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<SEC-DOCUMENT>0001047469-06-008690.txt : 20060621
<SEC-HEADER>0001047469-06-008690.hdr.sgml : 20060621
<ACCEPTANCE-DATETIME>20060621160229
ACCESSION NUMBER:		0001047469-06-008690
CONFORMED SUBMISSION TYPE:	DEFA14A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20060621
DATE AS OF CHANGE:		20060621
EFFECTIVENESS DATE:		20060621

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:		DEFA14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29661
		FILM NUMBER:		06917492

	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>DEFA14A
<SEQUENCE>1
<FILENAME>a2171356zdefa14a.htm
<DESCRIPTION>DEFA14A
<TEXT>
<HTML>
<HEAD>
</HEAD>
<BODY BGCOLOR="#FFFFFF" LINK=BLUE  VLINK=PURPLE>
<BR>
<FONT SIZE=3 ><A HREF="#06PAL1164_1">QuickLinks</A></FONT>
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<P ALIGN="CENTER"><FONT SIZE=2><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B> SCHEDULE 14A</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>Proxy
Statement Pursuant to Section 14(a) of<BR>
the Securities Exchange Act of 1934 (Amendment No. 1) </FONT></P>

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<TABLE WIDTH="73%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Filed by the Registrant <FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><BR><FONT SIZE=2>Filed by a Party other than the Registrant <FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2><BR>
Check the appropriate box:</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Preliminary Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><BR><FONT SIZE=2><B>Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Definitive Proxy Statement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Definitive Additional Materials</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="95%"><FONT SIZE=2><BR>
Soliciting Material Pursuant to &sect;240.14a-12<BR></FONT>
</TD>
</TR>
</TABLE>
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<TABLE WIDTH="77%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><BR><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2> (Name of Registrant as Specified In Its Charter)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5 ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2> (Name of Person(s) Filing Proxy Statement, if other than the Registrant)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>Payment of Filing Fee (Check the appropriate box):</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#253;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
No fee required.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and&nbsp;0-11.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(1)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Title of each class of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Aggregate number of securities to which transaction applies:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Proposed maximum aggregate value of transaction:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(5)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Total fee paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Fee paid previously with preliminary materials.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><BR>
Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
(1)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Amount Previously Paid:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Form, Schedule or Registration Statement No.:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(3)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Filing Party:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>(4)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Date Filed:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
</TR>
</TABLE>
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<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=1,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=553767,FOLIO='blank',FILE='DISK127:[06PAL4.06PAL1164]BA1164A.;12',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="bb1164_explanatory_note"> </A>
<A NAME="toc_bb1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXPLANATORY NOTE    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to this Amendment No.&nbsp;1 to the Proxy Statement, the definitive proxy statement on Schedule&nbsp;14A as filed with the Securities&nbsp;&amp;
Exchange Commission on June&nbsp;16, 2006 (the "</FONT><FONT SIZE=2><B>Proxy Statement</B></FONT><FONT SIZE=2>") is being amended to update certain information relating to director compensation and
related-party transactions approved by the Board of Directors of UTStarcom,&nbsp;Inc. on June&nbsp;20, 2006. The Proxy Statement is being re-filed in its entirety, as amended. </FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=2,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=541113,FOLIO='blank',FILE='DISK127:[06PAL4.06PAL1164]BB1164A.;4',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
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<P ALIGN="CENTER"><FONT SIZE=2><B>
<IMG SRC="g455485.jpg" ALT="LOGO" WIDTH="270" HEIGHT="76">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>June&nbsp;21,
2006 </FONT></P>

<P><FONT SIZE=2>Dear
Stockholder: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
are cordially invited to attend the 2006 annual meeting of stockholders of UTStarcom,&nbsp;Inc. (the "</FONT><FONT SIZE=2><B>Company</B></FONT><FONT SIZE=2>") to be held at the
Hilton Oakland Airport, 1 Hegenberger Road, Oakland, California&nbsp;94621, on Friday, July&nbsp;21, 2006 at 10:00&nbsp;a.m., Pacific Daylight Time. Enclosed are a notice of annual meeting of
stockholders, a proxy statement describing the business to be transacted at the meeting, and a proxy card for use in voting at the meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the annual meeting, you will be asked to vote on the important matters described in detail in the notice of annual meeting of stockholders and proxy statement accompanying this
letter. There also will be an opportunity for you to ask questions and receive information about the business of the Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Included
with the proxy statement is a copy of the Company's annual report to stockholders. We encourage you to read the annual report. It includes information on the Company's
operations as well as the Company's audited financial statements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
take this opportunity to participate in the affairs of the Company by voting on the business to come before this meeting. </FONT><FONT SIZE=2><B>WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR SHARES MAY BE REPRESENTED AT THE
MEETING</B></FONT><FONT SIZE=2>. Returning the proxy card does not deprive you of your right to attend the meeting and to vote your shares in person. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
look forward to seeing you at the meeting. </FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>Sincerely,</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>HONG LIANG LU</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Hong Liang Lu<BR></FONT> <FONT SIZE=2><I>President, Chief Executive Officer and<BR>
Chairman of the Board of Directors</I></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND DESIRE TO WITHDRAW YOUR PROXY, YOU MAY VOTE IN PERSON AND YOUR PROXY WILL BE WITHDRAWN.</B></FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=4><B>UTSTARCOM,&nbsp;INC.  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=3><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS<BR>  </B></FONT><FONT SIZE=2><B>To Be Held July&nbsp;21, 2006  </B></FONT></P>

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

<P><FONT SIZE=2>To the Stockholders: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTICE
IS HEREBY GIVEN that the annual meeting of stockholders (the "</FONT><FONT SIZE=2><B>Annual Meeting</B></FONT><FONT SIZE=2>") of UTStarcom,&nbsp;Inc. (the
"</FONT><FONT SIZE=2><B>Company</B></FONT><FONT SIZE=2>"), a Delaware corporation, will be held on Friday, July&nbsp;21, 2006 at 10:00&nbsp;a.m., Pacific Daylight Time, at the Hilton Oakland
Airport, 1 Hegenberger Road, Oakland, California 94621, for the following purposes: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>1.</FONT></DT><DD><FONT SIZE=2>To
elect two Class&nbsp;III Directors to serve for a term expiring on the date on which the annual meeting of stockholders is held in the year 2009.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>2.</FONT></DT><DD><FONT SIZE=2>To
approve the 2006 Equity Incentive Plan, including approval of its material terms and performance goals for the purposes of Section&nbsp;162(m) of the Internal Revenue Code of
1986, as amended.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>3.</FONT></DT><DD><FONT SIZE=2>To
ratify and approve the appointment of PricewaterhouseCoopers LLP as the independent registered accounting firm of the Company for the fiscal year ending December&nbsp;31, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>4.</FONT></DT><DD><FONT SIZE=2>To
transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing items of business are more fully described in the proxy statement accompanying this notice. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only
stockholders of record at the close of business on May&nbsp;25, 2006 are entitled to notice of, and to vote at, the Annual Meeting. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
stockholders are cordially invited to attend the Annual Meeting in person. However, to assure your representation at the Annual Meeting, you are urged to complete, sign and return
the enclosed proxy card as promptly as possible in the postage-paid envelope enclosed for that purpose. Any stockholder attending the Annual Meeting may vote in person even if he or she
returned a proxy. </FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2>By Order of the Board of Directors</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>FRANCIS P. BARTON</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Francis P. Barton<BR></FONT> <FONT SIZE=2><I>Executive Vice President and<BR>
Chief Financial Officer</I></FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>Alameda,
California<BR>
June&nbsp;21, 2006 </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="be1164_your_vote_is_important"> </A>
<A NAME="toc_be1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>YOUR VOTE IS IMPORTANT    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To assure your representation at the Annual Meeting, you are requested to complete, sign and date the enclosed proxy as promptly as possible and return it in the
enclosed postage-paid envelope, which requires no postage if mailed in the United States. </FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=4><B>UTSTARCOM,&nbsp;INC.  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=3><B>PROXY STATEMENT  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=3><B> <A NAME="de1164_questions_and_answers_about_th__que03328"> </A>
<A NAME="toc_de1164_1"> </A>
<BR>    </B></FONT><FONT SIZE=2><B>QUESTIONS AND ANSWERS ABOUT THE PROXY STATEMENT AND<BR>  VOTING AT THE ANNUAL MEETING    <BR>    </B></FONT></P>

