This Sale Leaseback Agreement involves
Title: Property Transfer and Leaseback Agreement
Industry: Communications Services Sector: Services
Property Transfer and Leaseback Agreement
Seller: UTStarcom Telecom Co., Ltd (hereinafter, “Party A”)
Buyer: Zhejiang Zhongnan Construction Group Co., Ltd. (hereinafter, “Party B”)
Party A and Party B, after discussions and negotiations, herby mutually agree to enter into this agreement (the “Agreement”) in respect of Party B’s purchase from Party A the real estate property, affiliated facilities, affiliated equipment and other auxiliary facilities and structures (hereinafter, the “Property”) located at 368 Liuhe Road, Binjiang District, Hangzhou, Zhejiang Province, People’s Republic of China, pursuant to the provisions of The People’s Republic of China Contract Law , The People’s Republic of China Real Estate Administration Law and The People’s Republic of China Property Law .
Part I Agreement on the Property Transfer
Article 1. General Information of the Transferred Property
1. Location of the Property: 368 Liuhe Road, Binjiang District, Hangzhou, Zhejiang Province, People’s Republic of China
2. Total Gross Floor Area (“GFA”): 240,645.35 sqm as listed in two Real Estate Certificates, Hang Fang Quan Zheng Gao Xin Zi No. 06004395 with a size of 119,889.45 sqm and Hang Fang Quan Zheng Gao Xin Zi No. 06004396 with a size of 120,755.9 sqm with details as set forth in the Real Estate Certificates issued by the Real Estate Administration Bureau.
3. Total land utilization area: 200,028 sqm as listed in two Land Title Certificates, Hang Bin Guo Yong (2007) Zi No. 00264 with a size 77,518 sqm and Hang Bin Guo Yong (2007) Zi No. 00265 with a size of 122,510 sqm with details as set forth in the Land Title Certificates issued by the Land Resource Bureau.
4. Affiliated facilities, affiliated equipment and auxiliary facilities: refer to the handover check list.
5. Other buildings and fixtures: refer to the handover checklist.
6. Current operating condition of the whole Property: refer to the handover checklist.
Article 2. Total Transaction Price
Total Transaction Price of the Property: RMB 950,000,000 (Nine hundred and fifty million RMB, including transaction-related taxes and fees payable by both parties) (hereinafter, the “Total Transaction Price”). The transaction-related taxes and fees include all the transaction-related taxes and fees relating to the transaction hereof, which is legally payable by both parties, including but not limited to business tax, deed tax, transaction management fee, registration fee, service charge, notarization fee, stamp duty etc. (hereinafter, the “Total Transaction-related Taxes and Fees”).
Article 3. Allocation of the Property Transaction Taxes
1. The Total Transaction-related Taxes and Fees shall be the sole responsibility of Party B provided that Party A shall pay Party B a lump sum amount of RMB 50,000,000 (Fifty million RMB), to be deducted from the Total Transaction Price. If the actual Total Transaction-related Taxes and Fees exceed this amount, Party B shall be responsible for any extra amount. If the actual Total Transaction-related Taxes and Fees are less than this amount, Party B shall keep any amount left. Party B agrees and covenants that Party A’s actual net proceed received shall not be less than RMB 900,000,000 (Nine hundred million RMB) ( hereinafter, the “Net Transaction Price”).
2. Related to the preceding provision, Party B shall make sure the Total Transaction-related Taxes and Fees legally and completely paid and provide all the vouchers and invoices and other original proof documents to Party A related to the taxes and fees payable by Party A. Meanwhile, should Party A at any time be investigated or prosecuted by the government for the incomplete payment of such taxes and fees, Party B shall be responsible for any related damaged and expenses incurred and shall hold Party A harmless from and against any loss.
Article 4. Payment Method
Party A and Party B agree to make the payments in installments as follows:
1.Within 3 business days from the signing of this Agreement, Party B shall pay a deposit in the amount of RMB 50,000,000 (Fifty million RMB) to Party A. After the payment of the deposit, should Party B refuse or delay to perform any obligations under this Agreement for over 20 business days, Party A has the right to keep all such deposit from Party B except if the performance of this Agreement is affected by the government, Force Majeure or changed circumstances.
