nand peril, that such MCI's approval shall not mean any license, express, implied\nor by estoppel, under any Intellectual Property Rights of MCI or its Affiliate,\nand that MCI MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH\nRESPECT TO SUCH SALE OF THE PRODUCT, INCLUDING, BUT NOT LIMITED TO,\nMERCHANTABILITY, NON-INFRINGEMENT, PRODUCT LIABILITY, OR FITNESS FOR A\nPARTICULAR PURPOSE.\n\n 7. LICENSE AND TECHNICAL ASSISTANCE\n\n 7.1 The parties agree to discuss an arrangement under which\nUTS grants to MCI a license under its Intellectual Property Rights and provide\ntechnical services, including the modification of the Products design, for the\npurpose of the manufacture of the IPTS by MCI or its Affiliate. The parties\nunderstand and agree that this Section 7.1 is intended solely as an expression\nof the parties' potential intent to enter into a future agreement and such\nfuture agreement, if agreed, shall be reduced to a written contract between the\nparties. Neither party is obligated by virtue of this Section 7.1 to enter into\nan agreement.\n\n 8. FUTURE IPTS DEVELOPMENT\n\n 8.1 The parties agree to discuss an arrangement under which\nUTS enhances the Products and\/or develops a new IPTS. The parties understand and\nagree that this Section 8.1 is intended solely as an expression of the parties'\npotential intent to enter into a future agreement and such future agreement, if\nagreed, shall be reduced to a written contract between the parties. Neither\nparty is obligated by virtue of this Section 8.1 to enter into an agreement.\n\n 9. MCI'S PAYMENT\n\n 9.1 In consideration for the Development Services performed by\nUTS hereunder, MCI shall pay UTS in United States dollars a total amount of\n[***], in accordance with the payment schedule set forth in Appendix E.\n\n 9.2 Payments made in accordance with Section 9.1 are not\nrefundable, as they represent payments for completed Deliverables.\n\n 9.3 MCI shall also reimburse UTS for all software and hardware\npurchased by UTS for the Development Services (including software and hardware\npurchased prior to the effective date of this Agreement, and which was\nauthorized by MCI for purchase), where in the reasonable judgment of UTS, such\nsoftware and\/or hardware is used by UTS primarily for the Development Services\nto be provided under this Agreement and provided that the purchase of such\n\n\n -6-\n\n\nsoftware and hardware is communicated by UTS to MCI in advance and approved \nby MCI. A partial list of software and hardware purchased through [***] and \napproved by MCI is entitled Prior Expenses and is attached as Appendix I. MCI \nshall provide such reimbursement to UTS in United States dollars, and within \n[***] of receipt of any invoice from UTS for reimbursement.\n\n 9.4 UTS shall provide [***] Product samples to MCI at no\ncharge; however, MCI shall pay UTS for any chargeable Product samples provided\nby UTS. In keeping with the Deliverables identified in Appendix A, MCI shall\nprovide details of the configurations of the approximately [***] to be supplied\nby UTS to MCI as part of this Section by [***]. These details shall include a\nbreakdown in terms of the number and types of daughter cards to be provided with\na motherboard so as to constitute a unit. For all chargeable Product samples\nprovided by UTS, MCI shall provide payment to UTS in United States dollars\naccording to the following schedule: [***] of the cost of the total number of\nunits covered by this Section by [***]; [***] of the cost of the total number of\nunits covered by this contract by [***]; and the balance of the cost of the\ntotal number of units covered by this section, within [***] of receipt of any\ninvoice for the said units from UTS for payment. The cost of a unit may be\napproximated from the costs of the boards and chassis that make up the unit;\nthese costs are provided in Appendix D, as part of the Development Plan.\n\n 9.5 Unless otherwise expressly provided in this Agreement,\n[***] shall be solely liable for any transportation, services, equipment,\nutilities, facilities, and other costs incurred in connection with UTS's\nperformance of this Agreement.\n\n 9.6 [***] shall be responsible for paying all taxes and duties\nimposed by any governmental body or authority in connection with the execution\nand performance of this Agreement.