<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> Why am I receiving these materials?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The Board of Directors (the "</FONT><FONT SIZE=2><B>Board</B></FONT><FONT SIZE=2>" or "</FONT><FONT SIZE=2><B>Board of Directors</B></FONT><FONT SIZE=2>") of
UTStarcom,&nbsp;Inc. (the "</FONT><FONT SIZE=2><B>Company</B></FONT><FONT SIZE=2>") is providing this proxy statement (the "</FONT><FONT SIZE=2><B>Proxy Statement</B></FONT><FONT SIZE=2>")
prepared in connection with the Company's annual meeting of stockholders, which will take place on Friday, July&nbsp;21, 2006 at 10:00&nbsp;a.m., Pacific Daylight Time (the
"</FONT><FONT SIZE=2><B>Annual Meeting</B></FONT><FONT SIZE=2>" or "</FONT><FONT SIZE=2><B>2006 Annual Meeting</B></FONT><FONT SIZE=2>") at the Hilton Oakland Airport, 1 Hegenberger Road, Oakland,
California 94621. The Company's telephone number at that location is (510)&nbsp;635-5000. As a stockholder, you are invited to attend the Annual Meeting and requested to vote on the
proposals described in this Proxy Statement. </FONT></DD></DL>
<UL>

<P><FONT SIZE=2>Only
stockholders of record at the close of business on May&nbsp;25, 2006 (the "</FONT><FONT SIZE=2><B>Record Date</B></FONT><FONT SIZE=2>") are entitled to notice of, and to vote at, the Annual
Meeting. As of the Record Date, 121,089,996 shares of the Company's common stock, par value $0.00125 per share (the "</FONT><FONT SIZE=2><B>Common Stock</B></FONT><FONT SIZE=2>"), were issued and
outstanding. No shares of the Company's preferred stock, par value $0.00125 per share, were issued and outstanding. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What information is contained in this Proxy Statement?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The information in this Proxy Statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our directors
and
most highly paid executive officers in 2005, and certain other required information. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How may I obtain a separate set of proxy
materials or Annual Report for 2005?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>If you share an address with another stockholder and previously consented to receiving one copy of the Proxy Statement on a voter instruction card submitted
for
last year's annual meeting of stockholders, only one copy of this Proxy Statement is being delivered to you. A stockholder at a shared address who received a single copy of this Proxy Statement may
request a separate copy either by calling the number provided below or mailing a written request to the address below: </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>Corporate
Secretary<BR>
UTStarcom,&nbsp;Inc.<BR>
1275 Harbor Bay Parkway<BR>
Alameda, California 94502<BR>
510-864-8800 </FONT></P>

<UL>

<P><FONT SIZE=2>The
Company will promptly mail a separate copy of this Proxy Statement upon such request, but any such request should be made as soon as possible to ensure timely delivery. </FONT></P>

<P><FONT SIZE=2>Stockholders
who share an address and received multiple copies of this Proxy Statement may also request that a single copy of the proxy statement be delivered in the future by filling out the
applicable section of the voter instruction card for the Annual Meeting. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What proposals will be voted on at the Annual Meeting?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The proposals scheduled to be voted on at the Annual Meeting are:
<BR><BR></FONT>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
election of two Class&nbsp;III Directors; </FONT></DD></DL>
</UL>
</DD></DL>
<HR NOSHADE>
<P style='page-break-before:always'></p>
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<UL>
<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
approval of the material terms and performance goals of the Company's 2006 Equity Incentive Plan; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
ratification and approval of the PricewaterhouseCoopers LLP as the independent registered accounting firm of the Company for the fiscal year ending December&nbsp;31,
2006. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD></DL>
</UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How does the Board recommend that I vote?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The Company's Board of Directors recommends that you vote your shares (1)&nbsp;"FOR" each of the nominees to the Board of Directors, (2)&nbsp;"FOR" the
approval of the 2006 Equity Incentive Plan, and (3)&nbsp;"FOR" the ratification and approval of the Company's independent registered public accounting firm for the 2006 fiscal year. </FONT> <FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT
SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How many votes do I have?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>On each proposal to be voted upon, you have one vote for each share of the Common Stock of the Company you own as of the Record Date. </FONT><FONT
SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What is the difference between holding shares as a stockholder of record and as a beneficial owner?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>Many of the Company's stockholders hold their shares through a broker or other nominee rather than directly in their own name. As summarized below, there are
some distinctions between shares held of record and those owned beneficially. </FONT></DD></DL>
<UL>

<P><FONT SIZE=2><B>Stockholder of Record:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., as
of the Record Date, you are considered, with respect to those shares, the </FONT><FONT SIZE=2><I>stockholder of record</I></FONT><FONT SIZE=2>, and these proxy materials are being sent directly to
you by the Company. As the </FONT><FONT SIZE=2><I>stockholder of record</I></FONT><FONT SIZE=2>, you have the right to grant your voting proxy directly to the Company or to vote in person at the
Annual Meeting. The Company has enclosed a proxy card for your use. </FONT></P>

<P><FONT SIZE=2><B>Beneficial Owner:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;If your shares are held in a brokerage account or by another nominee, you are considered the </FONT> <FONT SIZE=2><I>beneficial owner</I></FONT><FONT SIZE=2> of
shares held in </FONT><FONT SIZE=2><I>street name</I></FONT><FONT SIZE=2>, and these proxy materials are being forwarded to you
together with a voting instruction card by your broker, trustee or nominee, as the case may be. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote, and
you are also invited to attend the Annual Meeting. Since a beneficial owner is not the </FONT><FONT SIZE=2><I>stockholder of record</I></FONT><FONT SIZE=2>, you may not vote your shares in person at
the Annual Meeting unless you obtain a "legal proxy" from the broker, trustee or nominee that holds your shares giving you the right to vote the shares at the meeting. Your broker, trustee or nominee
has enclosed or provided voting instructions for you to use in directing the broker, trustee or other nominee how to vote your shares. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How can I vote my shares in person at the Annual Meeting?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>Shares held in your name as the stockholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in street name may be voted
by you in person at the Annual Meeting only if you obtain a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. </FONT><FONT SIZE=2><B>Even
if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the
meeting</B></FONT><FONT SIZE=2>. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How can I vote my shares without attending the Annual Meeting?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the
Annual Meeting. If you are a </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_de1164_1_3"> </A>
<UL>

<P><FONT SIZE=2>stockholder
of record, you may vote by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, trustee or nominee. For
directions on how to vote, please refer to the instructions below and those included on your proxy card or, for shares held beneficially in street name, the voting instruction card provided by your
broker, trustee or nominee. </FONT></P>

</UL>
<UL>

<P><FONT SIZE=2><B>By Internet:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of record with Internet access may submit proxies by following the
"Vote-Using-the-Internet" instructions on their proxy cards until 1:00&nbsp;a.m., Central Time, on July&nbsp;21, 2006. Most stockholders who hold shares
beneficially in street name may vote by accessing the web site specified on the voting instruction cards provided by their brokers, trustees or nominees. Please check the voting instruction card for
Internet voting availability. </FONT></P>

<P><FONT SIZE=2><B>By Telephone:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of record who live in the United States or Canada may submit proxies by following the
"Vote-Using-the-Telephone" instructions on their proxy cards until 1:00&nbsp;a.m., Central Time, on July&nbsp;21, 2006. Most stockholders who hold shares
beneficially in street name may vote by phone by calling the number specified on the voting instruction cards provided by their brokers, trustees or nominees. Please check the voting instruction card
for telephone voting availability. </FONT></P>

<P><FONT SIZE=2><B>By Mail:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Stockholders of record may submit proxies by completing, signing and dating their proxy cards and mailing them in the accompanying
pre-addressed envelopes. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to be voted. Stockholders who hold shares beneficially in street
name may vote by mail by completing, signing and dating the voting instruction cards provided by their brokers, trustees or nominees and mailing them in the accompanying pre-addressed
envelopes. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> Can I change my vote?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>You may change your proxy at any time prior to the proxy being used at the Annual Meeting by (i)&nbsp;delivering to the Corporate Secretary of the Company at
UTStarcom,&nbsp;Inc., 1275 Harbor Bay Parkway, Alameda, California 94502 a written notice of revocation or a duly executed proxy bearing a later date, or (ii)&nbsp;attending the Annual Meeting and
voting in person. The mere presence at the Annual Meeting of a stockholder who has appointed a proxy will not revoke the prior appointment. If not revoked, the proxy will be voted at the Annual
Meeting in accordance with the instructions indicated on the proxy card, or if no instructions are indicated, will be voted "FOR" the slate of nominees for the Board described herein, "FOR" Proposal
No.&nbsp;2, "FOR" Proposal No.&nbsp;3 and as to any other matter that may properly be brought before the Annual Meeting in accordance with the judgment of the proxy holders. For shares you hold
beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee following the instruction they provided, or, if you have obtained a legal
proxy from your broker or nominee giving you the right to vote your shares, by attending the meeting and voting in person. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I>
How many shares must be present or represented to conduct business at the Annual Meeting?</I></B></FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The quorum requirement for holding
the Annual Meeting and transacting business is that holders of a majority of the voting power of the issued and outstanding
Common Stock of the Company as of the Record Date must be present in person or represented by proxy. Both abstentions and broker non-votes (described below) are counted for the purpose of
determining the presence of a quorum. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What is the voting requirement to approve each of the proposals?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>In the election of directors, the two nominees receiving the highest number of "FOR" votes at the Annual Meeting will be elected. </FONT></DD></DL>
<UL>