A receipt of the deposit will be issued from Party A to Party B upon Party B’s payment of the deposit.
2. All the documentations of the Property in the possession of Party A, including but not limited to, government approval documents (if any), drawings, original engineering and construction documentations (including technical materials, material inspection reports, security reports, construction logs, all materials evidencing construction completion including the construction information of the construction units etc.), itemized sub-inspection reports (foundation inspection and acceptance, hidden works inspection and acceptance, annex main body inspection and acceptance etc.), construction supervision contract and related documents, construction contracts and construction cost auditing reports, external wall designs and construction contracts, other design, construction, decoration, material purchasing related contracts and vouchers, handbooks, warranties and invoices of affiliated facilities, affiliated equipment and other auxiliary facilities and structures, shall be handed over to Party B.
After confirmation by Party B, all the above documentations will be handed over from Party A to Party B through the handover team agreed upon by both parties. Within 3 business days after the completion date of the handover, Party B will pay another RMB 45,000,000 (Forty-five million RMB) to Party A and by then Party B will have paid 10% of the Total Transaction Price, equivalent to RMB 95,000,000 (Ninety-five million RMB), to Party A.
The handover team referred to above is a temporary handover team consisted of
financial, legal and other related personnel jointly assigned by both parties.
An effective receipt evidencing the receipt of the corresponding amount of the Transaction Price will be issued from Party A to Party B upon the payment of RMB 45,000,000 (Forty-five million RMB).
3. Within 20 business days from the completion date of the 10% payment as state in the preceding clause, the parties shall work together to apply to transfer the Property’s title to Party B. Upon the formal submission of the title transfer application, Party B shall pay 80% of the Total Transaction Price in the amount of RMB 760,000,000 (Seven hundred and sixty million RMB) to Party A.
4. The remaining 10% of the Total Transaction Price, after deducting the Total Transaction-related Taxes and Fees in the amount of RMB 50,000,000 (Fifty million RMB), shall be paid within 3 business days from the confirmation of the handover, inspection and acceptance of all of the Property. The Total Transaction Price shall by then have been paid in full and Party A shall issue an effective receipt reflecting the Total Transaction Price received to Party B.
5. For Party A to avoid the transaction risk, Party B will issue a bank guarantee for the 80% installment and the remaining 10% installment as respectively stated in Clauses 3 and 4 of this Article within 3 business days after the first 10% installment is paid. This bank guarantee shall expressly provide that (i) the corresponding guaranteed amount in the bank account will be frozen for the purpose of guaranteeing the performance of this Agreement, and shall not be unfrozen unless expressly agreed to by Party A in writing; and (ii) the bank shall guarantee that the guaranteed amount will be paid to Party A pursuant to Clauses 3 and 4 of this Article. All terms in the guarantee letter (including but not limited to the terms, conditions and schedule for unfreezing the guaranteed funds in the account) shall be expressly agreed to by Party A in writing. If Party B fails to provide a bank guarantee letter pursuant to this Clause, Party A shall have the right to refuse to apply for the transfer of the Property’s title.
6. Party A’s bank account for receiving payments :
Account Name : UTStarcom Telecom Co. Ltd.
Bank Name : Bank of China Zhengjiang Branch
Account Number :
Article 5. Party A’s Representations and Warranties
1. Party A has the legal authority to sell the Property. If there are discrepancies regarding the Property’s area and amount, then the Transaction Price shall be based on the actual area and amount as stated in the Real Estate Certificates.
2. As of the signing date of the Agreement, Party A has not sold or transferred the Property to any third party, nor has it agreed to sell or transfer the Property to any third party.
3. Party A has not mortgaged or pledged the Property to any third party, nor has it agreed to offer such mortgage or pledge to any third party.
