COMMITTED RECEIVABLES PURCHASE AGREEMENT

 

effectuated on such Proposed Date by payment in cash or by setoff by Buyer against the Purchase Price for the Proposed Receivables; and

 

iv.                                    There shall not have been any Material Adverse Change in Seller, Parent or, solely with respect to the purchase of its related Eligible Receivables (and unless waived in writing by Buyer), any Account Debtor, since the date of the last purchase hereunder.

 

(c)                                   Purchase Price .  Buyer shall pay the Purchase Price for Purchased Receivables purchased on any Purchase Date, denominated in U.S. dollars, to Seller’s Account in immediately available funds on such Purchase Date.

 

(d)                                  Security Interest .  Effective as of the date hereof, Seller has granted (and Seller hereby does grant) (in addition to and not in substitution of the grant under Section 5(e) below) to Buyer a first priority security interest in and to any and all present and future Purchased Receivables and the proceeds thereof to secure the repayment of all amounts paid to Seller hereunder with accrued interest thereon, and this Agreement is deemed to be a security agreement.  With respect to such grant of a security interest, Buyer may at its option exercise from time to time any and all rights and remedies available to it hereunder, under the UCC or otherwise.  Seller agrees that five Business Days shall be reasonable prior notice to Seller of the date of any public or private sale or other disposition of all or any of the Receivables.

 

(e)                                   Commitment Fee .  Seller agrees to pay to Buyer quarterly in arrears on or before the 10th day following the end of each of Seller’s fiscal quarter a commitment fee of [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SEC] (the “ Commitment Fee ”) on the average daily difference between the Outstanding Purchase Price and the Purchase Commitment.

 

(f)                                     True Sale; No Recourse .  On and at all times following the Trigger Date, except as otherwise provided in Section 5, each purchase of the Purchased Receivables is made without recourse to Seller and Seller shall have no liability to Buyer for any Account Debtor’s failure to pay any Purchased Receivable when it is due and payable under the terms applicable thereto.  Buyer agrees that it shall be responsible for the non-payment of any Purchased Receivable to the extent it is the result, with respect to Receivables purchased hereunder on and following the Trigger Date, of an Insolvency Event of an Account Debtor, such assumption of credit risk (with respect to the Outstanding Purchase Price relating thereto only) being effective as of the Purchase Date for such Purchased Receivables.  Buyer and Seller have structured the transactions contemplated by this Agreement as a sale after the occurrence of the Trigger Date, and Buyer and Seller each agree to treat each such transaction as a sale for all purposes, including, without limitation, in their respective books, records, computer files, tax returns (federal, state and local), regulatory and governmental filings (and shall reflect such sale in their respective financial statements).  Seller will advise all persons inquiring about the ownership of the Receivables that all such Purchased Receivables have been sold to Buyer.  In the event that, contrary to the mutual intent of the parties, any purchase of such Purchased Receivables following the Trigger Date is

 

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not characterized as a sale, Seller shall, effective as of the Trigger Date, be deemed to have granted to Buyer the security interest granted in Section 1(d) above.

 

2.                                        Seller Representations and Warranties .  Seller represents and warrants to Buyer on each Purchase Date that the representations and warranties set forth on Exhibit C are true and correct.

 

3.                                        Seller Covenants .  Seller agrees to perform the covenants set forth on Exhibit D.

 

4.                                        Collection Activities .

 