<P><FONT SIZE=2>The
approval of the 2006 Equity Incentive Plan requires the affirmative "FOR" vote of a majority of the total number of shares present in person or represented by proxy and entitled to vote on the
proposal at the Annual Meeting. </FONT></P>

<P><FONT SIZE=2>The
proposal to ratify the appointment of PricewaterhouseCooper LLP as the Company's independent registered public accounting firm, requires the affirmative "FOR" vote of a majority of the total
number of shares present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> How are votes counted?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>In the election of directors, you may vote "FOR" all or some of the nominees or your vote may be "WITHHELD" with respect to one or more of the nominees. Votes
"WITHHELD" with respect to the election of directors will be counted for purposes of determining the presence or absence of a quorum at the Annual Meeting but will have no other legal effect upon
election of directors. You may not cumulate your votes for the election of directors. </FONT></DD></DL>
<UL>

<P><FONT SIZE=2>For
the proposals to approve the 2006 Equity Incentive Plan and to ratify the appointment of PricewaterhouseCooper LLP as the Company's independent registered public accounting firm, you may vote
"FOR," "AGAINST" or "ABSTAIN." </FONT></P>

<P><FONT SIZE=2>If
you elect to "ABSTAIN," the abstention has the same effect as a vote "AGAINST." If you provide specific instructions with regard to certain proposals, your shares will be voted as you instruct on
such proposals. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What is the effect of broker non-votes?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute "broker
non-votes." Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions
are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote or votes cast on that proposal.
Thus, broker non-votes will not affect the outcome of any proposal being voted on at the Annual Meeting, but will count towards establishing quorum. Abstentions, however, as noted above,
will have the same effect as votes against the proposal. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> Who will serve as inspector of elections?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>The inspector of elections will be a representative from Computershare Trust Company, N.A. </FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT
SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> Who will bear the cost of soliciting votes for the Annual Meeting?
<BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>This solicitation is made by the Company, and all costs associated with soliciting proxies will be borne by the Company. In addition, the Company will
reimburse
brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees personally or by telephone, facsimile or electronic mail. No additional compensation will be paid to these persons for such services. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

<HR NOSHADE>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What is the deadline for submission of stockholder proposals for consideration at the Annual Meeting?</I></B></FONT><FONT SIZE=2><B><I> <BR><BR> </I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT
SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>For a stockholder proposal to be considered for this year's Annual Meeting, the stockholder must (i)&nbsp;deliver a proxy statement and form of proxy to
holders of a sufficient number of shares of the Company's Common Stock to approve that proposal, (ii)&nbsp;provide the information required by the Company's bylaws (the
"</FONT><FONT SIZE=2><B>Bylaws</B></FONT><FONT SIZE=2>") and (iii)&nbsp;give notice to the Corporate Secretary in accordance with the Bylaws, which requires that the notice be received by the
Corporate Secretary within ten (10)&nbsp;days of the mailing date of this Proxy Statement, June&nbsp;21, 2006. Notice of proposals should be addressed to: </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>Corporate
Secretary<BR>
UTStarcom,&nbsp;Inc.<BR>
1275 Harbor Bay Parkway<BR>
Alameda, California 94502 </FONT></P>

<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>Q:</I></B></FONT></DT><DD><FONT SIZE=2><B><I> What is the deadline for submission of stockholder proposals for consideration at the 2007 annual meeting of stockholders?</I></B></FONT><FONT SIZE=2><B><I> <BR><BR>
</I></B></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2><B><I>A:</I></B></FONT></DT><DD><FONT SIZE=2>Stockholder Proposals Other Than Nomination of Directors.&nbsp;&nbsp;&nbsp;&nbsp;For a stockholder proposal to be considered for inclusion in the proxy statement for
the
2007 annual meeting (the "</FONT><FONT SIZE=2><B>2007 Annual Meeting</B></FONT><FONT SIZE=2>"), the Corporate Secretary of the Company must receive the written proposal by such stockholder at the
Company's principal executive offices no later than February&nbsp;16, 2007. Such proposals also must comply with Securities and Exchange Commission (the
"</FONT><FONT SIZE=2><B>SEC</B></FONT><FONT SIZE=2>") regulations under Rule&nbsp;14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Notice of
such proposals should be addressed to: </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>Corporate
Secretary<BR>
UTStarcom,&nbsp;Inc.<BR>
1275 Harbor Bay Parkway<BR>
Alameda, California 94502 </FONT></P>

<UL>

<P><FONT SIZE=2>For
a stockholder proposal that is not intended to be included in the Company's proxy statement under Rule&nbsp;14a-8, the stockholder must (i)&nbsp;deliver a proxy statement and form
of proxy to holders of a sufficient number of shares of the Company's Common Stock to approve that proposal, (ii)&nbsp;provide the information required by the Bylaws and (iii)&nbsp;give timely
notice to the Corporate Secretary in accordance with the Bylaws, which generally require that the notice be received by the Corporate Secretary of the Company prior to May&nbsp;2, 2007. </FONT></P>

<P><FONT SIZE=2>However,
if the date of the 2007 Annual Meeting (the "</FONT><FONT SIZE=2><B>2007 Annual Meeting Date</B></FONT><FONT SIZE=2>") is moved more than 30&nbsp;days before or after the anniversary of
the 2006 Annual Meeting, then the Board shall determine an appropriate date by which notice of a stockholder proposal that is not intended to be included in the Company's proxy statement must be
received by the Company (the "</FONT><FONT SIZE=2><B>Notice Deadline</B></FONT><FONT SIZE=2>"). The Company will publicize the Notice Deadline at least ten (10)&nbsp;days prior to the Notice
Deadline by: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>a
filing pursuant to the Securities Exchange Act of 1934, as amended; or
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>a
press release. </FONT></DD></DL>
</UL>
</UL>
<UL>

<P><FONT SIZE=2><B>Nomination of Director Candidates:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Bylaws permit stockholders to nominate directors for election at an annual stockholder meeting. To
nominate a director, the stockholder must provide the information required by the Bylaws. To nominate directors for election at the 2007 Annual Meeting, the stockholder making such nomination must
give timely notice to the Corporate </FONT></P>

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

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<UL>

<P><FONT SIZE=2>Secretary
in accordance with the Bylaws, which must be received by the Corporate Secretary not less than one hundred twenty (120)&nbsp;days prior to the 2007 Annual Meeting. </FONT></P>

<P><FONT SIZE=2>However,
in the event the Company fails to publicize the 2007 Annual Meeting Date at least one hundred thirty (130)&nbsp;days prior to the 2007 Annual Meeting, notice by the stockholder must be
received by the Corporate Secretary within ten (10)&nbsp;days of: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
first public disclosure of the 2007 Annual Meeting Date by the Company; or
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
date the notice of the 2007 Annual Meeting Date is mailed to the Company's stockholders. </FONT></DD></DL>
</UL>
</UL>
<UL>

<P><FONT SIZE=2><B>Copy of Company Bylaws:</B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Copies of the provisions of the Bylaws governing the form and delivery requirements of stockholder nominations or
proposals may be obtained by sending an email request to the Company's investor relations department at investorrelations@utstar.com. A copy of the entire Bylaws is available via the link entitled
"Corporate Governance" on the Company's website at </FONT><FONT SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. </FONT></P>

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

<HR NOSHADE>
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<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dg1164_proposal_no._1_election_of_directors"> </A>
<A NAME="toc_dg1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL NO. 1<BR>  ELECTION OF DIRECTORS    <BR>    </B></FONT></P>


