{"id":42415,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/joint-venture-contract-for-the-establishment-of-universal.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"joint-venture-contract-for-the-establishment-of-universal","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/joint-venture-contract-for-the-establishment-of-universal.html","title":{"rendered":"Joint Venture Contract for the Establishment of Universal Communication Technology (Hangzhou) Co. Ltd. – UTStarcom Telecom Co. Ltd. and Matsushita Electric Industrial Co. Ltd. and Matsushita Communication Industrial Co. Ltd."},"content":{"rendered":"
JOINT VENTURE CONTRACT<\/b><\/p>\n\n
for the Establishment of<\/b><\/p>\n\n
UNIVERSAL COMMUNICATION TECHNOLOGY<\/b><\/p>\n\n
(HANGZHOU) COMPANY LIMITED<\/b><\/p>\n\n
by and among<\/b><\/p>\n\n
UTSTARCOM TELECOM CO., LTD.,<\/b><\/p>\n\n
MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.<\/b><\/p>\n\n
and<\/b><\/p>\n\n
MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD.<\/b><\/p>\n\n
 <\/p>\n\n\n
\n\n
\n\n<\/div>\n\n\n\n
\n\n\n
 <\/p>\n\n<\/pre>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Table of Content<\/b><\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Chapter 1.<\/a><\/p>\n<\/td>\n
\n
General Provisions<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 2.<\/a><\/p>\n<\/td>\n
\n
Definitions<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 3.<\/a><\/p>\n<\/td>\n
\n
Joint Venture Parties<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 4.<\/a><\/p>\n<\/td>\n
\n
Establishment of the Company<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 5.<\/a><\/p>\n<\/td>\n
\n
Purpose and Business Scope<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 6.<\/a><\/p>\n<\/td>\n
\n
Total Amount of Investment & Registered Capital<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 7.<\/a><\/p>\n<\/td>\n
\n
Representation & Warranty<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 8.<\/a><\/p>\n<\/td>\n
\n
Responsibilities of Parties<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 9.<\/a><\/p>\n<\/td>\n
\n
Board of Directors<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 10.<\/a><\/p>\n<\/td>\n
\n
Business Management Organization<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 11.<\/a><\/p>\n<\/td>\n
\n
Labor Management<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 12.<\/a><\/p>\n<\/td>\n
\n
Tax, Financial Affairs and
\n  Accounting<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 13.<\/a><\/p>\n<\/td>\n
\n
Confidentiality<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 14.<\/a><\/p>\n<\/td>\n
\n
Profit Distribution<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 15.<\/a><\/p>\n<\/td>\n
\n
Insurance<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 16.<\/a><\/p>\n<\/td>\n
\n
Equipment and Materials<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 17.<\/a><\/p>\n<\/td>\n
\n
Sale of Products<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 18.<\/a><\/p>\n<\/td>\n
\n
Duration of the Company<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 19.<\/a><\/p>\n<\/td>\n
\n
Dissolution of the Company<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 20.<\/a><\/p>\n<\/td>\n
\n
Liquidation and Disposal of Assets<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 21.<\/a><\/p>\n<\/td>\n
\n
Liabilities for Breach of Contract;
\n  Indemnities<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 22.<\/a><\/p>\n<\/td>\n
\n
Force Majeure<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 23.<\/a><\/p>\n<\/td>\n
\n
Intellectual Property<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 24.<\/a><\/p>\n<\/td>\n
\n
Applicable Law<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 25.<\/a><\/p>\n<\/td>\n
\n
Settlement of Disputes<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 26.<\/a><\/p>\n<\/td>\n
\n
Language<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 27.<\/a><\/p>\n<\/td>\n
\n
Notice<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 28.<\/a><\/p>\n<\/td>\n
\n
Trademark<\/p>\n<\/td>\n<\/tr>\n
\n
Chapter 29.<\/a><\/p>\n<\/td>\n
\n
Effectiveness of Contract and
\n  Miscellaneous<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 1<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GENERAL
\nPROVISIONS<\/p>\n
\n
Article 1<\/p>\n
\n
THIS JOINT VENTURE CONTRACT<\/b> (hereinafter referred to as the \u0093Contract\u0094) is signed
\nin on the fifth day of July in 2002 in Yokohama, Japan, in accordance with the
\nLaw of the People\u0092s Republic of China on Chinese-Foreign Equity Joint Ventures
\n(the \u0093Joint Venture Law\u0094) and other applicable Chinese laws, by and among UTStarcom Telecom Co., Ltd<\/b>. (hereinafter
\nreferred to as \u0093Party A\u0094, or \u0093UTS\u0094), Matsushita
\nElectric Industrial Co., Ltd<\/b>. (hereinafter referred to as
\n\u0093Party B\u0094, or \u0093MEI\u0094) and Matsushita
\nCommunication Industrial Co., Ltd<\/b>. (hereinafter referred to as
\n\u0093Party C\u0094, or \u0093MCI\u0094).\u00a0 The Parties
\nhereto agree to jointly invest to establish a sino-foreign equity joint venture
\ncompany in Hangzhou, Zhejiang Province of the People\u0092s Republic of China based
\non the principles of equality and mutual benefit in accordance with the terms
\nand conditions set forth below.<\/p>\n
Chapter 2<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 DEFINITIONS<\/p>\n
\n
Article 2<\/p>\n
\n
For
\npurposes of this Contract, except as otherwise expressly provided or unless the
\ncontent clearly indicates a contrary intent, the following terms shall have the
\nmeanings set forth below:<\/p>\n
\u0093Affiliate\u0094 of a
\nParty means any corporation, partnership, joint venture or other entity or
\nnatural person controlling, controlled by, or under common control with, such
\nParty, excluding the Company; a person or entity shall be deemed to \u0093control\u0094
\nanother person or entity if the former possesses, directly or indirectly, the
\npower to direct or cause the direction of the management and policies of the
\nlatter, through ownership of majority voting securities.<\/p>\n
\u0093Articles of
\nAssociation\u0094 shall mean, the Articles of Association of the Company as executed
\nby the Parties hereto and amended thereafter from time to time.<\/p>\n
\u0093Board of
\nDirectors\u0094 shall mean the board of directors of the Company.<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u0093Company\u0094 shall
\nmean \u0093Universal Communication Technology
\n(Hangzhou) Company Limited<\/b>\u0094 in English and [Chinese Characters<\/b>] in Chinese, the joint
\nventure company formed by the Parties pursuant to the Joint Venture Law, other
\napplicable laws and regulations of the PRC and this Contract.<\/p>\n
\u0093Contract\u0094, unless
\notherwise indicated, shall mean this contract, including appendixes.<\/p>\n
\u0093Party\u0094 and
\n\u0093Parties\u0094 shall mean each and all of Party A, Party B and
\nParty C.<\/p>\n
\u0093PRC law(s)\u0094 shall
\nmean the national and local laws, regulations and rules of the PRC.<\/p>\n
\u0093RMB\u0094 shall mean
\nthe legal currency of China.<\/p>\n
\u0093Trademark\u0094 and
\n\u0093Business name\u0094 shall mean the trademark and\/or business name of the
\nParty A to be licensed to the Company.<\/p>\n
\u0093US Dollars\u0094 or
\n\u0093US$\u0094 shall mean the legal currency of the United States of America.<\/p>\n
Chapter 3<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JOINT
\nVENTURE PARTIES<\/p>\n
\n
Article 3<\/p>\n
\n
The
\nParties to this Contract are as follows:<\/p>\n
UTStarcom Telecom Co., Ltd.,<\/b> registered in Hangzhou, People\u0092s
\nRepublic of China, with its legal address at 2,3 Yile Industrial Park, 129# Wen
\nYi Road, Hangzhou, China<\/p>\n
\n\n\n\n\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
Name: Ying Wu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Position: Chairman<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Nationality: Chinese<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
Matsushita Electric Industrial Co.,
\nLtd.,<\/b> registered
\nin 1006 Kadoma, Kadoma-shi, Osaka 571-8501, Japan.<\/p>\n
\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n\n\n\n\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
Name: Kunio Nakamura<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Position: President<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Nationality: Japanese<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
Matsushita Communication Industrial
\nCo., Ltd<\/b>.,
\nregistered in 4-3-1 Tsunashima-higashi, Kohoku-Ku, Yokohama, 223-8939, Japan.<\/p>\n
\n\n\n\n\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
Name: Yasuo Katsura<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Position: President<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Nationality: Japanese<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
Chapter 4<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ESTABLISHMENT
\nOF THE COMPANY<\/p>\n
\n
Article 4<\/p>\n
\n
The
\nParties hereto agree to set up a Sino-foreign joint venture company in
\naccordance with the Joint Venture Law and other applicable PRC laws and this
\nContract.\u00a0 This Contract shall become
\neffective on the day on which the approval of this Contract by the examination
\nand approval authority be obtained.<\/p>\n
\n
Article 5<\/p>\n
\n
The
\nname of the Company shall be Universal
\nCommunication Technology (Hangzhou) Company Limited <\/b>in English and [Chinese<\/b> Characters<\/b>]
\nin Chinese.\u00a0 The legal address of the
\nCompany shall be 3 Yile Industrial Park, 129# Wen Yi Road, Hangzhou, China.<\/p>\n
\n
Article
\n6<\/p>\n
\n
The
\nactivities of the Company shall be governed by and comply with PRC laws.<\/p>\n
\n
Article
\n7<\/p>\n
\n
The
\nCompany shall be a limited liability company under the laws of the PRC.\u00a0 The liability of the Parties for the losses,
\nrisks, liabilities and any other obligations whatsoever of the Company shall be
\nlimited and in proportion to the subscribed amount of their respective
\ncontributions to the registered capital of the Company.\u00a0 No Party shall have any liability to
\nthe Company or to any third Party in connection with the activities of the
\nCompany either jointly or severally other than the requirement<\/p>\n
\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
to
\nmake such contribution, unless otherwise agreed to in writing by the
\nParties.\u00a0 In no event shall any
\nParty be responsible for any losses, risks, liabilities or obligations
\nwhatsoever resulting from any act of the other Parties.<\/p>\n
\n
Article
\n8<\/p>\n
\n
The
\nproduction plan covering the period from the signature of this Contract to
\ncommencement of production by the Company shall be in compliance with those
\nplan confirmed by the Parties upon signature of this Contract by the Parties.\u00a0 Each Party shall be responsible for
\ncarrying out its obligation as assigned in accordance with such production
\nplan.<\/p>\n
Chapter 5<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 PURPOSE
\nAND BUSINESS SCOPE<\/p>\n
\n
Article
\n9<\/p>\n
 <\/h2>\n
9.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The purpose of establishment of the
\nCompany is to cause the Company to engage in the business described in
\nArticle 9.2 hereof on the principles of maximizing the profit.<\/h2>\n
9.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The business scope of the Company shall
\nbe design and development, manufacturing, sales, repair service of
\ncommunication products such as [***] (hereinafter referred to as \u0093Products\u0094).<\/h2>\n
Chapter 6<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TOTAL
\nAMOUNT OF INVESTMENT AND<\/p>\n
REGISTERED CAPITAL<\/b><\/p>\n
\n
Article
\n10<\/p>\n
\n
The
\ntotal amount of investment of the Company shall be [***].<\/p>\n
\n
Article
\n11<\/p>\n
\n
The
\nregistered capital of the Company shall be [***] US Dollars [***].\u00a0 Party A\u0092s contribution to the
\nregistered capital of the Company shall be RMB in cash which is equivalent to
\n[***] which accounts for [***] of the total registered capital of the
\nCompany.\u00a0 Party B\u0092s contribution to
\nthe registered capital of the Company shall be [***] in cash, which accounts
\nfor [***] of the total registered capital of the Company.\u00a0 Party C\u0092s contribution to the
\nregistered capital of the Company shall be [***] in cash, which accounts for
\n[***] of the total registered capital of the Company.<\/p>\n
 <\/h1>\n
-4-<\/h1>\n
\n
\n<\/h1>\n

<\/p>\n
\n
Article 12<\/p>\n
\n
The
\nParties hereto shall respectively make all of their contributions to the
\nregistered capital of the Company within [***] following the issuance of the
\nbusiness license of the Company.<\/p>\n
\n
Article 13<\/p>\n
\n
After
\nthe Parties have made their respective contributions in accordance with the
\nforegoing provision, the Company shall, on the basis of a capital contribution
\nverification report issued by an accounting firm registered in the PRC and
\nretained by the Company, issue an investment certificate to each Party.\u00a0 Such investment certificate shall specify
\nthe name of the Company, the date of the establishment of the Company, the name
\nof the Party and the capital investment contributed thereby, the dates of
\neach contribution, and the date of the investment certificate.<\/p>\n
\n
Article 14<\/p>\n
\n
The
\nbalance between the total amount of investment and registered capital of the
\nCompany may, pursuant to the decision of the Board of Directors in accordance
\nwith the business needs of the Company, be raised by the Company through loans
\nfrom domestic and\/or foreign financial institutions.<\/p>\n
\n
Article 15<\/p>\n
\n
The
\nCompany may increase and reduce its registered capital subject to any necessary
\napproval of the examination and approval authority.\u00a0 In case of any increase of the registered capital, each
\nParty shall have the right to subscribe to the amount of such additional
\ncapital in accordance with its respective proportional equity interest at the
\ntime.\u00a0 If any Party does not
\nsubscribe to the amount of additional capital in accordance with its
\nproportional equity interest at the time, the other Parties may subscribe to
\nit, in which event appropriate adjustments shall be made to the ratio of the
\nequity interest of the Parties.<\/p>\n
\n
Article 16<\/p>\n
 <\/h2>\n
16.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Except for transfer of any part of its
\nequity interest from Party C to Party B, no Party may transfer,
\nsell, assign, give or otherwise dispose of all or any part of its equity
\ninterest in the Company without the express prior written consent of the other
\nParties, the approval of the Board of Directors, and the approval of the
\noriginal examination and approval authority.<\/h2>\n
 <\/h2>\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
In the event a
\nParty intends to assign and transfer all or part of its equity interest to
\nany of its Affiliates, however, the other Parties shall grant its consent.<\/h2>\n
16.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The equity interest owned by each
\nParty shall be free and clear of any and all encumbrances, security and\/or
\nliens of any nature whatsoever.<\/h2>\n
16.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The transfer of its equity interest by
\nthe Party shall become effective upon the approval by the original
\nexamination and approval authority after the resolution of the Board of
\nDirectors and, signature of the agreement for the transfer of equity interest.<\/h2>\n
16.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When one Party to the Company assigns,
\nor transfers all or part of its equity interest (hereinafter referred to as
\n\u0093Proposing Party\u0094), the other Parties shall have pre-emptive right to purchase
\nsuch equity interest.\u00a0 If such
\npre-emptive right is not exercised within the [***] day period, the Proposing
\nParty shall have the right, exercisable after the expiry of the [***] day
\nperiod or the receipt of the offer to purchase portion of the equity interest
\nfrom the other Parties as the case may be, to transfer the equity interest to
\nthe third Party at the price, determined based on the latest audited
\nfinancial statements and on terms and conditions not more favorable to such
\nthird Party than those proposed by the Proposing Party for the
\nexercise of pre-emptive rights.<\/h2>\n
16.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Upon any transfer by a Party of all
\nor any part of its equity interest in the Company, the transferring
\nParty shall surrender to the Company for cancellation its investment
\ncertificates issued by the Company, and the Company shall issue a new
\ninvestment certificate to the transferee, if necessary.<\/h2>\n
16.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 After the approval of the original
\nexamination and approval authority of any increase or reduction of the
\nregistered capital of the Company or of any transfer of any Party\u0092s interest in
\nthe Company, procedures for registration shall be handled by the Company with
\nthe relevant department of administration of industry and commerce.<\/h2>\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 7<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 REPRESENTATION
\nAND WARRANTY<\/p>\n
\n
Article 17<\/p>\n
 <\/h2>\n
17.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A hereby represents and
\nwarrants that:<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A is a limited liability
\ncompany duly established, valid and existing in good standing as a legal person
\nin accordance with PRC laws.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A has all requisite power and
\nauthority and all necessary licenses and permits to execute and perform this
\nContract, all of the Appendixes attached hereto, the Articles of Associations,
\nand any agreement and documents referred to in this Contract to which it is a
\nParty and will be bound by the terms and conditions therein.\u00a0 The execution, delivery and performance of
\nthis Contract by Party A will not violate any provisions of PRC laws.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A\u0092s representative, whose
\nsignature is affixed to this Contract, has been fully authorized to execute
\nthis Contract pursuant to a valid power of attorney.<\/h3>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A\u0092s execution, and performance
\nof this Contract, the Articles of Association and any other agreements and
\ndocuments contemplated hereafter will not violate any of its constitution
\ndocuments, its any other agreement or obligation, or any currently effective
\nPRC law that may be applicable to any aspect of the transactions contemplated
\nhereafter.<\/h3>\n
17.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party B and Party C hereby
\nrepresent that:<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party B and Party C are limited
\nliability companies duly incorporated and valid existing in good standing under
\nthe laws of Japan.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party B and Party C have all
\nrequisite power and authority and all necessary licenses and permits to execute
\nand perform this Contract, all of the Appendixes attached hereto, the Articles
\nof Associations, and any agreement and documents referred to in this Contract
\nto which it is a Party and will be bound by the terms and conditions
\ntherein.<\/h3>\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Representatives of Party B and
\nParty C, whose signatures are affixed to this Contract, have been fully
\nauthorized to execute this Contract pursuant to a valid power of attorney.<\/h3>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Execution, and performance of this
\nContract, the Articles of Association and any other agreements and documents
\ncontemplated hereafter by Party B and Party C will not violate any of
\nits constitution documents, its any other agreement or obligation, or any
\ncurrently effective law, regulation or decree of its jurisdiction of
\norganization or incorporation that may be applicable to any aspect of the
\ntransactions contemplated hereafter.<\/h3>\n
Chapter 8<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 RESPONSIBILITIES
\nOF PARTIES<\/p>\n
\n
Article 18<\/p>\n
 <\/h2>\n
18.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A, Party B and
\nParty C shall respectively be responsible for the following duties and
\nobligations:<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Making timely contribution in full to the
\nregistered capital pursuant to Articles 12 herein.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Assisting each other in obtaining
\nnecessary approval and registration from the Chinese authorities.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Assisting the Company in obtaining
\navailability of foreign currency in the PRC and loans from financial
\ninstitutions in the PRC, in purchasing or leasing of parts and office
\nequipment, in applying for supplies of fuel, water, electricity, gas and for
\ntelephone, telegraph, facsimile, telex and other communication facilities, and
\nany other necessary for the Purpose of this Agreement.<\/h3>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 For the proper operation of the JV, each
\nparty hereto agrees to order the members of the Board of Directors it
\nassigns to the JV to reach, after the establishment of the JV, a resolution of
\nthe Board of Directors to duly execute the agreements attached hereto as
\nAppendix I (MCI Technical License Agreement), Appendix II (UTS
\nTechnical<\/h3>\n
 <\/h3>\n
-8-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
License
\nAgreement), Appendix III (Equipment Purchase Agreement) and
\nAppendix IV (Personnel Assignment Agreement).<\/h3>\n
v.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Licensing or caused to be licensed to the
\nCompany, pursuant to the terms and conditions of the Technical License
\nAgreement.<\/h3>\n
vi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 For Party B, entering into Personnel
\nAssignment; and for Party C, Equipment Purchase Agreement and Personnel
\nAssignment Agreement.<\/h3>\n
18.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any expense arising out of the period
\nfrom the signature of this Contact by all Parties to the commencement of the
\nproduction of the Products shall be appropriated for start-up expenses of the
\nCompany to the extent agreed by the Parties.\u00a0
\nAny expense firstly owed by the Party(s) prior to the signature of this
\nContract by all Parties and to be appropriated for start-up expenses shall be
\nappropriated for start-up expense after written consent of all Parties.<\/h2>\n
Chapter 9<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 BOARD
\nOF DIRECTORS<\/p>\n
\n
Article 19<\/p>\n
\n
The
\nCompany shall establish a Board of Directors.\u00a0
\nThe date of issuance of the Company business license shall be the date
\nof the establishment of the Board of Directors of the Company.<\/p>\n
\n
Article 20<\/p>\n
\n
The
\nBoard of Directors shall be composed of [***] members including the chairman,
\nof which [***] shall be appointed by Party A, [***] shall be appointed by
\nParty B and the [***] by Party C.\u00a0
\nThe chairman of the Board of Directors (hereinafter referred to as the
\n\u0093Chairman\u0094) shall be appointed by [***].<\/p>\n
\n
Article 21<\/p>\n
\n
The
\nterm of office for the directors and the Chairman shall be [***]; the term of
\noffice for the directors may be renewed by the appointing Party.\u00a0 Each Party may, by giving [***] of
\nprior written notice to the other Parties, remove at any time any director whom
\nit has appointed.\u00a0 If a director is
\nremoved during his term of office, the director succeeding him shall serve for
\nthe remaining term of office of such former director.<\/p>\n
\n
-9-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 22<\/p>\n
\n
The
\nChairman shall be the legal representative of the Company.\u00a0 Should the Chairman be unable to perform his
\nresponsibilities for some reasons, he\/she may authorize any other director to
\nrepresent the Company temporarily.<\/p>\n
\n
Article 23<\/p>\n