(a)                                   Buyer appoints Seller as its servicer and agent for the administration and servicing of all Purchased Receivables sold to Buyer hereunder, and Seller hereby accepts such appointment and agrees to perform all necessary and appropriate commercial collection activities with the same care and policies as are applied to its own Receivables in arranging the timely payment of amounts due and owing by any Account Debtor all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, including, without limitation, diligently and faithfully performing all servicing and collection actions (including, if necessary, acting as party of record in foreign jurisdictions); provided, however , that such appointment shall not release Seller from any of its duties, responsibilities, liabilities and obligations resulting from or arising hereunder.  Buyer may replace Seller as its servicer pursuant to clause (f) below.  In connection with its servicing obligations, Seller will perform its obligations and exercise its rights under contracts related to the Purchased Receivables with the same care and applying the same policies as it would exercise and apply if it owned the Purchased Receivables and shall act in the best interest of Buyer to maximize Collections and provided, further that following an Insolvency Event of an Account Debtor of Receivables purchased hereunder on or after the Trigger Date (or any other event that Buyer may assume the risk thereof in writing from time to time after the date hereof), Buyer shall be fully responsible for all costs and expenses incurred by Seller in connection herewith, which costs and expenses shall not be adjusted or setoff against Collections in any manner.

 

(b)                                  Seller will, on or prior to the initial Purchase Date, establish in its own name, the Collection Account.  Seller covenants and agrees (i) to send a notice to each Account Debtor substantially in the form attached hereto as Exhibit E instructing each Account Debtor to pay all amounts owing under the Receivables to the Collection Account, (ii) not to change such payment instructions while any Purchased Receivables remain outstanding, and (iii) to take any and all other reasonable actions, including actions requested by Buyer, to ensure that all amounts owing under the Receivables will be deposited exclusively to the Collection Account.

 

(c)                                   If Seller receives a misdirected payment of a Receivable from any Account Debtor, Seller will immediately notify Buyer and immediately (and in any event within two Business Days of receipt thereof) remit the funds to the Collection Account.

 

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Until remitted, Seller will hold such funds in trust as Buyer’s exclusive property and safeguard such funds for the benefit of Buyer.

 

(d)                                  Seller, as servicer, shall be responsible for identifying, matching and reconciling any payments received in the Collection Account with the Receivable associated with such payment. If any payment is received in the Collection Account other than payments on the Receivables, such funds will immediately be forwarded to Seller, subject to receipt of evidence of payments details documenting that the payment is for transactions other than the Receivables and that no event under Section 5 exists. If any payment is received from an Account Debtor, and such payment is not identified or misidentified by such Account Debtor as relating to a particular Receivable and cannot otherwise be reasonably identified (e.g. by invoice amount) as relating to a particular Receivable or if Buyer determines that the reconciliation is otherwise defective within five Business Days of receipt thereof or Seller defaults in its obligations as servicer as set forth under this Section 4, such payment shall be applied first to the unpaid Purchased Receivables of such Account Debtor in chronological order (beginning with the oldest unpaid Purchased Receivable), and then to Receivables which have not been purchased hereunder, also in chronological order.

 

(e)                                   Based on the reconciliation information  provided to Buyer by Seller as servicer prior to 11am Pacific time under clause (d) above and other information available to Buyer, (1) Buyer will remit to Seller’s Account the same day, if the reconciliation is in order, (i) Collections on account of Receivables not purchased hereunder and (ii) all other collections received in the Collection Account and not relating to the Receivables, and (2) Buyer will retain for its own account from Collections on account of Purchased Receivables an amount up to the Discount of such Purchased Receivables and any amounts then owing to Buyer.

 

(f)                                     If Seller defaults in its obligations as servicer as set forth under this Section 4, Buyer may at any time thereafter (and shall, without requirement of notice to Seller or any other Person, upon a Material Adverse Change or an Insolvency Event of Seller or Parent) replace Seller as servicer (which replacement may be effectuated through the outplacement to a Person of all back office duties, including billing, collection and processing responsibilities, and access to all personnel, hardware and software utilized in connection with such responsibilities).

