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<SEC-DOCUMENT>0000912057-02-017942.txt : 20020501
<SEC-HEADER>0000912057-02-017942.hdr.sgml : 20020501
ACCESSION NUMBER:		0000912057-02-017942
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20020331
FILED AS OF DATE:		20020501

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			UTSTARCOM INC
		CENTRAL INDEX KEY:			0001030471
		STANDARD INDUSTRIAL CLASSIFICATION:	COMMUNICATIONS EQUIPMENT, NEC [3669]
		IRS NUMBER:				521782500
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29661
		FILM NUMBER:		02629967

	BUSINESS ADDRESS:	
		STREET 1:		1275 HARBOR BAY PARKWAY
		STREET 2:		STE 100
		CITY:			ALAMEDA
		STATE:			CA
		ZIP:			94502
		BUSINESS PHONE:		5108648800

	MAIL ADDRESS:	
		STREET 1:		1275 HARBOR BAY PARKWAY
		STREET 2:		STE 100
		CITY:			ALAMEDA
		STATE:			CA
		ZIP:			94502
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a2078446z10-q.htm
<DESCRIPTION>10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>
</TITLE>
</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<BR>
<FONT SIZE=3 ><A HREF="#02PAL1633_1">QuickLinks</A></FONT>
<font size=3> -- Click here to rapidly navigate through this document</font>

<!-- TOC_END -->
<HR NOSHADE>
<HR NOSHADE>
<P ALIGN="CENTER"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>WASHINGTON, D.C. 20549  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=5><B>FORM 10-Q  </B></FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="14%" ALIGN="CENTER"><FONT SIZE=2><BR>
(Mark One)</FONT></TD>
<TD WIDTH="86%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="14%" ALIGN="CENTER"><BR><FONT SIZE=3><FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="86%"><BR><FONT SIZE=3><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2><B>For the quarterly period ended March&nbsp;31, 2002.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> OR  </B></FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=3><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="88%"><FONT SIZE=3><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> COMMISSION FILE NUMBER 000-29661  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=5><B>UTSTARCOM,&nbsp;INC.<BR>  </B></FONT><FONT SIZE=2>(Exact name of Registrant as specified in its charter) </FONT></P>

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<DIV ALIGN="CENTER"><TABLE WIDTH="72%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>DELAWARE</B></FONT><FONT SIZE=2><BR>
(State of Incorporation)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><B>52-1782500</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer Identification No.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><BR>
1275 HARBOR BAY PARKWAY,<BR>
ALAMEDA, CALIFORNIA<BR>
(Address of principal executive offices)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%" ALIGN="CENTER"><FONT SIZE=2><BR>
94502<BR>
(zip code)<BR></FONT>
</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:&nbsp;&nbsp;&nbsp;&nbsp;(510)&nbsp;864-8800 </FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the Registrant (1)&nbsp;has filed all reports required to be filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12&nbsp;months (or for such shorter period that the Registrant was required to file such reports), and (2)&nbsp;has been subject to such filing requirements for the past
90&nbsp;days.&nbsp;Yes&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of April&nbsp;12, 2002 there were 111,374,661 shares of the Registrant's Common Stock outstanding, par value $0.00125. </FONT></P>

<HR NOSHADE>
<HR NOSHADE>
<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_bg1633_1_2"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="bg1633_table_of_contents"> </A>
<A NAME="toc_bg1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>TABLE OF CONTENTS    <BR>  </B></FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=1><B>PART I.<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="78%" ALIGN="LEFT"><FONT SIZE=1><B>FINANCIAL INFORMATION<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>PAGE</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 1.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Condensed Consolidated Financial Statements</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
3</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Condensed Consolidated Balance Sheets as of March&nbsp;31, 2002 (unaudited) and December&nbsp;31, 2001</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Condensed Consolidated Statements of Operations for the three month periods ended March&nbsp;31, 2002 and March&nbsp;31, 2001 (unaudited)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Condensed Consolidated Statements of Cash Flows for the three month periods ended March&nbsp;31, 2002 and March&nbsp;31, 2001 (unaudited)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
5</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Notes to Condensed Consolidated Financial Statements (unaudited)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
6</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 2.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Management's Discussion and Analysis of Financial Condition and Results of Operations</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
16</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 3.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Quantitative and Qualitative Disclosure about Market Risk</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
46</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
PART II.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
OTHER INFORMATION</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 2.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Changes in Securities and Use of Proceeds</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
47</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 4.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Submission of Matters to a Vote of Security Holders</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
48</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 5.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Other Information</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
48</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
Item 6.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
Exhibits and Reports on Form&nbsp;8-K</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
48</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="78%"><FONT SIZE=2><BR>
SIGNATURES</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
49</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

<HR NOSHADE>
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<P><FONT SIZE=2><A
NAME="page_de1633_1_3"> </A> </FONT></P>

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<P><FONT SIZE=2><A
NAME="de1633_part_i_#151;financial_information"> </A>
<A NAME="toc_de1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>PART I&#151;FINANCIAL INFORMATION    <BR>  </B></FONT></P>

<P><FONT SIZE=2><A
NAME="de1633_item_1_#151;condensed_c__de101920"> </A>
<A NAME="toc_de1633_2"> </A></FONT> <FONT SIZE=2><B>ITEM 1&#151;CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="de1633_utstarcom,_inc._condensed_cons__uts03549"> </A>
<A NAME="toc_de1633_3"> </A></FONT> <FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.<BR>  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)<BR>  (In thousands, except share data)    <BR>  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31,<BR>
2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6 ALIGN="CENTER"><FONT SIZE=2><B>ASSETS</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Current assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>362,120</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>321,136</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Short term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>45,788</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>86,176</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts receivable, net of allowances for doubtful accounts of $22,099 and $19,053 at March 31, 2002 and December 31, 2001, respectively</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>205,181</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>193,046</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Inventories, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>239,414</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>229,050</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>70,964</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>67,067</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Total current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>923,467</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>896,475</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Property, plant and equipment, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>46,313</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>43,942</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Long-term investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>18,566</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>17,818</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Goodwill and intangible assets, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,516</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>38,992</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Other long term assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>19,626</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,653</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,046,488</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,005,880</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=6 ALIGN="CENTER"><FONT SIZE=2><B>LIABILITIES AND STOCKHOLDERS' EQUITY</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>83,326</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>83,649</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Bank debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>51,205</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>58,434</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Income taxes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,287</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>10,536</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Deferred revenue</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>73,310</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>76,424</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>72,290</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>76,329</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>292,418</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>305,372</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2><BR>
Long-term debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2><BR>
12,048</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2><BR>
12,048</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Minority interest in consolidated subsidiaries</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,101</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>6,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>311,567</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>323,993</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Commitments and Contingencies (Note 11)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Stockholders' equity:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Common stock: $0.00125 par value; authorized: 250,000,000 shares; issued and outstanding: 111,300,728 at March 31, 2002 and 109,302,816 at December&nbsp;31, 2001</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>141</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>138</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>673,206</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>638,697</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Deferred stock compensation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(4,660</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(6,045</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Retained earnings</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>66,672</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>49,146</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Receivable from stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(402</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(381</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other comprehensive income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(36</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>332</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Total stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>734,921</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>681,887</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total liabilities and stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,046,488</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,005,880</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=3,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=343126,FOLIO='3',FILE='DISK032:[02PAL3.02PAL1633]DE1633A.;12',USER='ILEONG',CD='30-APR-2002;20:46' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dg1633_1_4"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dg1633_utstarcom,_inc._condensed_cons__uts04195"> </A>
<A NAME="toc_dg1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.<BR>  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)<BR>  (In thousands, except per share data)    <BR>  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three months ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31,<BR>
2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>183,690</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>119,181</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Cost of sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>118,048</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>77,768</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>65,642</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>41,413</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Operating expenses:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>23,686</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>14,131</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Research and development expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>19,197</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,412</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Amortization of goodwill and intangible assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>477</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,471</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>43,360</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>28,014</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Operating income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>22,282</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>13,399</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
Interest income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1,574</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2,350</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Interest expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(688</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(861</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Other income (expenses)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>193</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,037</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Equity in net loss of affiliated companies</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(793</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(244</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Income before income taxes and minority interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>22,568</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>13,607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Income tax expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,514</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,652</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Minority interest in earnings of consolidated subsidiaries</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(528</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(593</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>9,362</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Basic earnings per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Diluted earnings per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>0.09</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Weighted average shares used in per-share calculations:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&#151; Basic</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>110,044</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>95,873</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&#151; Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>116,758</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>104,262</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=4,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=658779,FOLIO='4',FILE='DISK032:[02PAL3.02PAL1633]DG1633A.;5',USER='ILEONG',CD='30-APR-2002;20:47' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_di1633_1_5"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di1633_utstarcom,_inc._condensed_cons__uts03322"> </A>
<A NAME="toc_di1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.<BR>  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)<BR>  (In thousands)    <BR>  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three months ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>CASH FLOWS FROM OPERATING ACTIVITIES:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>9,362</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Adjustments to reconcile net income to net cash used in operating activities:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,198</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,293</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Non-qualified stock option exercise tax benefits</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,997</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,940</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Net loss on sale of assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>180</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>18</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Impairment of long term investment</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>440</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Stock compensation expense</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,346</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Allowance for doubtful accounts</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,046</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>794</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Inventory reserve</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,655</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,674</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Equity in net loss of affiliated companies</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>793</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>244</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Minority interest in consolidated subsidiary</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>528</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Changes in operating assets and liabilities:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Accounts receivable and receivable from related parties</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(15,782</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(9,622</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Inventories</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(12,019</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(35,822</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Other current and non-current assets</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,403</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(18,461</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Accounts payable</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(323</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,291</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Income taxes payable</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,751</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,144</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Deferred revenue</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,114</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,310</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4,038</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,263</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Net cash used in operating activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4,219</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(31,577</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>CASH FLOWS FROM INVESTING ACTIVITIES:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Additions to property, plant and equipment, net</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(7,273</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4,511</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Investment in affiliates, net of cash acquired</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(12,848</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,979</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Purchase of short-term investments</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(6,327</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Sales of short-term investments</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>40,154</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>57,391</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Net cash provided by investing activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>20,033</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>44,574</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>CASH FLOWS FROM FINANCING ACTIVITIES:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Issuance of stock, net of expenses</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>32,553</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,685</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Proceeds from borrowing</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>20,482</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>31,325</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Payments for borrowing</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(27,711</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(20,614</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Proceeds from stockholder notes</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(21</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Net cash provided by financing activities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>25,303</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>13,426</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Effects of exchange rates on cash</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(133</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Net increase in cash and cash equivalents</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>40,984</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>26,423</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Cash and cash equivalents at beginning of period</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>321,136</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>149,112</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3><FONT SIZE=2>Cash and cash equivalents at end of period</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>362,120</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>175,535</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dk1633_1_6"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk1633_utstarcom,_inc._notes_to_conde__uts03031"> </A>
<A NAME="toc_dk1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.<BR>  <BR>    NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>SIGNIFICANT ACCOUNTING POLICIES  </B></FONT></P>

<P><FONT SIZE=2><B>1.&nbsp;&nbsp;&nbsp;&nbsp;BASIS OF PRESENTATION:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying unaudited condensed consolidated financial statements include the accounts of UTStarcom,&nbsp;Inc. (the "Company") and its wholly and majority
(over 50&nbsp;percent) owned subsidiaries, except for the Guangdong manufacturing subsidiary ("GUTS"), which is accounted for using the equity method as the Company does not have voting control over
all significant matters. All significant intercompany accounts and transactions have been eliminated in the preparation of the condensed consolidated financial statements. Minority interest in
consolidated subsidiaries and equity in affiliated companies are shown separately in the condensed consolidated financial statements. Investments in affiliated companies, of which none represent
greater than 10&nbsp;percent voting ownership, are accounted for using the cost method. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
accompanying financial data as of March&nbsp;31, 2002 and for the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001 have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The December&nbsp;31, 2001 balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with the
Company's audited December&nbsp;31, 2001 financial statements, including the notes thereto, and the other information set forth in the Company's Annual Report on Form&nbsp;10K/A. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) considered necessary
for a fair presentation of the Company's financial condition, the results of its operations and its cash flows for the periods indicated. The results of operations for the three months ended
March&nbsp;31, 2002 are not necessarily indicative of the operating results for the full year. </FONT></P>

<P><FONT SIZE=2><B>2.&nbsp;&nbsp;&nbsp;&nbsp;REVENUE RECOGNITION:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from sales of telecommunication equipment are recognized when persuasive evidence of an agreement exists, delivery of the product has occurred, the fee
is fixed or determinable and collectability is reasonably assured. Where multiple elements exist in an arrangement, revenue is allocated to the different elements based upon verifiable objective
evidence of the fair value of the elements. Revenues from sales of telecommunication equipment involving significant production, modification or customization of the product or where services being
provided are deemed to be essential to the functionality of the product are recognized using the percentage completion method if the project cost can be reasonably estimated. If the cost cannot be
reasonably estimated, the completed contract method is applied. Any payments received prior to revenue recognition are recorded as deferred revenue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
from sales of telecommunication equipment incorporating software not considered incidental to the product as a whole ("software contracts") are recognized when persuasive
evidence of an agreement exists, the product has been delivered, the fee is fixed or determinable and collectability is probable. Revenues from software contracts with multiple elements are recognized
using the residual method when there is vendor specific objective evidence of the fair value of all undelivered elements in an arrangement but vendor specific objective evidence of fair value does not
exist for one or more of </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

<HR NOSHADE>
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<A NAME="page_dk1633_1_7"> </A>
<BR>

<P><FONT SIZE=2>
the delivered elements in an arrangement. Under the residual method, the fair value of the undelivered elements, as indicated by vendor specific objective evidence, is deferred and the difference
between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements regardless of any separate prices stated within the
contract for each element. If the fee due from the customer is not fixed or determinable due to extended payment terms, revenue is recognized as payments become due from the customer, assuming all
other criteria for revenue recognition is met. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
from engineering service contracts are recognized upon completion of the project, or using the percentage of completion method of the project where project costs can be
reasonably estimated. </FONT></P>

<P><FONT SIZE=2><B>3.&nbsp;&nbsp;&nbsp;&nbsp;EARNINGS PER SHARE (in thousands, except per share data):  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares of the Company's common
stock outstanding during the period. Diluted earnings per share is determined in the same manner as basic earnings per share except that the numbers of shares is increased by potentially dilutive
common shares outstanding during the period. Potentially dilutive common shares consist of employee stock options and warrants. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table presents the calculation of basic and diluted earnings per share: </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended March 31,</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Numerator:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>9,362</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Denominator:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Shares used to compute basic EPS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>110,044</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>95,873</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Dilutive common stock equivalent shares:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Stock options</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>6,685</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>8,361</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Warrants</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>29</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>28</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Shares used to compute diluted EPS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>116,758</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>104,262</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Basic earnings per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Diluted earnings per share</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.15</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.09</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
potential shares outstanding during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001 were not included in the diluted per share computations, since their
exercise prices were greater than the average market price of the common shares during the period and, accordingly, their effect is anti-dilutive. These shares totaled 0.5&nbsp;million
at a weighted average exercise price of $28.16 per share at
March&nbsp;31, 2002 and 0.7&nbsp;million with a weighted average exercise price of $25.45 per share at March&nbsp;31, 2001. </FONT></P>


<P><FONT SIZE=2><B>4.&nbsp;&nbsp;&nbsp;&nbsp;COMPREHENSIVE INCOME/(LOSS) (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statement of Financial Accounting Standards ("SFAS") No.&nbsp;130 requires disclosure of non-stockholder changes in equity, which include unrealized
gains and losses on securities classified as available-for-sale under SFAS No.&nbsp;115 and foreign currency translation adjustments accounted for under SFAS No.&nbsp;52. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=7,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=451974,FOLIO='7',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_8"> </A>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
reconciliation of net income to comprehensive income for the three months ended March&nbsp;31, 2002 and 2001 is as follows (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="74%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended March 31,</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="74%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,362</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Unrealized gains (losses) on investments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(236</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>155</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Change in cumulative translation adjustments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(132</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>Total comprehensive income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>17,158</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,517</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="74%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>5.&nbsp;&nbsp;&nbsp;&nbsp;CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the Company's cash equivalents and short-term investments are classified as available-for-sale. At March&nbsp;31,
2002, $265,280 of available-for-sale securities was included in cash equivalents and $45,788 of
available-for-sale securities was included in short-term investments. At December&nbsp;31, 2001, $162,218 of available-for-sale securities
was included in cash equivalents and $86,176 of available-for-sale securities was included in short-term investments. These
available-for-sale securities consist of government-sponsored entities' notes, commercial paper, floating rate corporate bonds and fixed income corporate bonds. </FONT></P>

<P><FONT SIZE=2><B>6.&nbsp;&nbsp;&nbsp;&nbsp;INVENTORIES (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories as of March&nbsp;31, 2002 and December&nbsp;31, 2001 consist of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31, 2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Raw materials</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>65,872</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>59,409</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Work-in-process</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>35,756</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>33,887</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Finished goods</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>159,785</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>156,098</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>261,413</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>249,394</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Less allowance for obsolete inventory</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(21,999</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(20,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>239,414</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>229,050</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=3,SEQ=8,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=300483,FOLIO='8',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_9"> </A>

<P><FONT SIZE=2><B>7.&nbsp;&nbsp;&nbsp;&nbsp;DEBT (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following represents the outstanding borrowings at March&nbsp;31, 2002 and December&nbsp;31, 2001: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1><B>Note<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER"><FONT SIZE=1><B>Rate</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER"><FONT SIZE=1><B>Maturity</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31, 2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>Bank of China (1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>From 4.54% to 5.56%</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>From 09/02 to 10/02</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>27,109</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>34,338</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>China Merchants Bank (2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>5.31%</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>03/03</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>6,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>6,024</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>Commercial Bank of Hangzhou (3)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>6.21%</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>06/10</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>CITIC Industrial Bank (4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>6.14%</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>05/02</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>6,024</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>6,024</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>China Everbright Bank (5)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>5.78%</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>06/02</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>Total debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>63,253</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>70,482</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>Long-term debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,048</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="24%"><FONT SIZE=2>Short-term debt</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>51,205</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>58,434</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Guaranteed
by the Company and the minority shareholder of HUTS. This represents drawings on the Company's line of credit with the bank. This line allows for borrowings of up to
$156,627.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Guaranteed
by HUTS. This line allows for borrowings of up to $6,024 and matures in March&nbsp;2003.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Guaranteed
by UTStarcom-China. This line allows for borrowings of up to $24,096 and matures in June&nbsp;2010.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Guaranteed
by HUTS. This line allows for borrowings of up to $6,024 and matures in May&nbsp;2002.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Guaranteed
by HUTS. This line allows for borrowings of up to $36,145 and matures in June&nbsp;2002. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has additional lines of credit available up to $54,100, which it is not borrowing against as of March&nbsp;31, 2002. </FONT></P>


<P><FONT SIZE=2><B>8.&nbsp;&nbsp;&nbsp;&nbsp;LONG TERM INVESTMENTS (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's investments are as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31,<BR>
2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>(in thousands)<BR> </B></FONT><BR></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in GUTS</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>750</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in Softbank China</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>7,874</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,314</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in Issanni Communication</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,001</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,001</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in Cellon International</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in Restructuring Fund No. 1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,981</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Investment in others</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,710</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>4,753</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>18,566</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>17,818</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company had invested $10.0&nbsp;million in Softbank China, (the "fund"), an investment fund established by SOFTBANK CORP. focused on investments in Internet companies in China.
This investment permits the Company to participate in the anticipated growth of Internet-related businesses in China. SOFTBANK CORP. and its related companies are significant stockholders of the
Company. The Company's investment constitutes 10% of the funding for Softbank China, with SOFTBANK CORP. contributing the remaining 90%. The Company is a passive investor and has no decision-making
authority with respect to investments by the fund. The fund has a separate management team, and </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=4,SEQ=9,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=240702,FOLIO='9',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_10"> </A>
<BR>

<P><FONT SIZE=2>
none of the Company's employees is employed by the fund. Many of the fund's investments are and will be in privately held companies, many of which can still be considered in the start-up
or development stages. These investments are inherently risky as the market for the technologies or products the companies have under development are typically in the early stages and may never
materialize. During the three months ended March&nbsp;31, 2002 and 2001, based upon a review of the carrying value of this investment, impairment charges of $0.4&nbsp;million and
$1.0&nbsp;million, respectively, were recognized to provide for the other than temporary decline in the fair value below the carrying value of this investment. The balance remaining in this
investment as of March&nbsp;31, 2002 was $7.9&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has also invested directly in a number of private technology-based companies in the early stages of development. The Company continually evaluates the carrying value of these
investments for possible impairment based on the achievement of business objectives and milestones, the financial condition and prospects of these companies and other relevant factors. During the
three months ended March&nbsp;31, 2002 and 2001, no impairment charge was considered necessary, based upon a review of the carrying value of these investments. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March&nbsp;31, 2002, the Company invested $2.0&nbsp;million in Restructuring Fund No.&nbsp;1, a venture capital investment limited partnership
established by SOFTBANK INVESTMENT CORP., an affiliate of SOFTBANK CORP. SOFTBANK America&nbsp;Inc., an entity affiliated with SOFTBANK CORP., is a significant stockholder of the Company. The fund
will focus on leveraged buyout (LBO) investments in companies in Asia undergoing restructuring or bankruptcy procedures. The total fund offering is expected to be between approximately
$150.0&nbsp;million and $226.0&nbsp;million, with each investor contributing a minimum of $0.8&nbsp;million. The Company is a passive investor and has no decision-making authority with respect
to investments by the fund. The fund has a separate management team, and none of the Company's employees is employed by the fund. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September&nbsp;1996, the Company purchased a 49% interest in GUTS. In February&nbsp;1998, the Company acquired an additional 2% interest in GUTS, increasing its ownership interest
to 51%. However,
because the Company does not have voting control over all significant matters of GUTS, the investment in and results of operations of GUTS are accounted for using the equity method as of
March&nbsp;31, 2002. On December&nbsp;18, 2001, the Company entered into an agreement to acquire the remaining 49% ownership in GUTS for a total consideration of $3.6&nbsp;million payable in
cash. The cash consideration was paid in the first quarter of 2002 and recorded as a long-term asset. Upon completion of this transaction, pending government approvals, GUTS will be a
wholly-owned subsidiary of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
July&nbsp;1997, the Company, as part of its business operations in China, acquired a 88% interest in UTStarcom (Hangzhou) Communication Co.,&nbsp;Ltd (HUTS). On January&nbsp;21,
2002, the Company entered into an agreement to acquire the remaining 12% ownership in the joint venture company for a total consideration of $14.5&nbsp;million payable in cash. Cash consideration of
$7.3&nbsp;million was paid in January&nbsp;2002, and was recorded as a long-term asset. The remaining consideration will be paid in the second quarter of fiscal 2002. Upon completion
of this transaction, pending China regulatory approvals, HUTS will be a wholly-owned subsidiary of the Company. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=5,SEQ=10,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=947917,FOLIO='10',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_11"> </A>
<BR>

<P><FONT SIZE=2><B>9.&nbsp;&nbsp;&nbsp;&nbsp;GOODWILL AND INTANGIBLE ASSETS (in thousands):  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="67%" ALIGN="LEFT"><FONT SIZE=1><B>(In thousands)<BR> </B></FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31, 2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>Goodwill</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>47,636</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>47,636</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>Purchased technology</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>4,340</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>4,340</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>51,976</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>51,976</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>Less accumulated amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(13,460</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(12,984</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>38,516</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>38,992</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="67%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
expense was $0.5&nbsp;million for the three months ended March&nbsp;31, 2002, and $1.5&nbsp;million for the three months ended March&nbsp;31, 2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
July&nbsp;2001, the FASB issued SFAS No.&nbsp;142, "Goodwill and Other Intangible Assets". SFAS No.&nbsp;142 requires that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead tested for impairment at least annually. SFAS No.&nbsp;142 also requires that intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No.&nbsp;121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS No.&nbsp;121"). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SFAS
No.&nbsp;142 was adopted by the Company on January&nbsp;1, 2002. SFAS No.&nbsp;142 had the effect of reducing amortization of goodwill and intangibles commencing
January&nbsp;1, 2002; however, impairment reviews may result in future periodic write-downs. The Company completed the required transitional assessment of goodwill during the first quarter of fiscal
2002. Based on this assessment, there was no transition goodwill impairment charge. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
reconciliation of net income to adjusted net income as if there had been no goodwill amortization in any period presented, for the three months ended March&nbsp;31, 2002 and 2001
is as follows (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="71%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31, 2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Reported net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>9,362</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Add back: goodwill amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,419</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Adjusted net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>17,526</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>10,781</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Basic earnings per share:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Reported net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Goodwill amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Adjusted net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.11</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Diluted earnings per share:</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Reported net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.15</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.09</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Goodwill amortization</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.01</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>Adjusted net income</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.15</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="71%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>10.&nbsp;&nbsp;SEGMENT REPORTING (in thousands):  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company provides telecommunications equipment through an integrated suite of network access systems, optical transmission products and subscriber terminal
products. The Company primarily operates in two geographic areas, China and other regions. The chief operating decision makers evaluate performance, make operating decisions, and allocate resources
based on consolidated financial data. Gross profit, operating income, income from operations, and income taxes are not allocated to </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=6,SEQ=11,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=673964,FOLIO='11',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_12"> </A>
<BR>

<P><FONT SIZE=2>
specific individual departments within the organization. In accordance with SFAS No.&nbsp;131 "Disclosures about Segments of an Enterprise and Related Information", the Company is considered a
single reportable segment. The Company is required to disclose certain information about product revenues, information about geographic areas, information about major customers, and information about
long-lived assets. No customer accounted for 10% or more of consolidated revenues during the three months ended March&nbsp;31, 2002. Revenues from Shaoxing Telecommunications Bureau
accounted for 14% of consolidated revenues during the three months ended March&nbsp;31, 2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Geographical
area data and product data are as follows (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="21%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 31, 2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Three Months Ended<BR>
March 31, 2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="21%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Telecommunications<BR>
Equipment</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Subscriber<BR>
Handsets</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Telecommunications<BR>
Equipment</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Subscriber<BR>
Handsets</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>Net sales:</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>China</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>97,625</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>69,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>167,198</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>83,354</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>33,424</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>116,778</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>16,492</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>16,492</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>2,403</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>2,403</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>Total net sales</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>114,117</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>69,573</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>183,690</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>85,757</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>33,424</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>119,181</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="21%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
attributable to the United States of America was insignificant during the three months ended March&nbsp;31, 2002 and 2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-lived
assets by geography are as follows (in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>March 31,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>December 31,<BR>
2001</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>China</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>40,310</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>41,289</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>U.S.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>44,519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>41,645</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Total long-lived assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>84,829</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>82,934</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>11.&nbsp;&nbsp;COMMITMENTS AND CONTINGENCIES:  </B></FONT></P>