 <\/h2>\n
23.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Board of Directors shall be the
\nhighest authority of the Company and shall have the right to make decisions on
\nall major and important matters of the Company.<\/h2>\n
23.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Resolutions involving the following
\nmatters shall require the unanimous approval of the directors present, including
\nany proxies at a duly convened meeting of Board of Directors:<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any amendment or modification of the
\nArticles of Association.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 increase, assignment or deduction of
\nregistered capital and the adjustment of each Party\u0092s contribution to the
\nregistered capital\u0092s ratio.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 merger of the Company with any other
\neconomic organization.<\/h3>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 termination, dissolution or liquidation
\nof the Company.<\/h3>\n
23.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Resolutions involving the following
\nmatters shall require an affirmative vote of at least four fifths (4\/5) of the
\ndirectors present, including any proxies at a duly convened meeting of Board of
\nDirectors:<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 issuance of any guarantees for the
\npayment obligations of any person or entity or the making of any other
\nfinancing arrangements.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of an individual loan
\ntransaction or aggregate loan transactions on behalf Company.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of capital expenditures or
\ncapital commitments with a value exceeding [***].<\/h3>\n
\n
-10-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 assignment, transfer, sale, lease or
\nother disposition of any business or assets of the Company with a value
\nexceeding [***] or the taking over or acquisition of any business or assets of
\nany other person or entity with a value exceeding [***].<\/h3>\n
v.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 mortgage, pledge or granting of a security
\ninterest or other types of liens in any building, factory, office space or
\nother fixed assets or capital equipment of the Company with a value exceeding
\n[***].<\/h3>\n
vi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 addition of items to or change of the
\nscope of business of the Company:<\/h3>\n
vii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 establishment of any subsidiaries or
\nrelated legal persons, including but not limited to representative offices,
\nbranch offices and\/or subsidiaries.<\/h3>\n
viii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 reorganization of the management
\norganization of the Company.<\/h3>\n
ix.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 appointment, suspension and dismissal of
\nthe general manager, deputy general manager, chief financial officer as well as
\nhis\/her scope of authority.<\/h3>\n
x.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of annual operating plan and
\nmarketing policies of the Company.<\/h3>\n
xi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of pricing policy for
\nProducts<\/h3>\n
xii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 distribution of profits of the Company<\/h3>\n
xiii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 execution of any contracts with a
\nperformance term of greater than [***] or involving individually or in the
\naggregate more than [***].<\/h3>\n
xiv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 licensing of technology or know-how to or
\nfrom any third party.<\/h3>\n
xv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of remuneration and benefits of
\nthe general manager, deputy general manager, and chief financial officer.<\/h3>\n
xv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of the annual business plan and
\nannual budget of the Company<\/p>\n
xvii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of the annual auditing report of
\nthe Company.<\/h3>\n
\n
-11-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
xviii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of any insurance to be carried
\nby the Company.<\/h3>\n
xix.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 determination of the Company\u0092s employment
\nplans, employee salary plans, pensions, fringe benefits and bonus plan.<\/h3>\n
xx.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 contribution, use or expenditure of the
\ngeneral reserve fund, the bonus\u00a0 and
\nwelfare fund and the enterprise expansion fund to be established under the PRC
\nlaws.<\/h3>\n
xxi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 establishment or change of the accounting
\nsystem of the Company, or appointment or dismissal of Company independent
\nfinancial accountants or legal counsel.<\/h3>\n
xxii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 other matters submitted to the Board of
\nDirectors.<\/h3>\n
\n
Article 24<\/p>\n
 <\/h2>\n
24.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Board of Directors shall meet at
\nleast once each year.\u00a0 The First meeting
\nof Board of Directors shall be held within thirty (30) days from the date of
\nthe issuance of the business license of the Company.\u00a0 The Chairman shall set the agenda of meetings of Board of
\nDirectors and shall be responsible for convening and presiding over meetings of
\nthe Board of Directors.<\/h2>\n
24.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Chairman shall call a special or interim
\nmeeting of the Board of Directors under a request of at least two (2) directors
\nspecifying the matters to be discussed, and shall notify all directors in
\nwriting of the agenda .<\/h2>\n
24.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Chairman shall notify each director
\nin writing of the time, date, place and agenda of any meeting of Board of
\nDirectors thirty (30) days prior to a regular meeting and twenty (20) days
\nprior to a special or interim meeting.\u00a0
\nHowever, upon the request of at least three fifths (3\/5) of all the
\ndirectors, any special or interim meeting of the Board of Directors may be held
\nwithout going through such advance notification procedure, but reasonable time
\nand writing notice shall be given to all the directors for their attending.<\/h2>\n
24.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Unless otherwise agreed to by the Board
\nof Directors, all meetings of the Board of Directors shall be held at the
\nCompany\u0092s legal address.<\/h2>\n
\n
-12-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
24.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Meetings of the Board of Directors may be
\nheld by telephone or other electronic audio means such that all persons
\nparticipating in the meeting are able to hear, be heard and communicate with
\neach other at all times, and participation by a director or his proxy in a
\nmeeting by such means shall constitute presence of such director or his proxy
\nin person at the meeting.<\/h2>\n
24.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any action to be taken at any meeting of
\nthe Board of Directors may be taken without a meeting of Board of Directors if
\nall directors consent to such action in writing, and such written consent shall
\nbe filed in the minute book.<\/h2>\n
24.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the Chairman gets sick or injured and
\nbecomes unable to preside over regular meeting of Board of Directors, another
\ndirector specifically authorized by the Chairman shall call upon the aforesaid
\nmeeting and take over the rights and powers of the Chairman.<\/h2>\n
24.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any director who is unable to attend a
\nmeeting of Board of Directors for any reason may appoint a proxy in writing, to
\nattend and vote on his\/her behalf.\u00a0 The
\nproxy shall have the same rights and powers as the director who entrusted him.<\/h2>\n
24.9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Majority of the Board of Directors shall
\nbe present in person or by proxy at any meetings of the Board of Directors to
\nform a quorum.<\/h2>\n
24.10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Detailed minutes shall be made for each
\nmeeting of the Board of Directors and be signed by all directors and proxies
\npresent at the meeting.\u00a0 The minutes
\nshall be written in both Chinese and English, but only the English text shall
\nbe authentic and have legal force.\u00a0
\nMinutes shall be kept by the Company during its term of existence and be
\nmade freely available to all directors and each Party at any time.<\/h2>\n
24.11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The traveling expenses, accommodation and
\nother costs and expenses directly incurred by a director or a proxy in
\nperforming its duties as a director of the Company shall be borne by the
\nCompany.<\/h2>\n
24.12\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Meetings of the Board of Directors shall
\nproceed in accordance with the agenda determined pursuant to the provisions
\nherein, and each matter on the agenda shall be discussed appropriately and, if
\nnecessary, put to a decision by way of resolutions.\u00a0 Any resolutions<\/h2>\n
 <\/h2>\n
-13-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
made at a meeting
\nconducted by telephone or other means of communication shall be confirmed in
\nwriting by all the persons participating in the meeting no later than seven (7)
\ndays after the meeting and filed in the minute books of the Company.<\/h2>\n
24.13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 All information discussed at meetings of
\nthe Board of Directors shall be treated as confidential and shall not be
\ndisclosed to any third Party other than Parties without the approval of
\nthe Board of Directors, unless otherwise required by law.<\/h2>\n
Chapter 10<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 BUSINESS
\nMANAGEMENT ORGANIZATION<\/p>\n
\n
Article 25<\/p>\n
\n
The
\nCompany shall establish a management office under the Board of Directors to be
\nresponsible for the daily operation and management of the Company.\u00a0 The management office shall have one (1)
\ngeneral manager and one (1) deputy general manager.\u00a0 The general manager shall be nominated by Party A and
\nappointed by the Board of Directors, while the deputy general manager shall be
\nnominated by Party C and appointed by the Board of Directors.\u00a0 The deputy general manager shall assist the
\ngeneral manager in the daily operation and management of the Company, and the
\ngeneral manager and the deputy general manager shall jointly organize and lead
\nthe daily operation and the management of the Company.\u00a0 The Company may set up various departments
\nto be responsible for such matters as technology, manufacturing, finance,
\ncustomer services, and administration.<\/p>\n
\n
Article 26<\/p>\n
\n
The
\nmanagement office shall directly report to the Board of Directors, and shall
\ncarry out the decisions of the Board of Directors, and shall organize and lead
\nthe daily operation and management of the Company.\u00a0 The specific rights and powers of the management office are
\nprescribed below:<\/p>\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 implement this Contract and its appendixes,
\nthe Articles of Association and the resolutions made by the Board of Directors.<\/h4>\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulate the annual operating plan and
\nsubmit to the Board of Directors for review and approval.<\/h4>\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 organize and manage the daily operation
\nof the Company.<\/h4>\n
\n
-14-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 submit regularly to the Board of
\nDirectors written reports on the revenue and expenses of the Company.<\/h4>\n
(e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulate and implement the rules and
\nregulations on the operation and management of the Company.<\/h4>\n
(f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 appoint and dismiss the department
\nmanagers<\/h4>\n
(g)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 determine the specific duties and
\nresponsibilities of the deputy general manager and the department managers.<\/h4>\n
(h)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 determine the employment and dismissal of
\nemployees other than those to be determined by the Board of Directors, the
\npolicies regarding rewards and punishment, promotion and salaries of employees
\nand personnel training programs.<\/h4>\n
(i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approve capital expenditures or capital
\ncommitments or such commitment in the aggregate of less than [***] in any
\nfiscal year.<\/h4>\n
(j)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of marketing policies of the
\nCompany subject to approval of the Board of Directors.<\/h4>\n
(k)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 establishment of policies and procedures
\nfor the management of the Company and change of the structure of the management
\norganization of the Company subject to approval of the Board of Directors.<\/h4>\n
(l)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of the Company\u0092s employment
\nplans, employee salary plans, pensions, fringe benefits, and bonus plans
\nsubject to approval of the Board of Directors.<\/h4>\n
(m)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Formulation of contribution, use or
\nexpenditure of the general reserve fund, the bonus and welfare fund and the
\nenterprise expansion fund to be established in accordance with PRC law, subject
\nto approval of the Board of Directors.<\/h4>\n
(n)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of any insurance to be carried
\nby the Company, subject to approval of the Board of Directors.<\/h4>\n
\n
-15-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(o)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 refer matters of importance to the
\nCompany to the Board of Directors for its consideration.<\/h4>\n
(p)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 handle other matters within the scope of
\nauthorization granted by the Board of Directors.<\/h4>\n
\n
Article 27<\/p>\n
\n
The
\nterm of office of the general manager and the deputy general manager shall be
\n[***] and their term of office may be renewed by the Board of Directors if they
\nare continuously nominated and recommended by the nominating and recommending
\nParty.<\/p>\n
Chapter 11<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LABOUR
\nMANAGEMENT<\/p>\n
\n
Article 28<\/p>\n
\n
The
\nrecruitment and employment of employees of the Company shall be made in
\naccordance with the provisions of the Contract and the guidelines adopted by
\nthe Board of Directors and based on the merits of the candidates and shall be
\nsupervised and approved by the general manager, subject to the consultation of
\nthe deputy general manager.\u00a0 However,
\nthe Company shall accept employees dispatched by Party A, Party B or
\nParty C as long as necessary for the purpose of this Contract in
\naccordance with Personnel Assignment Agreement attached hereto as
\nAppendix IV for Party C.\u00a0
\nDispatched employees from Party A, Party B and Party C
\n(except the general manager, the deputy general manager, chief financial
\nofficer and deputy department manager of design and development department)
\nshall be decided by the General Manager based on business needs.<\/p>\n
\n
Article 29<\/p>\n
\n
The
\nCompany shall sign labor contracts with its employees, which contracts shall
\ncover dismissal and resignation, wages, insurance, welfare benefits, rewards,
\ndisciplines, penalties and other matters, in accordance with applicable PRC
\nlaws.<\/p>\n
\n
Article 30<\/p>\n
 <\/h2>\n
30.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Without the consent of the general
\nmanager subject to the consultation of the deputy general manager, no employees
\nof the Company except those dispatched by either Party B or Party C,
\nshall maintain any employment relationship, whether contractual or otherwise,
\nwith<\/h2>\n
 <\/h2>\n
-16-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
any third
\nParty during their employment with the Company.\u00a0 In the event any such employee is found to be maintaining an
\nemployment relationship with any third party, the Company shall have the right
\nto terminate the employment of such employee at any time without any liability.<\/h2>\n
30.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 All personnel of the Company shall be
\nsubject to confidentiality obligations concerning information obtained from the
\nCompany and all Parties and shall be strictly forbidden from disclosing any of
\nsuch information to any third Party without the prior authorization and
\napproval of the general manager and the deputy general manager.<\/h2>\n
Chapter 12<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TAX,
\nFINANCIAL AFFAIRS AND ACCOUNTING<\/p>\n
\n
Article 31<\/p>\n
\n
The
\nCompany shall pay taxes and make proper withholding of income taxes from
\npayments made to its employees in accordance with the requirements of PRC laws.<\/p>\n
\n
Article 32<\/p>\n
\n
The
\nCompany shall establish a financial and accounting system in accordance with
\nPRC laws and this Contract.\u00a0 Such
\nfinancial and accounting system and any major change thereof shall be subject
\nto the approval of the Board of Directors.<\/p>\n
\n
Article 33<\/p>\n
\n
The
\nfiscal year of the Company shall coincide with the calendar year, i.e. from
\nJanuary 1 to December 31 of each year.\u00a0 The first fiscal year shall begin from the date of the
\nestablishment of the Company and end on December 31 of that year and the
\nlast fiscal year shall end on the date of the dissolution of the Company.<\/p>\n
\n
Article 34<\/p>\n
 <\/h2>\n
34.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The accounting of the Company shall be
\nsubject to the International Uniform Regime of Rights and Liabilities and the
\nInternational Uniform Accounting System of Debit and Credit.\u00a0 All accounting records, vouchers, books and
\nstatements of the Company shall be made and<\/h2>\n
 <\/h2>\n
-17-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
kept in both
\nChinese and English.\u00a0 All financial
\nstatements and reports of the Company shall be made and kept in both Chinese
\nand English.<\/h2>\n
34.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any Party may, at its own expense
\nand at any time, appoint an accountant for its own audit (the \u0093Accountant<\/b>\u0094), who may be either an
\naccountant registered abroad or registered in the PRC.\u00a0 Auditing results by the Accountant shall not
\nbe deemed as an official report issued by the Company, provided, however, that
\nthe Company shall fully cooperate with the Accountant in its auditing and
\nprovided, further, that the auditing results by the Accountant shall be
\nproperly reflected to the Company, to the extent permitted by applicable laws
\nand regulations.<\/h2>\n
\n
Article 35<\/p>\n
\n
The
\nCompany shall have its account denominated in RMB, but may, if necessary, also
\nadopt US Dollars or other foreign currencies as supplementary bookkeeping
\ncurrencies.\u00a0 Where RMB is converted to
\nother currencies, the conversion coefficient shall [***].<\/p>\n
\n
Article 36<\/p>\n
\n
Allocations
\nfor reserve funds and enterprise expansion funds of the Company and bonuses and
\nwelfare funds for staff and workers shall be set aside in accordance with
\napplicable laws.\u00a0 The annual proportion
\nof allocations shall be decided by the Board of Directors according to the
\nfinancial conditions of the Company and applicable PRC laws.\u00a0 The target annual proportion of allocations
\nshall be [***] subject to changes, of after-tax profit as determined in
\nArticle 45.1.<\/p>\n
\n
Article 37<\/p>\n
\n
The
\nCompany shall open RMB and foreign currency accounts with banks registered in
\nChina in accordance with PRC laws.\u00a0 The
\nforeign exchange matters of the Company shall be handled in accordance with the
\nprovisions of the PRC foreign exchange laws.<\/p>\n
\n
Article 38<\/p>\n
\n
The
\nCompany shall pay the reasonable costs of preparing regular financial
\nstatements as may be needed by Party A, Party B or Party C.<\/p>\n
\n
-18-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
<\/div>\n
\n
Chapter 13<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 CONFIDENTIALITY<\/p>\n
Article 39<\/h1>\n
Each Party shall maintain the secrecy
\nand confidentiality of and not disclose to any third person or party, directly
\nor indirectly, any proprietary information or any secret or confidential
\ninformation which is disclosed by the Company or the other Parties, except
\nwhere the information properly comes into public domain.<\/p>\n
Article 40<\/h1>\n
The Parties hereto shall cause their
\ndirectors, senior staff and other employees to comply with the confidentiality
\nobligations set forth in Article 39.<\/p>\n
Article 41<\/h1>\n
Without the approval of the Board of
\nDirectors, the Company shall not disclose proprietary information concerning
\nthe Company to any persons or entities except to Party A, Party B and
\nParty C during the valid term of this Contract (excluding information
\nwhich is required to be reported to officials or departments of the Chinese
\ngovernment), unless such information is already in the public domain.\u00a0 For business purpose, the Company may
\ndisclose proprietary information to any third Party company under a
\nnon-disclosure agreement with this third Party company.<\/p>\n
Article 42<\/h1>\n
This Chapter shall survive for ten (10) years
\nafter the expiration or termination of this Contract and the termination or
\ndissolution of the Company.<\/p>\n
Article 43<\/h1>\n
Both Parties to this Contract shall cause
\ntheir appointed directors to the Company to require the Company personnel to
\nexecute appropriate contracts or agreements to maintain the secrecy of
\nproprietary and confidential information of the Company.<\/p>\n
Article 44<\/h1>\n
The Party Breaching the obligations of
\nconfidentiality shall be liable for damages suffered by the other Parties.<\/p>\n
\n
-19-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 14<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 PROFIT
\nDISTRIBUTION<\/p>\n
Article 45<\/h1>\n
The Company shall distribute profits to the
\nParties as follows:<\/p>\n
45.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Within [***] from the end of each fiscal
\nyear, the Board of Directors shall determine the amount of after-tax profit of
\nthe Company to be reserved for production and operation and the amount of
\nprofits to be distributed to the Parties [***].\u00a0 Distribution of profits to the Parties B and C shall be made
\nin Japanese Yen.<\/h2>\n
45.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Losses from previous years must be made
\nup before any profits from the current year shall be distributed to the
\nParties.\u00a0 The undistributed profits of
\nthe past year(s) may be distributed together with this years\u0092 profits.<\/h2>\n
Chapter 15<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 INSURANCE<\/p>\n
Article 46<\/h1>\n
Insurance of the Company against all risks
\nshall be from the insurance companies registered within China.\u00a0 The cover, amount, period, etc of the
\ninsurance shall be proposed by the general manager and the deputy general
\nmanager in accordance with the needs of the Company, subject to approval by the
\nBoard of Directors.<\/p>\n
Chapter 16<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 EQUIPMENT
\nAND MATERIALS<\/p>\n
Article 47<\/h1>\n
The Company shall purchase equipment from
\nParty A, Party B, Party C and any third Party in accordance with
\nEquipment Purchase Agreement attached hereto as Appendix III for purchase
\nfrom Party C.\u00a0 Other equipment,
\nmaterials and parts of the Products necessary for the operation and business of
\nthe Company shall be procured in or outside the PRC in accordance with the
\noperation plan and the business plan authorized by the Board of Directors.<\/p>\n
\n
Party A shall assist the Company in