\n\n 9.7 If any amount is required by any governmental body or\nauthority to be deducted from any MCI payment to UTS, MCI shall deduct such\namount from the payment to UTS and send to UTS a copy of any receipt issued to\nMCI by such governmental body or authority documenting such deducted amount (a\n\"Tax Receipt\").\n\n 10. MCI'S REPRESENTATIONS AND WARRANTIES\n\n MCI represents and warrants as follows:\n\n 10.1 MCI has the corporate power and authority to execute and\ndeliver this Agreement, and perform its obligations hereunder. The execution,\ndelivery and performance of this Agreement has been duly and validly authorized\nby MCI, and upon execution and delivery by UTS, this Agreement constitutes the\nvalid and binding agreement of MCI enforceable against it in accordance with its\nterms.\n\n 10.2 Neither MCI's execution and delivery of this Agreement\nnor its performance hereunder will result in a breach of any agreement or\ncontract to which MCI is a party. MCI will not enter into any agreement or take\nany action that would restrict its performance under this Agreement.\n\n 10.3 MCI is not relying on any representation, warranties or\nagreements not expressly set forth herein in entering into this Agreement.\n\n\n -7-\n\n\n 11. UTS'S REPRESENTATIONS AND WARRANTIES\n\n UTS represents and warrants as follows:\n\n 11.1 UTS has the corporate power and authority to execute and\ndeliver this Agreement, and perform its obligations hereunder. UTS has procured\nall licenses and has received all governmental approvals and permits necessary\nfor UTS to enter into this Agreement and perform its obligations hereunder. The\nexecution, delivery and performance of this Agreement has been duly and validly\nauthorized by UTS, and upon execution and delivery by MCI, this Agreement\nconstitutes the valid and binding agreement of UTS enforceable against it in\naccordance with its terms.\n\n 11.2 Neither UTS's execution and delivery of this Agreement\nnor its performance hereunder will result in a breach of any agreement or\ncontract to which UTS is a party. UTS will not enter into any agreement or take\nany action that would restrict its performance under this Agreement.\n\n 11.3 UTS has not and shall not assign, transfer, convey or\notherwise encumber any right, title, or interest in or to any Deliverables or\nany Intellectual Property Rights therein.\n\n 11.4 Except for the case described Section 5.2 hereof, UTS is\nand shall be the sole and exclusive owner of all the Deliverables (and all\nIntellectual Property Rights therein) and no other person or entity has or shall\nhave any claim of ownership with respect to any Deliverables (or any\nIntellectual Property Rights therein) whatsoever.\n\n 11.5 No person, entity or association has made or threatened\nto make, any demand or claim asserting that the Deliverables as such exist as of\nthe date of UTS's signature hereof, infringes any rights under any Intellectual\nProperty Right. UTS has not and will not misappropriate or intentionally\ninfringe any Intellectual Property Right of MCI, and Affiliate or of any third\nparty in the course of the performing any obligation of UTS hereunder and will\nnot incorporate into the Deliverables any material incorporating Intellectual\nProperty Rights owned by any third party, without the prior written agreement of\nMCI.\n\n 11.6 UTS is not relying on any representation, warranties or\nagreements not expressly set forth herein in entering into this Agreement.\n\n 11.7 For the period of [***] after MCI's acceptance of \nall the Deliverables, UTS warrants that\n\n (a) The Deliverables shall be free from \ndefect in materials and workmanship and conform to the Requirement \nSpecification and Product Documentation,\n\n (b) The Deliverables shall perform and \nfunction as contemplated in the Requirement Specification and Product \nDocumentation when combined with any hardware and\/or software designated by \nUTS, and\n\n (c) The software in the Deliverables operates \nin accordance with the Requirement Specification and Product Documentation \nwithout defects and bugs.\n\n\n -8-\n\n\n 11.8 The software in the Deliverables does not and shall not\ncontain any \"back door,\" \"time bomb,\" \"drop door\" or other software routine\ndesigned to disable the software automatically with the passage of time or under\nthe positive control of any person; or virus, \"Trojan horse,\" \"worm\" or other\nsoftware routines or hardware components designed to permit unauthorized access,\nto disable, erase or otherwise harm the software, hardware, or data, or to\nperform any other similar actions.