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

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The authorized number of directors of the Company is currently established at six. The Company's certificate of incorporation provides that directors shall be
divided into three classes, with the classes serving for staggered, three-year terms (or less if they are filling a vacancy). Currently there are two directors in each of Class&nbsp;I,
Class&nbsp;II and Class&nbsp;III. Each of the two Class&nbsp;II Directors, Allen Lenzmeier and Larry Horner, will hold office until the 2008 annual meeting or until the Class&nbsp;II
Director's successor has been duly elected and qualified, and each of the two Class&nbsp;I Directors, Thomas Toy and Ying Wu, will hold office until the 2007 annual meeting or until the
Class&nbsp;I Director's successor has been duly elected and qualified. The Company's nominees for election as the Class&nbsp;III Directors at this Annual Meeting are the current Class&nbsp;III
Directors Hong Liang Lu and Jeff Clarke. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
otherwise instructed, the proxy holders will vote the proxies received by them for the Company's two nominees for Class&nbsp;III Directors, Hong Liang Lu and Jeff Clarke, each
to hold office until the 2009 annual meeting or until either of the Class&nbsp;III Director's successor has been duly elected and qualified. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company expects that each nominee for election as a Class&nbsp;III Director at the Annual Meeting will be able to serve if elected. Mr.&nbsp;Lu has notified the Company of his
resignation as the Company's President, Chief Executive Officer and Chairman of the Board, effective December&nbsp;31, 2006. Mr.&nbsp;Toy will assume the position of Chairman of the Board
effective January&nbsp;1, 2007. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event that any nominee of the Company becomes unable or declines to serve as a director at the time of the Annual Meeting, the proxy holders will vote the proxies for any
substitute nominee who is designated by the current Board to fill the vacancy. </FONT></P>

<P><FONT SIZE=2><B>Required Vote  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The two nominees receiving the highest number of votes of the shares entitled to be voted for such nominees shall be elected as Class&nbsp;III Directors. Votes
withheld from any nominee will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting, but have no other legal effect upon
election of directors under the Delaware General Corporation Law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE NOMINEES SET FORTH HEREIN.</B></FONT></P>

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

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<A NAME="toc_di1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>BOARD OF DIRECTORS    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The names of the two Class&nbsp;III nominees for director and the current Class&nbsp;I and Class&nbsp;II Directors with unexpired terms, their ages as of
July&nbsp;21, 2006 and certain other information are set forth below: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=1><B>Name of Director<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="4%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="35%" ALIGN="CENTER"><FONT SIZE=1><B>Principal Occupation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B>Director<BR>
Since</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Term<BR>
Expires</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><I>Nominees for Class III Directors:</I></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="35%"><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="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Jeff Clarke(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
46</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
Chief Executive Officer and President of Travel Distribution Services (TDS) Division of Cendant Corporation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2005</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2006</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Hong Liang Lu(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
51</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
President, Chief Executive Officer and Chairman of the Board</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1991</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2006</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="35%"><BR><FONT SIZE=2><I>Continuing Class II Directors:</I></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Larry Horner</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
72</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
Member of the board of directors of ConocoPhillips, Clinical Data, Inc., Novitron International, Inc., Technical Olympic USA, Inc. and New River Pharmaceuticals, Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2008</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Allen Lenzmeier</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
62</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
Vice Chairman and member of the board of directors of Best Buy Co. Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2005</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2008</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><BR><FONT SIZE=2><I>Continuing Class I Directors:</I></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Thomas Toy(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
51</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
Managing Director of PacRim Venture Partners, partner of Smart Forest Ventures and member of the board of directors of White Electronic Designs Corporation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1995</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2007</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="35%"><FONT SIZE=2><BR>
Ying Wu(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2><BR>
46</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="35%"><FONT SIZE=2><BR>
Executive Vice President and Vice Chairman of the Board, and Chairman and Chief Executive Officer for China</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1995</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2007</FONT></TD>
</TR>
</TABLE>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Clarke
was appointed by unanimous written consent of the Board on January&nbsp;17, 2005. Mr.&nbsp;Clarke is now the Company's nominee as a Class&nbsp;III Director to
serve on the Board until 2009.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>On
May&nbsp;5, 2006, Mr.&nbsp;Lu notified the Company of his resignation as the Company's President, Chief Executive Officer and Chairman of the Board, effective
December&nbsp;31, 2006. Mr.&nbsp;Wu will assume the position of Chief Executive Officer effective January&nbsp;1, 2007. Mr.&nbsp;Toy will assume the position of Chairman of the Board effective
January&nbsp;1, 2007. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
as set forth below, each nominee or incumbent director has been engaged in his principal occupation described above during the past five years. There is no family relationship
between any directors or executive officers of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Hong Liang Lu</I></FONT><FONT SIZE=2> has served as the Company's President, Chief Executive Officer and as a director since June&nbsp;1991, and as Chairman of
the Board since March&nbsp;2003. In June&nbsp;1991, Mr.&nbsp;Lu co-founded </FONT></P>

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

<HR NOSHADE>
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<P><FONT SIZE=2>the
Company under its prior name, Unitech Telecom,&nbsp;Inc., which subsequently acquired StarCom Network Systems,&nbsp;Inc. in September&nbsp;1995. From 1986 through December&nbsp;1990,
Mr.&nbsp;Lu served as President and Chief Executive Officer of Kyocera Unison, a majority-owned subsidiary of Kyocera International,&nbsp;Inc. Mr.&nbsp;Lu served as President and Chief Executive
Officer of Unison World,&nbsp;Inc., a software development company from 1983 until its merger with Kyocera in 1986. From 1979 to 1983, Mr.&nbsp;Lu served as Vice President and Chief Operating
Officer of Unison World,&nbsp;Inc. Mr.&nbsp;Lu holds a B.S. in Civil Engineering from the University of California at Berkeley. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Jeff Clarke</I></FONT><FONT SIZE=2> has served as a director since January&nbsp;17, 2005. Since May&nbsp;2006, Mr.&nbsp;Clarke has served as Chief Executive
Officer and President of Travel Distribution Services (TDS) Division of Cendant Corporation. From April&nbsp;2004 to April&nbsp;2006, Mr.&nbsp;Clarke served as the Chief Operating Officer of
CA,&nbsp;Inc., a global provider of management software. From 2002 to 2004, Mr.&nbsp;Clarke was Executive Vice President of Global Operations of Hewlett-Packard Company, and prior to that he was
the Chief Financial Officer of Compaq Computer Corporation. Mr.&nbsp;Clarke holds a B.A. in Economics from the State University of New York at Geneseo and an M.B.A. from Northeastern University. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Larry Horner</I></FONT><FONT SIZE=2> has served as a director since January&nbsp;2000. Mr.&nbsp;Horner has served as a director of ConocoPhillips from 1991 to
May&nbsp;2006, and he currently serves on the board of directors of Atlantis Plastics,&nbsp;Inc., Clinical Data&nbsp;Inc., Technical Olympic USA,&nbsp;Inc., New River
Pharmaceuticals,&nbsp;Inc. and several private companies. From 1994 until 2001, Mr.&nbsp;Horner served as Chairman of Pacific USA Holdings Corp., and as Chairman and Chief Executive Officer of
Asia Pacific Wire&nbsp;&amp; Cable Corporation Limited. Mr.&nbsp;Horner formerly served as Chairman and Chief Executive Officer of KPMG Peat Marwick from 1984 to 1990. Mr.&nbsp;Horner, a Certified
Public Accountant, holds a B.S. from the University of Kansas and is a graduate of the Stanford Executive Program. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Allen Lenzmeier</I></FONT><FONT SIZE=2> has served as a director since March&nbsp;15, 2005. Mr.&nbsp;Lenzmeier has served as the Vice Chairman of Best Buy
Co.&nbsp;Inc. since December&nbsp;2004. From 2002 to 2004, Mr.&nbsp;Lenzmeier served as the President and Chief Operating Officer of Best Buy Co.&nbsp;Inc. Mr.&nbsp;Lenzmeier served as the
President of Best Buy Retail from 2001 to 2002. From 1991 to 2001 Mr.&nbsp;Lenzmeier served as the Executive Vice President and Chief Financial Officer of Best Buy Co.&nbsp;Inc. and began his
employment with the company in 1984. Mr.&nbsp;Lenzmeier holds a B.S. from Minnesota State University Mankato. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Thomas Toy</I></FONT><FONT SIZE=2> has served as a director since February&nbsp;1995. Since March&nbsp;1999, Mr.&nbsp;Toy has served as Managing Director of
PacRim Venture Partners, a professional venture capital firm specializing in investments in the information technology sector. Since 2005, Mr.&nbsp;Toy has served as a partner of SmartForest
Ventures, a professional venture firm specializing in the information technology sector. From 1987 until 1992, Mr.&nbsp;Toy was employed as a Vice President at Technology Funding and was a partner
there from 1992 until 1999. Mr.&nbsp;Toy also serves as a director of White Electronic Designs
Corporation and several private companies. Mr.&nbsp;Toy holds B.A. and M.M. degrees from Northwestern University. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Ying Wu</I></FONT><FONT SIZE=2> has served as the Company's Executive Vice President and Vice Chairman of the Board since October&nbsp;1995. Mr.&nbsp;Wu has
also served as Chairman and Chief Executive Officer, and, until February&nbsp;2004, as President, of one of the Company's subsidiaries, UTStarcom China Co.,&nbsp;Ltd., beginning his duties there
in October&nbsp;1995. Mr.&nbsp;Wu was a co-founder, and from February&nbsp;1991 to September&nbsp;1995 served as Senior Vice President, of StarCom Network Systems,&nbsp;Inc., a
company that marketed and distributed third party telecommunications equipment. From 1988 to 1991, Mr.&nbsp;Wu served as a member of the technical staff of Bellcore Laboratories. From 1987 to 1988,
Mr.&nbsp;Wu served as a consultant at AT&amp;T Bell Labs. Mr.&nbsp;Wu also serves as a director of AsiaInfo Holdings,&nbsp;Inc. Mr.&nbsp;Wu holds a B.S. in Electrical Engineering from Beijing
Industrial University and an M.S. in Electrical Engineering from the New Jersey Institute of Technology. </FONT></P>