 

5.                                        Repurchase Events; Indemnities and Set-Off .

 

(a)                                   If any of the following events (“ Events of Repurchase ”) occurs and is continuing:

 

i.                                           any representation or warranty by Seller hereunder with respect to any of the Purchased Receivables is incorrect when made or deemed made and shall have an adverse effect on the ability to collect the Net Invoice Amount of such Purchased Receivables; or

 

ii.                                        If,

 

4

 

(1)                                   Seller fails to perform or observe any other term, covenant or agreement with respect to any of the Purchased Receivables and such failure shall have an adverse effect on the collectibility of the Net Invoice Amount of any Purchased Receivable;

 

(2)                                   Seller instructs an Account Debtor to pay to an account other than the Collection Account or if an Account Debtor makes repeated misdirected payments to Seller;

 

(3)                                   An Account Debtor asserts a Dispute with respect to any Purchased Receivable, or

 

(4)                                   Buyer does not receive all amounts owing with respect to a Purchased Receivable within 45 days of the Due Date thereof for any other reason, unless such non-payment with respect to Receivables purchased hereunder following the Trigger Date is the result of an Insolvency Event of an Account Debtor,

 

then, Seller shall, at the time, in the manner and otherwise as hereinafter set forth, repurchase and pay for the affected part (or, if such misrepresentation, Dispute or failure to perform relates to more than 20% of such affected Purchased Receivables then outstanding, then, at Buyer’s discretion, all) of such Purchased Receivables then outstanding affected by such Event of Repurchase at Buyer’s option and demand.  The repurchase price for a Purchased Receivable shall be the amount equal to the Outstanding Purchase Amount relating thereto and shall be paid to the Collection Account in immediately available funds.  Any repurchase of a Purchased Receivable hereunder shall be without recourse to or warranty by Buyer.  Seller agrees that Buyer may set off against any unpaid obligation of Seller under this Section, as provided in subsection (d) below.  Amounts due hereunder shall accrue interest at the Refundable Discount Margin.

 

(b)                                  Seller hereby agrees to indemnify Buyer (together with its officers, directors, agents, representatives, shareholders, counsel, employees and lenders, each, an “ Indemnified Party ”) from and against any and all claims, losses and liabilities (including, without limitation, reasonable attorneys’ fees) (all of the foregoing being collectively referred to as “ Indemnified Amounts ”) arising out of or resulting from any of the following: (i) the sale to Buyer of any Receivable which purports to be a Purchased Receivable as to which the representations and warranties made herein are not true and correct on the Purchase Date therefor; (ii) any other representation or warranty made or deemed made by Seller (or any of its officers) under or in connection with this Agreement which shall have been incorrect in any material respect when made; (iii) the failure by Seller or any Purchased Receivable to comply with any applicable law, rule or regulation; (iv) the failure to vest in Buyer a perfected security interest in each Purchased Receivable and the proceeds and Collections in respect thereof, free and clear of any liens or encumbrances of any kind or nature whatsoever; (v) any Dispute or any other claim resulting from the services or merchandise related to such Purchased Receivable or the furnishing or failure to furnish such services or merchandise or

 

5

 

relating to collection activities with respect to such Purchased Receivable; provided, however, this clause (v) shall not be deemed to include any failure to pay arising out of any Insolvency Event of an Account Debtor, or (vi) the commingling by Seller of Collections at any time with other funds of Seller or any other Person; provided, however , with respect to Receivables purchased hereunder on and following the Trigger Date that in all events there shall be excluded from the foregoing indemnification any claims, losses or liabilities resulting solely from the gross negligence or willful misconduct of an Indemnified Party or as the result of an Insolvency Event of an Account Debtor.  Amounts due hereunder shall accrue interest at the Refundable Discount Margin.

 

(c)                                   Tax Indemnification .  Seller shall pay, and indemnify and hold Buyer harmless from and against, any taxes that may at any time be asserted in respect of the purchase transactions hereunder (including any sales, occupational, excise, personal property, privilege or license taxes, or any withholdings, but not including taxes imposed upon Buyer with respect to its overall net income) and costs, expenses and reasonable counsel fees in defending against the same, whether arising by reason of the acts to be performed by Seller hereunder or otherwise.