\n\n 11.9 The software in the Deliverables shall operate \naccurately in the manner in which it was intended as it relates to time \nrelated operations when given a valid date containing century, year, month \nand day. For purposes of this Section 11.9, the accurate operation of the \nsoftware shall require (a) that calculations using dates must execute using a \nfour digit year; (b) that all functions, including but not limited to entry, \ninquiry, maintenance, storage, update and transmission of information, must \nsupport four digit year date processing; (c) that interfaces and reports must \nsupport four digit year processing; (d) successful translation into year 2000 \nwith the correct system date (e.g., 1\/1\/2000) without human intervention; (e) \nprocessing with a four digit year after transition to and beyond the year \n2000 without human intervention; and (f) providing correct results in forward \nand backward date calculations spanning century boundaries.\n\n 11.10 UTS shall have, or have available to it, and shall\ndevote, the resources, skill, expertise and experience necessary to provide MCI\nwith the Product Documentation and all Deliverables in conformity with the\nRequirement Specification, Business Regulations and in accordance with the\nMilestone Schedule, and to otherwise perform the obligations of UTS hereunder.\n\n 12. INDEMNIFICATION\n\n UTS shall defend, indemnify and hold harmless MCI, its Affiliates and\ntheir respective employees, agents, officers and directors from and against any\nclaims, losses, liabilities, damages, costs and expenses (including reasonable\nattorneys' fees) incurred by MCI or its Affiliates arising out of or in\nconnection with any claims, suits, actions or proceedings (\"Claim\") brought\nagainst MCI or any Affiliate by any third party (a) asserting that any\nDeliverable or any portion thereof infringes any Intellectual Property of any\nthird party or (b) arising out of any breach of any representation or warranty\nmade by UTS under this Agreement, subject to the condition that MCI and\/or its\nAffiliate shall provide the UTS notice of any such Claim promptly after MCI\nand\/or its Affiliate shall receive notice or obtain knowledge thereof, and\nprovide to UTS such reasonably available and disclosable information and\nassistance as is reasonably requested by UTS in connection with such Claim. Upon\nMCI's request, UTS agrees to inform MCI of the status of any such Claim, and to\nconsult with MCI before agreeing to any settlement of any such Claim. In no\nevent shall MCI agree to any settlement or compromise of a Claim involving any\nremedy other than the payment of monetary damages without obtaining the prior\nwritten approval of MCI. MCI shall have the right to assume or participate in\nthe defense of a Claim, at any time, at its own expense. If an injunction is\nissued in such action or agreed in the settlement barring the use by MCI or any\nAffiliate of any allegedly infringing Deliverable, or in MCI's opinion, any\nDeliverable is likely to become the subject of a claim of infringement, MCI\nshall at its option and expense either (i) procure for MCI and its Affiliates\nthe right to continue to use such Deliverable; and\/or (ii) replace or modify\nsuch \n\n\n -9-\n\n\nDeliverables so that it becomes non-infringing, while still complying with \nthe applicable Requirement Specification.\n\n 13. DISCLAIMER\n\n EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY WARRANTY\nOR REPRESENTATION AND EACH PARTY SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED\nWARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY AND\nFITNESS FOR A PARTICULAR PURPOSE.\n\n INDEPENDENTLY OF ANY OTHER LIMITATION AND REGARDLESS OF WHETHER THE\nPURPOSE OF ANY REMEDY SET FORTH HEREIN IS SERVED, NEITHER PARTY SHALL BE LIABLE\nUNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY FOR ANY\nINCIDENTAL, SPECIAL, CONSEQUENTIAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES WITH\nRESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT INCLUDING DAMAGES RESULTING FROM\nLOSS OF BUSINESS, PROFITS, OPPORTUNITY OR GOODWILL, EVEN IF PREVIOUSLY ADVISED\nOF THE POSSIBILITY THEREOF.\n\n 14. TERM AND TERMINATION\n\n 14.1 This Agreement shall come into effect on the Effective\nDate, and unless sooner terminated as set forth herein, shall remain effective\nuntil the completion date of the Development Services set forth in the Milestone\nSchedule, provided however that in no event shall the term of this Agreement\nexceed [***].