\nprocuring equipment and parts and materials necessary for the Products in PRC
\nby introducing sellers, negotiation for purchase agreements for such equipment
\nand parts and materials.<\/p>\n
\n
-20-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 17<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 SALE
\nOF PRODUCTS<\/p>\n
Article 48<\/h1>\n
The sale of Products shall be in accordance
\nwith the business operation authorized by the Board of Directors.<\/p>\n
Chapter 18<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 DURATION
\nOF THE COMPANY<\/p>\n
Article 49<\/h1>\n
The duration of the Company shall be [***]
\ncommencing from the date on which the business license of the Company is
\nissued.\u00a0 An application for the
\nextension of duration, proposed by one Party and unanimously approved by the
\nBoard of Directors, shall be submitted to the examination and approval
\nauthority six months prior to the expiration date of the term of the Company.<\/p>\n
Chapter 19<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 DISSOLUTION
\nOF THE COMPANY<\/p>\n
Article 50<\/h1>\n
50.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Company shall be dissolved and this
\nContract shall be terminated in case any of the following situations or
\naccidents occurs<\/h2>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the term of this Contract expires and is
\nnot extended.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any Party delays to perform its
\nobligations to contribute in full its subscription of the registered capital
\npursuant to this Contract and fails to perform the said obligations within
\n[***] commencing from the date specified in this Contract.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the Company does not generate, as
\nreported by its audited financial statements, a net profit for [***] after
\nconsultation, the Parties fail to agree on how to improve satisfactorily the
\nfinancial situation of the Company.<\/h3>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 due to an event of force majeure as
\nstipulated herein, the Company is unable to continue to carry out operations
\nfor [***] consecutive days from the day the event of force majeure occurs and
\nthe Parties fail to agree on how to improve the situation.<\/h3>\n
\n
-21-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
v.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the Company is ordered to close in
\naccordance with PRC laws because of serious violations of PRC laws.<\/h3>\n
vi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the operation and business as approved by
\nthe relevant departments of Chinese government are prohibited or significantly
\nrestricted by any government authority.<\/h3>\n
50.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event any of the conditions set
\nforth in (ii) above occurs, any non-breaching Party shall have the right to
\nunilaterally apply to the examination and approval authority to terminate this
\nContract and dissolve the Company.<\/h2>\n
50.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event any of the conditions set
\nforth in any of (iii) through (vi) above occurs, either Party shall have the
\nright to notify the other Parties in writing and request that this Contract be
\nterminated and the Company be dissolved.\u00a0
\nUpon such request, the Board of Directors shall within thirty (30) days
\nof such written request, adopt resolutions for such termination, and the
\nCompany shall apply to the relevant PRC authorities for approval of such
\ntermination and dissolution.\u00a0 Each Party
\nshall cause the directors it has appointed to vote in favor of such termination
\nresolutions.<\/h2>\n
50.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case of termination of this Contract,
\nthe following agreements shall terminate forthwith.<\/h2>\n
\n
Appendix I:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Technical License Agreement by MCI<\/p>\n
\n
Appendix II:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Technical License Agreement by UTS<\/p>\n
\n
Appendix III:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Equipment Purchase Agreement<\/p>\n
\n
Appendix IV:\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Personnel Assignment Agreement<\/p>\n
Chapter 20<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIQUIDATION
\nAND DISPOSAL OF ASSETS<\/p>\n
Article 51<\/h1>\n
The Company shall carry out liquidation in a
\ntimely manner in accordance with PRC laws upon expiration or termination of
\nthis Contract and dissolution of the Company in accordance with the provisions
\nherein.<\/p>\n
\n
-22-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 52<\/h1>\n
The Company shall organize a liquidation
\ncommittee in accordance with the resolutions of the Board of Directors and
\nformulate rules for the disposition of properties in accordance with applicable
\nlaws.\u00a0 In the event of the dissolution
\ndescribed in Article 50 hereof, upon payment of the obligations of the
\nCompany, the remaining assets shall be distributed in accordance with [***].<\/p>\n
Chapter 21<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIABILITIES
\nFOR BREACH OF CONTRACT;<\/p>\n
Article 53<\/h1>\n
Failure by any Party to make the full capital
\ncontributions subscribed for pursuant to this Contract shall be liable for
\nbreach of this Contract.\u00a0
\nIn such event the breaching Party shall pay to the non\u0096breaching
\nParty an amount equal to [***] of its unpaid contribution per day from the
\nfirst month after the time limit.<\/p>\n
Article 54<\/h1>\n
Any Party who otherwise breaches this
\nContract shall be liable to the other Parties for all losses suffered by the
\nother Parties as a result of such breach.\u00a0
\nShould all or part of this Contract be unable to be performed owing to
\nthe fault of one Party hereto, the Party at fault shall be liable to
\nthe other Parties for losses thus caused to such other Parties.<\/p>\n
Article 55<\/h1>\n
Notwithstanding any contrary provision in
\nthis Contract, except any breach of obligations stated in Chapter 13,
\nneither Party A, Party B nor Party C shall be liable to the
\nother, or to the Company, for any indirect, special or consequential damages,
\nas may be based upon any legal theory whatsoever.<\/p>\n
Chapter 22<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 FORCE
\nMAJEURE<\/p>\n
Article 56<\/h1>\n
\u0093Force Majeure\u0094 shall mean all events which are
\nbeyond the control of the Parties to this Contract and which are unforeseen or
\nif foreseen are unavoidable and which arise after the date of execution
\nof this Contract and which prevent total or partial performance by either
\nParty.\u00a0 Force Majeure may include but is
\nnot limited to explosions, fires, floods, earthquakes and other natural
\ndisasters, acts of<\/p>\n
\n
-23-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
war or civil disturbances, acts of any
\ngovernment in its sovereign capacity, sabotage, condemnation or expropriation.<\/p>\n
Article 57<\/h1>\n
In the event of an Force Majeure, the
\nParty whose performance is hindered or is absolutely impossible shall
\nnotify the other Parties by most expedient means without delay and within [***]
\nthereafter provide to the other Parties written report detailing the
\nevents.\u00a0 The Party experiencing the
\nForce Majeure event shall exercise all reasonable endeavors to terminate the
\nForce Majeure condition and to minimize all loss to the Company and to the
\nother Parties.\u00a0 Parties shall then,
\nthrough consultation, decide whether or not to terminate or postpone the
\nperformance of this Contract or to exempt the part of obligations of the
\nprevented Party according to the effects of the event on the performance
\nof this Contract.<\/p>\n
Article 58<\/h1>\n
If the Company is unable to operate or this
\nContract is impossible to be performed due to an event of Force Majeure, the
\nobligations of the Parties hereto (except obligations pertaining to Chapters 6
\nand 13) shall be suspended during the period of delay caused by the Force
\nMajeure and shall automatically be extended, without penalty, for a period
\nequal to such suspension.<\/p>\n
Chapter 23<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 INTELLECTUAL
\nPROPERTY<\/p>\n
Article 59<\/h1>\n
The Parties shall cause the Company to enter
\ninto the Technical License Agreements with Party C and Party A
\nrespectively.\u00a0 The Parties agree the
\nfollowing:<\/p>\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party A will grant to the Company a
\n[***] right to use technology regarding [***] in accordance with Technical
\nLicense Agreement by UTS attached hereto as Appendix 11;<\/h4>\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Party C will grant to the Company, a
\n[***] right to use technology regarding [***] in accordance with Technical
\nLicense Agreement by MCI attached hereto as Appendix I;<\/h4>\n
\n
-24-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any patents, patent applications,
\ncopyrights, trade secrets, mask works, industrial design rights, know-how,
\ndesign processes, techniques and methodologies and any and all other legal rights
\nprotecting intangible confidential information (collectively \u0093IPR<\/b>\u0094) developed by the Company shall be
\njointly owned by the Company, Party A and Party C in equal share, if
\nsuch IPR derives from, based on or in connection with the LICENSED TECHNOLOGY,
\nexcept that any IPR relating to [***] shall be jointly owned by the Company and
\nParty C and that any IPR relating to [***] shall be jointly owned by the
\nCompany and Party A;<\/h4>\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Each joint owner of IPR set forth in
\nabove section (c) shall be free to practice and use such jointly owned IPR on
\nnon-exclusive basis without accounting to and royalty-free to the other
\nparty.\u00a0 UTS and MCI may sublicense such
\njointly owned IPR to its subsidiaries, affiliates, parent company or any direct
\nor indirect subsidiary of parent company, without the consent of the other
\njoint owners.<\/h4>\n
Article 60<\/h1>\n
In case of termination of this Contract or
\ndissolution of the Company, IPR owned by the Company (in case the Company owns
\ncertain portion hereof, such portion) shall be transferred to Party C, for
\nIPR relating to [***] to Party A, for IPR relating to [***], and to
\nParty A and Party C in proportion to the share of ownership, for any
\nother IPR.\u00a0 The transfer price shall be
\ndetermined upon agreement between the Company and such Parties.<\/p>\n
Chapter 24<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 APPLICABLE
\nLAW<\/p>\n
Article 61<\/h1>\n
It is mutually understood that this is a
\ncontract for which the entering, effects, construction, performance and
\nresolution of disputes are all subject to PRC laws.<\/p>\n
\n
-25-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 25<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 SETTLEMENT
\nOF DISPUTES<\/p>\n
Article 62<\/h1>\n
62.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event a dispute arises out of or
\nin connection with the interpretation or implementation of this Contract, the
\nParties shall attempt in the first instance to resolve such dispute through
\nfriendly consultations.<\/h2>\n
62.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the dispute is not resolved through
\nfriendly consultations within sixty (60) days after the commencement of
\ndiscussions, or such longer period as the Parties agree in writing at that
\ntime, then notwithstanding any other provision of this Contract, any
\nParty may submit the dispute for arbitration.<\/h2>\n
62.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any disputes initiated by Party A,
\narising out of or in connection with this Contract shall be finally settled by
\nan arbitration in Tokyo, Japan by the Japan Commercial Arbitration Association
\n(\u0093JCAA\u0094) in accordance with JCAA\u0092s arbitration rules in effect at the time of
\narbitration.\u00a0 Any disputes initiated by
\nParty B or Party C, arising out of or in connection with this
\nContract shall be finally settled by an arbitration in Shanghai, PRC by the
\nChina International Economic and Trade Arbitration Commission (\u0093CIETAC\u0094) in
\naccordance with CIETAC\u0092s arbitration rules in effect at the time of
\narbitration.\u00a0 The award rendered by the
\narbitrators shall be final and binding upon the Parties.\u00a0 The Parties hereto agree to honor such
\naward.\u00a0 Any competent court may enforce
\nsuch award.\u00a0 All arbitration costs,
\nincluding costs, for the enforcement of any arbitration award, shall be borne
\nby the losing Party.<\/h2>\n
62.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Parties agree that during the
\narbitration proceedings, they shall continue to observe and perform this
\nContract except for the provisions subject to or involved in arbitration.<\/h2>\n
Chapter 26<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LANGUAGE<\/p>\n
Article 63<\/h1>\n
This Contract shall be signed in the Chinese
\nlanguage in six (6) originals and in the English language in six (6)
\noriginals.\u00a0 Both language versions shall
\nbe equally authentic.\u00a0 Each
\nParty shall retain one (1) of each original English and Chinese copies,
\nand the remaining originals shall be submitted to the related authorities for
\napproval.<\/p>\n
\n
-26-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 27<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NOTICE<\/p>\n
Article 64<\/h1>\n
Notices or other communications required to
\nbe given to any Party pursuant to this Contract shall be written in
\nEnglish and delivered in person or sent by mail, courier or facsimile to the
\naddress of the Party set forth below, or to such other addresses as may
\nfrom time to time be designated by the Party through notification to the
\nother Parties, and if to the Company, delivered to its legal address as in
\neffect from time to time.\u00a0 The dates on
\nwhich notices shall be deemed to have been effectively given shall be
\ndetermined as follows:<\/p>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notices delivered by person shall be
\ndeemed as being effectively given on the date of personal delivery.<\/h3>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notices delivered by mail shall be deemed
\nas being effectively given on the seventh day after the date mailed (as
\nindicated by the postmark) by registered airmail, postage prepaid, or on the
\nfourth day after delivery to any internationally recognized courier service.<\/h3>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notices delivered by facsimile shall be
\ndeemed as being effectively given on the first business day following the date
\nof transmission, as indicated on the transmission confirmation slip of the
\ndocument in question.<\/h3>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Party A:<\/p>\n<\/td>\n
\n
UTStarcom
\n  Telecom Co., Ltd.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Address:
\n  3, Yile Industrial Park, 129 Wenyi Road,<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Hangzhou, PRC<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Zip
\n  Code: 310012<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Attention:
\n  Mr. Johnny Chou, General Manager<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Telephone:
\n  (86571)-8886-2336<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Facsimile:
\n  (86571)-8886-2349<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
-27-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Party B:<\/p>\n<\/td>\n
\n
Matsushita
\n  Electric Industrial Co., Ltd.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Address:
\n  2-1-61, Shiromi, Chuo-ku, Osaka, Japan<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Zip
\n  Code: 540-6255<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Attention:<\/p>\n<\/td>\n
\n
Mr.
\n  Etsuto Okamoto, General Manager of<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Accounting
\n  & Business Support Group,<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Corporate
\n  Management Division for China &<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Northeast
\n  Asia<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Telephone:
\n  (816)-6937-7253<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Facsimile: (816)-6937-7249<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Party C:<\/p>\n<\/td>\n
\n
Matsushita
\n  Communication Industrial Co., Ltd.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Address:
\n  4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama,<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Japan<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Zip
\n  Code: 223-8639<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Attention:
\n  Mr. Nobuyoshi Itoh, Director of<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Mobile
\n  Network Division<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Telephone:
\n  (8145)-540-5250<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Facsimile: (8145)-544-3620<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
Chapter 28<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TRADEMARK<\/p>\n
Article 65<\/h1>\n
The Company shall manufacture Products to be
\nsold in the PRC under the Trademark and Business name to be licensed to the
\nCompany by Party A or the customer.\u00a0
\nFor Products to be sold outside the PRC, Parties shall discuss to
\ndetermine trademark and business name of the Products.<\/p>\n
Chapter 29<\/b><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 EFFECTIVENESS
\nOF CONTRACT AND MISCELLANEOUS<\/p>\n
Article 66<\/h1>\n
All appendices (Appendix I: Technical
\nLicense Agreement by MCI, Appendix II: Technical License Agreement by UTS,
\nAppendix III: Equipment Purchase Agreement, Appendix IV: Personnel
\nAssignment Agreement) to this Contract shall be integral parts hereof.\u00a0 This Contract and any<\/p>\n
\n
-28-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
appendices hereto shall become effective and
\ncome into force from the date of their approval by the examination and approval
\nauthority.<\/p>\n
Article 67<\/h1>\n
Any amendment to this Contract shall come
\ninto force only by written agreement duly executed by the Parties hereto and
\napproved by the original examination and approval authority.<\/p>\n
Article 68<\/h1>\n
A Party that in a particular situation waives
\nits rights in respect of a breach of contract by another Party shall not
\nbe deemed to have waived its rights against the other Parties for a similar
\nbreach of contract in other situations.<\/p>\n
Article 69<\/h1>\n
This Contract constitutes the complete and
\nexclusive agreement between the Parties on the establishment of the Company,
\nand this Contract supersedes all previous oral or written agreements,
\ncontracts, undertakings and communications of the Parties with respect of the
\nestablishment of the Company.<\/p>\n
Article 70<\/h1>\n
Chapters 7, 13, 20, 21, 23, 24, 25 and
\n28 shall survive the termination of the Contract until they are fulfilled.<\/p>\n
\n
-29-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
IN WITNESS WHEREOF, the Parties hereto caused
\ntheir authorized representatives to execute this Agreement on the date first
\nabove written.<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
UTStarcom Telecom Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Johnny Chou<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
Johnny Chou<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
General Manager<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Witnessed by:<\/p>\n<\/td>\n
\n
\/s\/ Hong Liang Lu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Name: <\/p>\n<\/td>\n
\n
Hong Liang Lu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Position: <\/p>\n<\/td>\n
\n
President & CEO<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
UTStarcom, Inc.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Electric Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Yukio Shohtoku<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name: <\/p>\n<\/td>\n
\n
Yukio Shohtoku<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
Managing Director<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Communication Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Yasuo Katsura<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name: <\/p>\n<\/td>\n
\n
Yasuo Katsura<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position: <\/p>\n<\/td>\n
\n
President<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/td>\n<\/tr>\n<\/table>\n
\n
-30-<\/p>\n
\n
\n<\/div>\n

<\/p>\n<\/div>\n
\n
Appendix I<\/p>\n
Technical License Agreement<\/b><\/p>\n
between<\/b><\/p>\n
Universal Communication Technology (Hangzhou)<\/b><\/p>\n
Company Limited<\/b><\/p>\n
and<\/b><\/p>\n
Matsushita
\nCommunication Industrial Co., Ltd.<\/b><\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
THIS AGREEMENT, dated as of __________, is
\nmade and entered into by and between Universal Communication Technology
\n(Hangzhou) Company Limited ( hereinafter referred to as \u0093JV\u0094) , and Matsushita
\nCommunication Industrial Co., Ltd. ( hereinafter referred to as \u0093MCI\u0094)<\/p>\n
WITNESSETH<\/b><\/p>\n
\n
WHEREAS, MCI owns technologies with respect
\nto [***] (hereinafter referred to as [***]) as a part of infrastructure of the
\nadvanced mobile terminal communications; and<\/p>\n
\n
WHEREAS, JV desires to acquire licenses to
\nutilize MCI\u0092s technical information and know-how so that JV may develop and
\nmanufacture [***] and<\/p>\n
\n
WHEREAS, MCI is willing to grant such
\nlicenses to JV<\/p>\n
\n
NOW, THEREFORE, in consideration of the
\nmutual covenants and premises contained herein, the parties hereto agree as
\nfollows:<\/p>\n
Article 1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/b>DEFINITIONS<\/p>\n
\n
For purpose of this Agreement, and in
\naddition to certain terms defined on first use herein and in any attachments
\nand exhibits attached hereto, the following terms shall have the following
\nmeanings.<\/p>\n
1.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093LICENSED TECHNOLOGY\u0094 shall mean the
\nfollowing items, as specifically described in Attachment I hereto:<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [***]<\/p>\n
1.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093TECHNICAL INFORMATION\u0094 shall mean
\ncertain MCI technical information, circuit diagram , data, formulas, knowledge,
\nprocesses and\/or know-how developed or acquired by MCI during the term hereof
\nrelating to the LICENSED TECHNOLOGY.<\/p>\n
1.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093SELLING PRICE\u0094 shall mean the price on
\nthe JV\u0092s sales invoice to customers for the portion of PRODUCTS , including
\nhardware and software.<\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
1.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093CONFIDENTIAL INFORMATION\u0094 shall mean
\n(1) TECHNICAL INFORMATION (2) all ideas and information of any kind,
\nincluding, without limitation, technology, know-how, technical data, products,
\nsoftware, works of authorship, business plans or any other aspect of MCI\u0092s
\nbusiness, in written, other tangible or electronic form provided by MCI to JV
\n(3) software in any form (including, without limitation, related
\ndocumentation), whether or not labeled in accordance with the preceding; and
\n(4) information orally disclosed and identified as confidential at the
\ntime of such disclosure.\u00a0 Confidential
\nInformation shall not, however, include any information that (a) lawfully
\nin the JV\u0092s possession, with no restriction on use or disclosure, prior to its
\nacquisition from MCI (b) received in good faith by JV, with no
\nrestrictions on use or disclosure, from a third Party not subject to any
\nconfidential obligation to MCI (c) now or later becomes publicly known
\nthrough no breach of confidential obligation by JV (d) independently
\ndeveloped by JV without any reliance on or use of CONFIDENTIAL INFORMATION of
\nthe disclosing party.\u00a0 The foregoing
\nexceptions shall not apply to software in any form.<\/p>\n