<P><FONT SIZE=2><I>Litigation:  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;31, 2001, a complaint captioned Lacek v. UTStarcom,&nbsp;Inc., et. al., Civil Action No.&nbsp;01-CV-9604, was filed
in United States District Court for the Southern District of New York against the Company, some of our directors and officers and various underwriters for our IPO. Plaintiffs allege undisclosed
improper underwriting practices concerning the allocation of IPO shares in exchange for excessive brokerage commissions or agreements to purchase shares at higher prices in the aftermarket, in
violation of the Securities Act of 1933 and the Securities Exchange Act of 1934. Substantially similar actions have been filed concerning the initial public offerings for more than 300 different
issuers, and the cases have been coordinated as In re Initial Public Offering Securities Litigation, 21 MC 92. The complaint seeks unspecified damages on behalf of a purported class of purchasers of
the Company's common stock between March&nbsp;2, 2000 and December&nbsp;6, 2000. The Company believes that it has meritorious defenses to this lawsuit and will defend this lawsuit vigorously. </FONT></P>

<P><FONT SIZE=2><B>12.&nbsp;&nbsp;RELATED PARTY TRANSACTIONS:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into transactions with several companies that are stockholders or are affiliated with one of the Company's stockholders as follows: </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2001, the Company entered into a engineering services agreement with Matsushita Communication Industrial Co.,&nbsp;Ltd. ("Matsushita"), a stockholder of the Company, pursuant to
which </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=7,SEQ=12,EFW="2078446",CP="UTSTARCOM, INC.",DN="1",CHK=296578,FOLIO='12',FILE='DISK032:[02PAL3.02PAL1633]DK1633A.;12',USER='ILEONG',CD='30-APR-2002;20:53' -->
<A NAME="page_dk1633_1_13"> </A>

<P><FONT SIZE=2>
the Company, in partnership with Matsushita, will develop a complete end-to-end third generation cellular network ("3G W-CDMA") standard compliant system,
targeting the next generation of communications systems in the global communications marketplace. The Company recognized revenue of $3.4&nbsp;million and $0.0&nbsp;million in connection with this
agreement during the three months ended March&nbsp;31, 2002 and 2001, respectively. Included in accounts receivable in respect of this agreement at March&nbsp;31, 2002 was $0.8&nbsp;million.
There were no amounts included in deferred revenue at March&nbsp;31, 2002. There were no amounts included in accounts receivable or deferred revenue in respect of this agreement at
December&nbsp;31, 2001. In addition, the Company purchases telecommunications equipment from a subsidiary of Matsushita. Purchases of PAS equipment from such subsidiary of Matsushita during the
three months ended March&nbsp;31, 2002 were $4.6&nbsp;million. Purchases of handsets and base stations from such subsidiary of Matsushita during the three months ended March&nbsp;31, 2001 were
$56.7&nbsp;million. There were no amounts outstanding at March&nbsp;31, 2002 and December&nbsp;31, 2001. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2001, the Company entered into an engineering services agreement with Mitsubishi Electric Corporation, a stockholder of the Company, to jointly develop and market a complete suite
of 3G W-CDMA infrastructure products. The Company recognized no revenue in connection with this agreement during the three months ended March&nbsp;31, 2002 and 2001, respectively.
Included in deferred revenue in respect of this agreement at March&nbsp;31, 2002 was $0.7&nbsp;million. There were no amounts included in accounts receivable in respect of this agreement at
March&nbsp;31, 2002. Included in deferred revenue in respect of this agreement at December&nbsp;31, 2001 was $0.7&nbsp;million. There were no amounts included in accounts receivable in respect
of this agreement at December&nbsp;31, 2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company recognized revenue of $10.0&nbsp;million and $0.0&nbsp;million during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001, respectively, with respect
to sales of telecommunications equipment to BB Technologies Corporation ("BBTC"), an affiliate of SOFTBANK CORP. SOFTBANK America&nbsp;Inc., an entity affiliated with SOFTBANK CORP., is a
significant stockholder of the Company. BBTC offers asynchronous digital subscriber line ("ADSL") coverage throughout Japan which is marketed under the name YAHOO. The Company provides
ADSL technology to BBTC. The contract was competitively bid and the terms of this contract were on terms no more favorable than those with unrelated parties. Included in accounts receivable at
March&nbsp;31, 2002 is $10.0&nbsp;million related to this agreement. There were no amounts included in deferred revenue in respect of this agreement at March&nbsp;31, 2002. Included in accounts
receivable in respect of this agreement at December&nbsp;31, 2001 was $13.5&nbsp;million. There were no amounts included in deferred revenue in respect of this agreement at December&nbsp;31,
2001. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2000, we invested $8.0&nbsp;million and during 2001, we invested an additional $2.0&nbsp;million in Softbank China (the "fund"), an investment fund established by SOFTBANK
CORP. focused on investments in Internet companies in China. This investment permits us to participate in the anticipated growth of Internet-related businesses in China. An entity affiliated with
SOFTBANK CORP., SOFTBANK America&nbsp;Inc., is a significant stockholder in our company. Our investment constitutes 10% of the funding for Softbank China, with SOFTBANK CORP. contributing the
remaining 90%. We are a passive investor and have no decision-making authority with respect to investments by the fund. Many
of the fund's investments are and will be in privately held companies, many of which can still be considered in the start-up or development stages. These investments are inherently risky
as the market for the technologies or products the companies have under development are typically in these early stages and may never materialize. During the three months ended March&nbsp;31, 2002,
based upon a review of the carrying value of this investment, an impairment charge of $0.4&nbsp;million was recognized to provide for the decline in the fair value below the carrying value of this
investment. The balance remaining in this investment as of March&nbsp;31, 2002 was $7.9&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March&nbsp;31, 2002, the Company invested $2.0&nbsp;million in Restructuring Fund No.&nbsp;1, a venture capital investment limited partnership,
established by SOFTBANK INVESTMENT CORP., an affiliate of SOFTBANK CORP. An entity affiliated with SOFTBANK </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

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<P><FONT SIZE=2>
CORP., SOFTBANK America&nbsp;Inc., is a significant stockholder of the Company. The fund will focus on leveraged buyout (LBO) investments in companies in Asia undergoing restructuring or bankruptcy
procedures. The total fund offering is expected to be between approximately $150.0&nbsp;million and $226.0&nbsp;million, with each investor contributing a minimum of $0.8&nbsp;million. The
Company is a passive investor and has no decision-making authority with respect to investments by the fund. The fund has a separate management team, and none of the Company's employees is employed by
the fund. </FONT></P>

<P><FONT SIZE=2><B>13.&nbsp;&nbsp;COUNTRY RISKS:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately 91% and 98% of the Company's sales for the three months ended March&nbsp;31, 2002, and 2001, respectively, were made in China. Accordingly, the
Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in China, and by the general state of China's economy. The
Company's operations in China are subject to special considerations and significant risks not typically associated with companies in the United States. These include risks associated with, among
others, the political, economic and legal environments and foreign currency exchange. The Company's results may be adversely affected by, among other things, changes in the political, economic and
social conditions in China, and by changes in governmental policies with respect to laws and regulations, changes in China's telecommunications industry and regulatory rules and policies,
anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
China's current regulatory structure, the communications products that the Company offers in China must meet government and industry standards, and a network access license for the
equipment must be obtained. Without the license, the equipment is not allowed to be connected to public telecommunications networks or sold in China. Moreover, the Company must ensure that the quality
of the telecommunications equipment for which it has obtained a network access license is stable and reliable, and may not lower the quality or performance of other installed licensed products. The
State Council's product quality supervision department, in concert with the Ministry of Information Industry, performs spot checks to track and supervise the quality of licensed telecommunications
equipment and publishes the results of such spot checks. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The regulations implementing these requirements are not very detailed, have not been applied by a court and may be interpreted and enforced by regulatory authorities in a number of
different ways. The Company obtained the required network access licenses for its AN-2000 platform. The Company applied for, but has not yet received, a network access license for its PAS
systems and handsets. Based upon conversations with the Ministry of Information Industry, the Company understands that its PAS systems and handsets are considered to still be in the trial period and
that sales of the Company's PAS systems and handsets may continue to be made during this trial period, but a license will ultimately be required. Network access licenses will also be required for most
additional products that the Company is selling or may sell in China, including the mSwitch platform. If the Company fails to obtain the required licenses, the Company could be prohibited from making
further sales of the unlicensed products, including the PAS systems and handsets, in China, which would substantially harm its business, financial condition and results of operations. The Company's
counsel in China has advised that China's governmental authorities may interpret or apply the regulations with respect to which licenses are required and the ability to sell a product while a product
is in the trial period in a manner that is inconsistent with the information received by such counsel in China, either of which could have a material adverse effect on the Company's business and
financial condition. </FONT></P>

<P><FONT SIZE=2><B>14.&nbsp;&nbsp;RECENT ACCOUNTING PRONOUNCEMENTS:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July&nbsp;2001, the FASB issued SFAS No.&nbsp;141, "Business Combinations", and SFAS No.&nbsp;142, "Goodwill and Other Intangible Assets". SFAS
No.&nbsp;141 requires that the purchase method of accounting be used for all business combinations initiated or completed after June&nbsp;30, 2001. SFAS No.&nbsp;141 also specifies the criteria
intangible assets acquired in a purchase method business combination must meet to be recognized and reported apart from goodwill. SFAS No.&nbsp;142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead tested for impairment at least annually. SFAS No.&nbsp;142 also requires that intangible assets with definite useful lives be amortized
over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No.&nbsp;121. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company adopted SFAS No.&nbsp;141 in July&nbsp;2001. SFAS No.&nbsp;142 is effective for fiscal years beginning after December&nbsp;15, 2001, and was adopted by the Company on
January&nbsp;1, 2002. The Company completed the required transitional assessment of goodwill impairment during the first quarter of fiscal 2002. Based on this assessment, it was determined that
there was no impairment of goodwill and thus no transition goodwill impairment charge. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October&nbsp;3, 2001, the FASB issued SFAS No.&nbsp;144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No.&nbsp;144 is effective for
financial statements issued for fiscal years beginning after December&nbsp;15, 2001 and interim periods within those fiscal years. This statement supercedes SFAS No.&nbsp;121 and amends APB
30&#151;"Reporting the Results of Operations&#151;Reporting the Effects of Disposal of a Segment of a Business." SFAS No.&nbsp;144 also requires that long-lived assets that
are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No.&nbsp;144 expands the scope of discontinued operations to include all
components of an entity with operations that (1)&nbsp;can be distinguished from the rest of the entity and (2)&nbsp;will be eliminated from the ongoing operations of the entity in a disposal
transaction. The Company adopted SFAS No.&nbsp;144 on January&nbsp;1, 2002, and the adoption had no impact on the Company's financial statements. </FONT></P>

<P><FONT SIZE=2><B>15.&nbsp;&nbsp;SUBSEQUENT EVENTS:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;19, 2002, the Company completed the purchase of Issanni Communications,&nbsp;Inc. ("Issanni"). The Company's investment in Issanni was
$2.0&nbsp;million prior to the acquisition. The purchase consideration for all the outstanding shares of Issanni, other than those already held by the Company prior to the acquisition, was
$2.1&nbsp;million, $0.5&nbsp;million of which is held in escrow for, among </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

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<P><FONT SIZE=2>
other things, any undisclosed liabilities or contingencies incurred by Issanni prior to closing. In addition, $2.0&nbsp;million will be payable in the form of an earnout to all Issanni shareholders
of record at closing, subject to the completion of certain performance milestones during 2002, 2003 and 2004. This earnout will be recorded as additional purchase price when earned. Furthermore, the
Company issued shares of restricted common stock valued at $1.0&nbsp;million to Issanni employees who will continue to perform services for the Company. These shares vest at the earlier of five
years or upon the achievement of certain performance milestones. The Company will record this amount as compensation expense as the milestones are met. Prior to the acquisition, the Company provided a
loan to Issanni in the amount of $0.5&nbsp;million. The acquisition will be accounted for as a purchase and the results of operations of Issanni will be included in the Company's results of
operations beginning April&nbsp;19, 2002. </FONT></P>

<P><FONT SIZE=2><B>ITEM 2&#151;MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS  </B></FONT></P>

<P><FONT SIZE=2><B>FORWARD-LOOKING STATEMENTS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Report on Form&nbsp;10-Q contains forward-looking statements within the meaning of the federal securities laws. These statements are based on
information that is currently available to management. We intend such forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995,
and we are including this statement for purposes of complying with those provisions. The forward-looking statements include those concerning the
following: our expectation regarding continued growth in our business and operations; our expectation that our PAS network access system will continue to be allowed in China's county-level cities and
counties; our expectation that there will be no penalties or fines for our non-compliance with the licensing requirements in China for our PAS system and other products; our expectation
that there will be fluctuations in our overall gross profit, gross margin, product mix and selling prices; our plans for expanding the direct sales organization and our selling and marketing campaigns
and activities; our expectation that we may use part of the net proceeds of our initial and follow on public offerings to acquire or invest in complementary businesses, technologies or product
offerings; our expectation that there will be increases in selling, marketing, research and development, general and administrative expenses; our expectation that we will continue to invest
significantly in research and development; our expectation that we will fill the majority of our current backlog orders; our expectation regarding our future investments, particularly in Softbank
China; and our expectation that existing cash and cash equivalents will be sufficient to finance our operations for at least the next 12&nbsp;months. Additional forward-looking statements may be
identified by the words, "anticipate," "expect," "believe," "intend," "will" and similar expressions, as they relate to us or our management. Investors are cautioned that these forward-looking
statements are inherently uncertain. These statements are subject to risks and uncertainties that may cause actual results and events to differ materially. For a detailed discussion of these risks and
uncertainties, see the "Factors Affecting Future Operating Results" section of this Form&nbsp;10-Q. We do not guarantee future results and undertake no obligation to update the forward-
looking statements to reflect events or circumstances occurring after the date of this Form&nbsp;10-Q. </FONT></P>

<P><FONT SIZE=2><B>OVERVIEW  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design, manufacture and market wireline and wireless broadband access and switching equipment that enables migration to next generation IP-based
networks. Our operations are conducted primarily by our foreign subsidiaries that manufacture, distribute and support our products, principally in China. Our systems and products allow service
providers to offer cost-efficient and expandable voice, data and Internet access services. Because our systems are based on widely adopted international communications standards, service
providers can easily integrate our systems into their existing networks and deploy our systems in new broadband, Internet Protocol and wireless network rollouts. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
incorporated in Delaware in 1991. Since our incorporation, we have focused our resources on developing products for China's communications market. We shipped our first network access
products in 1993. In 1995, we acquired StarCom Network Systems,&nbsp;Inc. and changed our name to UTStarcom,&nbsp;Inc. In 1996, we introduced our advanced, V5.1 and V5.2 compliant, multi-service
network access platform, the AN-2000. Late in 1996, we introduced our PAS wireless access system. In December&nbsp;1999, we completed the acquisition of the portion of our
Wacos,&nbsp;Inc. subsidiary owned by the minority shareholders. Wacos,&nbsp;Inc. is a research and development subsidiary that develops IP-based switching systems. In
November&nbsp;2001, we completed the acquisition of Advanced Communications Devices Corporation, or ACD, for $21.3&nbsp;million. In addition, we issued shares of restricted common stock valued at
$5.0&nbsp;million to ACD employees who will continue to perform services for us, vesting over a period of five years or upon the achievement of certain performance milestones. The first milestone
was met in December&nbsp;2001, resulting in a charge of $1.3&nbsp;million to operations in 2001. The second milestone was met in March&nbsp;2002, resulting in a charge of $0.8&nbsp;million to
operations during the three months ended
March&nbsp;31, 2002. ACD is a System- on-Chip (SoC) semiconductor company focusing on LAN and IP switching technology. We conduct our operations in China through wholly owned
subsidiaries and two joint ventures. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have derived substantially all of our revenues from sales of telecommunications equipment to service providers in China. However, we are currently expanding our sales to service
providers in other growing communications markets outside of China. Our customers often make a large initial purchase of our equipment followed by supplemental purchases of enhancements and upgrades.
As a result, our largest revenue-producing customers typically vary from period to period. The evaluation period for our products by potential customers may span a year or more and our business
generally depends on a relatively small number of large deployments. We sell our products in China through a direct sales force. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately
91% of our net sales for the three months ended March&nbsp;31, 2002 and approximately 98% of our net sales for the three months ended March&nbsp;31, 2001 were made in
China. Accordingly, our business, financial condition and results of operations are likely to be influenced by the political, economic and legal environment in China, and by the general state of
China's economy. Our results may be adversely affected by, among other things, changes in the political, economic, competitive and social conditions in China, including changes in governmental
policies with respect to laws and regulations, changes in telecommunications industry and regulatory rules and policies, anti-inflationary measures, currency conversion and remittance
abroad, and rates and methods of taxation. Our first and second largest customers accounted for 9.3% and 7.9% of our net sales for the three months ended March&nbsp;31, 2002, and 1.4% and 6.5% of
accounts receivable, respectively, as of March&nbsp;31, 2002. Our first and second largest customers accounted for 14.2% and 8.1% of our net sales, respectively, for the three months ended
March&nbsp;31, 2001, and 6.0% and 4.7% of accounts receivable, respectively, as of March&nbsp;31, 2001. We extend credit to our customers in China without requiring collateral. We monitor our
exposure for credit losses and maintain allowances for doubtful accounts. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
China's current regulatory structure, the communications products that we offer in China must meet government and industry standards, and a network access license for the equipment
must be obtained. Without a license, the equipment is not allowed to be connected to public telecommunications networks or sold in China. Moreover, we must ensure that the quality of the
telecommunications equipment for which we have obtained a network access license is stable and reliable, and may not lower the quality or performance of other installed licensed products. The State
Council's product quality supervision department, in concert with the Ministry of Information Industry, performs spot checks to track and supervise the quality of licensed telecommunications equipment
and publishes the results of such spot checks. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
regulations implementing these requirements are not very detailed, have not been applied by a court and may be interpreted and enforced by regulatory authorities in a number of
different ways. We </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>

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have obtained the required network access licenses for our AN-2000 platform. We have applied for, but have not yet received, a network access license for our PAS systems and handsets.
Based upon conversations with the Ministry of Information Industry, we understand that our PAS systems and
handsets are considered to still be in the trial period and that sales of our PAS systems and handsets may continue to be made by us during this trial period, but a license will ultimately be
required. Network access licenses will also be required for most additional products that we are selling or may sell in China, including our mSwitch platform. If we fail to obtain the required
licenses, we could be prohibited from making further sales of the unlicensed products, including our PAS systems and handsets, in China, which would substantially harm our business, financial
condition and results of operations. Our counsel in China has advised us that China's governmental authorities may interpret or apply the regulations with respect to which licenses are required and
the ability to sell a product while a product is in the trial period in a manner that is inconsistent with the information received by our counsel in China, either of which could have a material
adverse effect on our business, financial condition and results of operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Remittances
from China, which are of a capital nature, such as the repayment of bank loans denominated in foreign currencies, require approval from appropriate governmental authorities
before Renminbi can be used to purchase foreign currency. Although the payment of cash dividends is permitted so long as our subsidiaries have sufficient reserves and adequate amounts of Renminbi to
purchase foreign currency, regulations restrict the ability of our subsidiaries to transfer funds to us through intercompany loans and advances. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally,
business activity in China and many other countries in Asia declines considerably during the first quarter of each year in observance of the Lunar New Year. As a result,
sales during the first quarter of our fiscal year have typically been lower than sales during the fourth quarter of the preceding year, and we expect this trend to continue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
from sales of telecommunications equipment are recognized when persuasive evidence of an agreement exists, delivery of the product has occurred as evidenced by customer
acceptance, the fee is fixed or determinable and collectibility is reasonably assured. Where multiple elements exist in an arrangement, revenue is allocated to the different elements based upon
verifiable objective evidence of the fair value of the elements. Revenues from sales of telecommunications equipment involving significant production, modification or customization of the product or
where services being provided are deemed to be essential to the functionality of the product are recognized using the percentage of completion method if the project cost can be reasonably estimated.
If the cost cannot be reasonably estimated, the completed contract method is applied. Any payments received prior to revenue recognition are recorded as deferred revenue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
from sales of telecommunications equipment incorporating software not considered incidental to the product as a whole ("software contracts") are recognized when persuasive
evidence of an agreement exists, the product has been delivered as evidenced by customer acceptance, the fee is fixed or determinable and collectability is probable. Revenues from software contracts
with multiple elements are recognized using the residual method when there is vendor specific objective evidence of the fair value of all undelivered elements in an arrangement but vendor specific
objective evidence of fair value does not exist for one or more of the delivered elements in an arrangement. Under the residual method, the fair value of the undelivered elements, as indicated by
vendor specific objective evidence, is deferred and the difference between the total arrangement fee and the amount deferred for the undelivered elements is recognized as revenue related to the
delivered elements regardless of any separate prices stated within the contract for each element. If the fee due from the customer is not
fixed or determinable due to extended payment terms, revenue is recognized as payments become due from the customer, assuming all other criteria for revenue recognition are met. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
from engineering service contracts are recognized upon completion of the project, or using the percentage of completion method when project costs can be reasonably estimated. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
of sales consists primarily of material costs, third party commissions, costs associated with manufacturing, assembly and testing of products, costs associated with installation and
customer training and overhead and warranty costs. Cost of sales also includes import taxes and tariffs on components and assemblies. Some components and materials used in our products are purchased
from a single supplier or a limited group of suppliers and, in some cases, are subject to our obtaining Chinese import permits and approvals. We also rely on third party manufacturers in China to
manufacture and assemble most of our handsets. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
gross profit has been affected by product mix, average selling prices and material costs. Our gross profit, as a percentage of net sales, varies among our product families. The gross
profit, as a percentage of net sales, on our handsets is low compared to our other products. We expect that our overall gross profit, as a percentage of net sales, will fluctuate from period to period
as a result of shifts in product mix, anticipated decreases in average selling prices and our ability to reduce cost of sales. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative expenses include compensation and benefits, professional fees, sales commissions, provision for doubtful accounts receivable and travel and
entertainment costs. A large percentage of our costs are fixed and are difficult to quickly reduce in periods of reduced sales. We intend to pursue aggressive selling and marketing campaigns and to
expand our direct sales organization, and, as a result, our sales and marketing expenses will increase in future periods. We also expect that in support of our continued growth, general and
administrative expenses will continue to increase for the foreseeable future. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses consist primarily of salaries and related costs of employees engaged in research, design and development activities, the cost of parts for prototypes,
equipment depreciation and third party development expenses. A large percentage of our costs are fixed and are difficult to quickly reduce in periods of reduced sales. We believe that continued
investment in research and development is critical to our long-term success. Accordingly, we expect that our research and development expenses will increase in future periods. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
deferred stock compensation represents the difference between the fair value of common stock and the option exercise price for the options at the date of grant. Deferred compensation
is presented as a reduction of stockholders' equity, with amortization recorded over the vesting period of the option,
which is generally four years. No net deferred compensation expense was recorded in connection with the grant of stock options to our employees during the three months ended March&nbsp;31, 2002 and
2001, respectively. We recorded stock compensation expense of approximately $1.3&nbsp;million during the three months ended March&nbsp;31, 2002 and $1.3&nbsp;million during the corresponding
period in 2001. At March&nbsp;31, 2002, approximately $4.7&nbsp;million of deferred stock compensation remained to be amortized. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
of intangible assets consists primarily of the amortization of intangible assets associated with acquisitions in China, our acquisition of a minority interest in
Wacos,&nbsp;Inc. and our acquisitions of Stable Gain International&nbsp;Ltd. and ACD. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
equity in net income (loss) of affiliated companies comprises our 51.0% share of the earnings from our Guangdong manufacturing subsidiary, which is accounted for using the
equity method, as we do not have voting control over all significant matters. We have entered into an agreement to purchase the remaining 49.0% equity interest and we are in the process of applying
for the relevant governmental approvals. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
current regulations in China, foreign investment enterprises that have been accredited as technologically advanced enterprises are entitled to additional tax incentives. These tax
incentives vary in different locales and could include preferential national enterprise income tax treatment at 50% of </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>

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<P><FONT SIZE=2>
the usual rates for different periods of time. All of our active subsidiaries in China were accredited as technologically advanced enterprises. The tax holidays applicable to our wholly-owned
subsidiary, UTStarcom China, and our joint venture, Hangzhou UTStarcom, which together accounted for approximately 90.1% of our revenues in 2001, will expire at the end of 2002. At that time, the tax
rates for these two subsidiaries will increase from 7.5% to 15%, and from 10% to 15%, respectively, which will negatively impact our financial condition and results of operations by increasing our tax
rate. Additionally, the Chinese government is considering the imposition of a "unified" corporate income tax that would phase out, over time, the preferential tax treatment to which foreign-funded
enterprises, such as UTStarcom, are currently entitled. It is not certain whether the government will implement such a unified tax structure, or if implemented whether it will adversely affect our
financial results. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority
interest in (earnings) loss of consolidated subsidiaries represents the share of earnings in Hangzhou UTStarcom, our Zhejiang manufacturing joint venture, that is owned by our
joint venture partner. </FONT></P>