\n\n 14.2 Either party may terminate this Agreement by \nwritten notice:\n\n (a) immediately, in the event the other party \nfalls into bankruptcy, insolvency, reorganization, liquidation, or ceases to \nfunction as a going concern;\n\n (b) if a Force Majeure Event under Section 16 \nprevents performance of the other party's obligations hereunder for a period \nof [***] or longer; or\n\n (c) in the event the other party breaches any \nmaterial term hereof and fails to cure such breach within [***] after \ndelivery of written notice thereof from the non-breaching party.\n\n 14.3 The provisions of Sections 1, 5, 6, 7, 8, 9, 10, 11, 12,\n13, 14.3, 15, 16, 17, and 18 shall survive the expiration or termination hereof.\n\n 15. GENERAL\n\n 15.1 This Agreement and the Mutual Confidential Disclosure\nAgreement concluded on July 5, 1999 as amended constitute the entire agreement\nbetween the parties with respect to the subject matter hereof, and supersede and\nreplace all prior or contemporaneous \n\n\n -10-\n\n\nunderstandings, communications, or agreements, written, oral or otherwise \nregarding the subject matter hereof, including any letter of intent or \nmemorandum of understanding.\n\n 15.2 No alteration, amendment or modification of this\nAgreement shall be binding on the parties unless made in writing and signed by\nthe duly authorized representatives of both parties.\n\n 15.3 Failure by either party to enforce any provision of this\nAgreement shall not be deemed a waiver of future enforcement of that or any\nother provision.\n\n 15.4 Except as expressly set forth herein, this Agreement and\nits rights and obligations may not be assigned, transferred or delegated by\neither party without obtaining the prior written consent of the other party, and\nany attempted assignment, transfer or delegation without such consent shall not\nbe effective.\n\n Notwithstanding the foregoing, MCI may have Matsushita\nCommunication R&D Center U.S. (\"MCRDC\") of Panasonic Technologies, Inc. exercise\nMCI's rights herein, perform MCI's obligation herein, and\/or participate in the\nactivities contemplated herein, provided MCRDC observes the terms and conditions\nherein.\n\n 15.5 If for any reason a court of competent jurisdiction finds\nany provision of this Agreement, or any portion thereof, to be unenforceable,\nthat provision or portion shall be enforced to the maximum extent permissible so\nas to effect the intent of the parties, and the remainder of this Agreement\nshall continue in full force and effect.\n\n 15.6 The legal and equitable remedies available to the parties\nhereunder are all independent of one another, and are intended to be cumulative\nso as not to limit a party's other available remedies.\n\n 15.7 The parties are independent contractors and nothing\nherein will be construed to create a partnership, joint venture, employment or\nagency relationship between the parties. Neither party shall have the power or\nauthority to enter into any agreement of any kind on behalf of the other party,\nor to bind or obligate the other party in any manner.\n\n 15.8 All notices required or permitted under this Agreement\nshall be in writing, shall reference this Agreement and shall be deemed given:\nwhen personally delivered, when sent by confirmed facsimile, five days after\nhaving been sent by registered or certified air mail, return receipt requested,\npostage prepaid; or one day after deposit with a commercial overnight carrier,\nwith written verification of receipt. All communications shall be sent to the\naddresses set forth below or to such other address as may be designated by a\nparty by giving written notice to the other party pursuant to this Section 15.8;\n\n\n -11-\n\n\n To UTS\n Russell L. Boltwood\n Corporate Counsel\n UTStarcom, Inc.\n 1275 Harbor Bay Parkway\n Alameda, CA 94502\n\n To MCI\n General Manager, Overseas Department\n Communication Systems Division\n Matsushita Communication Industrial Co., Ltd.\n 3-1 Tsunashima-higashi 4-chome, Kohoku-ku,\n Yokohama 223-8639, Japan\n\n 15.9 This Agreement shall be governed by and construed in\naccordance with the laws of Japan, irrespective of its conflict of laws rules.\n\n 15.10 This Agreement has been freely negotiated by the\nparties, and shall be interpreted and construed fairly without any strict\nconstruction favoring or disfavoring either party regardless of which party\ndrafted this Agreement or any portion thereof.