1.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093EFFECTIVE DATE\u0094 shall mean the date on
\nwhich this Agreement is duly executed by both parties hereto.<\/p>\n
1.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093PRODUCTS\u0094 shall mean [***].<\/p>\n
Article 2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GRANT OF LICENSES<\/b><\/p>\n
\n
MCI hereby grants for the term of this
\nAgreement to JV [***] right and license to utilize LICENSED TECHNOLOGY only for
\nthe purpose of development, manufacture and sale of the PRODUCTS within the
\nterritory of [***].\u00a0 The rights granted
\nunder this Article does not include rights under patents, utility models
\nand designs held or to be held by MCI.<\/p>\n
Article 3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LICENSE FEE<\/b><\/p>\n
\n
In consideration of the license set forth in
\nArticle 2 above, JV shall pay MCI a royalty of [***] of SELLING PRICE of
\nthe PRODUCT which are manufactured by JV.<\/p>\n
\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 PAYMENTS, REPORTS, RECORDS AND
\nTAX<\/b><\/p>\n
4.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The royalty set forth in Section 3.1
\nabove shall be computed and paid to MCI by JV within [***] after the end of
\neach quarter ending on March 31st<\/sup>, June 30th<\/sup>,
\nSeptember 30th<\/sup>, and December 31st<\/sup>.<\/p>\n
4.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall, at the time of each payment of
\nthe royalty under Section 4.1 above, furnish to MCI a royalty report in
\nsuitable form prepared by chief financial officer of JV, which shall describe
\nsales quantity, type number and gross SELLING PRICE, any deduction from and\/or
\nadjustment to the gross SELLING PRICE.\u00a0
\nJV shall, within [***] after the end of each calendar year, also furnish
\nto MCI a royalty compliance report certified by an outside certified public
\naccountant, for the period of the year.<\/p>\n
4.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Payment hereunder shall be made
\n[***].\u00a0 However, income taxes or taxes
\nof similar nature imposed on by the Government of PRC or any other political
\nsubdivision thereof and paid by JV for the account of MCI shall be [***].\u00a0 To assist [***], JV shall furnish MCI with
\nsuch evidence as may be required by taxing authorities of the Government of
\nJapan to establish that any such taxes have been paid.<\/p>\n
4.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If JV fails to make any payment
\nstipulated in this Agreement within the time specified herein, JV shall pay an
\ninterest of [***] per year on the unpaid balance payable from the due date
\nuntil fully paid.<\/p>\n
4.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any payment from JV to MCI hereunder
\nshall be made by means of telegraphic transfer remittance in U.S. Dollars, at
\nselling rate of exchange [***] to the bank account of as designated by MCI, and
\nnotice of the payment shall be sent by JV to MCI\u0092s address set forth below:<\/p>\n
Article 5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ACCOUNTING AND AUDIT<\/b><\/p>\n
\n
With respect to the royalty set forth in
\nArticle 3 above, JV shall keep full, clear and accurate records and accounts
\nfor PRODUCTS subject to royalty for a period of [***].\u00a0 MCI shall have the right through a person(s)
\nappointed by MCI to audit, not more than [***] in each calendar year and during\n<\/p>\n
\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
normal business hours, all such records and
\naccounts to the extent necessary to verify that no underpayment has made by JV
\nhereunder.\u00a0 Such audit shall be
\nconducted at MCI\u0092s own expense, provided that if any discrepancy or error
\nexceeding [***] of the money actually due is found through the audit, the cost
\nof the audit shall be born by JV.<\/p>\n
Article 6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MAINTENANCE OF QUALITY & SAFETY STANDARDS<\/b><\/p>\n
6.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV hereby agrees to strictly comply with
\nquality standards of the PRODUCTS in manufacturing the PRODUCTS hereunder.\u00a0 At the request of MCI, JV agrees to submit
\nto MCI its quality control and inspection data for MCI\u0092s inspection.\u00a0 JV shall reimburse to MCI in Japanese Yen or
\nUnited States Dollars the actual expenses of inspection or test of such
\nPRODUCTS.\u00a0 MCI shall give JV pertinent
\nadvice or instruction, if MCI deems necessary after studying such reports of
\nquality control and inspection data, with which advice or instruction JV shall
\nalways and strictly comply.<\/p>\n
6.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case JV purchase components or
\nmaterials of the PRODUCTS in PRC, JV shall check duality of such components or
\nmaterials so that such components or materials may not harm duality standards
\nof the PRODUCTS.\u00a0 If such components or
\nmaterials are found to be defective or insufficient, JV shall procure
\nsubstituting components or materials.<\/p>\n
6.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV further agrees to promptly furnish MCI
\nwith information in connection with claims, if any, from customers of the
\nPRODUCTS, their nature and disposition thereof by JV, and MCI will give JV
\npertinent advice after checking the information so furnished hereunder.\u00a0 The preceding provision shall not be
\ninterpreted to obligate MCI to be responsible for any such claims.<\/p>\n
6.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Manufacture and sale, use or other
\ndisposition of the PRODUCTS as well as duality guarantee to customers,
\nresponsibility for product liability, advertising and servicing of the
\nPRODUCTS, obtaining approval(s) for the PRODUCTS pursuant to any standard,
\nlegal or otherwise applicable to the PRODUCTS shall be made by JV entirely at
\nJV\u0092s own account and responsibility, and MCI, its parent company, subsidiaries
\nand\/or affiliates shall not be responsible therefor to JV or any third
\nparty.\u00a0 JV shall indemnify MCI (or its
\nparent company, subsidiaries) for and hold MCI (or its parent company,
\nsubsidiaries) harmless from <\/p>\n
\n
\n
-4-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any liabilities, damages and costs and
\nexpenses arising out of or in connection with Ws operations.<\/p>\n
Article 7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TRAINING<\/b><\/p>\n
\n
MCI shall provide JV necessary training only
\nfor the purpose of using LICENSED TECHNOLOGY at location and\/or on a date to be
\ndetermined by MCI.\u00a0 MCI has the sole
\ndiscretion to determine the duration and program of such necessary
\ntraining.\u00a0 The cost of such training shall
\nbe determined later.\u00a0 [***].<\/p>\n
Article 8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TERM AND TERMINATION<\/b><\/p>\n
8.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This Agreement shall become effective on
\nEFFECTIVE DATE and shall , continue until terminated pursuant to
\nArticle 8.2 or 8.3 below.<\/p>\n
8.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In event of a breach of this Agreement by
\nJV hereto, and if such breach is not corrected [***] after written notice
\ncomplaining thereof is received by JV, MCI may terminate this Agreement
\nforthwith by written notice to that effect to JV.<\/p>\n
8.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI shall also have the right to
\nterminate this Agreement forthwith by giving written notice of termination to
\nJV at any time, upon or after:<\/p>\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the termination or expiration of the
\nJoint Venture Contract by and between UTStarcom Telecom Co., Ltd., Matsushita
\nElectric Industrial Co., Ltd, and MCI;<\/p>\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the making by JV of any assignment for
\nthe benefit of creditors;<\/p>\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the institution of any proceedings for
\nthe liquidation or winding up of JV\u0092s business or for the termination of its
\ncorporate charter;<\/p>\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the assignment to third Party of all
\nor substantially all of the assets of JV;<\/p>\n
(e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 important change in controlling ownership
\nof JV; or<\/p>\n
(f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any activity or assistance by JV of
\nchallenging the validity of any LICENSED TECHNOLOGY or restricting the scope
\nthereof.<\/p>\n
8.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event of expiration or termination
\nof this Agreement by MCI pursuant to Article 8.2 or 8.3 above, the
\nlicenses granted hereunder to JV shall automatically terminate when JV <\/p>\n
\n
\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 receives or deems to receives such
\ntermination notice hereunder, except those in stock.\u00a0 JV shall pay the amount of the royalty accrued on or before the date
\nof termination within [***] thereafter.<\/p>\n
8.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Upon expiration or termination of this\u0092
\nAgreement, JV shall immediately return LICENSED TECHNOLOGY to MCI.<\/p>\n
Article 9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 IMPROVEMENT OF LICENSED
\nTECHNOLOGY<\/b><\/p>\n
\n
Any new intellectual property rights
\n(hereinafter referred to as \u0093IPR\u0094) derived from, based on or in connection with
\nthe LICENSED TECHNOLOGY shall be owned jointly by MCI and JV in equal share, if
\nsuch IPR is for or related to [***], and derived from, based on, or in
\nconnection with the LICENSED TECHNOLOGY of MCI.\u00a0 Each Party shall be free to practice and use such jointly
\nowned IPR on non-exclusive basis without accounting to and royalty-free to the
\nother party.\u00a0 However, licenses to third
\nparties may be granted only upon the other party\u0092s prior consent, which may not
\nbe unreasonably withheld, except that MCI may sublicense such jointly owned IPR
\nto its subsidiaries, affiliates, the parent company or the subsidiaries and the
\naffiliates of the parent company, without the consent of the other joint
\nowners.<\/p>\n
Article 10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 CONFIDENTIAL INFORMATION<\/b><\/p>\n
10.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Restrictions.\u00a0 JV understands that LICENSED TECHNOLOGY, and TECHNICAL
\nINFORMATION provided from MCI to JV for the purpose of this Agreement is the
\nCONFIDENTIAL INFORMATION of MCI and any unauthorized disclosure of CONFIDENTIAL
\nINFORMATION causes unrepairable harm to MCI, and MCI shall have the right to
\ntake all necessary proceedings to prevent and restrain such unauthorized
\ndisclosure Further, JV shall not disclose CONFIDENTIAL INFORMATION to any third
\nParty and shall not use CONFIDENTIAL INFORMATION for any other purposes
\nthan authorized under this Agreement.\u00a0
\nJV shall instruct all of employees of JV who engage in work under this
\nAgreement that they shall keep CONFIDENTIAL INFORMATION confidential regardless
\nof whether their relationship with JV is terminated at some future time.<\/p>\n
\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
10.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Continuing Obligation.\u00a0 The obligation of nondisclosure and nonuse
\nwith respect to Confidential Information of the disclosing Party shall
\nsurvive the expiration or termination of this Agreement<\/p>\n
Article 11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIMITATION OF LIABILITY<\/b><\/p>\n
\n
[***] neither party be entitled to
\nrecover from the other Party any incidental, consequential, indirect,
\nspecial damages (including, without limitation, damages for loss of business,
\nloss of profits or loss of use), whether based on contract, tort (including,
\nwithout limitation, negligence), or any other cause of action relating to
\nintellectual property rights assigned or licensed hereunder or confidential
\ninformation, or otherwise relating to this Agreement, even if the other
\nParty has been informed of or should have known the possibility of such
\ndamages.<\/p>\n
Article 12\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 REPRESENTATIONS AND WARRANTIES<\/b><\/p>\n
12.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 OWNERSHIP.\u00a0 MCI has the full power and right to enter into this Agreement.<\/p>\n
12.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO ENCUMBRANCE.\u00a0 To the best of MCI\u0092s knowledge, the MCI rights in relation to the
\nLICENSED TECHNOLOGY hereunder are free and clear of any and all encumbrances
\nand \/or liens of any nature whatsoever, other than those identified by MCI
\npursuant to this Agreement, and other than non-exclusive licenses granted by
\nMCI to others to use the MCI rights.<\/p>\n
12.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO CONFLICTS.\u00a0 To the best of MCI\u0092s knowledge, MCI\u0092s performance of this
\nAgreement does not conflict with any other agreement to which MCI is bound and,
\nwhile performing this Agreement, MCI will not knowingly enter into any other
\nagreement in conflict with this Agreement or which would impair the ability of
\nMCI to perform this Agreement.<\/p>\n
12.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO HARMFUL CODE.\u00a0 In the event that any of the LICENSED
\nTECHNOLOGY and TECHNICAL INFORMATION are software or include software of any
\ntype, to the best of MCI\u0092s knowledge, to be free of any known viruses and or
\nknown bugs.<\/p>\n
12.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIMITATION OF WARRANTIES.\u00a0 Except as stated above, MCI disclaims all
\nwarranties, either express or implied, with respect to the LICENSED TECHNOLOGY
\nand <\/p>\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TECHNICAL INFORMATION,, including but not
\nlimited to the implied warranties of merchantability and fitness for a
\nparticular purpose..<\/p>\n
Article 13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GENERAL<\/b><\/p>\n
13.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notice.\u00a0
\nAny written notice either Party may give the other concerning the
\nsubject matter of this Agreement shall be in writing and given or made by means
\nthat obtain a written acknowledgment of receipt.\u00a0 Notices shall be sent to the parties at the following addresses,
\nwhich maybe changed by written notice:<\/p>\n
\n
To MCI:<\/p>\n
Address:4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama,<\/p>\n
Japan<\/p>\n
Zip Code:223-8639<\/p>\n
Attention: Mr. Nobuyoshi Itoh, Director of<\/p>\n
Mobile Network Division<\/p>\n
Telephone: (8145)-540-5250<\/p>\n
Facsimile: (8145)-544-3620<\/p>\n
\n
To JV:<\/p>\n
Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou,<\/p>\n
PRC<\/p>\n
Zip Code:310012<\/p>\n
Attention: Mr. John Yang, General Manager<\/p>\n
Telephone: (86571)-8886-2336<\/p>\n
Facsimile: (86571)-8886-2349<\/p>\n
\n
Notice shall be deemed to have been given or
\nmade when actually received, as evidenced by written acknowledgment of receipt.<\/p>\n
13.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any disputes initiated by JV, arising out
\nof or in connection with this Agreement shall be finally settled by an
\narbitration in Tokyo, Japan by the Japan Commercial Arbitration <\/p>\n
\n
\n
-8-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Association (\u0093JCAA\u0092) in accordance with
\nJCAA\u0092s arbitration rules in effect at the time of arbitration.\u00a0 Any disputes initiated by MCI, arising out
\nof or in connection with this Agreement shall be finally settled by an
\narbitration in Shanghai, PRC by the China International Economic and Trade
\nArbitration Commission (\u0093CIETAC\u0094) in accordance with CIETAC\u0092s arbitration rules
\nin effect at the time of arbitration.\u00a0
\nThe award rendered by the arbitrators shall be final and binding upon
\nthe Parties.\u00a0 The Parties hereto agree
\nto honor such award.\u00a0 Any competent
\ncourt may enforce such award.\u00a0 All
\narbitration costs, including costs for the enforcement of any arbitration
\naward, shall be borne by the losing Party.<\/p>\n
13.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Compliance.\u00a0 MCI and JV shall each comply with the provisions of all
\napplicable laws, ordinances, regulations and codes (including, without
\nlimitation, procurement of required permits or certificates) in fulfillment of
\ntheir obligations under this Agreement.\u00a0
\nAll Intellectual Property Rights held by either Party are subject
\nto PRC export and import technology control regulations.\u00a0 Each Party undertakes that it shall
\nneither export, nor cause nor permit to be exported, without the other party\u0092s
\nprior written consent and without compliance with applicable law and
\nregulation.\u00a0 Each Party agrees to
\ncomply with all applicable laws and regulations relating to the exportation of
\ntechnical information, as they currently exist and as they may be amended from
\ntime to time.<\/p>\n
13.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Assignment, Subcontracting.\u00a0 Neither this Agreement nor any rights or
\nobligations hereunder shall be assignable or subcontracted by JV without MCI\u0092s
\nprior written consent.\u00a0 ; Any attempted
\nor purported assignment in violation of the foregoing shall be void.\u00a0 Subject to the foregoing, this Agreement
\nshall be binding upon and inure to the benefit of the successors and permitted
\nassigns of each Party hereto.<\/p>\n
13.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Waiver of Terms and Conditions.\u00a0 Failure to enforce any of the terms or
\nconditions of this Agreement shall not constitute a waiver of any such terms or
\nconditions, or of any other terms or conditions.<\/p>\n
13.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Severability.\u00a0 Where any provision of this Agreement is declared invalid,
\nillegal, void or unenforceable, or any changes or modifications are required by
\nregulatory or judicial action, and any such invalid, illegal, void or
\nunenforceable provision, or such change or <\/p>\n
\n
\n
-9-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 modification, substantially affects any
\nmaterial obligation of a Party hereto, the remaining provisions of this
\nAgreement shall remain in effect and the parties shall mutually agree upon a
\ncourse of action with respect to such invalid provision or such change or
\nmodification to the end that the purposes of this Agreement are carried out.<\/p>\n
13.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Governing Law.\u00a0 This Agreement, and the rights and obligations contained in it,
\nshall be governed by and construed in accordance with the laws of PRC, without
\nregard to any conflicts of law principles that would require the application of
\nthe laws of any other jurisdiction.<\/p>\n
13.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 No Unreasonable Delay or
\nWithholding.\u00a0 Where agreement, approval,
\nacceptance, consent or similar action by MCI or JV is required, such action
\nshall not be unreasonably delayed or withheld.<\/p>\n
13.9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Force Majeure.\u00a0 If performance of any obligations by either Party under this
\nAgreement is prevented, restricted or interfered with by reason of acts of God,
\nwars, revolution, civil commotion, acts of public enemy, embargo, acts of
\ngovernment in its sovereign capacity, labor difficulties, including, without
\nlimitation, strikes, slowdowns, picketing or boycotts, communication line
\nfailures, power failures, or any other circumstances beyond the reasonable
\ncontrol and not involving any fault or negligence of the Party affected,
\nthe Party affected, upon giving prompt notice to the other party, shall be
\nexcused from such performance on a day-to-day basis during the continuance of
\nsuch prevention, restriction or interference (and the other Party shall
\nlikewise be excused, on a day-to-day basis during the same period, from
\nperformance of its obligations which are dependent upon or affected by such
\nnonperformance); provided, however, that the Party so affected shall use
\nits best reasonable efforts to avoid or remove such causes of nonperformance
\nand both parties shall proceed immediately with the performance of their
\nobligations under this Agreement whenever such causes are removed or cease.<\/p>\n
13.10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Entire Agreement.\u00a0
\nThis Agreement represents the entire understanding between the parties
\nwith the respect to its provisions and cancels and supersedes all prior
\nagreements or understandings, whether written or oral, with respect to the
\nsubject matter.\u00a0 This Agreement <\/p>\n
\n
\n
-10-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 may only be modified or amended by an
\ninstrument in writing signed by duly authorized representatives of the
\nparties.\u00a0 This Agreement shall be deemed
\nto include all attachments and exhibits, if any attached hereto.<\/p>\n
13.11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This Agreement is made in Chinese and English, each
\nParty retaining one copy.\u00a0 Both Chinese
\nand English versions are equally authentic.<\/p>\n
\n
\n
-11-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
IN WITNESS WHEREOF, the Parties hereto cause
\ntheir authorized representatives to execute this Agreement on the date first
\nabove written.<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Universal Communication Technology (Hangzhou)
\n  Company Limited.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Communication Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n
-12-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Attachment
\nI<\/b><\/p>\n
\n
The detail
\nof LICENSED TECHNOLOGY shall be as follows:<\/b><\/p>\n
\n
[***]<\/p>\n
\n
\n
\n
\n<\/div>\n

<\/p>\n<\/div>\n
\n
Appendix II<\/p>\n
Technical License Agreement<\/b><\/p>\n
by and between<\/b><\/p>\n
Universal Communication Technology (Hangzhou)<\/b><\/p>\n
Company Limited.,<\/b><\/p>\n
and<\/b><\/p>\n
UTStarcom Telecom Co., Ltd.<\/b><\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
THIS AGREEMENT, dated as of ________ is made
\nand entered into by and between Universal Communication Technology (Hangzhou)
\nCompany Limited (hereinafter referred to as \u0093JV\u0094), and UTStarcom Telecom Co.,
\nLtd. ( hereinafter referred to as \u0093UTS\u0094)<\/p>\n
WITNESSETH<\/b><\/p>\n
\n
WHEREAS, UTS owns technologies with respect
\nto [***] (hereinafter referred to as [***]) as a part of infrastructure of the
\nadvanced mobile communications; and<\/p>\n
\n
WHEREAS, JV desires to acquire licenses to
\nutilize UTS\u0092s technical information and know-how so that JV may develop and
\nmanufacture [***] and<\/p>\n
\n
WHEREAS, UTS is willing to grant such
\nlicenses to JV.<\/p>\n
\n
NOW, THEREFORE, in consideration of the
\nmutual covenants and premises contained herein, the parties hereto agree as
\nfollows:<\/p>\n
Article 1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 DEFINITIONS<\/b><\/p>\n
\n
For purpose of this Agreement, and in
\naddition to certain terms defined on first use herein and in any attachments
\nand exhibits attached hereto, the following terms shall have the following
\nmeanings.<\/p>\n
1.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093LICENSED TECHNOLOGY\u0094 shall mean the
\nfollowing items, as specifically described in Attachment I hereto:<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [***]<\/p>\n
1.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0  \u0093TECHNICAL INFORMATION\u0094 shall mean
\ncertain UTS any and all technical information, circuit diagram, data, formulas,
\nknowledge, processes and\/or know-how developed or acquired by UTS during the
\nterm hereof relating to the LICENSED TECHNOLOGY<\/p>\n
1.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093SELLING PRICE\u0094 shall mean the price on
\nthe JV\u0092s sales invoice to customers for the portion of PRODUCTS, including
\nhardware and software.<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
1.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093CONFIDENTIAL INFORMATION\u0094 shall mean
\n(1) TECHNICAL INFORMATION (2) all ideas and information of any kind,