<P><FONT SIZE=2><B>RECENT DEVELOPMENTS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;28, 2002, we sold 1,500,000 shares of our common stock upon exercise of the underwriter's over-allotment option in connection with
the resale public offering of 10,000,000 shares of our common stock by SOFTBANK America&nbsp;Inc., one of our stockholders, at $20.25 per share. We received aggregate
net proceeds of approximately $28.9&nbsp;million, after deducting underwriting discounts and commissions and related expenses. We intend to use these proceeds for general corporate purposes,
including research and development, expansion of our sales and marketing organization and working capital. A portion of the net proceeds may also be used to acquire or invest in complementary
businesses, technologies or product offerings; however, there are no current material agreements or commitments with respect to any such activities. We did not receive any proceeds from the offering
of the shares of our common stock by SOFTBANK America&nbsp;Inc. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
September&nbsp;1996, the Company purchased a 49% interest in Guangdong UTStarcom,&nbsp;Ltd. (GUTS). In February&nbsp;1998, the Company acquired an additional 2% interest in
GUTS, increasing its ownership interest to 51%. However, because the Company does not have voting control over all significant matters of GUTS, the investment in and results of operations of GUTS are
accounted for using the equity method as of March&nbsp;31, 2002. On December&nbsp;18, 2001, the Company entered into an agreement to acquire the remaining 49% ownership in GUTS for a total
consideration of $3.6&nbsp;million payable in cash. The cash consideration was paid in January&nbsp;2002. Upon completion of this transaction, pending China regulatory approvals, GUTS will be a
wholly-owned subsidiary of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
July&nbsp;1997, the Company, as part of its business operations in China, acquired a 88% interest in UTStarcom (Hangzhou) Communication Co.,&nbsp;Ltd (HUTS). On January&nbsp;21,
2002, the Company entered into an agreement to acquire the remaining 12% ownership in the joint venture company for a total consideration of $14.5&nbsp;million payable in cash. Cash consideration of
$7.3&nbsp;million was paid in January&nbsp;2002. The remaining consideration will be paid in the second quarter of fiscal 2002. Upon completion of this transaction, pending China regulatory
approvals, HUTS will be a wholly-owned subsidiary of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;19, 2002, the Company completed the purchase of Issanni Communications,&nbsp;Inc. ("Issanni"). Issanni develops remote access server (RAS) and local access technology.
The Company's investment in Issanni was $2.0&nbsp;million prior to the acquisition. The purchase consideration for all the outstanding shares of Issanni, other than those already held by the Company
prior to the acquisition was $2.1&nbsp;million. In addition, $2.0&nbsp;million will be payable in the form of an earnout to all Issanni shareholders of record at closing, subject to the completion
of certain performance milestones during 2002, 2003 and 2004. This earnout will be recorded as additional purchase price when earned. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>

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Furthermore, the Company issued shares of restricted common stock valued at $1.0&nbsp;million to Issanni employees who will continue to perform services for the Company. </FONT></P>


<P><FONT SIZE=2><B>CRITICAL ACCOUNTING POLICIES  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial condition and results of operations of the Company are based on certain critical accounting policies, which include judgments, estimates, and
assumptions on the part of management. The following summary of critical accounting policies highlights those areas of significant judgment in the application of our accounting policies that affect
our financial condition and results of operations. </FONT></P>

<P><FONT SIZE=2><B>Revenue Recognition, Allowances for Doubtful Accounts and Product Warranty  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize revenue from sales of telecommunication equipment when persuasive evidence of an agreement exists, delivery of the product has occurred, the fee is
fixed or determinable and collectability is assured. For transactions where we have yet to obtain customer acceptance, revenue is deferred until the terms of acceptance are satisfied. Management
judgment is required in the assessment of collectibility. A sales reserve is established based on historical trends in sales returns. If actual future sales returns do not reflect the historical data,
or the credit-worthiness of a major customer deteriorates, our revenue could be affected. Historically, the level of sales returns and our collection history have been within our expectations, and
there have been no circumstances that resulted in revised assumptions in the past. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also maintain allowances for doubtful accounts based on our assessment of the collectibility of our accounts receivable. We continually monitor collections from our customers and
maintain allowances for doubtful accounts based upon the age of outstanding invoices and any specific customer collection issues. Historically, doubtful accounts or credit losses have been within our
expectations, and our doubtful account allowances have been adequate. Our accounts receivable are not concentrated within a small number of customers. Therefore, a significant deterioration in the
financial condition of one of our largest customers would not have a material adverse effect on our operating results or cash flows. Our accounts receivable are, however, concentrated in China.
Therefore, a material adverse change in economic, political and social conditions in China could have an adverse effect on the collectibility of our accounts receivable, resulting in the need for
additional doubtful account allowances. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
provide a warranty on our equipment and handset sales for a period not greater than one year. We provide for the expected cost of product warranties at the time that we recognize
revenue, based on our assessment of past warranty experience. We continually monitor the level of our warranty expenses. If, however, there were a material adverse change in our product failure rates,
an additional warranty provision would be required. Historically, our warranty experience has been within our expectations, and there have been no circumstances that resulted in revised assumptions in
the past. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_do1633_1_22"> </A> </FONT> <FONT SIZE=2><B>Inventory Reserve  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our inventories are stated at the lower of cost or net realizable value, net of a reserve for excess, slow moving and obsolete inventory. The reserve is based on
our assumptions about future market conditions and customer demand. We continually monitor our inventory reserve and adjust it on a quarterly basis. Historically, the level of inventory reserves, our
inventory turnover, and obsolescence experience have been within our expectations. Our sales are, however, concentrated in China. Therefore a material adverse change in economic, political and social
conditions in China could have an adverse effect on expected future market conditions and demand from our customers, resulting in the need for additional inventory reserves. </FONT></P>

<P><FONT SIZE=2><B>Research and Development and Software Development Costs  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our research and development costs are charged to expense as incurred in accordance with Statement of Financial Accounting Standards (SFAS) No.&nbsp;2. We
capitalize costs incurred in the development of software that will ultimately be sold when technological feasibility has been attained. Management judgment is required in assessing expected future
revenues and changes in product technologies, and the ultimate recoverability of our capitalized software development costs. Our business is concentrated in China. Therefore, a material change in
market conditions in China could significantly impact these assessments and assumptions, and require an adjustment to our capitalized software development costs. </FONT></P>

<P><FONT SIZE=2><B>Deferred Income Taxes  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize deferred income taxes as the difference between the tax bases of assets and liabilities and their financial statement amounts based on enacted tax
rates. Management judgment is required in the assessment of the recoverability of our deferred tax assets based on our assessment of projected taxable income. Although we are recently profitable,
numerous factors could affect our results of operations in the future. If there were a significant material decline in our future operating results, our assessment of the recoverability of our
deferred tax asset would need to be revised, and any such adjustment to our deferred tax asset would be charged to income in that period. </FONT></P>

<P><FONT SIZE=2><B>Goodwill and Intangibles  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recorded goodwill and intangible assets in connection with our business acquisitions. Management judgment is required in the assessment of the related
useful lives, and the fair value and the recoverability of these assets. Historically, there have been no circumstances that resulted in revised assumptions or impairment charges. Our business is
concentrated in China. Therefore, a material change in market conditions in China could significantly impact these assessments and assumptions, and result in impairment in our recorded goodwill and
intangible assets. </FONT></P>

<P><FONT SIZE=2><B>Long-Term Investments  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have invested in a fund focused on investments in Internet companies in China and a fund focused on investments in companies in Asia undergoing restructuring
or bankruptcy procedures. We have also invested directly in a number of private technology-based companies in the early stages of development. Management judgment is required in evaluating the
carrying value of these private company investments for possible impairment based on the achievement of business objectives and milestones, the financial condition and prospects of these companies and
other relevant factors. We continually monitor these investments for impairment, and charge to income any impairment amounts in the period such a determination is made. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

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<P><FONT SIZE=2><B>RELATED PARTY TRANSACTIONS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2001, the Company entered into an engineering services agreement with Matsushita Communication Industrial Co.,&nbsp;Ltd. ("Matsushita"), a stockholder of
the Company, pursuant to which the Company, in partnership with Matsushita, will develop a complete end-to-end third generation cellular network (3G W-CDMA)
standard compliant system, targeting the next generation of communications systems in the global communications marketplace. The Company recognized revenue of $3.4&nbsp;million and
$0.0&nbsp;million in connection with this agreement during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001, respectively. In addition, the Company purchases telecommunications
equipment from a subsidiary of Matsushita. Purchases of PAS equipment from such subsidiary of Matsushita during the three months ended March&nbsp;31, 2002 were $4.6&nbsp;million. Purchases of
handsets and base stations from such subsidiary of Matsushita during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001 were $56.7&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2001, the Company entered into an engineering services agreement with Mitsubishi Electric Corporation, a stockholder of the Company, to jointly develop and market a complete suite
of 3G W-CDMA infrastructure products. The Company recognized no revenue in connection with this agreement during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001,
respectively. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company recognized revenue of $10.0&nbsp;million and $0.0&nbsp;million during the three months ended March&nbsp;31, 2002 and March&nbsp;31, 2001, respectively, with respect
to sales of telecommunications equipment to BB Technologies Corporation (BBTC) an affiliate of SOFTBANK CORP. An entity affiliated with SOFTBANK CORP., SOFTBANK America&nbsp;Inc., is a significant
stockholder in our company. BBTC offers ADSL coverage throughout Japan which is marketed under the name YAHOO. The Company provides ADSL technology to BBTC. The contract was competitively bid and the
terms of this contract were on terms no more favorable than those with unrelated parties. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2000, we invested $8.0&nbsp;million and during 2001, we invested an additional $2.0&nbsp;million in Softbank China (the "fund"), an investment fund established by SOFTBANK
CORP. focused on investments in Internet companies in China. This investment permits us to participate in the anticipated growth of Internet-related businesses in China. An entity affiliated with
SOFTBANK CORP., SOFTBANK America&nbsp;Inc., is a significant stockholder in our company. Our investment constitutes 10% of the funding for Softbank China, with SOFTBANK CORP. contributing the
remaining 90%. We are a passive investor and have no decision-making authority with respect to investments by the fund. The fund has a separate management team, and none of our employees is employed
by the fund. Many of the fund's investments are and will be in privately held companies, many of which can still be considered in the start-up or development stages. These investments are
inherently risky as the market for the technologies or products the companies have under development are typically in these early stages and may never materialize. During the three months ended
March&nbsp;31, 2002, based upon a review of the carrying value of this investment, an impairment charge of $0.4&nbsp;million was recognized to provide for the decline in the fair value below the
carrying value of this investment. During the three months ended March&nbsp;31, 2001, we recognized an impairment charge of $1.0&nbsp;million to provide for a similar decline in the fair value
below the carrying value of this investment. The balance remaining in this investment as of March&nbsp;31, 2002 was $7.9&nbsp;million. Due to the risky nature of this investment, we may experience
further losses in connection with this investment in Softbank China. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the three months ended March&nbsp;31, 2002, the Company invested $2.0&nbsp;million in Restructuring Fund No.&nbsp;1, a venture capital investment limited partnership,
established by SOFTBANK INVESTMENT CORP., an affiliate of SOFTBANK CORP. An entity affiliated with SOFTBANK CORP., SOFTBANK America&nbsp;Inc., is a significant stockholder of the Company. The fund
will focus on leveraged buyout (LBO) investments in companies in Asia undergoing restructuring or bankruptcy procedures. The total fund offering is expected to be between approximately
$150.0&nbsp;million and $226.0&nbsp;million, with each investor contributing a minimum of $0.8&nbsp;million. The Company is a passive </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>

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<P><FONT SIZE=2>
investor and has no decision-making authority with respect to investments by the fund. The fund has a separate management team, and none of the Company's employees is employed by the fund. Due to the
risky nature of this investment, we may experience losses in connection with this investment in Restructuring Fund No.&nbsp;1. </FONT></P>

<P><FONT SIZE=2><B>RESULTS OF OPERATIONS  </B></FONT></P>

<P><FONT SIZE=2><B>THREE MONTHS ENDED MARCH 31, 2002 AND MARCH 31, 2001  </B></FONT></P>

<P><FONT SIZE=2>NET
INCOME </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended March&nbsp;31, 2002 we reported net income of $17.5&nbsp;million as compared to net income of $9.4&nbsp;million for the three months ended
March&nbsp;31, 2001. Net income for the three months ended March&nbsp;31, 2002 reflects the adoption of SFAS No.&nbsp;142, "Goodwill and Other Intangible Assets," on January&nbsp;1, 2002. With
the adoption of SFAS No.&nbsp;142, goodwill is no longer amortized, but rather tested annually for impairment. The Company completed its transition impairment test during the quarter ended
March&nbsp;31, 2002, and no impairment charge was required. Had SFAS No.&nbsp;142 been in effect during the three months ended March&nbsp;31, 2001, net income reported for that period would have
been $10.8&nbsp;million. </FONT></P>

<P><FONT SIZE=2>NET
SALES </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
net sales increased 54% to $183.7&nbsp;million for the three months ended March&nbsp;31, 2002 from $119.2&nbsp;million for the corresponding period in 2001. Sales of
telecommunications equipment for the three months ended March&nbsp;31, 2002 were $114.1&nbsp;million, an increase of $28.4&nbsp;million or 33% as compared to the three months ended
March&nbsp;31, 2001. Sales of subscriber handsets for the three months ended March&nbsp;31, 2002 were $69.6&nbsp;million, an increase of $36.1&nbsp;million or 108%, as compared to the three
months ended March&nbsp;31, 2001. Sales of telecommunications equipment and sales of subscriber handsets increased due to the continued growth in spending on telecommunications infrastructure in
China, as China continues to modernize its telecommunications infrastructure. For the three months ended March&nbsp;31, 2002, no customer accounted for 10% or more of consolidated revenues. For the
three months ended March&nbsp;31, 2001, sales to Shaoxing Telecommunications Bureau accounted for 14% of our consolidated revenues. </FONT></P>


<P><FONT SIZE=2>GROSS
PROFIT </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
profit increased 59% to $65.6&nbsp;million for the three months ended March&nbsp;31, 2002 from $41.4&nbsp;million for the corresponding period in 2001. Gross profit, as a
percentage of net sales, increased to 36% for the three months ended March&nbsp;31, 2002 from 35% for the three months ended March&nbsp;31,
2001. Gross profit, as a percentage of net sales, increased due to increasing margins on our lower margin handset sales, which comprised 38% of sales for the three months ended March&nbsp;31, 2002
compared to 28% of sales for the corresponding period in 2001. </FONT></P>


<P><FONT SIZE=2>SELLING,
GENERAL AND ADMINISTRATIVE </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative expenses increased 68% to $23.7&nbsp;million for the three months ended March&nbsp;31, 2002 from $14.1&nbsp;million for the corresponding period
in 2001. The increase in selling, general and administrative expenses was primarily due to increased sales and administrative personnel and related expenses, including sales commissions, associated
with the growth in net sales and the expansion of our overall level of business activities. Selling, general and administrative expenses as a percentage of net sales were 13% for the three months
ended March&nbsp;31, 2002 compared to 12% for the corresponding period in 2001. We expect our selling, general and administrative expenses to increase in absolute dollar amounts in future periods as
sales and marketing activities increase and we further invest in infrastructure and incur additional expenses related to the anticipated growth of our business and operations. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>

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<P><FONT SIZE=2>RESEARCH
AND DEVELOPMENT </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses increased 55% to $19.2&nbsp;million for the three months ended March&nbsp;31, 2002 from $12.4&nbsp;million for the corresponding period in 2001.
The increase in research and development expenses was primarily due to the hiring of additional technical personnel, increased prototype expenses and licensing fees to support our research and
development efforts. As a percentage of net sales, research and development expenses were 10% for the three months ended March&nbsp;31, 2002 compared to 10% for the corresponding period in 2001. We
expect our research and development expenses to increase in absolute dollar amounts in future periods as we expand our research and development organization to support new product development. </FONT></P>

<P><FONT SIZE=2>AMORTIZATION
OF INTANGIBLE ASSETS </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
of intangible assets was $0.5&nbsp;million for the three months ended March&nbsp;31, 2002 and $1.5&nbsp;million for the three months ended March&nbsp;31, 2001. The
decrease in amortization of intangible assets was primarily due to the elimination of amortization of goodwill upon the adoption of SFAS No.&nbsp;142 on January&nbsp;1, 2002. Had SFAS
No.&nbsp;142 been in effect during the quarter ended March&nbsp;31, 2001, amortization expense would have been $0.1&nbsp;million. </FONT></P>

<P><FONT SIZE=2>INTEREST
INCOME (EXPENSES), NET </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
interest income was $0.9&nbsp;million for the three months ended March&nbsp;31, 2002 and $1.5&nbsp;million for the corresponding period in 2001. The decrease was primarily due
to a decline in interest rates during the period and an increase in cash balances held in non-interest bearing accounts. </FONT></P>


<P><FONT SIZE=2>OTHER
INCOME (EXPENSES), NET </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
net income (expense) was $0.2&nbsp;million for the three months ended March&nbsp;31, 2002 and $(1.0) million for the corresponding period in 2001. The increase was primarily
due to a reduction in investment impairment charges to $0.4&nbsp;million in the three months ended March&nbsp;31, 2002 compared to $1.0&nbsp;million in the corresponding period in 2001. </FONT></P>

<P><FONT SIZE=2>EQUITY
IN INCOME (LOSS) OF AFFILIATED COMPANIES </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidated
equity in the net loss of affiliated companies was $(0.8) million for the three months ended March&nbsp;31, 2002 and $(0.2) million for the corresponding period in 2001.
The change between the two periods was primarily due to the increase in net loss at our Guangdong manufacturing subsidiary. </FONT></P>

<P><FONT SIZE=2>INCOME
TAX EXPENSE </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
tax expense was $4.5&nbsp;million for the three months ended March&nbsp;31, 2002 and $3.7&nbsp;million for the corresponding period in 2001. The increase in the income tax
expense was due to our increasing income. The effective tax rate was 20% and 27% for the three months ended March&nbsp;31, 2002 and 2001, respectively. The reduction in our effective tax rate can
primarily be attributed to the increased income attributable to our China operations. The future rate may vary due to a variety of factors, including but not limited to, the relevant income
contribution by domestic and foreign operations, changes in statutory tax rates, the amount of tax exempt interest income generated during the year, the ability to utilize foreign tax credits and
non-deductible items relating to acquisitions or other non recurring charges. We will continue to monitor the effective tax rate on a quarterly basis. </FONT></P>

<P><FONT SIZE=2>MINORITY
INTEREST IN (EARNINGS) OF CONSOLIDATED SUBSIDIARIES </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minority
interest in (earnings) of consolidated subsidiaries was $(0.5) million for the three months ended March&nbsp;31, 2002 and $(0.6) million for the corresponding period in 2001. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>

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<P><FONT SIZE=2><B>LIQUIDITY AND CAPITAL RESOURCES  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to our initial public offering we financed our operations through the sales of preferred stock and, to a lesser extent, bank lines of credit. In November
and December&nbsp;1999, we secured private equity financing totaling $55.0&nbsp;million. In March&nbsp;2000, we raised $189.4&nbsp;million in net proceeds from our initial public offering in
which we sold 11,500,000 shares of common stock. On August&nbsp;3, 2001, we completed a follow on public offering and sold an aggregate of 7,400,000 shares of common stock in which we raised net
proceeds of $139.9&nbsp;million. On February&nbsp;28, 2002, we sold 1,500,000 shares of common stock upon exercise of the underwriter's over-allotment option in connection with the
resale public offering of 10,000,000 shares of our common stock, by SOFTBANK America&nbsp;Inc., one of our stockholders. Upon such sale, we received aggregate net proceeds of approximately
$28.9&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of March&nbsp;31, 2002, we had lines of credit totaling $283.0&nbsp;million of which our borrowings were $63.3&nbsp;million, with the remainder available for future borrowings.
Of the amount borrowed, $12.0&nbsp;million was included in long-term debt. We are not a guarantor of any debt not included in the condensed consolidated balance sheet. As of
March&nbsp;31, 2002, we had working capital of $631.0&nbsp;million, including $362.1&nbsp;million in cash and cash equivalents, $45.8&nbsp;million of short-term investments and
$51.2&nbsp;million of Renminbi-denominated bank borrowings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have invested in a fund focused on investments in Internet companies in China and a fund focused on investments in companies in Asia undergoing restructuring or bankruptcy procedures.
We have also invested directly in a number of private technology-based companies in the early stages of development. We continually evaluate the carrying value of these investments for possible
impairment based on achievement of business objectives and milestones, the financial condition and prospects of these companies and other relevant factors. During the three months ended
March&nbsp;31, 2002, and the corresponding period in 2001, no impairment charge was considered necessary, based upon a review of the carrying value of these investments. Due to the risky nature of
these investments, we may experience losses in connection with our investments in private technology companies. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash used in operations for the three months ended March&nbsp;31, 2002 of $4.2&nbsp;million was primarily due to net income of $17.5&nbsp;million adjusted for depreciation and
amortization expense of $5.2&nbsp;million, amortization of deferred stock compensation expense of $1.3&nbsp;million, non-qualified stock option exercise tax benefits of
$2.0&nbsp;million, inventory reserve of $1.7&nbsp;million, allowance for doubtful accounts of $3.0&nbsp;million and an increase in income taxes payable of $1.8&nbsp;million. This was more than
offset by an increase in inventories, accounts receivable and other current and non-current assets of $12.0&nbsp;million, $15.8&nbsp;million and $3.4&nbsp;million, respectively, and
decreases in deferred revenue and other current liabilities of $3.1&nbsp;million and $4.0&nbsp;million, respectively. Net cash used in operations in the three months ended March&nbsp;31, 2001 of
$31.6&nbsp;million was primarily due to an increase in inventories, accounts receivable and other current and non-current assets of $35.8&nbsp;million, $9.6&nbsp;million and
$18.5&nbsp;million,
respectively, and decreases in accounts payable and income taxes payable of $3.3&nbsp;million and $2.1&nbsp;million, respectively. The uses of cash were partially offset by net income of
$9.4&nbsp;million plus depreciation and amortization expense of $3.3&nbsp;million, non-qualified stock option exercise tax benefits of $2.9&nbsp;million, amortization of deferred
stock compensation expense of $1.3&nbsp;million, inventory reserve of $1.7&nbsp;million, allowance for doubtful accounts of $0.8&nbsp;million and an increase in deferred revenue and other
current liabilities of $12.3&nbsp;million and $4.3&nbsp;million, respectively. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash provided by investing activities for the three months ended March&nbsp;31, 2002 of $20.0&nbsp;million was primarily due to sales of short-term investments of
$40.2&nbsp;million offset by purchases of plant property and equipment of $7.3&nbsp;million and investment in affiliates of $12.8&nbsp;million. Net cash provided by investing activities for the
three months ended March&nbsp;31, 2001 of $44.6&nbsp;million was primarily due to net sales of short-term investments of $51.1&nbsp;million offset by purchases of plant property and
equipment of $4.5&nbsp;million and investment in affiliates of $2.0&nbsp;million. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have entered into agreements to purchase the remaining minority interests in two of our joint ventures. In December&nbsp;2001, we agreed to acquire the remaining 49% ownership in
GUTS for a total of $3.6&nbsp;million in cash, which was paid in January&nbsp;2002. This transaction is expected to close in the second quarter of 2002. In January&nbsp;2002, we agreed to
acquire the remaining 12% ownership in HUTS for a total of $14.5&nbsp;million in cash payable in 2002, of which $7.3&nbsp;million was paid in January&nbsp;2002. This transaction is expected to
also close in the second quarter of 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash provided by financing activities for the three months ended March&nbsp;31, 2002 of $25.3&nbsp;million was primarily due to net proceeds of $28.9&nbsp;million from the
exercise of the over-allotment option by our underwriters in connection with the resale public offering of our common stock in February&nbsp;2002 by SOFTBANK America&nbsp;Inc., one of
our stockholders, and $3.6&nbsp;million from the issuance of common stock through the exercise of stock options. This was offset by net payments of $7.2&nbsp;million on borrowings under our lines
of credit. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
international sales are generally denominated in local currencies. Due to the limitations on converting Renminbi, we are limited in our ability to engage in currency hedging
activities in China. As of March&nbsp;31, 2002, we were not engaged in any hedging activities and did not hold any derivative financial instruments. Although the impact of currency fluctuations to
date has been insignificant, we cannot guarantee that fluctuations in currency exchange rates in the future will not have a material adverse effect on revenues from international sales and,
correspondingly, on our business, financial condition and results of operations. We also have contracts negotiated in Japanese Yen for purchasing portions of our inventories and supplies. We have a
multi-currency bank account in Japanese Yen for purchasing portions of our inventories and supplies. The balance of this Japanese Yen account as of March&nbsp;31, 2002 was approximately
$1.9&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that our existing cash and cash equivalents, short-term investments and cash from operations will be sufficient to finance our operations through at least the next
12&nbsp;months. If additional financing is needed, we may be unable to obtain such financing on commercially reasonable terms, or at all. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
principal commitments, as of March&nbsp;31, 2002, consist of obligations under operating leases, borrowings under our lines of credit, and capital expenditures relating to the
construction of a new manufacturing facility. We lease certain of our facilities under non-cancelable operating leases, which expire at various dates through 2006. Borrowings under our
lines of credit were $63.3&nbsp;million at March&nbsp;31, 2002. Please refer to Note&nbsp;7 of our Notes to Condensed Consolidated Financial Statements for more detailed information on our
borrowings under our lines of credit. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have purchased the rights to use 49 acres of land located in Zhejiang Science and Technology Industry Garden of Hangzhou Hi-tech Industry Development Zone. We have
completed the design layout for a new manufacturing facility. Construction of the new facility is expected to be completed in 2003 at a projected cost of $90.0&nbsp;million. Capital expenditure
during 2002 is expected to be approximately $45.0&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not engaged in any transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect our liquidity or the availability
of, or requirements for, capital resources. </FONT></P>