4. Before the handover of the Property, Party A shall use commercially reasonable efforts to keep the Property (including affiliated facilities, affiliated equipment and other auxiliary facilities and structures) in the current condition. Any cost incurred herein shall be assumed by Party A.
5. Party B shall not be responsible for any Party A’s legal liabilities and obligations solely due to the purchase of the Property, regardless of whether these obligations have been incurred, will be incurred or may be incurred. Party B is expressly not responsible for the following obligations of Party A:
1) Any construction fee, material fee and service fee associated with the Property including the cost of design, construction, supervision, renovation, installation and purchase, material and labor cost etc. that Party A still has not paid;
2) Any unpaid payment related to wages, social insurances and benefits of the Party A’s employees;
3) Any payment related to government fees or taxes that that Party A still has not paid, but excluding the Total Transaction-related Taxes and Fees;
4) Any payment related to property management fee, electricity, water and other fees related to the Property that Party A still has not paid;
5) Any penalty from the governmental administrative department and other related departments incurred prior to the handover of the Property; and
6) Any other fees closely related to the Property before the handover of the Property.
Article 6. Other Agreements
1. In the event there is any inconsistency between this Agreement as signed by both parties and the formal contract provided by the Real Estate Administration Bureau and Land Resource Bureau and signed by both parties, this Agreement shall prevail.
2. In case there are some issues stated in the formal contract while not covered in this Agreement, the formal contact shall prevail.
3. After the signing of this Agreement, Party B has the right to form an operation company (hereinafter, the “Project Company”) to assume all the rights and obligations of Party B under this Agreement.
The Real Estate Certificates and other documentation related to the title transfer shall be transferred directly to the Project Company by Party A and Party B. But if due to the reasons caused by the government registration department or Party B or the Project Company, it is impossible for the Real Estate Certificates to be transferred to the Project Company, Party B will decide which company to hold the Real Estate Certificates. Under such circumstances, Party A shall provide cooperation and assistance, but all extra taxes and expenses incurred in connection therewith shall be borne by Party B. Neither party shall have a claim against the other party for any damages for breach under this provision.
In order to ensure the timely payment collection for Party A, the deadline for the 80% payment as stated in Clause 3 of Article 4 shall be no later than 30 business days after the initial 10% payment, and the deadline for the 10% payment as stated in Clause 4 of Article 4 shall be no later than 45 business days after the initial 10%
In connection herewith, Party B agrees to assume joint liabilities with the Project Company in performing all its obligations and undertakings under this Agreement.
Article 7. Property Delivery Deadline
If neither party is in breach of this Agreement, both Party A and Party B agree to use commercially reasonable efforts to officially transfer the title of the Property by March 15, 2010.
Part II Agreement on Property Leaseback
Article 8. Leaseback Area and Term
1. The leaseback area is 70,000 sqm GFA aboveground and 12,000 sqm GFA underground of the Property (hereinafter, the “Leaseback Space”). The leaseback term is 6 years (hereinafter, the “Leaseback Term”) starting from the earlier of (i) the completion date of the Property handover; or (ii) March 15, 2010. If the Property ownership transfer is not completed by March 15, 2010, the Leaseback Term shall start on the date the Property ownership title transfer is completed.
2. Both parties agree that regardless of any contrary terms in this Agreement and no matter whether the title transfer is completed, upon the signing of the Agreement, Party A has the right to leaseback and use the Leaseback Space with consideration pursuant to the leaseback agreement hereof.
Article 9. Rent and Payment Schedule
1.The rent during the Leaseback Term shall be paid in three phases and each phase includes two years: the payment due date for the initial phase shall be within 3 business days after the Property title is transferred.
1) Phase 1 rent: year one and year two, for the 70,000 sqm GFA aboveground of the Leaseback Space, the rent is RMB 2.5 per sqm per day (based on 365 days per year). For the 12,000 sqm GFA underground of the Leaseback Space, the rent is RMB 25 per sqm per month.
The property management fee is RMB 6.5 per sqm per month and the air-conditioning fee is RMB 4 per sqm per month.