 

(d)                                  Set-Off .  Seller further agrees that, if Seller fails to pay any amounts due under this Section 5 within three (3) Business Days after receipt of notice from Buyer of the occurrence of an Event of Repurchase, Seller hereby irrevocably instructs Buyer to set-off such amount against the Purchase Price of any Proposed Receivables to be purchased on or after such date or against any Collections.  Buyer may also set-off for unpaid amounts under this Section 5 against any other funds of Seller held by Buyer.  No act or consent of any nature whatsoever is required prior to the right of Buyer to exercise such right of set-off.

 

(e)                                   Collateral Security .  As collateral security for Seller’s existing and future obligations to repurchase and pay for Purchased Receivables as set forth in clause (a) above and indemnification obligations set forth in clauses (b) and (c) above, Seller hereby grants to Buyer a first priority lien on and security interest in, and the right of set-off against (1) the Collection Account and (2) all proceeds of the foregoing.

 

(f)                                     UCC .  The rights granted to Buyer hereunder are in addition to all other rights and remedies afforded to Buyer as a secured party under the UCC.

 

6.                                        Notices .  Unless otherwise provided herein, all communications by Seller or Buyer or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid, or by email) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telecopier (with confirmed receipt) to Seller or Buyer, as the case may be, at its address set forth below:

 

If to Seller:		UTStarcom, Inc.
		1275 Harbor Bay Parkway

 

6

 

		Alameda, CA 94502
		Fax: (510) 864-8802
		email: ksanfelipe@utstar.com
		cc email: candace.hsu@utstar.com
		Attention: Keith San Felipe, Treasurer
If to Buyer:		Citibank, N.A.
		388 Greenwich Street, 25th Floor
		New York, NY 10013
		Fax: (212) 816-6290
		email: Erik.Wanberg@citigroup.com
		Attention: Erik Wanberg

 

Any Request, and any supporting documentation in connection herewith or therewith, such as copies of invoices, may be sent by Seller by fax or as a PDF file attachment to an email, and Buyer and Seller may otherwise communicate by email or fax.  Seller agrees that Buyer may presume the authenticity, genuineness, accuracy, completeness and due execution of any email or fax communication bearing a facsimile or scanned signature resembling a signature of an authorized Person of Seller without further verification or inquiry by Buyer.  Notwithstanding the foregoing, Buyer in its sole discretion may elect not to act or rely upon such a communication and shall be entitled (but not obligated) to make inquiries or require further Seller action to authenticate any such communication.

 

A Person may change the address at which it is to receive notices hereunder by written notice in the foregoing manner given to the other.

 

7.                                        Survival .  All covenants, representations and warranties made herein shall continue in full force and effect so long as any Purchased Receivables remain outstanding.  Seller’s obligations to indemnify Buyer with respect to the expenses, damages, losses, costs and liabilities shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Buyer have run.

 

8.                                        Expenses .  Seller shall reimburse Buyer for all reasonable costs (including reasonable attorneys’ fees and expenses) Buyer incurs in connection with the preparation and negotiation of this Agreement in excess of $10,000 and for the enforcement of its rights or indemnities hereunder.

 

9.                                        General Provisions .

 

This Agreement shall be governed by the laws of the State of New York, without giving effect to conflicts of law principles.  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States sitting in the Borough of Manhattan, New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement

 

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of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court.  A final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court located in the Borough of Manhattan.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of inconvenient forum to the maintenance of such action or proceeding in any such court.

 

This Agreement represents the final agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings and agreements with respect to such subject matter.  No provision of this Agreement may be amended or waived except by a writing signed by the parties hereto.  This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided , however , that Seller may not assign any of its rights hereunder without Buyer’s prior written consent, given in its sole discretion.