<P><FONT SIZE=2><B>RECENT ACCOUNTING PRONOUNCEMENTS  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;3, 2001, the FASB issued SFAS No.&nbsp;144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No.&nbsp;144
is effective for financial statements issued for fiscal years beginning after December&nbsp;15, 2001 and interim periods within those fiscal years. This statement supercedes SFAS No.&nbsp;121 and
amends APB 30&#151;"Reporting the Results of Operations&#151;Reporting the Effects of Disposal of a Segment of a Business." SFAS No.&nbsp;144 also requires that long-lived
assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No.&nbsp;144 expands the scope of discontinued operations to
include all components of an entity with operations that (1)&nbsp;can be distinguished from the rest of the entity and (2)&nbsp;will be eliminated from the ongoing operations of the entity in a
disposal transaction. The Company adopted SFAS No.&nbsp;144 on January&nbsp;1, 2002, and the adoption had no impact on the Company's financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_dq1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>FACTORS AFFECTING FUTURE OPERATING RESULTS    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dq1633_risks_relating_to_our_company"> </A>
<A NAME="toc_dq1633_2"> </A></FONT> <FONT SIZE=2><B>RISKS RELATING TO OUR COMPANY    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>Our future product sales are unpredictable, our operating results are likely to fluctuate from quarter to quarter, and if we fail to meet the expectations of securities
analysts or investors, our stock price could decline significantly</B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
quarterly and annual operating results have fluctuated in the past and are likely to fluctuate in the future due to a variety of factors, some of which are outside of our control. As
a result, period-to-period comparisons of our operating results are not necessarily meaningful or indicative of future performance. Furthermore, it is likely that in some
future quarters our operating results will fall below the expectations of securities analysts or investors. If this occurs, the trading price of our common stock could decline. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Factors
that may affect our future operating results include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
timing, number and size of orders for our products, as well as the relative mix of orders for each of our products, particularly the volume of lower
margin handsets;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>cancellation,
deferment or delay in implementation of large contracts;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
evolving and unpredictable nature of the economic, regulatory, competitive and political environments in China and other countries in which we market or
plan to market our products;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>price
reductions by our competitors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in our customers' subscriber growth rate;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>currency
fluctuations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>market
acceptance of our products and product enhancements;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
lengthy and unpredictable sales cycles associated with sales of our products combined with the impact of this variability on our suppliers' ability to
provide us with components on a timely basis;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>longer
collection periods of accounts receivable in China and other countries; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
decline in business activity we typically experience during the Lunar New Year, which leads to decreased sales during our first fiscal quarter. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
limited performance history of some of our products, our limited forecasting experience and processes and the emerging nature of our target markets make forecasting our future sales
and operating results difficult. Our expense levels are based, in part, on our expectations regarding future sales, and these expenses are largely fixed, particularly in the short term. In addition,
to enable us to promptly fill orders, we maintain inventories of finished goods, components and raw materials. As a result, we commit to considerable costs in advance of anticipated sales. In the
past, a substantial portion of our sales in each quarter resulted from orders received and shipped in that quarter, and we have operated with a limited backlog of unfilled orders. Accordingly, we may
not be able to reduce our costs in a timely manner to compensate for any unexpected shortfall between forecasted and actual sales. Any significant shortfall of sales may require us to maintain higher
levels of inventories of finished goods, components and raw materials than we require, thereby increasing our risk of inventory obsolescence and corresponding inventory write-downs and
write-offs. </FONT></P>

<P><FONT SIZE=2><B>Competition in our markets may lead to reduced prices, revenues and market share  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are increasingly facing intense competition in our target markets, especially from domestic companies in China. We believe that our strongest competition in
the future may come from these </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>

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<P><FONT SIZE=2>
companies, many of which operate under lower cost structures and more favorable governmental policies and have much larger sales forces than we do. Furthermore, other companies not presently offering
competing products may also enter our target markets, particularly with the reduction of trade restrictions as a result of China's admission to the World Trade Organization, or WTO. Many of our
competitors have significantly greater financial, technical, product development, sales, marketing and other resources than we do. As a result, our competitors may be able to respond more quickly to
new or emerging technologies and changes in service provider requirements. Our competitors may also be able to devote greater resources than we can to the development, promotion and sale of new
products. These competitors may also be able to offer significant financing arrangements to service providers, in some cases facilitated by government policies, which is a competitive advantage in
selling systems to service providers with limited financial and currency resources. Increased competition is likely to result in price reductions, reduced gross profit as a percentage of net sales and
loss of market share, any one of which could materially harm our business, financial condition and results of operations. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover,
current and potential competitors have established or may establish cooperative relationships among themselves or with third parties, including Telecommunications
Administrations, Telecommunications Bureaus and other local organizations, to increase the ability of their products to address the needs of prospective customers in our target markets. Accordingly,
alliances among competitors or between competitors and third parties may emerge and rapidly acquire significant market share. To remain competitive, we believe that we must continue to partner with
Telecommunications Administrations and other local organizations, maintain a high level of investment in research and development and in sales and marketing, and manufacture and deliver products to
service providers on a timely basis and without significant defects. If we fail to meet any of these objectives, our business, financial condition and results of operations could be harmed. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
introduction of inexpensive wireless telephone service or other competitive services in China may also have an adverse impact on sales of our PAS systems and handsets in China. We
may not be able to compete successfully against current or future competitors, and competitive pressures in the future may materially adversely affect our business, financial condition and results of
operations. </FONT></P>

<P><FONT SIZE=2><B>Our business may suffer if we are unable to collect payments from our customers on a timely basis  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers often must make a significant commitment of capital to purchase our products. As a result, any downturn in a customer's business that affects the
customer's ability to pay us could harm our financial condition. Moreover, accounts receivable collection cycles historically tend to be much longer in China than in other markets. The failure of any
of our customers to make timely payments could require us to write-off accounts receivable or increase our accounts receivable reserves, either of which could adversely affect our
financial condition. </FONT></P>

<P><FONT SIZE=2><B>Our market is subject to rapid technological change, and to compete effectively, we must continually introduce new products that achieve market acceptance  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The emerging market for communications equipment in developing countries is characterized by rapid technological developments, frequent new product introductions
and evolving industry and regulatory standards. Our success will depend in large part on our ability to enhance our network access and switching technologies and develop and introduce new products and
product enhancements that anticipate changing service provider requirements and technological developments. We may need to make substantial capital expenditures and incur significant research and
development costs to develop and introduce new products and enhancements. If we fail to timely develop and introduce new products or enhancements to existing products that effectively respond to
technological change, our business, financial condition and results of operations could be materially adversely affected. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From
time to time, our competitors or we may announce new products or product enhancements, technologies or services that have the potential to replace or shorten the life cycles of our
products and that may cause customers to defer purchasing our existing products, including the possible adoption and implementation of third generation, or 3G systems, resulting in inventory
obsolescence. Future technological advances in the communications industry may diminish or inhibit market acceptance of our existing or future products or render our products obsolete. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even
if we are able to develop and introduce new products, they may not gain market acceptance. Market acceptance of our products will depend on various factors including: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
ability to obtain necessary approvals from regulatory organizations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
perceived advantages of the new products over competing products;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
ability to attract customers who have existing relationships with our competitors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>product
cost relative to performance; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
level of customer service available to support new products. </FONT></DD></DL>
</UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Specifically,
sales of PAS, our wireless access system, will depend in part upon consumer acceptance of the mobility limitations of this service relative to other wireless service
systems, such as GSM or CDMA. If our existing or new products fail to achieve market acceptance for any reason, our business could be seriously harmed. </FONT></P>

<P><FONT SIZE=2><B>Our business will suffer if we are unable to deliver quality products on a timely and cost effective basis  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating results depend on our ability to manufacture products on a timely and cost effective basis. In the past, we have experienced reductions in yields as
a result of various factors, including defects in components and human error in assembly. If we experience deterioration in manufacturing performance or a delay in production of any of our products,
we could experience delays in shipments and cancellations of orders. Moreover, networking products frequently contain undetected software or hardware defects when first introduced or as new versions
are released. In addition, our products are often embedded in or deployed in conjunction with service providers' products, which incorporate a variety of components produced by third parties. As a
result, when a problem occurs, it may be difficult to identify the source of the problem. These problems may cause us to incur significant warranty and repair costs, divert the attention of our
engineering personnel from our product development efforts and cause significant customer relation problems or loss of customers, any one of which could harm our business. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
contract with third parties in China to undertake high volume manufacturing and assembly of our handsets. In addition, we sometimes use third parties for high volume assembly of
circuit boards. We do not have any long term contracts with these third party manufacturers, and in the event that these manufacturers are unable or unwilling to continue to manufacture our products,
we may be unable to secure alternative manufacturers or could experience delays in qualifying new manufacturers. We currently manufacture internally only a very limited quantity of our handsets.
However, if future demand for our handsets requires additional manufacturing capacity, we may invest in and build additional manufacturing facilities, most likely in China. However, new manufacturing
facilities may not attain the same quality or level of efficiencies as those of our existing third party manufacturers. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>

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<P><FONT SIZE=2><B>We depend on some sole source and other key suppliers for handsets, components and materials used in our products, and if these suppliers fail to provide us with adequate
supplies of high quality products at competitive prices, our competitive position, reputation and business could be harmed</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
components and materials used in our products are purchased from a single supplier or a limited group of suppliers. If any supplier is unwilling or unable to provide us with high
quality components and materials in the quantities required and at the costs specified by us, we may not be able to find
alternative sources on favorable terms, in a timely manner, or at all. Our inability to obtain or to develop alternative sources if and as required could result in delays or reductions in
manufacturing or product shipments. Moreover, these suppliers may delay product shipments or supply us with inferior quality products. If any of these events occur, our competitive position,
reputation and business could suffer. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
ability to source a sufficient quantity of high quality components used in our products may be limited by China's import restrictions and duties. We require a significant number of
imported components to manufacture our products in China. Imported electronic components and other imported goods used in the operation of our business are subject to a variety of permit requirements,
approval procedures, import duties and registration requirements. Non-payment of required import duties could subject us to penalties and fines and could adversely affect our ability to
manufacture and sell our products in China. In addition, import duties increase the cost of our products and may make them less competitive. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
particular, an integral component of our PAS system is the handset used by subscribers to make and receive mobile telephone calls. Our inability to obtain a sufficient number of high
quality components and assemblies for handsets could severely harm our business. From time to time, there has been a worldwide shortage of handsets, and there currently exists a shortage of
low-priced handsets, which we have found to be popular with many consumers in China. We have only used third parties to assemble and manufacture handsets in China for us for a limited
period of time. These manufacturers may be unable to produce adequate quantities of high-quality handsets to meet the demand of our customers. </FONT></P>

<P><FONT SIZE=2><B>If we are unable to expand our direct sales operation in China and indirect distribution channels elsewhere or successfully manage our expanded sales organization, our
operating results may suffer</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
distribution strategy focuses primarily on developing and expanding our direct sales organization in China and our indirect distribution channels outside of China. We may not be able
to successfully expand our direct sales organization in China and the cost of any expansion may exceed the revenue generated from these efforts. Even if we are successful in expanding our direct sales
organization in China, we may not be able to compete successfully against the significantly larger and better-funded sales and marketing operations of current or potential competitors. In addition, if
we fail to develop relationships with significant international resellers or manufacturers' representatives, or if these resellers or representatives are not successful in their sales or marketing
efforts, we may be unsuccessful in our expansion efforts outside China. </FONT></P>

<P><FONT SIZE=2><B>We expect average selling prices of our products to decrease which may reduce our revenues, and, as a result, we must introduce new products and reduce our costs in order to
maintain profitability</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
average selling prices for communications access and switching systems and subscriber terminal products, such as handsets, in China have been declining as a result of a number of
factors, including: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>increased
competition;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>aggressive
price reductions by competitors; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>rapid
technological change. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>

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<UL>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
anticipate that average selling prices of our products will decrease in the future in response to product introductions by us or our competitors or other factors, including price
pressures from customers. Therefore, we must continue to develop and introduce new products and enhancements to existing products that incorporate features that can be sold at higher average selling
prices. Failure to do so could cause our revenues and gross profit, as a percentage of net sales, to decline. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
cost reduction efforts may not allow us to keep pace with competitive pricing pressures or lead to improved gross profit, as a percentage of net sales. In order to be competitive, we
must continually reduce the cost of manufacturing our products through design and engineering changes. We may not be successful in these efforts or delivering our products to market in a timely
manner. Any redesign may not result in sufficient cost reductions to allow us to reduce the prices of our products to remain competitive or to improve or maintain our gross profit, as a percentage of
net sales. </FONT></P>

<P><FONT SIZE=2><B>Shifts in our product mix may result in declines in gross profit, as a percentage of net sales  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit, as a percentage of net sales, varies among our product groups. Our gross profit, as a percentage of net sales, is generally higher on our access
network system products and is significantly lower on our handsets. We also anticipate that the gross profit, as a percentage of net sales, may be lower for our newly developed products due to
start-up costs and may improve as unit volumes increase and efficiencies can be realized. Our overall gross profit, as a percentage of net sales, has fluctuated from period to period as a
result of shifts in product mix, the introduction of new products, decreases in average selling prices for older products and our ability to reduce manufacturing costs. </FONT></P>


<P><FONT SIZE=2><B>Service providers sometimes evaluate our products for long and unpredictable periods which causes the timing of purchases and our results of operations to be unpredictable  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The period of time between our initial contact with a service provider and the receipt of an actual purchase order may span a year or more. During this time,
service providers may subject our products to an extensive and lengthy evaluation process before making a purchase. The length of these qualification processes may vary substantially by product and
service provider, making our results of operations unpredictable. We may incur substantial sales and marketing expenses and expend significant management effort during this process, which ultimately
may not result in a sale. These qualification processes often make it difficult to obtain new customers, as service providers are reluctant to expend the resources necessary to qualify a new supplier
if they have one or more existing qualified sources. </FONT></P>

<P><FONT SIZE=2><B>Our multi-national operations subject us to various economic, political, regulatory and legal risks  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We market and sell our products in China and other markets, including Taiwan and India. The expansion of our existing multi-national operations and entry into
additional international markets will require significant management attention and financial resources. Multi-national operations are subject to inherent risks, including: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>difficulties
in designing products that are compatible with varying international communications standards;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>longer
accounts receivable collection periods and greater difficulty in accounts receivable collection;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>unexpected
changes in regulatory requirements or the regulatory environment;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in governmental control or influence over our customers;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
to import and export regulations, including quotas, tariffs and other trade barriers;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>delays
or difficulties in obtaining export and import licenses; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P>

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<UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>potential
foreign exchange controls and repatriation controls on foreign earnings;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>exchange
rate fluctuations and currency conversion restrictions;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
burdens of complying with a variety of foreign laws and regulations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>difficulties
and costs of staffing and managing multi-national operations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>reduced
protection for intellectual property rights in some countries;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>potentially
adverse tax consequences; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>political
and economic instability. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Multi-national
companies are required to establish intercompany pricing for transactions between their separate legal entities operating in different taxing jurisdictions. These
intercompany transactions are subject to audit by taxing authorities in the jurisdictions in which multinational companies operate. An additional tax liability may be incurred if it is determined that
intercompany pricing was not done at arm's length. We believe we have adequately estimated and recorded our liability arising from intercompany pricing, but an additional tax liability may result from
audits of our intercompany pricing policies. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
markets outside of China, we rely on a number of original equipment manufacturers, or OEMs, and third-party distributors and agents to market and sell our network access products. If
these OEMs, distributors or agents fail to provide the support and effort necessary to service developing markets effectively, our ability to maintain or expand our operations outside of China will be
negatively impacted. We may not successfully compete in these markets, our products may not be accepted and we may not successfully overcome the risks associated with international operations. </FONT></P>

<P><FONT SIZE=2><B>We are subject to risks relating to currency exchange rate fluctuations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to foreign exchange rate risk because our sales to China are denominated in Renminbi and portions of our accounts payable are denominated in
Japanese Yen. Due to the limitations on converting Renminbi, we are limited in our ability to engage in currency hedging activities in China. Although the impact of currency fluctuations of Renminbi
to date has been insignificant, fluctuations in currency exchange rates in the future may have a material adverse effect on our results of operations. </FONT></P>

<P><FONT SIZE=2><B>Our failure to meet international and governmental product standards could be detrimental to our business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our products are required to comply with numerous government regulations and standards, which vary by market. As standards for products continue to
evolve, we will need to modify our products or develop and support new versions of our products to meet emerging industry standards, comply with government regulations and satisfy the requirements
necessary to obtain approvals. Our inability to obtain regulatory approval and meet established standards could delay or prevent our entrance into or force our departure from particular markets. </FONT></P>

<P><FONT SIZE=2><B>Our recent growth has strained our resources, and if we are unable to manage and sustain our growth, our operating results will be negatively affected  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have recently experienced a period of rapid growth and anticipate that we must continue to expand our operations to address potential market opportunities. If
we fail to implement or improve systems or controls or to manage any future growth and expansion effectively, our business could suffer. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>33</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
expansion has placed and will continue to place a significant strain on our management, operational, financial and other resources. To manage our growth effectively, we will need to
take various actions, including: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>enhancing
management information systems and forecasting procedures;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>further
developing our operating, administrative, financial and accounting systems and controls;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>maintaining
close coordination among our engineering, accounting, finance, marketing, sales and operations organizations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>expanding,
training and managing our employee base; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>expanding
our finance, administrative and operations staff. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>We have only recently become profitable and may not be able to sustain profitability  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have only recently become profitable and may not be able to remain profitable in future periods. We anticipate continuing to incur significant sales and
marketing, research and development and general and administrative expenses and, as a result, we will need to generate higher revenues to remain profitable. Numerous factors could negatively impact
our results of operations, including a decrease in sales, price pressures and significant fixed costs. Our past results should not be relied on as an indication of our future performance. </FONT></P>


<P><FONT SIZE=2><B>Our success is dependent on continuing to hire and retain qualified personnel, and if we are not successful in attracting and retaining these personnel, our business would be
harmed</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
success of our business depends in significant part upon the continued contributions of key technical and senior management personnel, many of whom would be difficult to replace. In
particular, our success depends in large part on the knowledge, expertise and services of Hong Liang Lu, our President and Chief Executive Officer, and Ying Wu, our Executive Vice President and Chief
Executive Officer of China Operations. The loss of any key employee, the failure of any key employee to perform satisfactorily in his or her current position or our failure to attract and retain other
key technical and senior management employees could have a significant negative impact on our operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
effectively manage our recent growth as well as any future growth, we will need to recruit, train, assimilate, motivate and retain qualified employees. Competition for qualified
employees is intense, and the process of recruiting personnel with the combination of skills and attributes required to execute our business strategy can be difficult, time-consuming and
expensive. We are actively searching for research and development engineers and sales and marketing personnel, who are in short supply. Additionally, we have a need for and have experienced difficulty
in finding qualified accounting personnel knowledgeable in U.S. and China accounting standards who are resident in China. If we fail to attract, hire, assimilate or retain qualified personnel, our
business would be harmed. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Competitors
and others have in the past and may in the future attempt to recruit our employees. In addition, companies in the communications industry whose employees accept positions
with competitors frequently claim that the competitors have engaged in unfair hiring practices. We may be the subject of these types of claims in the future as we seek to hire qualified personnel.
Some of these claims may result in material litigation and disruption to our operations. We could incur substantial costs in defending ourselves against these claims, regardless of their merit. </FONT></P>


<P><FONT SIZE=2><B>Any acquisitions that we undertake could be difficult to integrate, disrupt our business, dilute our stockholders and harm our operating results  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may acquire complementary businesses, products and technologies. For example, in November&nbsp;2001, we acquired Advanced Communication Devices Corporation,
a system on chip </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>34</FONT></P>

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<P><FONT SIZE=2>
semiconductor company. Any anticipated benefits of an acquisition may not be realized. We have in the past and will continue to evaluate acquisition prospects that would complement our existing
product offerings, augment our market coverage, enhance our technological capabilities, or that may otherwise offer growth opportunities. Acquisitions of other companies may result in dilutive
issuances of equity securities, the incurrence of debt and the amortization of expenses related to goodwill and other intangible assets. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of operations, technologies, products and personnel of the acquired company, diversion of management's attention from other business concerns, risks of entering
markets in which we have no direct or limited prior experience, and the potential loss of key employees of the acquired company. </FONT></P>


<P><FONT SIZE=2><B>We may be unable to adequately protect our intellectual property and may be subject to claims that we infringe the intellectual property of others, either of which could
substantially harm our business</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
rely on a combination of patents, copyrights, trademarks, trade secret laws and contractual obligations to protect our technology. We have applied for patents in the United States,
three of which have been issued. We have also filed patent applications in other countries. Additional patents may not be issued from our pending patent applications and our issued patents may not be
upheld. In addition, we have, from time to time, chosen to abandon previously filed applications. Moreover, we have not yet obtained, and may not be able to obtain, patents in China on our products or
the technology that we use to manufacture our products. Our subsidiaries and joint ventures in China rely upon our trademarks, technology and know-how to manufacture and sell our products.
We cannot guarantee that these and other intellectual property protection measures will be sufficient to prevent misappropriation of our technology or that our competitors will not independently
develop technologies that are substantially equivalent or superior to ours. In addition, the legal systems of many foreign countries, including China, do not protect intellectual property rights to
the same extent as the legal system of the United States. If we are unable to adequately protect our proprietary information and technology, our business, financial condition and results of operations
could be materially adversely affected. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
increasing dependence of the communications industry on proprietary technology has resulted in frequent litigation based on allegations of the infringement of patents and other
intellectual property. In the future we may be subject to litigation to defend against claimed infringements of the rights of others or to determine the scope and validity of the proprietary rights of
others. Future litigation also may be necessary to enforce and protect our trade secrets and other intellectual property rights. Any intellectual property litigation could be costly and could cause
diversion of management's attention from the operation of our business. Adverse determinations in any litigation could result in the loss of our proprietary rights, subject us to significant
liabilities or require us to seek licenses from third parties which may not be available on commercially reasonable terms, if at all. We could also be subject to court orders preventing us from
manufacturing or selling our products. </FONT></P>

<P><FONT SIZE=2><B>Business interruptions could adversely affect our business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure and other events beyond our control. We do not have a
detailed disaster recovery plan. Our headquarters facility in the State of California is currently subject to electrical blackouts as a consequence of a shortage of available electrical power. In the
event these blackouts continue or increase in severity, they could disrupt the operations at our headquarters. In addition, we do not carry sufficient business interruption insurance to compensate us
for losses that may occur and any losses or damages incurred by us could have a material adverse effect on our business. </FONT></P>

<P><FONT SIZE=2><B>We have been named as a defendant in securities litigation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;31, 2001, a putative stockholder class action lawsuit was filed against our company, some of our directors and officers and various underwriters
for our initial public offering. The complaint alleges undisclosed improper underwriting practices concerning the allocation of IPO shares, in violation of the federal securities laws. Similar
complaints have been filed concerning the IPOs of more than 300 companies, and the litigation has been coordinated in federal court for the Southern District of New York as In re Initial Public
Offering Securities Litigation, 21 MC 92. We believe we have meritorious defenses to the claims against us and intend to defend the litigation vigorously. However, as litigation is by its nature
uncertain, an unfavorable resolution of the lawsuit could have a material adverse effect on our business, results of operations, or financial condition. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>35</FONT></P>

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<BR></FONT><FONT SIZE=2><B>RISKS RELATING TO THE STRUCTURE AND REGULATION OF CHINA'S TELECOMMUNICATIONS INDUSTRY    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>China's telecommunications industry is subject to extensive government regulation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China's telecommunications industry is heavily regulated by the Ministry of Information Industry. The Ministry of Information Industry has broad discretion and
authority to regulate all aspects of the telecommunications and information technology industry in China, including managing spectrum bandwidths, setting network equipment specifications and standards
and drafting laws and regulations related to the electronics and telecommunications industries. Additionally, the Ministry of Information Industry can decide what types of equipment may be connected
to the national telecommunications networks, the forms and types of services that may be offered to the public, the rates that are charged to subscribers for those services and the content of material
available in China over the Internet. If the Ministry of Information Industry sets standards with which we are unable to comply or which render our products noncompetitive, our ability to sell
products in China may be limited, resulting in substantial harm to our operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the end of May&nbsp;2000, we became aware of an internal notice, circulated within the Ministry of Information Industry, announcing a review of PHS-based
telecommunications equipment for future installation into China's telecommunications infrastructure. The Ministry of Information Industry requested service providers to temporarily halt new
deployments of PHS-based telecommunications equipment, including our PAS systems and handsets, pending conclusion of a review by the Ministry of Information Industry. Subsequently, at the
end of June&nbsp;2000, the Ministry of Information Industry issued a notice stating that it had concluded its review of PHS-based equipment and that the continued deployment of
PHS-based systems, such as our PAS systems and handsets, in China's county-level cities and towns and villages would be permitted. In addition, the notice stated that deployments within
large and medium-sized cities would only be allowed in very limited areas of dense population, such as campuses, commercial buildings and special development zones. The notice confirmed, however, that
new citywide deployments of our PAS system in large and medium cities would not be permitted. Failure of the Ministry of Information Industry to permit the sale or deployment of our PAS systems and
handsets, or the sale or deployment of our other products, or the imposition of additional limitations on their sale in the future could have a material adverse effect on our business and financial
condition. The Ministry of Information Industry may conduct further reviews or evaluations of PHS-based telecommunications equipment or may change its position regarding
PHS-based systems in the future. </FONT></P>

<P><FONT SIZE=2><B>China's telecommunications regulatory framework is in the process of being developed, which has led to uncertainties regarding how to conduct our business in China  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China does not yet have a national telecommunications law. However, with China's recent admission into the WTO the Ministry of Information Industry, under the
direction of the State Council, must shortly present the first draft of the Telecommunications Law of the People's Republic of China for ultimate submission to the National People's Congress for
review and adoption. We do not know the nature and scope of regulation that the Telecommunications Law would create. Accordingly, we cannot predict whether it will have a positive or negative effect
on us or on some or all aspects of our business. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China's
telecommunications regulatory framework is in the process of being developed. In September&nbsp;2000, the State Council issued the Telecommunications Regulations of the
People's Republic of China, known as the Telecom Regulations. The Telecom Regulations cover telecommunications services and market regulations, pricing, interconnection and connection, as well as
telecommunications construction and security issues. In May&nbsp;2001, the Ministry of Information Industry issued the Administrative Measures of Network Access Licenses to implement the Telecom
Regulations. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>36</FONT></P>

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Regulations in this area often require subjective interpretation and, given the relative infancy of the Telecom Regulations and the implementing regulations, we do not know how the regulations will
be interpreted or enforced. As a result, our attempts to comply with these regulations may be deemed insufficient by the appropriate regulatory agencies, which could subject us to penalties that
adversely affect our business. </FONT></P>