\n\n 15.11 The headings and captions used in this Agreement are\nused for convenience only are not to be considered in construing or interpreting\nthis Agreement.\n\n 15.12 Rules of Construction\n\n As used herein, neutral pronouns and any variations thereof will be\ndeemed to include the feminine as well as the masculine. All terms in the\nsingular will be deemed to include the plural, and vice versa. The words\n\"herein,\" \"hereof\" and \"hereunder\" and other words of similar import shall refer\nto this Agreement as a whole, including any attachments, as from time to time\nmay be amended or modified, and do not refer to any subdivision of this\nAgreement. The word \"including\" when used herein is not intended to be\nexclusive, and shall mean \"including, but not limited to.\" References herein to\nArticle and Section shall refer to the appropriate Article or Section of this\nAgreement.\n\n 16. FORCE MAJEURE\n\n Neither party shall be liable for delay or failure in the performance\nhereof arising from any of the following matters; acts of God or public enemy or\nwar (declared or undeclared); acts of governmental or quasi-governmental\nauthorities or any subdivision, department or agency thereof, or regulations or\nrestrictions imposed by law or by court action; acts of persons engaged in\nsubversive activities or sabotage; fires, floods, explosions or other\ncatastrophes; epidemics or quarantine restrictions; strikes, slowdowns, lockouts\nor labor stoppage or dispute of any kind; freight embargoes, or interruption of\ntransportation; unusually severe weather; any other causes, similar or\ndissimilar, beyond the control of the party concerned (collectively, \"Force\nMajeure Events\").\n\n\n -12-\n\n\n 17. DISPUTE RESOLUTION\n\n Any disputes or disagreement which may arise out of or in connection\nwith this Agreement or the breach thereof, shall be finally settled by\narbitration. If the arbitration is initiated by UTS, the arbitration shall be\nheld in Tokyo, Japan in accordance with the rules of Japan Commercial\nArbitration Association. If the arbitration is initiated by MCI, the arbitration\nshall be held in San Francisco, California in accordance with the International\nArbitration rules of the American Arbitration Association. The arbitration shall\nbe conducted by one arbitrator and in the English language. The cost of\narbitrator and the said Association shall be shared equally by the parties.\n\n 18. EXPORT CONTROL\n\n Each party understands and acknowledges that export administration laws\nand regulations including the U.S. Export Administration Regulations, restrict\nthe export or diversion of certain products and technology. UTS shall notify MCI\nin writing and obtain MCI's written approval before incorporating any item or\ntechnology restricted under such laws and regulations into the Product\nDocumentation or any Deliverable. UTS shall obtain all export licenses or\nexemptions necessary to deliver to MCI Product Documentation and other\nDeliverables, and shall cooperate with MCI in order to obtain licenses or\nexemptions permitting the export and re-export of the same.\n\n\n -13-\n\n\n\n IN WITNESS WHEREOF, the parties have, by their duly authorized\nrepresentatives, executed this Agreement as of the date shown below.\n\nUTS: MCI:\n\nUTStarcom Inc. Matsushita Communication Industrial\n Co., Ltd. acting through its\n Communication Systems Division\n\n\nSignature Signature\n\n\/s\/ Signature Illegible \/s\/ Signature Illegible\nName: Gerald S. Soloway Name: Yasuo Katsura\nTitle: VP Engineering Title: Director of CSD\/MCI\n\nDate: Sept 19, 2000 Date: 26.09.2000\n\n\n\n\n\n -14-\n\n\nAppendix A\nMilestone Schedule\n\nAppendix B\nRequirement Specification\n\nAppendix C\nMCI Business Regulation\n(MCI Business Requirement for Product Reliability Durability)\n\nAppendix D\nDevelopment Plan\n\nAppendix E\nMCI Payment Schedule\n\nAppendix F\nThird Party Software\n\nAppendix G\nPrior Intellectual Property Right List\n\nAppendix H\nMaterials\n\nAppendix I\nPrior Expenses\n\n\n\n\n\n APPENDIX A\n\n<\/pre>\n
\n\nMILESTONE SCHEDULE<\/p>\nMilestones Date
\n———- —-
\n
\nContract Signing [***] September 22, 2000<\/p>\n[***]<\/p>\n
MILESTONES AND RESPECTIVE PROPOSED CONTENT AND DELIVERABLES:
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\n<\/c><\/s><\/caption>\n<\/table>\n
CONTRACT SIGNING<\/p>\n
[***]<\/p>\n
DETAILED SCHEDULE AND DEVELOPMENT SERVICES<\/p>\n
IPTS [***]<\/p>\n
PRODUCT TECHNICAL SPECIFICATIONS<\/p>\n
[***]<\/p>\n
-2-<\/p>\n
[***]<\/p>\n
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