\nincluding, without limitation, technology, know-how, technical data, products,
\nsoftware, works of authorship, business plans or any other aspect of UTS\u0092s
\nbusiness, in written, other tangible or electronic form provided by UTS to JV
\n(3) software in any form (including, without limitation, related
\ndocumentation), whether or not labeled in accordance with the preceding; and
\n(4) information orally disclosed and identified as confidential at the
\ntime of such disclosure .\u00a0 Confidential
\nInformation shall not, `however, include any information that (a) lawfully
\nin the JV\u0092s possession, with no restriction on use or disclosure, prior to its
\nacquisition from UTS (b) received in good faith by JV with no restrictions
\non use or disclosure, from a third Party not subject to any confidential
\nobligation to UTS (c) now or later becomes publicly known through no
\nbreach of confidential obligation by JV (d) independently developed by JV
\nwithout any reliance on or use of CONFIDENTIAL INFORMATION of the disclosing
\nparty.\u00a0 The foregoing exceptions shall
\nnot apply to software in any form.<\/p>\n
1.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093EFFECTIVE DATE\u0094 shall mean the date on
\nwhich this Agreement is duly executed by both parties hereto.<\/p>\n
1.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093PRODUCTS\u0094 shall mean [***].<\/p>\n
Article 2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GRANT OF LICENSES<\/b><\/p>\n
\n
UTS hereby grants for the term of this
\nAgreement to JV a [***] right and license to utilize LICENSED TECHNOLOGY only
\nfor the purpose of development, manufacture and sale of the PRODUCTS within the
\nterritory of [***].\u00a0 The rights granted
\nunder this Article does not include rights under patents, utility models
\nand designs held or to be held by UTS.<\/p>\n
Article 3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LICENSE FEE<\/b><\/p>\n
\n
In consideration of the license set forth in
\nArticle 2 above, JV shall pay UTS, a royalty of [***] of SELLING PRICE of
\nthe PRODUCT which are manufactured by JV.<\/p>\n
\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 PAYMENTS, REPORTS, RECORDS AND
\nTAX<\/b><\/p>\n
4.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The royalty set forth in Section 3.1
\nabove shall be computed and paid to UTS by JV within [***] after the end of
\neach quarter ending on March 31st<\/sup>, June 30th<\/sup>,
\nSeptember 30th<\/sup>, and December 31st<\/sup>.<\/p>\n
4.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall, at the time of each payment of
\nthe royalty under Section 4.1 above, furnish to UTS a royalty report in
\nsuitable form prepared by chief financial officer of JV, which shall describe
\nsales quantity, type number and gross SELLING PRICE, any deduction from and\/or
\nadjustment to the gross SELLING PRICE.\u00a0
\nJV shall, within [***] after the end of each calendar year, also furnish
\nto UTS a royalty compliance report certified by an outside certified public
\naccountant, for the period of the year.<\/p>\n
4.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Payment hereunder shall be made [***].<\/p>\n
4.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If JV fails to make any payment
\nstipulated in this Agreement within the time specified herein, JV shall pay an
\ninterest of [***] per year on the unpaid balance payable from the due date
\nuntil fully paid.<\/p>\n
4.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any payment from JV to UTS hereunder
\nshall be made by means of telegraphic transfer remittance in U.S. Dollars, at
\nselling rate of exchange [***] to the bank account of as designated by UTS, and
\nnotice of the payment shall be sent by JV to UTS\u0092s address set forth below:<\/p>\n
Article 5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 ACCOUNTING AND AUDIT<\/b><\/p>\n
\n
With respect to the royalty set forth in
\nArticle 3 above, JV shall keep full, clear and accurate records and
\naccounts for PRODUCTS subject to royalty for a period of [***].\u00a0 UTS shall have the right through a person(s)
\nappointed by UTS to audit, not more than [***] in each calendar year and during
\nnormal business hours, all such records and accounts to the extent necessary to
\nverify that no underpayment has made by JV hereunder.\u00a0 Such audit shall be conducted at UTS\u0092s own expense, provided that
\nif any discrepancy or error exceeding [***] of the money actually due is found
\nthrough the audit, the cost of the audit shall be born by JV.<\/p>\n
\n
\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MAINTENANCE OF QUALITY & SAFETY STANDARDS<\/b><\/p>\n
6.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV hereby agrees to strictly comply with
\nquality standards of the PRODUCTS in manufacturing the PRODUCTS hereunder.\u00a0 At the request of UTS, JV agrees to submit
\nto UTS its quality control and inspection data for UTS inspection.\u00a0 JV shall reimburse to UTS in Chinese
\ncurrency the actual expenses of inspection or test of such PRODUCTS.\u00a0 UTS shall give JV pertinent advice or
\ninstruction, if UTS deems necessary after studying such reports of quality
\ncontrol and inspection data, with which advice or instruction JV shall always
\nand strictly comply.<\/p>\n
6.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case JV purchase components or
\nmaterials of the PRODUCTS in PRC, JV shall check quality of such components or
\nmaterials so that such components or materials may not harm quality standards
\nof the PRODUCTS.\u00a0 If such components or
\nmaterials are found to be defective or insufficient, JV shall procure
\nsubstituting components or materials.<\/p>\n
6.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV further agrees to promptly furnish UTS
\nwith information in connection with claims, if any, from customers of the
\nPRODUCTS, their nature and disposition thereof by JV, and UTS will give JV
\npertinent advice after checking the information so furnished hereunder.\u00a0 The preceding provision shall not be
\ninterpreted to obligate UTS to be responsible for any such claims.<\/p>\n
6.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Manufacture and sale, use or other
\ndisposition of the PRODUCTS as well as quality guarantee to customers,
\nresponsibility for product liability, advertising and servicing of the
\nPRODUCTS, obtaining approval(s) for the PRODUCTS pursuant to any standard,
\nlegal or otherwise applicable to the PRODUCTS shall be made by JV entirely at
\nJV\u0092s own account and responsibility, and UTS, its parent company, subsidiaries
\nand\/or affiliates shall not be responsible therefor to JV or any third
\nparty.\u00a0 JV shall indemnify UTS (or its
\nparent company, subsidiaries) for and hold UTS (or its parent company,
\nsubsidiaries) harmless from any liabilities, damages and costs and expenses
\narising out of or in connection with JV\u0092s operations.<\/p>\n
\n
\n
-4-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TRAINING<\/b><\/p>\n
\n
UTS shall provide JV necessary training only
\nfor the purpose of using LICENSED TECHNOLOGY at location and\/or on a date to be
\ndetermined by UTS.\u00a0 UTS has the sole
\ndiscretion to determine the duration and program of such necessary
\ntraining.\u00a0 The cost of such training
\nshall be determined later.\u00a0 [***].<\/p>\n
Article 8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TERM AND TERMINATION<\/b><\/p>\n
8.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This Agreement shall become effective on
\nEFFECTIVE DATE and shall continue until terminated pursuant to Article 8.2
\nor 8.3 below.<\/p>\n
8.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In event of a breach of this Agreement by
\nJV hereto, and if such breach is not corrected within [***] after written
\nnotice complaining thereof is received by JV, UTS may terminate this Agreement
\nforthwith by written notice to that effect to JV.<\/p>\n
8.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 UTS shall also have the right to terminate
\nthis Agreement forthwith by giving written notice of termination to JV at any
\ntime, upon or after:<\/p>\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the termination or expiration of the
\nJoint Venture Contract by and between Matsushita Communications Industrial Co.,
\nLtd., Matsushita Electric Industrial Co., Ltd, and UTS<\/p>\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the making by JV of any assignment for
\nthe benefit of creditors;<\/p>\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the institution of any proceedings for
\nthe liquidation or winding up of JV\u0092s business or for the termination of its
\ncorporate charter;<\/p>\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the assignment to third Party of all
\nor substantially all of the assets of JV;<\/p>\n
(e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 important change in controlling ownership
\nof JV; or<\/p>\n
(f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any activity or assistance by JV of
\nchallenging the validity of any LICENSED TECHNOLOGY or restricting the scope
\nthereof.<\/p>\n
8.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event of expiration or termination
\nof this Agreement by UTS pursuant to Article 8.2 or 8.3 above, the
\nlicenses granted hereunder to JV shall automatically terminate when JV receives
\nor deems to receives such termination notice hereunder, except those in stock.\u00a0 JV<\/p>\n
\n
\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 shall pay the amount of the royalty
\naccrued on or before the date of termination within [***] days thereafter.<\/p>\n
8.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Upon expiration or termination of this
\nAgreement, JV shall immediately return LICENSED TECHNOLOGY to UTS.<\/p>\n
Article 9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 IMPROVEMENT OF LICENSED
\nTECHNOLOGY<\/b><\/p>\n
\n
Any new intellectual property rights
\n(hereinafter referred to as \u0093IPR\u0094) derived from, based on or in connection with
\nthe LICENSED TECHNOLOGY shall be owned jointly by UTS and JV in equal share, if
\nsuch IPR is for or related to [***], and derived from, based on, or in
\nconnection with the LICENSED TECHNOLOGY of UTS.\u00a0 Each Party shall be free to practice and use such jointly
\nowned IPR on non-exclusive basis without accounting to and royalty-free to the
\nother party.\u00a0 However, licenses to third
\nparties may be granted only upon the other party\u0092s prior consent, which may not
\nbe unreasonably withheld, except that UTS may sublicense such jointly owned IPR
\nto its subsidiaries, affiliates, the parent company or the subsidiaries and the
\naffiliates of the parent company, without the consent of the other joint
\nowners.<\/p>\n
Article 10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 CONFIDENTIAL INFORMATION<\/b><\/p>\n
10.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Restrictions.\u00a0 JV understands that LICENSED TECHNOLOGY, and TECHNICAL
\nINFORMATION provided from UTS to JV for the purpose of this Agreement is the
\nCONFIDENTIAL INFORMATION of UTS and any unauthorized disclosure of CONFIDENTIAL
\nINFORMATION causes unrepairable harm to UTS, and UTS shall have the right to
\ntake all necessary proceedings to prevent and restrain such unauthorized
\ndisclosure.\u00a0 Further, JV shall not
\ndisclose CONFIDENTIAL INFORMATION\u0092 to any third Party and shall not use
\nCONFIDENTIAL INFORMATION for any other purposes than authorized under this
\nAgreement.\u00a0 JV shall instruct all of
\nemployees of JV who engage in work under this Agreement that they shall keep
\nCONFIDENTIAL INFORMATION confidential regardless of whether their relationship
\nwith JV is terminated at some future time.<\/p>\n
\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
10.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Continuing Obligation.\u00a0 The obligation of nondisclosure and nonuse
\nwith respect to Confidential Information of the disclosing Party shall
\nsurvive the expiration or termination of this Agreement.<\/p>\n
Article 11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIMITATION OF LIABILITY<\/b><\/p>\n
\n
[***] neither Party Be entitled to
\nrecover from the other Party any incidental, consequential, indirect,
\nspecial damages (including, without limitation, damages for loss of business,
\nloss of profits or loss of use), whether based on contract, toil (including,
\nwithout limitation, negligence), or any other cause of action relating to
\nintellectual property rights assigned or licensed hereunder or confidential
\ninformation, or otherwise relating to this Agreement, even if the other
\nParty has been informed of or should have known the possibility of such
\ndamages.<\/p>\n
Article 12\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 REPRESENTATIONS AND WARRANTIES<\/b><\/p>\n
12.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 OWNERSHIP.\u00a0 UTS has the full power and right to enter into this Agreement.<\/p>\n
12.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO ENCUMBRANCE.\u00a0 To the best of UTS\u0092s knowledge, the UTS rights in relation to the
\nLICENSED TECHNOLOGY hereunder are free and clear of any and all encumbrances
\nand \/or liens of any nature whatsoever, other than those identified by UTS
\npursuant to this Agreement, and other than non-exclusive licenses granted by
\nUTS to others to use the UTS rights.<\/p>\n
12.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO CONFLICTS.\u00a0 To the best of UTS\u0092s knowledge, UTS\u0092s performance of this
\nAgreement does not conflict with any other agreement to which UTS is bound and,
\nwhile performing this Agreement, UTS will not knowingly enter into any other
\nagreement in conflict with this Agreement or which would impair the ability of
\nUTS to perform this Agreement.<\/p>\n
12.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 NO HARMFUL CODE.\u00a0 In the event that any of the LICENSED
\nTECHNOLOGY and TECHNICAL INFORMATION are software or include software of any
\ntype, to the best of UTS\u0092s knowledge, to be free of any known viruses and or
\nknown bugs.<\/p>\n
12.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 LIMITATION OF WARRANTIES.\u00a0 Except as stated above, UTS disclaims all
\nwarranties, either express or implied, with respect to the LICENSED TECHNOLOGY
\nand <\/p>\n
\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 TECHNICAL INFORMATION, including but not
\nlimited to the implied warranties of merchantability and fitness for a
\nparticular purpose.<\/p>\n
Article 13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GENERAL<\/b><\/p>\n
13.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notice.\u00a0
\nAny written notice either Party may give the other concerning the
\nsubject matter of this Agreement shall be in writing and given or made by means
\nthat obtain a written acknowledgment of receipt.\u00a0 Notices shall be sent to the parties at the following addresses,
\nwhich may be changed by written notice:<\/p>\n
\n
To UTS:<\/p>\n
Address:2,3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC<\/p>\n
Zip Code:310012<\/p>\n
Attention: Mr. Johnny Chou, General Manager<\/p>\n
Telephone:(86571)-8886-2336<\/p>\n
Facsimile:(86571)-8886-2349<\/p>\n
\n
To JV:<\/p>\n
Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC<\/p>\n
Zip Code:310012<\/p>\n
Attention: Mr. John Yang, General Manager<\/p>\n
Telephone:(86571)-8886-2336<\/p>\n
Facsimile: (86571)-8886-2349<\/p>\n
\n
Notice shall be deemed to have been given or
\nmade when actually received, as evidenced by written acknowledgment of receipt.<\/p>\n
13.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The parties hereto shall use their best
\nefforts to resolve by mutual agreement any disputes, controversies or
\ndifferences which may arise from, under, out of or in connection with this
\nAgreement.\u00a0 If any such disputes,
\ncontroversies or differences can not be settled between the parties hereto,
\nthey shall be finally submitted to China International Economic and Trade
\nArbitration Commission for arbitration.\u00a0
\nThe award rendered by the arbitrators shall be final and binding upon
\nthe parties hereto.<\/p>\n
\n
\n
-8-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
13.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Compliance.\u00a0 UTS and JV shall each comply with the provisions of all
\napplicable laws, ordinances, regulations and codes (including, without
\nlimitation, procurement of required permits or certificates) in fulfillment of
\ntheir obligations under this Agreement.\u00a0
\nAll Intellectual Property Rights held by either Party are subject
\nto PRC export and import technology control regulations.\u00a0 Each Party undertakes that it shall
\nneither export, nor cause nor permit to be exported, without the other party\u0092s
\nprior written consent and without compliance with applicable law and
\nregulation.\u00a0 Each Party agrees to
\ncomply with all applicable laws and regulations relating to the exportation of
\ntechnical information, as they currently exist and as they may be amended from
\ntime to time.<\/p>\n
13.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Assignment, Subcontracting.\u00a0 Neither this Agreement nor any rights or
\nobligations hereunder shall be assignable or subcontracted by JV without UTS\u0092s
\nprior written consent.\u00a0 Any attempted or
\npurported assignment in violation of the foregoing shall be void.\u00a0 Subject to the foregoing, this Agreement
\nshall be binding upon and inure to the benefit of the successors and permitted
\nassigns of each Party hereto.<\/p>\n
13.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Waiver of Terms and Conditions.\u00a0 Failure to enforce any of the terms or
\nconditions of this Agreement shall not constitute a waiver of any such terms or
\nconditions, or of any other terms or conditions.<\/p>\n
13.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Severability.\u00a0 Where any provision of this Agreement is declared invalid,
\nillegal, void or unenforceable, or any changes or modifications are required by
\nregulatory or judicial action, and any such invalid, illegal, void or
\nunenforceable provision, or such change or modification, substantially affects
\nany material obligation of a Party hereto, the remaining provisions of
\nthis Agreement shall remain in effect and the parties shall mutually agree upon
\na course of action with respect to such invalid provision or such change or
\nmodification to the end that the purposes of this Agreement are carried out.<\/p>\n
13.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Governing Law.\u00a0 This Agreement, and the rights and obligations contained in it,
\nshall be governed by and construed in accordance with the laws of PRC, without
\nregard to any conflicts of law principles that would require the application of
\nthe laws of any other jurisdiction.<\/p>\n
\n
\n
-9-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
13.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 No Unreasonable Delay or
\nWithholding.\u00a0 Where agreement, approval,
\nacceptance, consent or similar action by UTS or JV is required, such action
\nshall not be unreasonably delayed or withheld.<\/p>\n
13.9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Force Majeure.\u00a0 1f performance of any obligations by either Party under this
\nAgreement is prevented, restricted or interfered with by reason of acts of God,
\nwars, revolution, civil commotion, acts of public enemy, embargo, acts of
\ngovernment in its sovereign capacity, labor difficulties, including, without
\nlimitation, strikes, slowdowns, picketing or boycotts, communication line
\nfailures, power failures, or any other circumstances beyond the reasonable
\ncontrol and not involving any fault or negligence of the Party affected,
\nthe Party affected, upon giving prompt notice to the other party, shall be
\nexcused from such performance on a day-to-day basis during the continuance of
\nsuch prevention, restriction or interference (and the other Party shall
\nlikewise be excused, on a day-to-day basis during the same period, from
\nperformance of its obligations which are dependent upon or affected by such
\nnonperformance); provided, however, that the Party so affected shall use
\nits best reasonable efforts to avoid or remove such causes of nonperformance
\nand both parties shall proceed immediately with the performance of their
\nobligations under this Agreement whenever such causes are removed or cease.<\/p>\n
13.10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Entire Agreement.\u00a0
\nThis Agreement represents the entire understanding between the parties
\nwith the respect to its provisions and cancels and supersedes all prior
\nagreements or understandings, whether written or oral, with respect to the
\nsubject matter.\u00a0 This Agreement may only
\nbe modified or amended by an instrument in writing signed by duly authorized
\nrepresentatives of the parties.\u00a0 This
\nAgreement shall be deemed to include all attachments and exhibits, if any
\nattached hereto.<\/p>\n
13.11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This Agreement is made in Chinese and English, each
\nParty retaining one copy.\u00a0 Both
\nChinese and English versions are equally authentic.<\/p>\n
\n
-10-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
IN WITNESS WHEREOF, the Parties hereto cause
\ntheir authorized representatives to execute this Agreement on the date first
\nabove written:<\/p>\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Universal Communication Technology (Hangzhou)
\n  Company Limited.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
UTStarcom Telecom Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
-11-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
Attachment l<\/p>\n
The detail of LICENSED TECHNOLOGY shall be as follows:<\/b><\/p>\n
\n
[***]<\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n<\/div>\n
\n
Appendix III<\/p>\n
Equipment Purchase Agreement<\/b><\/p>\n
by
\nand between<\/b><\/p>\n
Universal
\nCommunication Technology (Hangzhou)
\nCompany Limited.,<\/b><\/p>\n
and<\/b><\/p>\n
Matsushita
\nCommunication Industrial Co., Ltd.<\/b><\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
THIS AGREEMENT, dated as of ________, is made
\nand entered into by and between Universal Communication Technology (Hangzhou)
\nCompany Limited (hereinafter referred to as \u0093JV\u0094), and Matsushita Communication
\nIndustrial Co., Ltd. (hereinafter referred to as \u0093MCI\u0094).<\/p>\n
WITNESSETH<\/b><\/p>\n
\n
WHEREAS, MCI owns technologies with respect
\nto [***] (hereinafter referred to as [***] as a part of infrastructure of the
\n[***]; and<\/p>\n
\n
WHEREAS, MCI desires to sell equipment to JV
\nand JV desires to acquire such equipment from MCI to modulate and test [***]
\ndeveloped and manufactured by JV, and<\/p>\n
\n
NOW, THEREFORE, in consideration of the
\nmutual covenants and premises contained herein, the parties hereto agree as
\nfollows:<\/p>\n
Article
\n1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Basic Agreement<\/b><\/p>\n
\n
In accordance with the terms and conditions
\nset forth herein, MCI agrees to supply to JV the Equipment defined in
\nArticle 2 hereof and JV agrees to purchase such Equipment from the MCI.<\/p>\n
Article
\n2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Equipment<\/b><\/p>\n
2.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV desires to purchase from MCI the
\nfollowing equipment (hereinafter referred to as the \u0093Equipment\u0094) necessary for
\nthe production of BTS:<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [***]<\/p>\n
2.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The detailed list of Equipment shall be
\ndesignated by MCI and attached hereto as Attachment 1 hereof.<\/p>\n
2.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Both parties may discuss otherwise to
\nchange the subject matter hereof in case of any changes in JV\u0092s production and
\nbusiness.<\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
2.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Spare parts of Equipment shall be delivered
\nfrom MCI to JV together with the Equipment contemplated in this Agreement.\u00a0 The detailed list of the spare parts shall