<P><FONT SIZE=2><B>Our business may suffer as a result of the recent restructuring of China Telecom  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;1999, the State Council approved a restructuring plan for the China Telecom system, under which the telecommunications operations of the China
Telecom system were separated along four business lines: fixed line, mobile, paging and satellite communications services. Following the announcement, we observed a reduction in orders from
Telecommunications Bureaus, which we attributed to the uncertainties surrounding the restructuring and the ultimate impact the restructuring would have on the Telecommunications Bureaus. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
December&nbsp;11, 2001, the Chinese government announced that China Telecom would be further split into two entities by region, Northern and Southern. The 10 Northern provinces,
municipalities and autonomous regions of China Telecom will be merged with China Netcom Co.&nbsp;Ltd. and China Jitong Network Communications Co.&nbsp;Ltd. to form&nbsp;a new company which we
refer to as the New CNC. The remaining 21 provinces, municipalities and autonomous regions will constitute the Southern entity, which will keep the name of China Telecom. The New CNC will inherit 30%
of the old China Telecom's national backbone network, with the rest going to the New China Telecom. As this change is
very recent and its implementation is ongoing, we cannot be certain what impact the restructuring will have on our business operations. However, we may experience another decline in orders and related
revenues similar to that which we experienced following the 1999 restructuring, resulting from uncertainty among our Telecommunications Bureau customers associated with the restructuring. Moreover,
following any restructuring, the New CNC, the New China Telecom or any other entity that may replace it as a result of any subsequent restructuring may restrict or prohibit the sales of our products,
which could cause substantial harm to our business. </FONT></P>

<P><FONT SIZE=2><B>We do not have some of the licenses we are required to have to sell our network access products in China  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under China's current regulatory structure, the communications products that we offer in China must meet government and industry standards, and a network access
license for the equipment must be obtained. Without the license, the equipment is not allowed to be connected to public telecommunications networks or sold in China. Moreover, we must ensure that the
quality of the telecommunications equipment for which we have obtained a network access license is stable and reliable, and may not lower the quality or performance of other installed licensed
products. The State Council's product quality supervision department, in concert with the Ministry of Information Industry, performs spot checks to track and supervise the quality of licensed
telecommunications equipment and publishes the results of such spot checks. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
regulations implementing these requirements are not very detailed, have not been applied by a court and may be interpreted and enforced by regulatory authorities in a number of
different ways. We have obtained the required network access licenses for our AN-2000 platform. We have applied for, but have not yet received, a network access license for our PAS systems
and handsets. Based upon conversations with the Ministry of Information Industry, we understand that our PAS systems and handsets are considered to still be in the trial period and that sales of our
PAS systems and handsets may continue to be made by us during this trial period, but a license will ultimately be required. Network access licenses will also be required for most additional products
that we are selling or may sell in China, including our mSwitch platform. If we fail to obtain the required licenses, we could be prohibited from making further sales of the unlicensed products,
including our PAS systems and </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>37</FONT></P>

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<P><FONT SIZE=2>
handsets, in China, which would substantially harm our business, financial condition and results of operations. Our counsel in China has advised us that China's governmental authorities may interpret
or apply the regulations with respect to which licenses are required and the ability to sell a product while a product is in the trial period in a manner that is inconsistent with the information
received by our counsel in China, either of which could have a material adverse effect on our business and financial condition. </FONT></P>

<P><FONT SIZE=2><B>Software incorporated in our products has not been registered in accordance with relevant Chinese regulations, and our ability to sell the products incorporating the software
may be affected</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
October&nbsp;2000, the Ministry of Information Industry issued regulations which prohibit the production and sale of software products, or products incorporating software, in China
unless the software is registered with the government. We are in the process of applying for registration of our software. Based upon verbal advice received from the Ministry of Information Industry,
we believe that we will be able to continue to sell products incorporating our software during the period in which the regulations are being implemented and our applications are pending. However, this
implementation period may not last long enough for us to complete the registration of our software. Moreover, the Chinese government may interpret or apply the regulations in such a way as to prohibit
sales of products incorporating our unregistered software prior to registration. If the government prohibits sales pending registration, or if we fail in our efforts to register our software, we could
be prohibited from making further sales of products incorporating our unregistered software in China, which could substantially harm our business and financial condition. </FONT></P>


<P><FONT SIZE=2><B>Most of our customers in China are part of the China Telecom system and are subject to its ultimate control, and, following the restructuring of China Telecom, most will be
part of the New China Telecom or the New CNC and will be subject to their ultimate control</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
main customers in China are the local Telecommunications Bureaus, which operate under China Telecom, China's state-owned fixed line operator, and are subject to its ultimate control.
The Telecommunications Bureaus will operate under the ultimate control of the New China Telecom or the New CNC after the restructuring of China Telecom. Policy statements may be issued, or decisions
may be made by these entities, which govern the equipment purchasing decisions of most of our customers in China. For example, in late 1999 China Telecom prohibited all Telecommunications Bureaus from
purchasing PHS systems, such as our PAS systems, for implementation in large cities, even before these sales were prohibited by the Ministry of Information Industry. As most of our sales are generated
from our operations in China, any decisions by China Telecom and, thereafter, the New China Telecom or the New CNC, restricting or prohibiting the sales or deployment of our products could cause
substantial harm to our business. </FONT></P>

<P><FONT SIZE=2><B>Our ability to sell our PAS wireless systems and handsets could be significantly impaired if China Telecom or the resulting organizations following the reorganization of China
Telecom are granted or otherwise acquire mobile licenses, which will allow China Telecom or such resulting entities to deliver cellular services</B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China
Telecom holds and operates and, after the restructuring, the New China Telecom and the New CNC will hold and operate, the fixed line telephone and data communications assets in
China and will be prohibited from offering cellular services. To offer wireless services to end users, the Telecommunications Bureaus must offer services that can be delivered over wireline networks,
such as those delivered over our PAS wireless systems and handsets. China's media sources have widely reported that after the restructuring of China Telecom, the Ministry of Information Industry may
grant mobile licenses to either one or both of the New CNC and the New China Telecom. If the Ministry of Information Industry does grant a mobile license to the New China Telecom or the New CNC, or if
such entities otherwise acquire mobile licenses, local Telecommunications Bureaus will be free to offer cellular services, such as GSM or CDMA, to their customers and they may therefore elect not to </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P>

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deploy our PAS systems and handsets. If this were to occur, we could lose current and potential customers for our PAS systems and handsets, and our financial condition and results of operations could
be harmed. </FONT></P>

<P><FONT SIZE=2><B>Changes in telecommunications rates or pricing policies may result in decreased demand for our products  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2000, the Ministry of Information Industry announced significant changes in rates for telecommunications services in China. While long
distance, international, leased line and Internet connection fees were cut by up to 70%, the rates for local telephone services, which include certain types of wireless access services such as those
offered over our PAS systems and handsets, were increased, from approximately $0.01 per minute to approximately $0.02 per minute. The increase in rates may result in a reduced demand by end users for
wireless services delivered over our PAS system and a corresponding decline in demand for our products. Additionally, the Ministry of Information Industry may implement future rate changes for
wireline or wireless services in China or change telecommunications pricing policies, including allowing carriers to set prices based on market conditions, any of which may lead to reduced demand for
our systems and products and result in a material adverse effect on our business or results of operations. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>39</FONT></P>

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<A NAME="toc_du1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>RISKS RELATING TO CONDUCTING OPERATIONS IN CHINA    <BR>  </B></FONT></P>

<P><FONT SIZE=2><B>Sales in China have accounted for most of our sales, and therefore, our business, financial condition and results of operations are to a significant degree subject to economic,
political and social events in China</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approximately
$167.2&nbsp;million, or 91%, of our net sales for the three months ended March&nbsp;31, 2002, and $116.8&nbsp;million, or 98%, of our net sales for the corresponding
period in 2001, occurred in China. Additionally, a substantial portion of our fixed assets are located in China. Of our total fixed assets, approximately 78% as of March&nbsp;31, 2002 and 75% as of
December&nbsp;31, 2001 were in China. We expect to make further investments in China in the future. Therefore, our business, financial condition and results of operations are to a significant degree
subject to economic, political and social events in China. </FONT></P>

<P><FONT SIZE=2><B>Devaluation in the value of the Renminbi and fluctuations in exchange rates could adversely affect our financial results  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exchange rate fluctuations could have a substantial negative impact on our financial condition and results of operations. We purchase substantially all of our
materials in the United States and Japan and a significant portion of our cost of goods sold is incurred in U.S. dollars and Japanese yen. A significant portion of our operating expenses are incurred
in U.S. dollars. At the same time, most of our sales are denominated in Renminbi. The value of the Renminbi is fixed by China's national government and is subject to changes in China's governmental
policies and to international economic and political developments. China may choose to devalue the Renminbi against the U.S. dollar. Additionally, China's government has considered from time to time
whether to partially or fully abandon the official exchange rate for Renminbi to the U.S. dollar. The abandonment of this official exchange rate policy may lead to sharp depreciation of the Renminbi
against the U.S. dollar and other foreign currencies and to significantly more volatility in the Renminbi exchange rate in the future, both of which would adversely affect our financial results and
make our future results more subject to fluctuation. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the past, financial markets in many Asian countries have experienced severe volatility and, as a result, some Asian currencies have experienced significant devaluation from time to
time. The devaluation of some Asian currencies may have the effect of rendering exports from China more expensive and less competitive and therefore place pressure on China's government to devalue the
Renminbi. Any devaluation of the Renminbi could result in an increase in volatility of Asian currency and capital markets. Future volatility of Asian financial markets could have an adverse impact on
our ability to expand our product sales into Asian markets outside of China. Moreover, due to the limitations on the convertibility of Renminbi, we are limited in our ability to engage in currency
hedging activities in China and do not currently engage in currency hedging activities with respect to international sales outside of China. </FONT></P>

<P><FONT SIZE=2><B>Currency restrictions in China may limit the ability of our subsidiaries and joint ventures in China to obtain and remit foreign currency necessary for the purchase of imported
components and may limit our ability to obtain and remit foreign currency in exchange for Renminbi earnings</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China's
government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under the current foreign
exchange control system, sufficient foreign currency may not be available to satisfy our currency needs. Shortages in the availability of foreign currency may restrict the ability of our Chinese
subsidiaries to obtain and remit sufficient foreign currency to pay dividends to us, or otherwise satisfy their foreign currency denominated obligations, such as payments to us for components which we
export to them and for </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>40</FONT></P>

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technology licensing fees. We may also experience difficulties in completing the administrative procedures necessary to obtain and remit needed foreign currency. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
business could be substantially harmed if we are unable to convert and remit our sales received in Renminbi into U.S. dollars. Under existing foreign exchange laws, Renminbi held by
our China subsidiaries can be converted into foreign currencies and remitted out of China to pay current account items such as payments to suppliers for imports, labor services, payment of interest on
foreign exchange loans and distributions of dividends so long as the subsidiaries have adequate amounts of Renminbi to purchase the foreign currency. Expenses of a capital nature such as the repayment
of bank loans denominated in foreign currencies, however, require approval from appropriate governmental authorities before Renminbi can be used to purchase foreign currency and then remitted out of
China. This system could be changed at any time by executive decision of the State Council to impose limits on current account convertibility of the Renminbi or other similar restrictions. Moreover,
even though the Renminbi is intended to be freely convertible under the current account, the State Administration of Foreign Exchange, which is responsible for administering China's foreign currency
market, has a significant degree of administrative discretion in implementing the laws. From time to time, the State Administration of Foreign Exchange has used this discretion in ways which
effectively limit the convertibility of current account payments and restrict remittances out of China. Furthermore, in many circumstances the State Administration of Foreign Exchange must approve
foreign currency conversions and remittances. Under the current foreign exchange control system, sufficient foreign currency may not be available at a given exchange rate to satisfy our currency
demands. </FONT></P>

<P><FONT SIZE=2><B>China subjects foreign investors in the telecommunications industry to ownership and geographic limitations  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China's government and its agencies, including the Ministry of Information Industry and the State Council, regulate foreign investment in the telecommunications
industry through the promulgation of various laws and regulations and the issuance of various administrative orders and decisions. Currently, foreign investors may engage in such activities only in
accordance with certain ownership and geographic limitations. China may promulgate new laws or regulations, or issue administrative or judicial decisions or interpretations, which would further
restrict or bar foreigners from engaging in telecommunications-related activities. The promulgation of laws or regulations or the issuance of administrative orders or judicial decisions or
interpretations restricting or prohibiting telecommunications activities by foreigners could have a substantial impact on our ongoing operations. </FONT></P>

<P><FONT SIZE=2><B>Governmental policies in China could impact our business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since 1978, China's government has been and is expected to continue reforming its economic and political systems. These reforms have resulted in and are expected
to continue to result in significant economic and social development in China. Many of the reforms are unprecedented or experimental and may be subject to change or readjustment due to a number of
political, economic and social factors. We believe that the basic principles underlying the political and economic reforms will continue to be implemented and provide the framework for China's
political and economic system. New reforms or the readjustment of previously implemented reforms could have a significant negative effect on our operations. Changes in China's political, economic and
social conditions and governmental policies which could have a substantial impact on our business include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>new
laws and regulations or the interpretation of those laws and regulations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
introduction of measures to control inflation or stimulate growth;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in the rate or method of taxation;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
imposition of additional restrictions on currency conversion and remittances abroad; and </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P>

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<UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>any
actions which limit our ability to develop, manufacture, import or sell our products in China, or to finance and operate our business in China. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B>Economic policies in China could impact our business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The economy of China differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development in various respects such
as structure, government involvement, level of development, growth rate, capital reinvestment, allocation of resources, self-sufficiency, rate of inflation and balance of payments
position. In the past, the economy of China has been primarily a planned economy subject to one- and five-year state plans adopted by central government authorities and largely
implemented by provincial and local authorities, which set production and development targets. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
1978, increasing emphasis had been placed on decentralization and the utilization of market forces in the development of China's economy. Economic reform measures adopted by
China's government may be inconsistent or ineffectual, and we may not in all cases be able to capitalize on any reforms. Further, these measures may be adjusted or modified in ways which could result
in economic liberalization measures that are inconsistent from time to time or from industry to industry or across different regions of the country. China's economy has experienced significant growth
in the past decade. This growth, however, has been accompanied by imbalances in China's economy and has resulted in significant fluctuations in general price levels, including periods of inflation.
China's government has implemented policies from time to time to increase or restrain the rate of economic growth, control periods of inflation or otherwise regulate economic expansion. While we may
be able to benefit from the effects of some of these policies, these policies and other measures taken by China's government to regulate the economy could also have a significant negative impact on
economic conditions in China with a resulting negative impact on our business. </FONT></P>

<P><FONT SIZE=2><B>China's entry into the World Trade Organization creates uncertainty as to the future economic and business environments in China  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China's entry into the WTO was approved in September&nbsp;2001. Entry into the WTO will require China to further reduce tariffs and eliminate
non-tariff barriers, which include quotas, licenses and other restrictions by 2005 at the latest. While China's entry into the WTO and the related relaxation of trade restrictions may lead
to increased foreign investment, it may also lead to increased competition in China's markets from international companies. China's entry into the WTO could have a negative impact on China's economy
with a resulting negative impact on our business. </FONT></P>

<P><FONT SIZE=2><B>If tax benefits available to our subsidiaries located in China are reduced or repealed, our business could suffer  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiaries and joint ventures located in China enjoy tax benefits in China which are generally available to foreign investment enterprises, including full
exemption from national enterprise income tax for two years starting from the first profit-making year and/or a 50% reduction in national income tax rate for the following three years. In addition,
local enterprise income tax is often waived or reduced during this tax holiday/incentive period. Under current regulations in China, foreign investment enterprises that have been accredited as
technologically advanced enterprises are entitled to additional tax incentives. These tax incentives vary in different locales and could include preferential national enterprise income tax treatment
at 50% of the usual rates for different periods of time. All of our active subsidiaries in China were accredited as technologically advanced enterprises. Two of our principal subsidiaries, UTStarcom
China and Hangzhou UTStarcom, accounted for approximately 90.1% of our revenues in 2001. The tax holidays applicable to, UTStarcom China will expire at the end of 2002. At that time, the tax rate will
increase from 7.5% to 15% and will negatively impact our financial condition and results of operations. The tax holiday applicable to our other principal </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>42</FONT></P>

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subsidiary, Hangzhou UTStarcom, expired in 2001 and is now subject to annual review. Consequently, its tax rate could increase from 10% to 15% if it is unable to maintain a tax holiday in 2002. If we
are unable to extend this tax holiday to 2002, our financial condition and results of operations may be negatively impacted. Additionally, the Chinese government is considering the imposition of a
"unified" corporate income tax that would phase out, over time, the preferential tax treatment to which foreign-funded enterprises, such as UTStarcom, are currently entitled. While it is not certain
whether the government will implement such a unified tax structure or whether, if implemented, UTStarcom will be grandfathered into the new tax structure, if the new tax structure is implemented, it
will adversely affect our financial condition. </FONT></P>

<P><FONT SIZE=2><B>We may be exposed to contingent tax liabilities in China resulting from our failure to withhold sufficient amounts for China's income tax purposes  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We employ a number of U.S. citizens who work on a full time basis in China. These expatriate employees participate in our stock option plans and have exercised a
number of options granted under the plans. The option exercises generated income that may be subject to personal income taxes under China's income tax laws. We did not withhold China income taxes on
the option exercises, and the employees have not yet paid any taxes in China that may be due. Should the employees fail to pay the income taxes, we may be liable for such taxes in our capacity as
withholding agent. In the event that it is determined that taxes are due in China, we, on behalf of our employees, will apply for a refund from the U.S. tax authorities corresponding to the amount of
the foreign tax credit which would then be applicable. The refund amounts are required to be paid to us by the employees who receive them. In addition, our failure to collect and remit China
withholding tax may also subject us to penalties. </FONT></P>

<P><FONT SIZE=2><B>China's legal system embodies uncertainties that could negatively impact our business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China has a civil law system. Decided court cases do not have binding legal effect on future decisions. Since 1979, many new laws and regulations covering general
economic matters have been promulgated in China. Despite this activity to develop the legal system, China's system of laws is not yet complete. Even where adequate law exists in China, enforcement of
existing laws or contracts based on existing law may be uncertain and sporadic and it may be difficult to obtain swift and equitable enforcement, or to obtain enforcement of a judgment by a court of
another jurisdiction. The relative inexperience of China's judiciary in many cases creates additional uncertainty as to the outcome of any litigation. Further, interpretation of statutes and
regulations may be subject to government policies reflecting domestic political changes. Moreover, government policies and internal rules promulgated by governmental agencies may not be published in
time, or at all. As a result, we may operate our business in violation of new rules and policies without having any knowledge of their existence. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China
has adopted a broad range of related laws, administrative rules and regulations that govern the conduct and operations of foreign investment enterprises and restrict the ability of
foreign companies to conduct business in China. These laws, rules and regulations provide some incentives to encourage the flow of investment into China, but also subject foreign companies, and
foreign investment enterprises, including our subsidiaries in China, to a set of restrictions that may not always apply to domestic companies in China. As a result of its admission into the WTO, China
is increasingly according foreign companies and foreign investment enterprises established in China the same rights and privileges as Chinese domestic companies. These special laws, administrative
rules and regulations governing foreign companies and foreign investment enterprises may still place us and our subsidiaries at a disadvantage in relation to Chinese domestic companies and may
adversely affect our competitive position. Moreover, as China's legal system develops, the promulgation of new laws, changes to existing laws and the pre-emption of local regulations by
national laws may adversely affect foreign investors and companies. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>43</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many
of our activities and products in China are subject to administrative review and approval by various national and local agencies of China's government. Because of the changes
occurring in China's legal and regulatory structure, we may not be able to secure the requisite governmental approval for our activities and products. Failure to obtain the requisite government
approval for any of our activities or products could substantially harm our business. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>44</FONT></P>

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<A NAME="toc_dw1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>RISKS RELATING TO OUR STOCK PERFORMANCE    <BR>  </B></FONT></P>


<P><FONT SIZE=2><B>Our stock price is highly volatile  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trading price of our common stock has fluctuated significantly since our initial public offering in March&nbsp;2000. Our stock price could be subject to
wide fluctuations in the future in response to many events or factors, including those discussed in the preceding risk factors relating to our operations, as well as: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>actual
or anticipated fluctuations in operating results;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in expectations as to future financial performance or changes in financial estimates or buy/sell recommendations of securities analysts;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in governmental regulations or policies in China, such as the temporary suspension of sales of our PAS systems that occurred in May and June of 2000,
which caused our stock price to drop;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our,
or a competitor's, announcement of new products, services or technological innovations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
operating and stock price performance of other comparable companies; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>news
and commentary emanating from the media, securities analysts, and government bodies in China relating to UTStarcom and to the industry in general. </FONT></DD></DL>
</UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General
market conditions and domestic or international macroeconomic factors unrelated to our performance may also affect our stock price. For these reasons, investors should not rely
on recent trends to predict future stock prices or financial results. In addition, following periods of volatility in a company's securities, securities class action litigation against a company is
sometimes instituted. This type of litigation could result in substantial costs and the diversion of management time and resources. </FONT></P>

<P><FONT SIZE=2><B>SOFTBANK CORP. and its related entities, including SOFTBANK America&nbsp;Inc., has significant influence over our management and affairs, which it could exercise against your
best interests</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SOFTBANK
CORP. and its related entities, including SOFTBANK America&nbsp;Inc., beneficially own 31.3% of our outstanding stock. As a result, SOFTBANK CORP. and its related entities,
including SOFTBANK America&nbsp;Inc., have the ability to exercise significant influence over all matters submitted to our stockholders for approval and exert significant influence over our
management and affairs. This concentration of ownership may delay or prevent a change of control or discourage a potential acquiror from making a tender offer or otherwise attempting to obtain control
of our company, which could decrease the market price of our common stock. Matters that could require stockholder approval include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>election
and removal of directors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>merger
or consolidation of our company; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>sale
of all or substantially all of our assets. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
interests of SOFTBANK America&nbsp;Inc. may not always coincide with our interests. SOFTBANK America&nbsp;Inc., acting through its designees on the Board of Directors and through
its ownership of voting securities, will have the ability to exercise significant influence over our actions irrespective of the desires of our other stockholders or directors. </FONT></P>


<P><FONT SIZE=2><B>Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if the transaction would benefit our stockholders  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other companies may seek to acquire or merge with us. An acquisition or merger of our company could result in benefits to our stockholders, including an increase
in the value of our common stock. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>45</FONT></P>

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<P><FONT SIZE=2>
Some provisions of our Certificate of Incorporation and Bylaws, as well as provisions of Delaware law, may discourage, delay or prevent a merger or acquisition that a stockholder may consider
favorable. These provisions include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>authorizing
the Board of Directors to issue additional preferred stock;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>prohibiting
cumulative voting in the election of directors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>limiting
the persons who may call special meetings of stockholders;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>prohibiting
stockholder action by written consent;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>creating
a classified Board of Directors pursuant to which our directors are elected for staggered three year terms; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>establishing
advance notice requirements for nominations for election to the Board of Directors and for proposing matters that can be acted on by
stockholders at stockholder meetings. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><A
NAME="dw1633_item_3._quantitative_and_quali__ite02683"> </A>
<A NAME="toc_dw1633_2"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to the impact of interest rate changes and changes in foreign currency exchange rates. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest Rate Risk.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio.
The fair value of our investment portfolio would not be significantly affected by either a 10% increase or decrease in interest rates due mainly to the short term nature of our investment portfolio.
However, our interest income can be sensitive to changes in the general level of U.S. interest rates since the majority of our funds are invested in instruments with maturities less than one year. Our
policy is to limit the risk of principal loss and ensure the safety of invested funds by limiting market risk. Funds in excess of current operating requirements are invested in government sponsored
entities' notes, commercial paper, floating rate corporate bonds, fixed income corporate bonds and tax exempt instruments. In accordance with our investment policy, all short-term
investments are invested in "investment grade" rated securities with minimum A or better ratings. Currently, most of our short-term investments have AA or better ratings. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below represents carrying amounts and related weighted-average interest rates of maturity of our investment portfolio at March&nbsp;31, 2002: </FONT></P>

<UL>
<UL>
<UL>

<P><FONT SIZE=2>(In
thousands, except interest rates) </FONT></P>
</UL>
</UL>
</UL>
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<DIV ALIGN="CENTER"><TABLE WIDTH="75%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>362,120</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Average interest rate</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Short-term investments</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>45,788</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Average interest rate</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Total investment securities</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>407,908</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Average interest rate</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign Exchange Rate Risk.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to foreign exchange rate risk because most of our sales in China are denominated
in Renminbi and portions of our accounts payable are denominated in Japanese Yen. Due to the limitations on converting Renminbi, we are limited in our ability to engage in currency hedging activities
in China. Although the impact of currency fluctuations of Renminbi to date has been insignificant, fluctuations in currency exchange rates in the future may have a material adverse effect on our
results of operations. We have a multi-currency bank account in Japanese Yen for purchasing portions of our inventories and supplies. The balance of this Japanese Yen account as of March&nbsp;31,
2002 is approximately $1.9&nbsp;million. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>46</FONT></P>

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<BR>

<P><FONT SIZE=2><A
NAME="dw1633_part_ii_#151;other_information"> </A>
<A NAME="toc_dw1633_3"> </A>
<BR></FONT><FONT SIZE=2><B>PART II&#151;OTHER INFORMATION    <BR>  </B></FONT></P>