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

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<P><FONT SIZE=2><B>The Company's Director Nomination Process  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board's process for identifying and evaluating nominees for director consists mainly of evaluating candidates who are recommended by the Nominating and
Corporate Governance Committee. The Nominating and Corporate Governance Committee identifies and recommends nominees for election or reelection to the Board, or for appointment to fill any vacancy
that is anticipated or has arisen on the Board, in accordance with the criteria, policies and principles set forth in the Nominating and Corporate Governance Committee Charter, or otherwise approved
by the Board. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board may also, on a periodic basis, solicit ideas for possible candidates from a number of sources, including current members of the Board, senior Company executives, individuals
personally known to members of the Board, and employment of one or more third-party search firms. The Company engaged a third-party search firm in connection with the identification of
Mr.&nbsp;Clarke, who is a Class&nbsp;III Director candidate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholder
nominations of director candidates will be given the same consideration and evaluated with the same criteria as candidates that are recommended internally. For more
information on stockholder nominations of director candidates, please see the section entitled "Nomination of Director Candidates" under "Deadlines for Submission of Stockholder Proposals for 2007
Annual Meeting" in this Proxy Statement. The form and delivery requirements of such stockholder nominations must comply with the relevant provisions of the Bylaws, copies of which may be obtained by
sending an email to the Company's investor relations department at investorrelations@utstar.com. A copy of the entire Bylaws is also available via the link entitled "Corporate Governance" on the
Company's website at </FONT><FONT SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. </FONT></P>


<P><FONT SIZE=2><B>Stockholder Communications with the Board  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Board has established a process for stockholders to communicate with members of the Board, which includes the creation of the Lead Director position. All
concerns, questions or complaints regarding the Company's compliance with any policy or law, or any other Board-related communication, should be directed to the Board via the link entitled "Email
Board of Directors" at </FONT><FONT SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. All substantive and appropriate communications received from stockholders will be
received and reviewed by one or more independent directors, or officers acting under their direction, who will forward such communications to the Board or particular Board committees, as appropriate. </FONT></P>

<P><FONT SIZE=2><B>Board Attendance, Director Independence and Financial Sophistication  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Of the Company's incumbent directors standing for reelection and those with continuing terms, Messrs.&nbsp;Horner, Toy, Clarke and Lenzmeier have been
determined by the Board to be independent as set forth in Rule&nbsp;4200(a)(15) of the Nasdaq Marketplace Rules, the listing standards of The Nasdaq Stock Market, as currently in effect. In
addition, the Board has also determined that each of Messrs.&nbsp;Horner, Clarke and Lenzmeier possess the attributes to be considered financially sophisticated for purposes of applicable Nasdaq
Marketplace Rules and has the background to be considered an "audit committee financial expert" as defined by the rules and regulations of the SEC and required by the Nasdaq Marketplace Rules. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board held a total of 13 meetings during the fiscal year ended December&nbsp;31, 2005. During fiscal year 2005, each of the directors attended 75% or more of the aggregate number
of meetings of the Board and the committees of the Board on which the director served subsequent to becoming a director or a member of such committee, except for Ms.&nbsp;Betsy Atkins, whose term as
a director expired in May&nbsp;2005, and Ying Wu, who missed 5 meetings for reasons related to his corporate duties. It is the </FONT></P>

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

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<P><FONT SIZE=2>Board's
policy to encourage directors to attend the Annual Meeting. Three (3)&nbsp;directors attended the 2005 annual meeting of stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
principal standing committees of the Board are the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which consists solely of
independent directors. In addition to these committees, effective June&nbsp;6, 2006, the Board appointed Mr.&nbsp;Toy as Lead Director. Mr.&nbsp;Horner had previously served as Lead Director.
The Lead Director's
responsibilities include, among other things, facilitating communications among directors, working with the Chief Executive Officer to ensure appropriate information flows to the Board, chairing an
executive session of the independent directors at regularly scheduled meetings as required by Nasdaq Marketplace Rule&nbsp;4350(c)(2), overseeing processes established for stockholder communication
with members of the Board, and acting as a liaison between disinterested directors and interested parties in the case of related-party transactions or other such matters. The Lead Director is not an
employee of the Company or a holder of 5% or more of the Company's issued and outstanding Common Stock. </FONT></P>

<P><FONT SIZE=2><B>Board Committees and Related Functions  </B></FONT></P>

<UL>

<P><FONT SIZE=2><I> Audit Committee  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board, currently consisting of Mr.&nbsp;Horner, who chairs the committee, and Messrs.&nbsp;Clarke, Toy and Lenzmeier, held 30
meetings during the 2005 fiscal year. The Audit Committee, among other duties and responsibilities, (i)&nbsp;reviews and approves the annual appointment of the Company's independent registered
public accounting firm; (ii)&nbsp;discusses and reviews in advance the scope and fees of the annual audit; (iii)&nbsp;reviews the results of the audit with the independent registered public
accounting firm and discusses the foregoing with the Company's management; (iv)&nbsp;reviews and approves non-audit services of the independent registered public accounting firm;
(v)&nbsp;reviews compliance with the Company's existing major accounting and financial reporting policies; (vi)&nbsp;reviews and approves in advance all related-party transactions that would
require disclosure pursuant to the rules of the SEC and the policies and procedures related to such transactions; and (vii)&nbsp;provides oversight and monitoring of the Company's management and
their activities with respect to the Company's financial reporting process. In connection with the execution of the responsibilities of the Audit Committee, including the review of the Company's
quarterly earnings reports prior to public release, Audit Committee members communicated throughout 2005 with the Company's management and the independent registered public accounting firm. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
member of the Audit Committee meets the applicable independence and financial literacy requirements of the Nasdaq Marketplace Rules and the SEC. Further, Messrs.&nbsp;Horner,
Clarke and Lenzmeier have been determined by the Board to meet the "financial expert" requirements of the same SEC and Nasdaq Marketplace Rules. On March&nbsp;29, 2004, the Board approved a revised
charter of the Audit Committee, a copy of which was filed as an attachment to the Company's proxy statement for the 2004 annual meeting of stockholders. A copy of the Audit Committee Charter is
available via the link entitled "Corporate Governance" on the Company's website at </FONT><FONT SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Nominating and Corporate Governance Committee  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Nominating and Corporate Governance Committee, currently consisting of Mr.&nbsp;Clarke, who chairs the committee, and Messrs.&nbsp;Horner and Toy, held
three (3)&nbsp;meetings during the last fiscal year. Each member of the Nominating and Corporate Governance Committee meets the applicable independence requirements of the Nasdaq Marketplace Rules. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating and Corporate Governance Committee's responsibilities include the selection of director nominees for the Board and the development and annual review of the Company's
governance principles. The Nominating and Corporate Governance Committee also (i)&nbsp;assists the Board by actively </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=15,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=110545,FOLIO='11',FILE='DISK127:[06PAL4.06PAL1164]DI1164A.;8',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
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<BR>