\nbe determined later.<\/p>\n
2.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Due to the necessity of the production
\nand operation of JV\u0092s plant, the Equipment shall include new products as well
\nas second-hand products that have been used in MCI\u0092s plan or that are procured
\notherwise.<\/p>\n
2.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any machine, instruments and related
\ngoods consisting of the Equipment may be procured [***].\u00a0 Such machine, instruments and related goods
\nprocured [***] shall not be included in the subject matter of this Contract as
\ndefined in Article 1 hereto.\u00a0 The
\ndetail of such procurement in PRC shall be determined later.<\/p>\n
Article
\n3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Orders<\/b><\/p>\n
3.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI shall determine the specifications of
\nthe Equipment of MCI and any other necessary conditions for the purpose of this
\nAgreement, and submit quotation(s) to JV<\/p>\n
3.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 After receipt of quotation(s), JV subject
\nto confirmation of both general manager and deputy general manager of JV shall
\nissue individual purchase order(s) of the Equipment (hereinafter referred to as
\n\u0093Individual Purchase Order\u0094) to MCI.\u00a0
\nIndividual Purchase Order shall become effective upon acceptance by MCI,
\nand in that event, the terms and conditions of this Agreement shall be applied
\nto such Individual Purchase Orders.<\/p>\n
3.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Order number, model number of the
\nEquipment, quantity, date of shipment and delivery, price and other matters
\nnecessary for the delivery of the Equipment shall be described in each
\nIndividual Purchase Order subject to the approval by the general manager.<\/p>\n
3.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 As long as the Individual Purchase Order
\nof Equipment fulfills the terms and conditions of this Agreement, or unless
\nthere is any reason justifiable to refuse, JV shall issue the Individual
\nPurchase Order.<\/p>\n
3.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event of any conflict or
\ncontradiction between the terms of this Agreement and any of the Individual
\nPurchase Orders, the terms of this Agreement shall govern and prevail.<\/p>\n
\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
3.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The price of the Equipment shall be
\nestablished in Japanese Yen or US Dollars in terms of CIF Hangzhou via
\nShanghai.<\/p>\n
Article
\n4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Payment<\/b><\/p>\n
\n
JV shall, [***] before the shipment of the
\nEquipment by MCI, open an irrevocable, unalterable and non-transferable letter
\nof credit, issued by the bank in PRC which is internationally recognized, at
\nsight with MCI as beneficiary, the value of which shall be [***] of the total
\ncontract value.\u00a0 The letter of credit
\nshall be payable at sight.<\/p>\n
Article
\n5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Packaging<\/b><\/p>\n
\n
MCI may prepare packing materials (including
\ncarton box, labels and printing) for the Equipment.\u00a0 The detail of packing shall be determined later.<\/p>\n
Article
\n6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Loading sand Delivery
\nDate of Equipment<\/b><\/p>\n
6.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Equipment shall be delivered by MCI
\nto JV in accordance with progress of localization of production in which such
\nprogress consists of phases as follows:<\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The first phase shall begin from the
\nstart of operation of JV and end by the end of [***], and subsequently, the
\nsecond phase shall end by the end of [***].<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case of the third or fourth phases,
\nperiod of each phase is [***] thereafter.<\/p>\n
6.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The delivery of Equipment for phases
\nabove shall be made upon the Acceptance of Equipment according to
\nArticle 7.1.4 subject to the adjustment based on the business needs.<\/p>\n
Article
\n7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Installation, Testing
\nOperation, Trial Production and Acceptance of Equipment<\/b><\/p>\n
7.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Definitions:<\/p>\n
\n
7.1.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093Installation\u0094
\nmeans assembling the Equipment and installing them in the plant of JV subject
\nto the adjustment based on the business needs.<\/p>\n
\n
7.1.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093Testing
\nOperation\u0094 means, after the Installation of Equipment, checking the operation
\nof the Equipment under unloaded and loaded conditions and also checking whether
\nit satisfies the <\/p>\n
\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 performances
\nprovided in the specifications of the Equipment subject to the adjustment based
\non the business needs.<\/p>\n
\n
7.1.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093Trial
\nProduction\u0094 means, prior to the pre-production in the plant of JV, trial
\nproduction directed by JV\u0092s technical personnel of a testing nature by using
\nthe materials procured by JV and the Equipment which passes Testing Operation.<\/p>\n
\n
7.1.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0093Acceptance\u0094
\nmeans acceptance of the delivery of Equipment of JV after going through Testing
\nOperation and Trial Production, by checking the performances of the Equipment
\nin accordance with the specifications of Equipment prepared at the time of
\nquotation of the Equipment, and checking whether the Equipment properly
\noperates in the plant of JV for production.<\/p>\n
7.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI shall assist JV to complete the
\nInstallation, Testing Operation, Trial Production and Acceptance of the
\nEquipment.\u00a0 If necessary, MCI shall
\nassist JV by using the materials procured by JV for Testing Operation.<\/p>\n
7.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case problems arise out of the
\nprocedure of Acceptance of the Equipment, both JV and MCI shall discuss with
\neach other and determine the share of responsibilities after reviewing the
\ncause of such problems in order to satisfactorily solve the problems and
\ncomplete the procedure of Acceptance.<\/p>\n
7.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any expenses in relation to the business
\ntrip(s) made by MCI to JV\u0092s plant necessary for the Installation, Testing
\nOperation, Trial Production, and Acceptance of Equipment shall be borne by JV.<\/p>\n
Article
\n8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Repair Warranty<\/b><\/p>\n
8.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI warrants that Equipment, whether new
\nproduct or not, provided by MCI meets the requirement of the performance necessary
\nfor production of the Equipment in the plant of MCI as well as JV\u0092s plant for
\nthe period provided in Article 8.2.<\/p>\n
8.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Warranty period<\/p>\n
\n
\n
-4-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
8.2.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Warranty for Equipment that is new
\nproduct<\/p>\n
\n
During the warranty period,
\nfor defects not attributable to JV, MCI shall use its best effort to repair
\nsuch defect at no cost to JV.\u00a0 The
\nwarranty period shall be [***] commencing on the date of Acceptance of
\nEquipment.<\/p>\n
\n
8.2.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Warranty for Equipment that is second
\nhand<\/p>\n
\n
During the warranty period,
\nfor defects not attributable to JV MCI shall use its best effort to repair such
\ndefect at no cost to JV.\u00a0 The warranty
\nperiod shall be [***] commencing on the date of Acceptance of Equipment.<\/p>\n
8.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 After the warranty period expires, MCI
\nshall, with its reasonable efforts, assist JV to repair or fix any breakdown in
\nutilizing Equipment, and provide necessary parts for such repair at
\npreferential prices to be determined by MCI.\u00a0
\nHowever, all the costs in relation to dispatching engineers of MCI to JV
\nincluding air fare, transportation and accommodation, shall be borne by JV.<\/p>\n
Article
\n9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Technical Information<\/b><\/p>\n
\n
MCI shall use its best efforts to provide JV
\nwith specifications and instruction manuals in two (2) copies for each Equipment.\u00a0 The methods of delivery of such
\nspecifications, manuals and instructions shall be determined by MCI.<\/p>\n
Article
\n10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Technical Support<\/b><\/p>\n
10.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI shall dispatch its engineers to JV\u0092s
\nplant for training engineers of JV in relation to Installation, operation and
\nmaintenance of the Equipment, in accordance with the necessity of such
\ntraining.<\/p>\n
10.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MCI may provide training in relation to
\nInstallation, operation and maintenance of the Equipment, in both Japan and
\nChina, at JV\u0092s costs; including air fare, transportation and
\naccommodation.\u00a0 The training period
\nshall be decided by both JV and MCI considering the time necessary for the JV\u0092s
\nengineers to independently operate Equipment for production.<\/p>\n
\n
\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
10.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The training shall be, if provided in the
\nplant of MCI, held by accepting JV\u0092s engineers or if provided in the plant of
\nJV held by dispatching MCI\u0092s engineers.<\/p>\n
Article
\n11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Modification<\/b><\/p>\n
\n
MCI may make any modifications and keep JV
\ninformed of the modifications and explain reasons of modifications to the
\nspecifications of the Equipment without the prior written consent of JV.<\/p>\n
Article
\n12\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Export Control Regulation<\/b><\/p>\n
\n
In the event that the Equipment and the
\ncomponents, parts and materials thereof are the object of export regulations of
\nJapan, MCI use its best effort to obtain the license necessary for JV\u0092s export
\nof such Equipment and the components, parts and materials.\u00a0 JV shall furnish, without delay, any
\ninformation to MCI as requested by MCI in the event that MCI requires such
\ninformation from JV for the purpose of conforming to the Foreign Exchange and
\nForeign Trade Control Act and the Export Trade Control Order and the Foreign
\nExchange Control Ordinance of Japan.<\/p>\n
Article
\n13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Term<\/b><\/p>\n
\n
This Agreement shall become effective on the
\ndate of signature of this Agreement by both parties and shall continue until
\nterminated pursuant to Article 14.<\/p>\n
Article
\n14\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Termination<\/b><\/p>\n
\n
This Agreement and any Individual Purchase
\nOder may be immediately terminated by either Party upon written notice to
\nthe other:<\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in the event of a default not
\nattributable to Force Majeure or a breach by the other Party of any
\nobligation of this Agreement and\/or any Individual Purchase Order hereunder and
\nthe failure to cure such breach within [***]; or<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in the event that the performance of this
\nAgreement and\/or any Individual Purchase Order by other Party is wholly
\nsuspended for a period of [***] or more, due to Force Majeure, and thereafter
\nsuch suspension is not cured within [***] after notice; or<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in the event of insolvency or ceasing its
\nbusiness of the other party; or<\/p>\n
\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 in the event that the other
\nParty shall be dissolved, liquidated, declared bankrupt or has commenced
\nproceedings relating to bankruptcy, creditor composition or reorganization of
\ncompany, either voluntarily or otherwise, or any other similar event occurs in
\nthe other party.<\/p>\n
\n
In the event of the termination or expiration
\nof this Agreement, any Individual Purchase Order which exists prior to such
\ntermination or expiration shall be deemed to be terminated and both parties
\nshall not perform the respective obligations thereunder.<\/p>\n
Article
\n15\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Indemnity<\/b><\/p>\n
\n
[***]<\/p>\n
Article
\n16\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Confidential Information<\/b><\/p>\n
\n
All drawings, technical information, data,
\nand other information, and industrial property rights in Equipment and any
\nother equipment with related components, parts materials, supplied to JV by MCI
\nin relation to this Agreement (hereinafter called \u0093Information\u0094) are the
\nproperty of MCI.\u00a0 JV shall keep the
\nInformation confidential and shall return all Information (including any copies
\nthereof) to MCI when requested by MCI.<\/p>\n
\n
JV shall use the Information only for the
\npurpose of this Agreement.<\/p>\n
\n
JV shall not allow any third party to use the
\nInformation without MCI\u0092s prior written consent nor allow in any circumstances
\nsuch third party to use the Information not for the purpose of this Agreement.<\/p>\n
Article
\n17\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Insurance<\/b><\/p>\n
\n
JV shall maintain at its own expense
\ninsurance for product liability in the reasonable amount in US Dollars or
\nequivalents in Chinese currency for bodily injury and death liability and
\nproperty damage liability.<\/p>\n
\n
Such insurance shall be carried during the
\nterm of this Agreement, including extension, [***].\u00a0 (Coverage should cover injury or damage during the year, even
\nthough claim may be filed at a later date, up to the time limit established by
\nthe applicable statute of limitation laws.)<\/p>\n
\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article
\n18\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Force Majeure<\/b><\/p>\n
\n
Neither MCI nor JV shall be liable for
\nfailure in the performance of this Agreement and\/or individual purchase orders
\nunder this Agreement arising from war, sabotage, rebellion, riots, hostile
\nactivities, accident of transportation, acts of governmental or
\nquasi-governmental authorities, regulations or restrictions imposed by law or
\nby court action, fires, explosions, floods, storms or other catastrophes, or
\nany other cause beyond the control of either party.<\/p>\n
Article
\n19\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Settlement of Disputes<\/b><\/p>\n
19.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event a dispute arises in
\nconnection with the interpretation or implementation of this Agreement, both
\nparties shall attempt in the first instance to resolve such dispute through
\nfriendly consultations.<\/p>\n
19.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the dispute is not resolved through
\nfriendly consultations within sixty (60) days after the commencement of
\ndiscussions, or such longer period as the parties agree in writing at that
\ntime, then notwithstanding any other provision of this Agreement, any
\nParty may submit the dispute for arbitration.<\/p>\n
\n
Any disputes initiated by JV, arising out of
\nor in connection with this Agreement shall be finally settled by an arbitration
\nin Tokyo, Japan by the Japan Commercial Arbitration Association (\u0093JCAA\u0094) in
\naccordance with JCAA\u0092s arbitration rules in effect at the time of arbitration.\u00a0 Any disputes initiated by MCI, arising out
\nof or in connection with this Agreement shall be finally settled by an
\narbitration in Shanghai, PRC by the China International Economic and Trade
\nArbitration Commission (\u0093CIETAC\u0094) in accordance with CIETAC\u0092s arbitration rules
\nin effect at the time of arbitration.\u00a0
\nThe award rendered by the arbitrators shall be final and binding upon
\nthe Parties.\u00a0 The Parties hereto agree
\nto honor such award.\u00a0 Any competent
\ncourt may enforce such award.\u00a0 All
\narbitration costs, including costs for the enforcement of any arbitration
\naward, shall be borne by the losing Party.<\/p>\n
Article
\n20\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Languages<\/b><\/p>\n
\n
This Agreement is made in Chinese and
\nEnglish, each Party retaining one copy.\u00a0
\nBoth Chinese and English versions are equally authentic.<\/p>\n
\n
\n
-8-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article
\n21\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 GENERAL<\/b><\/p>\n
21.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Notice.\u00a0
\nAny written notice either Party may give the other concerning the
\nsubject matter of this Agreement shall be in writing and given or made by means
\nthat obtain a written acknowledgment of receipt.\u00a0 Notices shall be sent to the parties at the following addresses,
\nwhich may be changed by written notice:<\/p>\n
\n
To
\nMCI:<\/p>\n
Address:4-3-1 Tsunashima-higashi, Kohoku-ku, Yokohama, Japan<\/p>\n
Zip Code:223-8639<\/p>\n
Attention: Mr. Nobuyoshi Itoh, Director of<\/p>\n
Mobile Network Division<\/p>\n
Telephone: (8145)-540-5250<\/p>\n
Facsimile: (8145)-544-3620<\/p>\n
\n
To
\nJV:<\/p>\n
Address:3, Yile Industrial Park, 129 Wenyi Road, Hangzhou, PRC<\/p>\n
Zip Code:310012<\/p>\n
Attention: Mr. John Yang, General Manager<\/p>\n
Telephone: (86571)-8886-2336<\/p>\n
Facsimile: (86571)-8886-2349<\/p>\n
\n
Notice shall be deemed to have been given or
\nmade when actually received, as evidenced by written acknowledgment of receipt.<\/p>\n
21.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Assignment, Subcontracting.\u00a0 Neither this Agreement nor any rights or
\nobligations hereunder shall be assignable or subcontracted by JV without MCI\u0092s
\nprior written consent.\u00a0 Any attempted or
\npurported assignment in violation of the foregoing shall be void.\u00a0 Subject to the foregoing, this Agreement
\nshall be binding upon and inure to the benefit of the successors and permitted
\nassigns of each party hereto.<\/p>\n
\n
\n
-9-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
21.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Waiver of Terms and Conditions.\u00a0 Failure to enforce any of the terms or
\nconditions of this Agreement shall not constitute a waiver of any such terms or
\nconditions, or of any other terms or conditions.<\/p>\n
21.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Severability.\u00a0 Where any provision of this Agreement is declared invalid,
\nillegal, void or unenforceable, or any changes or modifications are required by
\nregulatory or judicial action, and any such invalid, illegal, void or
\nunenforceable provision, or such change or modification, substantially affects
\nany material obligation of a party hereto, the remaining provisions of
\nthis Agreement shall remain in effect and the parties shall mutually agree upon
\na course of action with respect to such invalid provision or such change or
\nmodification to the end that the purposes of this Agreement are carried out.<\/p>\n
21.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Survival.\u00a0 After the expiration or termination of this Agreement and any
\nIndividual Purchase Order for any reason, the provisions of Article 15,
\nArticle 16, Article 17, Article 19 and Article 21 of this
\nAgreement shall remain in effect.<\/p>\n
21.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Governing Law.\u00a0 This Agreement, and the rights and obligations contained in it,
\nshall be governed by and construed in accordance with the laws of China,
\nwithout regard to any conflicts of law principles that would require tile
\napplication of the laws of any other jurisdiction.<\/p>\n
21.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 No Unreasonable Delay or
\nWithholding.\u00a0 Where agreement, approval,
\nacceptance, consent or similar action by MCI or JV is required, such action
\nshall not be unreasonably delayed or withheld.<\/p>\n
Article
\n22\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Entire Agreement<\/b><\/p>\n
\n
This Agreement represents the entire
\nunderstanding between the parties with the respect to its provisions and
\ncancels and supercedes all prior agreements or understandings, whether written
\nor oral, with respect to the subject matter.\u00a0
\nThis Agreement may only be modified or amended by an instrument in
\nwriting signed by duly authorized representatives of the parties.\u00a0 This Agreement shall be deemed to include
\nall individual purchase orders.<\/p>\n
\n
\n
-10-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
IN WITNESS WHEREOF, the Parties hereto cause
\ntheir authorized representatives to execute this Agreement on the date first
\nabove written.<\/p>\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Universal Communication Technology (Hangzhou)
\n  Company Limited.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Communication Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n
\n
-11-<\/p>\n
\n
\n<\/div>\n

<\/p>\n<\/div>\n
\n
Appendix IV<\/p>\n
Personnel Assignment Agreement<\/b><\/p>\n
by and among<\/b><\/p>\n
UNIVERSAL
\nCOMMUNICATION TECHNOLOGY
\n(HANGZHOU) COMPANY LIMITED,<\/b><\/p>\n
MATSUSHITA
\nELECTRIC INDUSTRIAL CO., LTD.<\/b><\/p>\n
and<\/b><\/p>\n
MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD.<\/b><\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
Table
\nof Contents<\/b><\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
General<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
1.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Dispatch of
\n  MATSUSHITA employees<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
2.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Safety<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
3.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Compensation<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
4.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
The salary paid in
\n  PRC<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
5.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Remittance to Japan<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
6.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Income
\n  tax<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
7.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Business
\n  trip<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
8.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Dwelling<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
9.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Transportation<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
10.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Language Study<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
11.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Holidays<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
12.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Medical
\n  Care<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
13.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Other
\n  Welfares<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
14.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Other Expenses<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
15.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Modification<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
16.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Effectiveness<\/a><\/p>\n<\/td>\n<\/tr>\n
\n
17.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Miscellaneous<\/a><\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
Personnel Assignment Agreement<\/b><\/p>\n
\n
This Agreement is made as of _________, 2002,
\nby and among UNIVERSAL COMMUNICATION TECHNOLOGY (HANGZHOU) COMPANY LIMITED
\n(hereinafter referred to as the \u0093JV\u0094), MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD.