<P><FONT SIZE=2><A
NAME="dw1633_item_2_#151;changes_in_securities_and_use_of_proceeds"> </A>
<A NAME="toc_dw1633_4"> </A></FONT> <FONT SIZE=2><B>ITEM 2&#151;CHANGES IN SECURITIES AND USE OF PROCEEDS    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We completed our initial public offering ("IPO") on March&nbsp;3, 2000 pursuant to a Registration Statement on Form&nbsp;S-1 (File
No.&nbsp;333-93069). In the IPO, we sold an aggregate of 11,500,000 shares of common stock (including an over-allotment option of 1,500,000 shares) at $18.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
managing underwriters of our initial public offering were Merrill Lynch&nbsp;&amp; Co., Banc of America Securities LLC, U.S. Bancorp Piper Jaffray, Merrill Lynch Japan&nbsp;Inc., and
E-TRADE Securities Co.,&nbsp;Ltd. The sale of the shares of common stock generated aggregate gross proceeds of approximately $207.0&nbsp;million. The aggregate net proceeds were
approximately $189.4&nbsp;million, after deducting underwriting discounts and commissions of approximately $14.5&nbsp;million and expenses of the offering of approximately $3.1&nbsp;million.
None of such amounts were direct or indirect payments to our directors or officers or their associates, to persons owning 10&nbsp;percent or more of any class of our equity securities or to our
affiliates. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
completed a follow-on public offering on August&nbsp;3, 2001 pursuant to a Registration Statement on Form&nbsp;S-3 (File No.&nbsp;333-63356).
A total of 10,350,000 shares of common stock (including the underwriters' over-allotment) were registered. We sold an aggregate of 7,400,000 shares of common stock, which included the
underwriters' over-allotment, at a price to the public of $20.00 per share. Selling stockholders sold an additional 2,950,000 shares of common stock in the offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
managing underwriter of our follow on public offering was Merrill Lynch&nbsp;&amp; Co. Salomon Smith Barney, Banc of America Securities LLC, HSBC Securities (USA)&nbsp;Inc., and U.S.
Bancorp Piper Jaffray served as co-managers of our offering. The sale of the shares of common stock generated aggregate gross proceeds of approximately $148.0&nbsp;million. The aggregate
net proceeds that we received was approximately $139.9&nbsp;million, after deducting underwriting discounts and commissions of approximately $7.3&nbsp;million and expenses of the offering of
approximately $1.0&nbsp;million. None of such amounts were direct or indirect payments to our directors or officers or their associates, to persons owning 10&nbsp;percent or more of any class of
our equity securities or to our affiliates. The aggregate gross proceeds for the selling stockholders were approximately $59.0&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;28, 2002, we sold 1,500,000 shares of common stock upon exercise of the underwriter's over-allotment option in connection with the resale public offering
of 10,000,000 shares of our common stock, by SOFTBANK America&nbsp;Inc., one of our stockholders, at a price to the public of $20.25 per share, pursuant to a Registration Statement on
Form&nbsp;S-3 (File No.&nbsp;333-82458). A total of 11,500,000 shares of common stock were registered. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
joint book-running managers of this public offering were Merrill Lynch&nbsp;&amp; Co. and Credit Suisse First Boston Corporation. Salomon Smith Barney, Banc of America
Securities LLC, U.S. Bancorp Piper Jaffray and HSBC Securities (USA)&nbsp;Inc., served as co-managers of our offering. The aggregate net proceeds we received was approximately
$28.9&nbsp;million, after deducting underwriting discounts and commissions and related expenses of $1.5&nbsp;million. None of such amounts were direct or indirect payments to our directors or
officers or their associates, to persons owning 10&nbsp;percent or more of any class of our equity securities or to our affiliates. We did not receive any proceeds from the offering of
the shares of our common stock by SOFTBANK America&nbsp;Inc. The aggregate gross proceeds for SOFTBANK America&nbsp;Inc., was approximately $202.5&nbsp;million. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
expect to use the net proceeds from these offerings for general corporate purposes, including research and development, expansion of our sales and marketing organization and working
capital and capital expenditures. The amounts actually expended for such purposes may vary significantly and will depend on a number of factors, including our future revenues and cash generated by
operations and the other factors described under "Factors Affecting Future Operating Results". Accordingly, we retain broad discretion in the allocation of the net proceeds of the offerings. A portion
of the net proceeds </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>47</FONT></P>

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<BR>

<P><FONT SIZE=2>
may also be used to acquire or invest in complementary businesses, technologies or product offerings. As of April&nbsp;26, 2002 we have not used any of the net proceeds from either offering and the
entire amount of net proceeds from both offerings remains in our cash and cash equivalents and short-term investments accounts. </FONT></P>

<P><FONT SIZE=2><A
NAME="dw1633_item_4_#151;submission_of_matt__ite02288"> </A>
<A NAME="toc_dw1633_5"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 4&#151;SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

<P><FONT SIZE=2><A
NAME="dw1633_item_5_#151;other_information"> </A>
<A NAME="toc_dw1633_6"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 5&#151;OTHER INFORMATION    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our directors, officers, or employees have entered, and may from time to time enter, into good faith trading plans pursuant to SEC
Rule&nbsp;10b5-1(c). </FONT></P>

<P><FONT SIZE=2><A
NAME="dw1633_item_6._exhibits_and_reports_on_form_8-k"> </A>
<A NAME="toc_dw1633_7"> </A>
<BR></FONT><FONT SIZE=2><B>ITEM 6.&nbsp;&nbsp;&nbsp;&nbsp;EXHIBITS AND REPORTS ON FORM 8-K    <BR>  </B></FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD><FONT SIZE=2>Exhibits:
</FONT></DD></DL>
</UL>
<BR>

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<TH WIDTH="12%" ALIGN="LEFT"><FONT SIZE=1><B>NUMBER<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="85%" ALIGN="CENTER"><FONT SIZE=1><B>EXHIBIT DESCRIPTION</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10.72</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%"><FONT SIZE=2>Comprehensive Credit-Extension Agreement between UTStarcom (China) Ltd. and Bejing City Commercial Bank, Yuhaiyuan Road Branch, dated February&nbsp;20, 2002, and Maximum Amount Guaranty Contract between UTStarcom
(Hangzhou) Telecommunication Co., Ltd. and Bejing City Commercial Bank, Yuhaiyuan Road Branch, dated February&nbsp;20, 2002.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10.73</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%"><FONT SIZE=2>Change of Control Severance Agreement between Gerald Soloway and UTStarcom, Inc. dated April 12, 2002.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10.74</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%"><FONT SIZE=2>Change of Control Severance Agreement between Howard Kwock and UTStarcom, Inc. dated April 12, 2002.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10.75</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="85%"><FONT SIZE=2>Change of Control Severance Agreement between Michael J. Sophie and UTStarcom, Inc. dated April 12, 2002.</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD><FONT SIZE=2>Reports
on Form&nbsp;8-K: </FONT></DD></DL>
<BR>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2>No
reports on Form&nbsp;8-K were filed during the quarter. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>48</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc1633_utstarcom,_inc."> </A>
<A NAME="toc_jc1633_1"> </A>
<BR></FONT><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.    <BR>  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc1633_signatures"> </A>
<A NAME="toc_jc1633_2"> </A></FONT> <FONT SIZE=2><B>SIGNATURES    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized. </FONT></P>

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<TD WIDTH="53%"><FONT SIZE=2>Date: May&nbsp;1, 2002</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>UTSTARCOM,&nbsp;INC.<BR>
(Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>BY:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>/s/ Hong Liang Lu</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><HR NOSHADE><FONT SIZE=2> Hong Liang Lu<BR>
President, Chief Executive Officer and Director</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>/s/ Michael J. Sophie</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="53%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="45%"><HR NOSHADE><FONT SIZE=2> Michael J. Sophie<BR>
Chief Financial Officer and Assistant Secretary</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>49</FONT></P>

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<BR>
<P><br><A NAME="02PAL1633_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_bg1633_1">TABLE OF CONTENTS</A></FONT><BR>
<!-- TOC_BEGIN -->
<UL>
<FONT SIZE=2><A HREF="#toc_de1633_1">PART I&#151;FINANCIAL INFORMATION</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_de1633_2">ITEM 1&#151;CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</A></FONT><BR>
</UL>
<FONT SIZE=2><A HREF="#toc_de1633_3">UTSTARCOM, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data)</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dg1633_1">UTSTARCOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_di1633_1">UTSTARCOM, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dk1633_1">UTSTARCOM, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dq1633_1">FACTORS AFFECTING FUTURE OPERATING RESULTS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dq1633_2">RISKS RELATING TO OUR COMPANY</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ds1633_1">RISKS RELATING TO THE STRUCTURE AND REGULATION OF CHINA'S TELECOMMUNICATIONS INDUSTRY</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_du1633_1">RISKS RELATING TO CONDUCTING OPERATIONS IN CHINA</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dw1633_1">RISKS RELATING TO OUR STOCK PERFORMANCE</A></FONT><BR>
<UL>
<FONT SIZE=2><A HREF="#toc_dw1633_2">ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1633_3">PART II&#151;OTHER INFORMATION</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1633_4">ITEM 2&#151;CHANGES IN SECURITIES AND USE OF PROCEEDS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1633_5">ITEM 4&#151;SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1633_6">ITEM 5&#151;OTHER INFORMATION</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1633_7">ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K</A></FONT><BR>
</UL>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_jc1633_1">UTSTARCOM, INC.</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_jc1633_2">SIGNATURES</A></FONT><BR>
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<p align="right" style="font-weight:bold;margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">EXHIBIT
10.72</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></b></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">Comprehensive
Credit-Extension Agreement</font></b></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">No.(2001)YBCBC(105-2001-006)</font></b></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.5pt;text-align:left;text-indent:-40.5pt;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Creditor</font></b><font size="2" style="font-size:10.0pt;">:</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Beijing
City Commercial Bank, Yuhaiyuan Road Branch (hereinafter referred to Party A)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Address: No.59, Fuxing
RD, Haidian District, Beijing 100036</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal Representative:
Wang Jianliang</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tel.: 6821 4551</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Fax: 6828 6861</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Credit Receiver:&#160;
UTSTARCOM (CHINA) LTD. </font></b><font size="2" style="font-size:10.0pt;">(hereinafter referred to Party B)</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Address: 11/F CNC
Manhattam Bldg, Dongcheng District, Beijing 100027</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal
Representative: Lu Hongliang</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tel.: 65542030</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Fax: 65542058</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WHEREAS, In light of &#147;Act
on Commercial Bank of People&#146;s Republic of China&#148;, &#147;Contract Law&#148; and &#147;Interim
Administration on Authorization and Credit Extension of Commercial Bank&#148;,
through equal negotiation under the principle of goodwill and equality, both
parties reach the Agreement as follows and agree it is binding on them both:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 style="line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chapter One: Maximum Credit Margin and Specific Credit
Margin</font></b></h4>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 1</font></b><font size="2" style="font-size:10.0pt;">: At the duration of the credit extension, Maximum
credit extension margin Party B can apply for is<u> SAY: RMB One Hundred
Million Yuan&#160;&#160; (RMB 100,000,000
Yuan)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </u></font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 2</font></b><font size="2" style="font-size:10.0pt;">: Within maximum credit extension margin, specific
credit margin regarding specific transaction is as such:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">RMB:&#160; 1. Common loan: SAY RMB Fifty Million Yuan
(RMB 50,000,000Yuan)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 2. Discount of commercial invoice: <u>SAY
RMB Fifty Million Yuan (RMB 50,000,000Yuan)</u></font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter Two: Term of Credit Extension</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 3</font></b><font size="2" style="font-size:10.0pt;">: Validity term of maximum credit extension margin is:
from December 20 of 2001 to December 20 of 2002.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- ZEQ.=1,SEQ=1,EFW="2078446",CP="UTSTARCOM, INC.",DN="2",CHK=96175,FOLIO='',FILE="DISK020:[02PAL6.02PAL1636.EDGAR]EX10-72_1636.CHC",USER="MWORTHY",CD='Apr 30 17:51 2002' -->
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
4</font></b><font size="2" style="font-size:10.0pt;">:&#160; Party A has the right to check up the usage
of the credit extension of this contract periodically. Party A has the right to
change the term of the credit extension provided that the issues set forth in
Chapter six occurred.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="line-height:normal;margin:0in 0in .0001pt 39.65pt;text-align:center;text-indent:-39.65pt;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter
Three: Usage of Maximum Credit Margin and Specific Credit Margin</font></b></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt .55in;text-align:left;text-indent:-.55in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 39.65pt;text-align:left;text-indent:-39.65pt;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
5</font></b><font size="2" style="font-size:10.0pt;">: The credit
capital herein can only be used for the current capital loan and discount of
commercial notes.</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt .55in;text-align:left;text-indent:-.55in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 6</font></b><font size="2" style="font-size:10.0pt;">: During the term of credit extension
agreed on in the Agreement and within the maximum credit margin, Party A may
apply to Party B for usage of specific credit extension on one lump sum or by
items on different occasions. In the event Party A think the application
complies with this contract by examination and its own determination, Party A
shall go through the relevant formalities with Party A.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 7</font></b><font size="2" style="font-size:10.0pt;">: In the event Party B applies to Party A for loan,
Parties shall not otherwise sign the loan contract, the amount, term, interest
rate, species and usage of loan shall be accorded to the loan receipt.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In the event Party B applies to Party A for other specific
credit margin other than set forth in article 2, Parties shall otherwise sign
the specific contract/agreement under the relevant credit extension (the
relevant credit extension hereinafter referred to as: &#147;Other Specific
Transaction&#148;; the specific contract/agreement hereinafter referred to as
&#147;Specific Transaction Contract&#148;).</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Any Specific Transaction Contract or loan receipt concluded
between Party A and Party B under every specific transaction is made a part of
and subject to this Agreement, together form a single integrated Agreement.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
8</font></b><font size="2" style="font-size:10.0pt;">: Summation of
credit margin (that is the outstanding capital sum of debt) already used by
Party B shall not exceed the maximum credit margin. During the term of credit
extension, Party B may re-apply for the usage of the specific credit margin
under which the debt is paid up. The unused specific credit margin within the
term of credit extension shall be automatically cancelled on expiration of the
term of credit extension.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
9</font></b><font size="2" style="font-size:10.0pt;">: Party B must
apply for using the credit margin within the term of credit extension. The
commencement of every credit margin shall not exceed the expiration date of the
term of credit extension, such expiration date includes such day of the changed
term of credit extension.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 10</font></b><font size="2" style="font-size:10.0pt;">:</font><font size="2" style="font-size:10.0pt;"> The Specific Transaction Contract or loan receipt
shall prevail if this contract conflicts with the Specific Transaction Contract
or loan receipt concluded by Party A and Party B.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 11</font></b><font size="2" style="font-size:10.0pt;">:</font><b><font size="2" style="font-size:10.0pt;font-weight:bold;">  </font></b><font size="2" style="font-size:10.0pt;">The interest rate, expenses charged by Party A in
the business of bank accepted draft, comfort letter or letter of guarantee and
international trade financing etc., the discount rate, and the interest rate
and foreign exchange rate needed in the secured loan of import and export are
determined as follows by Party A and Party B:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;1 The interest rate of current capital loan
is base rate (4.875</font><font size="2" face="SimSun" style="font-family:SimSun;font-size:10.0pt;">&#137;</font><font size="2" style="font-size:10.0pt;"> per year, 4.65</font><font size="2" face="SimSun" style="font-family:SimSun;font-size:10.0pt;">&#137;</font><font size="2" style="font-size:10.0pt;"> per half a year)</font></p>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;2. The discount rate of notes is 3.5</font><font size="2" face="SimSun" style="font-family:SimSun;font-size:10.0pt;">&#137;</font><font size="2" style="font-size:10.0pt;">.</font></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
12</font></b><font size="2" style="font-size:10.0pt;">: Within the term
of this contract, in the event the central bank adjusts the interest rate,
expense rate and the criteria of commission charge in the relevant businesses,
Party A and Party B shall re-determine the new rate and criteria of this
contract through negotiation.</font></p>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&#160;Chapter Four: Party
A&#146;s Commitment</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 13</font></b><font size="2" style="font-size:10.0pt;">: Party A shall approve Party B&#146;s application and
execute in due course pursuant to the Specific Transaction Contract or loan
receipt on the ground that Party B&#146;s application for usage of credit margin complies
with this contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 14</font></b><font size="2" style="font-size:10.0pt;">: Party A shall not take the liberty to adjust maximum
credit margin and term of credit extension to the extent of being unfavorable
to Party B, unless otherwise set forth in chapter six of this contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h4 style="line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chapter Five: Party B&#146;s Commitment</font></b></h4>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 15</font></b><font size="2" style="font-size:10.0pt;">: Party B shall use the capital in conformity with
law, Specific Transaction Contract or loan receipt and subject to Party A&#146;s
examination at any time.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 16</font></b><font size="2" style="font-size:10.0pt;">: During the term of credit extension, Party B
promises to duly provide Party A true financial statements, all of its banks of
deposit, accounts, balance held on deposits and credits and other related
financial materials.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
17</font></b><font size="2" style="font-size:10.0pt;">: Party B shall
notify Party A in writing immediately in the event of the occurrence of any
affair threatening Party B&#146;s ordinary operation and repayment obligation under
this contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 18</font></b><font size="2" style="font-size:10.0pt;">:</font><b><font size="2" style="font-size:10.0pt;font-weight:bold;">  </font></b><font size="2" style="font-size:10.0pt;">Party
B shall give prior notice to Party A in the event that Party B conducts such </font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- ZEQ.=1,SEQ=3,EFW="2078446",CP="UTSTARCOM, INC.",DN="2",CHK=406284,FOLIO='',FILE="DISK020:[02PAL6.02PAL1636.EDGAR]EX10-72_1636.CHC",USER="MWORTHY",CD='Apr 30 17:51 2002' -->
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">activities as merger,
division, acquisition, changing company style into company limited by share,
contract, lease, transfer, joint management, investment, applying for the
ceasing operation for consolidation, dissolution and bankruptcy, and other
activities which can affect the credit and debt under this contract or the
equity of Party A, otherwise Party B shall not carry out the above activities
before repaying all of the debt hereunder.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 19</font></b><font size="2" style="font-size:10.0pt;">:</font><b><font size="2" style="font-size:10.0pt;font-weight:bold;">  </font></b><font size="2" style="font-size:10.0pt;">During the term of this contract, Party B </font><font size="2" style="font-size:10.0pt;">shall notify Party A within 15 statutory
working days after change or modification in event of change of name, address
or legal representatives.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
20</font></b><font size="2" style="font-size:10.0pt;">: Before
repaying all the debt hereunder, Party B shall not tender guarantee for the
Third Party beyond Party B&#146;s liquidity. Party B shall notify Party A in writing
provided that Party B tendered guarantee for the Third Party.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 21</font></b><font size="2" style="font-size:10.0pt;">: Party B promise to repay the principal and interests
of the debts due on schedule and pay all the expenses receivable due on
schedule.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 22</font></b><font size="2" style="font-size:10.0pt;">: The average balance of each day at the account of
settlement opened at Party A shall not be less than 15% of the summation of
used credit margins.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="line-height:normal;margin:0in 0in .0001pt 39.65pt;text-align:center;text-indent:-39.65pt;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter
Six: Adjustment of Credit Margin</font></b></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt .55in;text-align:left;text-indent:-.55in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 23</font></b><font size="2" style="font-size:10.0pt;">: In the duration of execution of this contract, Party
A has the right to adjust or terminate the credit extension (recall in advance
all the loan and cease making loans) in the event of the following:</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The State&#146;s monetary policies undergo a
material change;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">There is occurrence or threatening
occurrence of grave financial risks in Party B&#146;s area;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The market relevant to Party B&#146;s
transaction undergoes a material change;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B is being or to be exposed to
grave transactional difficulties or risks;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B undergoes material system
changes;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The guaranty ability of guarantor in this
contract is substantially insufficient, or the security is lost or its value is
apparently decreased;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B uses the fund under credit
extension or loan receipt in the manner contradicting with the provision
concerned;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B loses its business credit
standing;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B has such acts as property
transfer, flight of capital and debt evasion or other acts infringing Party A&#146;s
interests;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B uses the fund in the manner
contradicting with the provision set forth in article 5 ;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B breaks the promises set forth in
chapter 5;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12.</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The occurrence of any other event or
situation has already caused or has the possibility to cause the deterioration
of<br>
Party B&#146;s ability to pay debts.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter Seven: Security</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 24</font></b><font size="2" style="font-size:10.0pt;">: To ensure the prompt repayment of the debt under
this Agreement, the following means of security are adopted:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1. Surety: UTStarcom
(Hangzhou) Communication Co., Ltd.; which signed the Maximum Margin Guarantee
Contract with the contract no. as <b><font style="font-weight:bold;">(2001)YBCBC(105-2001-006)</font></b> &#147;CEB Chao Max
Surety&#148;.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h5 style="color:black;line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">Chapter Eight: Responsibility of breach</font></b></h5>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 25</font></b><font size="2" style="font-size:10.0pt;">: After going into effect of this contract, Party A
and Party B shall execute the responsibilities under this contract, Specific
Transaction Contract or loan receipt. In the event any party does not execute
such responsibilities, such party shall undertake the relevant responsibilities
of breach and compensate the counter party all the losses caused by the breach.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
26</font></b><font size="2" style="font-size:10.0pt;">: Party A has
the right to announce the mature of this contract, Specific Transaction
Contract or loan receipt in advance, and recall in advance any financing fund
under comprehensive credit margin in the event of Party B&#146;s breach. Party B
shall pay all the losses caused by Party B&#146;s breach to Party A.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Article 27</font></b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;">: In the event
Party B does not refund the principals of loan and other credit capitals in the
term set forth in the loan receipt under this contract or Specific Transaction
Contract, Party A shall charge the punitive interest at the rate of 0.21</font><font size="2" color="black" face="SimSun" style="color:windowtext;font-family:SimSun;font-size:10.0pt;">&#137;</font><font size="2" color="black" style="color:windowtext;font-size:10.0pt;"> per day pursuant to the delayed
amount and time. In the event Party B does not use the loan and other credit
capitals as set forth, Party A shall charge the punitive interest at the rate
of 0.5</font><font size="2" color="black" face="SimSun" style="color:windowtext;font-family:SimSun;font-size:10.0pt;">&#137;</font><font size="2" color="black" style="color:windowtext;font-size:10.0pt;"> per day
pursuant to used amount and time.</font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Article 28</font></b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;">: Party A has the
right to receive the compound interests for unpaid interests from Party B.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Article 29</font></b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;">: Party A has the
right to deduct receivable principle of loan, interests, punitive interests </font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">&nbsp;</font></p>


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</font></div>

<font size="2" color="black" face="Times New Roman" style="color:black;font-size:10.0pt;">
<!-- ZEQ.=1,SEQ=5,EFW="2078446",CP="UTSTARCOM, INC.",DN="2",CHK=140346,FOLIO='',FILE="DISK020:[02PAL6.02PAL1636.EDGAR]EX10-72_1636.CHC",USER="MWORTHY",CD='Apr 30 17:51 2002' -->
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<p align="center" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">for delayed payment, compound interests and other expensive
receivable from Party B.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter Nine: Force Majeure</font></b></h2>

<p style="margin:0in 0in .0001pt;text-align:justify;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 30</font></b><font size="2" style="font-size:10.0pt;">: In the event any force majeure causes Party B fails
to execute the contract, Party B shall notify Party A within 3 legal working
day after the incurrence of the force majeure and provide the written proof
about such occurrence of force majeure issued by the local notarial department.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter Ten: Settlement of Disputes</font></b></h2>

<p style="margin:0in 0in .0001pt;text-align:justify;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 31</font></b><font size="2" style="font-size:10.0pt;">: Both Parties shall settle through friendly
negotiation any disputes arising out of or relating with the performance of
this Agreement. If negotiation fails, the jurisdiction of Party A shall
prevail.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h6 style="color:black;font-weight:normal;line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;font-weight:bold;">Chapter Eleven: Effect, Change and Dissolution of the
Contract</font></b></h6>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
32</font></b><font size="2" style="font-size:10.0pt;">: The contract
comes into force at the date both parties&#146; legal representative or main principals,
or the entrusted agents sign it and seal it by company chop.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
33</font></b><font size="2" style="font-size:10.0pt;">: After the
effectiveness of this contract, any party shall not presume on change or
termination in advance of this contract. Parties shall make a consensus about
any change or termination and reach an written agreement.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter Twelve: Appendix</font></b></h2>

<p style="margin:0in 0in .0001pt;text-align:justify;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h2 align="left" style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 34</font></b><font size="2" style="font-size:10.0pt;">: The appendix of this contract is: Nill</font></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
35</font></b><font size="2" style="font-size:10.0pt;">: The appendix
is an indiscerptible parts of this contract and has the same effectiveness with
the originals.</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h3 style="color:black;line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">Chapter Thirteen: Miscellaneous</font></b></h3>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article 36</font></b><font size="2" style="font-size:10.0pt;">: Any notice given or made by telex and facsimile
shall be deemed to have been received at the date of transmission; if sent by
mail, shall be deemed to have received within 3 days after the date of mailing.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
37</font></b><font size="2" style="font-size:10.0pt;">: Other issues
stipulated by parties: Nill</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Article
38</font></b><font size="2" style="font-size:10.0pt;">: Any term and
conditions which are not stipulated in this Agreement can be otherwise set
forth in writing.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<h3 align="left" style="color:black;line-height:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;"><b><font size="2" color="black" face="Times New Roman" style="color:windowtext;font-size:10.0pt;">Article 39</font></b><font size="2" color="black" style="color:windowtext;font-size:10.0pt;font-weight:normal;">:</font><font size="2" color="black" style="color:windowtext;font-size:10.0pt;">  </font><font size="2" color="black" style="color:windowtext;font-size:10.0pt;font-weight:normal;">This Agreement has three originals with same effectiveness and Party A,
Party B and the guarantor respectively holds one.</font></h3>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A<b><font style="font-weight:bold;">rticle 40</font></b>: This Agreement is signed in
Beijing as of February 20, 2002.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="41%" valign="top" style="padding:0in .7pt 0in .7pt;width:41.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Party A(stamp)</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="54%" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Party B(Stamp)</font></p>
  </td>
 </tr>
 <tr>
  <td width="41%" valign="top" style="padding:0in .7pt 0in .7pt;width:41.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal representative:</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="54%" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal representative:</font></p>
  </td>
 </tr>
 <tr>
  <td width="41%" valign="top" style="padding:0in .7pt 0in .7pt;width:41.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(or entrusted agent):</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="54%" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(or entrusted agent):</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<u><font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;text-decoration:underline;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Translation Certification</font></u></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I hereby certify that the
foregoing represents a fair and accurate English translation of the original
Chinese document.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated:&#160; April 29, 2002</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
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  <td width="50%" valign="top" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.16%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="45%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Michael J. Sophie</font></p>
  </td>
 </tr>
 <tr>
  <td width="50%" valign="top" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="45%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Michael J. Sophie</font></p>
  </td>
 </tr>
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  <td width="50%" valign="top" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>