<P><FONT SIZE=2>identifying
individuals qualified to become Board members; (ii)&nbsp;recommends director nominees to the Board for election at the next annual meeting of stockholders; (iii)&nbsp;monitors
significant developments in the law and practice of corporate governance and of the duties and responsibilities of directors of public companies; (iv)&nbsp;leads the Board in its annual performance
self-evaluation, including establishing criteria to be used in connection with such evaluation; (v)&nbsp;oversees compliance with the Company's Code of Business Conduct and Ethics; and
(vi)&nbsp;develops and recommends to the Board and administers the corporate governance guidelines of the Company, including appropriate stock ownership guidelines for officers and directors. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March&nbsp;29, 2004, the Board adopted a formal charter of the Nominating and Corporate Governance Committee, addressing the nominations process and such related matters as may be
required under federal securities laws and Nasdaq Marketplace Rule&nbsp;4350(c)(4)(B). A copy of this charter was filed as an attachment to the Company's proxy statement for the 2004 annual meeting
of stockholders. A copy of the Nominating and Corporate Governance Committee Charter is available via the link entitled "Corporate Governance" on the Company's website at </FONT> <FONT
SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Compensation Committee  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of the Board, currently consisting of Mr.&nbsp;Toy, who chairs the committee, and Messrs.&nbsp;Lenzmeier and Horner, held seven
(7)&nbsp;formal meetings and one (1)&nbsp;subcommittee meeting during the last fiscal year. The authority and duties of the Compensation Committee include, among others, (i)&nbsp;approving and
overseeing the total compensation package for the Company's executives; (ii)&nbsp;reviewing and approving corporate goals and objectives relevant to the compensation of the Company's Chief Executive
Officer; (iii)&nbsp;reviewing and making recommendations to the Board regarding
all new employment agreements or arrangements; (iv)&nbsp;reviewing and making recommendations to the Board regarding long-term incentive compensation or equity plans, programs or similar
arrangements of the Company; and (v)&nbsp;preparing an annual report on executive compensation as required by the SEC to be included in the Company's annual proxy statement filed with the SEC. Each
member of the Compensation Committee meets the applicable independence requirements of the Nasdaq Marketplace Rules. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
charter for the Compensation Committee provides that the purpose of such committee is to discharge the responsibilities of the Board relating to all compensation, including equity
compensation of the Company's executives. The charter also generally provides the membership requirements, authority and duties of the Compensation Committee. The Compensation Committee shall consist
of no fewer than three members, all of whom (i)&nbsp;meet the independence requirements of the Nasdaq Marketplace Rules, (ii)&nbsp;are "Non-Employee Directors" under the definition of
Rule&nbsp;16b-3 promulgated under Section&nbsp;16 of the Exchange Act, and (iii)&nbsp;are "outside directors" for purposes of the regulations promulgated under Section&nbsp;162(m)
of the Internal Revenue Code of 1986, as amended (the "</FONT><FONT SIZE=2><B>Internal Revenue Code</B></FONT><FONT SIZE=2>"). The chair of the Compensation Committee is appointed by the Board. The
Compensation Committee must conduct a self-evaluation annually and report such findings to the Board. In addition, the Compensation Committee must periodically assess the adequacy of its
charter and recommend changes to the Board. A copy of the Compensation Committee Charter is available via the link entitled "Corporate Governance" on the Company's website at </FONT> <FONT
SIZE=2><I>http://investorrelations.utstar.com/governance</I></FONT><FONT SIZE=2>. </FONT></P>

<P><FONT SIZE=2><B>Director Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Directors who are employees of the Company receive no additional compensation for serving on the Board. In 2005, Non-Employee Directors received a
quarterly participation fee of $10,000 for </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P><FONT SIZE=2>services
rendered as to meetings of the full Board. In addition, Non-Employee Directors received annual retainer fees for committee membership and other duties as follows: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Lead
Director: $20,000;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Audit
Committee: $10,000 for chair, $3,500 for members;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Compensation
Committee: $5,000 for chair, $3,000 for members; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Corporate
Governance and Nominating Committee: $5,000 for chair, $2,000 for members. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January&nbsp;2005, in recognition of services rendered in 2004, the Company also paid Mr.&nbsp;Horner, the Company's then Lead Director, a one-time compensation award
of $25,000, and Mr.&nbsp;Toy and Ms.&nbsp;Atkins (whose term as a director expired in May&nbsp;2005), both Non-Employee Directors, a one-time compensation award of
$20,000. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company reimburses all directors for travel and other related expenses incurred in connection with the business of the Company, including attending stockholder meetings and meetings
of the Board or any Board committee. For information on director compensation for the year 2006, please see the section entitled "2006 Director Compensation" under "Certain Relationships and Related
Transactions" in this Proxy Statement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to April&nbsp;27, 2006, Non-Employee Directors were eligible to receive stock option grants under the 2001 Director Option Plan (the "</FONT><FONT SIZE=2><B>Director
Plan</B></FONT><FONT SIZE=2>"). Under the Director Plan, each Non-Employee Director, upon appointment, was automatically awarded options to purchase 80,000 shares of Common Stock (the
"</FONT><FONT SIZE=2><B>First Option</B></FONT><FONT SIZE=2>"), which would vest in equal installments of 25% per year on each of the first four anniversaries of the date of grant. After the First
Option has fully vested, each Non-Employee Director would have received an automatic annual grant of an option to purchase 20,000 shares of Common Stock (an "</FONT><FONT SIZE=2><B>Annual
Option</B></FONT><FONT SIZE=2>"), which would vest in full on the first anniversary of the date of grant. On April&nbsp;27, 2006, concurrently with the effectiveness of the Company's compensation
plan for the Non-Employee Directors in the year 2006, the Board suspended until further action all future grants of stock options to the Non-Employee Director under the
Director Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
past grants made to the Non-Employee Directors under the Director Plan are as follows. On May&nbsp;11, 2001, the Company granted a First Option to each of
Messrs.&nbsp;Horner and Toy, on March&nbsp;20, 2002, the Company granted a First Option to Ms.&nbsp;Atkins (whose term as a director expired in May&nbsp;2005), on January&nbsp;17, 2005, the
Company granted a First Option to Mr.&nbsp;Clarke and on March&nbsp;15, 2005, the Company granted a First Option to Mr.&nbsp;Lenzmeier. The First Option granted to each of Messrs.&nbsp;Horner
and Toy has an exercise price of $22.71 and fully vested on May&nbsp;11, 2005. Messrs.&nbsp;Horner and Toy were each granted an Annual Option on May&nbsp;11, 2005 with an exercise price of
$6.84. The First Option granted to Mr.&nbsp;Clarke has an exercise price of $16.96, the First Option granted to Mr.&nbsp;Lenzmeier has an exercise price of $13.14, and each will be fully vested on
January&nbsp;17, 2009 and March&nbsp;15, 2009, respectively. The unvested and unexercised portion of the First Option granted to Ms.&nbsp;Atkins reverted back to the Director Plan upon the
expiration of her term as a director in May&nbsp;2005. If, following a change in control of the Company, a Non-Employee Director's status as a Director of the Company or the successor
corporation is terminated (other than as a result
of voluntary resignation), the options become fully exercisable for a period of 3&nbsp;months from the date of such termination. The exercise price of all options granted under the Director Plan is
100% of the fair market value of the Common Stock on the date of grant. The options expire ten years after the date of grant, subject to earlier termination if the optionee ceases to serve as a
director. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior
to April&nbsp;27, 2006, it was also the Company's policy to grant each Non-Employee Director an annual grant of an option to purchase 25,000 shares pursuant to the
Company's 1997 Stock Plan (the "</FONT><FONT SIZE=2><B>1997 Plan</B></FONT><FONT SIZE=2>"). The Board suspended this policy on April&nbsp;27, 2006, choosing instead to issue a specific number of
options as part of each Non-Employee Director's overall annual compensation package. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P><FONT SIZE=2>During
2005, pursuant to this now suspended policy, certain option grants were made as follows. On October&nbsp;28, 2005 (the "</FONT><FONT SIZE=2><B>Grant Date</B></FONT><FONT SIZE=2>"), the
Company granted an option to purchase 25,000 shares of Common Stock to each of Messrs.&nbsp;Horner, Toy, Clarke and Lenzmeier (the "</FONT><FONT SIZE=2><B>Director Options</B></FONT><FONT SIZE=2>")
with a vesting commencement date of August&nbsp;23, 2005 (the "</FONT><FONT SIZE=2><B>Vesting Commencement Date</B></FONT><FONT SIZE=2>"). The Director Options have an exercise price per share of
$7.98, which equals the greater of the closing sales prices of the Common Stock as listed on the Nasdaq National Market on (i)&nbsp;the Grant Date and (ii)&nbsp;the Vesting Commencement Date. The
Director Options vest in equal monthly installments over a 12&nbsp;month period from the Vesting Commencement Date and have an exercise term of 10&nbsp;years. If, following a change in control of
the Company, a Non-Employee Director's status with the Company or the successor corporation is terminated (other than as a result of voluntary resignation), the Director Options will
become fully exercisable for a period of 3&nbsp;months from the date of such termination. For further discussion on change of control arrangements regarding Director Options, please see the section
entitled "Change of Control Arrangements in Option Agreements for Use under the 1997 Stock Plan" under "Employment Contracts and Change of Control Arrangements" contained in this Proxy Statement. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_dk1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to beneficial ownership of the Common Stock as of May&nbsp;12, 2006 (except as otherwise
indicated), by: (i)&nbsp;each person who is known by the Company to own beneficially more than 5% of the Common Stock; (ii)&nbsp;each of the Company's President and Chief Executive Officer and
each of the named executive officers as defined in Item&nbsp;402(a)(3) of Regulation&nbsp;S-K, (iii)&nbsp;each of the Company's directors; and (iv)&nbsp;all directors and executive
officers as a group. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where applicable. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Calculations
are based on a total number of outstanding shares of 121,089,996 shares as of May&nbsp;12, 2006. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="71%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="62%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Address of Beneficial Owner<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="16%" ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Beneficially<BR>
Owned(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="15%" ALIGN="CENTER"><FONT SIZE=1><B>Approximate<BR>
Percent<BR>
Owned(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Entities affiliated with SOFTBANK CORP.(2)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>14,651,630</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>12.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Brandes Investment Partners, L.P.(3)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>14,063,327</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&#134;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>11.61</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>FMR Corp.(4)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>8,273,850</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&#134;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6.83</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Donald Smith &amp; Co., Inc.(5)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>7,417,738</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&#134;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>6.13</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Ying Wu(6)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>4,676,965</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3.84</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Hong Liang Lu(7)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>4,097,027</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>3.35</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>William Huang(8)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>1,132,056</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Michael Sophie(9)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>405,166</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Francis Barton(10)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>100,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Larry Horner(11)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>239,208</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Thomas Toy(12)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>153,235</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Jeff Clarke(13)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>44,219</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Allen Lenzmeier(14)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>94,278</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>Shao-Ning J. Chou(15)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="62%"><FONT SIZE=2>All current directors and officers as a group (9&nbsp;persons)(16)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>10,942,154</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2>8.80</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>Less
than 1%.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#134;</FONT></DT><DD><FONT SIZE=2>Information
based on Schedule&nbsp;13G filed with the SEC by Brandes Investment Partners, L.P., FMR Corp. and Donald Smith&nbsp;&amp; Co.,&nbsp;Inc. on or
about February&nbsp;14, 2006. The Company cannot guarantee the accuracy of the information as of the date of this Proxy Statement.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
any shares issuable pursuant to options held by the person or group in question that may be exercised within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Includes
14,651,630 shares registered in the name of SOFTBANK America&nbsp;Inc., a Delaware corporation. SOFTBANK America&nbsp;Inc. is a wholly owned subsidiary of
SOFTBANK Holdings&nbsp;Inc., a Delaware corporation. SOFTBANK Holdings&nbsp;Inc. is a wholly owned subsidiary of SOFTBANK CORP., a Japanese corporation. Softbank America&nbsp;Inc. has sole power
to vote or direct the voting of 14,651,630 shares and sole dispositive power over 14,651,630 shares. The business address for these entities is c/o SOFTBANK CORP., 24 1 Nihonbashi Hakozakicho, Chuoku,
Tokyo 103 8501 Japan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Includes
14,063,327 shares beneficially and jointly owned by Brandes Investment Partners, L.P., Brandes Investment Partners,&nbsp;Inc., Brandes Worldwide Holdings,
L.P., Charles H. Brandes, </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_dk1164_1_16"> </A>
<UL>