\nand MATSUSHITA COMMUNICATION INDUSTRIAL CO., LTD. (hereinafter collectively
\nreferred to as \u0093MATSUSHITA\u0094)<\/p>\n
\n
Whereas, upon the terms and subject to
\nconditions of this Agreement and in accordance with Article 28 of the
\nJOINT VANTURE CONTRACT (hereinafter referred to as \u0093JV CONTRACT\u0094), MATSUSHITA
\ndesires to provide and dispatch their employees to the People\u0092s Republic of
\nChina (hereinafter referred to as \u0093PRC\u0094) and JV desires to accept employees provided
\nand dispatched by MATSUSHITA;<\/p>\n
\n
Whereas during the term of employment in JV
\nthe dispatched employee and his\/her family members shall be entitled to receive
\nthe treatments and benefits contained in the \u0093Rules on Overseas Work of
\nMATSUSHITA Employees\u0094;<\/p>\n
\n
Now, THEREFORE, Parties agree as follows:<\/p>\n
Article
\n1.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Dispatch of MATSUSHITA
\nemployees<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In accordance with the JV CONTRACT and
\nthe discussions among the parties of the JV MATSUSHITA shall dispatch to the JV
\nemployees competent for the posts that they shall hold in the JV for the
\nrelevant work, and those employees are referred to as \u0093Dispatched MATSUSHITA
\nEmployee\u0094 (hereinafter referred to as \u0093DIME\u0094).<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The term of dispatch shall be set forth
\nin accordance with the JV CONTRACT (upon conferring with JV)<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall get the prior consent from
\nMATSUSHITA before requesting DME to perform work assignments out of the scope
\nset forth in the JV CONTRACT or Technical License Agreement attached to JV
\nCONTRACT as Appendix II.<\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
Article
\n2.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Safety<\/b><\/a><\/p>\n
\n
During the term of employment in the JV, DME
\nand his\/her family members shall abide by the Laws and Regulations of PRC.\u00a0 JV shall do its best efforts to guarantee
\nthe safety of the DME and his\/her family members.<\/p>\n
Article
\n3.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Compensation<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 For compensations for DME during their
\nterm of employment in JV, JV shall be responsible for the salaries (including
\napplicable taxes) to be paid in PRC and the remittance to Japan and in
\naccordance with the agreement between JV and MATSUSHITA.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The compensation for the DME shall be
\ncounted from the date when DME receive the work assignment after arriving in
\nPRC.\u00a0 In case that such DME does not
\nwork for a full month, his\/her salary shall be calculated at a daily rate,
\nwhich is one thirtieth (30th<\/sup>) of his\/her one month salary per day.<\/p>\n
Article
\n4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The salary laid in PRC<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The salary of DME in PRC shall consist of
\nthe following items, and the net standard amount paid shall be subject to
\n[***].<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [***]<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Payment of net standard amount
\nreceived shall be made in U.S dollars on a monthly basis by JV and such
\nstandard amount as of September l of each year shall be submitted to the board
\nof directors of JV.<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case of significant changes with
\nrespect to the living expenses in PRC, JV and the board of directors of JV
\nshall have the right to alter the part of DME\u0092s salary to be paid in PRC.<\/p>\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall make salary payments to DME on
\nthe specified date of each month in the currency of RMB or U.S. dollar.\u00a0 The exchange rate shall be [***].<\/p>\n
(5)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 During the term of dispatch, DME shall be
\nentitled to receive the normal salary payment when he\/she is out for business
\ntrips and on holidays.<\/p>\n
\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(6)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall guarantee to make net salary
\npayments in accordance with the amount notified by MATSUSHITA.<\/p>\n
Article 5.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Remittance to Japan<\/b><\/a><\/p>\n
\n
Of the compensations for DME, the remittance
\nto Japan shall be requested in Japanese Yen in accordance with the amount
\nactually paid in Japan.The requested amount, based on actual payment made by
\nMATSUSHITA in Japan, will be billed to JV at the end of June and December of
\neach year.\u00a0 JV shall remit the required
\namounts to MATSUSHITA in Japanese Yen.\u00a0
\nJV shall bear all the fees and expenses occurring in PRC and in relation
\nto such remittance.<\/p>\n
Article 6.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Income tax<\/b><\/a><\/p>\n
\n
The income tax imposed on DUE, the amount of
\nwhich shall comply with the relevant tax laws and regulations of PRC, shall be
\nborne by [***] and paid in full amount.\u00a0
\n(the expenses associated therewith shall be included in compensations)<\/p>\n
Article 7.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Business
\ntrip<\/b><\/a><\/p>\n
\n
In case that DME takes business trip (in PRE
\nor outside PRC) for JV\u0092s business, the transportation fee, accommodation
\nexpenses, business allowances and any cost and expenses associated with such
\nbusiness trips, shall be paid or reimbursed by JV in accordance with the Rules
\nfor Business Trip stipulated by JV.<\/p>\n
Article 8.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Dwelling<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall provide dwelling with furniture
\nfurnished for DME to living at JV\u0092s cost.\u00a0
\nThe furniture shall include the following:<\/p>\n
Bed,
\ndesk, book cabinet, three sets of two sofas and a table for the living room,
\ndinner table, cupboard, clothes closet, carpet, curtains, lighting apparatus,
\nrefrigerator, vacuum cleaner, washing machine, color TV, video (DVD) player,
\nair-conditioner (warm and cold) and microwave oven.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The fees for electricity, water, and gas
\nshall be paid by the dweller.\u00a0 The
\nstandard of the aforementioned fees shall be calculated in accordance with that
\nof Hangzhou City.<\/p>\n
\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall bear all the accommodation expenses
\nand taxes caused by DME in four-star hotels, before JV provides him\/her with
\ndwellings.<\/p>\n
Article 9.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Transportation<\/b><\/a><\/p>\n
\n
During the term of a DME working in JV, JV
\nshall furnish gratuitously vehicles necessary for work and shall endeavor to
\noffer transportation convenience to DME and his family members.<\/p>\n
Article 10.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Language Training<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the general manager and the deputy
\ngeneral manager of JV deems it necessary for a DME to learn Chinese for work
\npurpose, JV shall bear all fees pertinent to such employee\u0092s training.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If it is necessary for the family of a
\nDME to learn Chinese, [***] shall be offered to each person until one year
\nelapses, commencing on the date of receiving training.\u00a0 If Japanese is not the language used in the
\nschool, JV shall offer [***] to each person with respect to each language.\u00a0 However, JV shall not bear fees for training
\nif JV provides DME and his family with gratuitous language training.<\/p>\n
Article 11.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Holidays<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Under one of the following circumstances,
\nDME and his\/her family, after joint permission of the general manager and the
\ndeputy general manager, may enjoy a furlough back to Japan as long as [***] and
\n[***] shall bear any traveling fees incurred for round trip and the necessary
\naccommodation fees.<\/p>\n
\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When the DME\u0092s wife, parents, son and\/or
\ndaughter, sister and\/or brother pass(es) away or falls into critical condition.<\/p>\n
\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When a DME supposed to work in JV more
\nthan two years is preparing for marriage in Japan.<\/p>\n
\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When the son and\/or daughter of a DME
\nis\/are preparing for marriage in Japan.<\/p>\n
\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When the sister and\/or brother of a DME
\nor his\/her spouse is\/are preparing for marriage.<\/p>\n
\n
\n
-4-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The DME and his\/her family may enjoy
\n[***] furloughs back to Japan each year as long as [***] and JV shall bear any
\ntraveling fees incurred for round trip and the necessary accommodation fees.<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Before the DNE\u0092s return to Japan, if
\nhis\/her son and\/or daughter should come back to Japan to attend examinations
\nheld by a secondary school or by a school at a higher level, his\/her son and\/or
\ndaughter may return to Japan, accompanied by one guardian, upon the joint
\napproval of the general manager and the deputy general manager.\u00a0 JV shall bear any the traveling fee incurred
\nfor round trip.<\/p>\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 For circumstances other than those
\nmentioned above, the general manager and the deputy general manager may
\nnegotiate and determine rewards during furlough for DME.<\/p>\n
Article 12.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Medical Care<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall be responsible for, at its
\nexpense, health examination conducted once a year for DME and his\/her family.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall promptly take measures to
\nprovide proper medical care, at its expense, for DME who is sick or injured
\nduring work.\u00a0 DME may enjoy sick leave
\naccording to the doctor\u0092s diagnosis.<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall offer assistance in language and
\nthe selection of doctors when the family of a DME is sick or injured.<\/p>\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall bear any traveling fee incurred
\nfor round trip, if the family member of a DNIE sick or injured during work,
\nafter the permission of the general manager and the\u0092 deputy general manager,
\ncomes back to Japan for medical treatment in accordance with the doctor\u0092s
\nadvice.<\/p>\n
(5)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall bear the following fees, when
\nthe wife of a DME who stays in PRC for more than one year gets childbirth.<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0095\u00a0\u00a0\u00a0 Normal childbirth: 70% of hospitalization
\nand medical treatment<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 \u0095\u00a0\u00a0\u00a0 Abnormal childbirth: 90% of hospitalization
\nand medical treatment<\/p>\n
\n
\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article
\n13.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Other Welfare<\/b><\/a><\/p>\n
\n
JV shall reimburse DNIE and his\/her family
\nthe following fees:<\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Allowance for Arrival<\/p>\n
\n
DME and his\/her family who are supposed to
\nwork in JV in PRC for more than one year may enjoy the following allowances
\nwhen they arrive in PRC.<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 [***]<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Allowances for Return to Japan<\/p>\n
\n
The DME and his\/her
\nfamily who have worked in JV in PRC for more than one year may enjoy the
\nfollowing allowances when they return to Japan for work.<\/p>\n
[***]<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Delivery charges for Personal Belongings<\/p>\n
\n
JV shall bear delivery
\ncharges for personal belongings in accordance with the following items when the
\nDME and his\/her family return to Japan.<\/p>\n
[***]<\/p>\n
Article
\n14.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Other Expenses<\/b><\/a><\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 MATSUSHITA shall bear the air fare from
\nJapan to PRC for DME and his\/her family\u0092s coming to PRC while JV shall bear the
\nair fare from PRC to Japan for their return to Japan.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 JV shall make effort to assist DME and
\nhis\/her family in applying for the entry & exit procedure, residency
\nprocedure and in movement of personal belongings.\u00a0 JV shall bear airport construction charges.<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Membership Fees for Japanese.<\/p>\n
Both
\nparties understand that he Japanese club is an organization established for
\npromotion of friendship and assistance among Japanese residing outside
\nJapan.\u00a0 If a DME wishes to join in the <\/p>\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
club,
\nJV shall bear the membership fee for legal person while the individual DIVE
\nshall bear his\/her personal membership fee.<\/p>\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Local social insurance<\/p>\n
If
\nsuch social insurance as health insurance is available in PRC, Party A
\nshall effect, at its own cost, health insurance for DME with the permission of
\nthe general manager and the deputy general manager.<\/p>\n
Article 15.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Modification<\/b><\/a><\/p>\n
\n
This Agreement after consultation may be
\nmodified with the consent of Parties hereto in writing.<\/p>\n
Article 16.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Effectiveness<\/b><\/a><\/p>\n
\n
This Agreement is valid until the Joint
\nVenture Contract is expired or terminated.<\/p>\n
Article 17.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Miscellaneous<\/b><\/a><\/p>\n
\n
This Agreement is made in Chinese and English
\nwith three copies, each Party retaining one copy.\u00a0 Both Chinese and English versions are
\nequally authentic.<\/p>\n
\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
IN WITNESS WHEREOF, the Parties hereto cause
\ntheir authorized representatives to execute this Agreement on the date first
\nabove written.<\/p>\n
\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
Universal Communication Technology
\n  (Hangzhou) Company Limited.<\/b><\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Electric Industrial Co.,
\n  Ltd.<\/b><\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Communication Industrial
\n  Co., Ltd.<\/b><\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position:<\/p>\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n
\n<\/div>\n

<\/p>\n<\/div>\n
\n
ARTICLES OF ASSOCIATION<\/b><\/p>\n
OF<\/b><\/p>\n
UNIVERSAL COMMUNICATION
\nTECHNOLOGY (HANGZHOU COMPANY)
\nLIMITED<\/b><\/p>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
Table of Contents<\/b><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
CHAPTER 1<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
GENERAL PROVISIONS<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  2<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
PURPOSE, SCOPE AND SCALE OF BUSINESS<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  3<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
TOTAL AMOUNT OF INVESTMENT AND THE
\n  REGISTERED CAPITAL<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 4<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
BOARD OF DIRECTORS<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 5<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
MANAGEMENT OFFICE<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 6<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
FINANCIAL AFFAIRS AND AUDITING<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 7<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
TAXATION<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 8<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
PROFIT DISTRIBUTION<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 9<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
EMPLOYEES AND LABOR MANAGEMENT<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  10<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
TRADE UNION<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  11.<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
INSURANCE<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  12.<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
TERM, TERMINATION, DISSOLUTION AND
\n  LIQUIDATION<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER  13<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
RULES AND REGULATIONS<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER
\n  14<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
APPLICABLE LAW<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 15<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
SETTLEMENT OF DISPUTES<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
CHAPTER 16<\/a><\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
MISCELLANEOUS<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n<\/div>\n

<\/p>\n
\n
Articles
\nof Association<\/b><\/p>\n
Chapter
\n1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 General Provisions<\/b><\/a><\/p>\n
These
\nArticles of Association <\/b>are made on the fifth day of July in 2002 in Yokohama, Japan, in
\naccordance with the Law of the People\u0092s Republic of China on Sino-Foreign
\nEquity Joint Ventures (the \u0093Joint Venture Law<\/b>\u0094),
\nthe Regulations for the Implementation of the Law of the People\u0092s Republic of
\nChina on Sino-Foreign Equity Joint Ventures (the \u0093Joint Venture Regulations<\/b>\u0094) and other relevant officially
\npublished laws and regulations, and the provisions of the Joint Venture Contact
\non the Establishment of UNIVERSAL
\nCOMMUNICATION TECHNOLOGY (HANGZHOU) COMPANY LIMITED<\/b> (hereinafter
\nreferred to as the \u0093Company<\/b>\u0094) made
\non the fifth day of July in 2002 in Yokohama, Japan, among UTStarcom Telcom Co., Ltd.<\/b> (hereinafter
\nreferred to as \u0093Party A<\/b>\u0094 or \u0093UTS<\/b>\u0094), and Matsushita Electric Industrial Co., Ltd.<\/b> (hereinafter referred
\nto as \u0093Party B<\/b>\u0094 or \u0093MEI<\/b>\u0094), and Matsushita Communication Industrial Co., Ltd.<\/b> (hereinafter
\nreferred to as \u0093Party C<\/b>\u0094 or \u0093MCI<\/b>\u0094).<\/p>\n
MEI, MCI and UTS
\nhereunder are collectively called \u0093Parties<\/b>\u0094
\nand each a \u0093Party<\/b>\u0094.\u00a0 The Joint Venture Contract on the
\nEstablishment of UNIVERSAL COMMUNICATION
\n(HANGZHOU) TECHNOLOGY COMPANY LIMITED<\/b> are called \u0093JVC Contract<\/b>\u0094.<\/p>\n
Unless a provision
\nof these Articles of Associations otherwise provides, terms defined in the JVC
\nContract shall have the same meanings when used herein.<\/p>\n
Article 1<\/p>\n
The name of the
\nCompany shall be Universal Communication
\nTechnology (Hangzhou) Company Limited <\/b>in English and [Chinese Characters] <\/b>in Chinese.\u00a0 The legal address of the Company shall be 3
\nYile Industrial Park, 129# Wen Yi Road, Hangzhou,, China.<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 2<\/p>\n
The names and addresses of the investors of COMPANY
\nareas follows:<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
\n<\/td>\n
\n
(1) UTStarcom Telecom Co., Ltd.<\/b>, registered in Hangzhou, People\u0092s
\n  Republic of China, with its legal address at 2,3 Yile Industrial Park,
\n  129# Wen Yi Road, Hangzhou, China<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Name: Ying Wu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Position: Chairman<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Nationality: Chinese<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
(2)Matsushita Electric Industrial
\n  Co., Ltd.<\/b>,
\n  registered in 1006 Kadoma, Kadoma-shi, Osaka 571-8501, Japan.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Name:Kunio Nakamura<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Position:President<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Nationality:Japanese<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
(3)Matsushita Communication
\n  Industrial Co., Ltd.<\/b>, registered in 4-3-1 Tsunashima-higashi, Kohoku-Ku, Yokohama,
\n  223-8939, Japan.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
Legal representative:<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
Name:Yasuo Katsura<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Position:President<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Nationality:Japanese<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
Article 3<\/p>\n
\n
The
\nCompany shall be a limited liability company.\u00a0
\nThe liability of each party to the Company shall be limited to the
\namount subscribed and paid into the registered capital (as defined in
\nArticle 8).<\/p>\n
\n
Article 4<\/p>\n
\n
The
\nCompany is a Chinese corporation and is subject to the jurisdiction and
\nprotection of Chinese law.\u00a0 Any and all
\nactivities engaged in by the Company shall comply with the laws, rules and
\nregulations of China.<\/p>\n
\n
-2-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Chapter 2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Purpose, Scope and Scale of
\nBusiness<\/b><\/a><\/p>\n
Article 5<\/p>\n
The purpose of
\nestablishment of the Company is to cause the Company to engage in the business
\ndescribed in Article 6 hereof on the principles of maximizing the profit.<\/p>\n
Article 6<\/p>\n
The business scope
\nof the Company shall be design and development, manufacturing, sales, repair
\nservice of communication products such as [***].<\/p>\n
Chapter
\n3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Total Amount of Investment
\nand the Registered Capital<\/b><\/a><\/p>\n
Article 7<\/p>\n
The total amount of investment of the Company shall
\nbe\u00a0 [***].<\/p>\n
Article 8<\/p>\n
The registered
\ncapital of the Company shall be [***].<\/p>\n
Party A\u0092s
\ncontribution to the registered capital of the Company shall be RMB in cash
\nwhich is equivalent to [***] which accounts for [***] of the total registered
\ncapital of the Company.<\/p>\n
Party B\u0092s
\ncontribution to the registered capital of the Company shall be [***] in cash,
\nwhich accounts for [***] of the total registered capital of the Company:<\/p>\n
Party C\u0092s
\ncontribution to the registered capital of the Company shall be [***] in cash,
\nwhich accounts for [***] of the total registered capital of the Company:<\/p>\n
Article 9<\/p>\n
The Parties hereto
\nshall respectively make all of their contributions to the registered capital of
\nthe Company within [***] following the issuance of the business license of the
\nCompany.<\/p>\n
\n
-3-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 10<\/p>\n
After the parties
\nhave made their respective contributions in accordance with the foregoing
\nprovision, the Company shall, on the basis of a capital contribution
\nverification report issued by an accounting firm registered in the PRC and
\nretained by the Company, issue an investment certificate to each Party.\u00a0 Such investment certificate shall specify
\nthe name of the Company, the date of the establishment of the Company, the name
\nof the Party and the capital investment contributed thereby, the dates of each
\ncontribution, and the date of the investment certificate.<\/p>\n
Article 11<\/p>\n
The balance
\nbetween the total amount of investment and registered capital of the Company
\nmay, pursuant to the decision of the Board of Directors in accordance with the
\nbusiness needs of the Company, be raised by the Company through loans from
\ndomestic and\/or foreign financial institutions.<\/p>\n
Article 12<\/p>\n
The Company may
\nincrease and reduce its registered capital subject to any necessary approval of
\nthe examination and approval authority.\u00a0
\nIn case of any increase of the registered capital, each Party shall have
\nthe right to subscribe to the amount of such additional capital in accordance
\nwith its respective proportional equity interest at the time.\u00a0 If any Party does not subscribe to the
\namount of additional capital in accordance with its proportional equity
\ninterest at the time, the other Party may subscribe to it, in which event
\nappropriate adjustments shall be made to the ratio of the equity interest of
\nthe Parties.<\/p>\n
Article 13<\/p>\n
13.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Except for transfer of any part of its
\nequity interest from Party C to Party B, no party may transfer, sell,
\nassign, give or otherwise dispose of all or any part of its equity interest in
\nthe Company without the express prior written consent of the other Party, the approval
\nof the Board of Directors, and the approval of the original examination and
\napproval authority.\u00a0 In the event a
\nParty intends to assign and transfer all or part of its investment to any of
\nits affiliated companies affiliates, however, the other Parties shall grant
\ntheir consent.<\/p>\n
\n
-4-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
13.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 When one Party to the Company assigns, or
\ntransfers all or part of its equity interest (hereinafter referred to as
\n\u0093Proposing Party\u0094), the other Parties shall have pre-emptive right to purchase
\nsuch equity interest.\u00a0 If such
\npre-emptive right is not exercised within the [***] period, the Proposing Party
\nshall have the right, exercisable after the expiry of the [***] period or the
\nreceipt of the offer to purchase portion of the equity interest from the other
\nParties as the case may be, to transfer the equity interest to the third party
\nat the price, determined based on the latest audited financial statements and
\non terms and conditions not more favorable to such third party than those
\nproposed by the Proposing Party for the exercise of pre-emptive rights.<\/p>\n
13.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Upon any transfer by a Party of all or
\nany part of its equity interest in the Company, the transferring Party shall
\nsurrender to the Company for cancellation its investment certificates issued by
\nthe Company, and the Company shall issue a new investment certificate to the
\ntransferee, if necessary.<\/p>\n
13.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 After the approval of the original
\nexamination and approval authority of any increase or reduction of the registered
\ncapital of the Company or of any transfer of any Party\u0092s interest in the
\nCompany, procedures for registration shall be handled by the Company with the
\nrelevant department of administration for industry and commerce.<\/p>\n
Chapter
\n4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Board of Directors<\/b><\/a><\/p>\n
Article 14<\/p>\n
The Board of
\nDirectors is established for the Company which represents the supreme authority
\nthereof.\u00a0 The date of issuance of the
\nCompany business license shall be the date of the establishment of the Board of
\nDirectors of the Company.<\/p>\n
Article 15<\/p>\n
The Board of
\nDirectors shall be composed of [***] members including the chairman, of which
\n[***] shall be appointed by Party A, [***] shall be appointed by
\nParty B and the other [***] by Party C.\u00a0 The chairman of the Board of Directors (hereinafter referred to
\nas \u0093Chairman\u0094) shall be appointed by [***].<\/p>\n
\n
-5-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 16<\/p>\n
The term of office
\nfor the directors and the Chairman shall be [***] years; the term of office for
\nthe directors may be renewed by the appointing Party.\u00a0 Each Party may, by giving [***] of prior written notice to the
\nother Parties, remove at any time any director whom it has appointed.\u00a0 If a director is removed during his term of
\noffice, the director succeeding him shall serve for the remaining term of
\noffice of such former director.<\/p>\n
Article 17<\/p>\n
The Chairman shall
\nbe the legal representative of the Company.\u00a0
\nShould the chairman be unable to perform his responsibilities for any
\nreasons, he\/she may authorize any other director to represent the Company temporarily.<\/p>\n
Article 18<\/p>\n
18.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Board of Directors shall be the
\nhighest authority of the Company and shall have the right to make decisions on
\nall major and important matters of the Company.<\/p>\n
18.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Resolutions involving the following
\nmatters shall require the unanimous approval of the directors present,
\nincluding any proxies at a duly convened meeting of Board of Directors:<\/p>\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any amendment or modification of the
\nArticles of Association.<\/p>\n
ii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 increase, assignment or deduction of
\nregistered capital and the adjustment of each Party\u0092s contribution to the
\nregistered capital\u0092s ratio.<\/p>\n
iii.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 merger of the Company with any other
\neconomic organization.<\/p>\n
iv.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 termination, dissolution or liquidation
\nof the Company.<\/p>\n
Resolutions
\ninvolving the following matters shall require an affirmative vote of at least
\nfour fifths (4\/5) of the directors present, including any proxies at a duly
\nconvened meeting of Board of Directors:<\/p>\n
\n
i.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 issuance of any guarantees for the payment obligations
\nof any person or entity or the making of any other financing arrangements.<\/p>\n
\n
\n
-6-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
\n<\/td>\n
\n
ii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of an individual loan transaction or
\n  aggregate loan transactions on behalf of the Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
iii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of capital expenditures or capital
\n  commitments with a value exceeding [***].<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
iv.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
assignment, transfer, sale, lease or other
\n  disposition of any business or assets of the Company with a value exceeding
\n  [***] or the taking over or acquisition of any business or assets of any
\n  other person or entity with a value exceeding [***].<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
v.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
mortgage, pledge or granting of a security interest
\n  or other types of liens in any building, factory, office space or other fixed
\n  assets or capital equipment of the Company with a value exceeding [***].<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
vi.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