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<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&nbsp;</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Beijing
City Commercial Banking Co., Ltd.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h1 style="margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">Maximum Amount Guaranty Contract</font></b></h1>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Serial number: (2001) bei
shang yin gao bao zi</font></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">No. (105-2001-006)</font></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Guarantor:
UTStarcom (Hangzhou) Telecommunication Co., Ltd. (hereinafter referred to as
Party A)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Domicile: Building 2 and 3,
Yile Industrial Park, No. 129 Wenyi Road, Hangzhou, Zhejiang Province</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Postcode: 310012</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal Representative:
Wuying</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tel: 0571-88856112&#160; 88862342</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Fax: 0571-88855203</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Account Opening Bank:
Zhejiang Province Branch of Bank of China</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Account Number: 4518252011617</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Creditor:&#160; Beijing City Commercial Banking Co., Ltd.,
Yuhaiyuan Road Branch (hereinafter referred to as Party B)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Domicile: 59 Yi Fuxing
Road, Haidian District, Beijing</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Postcode: 100036</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal
Representative/Person in Charge: Wang Jianliang</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Tel: 68214551</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Fax: 68286861</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Party A voluntarily
provides security guaranty for all creditor&#146;s right under the Comprehensive
credit granting Contract (hereinafter referred to as the principal contract)
which is numbered as (2001) Bei shang yin ZHONG SHOU zi No. (105-2001-006)
signed by UTStarcom (China) Co., Ltd. (hereinafter referred to as debtor) and
Party B of this Contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Party B agreed to accept
the security provided by Party A after examination. This contract is drawn up
in order to make clear the rights and obligations of both parties in accordance
with relevant laws and rules of the state.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 1&#160;&#160;&#160; Type and
Amount of the Principal</font></b></h2>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">&#160;Creditor&#146;s Right to
be guaranteed</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt .55in;text-align:left;text-indent:-.55in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 1</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The
type and amount of the principal creditor&#146;s right guaranteed by Party A are the
type and amount of the principal creditor&#146;s right under the principal contract,
and the maximum amount of the principal creditor&#146;s right to be guaranteed is
the maximum credit granting amount agreed in the principal contract, that is
ONE HUNDRED MILLON RMB(writing in large form), 100,000,000 RMB(writing in small
form); foreign currency<u>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
<br>
</u>(writing in large form),<u>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
</u>&#160;(writing in small form).</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 2&#160;&#160;&#160; Time
Limit for debt performed by debtor</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt .55in;text-align:left;text-indent:-.55in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 2</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The
time limit for debt performed by debtor shall comply with what&#146;s agreed in each
specific business contract or bill of debt under principal contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 3&#160;&#160;&#160; Guaranty
Form</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 3&#160;&#160;&#160; The guaranty form of this contract is a
joint liability guaranty.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 4&#160;&#160; &#160;Scope of security guaranty</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 38.5pt;text-align:left;text-indent:-38.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 4</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The
scope of security guaranty includes principal creditor&#146;s right, interest,
overdue penalty interest, compound interest, contractual fine, payment for
damages, fees to realize creditor&#146;s right (including but not limited to court
costs, attorney fees and business trip cost) and all other necessary fees which
are agreed in Article 1 under this contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 5&#160;&#160;&#160; Duration
of Guaranty</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.2pt;text-align:left;text-indent:-40.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 5</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The duration of guaranty for Party A to bear guaranty
liability is 2 years, that is, within 2 years as of the expiration of expiry
date for debt agreed in each specific business contract or bill of debt. The
duration of guaranty of each specific business is calculated separately.</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.5pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If the debt is
expirated in advance of time according to the principal </font></p>

<p align="left" style="margin:0in 0in .0001pt 40.5pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="left" style="margin:0in 0in .0001pt 40.5pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">contract or
specific business contract, the advanced expiry date is regarded as the expiry
date of debt.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 6&#160;&#160;&#160; Rights
and Obligations of Both Parties</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 6 Rights
and Obligations of Both Parties:</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.1</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party A shall guarantee that it is a lawful Chinese
legal person or other organization according to laws of People&#146;s Republic of
China and has the necessary capacity of civil rights and capacity of civil
disposition to sign and perform this contract;</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.2</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party A shall know and agree all articles of the
principal contract, voluntarily provides guaranty for Party B and all proposals
in this contract are truthful.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.3</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">In case there is the third party providing another
guaranty, all guarantors shall be jointly and severally liable for the debt.
Party B may require any one of the guarantors to bear relevant security
liabilities.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.4</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Should the debtor pay all debts under the principal
contract and relevant specific business contract or bill of debt on schedule,
then Party A may not bear the security liabilities under this contract any
more.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.5</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">If principal creditor&#146;s right amount guaranteed by
Party A is not increased, the modification of the principal contract by debtor
and Party B through agreement needs not obtain Party A&#146;s consent and Party A
shall not be exempted from joint and several liability for the amendment.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.6</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">During the performance of this contract, if the
People&#146;s Bank of China adjusts loan interest rates, it shall be performed
according to the regulations of the People&#146;s Bank of China, which shall not be
regarded as the modification of the principal contract and this contract. Party
B is not required to notice Party A and Party A shall continue to bear the
security liability.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.7</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party A shall ensure that its credit information,
financial report and other materials, documents are truthful, legal and valid;</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.8</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">In case the debtor fails to pay debt according to
what&#146;s agreed in specific business contract or bill of debt, Party B may ask
Party A to bear security liability and Party A shall pay Party B on the date of
receiving Party B&#146;s written notice without delay.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.9</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">When performing its security liability, Party A shall
pay to Party B according to the following sequence except as otherwise agreed
upon in this contract: (1) fees to realize the creditor&#146;s right; (2) payment
for damages; (3) contractual fines; (4) compound interest of principal
creditor&#146;s right; (5) overdue interest penalty for principal creditor&#146;s right;
(6) interest of principal creditor&#146;s right; (7) the principal of principal
creditor&#146;s right.</font></p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt 19.2pt;text-align:center;text-indent:-19.2pt;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt 19.2pt;text-align:left;text-indent:-19.2pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.10</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Should Party A fails to perform the security liability
agreed in Article 6.8 of this contract, Party B may deduct directly from any
accounts opened by Party B or exercise right of disposition of Party A&#146;s
property or property right lawfully possessed and managed by Party B to off the
debtor&#146;s right guaranteed by Party A.</font></p>

<p align="left" style="margin:0in 0in .0001pt 21.0pt;text-align:left;text-indent:-21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.11</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">During the period of validity of principal contract,
Party A shall take measures actively to realize its security liability and
inform Party B within 3 statutory working days if it is under any of the
following circumstances:</font></p>

<p align="left" style="margin:0in 0in .0001pt 38.25pt;text-align:left;text-indent:-17.25pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Litigation, arbitration involving Party
A, or other events which may have an effect on its capacity of guaranty;</font></p>

<p align="left" style="margin:0in 0in .0001pt 38.25pt;text-align:left;text-indent:-17.25pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party A modify its name, domicile or
legal representative;</font></p>

<p align="left" style="margin:0in 0in .0001pt 38.25pt;text-align:left;text-indent:-17.25pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Merger, division, annexation, stock
system reform, contracting out, leasing, capital transfer, economic
association, investment, application for closing down for rectification,
application for dissolution, application for bankruptcy or other changes occurs
to Party A.</font></p>

<p align="left" style="margin:0in 0in .0001pt 22.1pt;text-align:left;text-indent:-22.1pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.12</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Should Party B and the debtor sign specific credit
granting contract or bill of debt under the specific credit business of
principal contract, it is not necessary to inform Party A.</font></p>

<p align="left" style="margin:0in 0in .0001pt 22.1pt;text-align:left;text-indent:-22.1pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.13</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Party B has the right to investigate and check Party
A&#146;s business and property situation and Party A shall coordinate actively and
provide relevant materials to Party B without delay.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 7&#160;&#160; Liability
for Breach of Contract</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.8pt;text-align:left;text-indent:-40.8pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 7</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Both parties shall perform the obligations prescribed
by this contract after the effectiveness of it. Should either party fails to
perform or partially perform the obligations prescribed by this contract, that
party shall bear relevant liabilities for breach of contract and compensate for
losses therefor.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 8&#160;&#160;&#160; Force
Majeure</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 38.5pt;text-align:left;text-indent:-38.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 8</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Should
Party A be prevented from executing its obligations by force majeure, Party A
shall notify Party B within 3 statutory working days from the occurrence date
of force majeure and thereafter provide a written document for evidence about
the occurrence of force majeure issued by the local public notary organization.</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 38.5pt;text-align:left;text-indent:-38.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 9&#160;&#160;&#160;
Settlement of Dispute</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 38.5pt;text-align:left;text-indent:-38.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 9</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Any
disputes arising from the execution of the contract, the contract shall be
settled through consultations between both parties. In case no settlement can
be reached through consultations, the parties may seek recourse to the law
court of the district of Party B&#146;s domicile.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 10&#160;&#160; Validity,
Alteration and dissolution of the Contract</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 10</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">This contract shall go into effect upon signature and
official seal by legal representatives/ persons in charge or entrusted agents
of both parties.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 11</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">This contract is separate from the principal contract
and does not become invalid because of the invalidity of the principal
contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 12</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Neither party shall alter or dissolve this contract
ahead of time arbitrarily. When any alteration or dissolution is necessary, a
written agreement shall be reached through consultations between both parties.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 11&#160;&#160;&#160; Appendix</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.8pt;text-align:left;text-indent:-40.8pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 13&#160; The appendix of this contract includes none.</font></p>

<p align="left" style="margin:0in 0in .0001pt 40.8pt;text-align:left;text-indent:-40.8pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 14&#160; The appendix of this contract is an
inseparable part of this contract and are equally valid as the main body of the
contract.</font></p>

<p align="left" style="margin:0in 0in .0001pt 43.1pt;text-align:left;text-indent:-43.1pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 43.1pt;text-align:left;text-indent:-43.1pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Chapter 12&#160;&#160;&#160; Supplementary
Provisions</font></b></h2>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:21.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 15</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">Notices agreed in this contract shall be made in the
form of telegram, fax and once they are sent out it is regarded as delivered;
where the notice is made in a letter, it is regarded as delivered within 3 days
from the date of mailing.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 16</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">other matters agreed by both parties: none</font></p>

<p align="left" style="line-height:normal;margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 17</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">&#147;The
specific business contracts&#148; called in this contract refer to the contract or
agreement signed separately by debtor and Party B on each specific credit
granting business during credit granting period.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 18</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">As to the uncovered matters of this contract, both
parties may agreed upon separately and reach written agreements.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt 45.5pt;text-align:center;text-indent:-45.5pt;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 19</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The original of this contract has three copies. Party
A, Party B and debtor holds one respectively and they are equally valid.</font></p>

<p align="left" style="margin:0in 0in .0001pt 45.5pt;text-align:left;text-indent:-45.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Article 20</font><font size="1" style="font-size:3.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font><font size="2" style="font-size:10.0pt;">The contract is signed in Hangzhou, Zhejiang Province
by both parties on 20 February 2002.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
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  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For Party A:</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal Representative:</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(seal)</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(or Entrusted Agent)</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(signature)</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For Party B:</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
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  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Legal Representative:</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(seal)</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in .7pt 0in .7pt;width:48.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(or Entrusted Agent)</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in .7pt 0in .7pt;width:46.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(signature)</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;text-decoration:underline;"><b><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">Translation
Certification</font></u></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I hereby certify that the
foregoing represents a fair and accurate English translation of the original
Chinese document.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated:&#160; April 29, 2002</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
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  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="45%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Michael J. Sophie</font></p>
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  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="top" style="padding:0in .7pt 0in .7pt;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="45%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Michael J. Sophie</font></p>
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  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
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  </td>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt 3.0in;text-align:left;text-indent:22.5pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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<p align="right" style="font-weight:bold;margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">EXHIBIT 10.73</font></b></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">UTSTARCOM,
INC.</font></b></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">CHANGE OF CONTROL
SEVERANCE AGREEMENT</font></b></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This Change of Control Severance Agreement (the &#147;Agreement&#148;) is made
and entered into effective as of April 12, 2002 (the &#147;Effective Date&#148;), by and
between Gerald Soloway (the &#147;Employee&#148;) and UTStarcom, Inc., a California
corporation (the &#147;Company&#148;).&#160; Certain
capitalized terms used in this Agreement are defined in Section&nbsp;1 below.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">R E C I T A L S</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; It is expected that
the Company from time to time will consider the possibility of a Change of
Control.&#160; The Board of Directors of the
as Company (the &#147;Board&#148;) recognizes that such consideration can be a
distraction to the Employee and can cause the Employee to consider alternative
employment opportunities.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Board believes
that it is in the best interests of the Company and its shareholders to provide
the Employee with an incentive to continue his employment and to maximize the
value of the Company upon a Change of Control for the benefit of its
shareholders.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In order to provide
the Employee with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee&#146;s termination of employment following a
Change of Control.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">AGREEMENT</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Definition
of Terms</u>.&#160; The following terms
referred to in this Agreement shall have the following meanings:</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Cause</u>.&#160; &#147;Cause&#148; shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee which is intended to result in substantial personal enrichment of the
Employee,&#160; (ii) Employee&#146;s conviction of
a felony which the Board reasonably believes has had or will have a material
detrimental effect on the Company&#146;s reputation or business, (iii) a willful act
by the Employee which constitutes misconduct and is injurious to the Company,
and (iv) continued willful violations by the Employee of the Employee&#146;s
obligations to the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the basis for
the Company&#146;s belief that the Employee has not substantially performed his
duties.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Change
of Control</u>.&#160; &#147;Change of Control&#148;
shall mean the occurrence of any of the following events:</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; the
approval by shareholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; the
approval by the shareholders of the Company of a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company&#146;s assets;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; any
&#147;person&#148; (as such term is used in Sections&nbsp;13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the &#147;beneficial owner&#148;
(as defined in Rule&nbsp;13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company&#146;s then outstanding voting securities; or</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iv)&#160; a change in
the composition of the Board, as a result of which fewer than a majority of the
directors are Incumbent Directors.&#160;
&#147;Incumbent Directors&#148; shall mean directors who either (A) are directors
of the Company as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or (iii) or in connection with
an actual or threatened proxy contest relating to the election of directors of
the Company.</font></h3>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Involuntary
Termination</u>.&#160; &#147;Involuntary
Termination&#148; shall mean (i)&nbsp;without the Employee&#146;s express written
consent, a significant reduction of the Employee&#146;s duties, position or
responsibilities relative to the Employee&#146;s duties, position or
responsibilities in effect immediately prior to such reduction, or the removal
of the Employee from such position, duties and responsibilities, unless the
Employee is provided with comparable duties, position and responsibilities that
are expressly consented to in advance by the Employee in writing;
(ii)&nbsp;without the Employee&#146;s express written consent, a substantial
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction; (iii)&nbsp;a reduction by the Company of the Employee&#146;s
base salary as in effect immediately prior to such reduction; (iv)&nbsp;a
material reduction by the Company in the kind or level of employee benefits to
which the Employee is entitled immediately prior to such reduction with the
result that the Employee&#146;s overall benefits package is significantly reduced;
(v)&nbsp;without the Employee&#146;s express written consent, the relocation of the
Employee to a facility or a location more than twenty (20) miles from his
current location; (vi)&nbsp;any purported termination of the Employee by the
Company which is not effected for Cause or for which the grounds relied upon
are not valid; or (vii)&nbsp;the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section&nbsp;6
below.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Date</u>.&#160; &#147;Termination Date&#148; shall mean
the effective date of any notice of termination delivered by one party to the
other hereunder.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-2-</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Term
of Agreement</u>.&#160; This Agreement shall
terminate upon the date that all obligations of the parties hereto under this
Agreement have been satisfied or, if earlier, on the date, prior to a Change of
Control, Employee is no longer employed by the Company.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>At-Will
Employment</u>.&#160; The Company and the
Employee acknowledge that the Employee&#146;s employment is and shall continue to be
at-will, as defined under applicable law.&#160;
If the Employee&#146;s employment terminates for any reason, the Employee
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company&#146;s then existing employee benefit plans or
policies at the time of termination.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severance
Benefits</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Following A Change of Control</u>.&#160; If
the Employee&#146;s employment with the Company terminates as a result of an
Involuntary Termination at any time within twelve (12) months after a Change of
Control, or prior to a Change of Control where Employee&#146;s employment with the
Company is terminated as a result of an Involuntary Termination done in
contemplation of a Change in Control, Employee shall be entitled to the
following severance benefits:</font></h2>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; Twenty-four
(24) months of Employee&#146;s base salary as in effect as of the date of such
termination, less applicable withholding, payable in a lump sum within thirty
(30) days of the Involuntary Termination;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; one
hundred percent (100%) of Employee&#146;s bonus for the year in which the
termination occurs;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; all stock
options granted by the Company to the Employee prior to the Change of Control
shall become fully vested and exercisable as of the date of the termination to
the extent such stock options are outstanding and unexercisable at the time of
such termination and all stock subject to a right of repurchase by the Company (or
its successor) that was purchased prior to the Change of Control shall have
such right of repurchase lapse with respect to all of the shares;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(iv)&#160; </font></b><font size="2" style="font-size:10.0pt;">the same level of health (i.e., medical, vision and
dental) coverage and benefits as in effect for the Employee on the day
immediately preceding the day of the Employee&#146;s termination of employment;
provided, however, that (i) the Employee constitutes a qualified beneficiary,
as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
amended; and&#160; (ii) Employee elects
continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (&#147;COBRA&#148;), within the time period
prescribed pursuant to COBRA.&#160; The
Company shall continue to provide Employee with health coverage until the
earlier of (i) the date Employee is no longer eligible to receive continuation
coverage pursuant to COBRA, or (ii) twelve (12) months from the termination
date.</font></h3>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Apart from a Change of Control</u>.&#160; If
the Employee&#146;s employment with the Company terminates other than as a result of
an Involuntary Termination or resignation </font></h2>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-3-</font></p>


<div style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 style="font-size:12.0pt;font-weight:normal;margin:0in 0in .0001pt;">&nbsp;</h2>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">within the twelve (12) months following a Change of
Control, then the Employee shall be entitled to receive twelve (12) months of
Employee&#146;s base salary as in effect as of the date of such termination, less
applicable withholding, payable in a lump sum within thirty (30) days of the
termination.&#160; Additionally, Employee
shall also be entitled to those benefits (if any) as may then be established
under the Company&#146;s then existing severance and benefits plans and policies at
the time of such termination.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Accrued
Wages and Vacation; Expenses</u>.&#160;
Without regard to the reason for, or the timing of, Employee&#146;s termination
of employment:&#160; (i)&nbsp;the Company
shall pay the Employee any unpaid base salary due for periods prior to the
Termination Date; (ii)&nbsp;the Company shall pay the Employee all of the
Employee&#146;s accrued and unused vacation through the Termination Date; and
(iii)&nbsp;following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date.&#160;
These payments shall be made promptly upon termination and within the
period of time mandated by law.</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Death Acceleration. If Employee&#146;s
employment with the Company terminates due to his death, then 100% of the
unvested shares, if any, subject to his stock option(s) with the Company shall
immediately vest and become exercisable. Thereafter, the option(s) will
continue to be subject to the terms, definitions and provisions of the
Company&#146;s 1997 Stock Plan and applicable stock option agreement(s) by and
between Employee and Company.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Limitation on
Payments</u>. In the event that the severance and other benefits provided for
in this Agreement or otherwise payable to the Employee constitute &#147;parachute
payments&#148; within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the &#147;Code&#148;) and will be subject to the excise tax imposed by
Section 4999 of the Code, then the Employee shall receive (i) a payment from
the Company sufficient to pay such excise tax, and (ii) an additional payment
from the Company sufficient to pay the excise tax and federal and state income
taxes arising from the payments made by the Company to Employee pursuant to
this sentence. Unless the Company and the Employee otherwise agree in writing,
the determination of Employee&#146;s excise tax liability and the amount required to
be paid under this Section shall be made in writing by the Accountants. In the
event that the excise tax incurred by Employee is determined by the Internal
Revenue Service to be greater or lesser than the amount so determined by the
Accountants, the Company and Employee agree to promptly make such additional
payment, including interest and any tax penalties, to the other party as the
Accountants reasonably determine is appropriate to ensure that the net economic
effect to Employee under this Section, on an after-tax basis, is as if the Code
Section 4999 excise tax did not apply to Employee. For purposes of making the
calculations required by this Section, the Accountants may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
interpretations of the Code for which there is a &#147;substantial authority&#148; tax
reporting position. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may reasonably
request in order to make a determination under this Section. The Company shall
bear all costs the Accountants may reasonably incur in connection with any
calculations contemplated by this Section.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-4-</font></p>


<div style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.&#160;&#160;&#160;&#160; Successors.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Company&#146;s
Successors</u>.&#160; Any successor to the
Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company&#146;s business and/or assets shall assume the Company&#146;s obligations under
this Agreement and agree expressly to perform the Company&#146;s obligations under
this Agreement in the same manner and to the same extent as the Company would
be required to perform such obligations in the absence of a succession.&#160; For all purposes under this Agreement, the
term &#147;Company&#148; shall include any successor to the Company&#146;s business and/or
assets which executes and delivers the assumption agreement described in this
subsection&nbsp;(a) or which becomes bound by the terms of this Agreement by
operation of law.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employee&#146;s
Successors</u>.&#160;&#160;&#160; Without the written
consent of the Company, Employee shall not assign or transfer this Agreement or
any right or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of
Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee&#146;s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notices</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>General</u>.&#160; Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.&#160; In the case of the Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing.&#160;
In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notice
of Termination</u>.&#160; Any termination by
the Company for Cause or by the Employee as a result of a voluntary resignation
or an Involuntary Termination shall be communicated by a notice of termination
to the other party hereto given in accordance with this Section.&#160; Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than 30 days after the giving of such notice).&#160; The failure by the Employee to include in
the notice any fact or circumstance which contributes to a showing of
Involuntary Termination shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstance in enforcing his
rights hereunder.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Arbitration</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, shall be settled by binding arbitration to be held in
Santa Clara County, California, in </font></h2>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-5-</font></p>


<div style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 style="font-weight:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">accordance with the National Rules for the Resolution
of Employment Disputes then in effect of the American Arbitration Association
(the &#147;Rules&#148;).&#160; The arbitrator may grant
injunctions or other relief in such dispute or controversy.&#160; The decision of the arbitrator shall be
final, conclusive and binding on the parties to the arbitration.&#160; Judgment may be entered on the arbitrator&#146;s
decision in any court having jurisdiction.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
arbitrator(s) shall apply California law to the merits of any dispute or claim,
without reference to conflicts of law rules.&#160;
The arbitration proceedings shall be governed by federal arbitration law
and by the Rules, without reference to state arbitration law.&#160; Employee hereby consents to the personal
jurisdiction of the state and federal courts located in California for any
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Employee
understands that nothing in this Section modifies Employee&#146;s at-will employment
status.&#160; Either Employee or the Company
can terminate the employment relationship at any time, with or without Cause.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; EMPLOYEE
HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.&#160; EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR
THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE&#146;S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:</font></h2>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; ANY AND
ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH
EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; ANY AND
ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING,
BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS
ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS
WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA
FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, <i><font style="font-style:italic;">et seq</font></i>;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; ANY AND
ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT
OR EMPLOYMENT DISCRIMINATION.</font></h3>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-6-</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Miscellaneous
Provisions</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>No
Duty to Mitigate</u>.&#160; The Employee
shall not be required to mitigate the amount of any payment contemplated by
this Agreement, nor shall any such payment be reduced by any earnings that the
Employee may receive from any other source.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Waiver</u>.&#160; No provision of this Agreement may be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee).&#160;
No waiver by either party of any breach of, or of compliance with, any
condition or provision of this Agreement by the other party shall be considered
a waiver of any other condition or provision or of the same condition or
provision at another time.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Integration</u>.&#160; This Agreement and any outstanding stock
option agreements and restricted stock purchase agreements referenced herein
represent the entire agreement and understanding between the parties as to the
subject matter herein and supersede all prior or contemporaneous agreements,
whether written or oral, with respect to this Agreement and any stock option
agreement or restricted stock purchase agreement.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Choice
of Law</u>.&#160; The validity,
interpretation, construction and performance of this Agreement shall be
governed by the internal substantive laws, but not the conflicts of law rules,
of the State of California.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severability</u>.&#160; The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employment
Taxes</u>.&#160; All payments made pursuant
to this Agreement shall be subject to withholding of applicable income and
employment taxes.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Counterparts</u>.&#160; This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.</font></h2>

<h2 style="font-weight:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-7-</font></p>


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<h2 style="font-weight:normal;margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN WITNESS WHEREOF, each of the parties has executed
this Agreement, in the case of the Company by its duly authorized officer, as
of the day and year first above written.</font></h2>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">COMPANY:</font></p>
  </td>
  <td width="54%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UTSTARCOM, INC.</font></p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="54%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="50%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="50%" valign="top" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Title:</font></p>
  </td>
  <td width="50%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in .7pt 0in .7pt;width:4.98%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="50%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">EMPLOYEE:</font></p>
  </td>
  <td width="54%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="54%" colspan="2" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Signature</font></p>
  </td>
 </tr>
 <tr>
  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="54%" colspan="2" valign="top" style="padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
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  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="54%" colspan="2" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <td width="45%" valign="top" style="padding:0in .7pt 0in .7pt;width:45.02%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="54%" colspan="2" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:54.98%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Printed Name</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt 3.0in;text-indent:-2.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-8-</font></p>