<P><FONT SIZE=2>Glenn&nbsp;R.
Carlson and Jeffrey A. Busby. Each of Brandes Investment Partners, L.P., Brandes Investment Partners,&nbsp;Inc., Brandes Worldwide Holdings, L.P., Charles H. Brandes, Glenn R.
Carlson and Jeffrey A. Busby has shared power to vote or direct the voting of 12,168,716 shares and shared dispositive power over 14,063,327 shares. The business address for Brandes Investment
Partners, L.P. is 11988 El Camino Real, Suite 500, San Diego, CA 92130. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
8,273,850 shares beneficially owned by Fidelity Low Priced Stock Fund, a subsidiary of FMR Corp. Each of FMR Corp. and Edward C. Johnson, III, Chairman of FMR
Corp., has sole dispositive power over the 8,273,850 shares through its/his control of Fidelity Low Priced Stock Fund. The Board of Trustee of Fidelity Funds has sole power to vote or direct the
voting of 8,273,850 shares. The business address for FMR Corp. is 82 Devonshire Street, Boston, MA 02109.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Includes
7,417,738 shares beneficially owned by Donald Smith&nbsp;&amp; Co.,&nbsp;Inc. Donald Smith&nbsp;&amp; Co.,&nbsp;Inc. has sole power to vote or to direct the
voting of 6,145,511 shares and sole dispositive power over 7,417,738 shares. The business address for Donald Smith&nbsp;&amp; Co.,&nbsp;Inc. is 152 West 57th Street, New York, NY 10019.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;1,505,500 shares registered in the name of Wu Partners, a California Limited Partnership, of which Mr.&nbsp;Wu is general partner,
(ii)&nbsp;1,080,000 shares registered in the name of Stonybrook Investors L.P., (iii)&nbsp;4,868 shares registered in the name of Wu Living Trust, (iv)&nbsp;4,873 shares registered in the name
of Ashley Wu Trust&#151;1998 and (v)&nbsp;4,873 shares registered in the name of Richard Wu Trust&#151;1998. Ashley Wu and Richard Wu are Mr.&nbsp;Wu's children. Mr.&nbsp;Wu may be
deemed the beneficial owner of the shares. Also includes 686,564 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;229,000 shares owned by The Lu Family Limited Partnership, of which Mr.&nbsp;Lu is a general partner, (ii)&nbsp;130,000 shares registered in the
name of Lu Charitable Remainder Trust, of which Mr.&nbsp;Lu is the trustee, (iii)&nbsp;5,332 shares registered in the name of Benjamin Lu, and (iv)&nbsp;5,332 shares registered in the name of
Melissa Lu. Benjamin Lu and Melissa Lu are Mr.&nbsp;Lu's children. Mr.&nbsp;Lu may be deemed the beneficial owner of the shares. Also includes 1,325,938 shares issuable upon exercise of options
that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;106,000 shares owned by the 2000 Huang Family Limited Partnership, of which Mr.&nbsp;Huang is a general partner, (ii)&nbsp;6,600 shares
registered in the name of Alexander Huang, and (iii)&nbsp;6,600 shares registered in the name of Helen Huang. Alexander Huang and Helen Huang are Mr.&nbsp;Huang's children. Mr.&nbsp;Huang may be
deemed the beneficial owner of the shares. Also includes 351,876 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Sophie
resigned as the Company's Executive Vice President and Chief Operating Officer in May&nbsp;2006. Includes 374,700 shares issuable upon exercise of
options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD><FONT SIZE=2>Represents
100,000 shares of Common Stock subject to the Company's right of repurchase (the "</FONT><FONT SIZE=2><B>Restricted Shares</B></FONT><FONT SIZE=2>"). The
Restricted Shares will vest in equal annual installments over a period of four (4)&nbsp;years beginning on August&nbsp;1, 2005.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;1,775 shares owned by Donna Manning, who is Mr.&nbsp;Horner's spouse. Also includes 207,433 shares issuable upon exercise of options that are
exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD><FONT SIZE=2>Includes
153,235 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_dk1164_1_17"> </A>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD><FONT SIZE=2>Includes
44,219 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(14)</FONT></DT><DD><FONT SIZE=2>Includes
44,278 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(15)</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Chou
resigned as the Company's Senior Vice President and President and Chief Operating Officer for China in May&nbsp;2005.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(16)</FONT></DT><DD><FONT SIZE=2>Includes
a total of 3,188,243 shares issuable upon exercise of options that are exercisable within 60&nbsp;days of May&nbsp;12, 2006. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dm1164_1_18"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dm1164_management"> </A>
<A NAME="toc_dm1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>MANAGEMENT    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Executive Officers  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's executive officers as of the date of this Proxy Statement, and their ages as of July&nbsp;21, 2006, are as follows: </FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="60%" ALIGN="CENTER"><FONT SIZE=1><B>Position</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>Hong Liang Lu(1)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>51</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>President, Chief Executive Officer and Chairman of the Board</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>Ying Wu(1)</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>46</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Executive Vice President and Vice Chairman of the Board, Chairman and Chief Executive Officer for China</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>William Huang</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>43</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Senior Vice President and Chief Technology Officer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2>Francis Barton</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>59</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="60%"><FONT SIZE=2>Executive Vice President and Chief Financial Officer</FONT></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>On
May&nbsp;5, 2006, Mr.&nbsp;Lu notified the Company of his resignation as the Company's President, Chief Executive Officer and Chairman of the Board, effective
December&nbsp;31, 2006. Mr.&nbsp;Wu will assume the position of Chief Executive Officer effective January&nbsp;1, 2007. Mr.&nbsp;Toy, currently our Lead Director, will assume the position of
Chairman of the Board effective January&nbsp;1, 2007. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Hong Liang Lu</I></FONT><FONT SIZE=2> has served as the Company's President, Chief Executive Officer and director since June&nbsp;1991. Mr.&nbsp;Lu has served
as the Chairman of the Board since March&nbsp;2003. In June&nbsp;1991, Mr.&nbsp;Lu co-founded UTStarcom under its prior name, Unitech Telecom,&nbsp;Inc., which subsequently
acquired StarCom Network Systems,&nbsp;Inc. in September&nbsp;1995. From 1986 through December&nbsp;1990, Mr.&nbsp;Lu served as President and Chief Executive Officer of Kyocera Unison, a
majority owned subsidiary of Kyocera International,&nbsp;Inc. Mr.&nbsp;Lu served as President and Chief Executive Officer of Unison World,&nbsp;Inc., a software development company from 1983
until its merger with Kyocera in 1986. From 1979 to 1983, Mr.&nbsp;Lu served as Vice President and Chief Operating Officer of Unison World,&nbsp;Inc. Mr.&nbsp;Lu holds a B.S. in Civil
Engineering from the University of California at Berkeley. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Ying Wu</I></FONT><FONT SIZE=2> has served as the Company's Executive Vice President and Vice Chairman of the Board since October&nbsp;1995. Mr.&nbsp;Wu has
also served as the Chairman and Chief Executive Officer, and, until February&nbsp;2004, as President, of one of the Company's subsidiaries, UTStarcom China Co.,&nbsp;Ltd., beginning his duties
there in October&nbsp;1995. Mr.&nbsp;Wu was a co-founder, and from February&nbsp;1991 to September&nbsp;1995 served as Senior Vice President, of StarCom Network
Systems,&nbsp;Inc., a company that marketed and distributed third party telecommunications equipment. From 1988 to 1991, Mr.&nbsp;Wu served as a member of the technical staff of Bellcore
Laboratories. From 1987 through 1988, Mr.&nbsp;Wu served as a consultant at AT&amp;T Bell Labs. Mr.&nbsp;Wu also serves as a director of AsiaInfo Holdings,&nbsp;Inc. Mr.&nbsp;Wu holds a B.S. in
Electrical Engineering from Beijing Industrial University and an M.S. in Electrical Engineering from the New Jersey Institute of Technology. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>William Huang</I></FONT><FONT SIZE=2> has been the Company's Chief Technology Officer since September&nbsp;1999, and was appointed the Company's Senior Vice
President in September&nbsp;2001. From December&nbsp;1996 to September&nbsp;1999, Mr.&nbsp;Huang was the Company's Vice President of Strategic Product Planning. From June&nbsp;1995 to
December&nbsp;1996, Mr.&nbsp;Huang served as the Company's Vice President of China Operations. From 1994 to June&nbsp;1995, Mr.&nbsp;Huang was the Company's Director of Engineering. From 1992
to 1994, Mr.&nbsp;Huang was a consultant, Member of the Technical Staff and project leader at AT&amp;T CellRelay Systems (part of Bell Labs). Mr.&nbsp;Huang serves on the board of Shenzhen Gin De
(Group)&nbsp;Ltd., a publicly listed real estate investment company in China. Mr.&nbsp;Huang holds a B.S. in Electrical Engineering from Huazhong University of Science&nbsp;&amp; Technology, and an
M.S. in Electrical Engineering and Computer Sciences from the University of Illinois. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Francis P. Barton</I></FONT><FONT SIZE=2> has been the Company's Executive Vice President and Chief Financial Officer since August&nbsp;2005. From
May&nbsp;2003 to July&nbsp;2005, Mr.&nbsp;Barton was Executive Vice President and Chief Financial Officer of Atmel Corporation. From May&nbsp;2001 to May&nbsp;2003, Mr.&nbsp;Barton was
Executive Vice </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_dm1164_1_19"> </A>
<BR>