addition of items to or change of the scope of
\n  business of the Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
vii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
establishment of any subsidiaries or related legal
\n  persons, including but not limited to representative offices, branch offices
\n  and\/or subsidiaries.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
viii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
reorganization of the management organization of the
\n  Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
ix.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
appointment, suspension and dismissal of the general
\n  manager, deputy general manager, chief financial officer as well as his\/her
\n  scope of authority.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
x.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
formulation of annual operating plan and marketing
\n  policies of the Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xi.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
formulation of pricing policy for Products<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
distribution of profits of the Company<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xiii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
execution of any contracts with a performance term
\n  of greater than [***] or involving individually or in the aggregate more than
\n  [***].<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xiv.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
licensing of technology or know-how to or from any
\n  third party.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xv.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of remuneration and benefits of the general
\n  manager, deputy general manager, and chief financial officer.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xvi.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of the annual business plan and annual
\n  budget of the Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xvii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of the annual auditing report of the
\n  Company.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xviii.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
approval of any insurance to be carried by the
\n  Company<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
xix.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
determination of the Company\u0092s employment plans,
\n  employee salary plans, pensions, fringe benefits and bonus plan.<\/p>\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
\n
-7-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\n
\n
xx.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 contribution, use or expenditure of the general
\nreserve fund, the bonus and welfare fund and the enterprise expansion fund to
\nbe established under the PRC laws.<\/p>\n
\n
xxi.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 establishment or change of the accounting system of
\nthe Company, or appointment or dismissal of Company independent financial
\naccountants or legal counsel.<\/p>\n
\n
xxii.\u00a0\u00a0\u00a0\u00a0 other matters submitted to the Board of Directors<\/p>\n
Article 19<\/p>\n
19.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Board of Directors shall meet at
\nleast once each year.\u00a0 The First meeting
\nof Board of Directors shall be held within thirty (30) days from the date of
\nthe issuance of the business license of the Company.\u00a0 The Chairman shall set the agenda of meetings of the Board of
\nDirectors and shall be responsible for convening and presiding over meetings of
\nthe Board of Directors.<\/p>\n
19.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Chairman shall call an interim
\nmeeting of the Board of Directors under a request of at least two (2) directors
\nspecifying the matters to be discussed, and shall notify all directors in
\nwriting of the agenda.<\/p>\n
19.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Chairman shall notify each director
\nin writing of the time, date, place and agenda of any meeting of the Board of
\nDirectors thirty (30) days prior to a regular meeting and twenty (20) days
\nprior to a special or interim meeting.\u00a0
\nHowever, upon the request of at least three fifths (3\/5) of all the
\ndirectors, any special or interim meeting of the Board of Directors may be held
\nwithout going through such advance notification procedure, but reasonable time
\nand writing notice shall be given to all the directors for their attending.<\/p>\n
19.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Unless otherwise agreed to by the Board
\nof Directors, all meetings of the Board of Directors shall be held at the
\nCompany\u0092s legal address.<\/p>\n
19.5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Meetings of the Board of Directors may be
\nheld by telephone or other electronic audio means such that all persons
\nparticipating in the meeting are able to hear, be heard and communicate with
\neach other at all times, and participation by a director or his proxy in a
\nmeeting by such means shall constitute presence of such director or his proxy
\nin person at the meeting.<\/p>\n
\n
-8-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
19.6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any action to be taken at any meeting of
\nthe Board of Directors may be taken without a meeting of Board of Directors if
\nall directors consent to such action in writing, and such written consent shall
\nbe filed in the minute book.<\/p>\n
19.7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the Chairman gets sick or injured and
\nbecomes unable to preside over regular meeting of Board of Directors, another
\ndirector specifically authorized by the Chairman shall call upon the aforesaid
\nmeeting and take over the rights and powers of the Chairman.<\/p>\n
19.8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any director who is unable to attend a
\nmeeting of the Board of Directors for any reason may appoint a proxy in
\nwriting, the proxy may be a director or not, to attend and vote on his\/her
\nbehalf.\u00a0 The proxy shall have the same
\nrights and powers as the director who entrusted him.<\/p>\n
19.9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Majority of the Board of Directors shall
\nbe present in person or by proxy at any meetings of the Board of Directors to
\nform a quorum.<\/p>\n
19.10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Detailed minutes shall be made for each meeting of the
\nBoard of Directors and be signed by all directors and proxies present at the
\nmeeting.\u00a0 The minutes shall be written
\nin both Chinese and English, but only the English text shall be authentic and
\nhave legal force.\u00a0 Minutes shall be kept
\nby the Company during its term of existence and be made freely available to all
\ndirectors and each Party at any time.<\/p>\n
19.11\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The traveling expenses, accommodation and other costs
\nand expenses directly incurred by a director or a proxy in performing its
\nduties as a director of the Company shall be borne by the Company.<\/p>\n
19.12\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Meetings of the Board of Directors shall proceed in
\naccordance with the agenda determined pursuant to the provisions herein, and
\neach matter on the agenda shall be discussed appropriately and, if necessary,
\nput to a decision by way of resolutions.\u00a0
\nAny resolutions made at a meeting conducted by telephone or other means
\nof communication shall be confirmed in writing by all the persons participating
\nin the meeting no later than seven (7) days after the meeting and filed in the
\nminute books of the Company.<\/p>\n
\n
-9-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
19.13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 All information discussed at meetings of the Board of
\nDirectors shall be treated as confidential and shall not be disclosed to any
\nthird party without the approval of the Board of Directors, unless otherwise
\nrequired by law.<\/p>\n
Chapter
\n5\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Business Management
\nOrganization<\/b><\/a><\/p>\n
Article 20<\/p>\n
The Company shall
\nestablish a management office under the Board of Directors to be responsible
\nfor the daily operation and management of the Company.\u00a0 The management office shall have one (1)
\ngeneral manager and one (1) deputy general manager.\u00a0 The general manager shall be nominated by Party A and
\nappointed by the Board of Directors, while the deputy general manager shall be
\nnominated by Party C and appointed by the Board of Directors.\u00a0 The deputy general manager shall assist the
\ngeneral manager in the daily operation and management of the Company, and the
\ngeneral manager and deputy general manager shall jointly organize and lead the
\ndaily operation and the management of the Company.\u00a0 The Company may set up various departments to be responsible for
\nsuch matters as technology, manufacturing, finance, customer services, and
\nadministration.<\/p>\n
Article 21<\/p>\n
The management
\noffice shall directly report to the Board of Directors, shall carry out the
\ndecisions of the Board of Directors, and shall organize and lead the daily
\noperation and management of the Company.\u00a0
\nThe specific rights and powers of the management office are prescribed
\nbelow:<\/p>\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 implement JVC Contract and its
\nappendixes, the Articles of Association and the resolutions made by the Board
\nof Directors.<\/p>\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulate the annual operating plan and
\nsubmit to the Board of Directors for review and approval,<\/p>\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 organize and manage the daily operation
\nof the Company.<\/p>\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 submit regularly to the Board of
\nDirectors written reports on the revenue and expenses of the Company.<\/p>\n
\n
-10-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulate and implement the rules and
\nregulations on the operation and management of the Company.<\/p>\n
(f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 appoint and dismiss the department
\nmanagers<\/p>\n
(g)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 determine the specific duties and
\nresponsibilities of the deputy general manager and the department managers.<\/p>\n
(h)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 determine the employment and dismissal of
\nemployees other than those to be determined by the Board of Directors, the
\npolicies regarding rewards and punishment, promotion and salaries of employees
\nand personnel training programs.<\/p>\n
(i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approve capital expenditures or capital
\ncommitments or such commitment in the aggregate of less than [***] in any
\nfiscal year.<\/p>\n
(j)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of marketing policies of the
\nCompany subject to approval of the Board of Directors;<\/p>\n
(k)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 establishment of policies and procedures
\nfor the management of the Company and change of the structure of the management
\norganization of the Company subject to approval of the Board of Directors<\/p>\n
(l)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 formulation of the Company\u0092s employment
\nplans, employee salary plans, pensions, fringe benefits, and bonus plans
\nsubject to approval of the Board of Directors<\/p>\n
(m)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Formulation of contribution, use or
\nexpenditure of the general reserve fund, the bonus and welfare fund and the
\nenterprise expansion fund to be established under PRC law, subject to approval
\nof the Board of Directors<\/p>\n
(n)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 approval of any insurance to be carried
\nby the Company, subject to approval of the Board of Directors<\/p>\n
(o)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 refer matters of importance to the
\nCompany to the Board of Directors for its consideration.<\/p>\n
\n
-11-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(p)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 handle other matters within the scope of
\nauthorization granted by the Board of Directors.<\/p>\n
Article 22<\/p>\n
The term of office
\nof the general manager and the deputy general managers shall be [***], and
\ntheir term of office may be renewed by the Board of Directors if they are
\ncontinuously nominated and recommended by the nominating and recommending
\nParty.<\/p>\n
Chapter
\n6\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Financial Affairs and
\nAuditing<\/b><\/a><\/p>\n
Article 23<\/p>\n
The Company shall
\nestablish a financial and accounting system in accordance with PRC laws and the
\nJVC Contract.\u00a0 Such financial and
\naccounting system and any major changes thereof shall be subject to the
\napproval of the Board of Directors.<\/p>\n
Article 24<\/p>\n
The fiscal year of
\nthe Company shall coincide with the calendar year, i.e. from January 1 to
\nDecember 31 of each year.\u00a0 The
\nfirst fiscal year shall begin from the date of the establishment of the Company
\nand end on December 31 of that year and the last fiscal year shall end on
\nthe date of the dissolution of the Company.<\/p>\n
Article 25<\/p>\n
The accounting of
\nthe Company shall be subject to the International Uniform Regime of Rights and
\nLiabilities and the International Uniform Accounting System of Debit and
\nCredit.\u00a0 All accounting records,
\nvouches, books and statements of the Company shall be made and kept in both
\nChinese and English.\u00a0 All financial
\nstatements and reports of the Company shall be made and kept in both Chinese
\nand English.<\/p>\n
Article 26<\/p>\n
The Company shall
\nhave its account denominated in RMB, but may, if necessary, also adopt US
\nDollars or other foreign currencies as supplementary bookkeeping
\ncurrencies.\u00a0 Where RMB is converted to
\nother currencies, the conversion coefficient [***].<\/p>\n
\n
-12-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 27<\/p>\n
Allocations for
\nreserve funds and enterprise expansion funds of the Company and bonuses and
\nwelfare funds for staff and workers shall be set aside in accordance with
\napplicable laws.\u00a0 The annual proportion
\nof allocations shall be decided by the Board of Directors according to the
\nfinancial conditions of the Company and applicable PRC laws.\u00a0 The target annual proportion of allocations
\nshall be [***], subject to change of after-tax profits as determined in
\nArticle 32.1<\/p>\n
Article 28<\/p>\n
The Company shall
\nopen RMB and foreign currency accounts with banks registered in China in
\naccordance with PRC laws.\u00a0 The foreign
\nexchange matters of the Company shall be handled in accordance with the
\nprovisions of the PRC foreign exchange laws.<\/p>\n
Article 29<\/p>\n
The Company shall
\npay the reasonable costs of preparing regular financial statements as may be
\nneeded by Party A, Party B or Party C.<\/p>\n
Chapter
\n7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Taxation<\/b><\/a><\/p>\n
Article 30<\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Company shall pay taxes in accordance
\nwith the laws and regulations of the PRC in relation to taxes of foreign
\ninvestment enterprise.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The parties shall apply to obtain the
\nbenefits for the Company, the parties hereto and all of their personnel, for
\nall of the applicable tax exemptions, reductions, privileges and preferences
\nwhich are now or in the future become obtainable under the laws and regulations
\nof the PRC and under any applicable treaties or international agreements to
\nwhich the PRC may now be or may hereafter become a party.<\/p>\n
Article 31<\/p>\n
The employees of
\nthe Company shall pay individual income tax in accordance with the Individual
\nIncome Tax Law of the PRC.\u00a0 Party A
\nand the Company shall assist the members of the <\/p>\n
\n
-13-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Management Office
\nand employees dispatched to the Company by Party B or Party C in
\nrelation to the procedure for payment of individual income tax.<\/p>\n
Chapter
\n8\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Profit Distribution<\/b><\/a><\/p>\n
Article 32<\/p>\n
The Company shall
\ndistribute profits to the Parties as follows:<\/p>\n
32.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Within [***] from the end of each fiscal
\nyear, the Board of Directors shall determine the amount of after-tax profit of
\nthe Company to be reserved for production and operation and the amount of
\nprofits to be distributed to the Parties [***].\u00a0 Distribution of profits to the Parties B and C shall be made
\nin Japanese Yen.<\/p>\n
32.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Losses from previous years must be made
\nup before any profits from the current year are distributed to the
\nParties.\u00a0 The undistributed profits of
\nthe past year(s) may be distributed together with this year\u0092s profits.<\/p>\n
Chapter
\n9\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Employees and Labor
\nManagement<\/b><\/a><\/p>\n
Article 33<\/p>\n
The recruitment
\nand employment of employees of the Company shall be made in accordance with the
\nprovisions of the Contract and the guidelines adopted by the Board of Directors
\nand based on the merits of the candidates and shall be supervised and approved
\nby the general manager subject to the consultation of the deputy general
\nmanager.\u00a0 However, the Company shall
\naccept employees dispatched by Party A, Party B or Party C as
\nlong as necessary for the purpose of the JVC Contract in accordance with
\nPersonnel Assignment Agreement attached hereto as Appendix IV.\u00a0 Dispatched employees from Party A,
\nParty B and Party C (except the general manager, the deputy general
\nmanager, chief financial officer and deputy department manager of design and
\ndevelopment department ) shall be decided by the general manager based on
\nbusiness needs.<\/p>\n
\n
-14-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
Article 34<\/p>\n
The Company shall
\nsign labor contracts with its employees, which contracts shall cover dismissal
\nand resignation, wages, insurance, welfare benefits, rewards, disciplines,
\npenalties and other matters, in accordance with applicable PRC laws<\/p>\n
Article 35<\/p>\n
35.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Without the consent of the general
\nmanager subject to the consultation of the deputy general manager, no employees
\nof the Company except those dispatched by either Party B or Party C,
\nshall maintain any employment relationship, whether contractual or otherwise,
\nwith any third party during their employment with the Company.\u00a0 In the event any such employee is found to
\nbe maintaining an employment relationship with any third party, the Company
\nshall have the right to terminate the employment of such employee at any time
\nwithout any liability.<\/p>\n
35.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 All personnel of the Company shall be
\nsubject to confidentiality obligations concerning information obtained from the
\nCompany and all the Parties and shall be strictly forbidden from disclosing any
\nof such information to any third party without the prior authorization and
\napproval of the general manager and the deputy general manager.<\/p>\n
Chapter
\n10\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Trade Union<\/b><\/a><\/p>\n
Article 36<\/p>\n
The PRC employees
\nof the Company shall have the right to establish a trade union and to
\nparticipate in the activities of such trade union in accordance with the Trade
\nUnion Law of the People\u0092s Republic of China, Articles of Association of Chinese
\nTrade Union and other relevant regulations applicable to foreign investment
\nenterprises.<\/p>\n
Article 37<\/p>\n
The trade union
\nestablished pursuant to Article 34 hereof has the right to represent the
\ninterests of the employees in signing labor contracts with the Company and to
\nsupervise the execution of labor contracts.\u00a0
\nIt shall also have the right to protect the legal rights and material
\nbenefits of the employees of the Company.\u00a0
\nThe trade union will assist the mediation of disputes arising between <\/p>\n
\n
-15-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
the Company and
\nthe employees thereof, and may negotiate such disputes with the Company if
\nentrusted by the relevant employee.<\/p>\n
Chapter
\n11.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Insurance<\/b><\/a><\/p>\n
Article 38<\/p>\n
Insurance of the
\nCompany against all risks shall be from the insurance companies registered
\nwithin China.\u00a0 The cover, amount,
\nperiod, etc of the insurance shall be proposed by the general manager and the
\ndeputy general manager in accordance with the needs of the Company, subject to
\napproval by the Board of Directors.<\/p>\n
Chapter
\n12.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Term, Termination,
\nDissolution and Liquidation<\/b><\/a><\/p>\n
Article 39<\/p>\n
The duration of
\nthe Company shall be [***] commencing from the date on which the business
\nlicense of the Company is issued.\u00a0 An
\napplication for the extension of duration, proposed by one Party and
\nunanimously approved by the Board of Directors, shall be submitted to the
\nexamination and approval authority six months prior to the expiration date of
\nthe term of the Company.<\/p>\n
Article 40<\/p>\n
40.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Company shall be dissolved and the
\nJVC Contract shall be terminated in case any of the following situations or
\naccidents occurs:<\/p>\n
(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the term of JVC Contract expires and is
\nnot extended.<\/p>\n
(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 any Party delays to perform its
\nobligations to contribute in full its subscription of the registered capital
\npursuant to JVC Contract and fails to perform the said obligations within [***]
\ncommencing from the date specified in the JVC Contract.<\/p>\n
(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the Company does not generate, as
\nreported by its audited financial statements, a net profit for [***], after
\nconsultation, the Parties fail to agree on how to improve satisfactorily the
\nfinancial situation of the Company.<\/p>\n
\n
-16-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 due to an event of force majeure as
\nstipulated herein, the Company is unable to continue to carry out operations
\nfor [***] from the day the event of force majeure occurs and the Parties fail
\nto agree on how to improve the situation.<\/p>\n
(5)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the Company is ordered to close in
\naccordance with PRC laws because of serious violations of PRC laws.<\/p>\n
(6)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 the operation and business as approved by
\nthe relevant departments of Chinese government are prohibited or significantly
\nrestricted by any government authority.<\/p>\n
40.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event any of the conditions set
\nforth in (ii) above occurs, any non-breaching Party shall have the right to
\nunilaterally apply to the examination and approval authority to terminate the
\nJVC Contract and dissolve the Company.<\/p>\n
40.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event any of the conditions set
\nforth in any of (iii) through (vi) above occurs, either Party shall have the
\nright to notify the other Parties in writing and request that the JVC Contract
\nbe terminated and the Company be dissolved.\u00a0
\nUpon such request, the Board of Directors shall within thirty (30) days
\nof such written request, adopt resolutions for such termination, and the
\nCompany shall apply to the relevant PRC authorities for approval of such
\ntermination and dissolution.\u00a0 Each Party
\nshall cause the directors it has appointed to vote in favor of such termination
\nresolutions.<\/p>\n
40.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In case of termination of the JVC
\nContract, the following appendixes shall terminate forthwith.<\/p>\n
\n
Appendix I: Technical License Agreement by MCI<\/p>\n
Appendix II: Technical License Agreement by UTS<\/p>\n
Appendix III: Equipment Purchase Agreement<\/p>\n
Appendix IV: Personnel Assignment Agreement<\/p>\n
Chapter
\n13\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Rules and Regulations<\/b><\/a><\/p>\n
Article 41<\/p>\n
The rules and
\nregulations made by the Board of Directors and Management Office include:<\/p>\n
\n
-17-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
(a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Business administration regulations,
\nincluding those in respect of the functions and powers of all sub-sections and
\nthe work procedures;<\/p>\n
\n
(b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Employees regulations;<\/p>\n
\n
(c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Manpower and payment regulations;<\/p>\n
\n
(d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Employees\u0092 attendance, promotion, reward,
\nand punishment regulations;<\/p>\n
\n
(e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Employees\u0092 welfare regulations;<\/p>\n
\n
(f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Finance rules;<\/p>\n
\n
(g)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Liquidation procedures where the COMPANY
\ndissolves;<\/p>\n
\n
(h)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Other rules and regulations where
\nnecessary.<\/p>\n
Chapter
\n14\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Applicable Law<\/b><\/a><\/p>\n
Article 42<\/p>\n
The conclusion,
\nvalidity, interpretation and implementation of these Articles of Association
\nand resolution of disputes thereunder shall be governed by the laws of the PRC.<\/p>\n
Chapter
\n15\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Settlement of Disputes<\/b><\/a><\/p>\n
Article 43<\/p>\n
43.1\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In the event a dispute arises in
\nconnection with the interpretation or implementation of these Articles, the
\nParties shall attempt in the first instance to resolve such dispute through
\nfriendly consultations.<\/p>\n
43.2\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the dispute is not resolved through
\nfriendly consultations within sixty (60) days after the commencement of
\ndiscussions, or such longer period as the Parties agree in writing at that
\ntime, then notwithstanding any other provision of these Articles, any Party may
\nsubmit the dispute for arbitration.<\/p>\n
43.3\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Any disputes initiated by Party A, arising
\nout of or in connection with these Articles, shall be finally settled by an
\narbitration in Tokyo, Japan by the Japan Commercial Arbitration Association
\n(\u0093JCAA\u0094) in accordance with JCAA\u0092s arbitration rules in effect at the time of
\narbitration.\u00a0 Any disputes initiated by
\nParty B or Party C, arising out of or in connection with <\/p>\n
\n
-18-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 these Articles shall be finally settled
\nby an arbitration in Shanghai, PRC by the China International Economic and
\nTrade Arbitration Commission (\u0093CIETAC\u0094) in accordance with CIETAC\u0092s arbitration
\nrules in effect at the time of arbitration.\u00a0
\nThe award rendered by the arbitrators shall be final and binding upon
\nthe Parties.\u00a0 The Parties hereto agree
\nto honor such award.\u00a0 Any competent
\ncourt may enforce such award.\u00a0 All
\narbitration costs, including costs for the enforcement of any arbitration
\naward, shall be borne by the losing Party.<\/p>\n
43.4\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The Parties agree that during the
\narbitration proceedings, they shall continue to observe and perform these
\nArticles except for the provisions subject to or involved in arbitration.<\/p>\n
Chapter 16\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Miscellaneous<\/b><\/a><\/p>\n
Article 44<\/p>\n
Any modification
\nof these Articles of Association shall be adopted by the Board of Directors by
\nunanimous consent of the directors present including any proxies, at the
\nmeeting, and shall be reported to and ratified by the original Approval
\nAuthority.<\/p>\n
Article 45<\/p>\n
These Articles of
\nAssociation have been concluded by execution of six original copies each in
\nChinese and English.\u00a0 Both of the
\nlanguage versions shall be equally authentic.<\/p>\n
Article 46<\/p>\n
These Articles of
\nAssociation shall not take effect unless they win the approval of the Approval
\nAuthority.<\/p>\n
Article 47<\/p>\n
In case of any
\ninconsistency or conflict between any of the provisions of these Articles of
\nAssociation and the provisions of the JVC Contract, the provisions of the JVC
\nContract shall prevail.<\/p>\n
Article 48<\/p>\n
Unless otherwise
\nagreed by the parties the Company shall bear all the costs incurred in
\nconnection with these Articles of Association and all the costs of the business
\nlicense application.<\/p>\n
\n
-19-<\/p>\n
\n
\n<\/div>\n

<\/p>\n
\n
These Articles of
\nAssociation are signed in the Chinese language in six (6) originals and in
\nEnglish language in six (6) originals by the legal or authorized
\nrepresentatives of the parties on the date first set forth above.<\/p>\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n
UTStarcom Telecom Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Johnny Chou<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name: Johnny Chou<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position: General Manager<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Witnessed by:<\/p>\n<\/td>\n
\n
\/s\/ Hong Liang Lu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Name: Hong Liang Lu<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
Position: President
\n  & CEO<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
UTStarcom, Inc.<\/p>\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita Communication Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Yukio Shohtoku<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name: Yukio Shohtoku<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position: Managing Director<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Matsushita
\n  Communication Industrial Co., Ltd.<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
By:<\/p>\n<\/td>\n
\n
\/s\/ Yasuo Katsura<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Name. Yasuo Katsura<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n
\n
Position: President<\/p>\n<\/td>\n
\n
\n<\/td>\n
\n
\n<\/td>\n<\/tr>\n<\/table>\n
\n
\n
-20-<\/p>\n
\n
\n<\/div>\n

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