 

Buyer shall have the right to sell, transfer, assign, negotiate, or grant participations in all or any part of, or any interest in, Buyer’s rights, obligations and benefits hereunder; provided , that, at all times prior to an Event of Termination, Buyer shall provide Seller at least 30 days’ notice prior to any sale, transfer or assignment of Buyer’s obligations under this Agreement, such  sale, transfer or assignment shall be only to an Eligible Assignee and shall be subject to the prior consent of Seller, such consent to be provided in a timely fashion and not unreasonably withheld; and provided, further , that an assignment by Buyer to an Affiliate of Buyer shall not be subject to such prior notice and consent provisions.  Subject to the notice and consent provisions set forth above, from and after the effective date of any sale, transfer or assignment , the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned thereunder, shall have the rights, duties and obligations of a Buyer under this Agreement, the Performance Undertaking and related documents, and the assigning Buyer thereunder, to the extent of the interest so assigned, shall be released from its obligations under this Agreement and the other documents relating hereto.

 

Each provision of this Agreement shall be severable from every other provision hereof for the purpose of determining the legal enforceability of any specific provision.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement.

 

BUYER AND SELLER IRREVOCABLY WAIVE ANY RIGHT THAT EITHER MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR

 

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ARISING OUT OF ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.

 

	UTSTARCOM PERSONAL COMMUNICATIONS LLC, Seller
	By:					/s/ Keith San Felipe
	Title:					Treasurer
	CITIBANK, N.A., Buyer
	By:					/s/ Keith R. Karako
	Title:					Vice President

 

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SCHEDULE I

 

Form of Request

 

[date]

 

Citibank, N.A.
388 Greenwich Street, 25th Floor
New York, NY 10013

 

Reference is hereby made to that certain Purchase Agreement, dated as of August 1, 2005, between UTSTARCOM PERSONAL COMMUNICATIONS LLC (“ Seller ”) and CITIBANK, N.A. (“ Buyer ”) (as it may be amended, modified or supplemented from time to time, the “ Agreement ”; terms not otherwise defined herein shall have the meanings set forth in the Agreement).

 

Pursuant to the terms of the Agreement, Seller hereby requests that Buyer purchase from Seller the Proposed Receivables listed on the Exhibit attached hereto with an aggregate Purchase Price of $                .

 

Seller represents and warrants that as of the date hereof, assuming the purchase of the Proposed Receivables pursuant to terms of the Agreement:

 

1.                                        Following the purchase of the Proposed Receivables set forth in this Request, the Outstanding Purchase Price does not exceed $100,000,000;

 

2.                                        Seller’s representations, warranties and covenants set forth in the Agreement are true and accurate in all material respects;

 

3.                                        No Event of Repurchase exists on such Purchase Date except for repurchases being effectuated on the date hereof by setoff by Buyer against the Purchase Price for the Proposed Receivables; and

 

4.                                        There has not been any Material Adverse Change in Seller or Account Debtor since the date of the last purchase under the Agreement.

 

5.                                        There has not been any Dispute with any Account Debtor of any Proposed Receivable or Purchased Receivable since the date of the last purchase under the Agreement that has not been disclosed to Buyer (and for which Buyer may establish a reserve, at its discretion, in an amount not exceeding the amount asserted in connection with such Dispute).

 

Upon acceptance by Buyer of this Request and payment of the Purchase Price, Buyer hereby purchases, and Seller hereby sells, all of Seller’s right, title and interest (but none of Seller’s obligations) with respect to the Proposed Receivables on the attached Exhibit as of the date hereof, and the Proposed Receivables shall become Purchased Receivables in the manner set forth in the Agreement.

 

I-1

 

				UTSTARCOM PERSONAL COMMUNICATIONS LLC
				By:
						Title:
REQUEST ACCEPTED:
CITIBANK, N.A.
By:
Title:

 

I-2

 

EXHIBIT TO REQUEST

 

List of Accounts Receivable
Proposed for Sale as of                , 200  

 

Customer		Invoice/Purchase Order Number		Invoice Amount		Shipment Date		Customer P.O. #		Due Date

 

CALCULATION OF PURCHASE PRICE FOR THE PROPOSED RECEIVABLES

 

Net Invoice Amount:		$
multiplied by Adjustment Percentage		95	%
Adjusted Invoice Amount		$
Less: Discount		$
Purchase Price		$
CALCULATION OF MAXIMUM AMOUNT
Outstanding Purchase Pric