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<DESCRIPTION>EX-10.74
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<p align="right" style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">EXHIBIT 10.74</font></b></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">UTSTARCOM, INC.</font></b></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;CHANGE OF CONTROL SEVERANCE AGREEMENT</font></b></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This Change of Control Severance Agreement (the &#147;Agreement&#148;) is made
and entered into effective as of April 12, 2002 (the &#147;Effective Date&#148;), by and
between Howard Kwock (the &#147;Employee&#148;) and UTStarcom, Inc., a Delaware
corporation (the &#147;Company&#148;).&#160; Certain
capitalized terms used in this Agreement are defined in Section&nbsp;1 below.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">R E C I T A L S</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; It is expected that
the Company from time to time will consider the possibility of a Change of Control.&#160; The Board of Directors of the as Company
(the &#147;Board&#148;) recognizes that such consideration can be a distraction to the
Employee and can cause the Employee to consider alternative employment
opportunities.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Board believes
that it is in the best interests of the Company and its shareholders to provide
the Employee with an incentive to continue his employment and to maximize the
value of the Company upon a Change of Control for the benefit of its
shareholders.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In order to provide
the Employee with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee&#146;s termination of employment following a
Change of Control.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">AGREEMENT</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Definition
of Terms</u>.&#160; The following terms
referred to in this Agreement shall have the following meanings:</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Cause</u>.&#160; &#147;Cause&#148; shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee which is intended to result in substantial personal enrichment of the
Employee,&#160; (ii) Employee&#146;s conviction of
a felony which the Board reasonably believes has had or will have a material
detrimental effect on the Company&#146;s reputation or business, (iii) a willful act
by the Employee which constitutes misconduct and is injurious to the Company,
and (iv) continued willful violations by the Employee of the Employee&#146;s
obligations to the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the basis for
the Company&#146;s belief that the Employee has not substantially performed his
duties.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Change
of Control</u>.&#160; &#147;Change of Control&#148;
shall mean the occurrence of any of the following events:</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; the
approval by shareholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger or
consolidation;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; the
approval by the shareholders of the Company of a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company&#146;s assets;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; any
&#147;person&#148; (as such term is used in Sections&nbsp;13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the &#147;beneficial owner&#148;
(as defined in Rule&nbsp;13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company&#146;s then outstanding voting securities; or</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iv)&#160; a change in
the composition of the Board, as a result of which fewer than a majority of the
directors are Incumbent Directors.&#160;
&#147;Incumbent Directors&#148; shall mean directors who either (A) are directors
of the Company as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or (iii) or in connection with
an actual or threatened proxy contest relating to the election of directors of
the Company.</font></h3>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Involuntary
Termination</u>.&#160; &#147;Involuntary
Termination&#148; shall mean (i)&nbsp;without the Employee&#146;s express written
consent, a significant reduction of the Employee&#146;s duties, position or
responsibilities relative to the Employee&#146;s duties, position or
responsibilities in effect immediately prior to such reduction, or the removal
of the Employee from such position, duties and responsibilities, unless the
Employee is provided with comparable duties, position and responsibilities;
provided, however, that a reduction in duties, position or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, when the Chief Financial Officer of the Company remains as
such following a Change of Control but is not made the Chief Financial Officer
of the acquiring corporation) shall not constitute an &#147;Involuntary
Termination;&#148; (ii)&nbsp;without the Employee&#146;s express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii)&nbsp;a reduction by the Company of
the Employee&#146;s base salary as in effect immediately prior to such reduction;
(iv)&nbsp;a material reduction by the Company in the kind or level of employee
benefits to which the Employee is entitled immediately prior to such reduction
with the result that the Employee&#146;s overall benefits package is significantly
reduced; (v)&nbsp;without the Employee&#146;s express written consent, the
relocation of the Employee to a facility or a location more than twenty-five
(25) miles from his current location; (vi)&nbsp;any purported termination of
the Employee by the Company which is not effected for Cause or for which the
grounds relied upon are not valid; or (vii)&nbsp;the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in
Section&nbsp;6 below.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Date</u>.&#160; &#147;Termination Date&#148; shall mean
the effective date of any notice of termination delivered by one party to the
other hereunder.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Term
of Agreement</u>.&#160; This Agreement shall
terminate upon the date that all obligations of the parties hereto under this
Agreement have been satisfied or, if earlier, on the date, prior to a Change of
Control, Employee is no longer employed by the Company.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>At-Will
Employment</u>.&#160; The Company and the
Employee acknowledge that the Employee&#146;s employment is and shall continue to be
at-will, as defined under applicable law.&#160;
If the Employee&#146;s employment terminates for any reason, the Employee
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company&#146;s then existing employee benefit plans or
policies at the time of termination.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severance
Benefits</u>.</font></h1>

<h2 style="font-family:'Times New Roman';font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font></b><u><font size="2" style="font-size:10.0pt;">Termination Following A Change of Control</font></u><font size="2" style="font-size:10.0pt;">.&#160;
If the Employee&#146;s employment with the Company terminates as a result of
an Involuntary Termination at any time within twelve (12) months after a Change
of Control, Employee shall be entitled to all stock options granted by the
Company to the Employee prior to the Change of Control becoming fully vested
and exercisable as of the date of the termination to the extent such stock
options are outstanding and unexercisable at the time of such termination and
all stock subject to a right of repurchase by the Company (or its successor)
that was purchased prior to the Change of Control shall have such right of
repurchase lapse with respect to all of the shares.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Apart from a Change of Control</u>.&#160; If
the Employee&#146;s employment with the Company terminates other than as a result of
an Involuntary Termination within the twelve (12) months following a Change of
Control, then the Employee shall not be entitled to receive the benefits
described in Section 4(a) of this Agreement, but may be eligible for those
benefits (if any) as may then be established under the Company&#146;s then existing
severance and benefits plans and policies at the time of such termination.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Accrued
Wages and Vacation; Expenses</u>.&#160;
Without regard to the reason for, or the timing of, Employee&#146;s
termination of employment:&#160; (i)&nbsp;the
Company shall pay the Employee any unpaid base salary due for periods prior to
the Termination Date; (ii)&nbsp;the Company shall pay the Employee all of the
Employee&#146;s accrued and unused vacation through the Termination Date; and
(iii)&nbsp;following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date.&#160;
These payments shall be made promptly upon termination and within the
period of time mandated by law.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Limitation
on Payments</u>.&#160; In the event that the
severance and other benefits provided for in this Agreement or otherwise
payable to the Employee (i)&nbsp;constitute &#147;parachute payments&#148; within the
meaning of Section&nbsp;280G of the Code, and (ii)&nbsp;would be subject to the
excise tax imposed </font></h1>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">by
Section&nbsp;4999 of the Code (the &#147;Excise Tax&#148;), then Employee&#146;s benefits
under this Agreement shall be either</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; delivered
in full, or</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; delivered
as to such lesser extent which would result in no portion of such benefits
being subject to the Excise Tax,</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the Excise Tax, results in the
receipt by Employee on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of such benefits may be taxable under
Section&nbsp;4999 of the Code.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company&#146;s independent public accountants (the &#147;Accountants&#148;), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes.&#160; For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Section&nbsp;280G and 4999 of the Code.&#160;
The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section.&#160;
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section.</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;page-break-after:avoid;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Successors</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Company&#146;s
Successors</u>.&#160; Any successor to the
Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company&#146;s business and/or assets shall assume the Company&#146;s obligations under
this Agreement and agree expressly to perform the Company&#146;s obligations under
this Agreement in the same manner and to the same extent as the Company would
be required to perform such obligations in the absence of a succession.&#160; For all purposes under this Agreement, the
term &#147;Company&#148; shall include any successor to the Company&#146;s business and/or
assets which executes and delivers the assumption agreement described in this
subsection&nbsp;(a) or which becomes bound by the terms of this Agreement by
operation of law.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employee&#146;s
Successors</u>.&#160;&#160;&#160; Without the written
consent of the Company, Employee shall not assign or transfer this Agreement or
any right or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of
Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee&#146;s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notices</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>General</u>.&#160; Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.&#160; In the case of the Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing.&#160;
In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of
its Secretary.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notice
of Termination</u>.&#160; Any termination by
the Company for Cause or by the Employee as a result of a voluntary resignation
or an Involuntary Termination shall be communicated by a notice of termination
to the other party hereto given in accordance with this Section.&#160; Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than 30 days after the giving of such
notice).&#160; The failure by the Employee to
include in the notice any fact or circumstance which contributes to a showing
of Involuntary Termination shall not waive any right of the Employee hereunder
or preclude the Employee from asserting such fact or circumstance in enforcing
his rights hereunder.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Arbitration</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, shall be settled by binding arbitration to be held in
Santa Clara County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the &#147;Rules&#148;).&#160; The
arbitrator may grant injunctions or other relief in such dispute or
controversy.&#160; The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration.&#160; Judgment may be entered on
the arbitrator&#146;s decision in any court having jurisdiction.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
arbitrator(s) shall apply California law to the merits of any dispute or claim,
without reference to conflicts of law rules.&#160;
The arbitration proceedings shall be governed by federal arbitration law
and by the Rules, without reference to state arbitration law.&#160; Employee hereby consents to the personal
jurisdiction of the state and federal courts located in California for any
action or proceeding arising from or relating to this Agreement or relating to
any arbitration in which the parties are participants.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Employee
understands that nothing in this Section modifies Employee&#146;s at-will employment
status.&#160; Either Employee or the Company
can terminate the employment relationship at any time, with or without Cause.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; EMPLOYEE
HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.&#160; EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR
THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, </font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="3" style="font-size:12.0pt;">
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<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">BREACH
OR TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF
EMPLOYEE&#146;S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES
RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT
NOT LIMITED TO, THE FOLLOWING CLAIMS:</font></h2>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; ANY AND
ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH
EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; ANY AND
ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING,
BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS
ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS
WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA
FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, <i><font style="font-style:italic;">et seq</font></i>;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; ANY AND
ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT
OR EMPLOYMENT DISCRIMINATION.</font></h3>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Miscellaneous
Provisions</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>No
Duty to Mitigate</u>.&#160; The Employee
shall not be required to mitigate the amount of any payment contemplated by
this Agreement, nor shall any such payment be reduced by any earnings that the
Employee may receive from any other source.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Waiver</u>.&#160; No provision of this Agreement may be
modified, waived or discharged unless the modification, waiver or discharge is agreed
to in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee).&#160; No
waiver by either party of any breach of, or of compliance with, any condition
or provision of this Agreement by the other party shall be considered a waiver
of any other condition or provision or of the same condition or provision at
another time.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Integration</u>.&#160; This Agreement and any outstanding stock
option agreements referenced herein represent the entire agreement and
understanding between the parties as to the subject matter herein and supersede
all prior or contemporaneous agreements, whether written or oral, with respect
to this Agreement and any stock option agreement.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Choice
of Law</u>.&#160; The validity,
interpretation, construction and performance of this Agreement shall be
governed by the internal substantive laws, but not the conflicts of law rules,
of the State of California.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severability</u>.&#160; The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employment
Taxes</u>.&#160; All payments made pursuant
to this Agreement shall be subject to withholding of applicable income and
employment taxes.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Counterparts</u>.&#160; This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;font-family:'Times New Roman';width:100.0%;">
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  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">COMPANY:</font></p>
  </td>
  <td width="50%" colspan="2" valign="bottom" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">UTSTARCOM, INC.</font></b></p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="44%" valign="top" style="padding:0in .7pt 0in .7pt;width:44.46%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <td width="50%" valign="top" style="padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="5%" valign="top" style="padding:0in .7pt 0in .7pt;width:5.54%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="44%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:44.46%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Title:</font></p>
  </td>
  <td width="44%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:44.46%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">EMPLOYEE:</font></p>
  </td>
  <td width="5%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:5.54%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="5%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:5.54%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="50%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:50.0%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  </td>
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  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Signature</font></p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
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  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Printed Name</font></p>
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<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>


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<TYPE>EX-10.75
<SEQUENCE>6
<FILENAME>a2078446zex-10_75.htm
<DESCRIPTION>EX-10.75
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<p align="right" style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">EXHIBIT 10.75</font></b></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">UTSTARCOM, INC.</font></b></p>

<p style="font-weight:bold;margin:12.0pt 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;">CHANGE OF CONTROL
SEVERANCE AGREEMENT</font></b></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This Change of Control Severance Agreement (the &#147;Agreement&#148;) is made
and entered into effective as of April 12, 2002 (the &#147;Effective Date&#148;), by and
between Michael J. Sophie (the &#147;Employee&#148;) and UTStarcom, Inc., a Delaware
corporation (the &#147;Company&#148;).&#160; Certain
capitalized terms used in this Agreement are defined in Section&nbsp;1 below.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">R E C I T A L S</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; It is expected that
the Company from time to time will consider the possibility of a Change of
Control.&#160; The Board of Directors of the
as Company (the &#147;Board&#148;) recognizes that such consideration can be a
distraction to the Employee and can cause the Employee to consider alternative
employment opportunities.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The Board believes
that it is in the best interests of the Company and its shareholders to provide
the Employee with an incentive to continue his employment and to maximize the
value of the Company upon a Change of Control for the benefit of its
shareholders.</font></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; In order to provide
the Employee with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee&#146;s termination of employment following a
Change of Control.</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">AGREEMENT</font></u></p>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Definition
of Terms</u>.&#160; The following terms
referred to in this Agreement shall have the following meanings:</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Cause</u>.&#160; &#147;Cause&#148; shall mean (i) any act of personal
dishonesty taken by the Employee in connection with his responsibilities as an
employee which is intended to result in substantial personal enrichment of the
Employee,&#160; (ii) Employee&#146;s conviction of
a felony which the Board reasonably believes has had or will have a material
detrimental effect on the Company&#146;s reputation or business, (iii) a willful act
by the Employee which constitutes misconduct and is injurious to the Company,
and (iv) continued willful violations by the Employee of the Employee&#146;s
obligations to the Company after there has been delivered to the Employee a
written demand for performance from the Company which describes the basis for
the Company&#146;s belief that the Employee has not substantially performed his
duties.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Change
of Control</u>.&#160; &#147;Change of Control&#148;
shall mean the occurrence of any of the following events:</font></h2>


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</font>

<p align="center" style="font-family:'Times New Roman';font-size:12.0pt;margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; the
approval by shareholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; the
approval by the shareholders of the Company of a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company&#146;s assets;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; any
&#147;person&#148; (as such term is used in Sections&nbsp;13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the &#147;beneficial owner&#148;
(as defined in Rule&nbsp;13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company&#146;s then outstanding voting securities; or</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iv)&#160; a change in
the composition of the Board, as a result of which fewer than a majority of the
directors are Incumbent Directors.&#160;
&#147;Incumbent Directors&#148; shall mean directors who either (A) are directors
of the Company as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any
transactions described in subsections (i), (ii), or (iii) or in connection with
an actual or threatened proxy contest relating to the election of directors of
the Company.</font></h3>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Involuntary
Termination</u>.&#160; &#147;Involuntary
Termination&#148; shall mean (i)&nbsp;without the Employee&#146;s express written
consent, a significant reduction of the Employee&#146;s duties, position or
responsibilities relative to the Employee&#146;s duties, position or
responsibilities in effect immediately prior to such reduction, or the removal
of the Employee from such position, duties and responsibilities, unless the
Employee is provided with comparable duties, position and responsibilities (as,
for example, following a Change of Control, the Chief Financial Officer of the
Company is made the Chief Financial Officer of the acquiring entity);
(ii)&nbsp;without the Employee&#146;s express written consent, a substantial
reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately
prior to such reduction; (iii)&nbsp;a reduction by the Company of the
Employee&#146;s base salary as in effect immediately prior to such reduction;
(iv)&nbsp;a material reduction by the Company in the kind or level of employee
benefits to which the Employee is entitled immediately prior to such reduction
with the result that the Employee&#146;s overall benefits package is significantly
reduced; (v)&nbsp;without the Employee&#146;s express written consent, the
relocation of the Employee to a facility or a location more than fifty (50)
miles from his current location; (vi)&nbsp;any purported termination of the
Employee by the Company which is not effected for Cause or for which the
grounds relied upon are not valid; or (vii)&nbsp;the failure of the Company to
obtain the assumption of this Agreement by any successors contemplated in
Section&nbsp;6 below.</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-2-</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Date</u>.&#160; &#147;Termination Date&#148; shall mean
the effective date of any notice of termination delivered by one party to the
other hereunder.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Term
of Agreement</u>.&#160; This Agreement shall
terminate upon the date that all obligations of the parties hereto under this
Agreement have been satisfied or, if earlier, on the date, prior to a Change of
Control, Employee is no longer employed by the Company.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>At-Will
Employment</u>.&#160; The Company and the
Employee acknowledge that the Employee&#146;s employment is and shall continue to be
at-will, as defined under applicable law.&#160;
If the Employee&#146;s employment terminates for any reason, the Employee
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company&#146;s then existing employee benefit plans or
policies at the time of termination.</font></h1>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severance
Benefits</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Following A Change of Control</u>.&#160; If
the Employee&#146;s employment with the Company terminates as a result of an
Involuntary Termination at any time within twelve (12) months after a Change of
Control, Employee shall be entitled to the following severance benefits:</font></h2>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; Twenty-four
(24) months of Employee&#146;s base salary as in effect as of the date of such
termination, less applicable withholding, payable in a lump sum within thirty
(30) days of the Involuntary Termination;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; one hundred
percent (100%) of Employee&#146;s bonus for the year in which the termination
occurs;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; all stock
options granted by the Company to the Employee prior to the Change of Control
shall become fully vested and exercisable as of the date of the termination to the
extent such stock options are outstanding and unexercisable at the time of such
termination and all stock subject to a right of repurchase by the Company (or
its successor) that was purchased prior to the Change of Control shall have
such right of repurchase lapse with respect to all of the shares;</font></h3>

<h3 style="font-family:'Times New Roman';font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(iv)&#160; </font></b><font size="2" style="font-size:10.0pt;">the same level of health (i.e., medical, vision and
dental) coverage and benefits as in effect for the Employee on the day
immediately preceding the day of the Employee&#146;s termination of employment;
provided, however, that (i) the Employee constitutes a qualified beneficiary,
as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
amended; and&#160; (ii) Employee elects
continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (&#147;COBRA&#148;), within the time period prescribed pursuant
to COBRA.&#160; The Company shall continue to
provide Employee with health coverage until the earlier of (i) the date
Employee is no longer eligible to receive continuation coverage pursuant to
COBRA, or (ii) twelve (12) months from the termination date.</font></h3>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Termination
Apart from a Change of Control</u>.&#160; If
the Employee&#146;s employment with the Company terminates other than as a result of
an Involuntary Termination within the twelve</font></h2>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<h2 align="center" style="font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-3-</font></h2>


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</font></h2>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;(12) months
following a Change of Control, then the Employee shall not be entitled to
receive severance or other benefits hereunder, but may be eligible for those
benefits (if any) as may then be established under the Company&#146;s then existing
severance and benefits plans and policies at the time of such termination.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Accrued
Wages and Vacation; Expenses</u>.&#160;
Without regard to the reason for, or the timing of, Employee&#146;s
termination of employment:&#160; (i)&nbsp;the
Company shall pay the Employee any unpaid base salary due for periods prior to
the Termination Date; (ii)&nbsp;the Company shall pay the Employee all of the
Employee&#146;s accrued and unused vacation through the Termination Date; and
(iii)&nbsp;following submission of proper expense reports by the Employee, the
Company shall reimburse the Employee for all expenses reasonably and
necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date.&#160;
These payments shall be made promptly upon termination and within the
period of time mandated by law.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Limitation
on Payments</u>.&#160; In the event that the
severance and other benefits provided for in this Agreement or otherwise
payable to the Employee (i)&nbsp;constitute &#147;parachute payments&#148; within the
meaning of Section&nbsp;280G of the Code, and (ii)&nbsp;would be subject to the
excise tax imposed by Section&nbsp;4999 of the Code (the &#147;Excise Tax&#148;), then
Employee&#146;s benefits under this Agreement shall be either</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; delivered
in full, or</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; delivered
as to such lesser extent which would result in no portion of such benefits
being subject to the Excise Tax,</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">whichever of the foregoing amounts, taking into
account the applicable federal, state and local income taxes and the Excise
Tax, results in the receipt by Employee on an after-tax basis, of the greatest
amount of benefits, notwithstanding that all or some portion of such benefits
may be taxable under Section&nbsp;4999 of the Code.</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company&#146;s independent public accountants (the &#147;Accountants&#148;), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes.&#160; For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Section&nbsp;280G and 4999 of the Code.&#160;
The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section.&#160;
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section.</font></p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;page-break-after:avoid;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Successors</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Company&#146;s
Successors</u>.&#160; Any successor to the
Company (whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or</font></h2>

<h2 align="center" style="font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="center" style="font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-4-</font></h2>


<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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</font></h2>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<h2 align="center" style="font-family:'Times New Roman';font-size:12.0pt;font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;">&nbsp;</h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;substantially all of the Company&#146;s business
and/or assets shall assume the Company&#146;s obligations under this Agreement and
agree expressly to perform the Company&#146;s obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession.&#160; For all purposes under this Agreement, the
term &#147;Company&#148; shall include any successor to the Company&#146;s business and/or
assets which executes and delivers the assumption agreement described in this
subsection&nbsp;(a) or which becomes bound by the terms of this Agreement by
operation of law.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employee&#146;s
Successors</u>.&#160;&#160;&#160; Without the written
consent of the Company, Employee shall not assign or transfer this Agreement or
any right or obligation under this Agreement to any other person or entity.
Notwithstanding the foregoing, the terms of this Agreement and all rights of
Employee hereunder shall inure to the benefit of, and be enforceable by,
Employee&#146;s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notices</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>General</u>.&#160; Notices and all other communications
contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid.&#160; In the case of the Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing.&#160;
In the case of the Company, mailed notices shall be addressed to its
corporate headquarters, and all notices shall be directed to the attention of its
Secretary.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Notice
of Termination</u>.&#160; Any termination by
the Company for Cause or by the Employee as a result of a voluntary resignation
or an Involuntary Termination shall be communicated by a notice of termination
to the other party hereto given in accordance with this Section.&#160; Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination
Date (which shall be not more than 30 days after the giving of such
notice).&#160; The failure by the Employee to
include in the notice any fact or circumstance which contributes to a showing
of Involuntary Termination shall not waive any right of the Employee hereunder
or preclude the Employee from asserting such fact or circumstance in enforcing
his rights hereunder.</font></h2>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Arbitration</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Any
dispute or controversy arising out of, relating to, or in connection with this
Agreement, or the interpretation, validity, construction, performance, breach,
or termination thereof, shall be settled by binding arbitration to be held in
Santa Clara County, California, in accordance with the National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association (the &#147;Rules&#148;).&#160; The
arbitrator may grant injunctions or other relief in such dispute or
controversy.&#160; The decision of the
arbitrator shall be final, conclusive and binding </font></h2>

<h2 align="center" style="font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></h2>

<h2 align="center" style="font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-5-</font></h2>


<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></h2>

<font size="3" style="font-size:12.0pt;">
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<h2 align="center" style="font-family:'Times New Roman';font-size:12.0pt;font-weight:normal;margin:12.0pt 0in .0001pt;text-align:center;">&nbsp;</h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">on the
parties to the arbitration.&#160; Judgment
may be entered on the arbitrator&#146;s decision in any court having jurisdiction.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
arbitrator(s) shall apply California law to the merits of any dispute or claim,
without reference to conflicts of law rules.&#160;
The arbitration proceedings shall be governed by federal arbitration law
and by the Rules, without reference to state arbitration law.&#160; Employee hereby consents to the personal
jurisdiction of the state and federal courts located in California for any action
or proceeding arising from or relating to this Agreement or relating to any
arbitration in which the parties are participants.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Employee
understands that nothing in this Section modifies Employee&#146;s at-will employment
status.&#160; Either Employee or the Company
can terminate the employment relationship at any time, with or without Cause.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; EMPLOYEE
HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION.&#160; EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY
CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR
THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION
THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE&#146;S RIGHT TO A
JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL
ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO,
THE FOLLOWING CLAIMS:</font></h2>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(i)&#160;&#160;&#160; ANY AND
ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF CONTRACT, BOTH
EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING,
BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL
DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR INTENTIONAL
INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(ii)&#160;&#160; ANY AND ALL
CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT
NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT
OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, <i><font style="font-style:italic;">et seq</font></i>;</font></h3>

<h3 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.75in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(iii)&#160; ANY AND
ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO EMPLOYMENT
OR EMPLOYMENT DISCRIMINATION.</font></h3>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-6-</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- ZEQ.=1,SEQ=6,EFW="2078446",CP="UTSTARCOM, INC.",DN="5",CHK=440567,FOLIO='-6-',FILE="DISK020:[02PAL6.02PAL1636.EDGAR]EX10-75_1636.CHC",USER="MWORTHY",CD='Apr 30 21:59 2002' -->
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</font>

<p align="center" style="font-family:'Times New Roman';font-size:12.0pt;margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h1 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Miscellaneous
Provisions</u>.</font></h1>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>No
Duty to Mitigate</u>.&#160; The Employee
shall not be required to mitigate the amount of any payment contemplated by
this Agreement, nor shall any such payment be reduced by any earnings that the
Employee may receive from any other source.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Waiver</u>.&#160; No provision of this Agreement may be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by an authorized officer of
the Company (other than the Employee).&#160;
No waiver by either party of any breach of, or of compliance with, any
condition or provision of this Agreement by the other party shall be considered
a waiver of any other condition or provision or of the same condition or
provision at another time.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Integration</u>.&#160; This Agreement and any outstanding stock
option agreements and restricted stock purchase agreements referenced herein
represent the entire agreement and understanding between the parties as to the
subject matter herein and supersede all prior or contemporaneous agreements,
whether written or oral, with respect to this Agreement and any stock option
agreement or restricted stock purchase agreement.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Choice
of Law</u>.&#160; The validity, interpretation,
construction and performance of this Agreement shall be governed by the
internal substantive laws, but not the conflicts of law rules, of the State of
California.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(e)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severability</u>.&#160; The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(f)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Employment
Taxes</u>.&#160; All payments made pursuant
to this Agreement shall be subject to withholding of applicable income and
employment taxes.</font></h2>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;text-indent:1.0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(g)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Counterparts</u>.&#160; This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.</font></h2>

<p style="margin:12.0pt 0in .0001pt;text-indent:.5in;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-7-</font></p>


<div style="margin:12.0pt 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- ZEQ.=1,SEQ=7,EFW="2078446",CP="UTSTARCOM, INC.",DN="5",CHK=548546,FOLIO='-7-',FILE="DISK020:[02PAL6.02PAL1636.EDGAR]EX10-75_1636.CHC",USER="MWORTHY",CD='Apr 30 21:59 2002' -->
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</font>

<p align="center" style="font-family:'Times New Roman';font-size:12.0pt;margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;">&nbsp;</p>

<h2 style="font-weight:normal;margin:12.0pt 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
of the Company by its duly authorized officer, as of the day and year first
above written.</font></h2>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;font-family:'Times New Roman';width:100.0%;">
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">COMPANY:</font></p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">UTSTARCOM, INC.</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="47%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Title:</font></p>
  </td>
  <td width="47%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">EMPLOYEE:</font></p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="border:none;padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Signature</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="52%" colspan="2" valign="bottom" style="border:none;padding:0in .7pt 0in .7pt;width:52.22%;">
  <p style="margin:0in 0in .0001pt;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Printed Name</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in .7pt 0in .7pt;width:4.44%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
  <td width="47%" valign="top" style="padding:0in .7pt 0in .7pt;width:47.78%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;text-indent:0in;">&nbsp;</p>
  </td>
 </tr>
</table>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:12.0pt 0in .0001pt;text-align:center;text-indent:0in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">-8-</font></p>


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</font></div>

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