<P><FONT SIZE=2>President
and Chief Financial Officer of BroadVision&nbsp;Inc. From 1998 to 2001, Mr.&nbsp;Barton was Senior Vice President and Chief Financial Officer of Advanced Micro Devices,&nbsp;Inc. From
1996 to 1998, Mr.&nbsp;Barton was Vice President and Chief Financial Officer of Amdahl. Corporation. From 1974 to 1996, Mr.&nbsp;Barton worked at Digital Equipment Corporation, beginning his
career as a financial analyst and moving his way up through various financial roles to Vice President and Chief Financial Officer of Digital Equipment Corporation's Personal Computer Division.
Mr.&nbsp;Barton holds a B.S. in Chemical Engineering from Worcester Polytechnic Institute and an M.B.A. with a focus in finance from Northeastern University. </FONT></P>

<P><FONT SIZE=2><B>Executive Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth information for the three most recently completed fiscal years concerning the compensation of the Chief Executive Officer and other
executive officers.(1) </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dm1164_summary_compensation_table"> </A>
<A NAME="toc_dm1164_2"> </A>
<BR></FONT><FONT SIZE=2><B>Summary Compensation Table    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="26%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="4%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Annual Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=7 ALIGN="CENTER"><FONT SIZE=1><B>Long Term Compensation</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="26%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Principal Position<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="4%" ALIGN="CENTER"><FONT SIZE=1><B>Fiscal<BR>
Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Salary&nbsp;($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Bonus&nbsp;($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Annual<BR>
Other<BR>
Compensation<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Restricted<BR>
Stock Award<BR>
($)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Securities<BR>
Underlying<BR>
Options/SARs<BR>
(#)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>All Other<BR>
Compensation<BR>
($) (6)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1>Hong Liang Lu<BR>
President, Chief Executive Officer<BR>
and Chairman of the Board</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1>2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>700,000<BR>
700,000<BR>
500,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
325,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>&#151;<BR>
250,000<BR>
120,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1>9,530<BR>
20,500<BR>
5,469</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1><BR>
Ying Wu<BR>
Executive Vice President and Vice<BR>
Chairman</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
500,000<BR>
500,000<BR>
400,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
250,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2,629,275<BR>
&#151;<BR>
81,007</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>(2)<BR><BR>(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
200,000<BR>
85,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
10,502<BR>
5,500<BR>
5,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1><BR>
William Huang<BR>
Chief Technology Officer and<BR>
Senior Vice President</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
300,000<BR>
300,000<BR>
250,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
79,200<BR>
&#151;<BR>
100,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
11,538<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>(3)<BR><BR></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
75,000<BR>
100,000<BR>
50,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
6,537<BR>
5,500<BR>
2,344</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1><BR>
Francis Barton*<BR>
Executive Vice President and<BR>
Chief Financial Officer</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR></FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
167,667<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
250,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR></FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
882,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>(5)<BR><BR></FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
400,000<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
16,458<BR>
&#151;<BR>
&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1><BR>
Michael Sophie&#134;<BR>
Former Executive Vice President and Chief<BR>
Operating Officer</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
400,000<BR>
400,000<BR>
300,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
200,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
100,000<BR>
150,000<BR>
75,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
12,370<BR>
13,000<BR>
5,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="26%"><FONT SIZE=1><BR>
Shao-Ning J. Chou<BR>
Former Senior Vice President</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=1><BR>
2005<BR>
2004<BR>
2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
300,000<BR>
400,000<BR>
300,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
250,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
223,226<BR>
&#151;<BR>
859,162</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>(4)<BR><BR>(4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
&#151;<BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
&#151;<BR>
150,000<BR>
75,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>$<BR>$<BR>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=1><BR>
10,273<BR>
5,500<BR>
5,500</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-9pt;'><FONT SIZE=1>*</FONT></DT><DD><FONT SIZE=1>Mr.&nbsp;Barton
joined the Company in August&nbsp;2005.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>&#134;</FONT></DT><DD><FONT SIZE=1>Mr.&nbsp;Sophie
resigned as the Company's Executive Vice President and Chief Operating Officer in May 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(1)</FONT></DT><DD><FONT SIZE=1>The
Company has provided full disclosure for all its Section&nbsp;16 executive officers, which includes the "named executive officers" as defined in Item 402(a)(3) of
Regulation&nbsp;S-K.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(2)</FONT></DT><DD><FONT SIZE=1>Consists
of (i)&nbsp;a housing allowance of $48,000 in 2005 paid in connection with Mr.&nbsp;Wu's international work assignment, (ii)&nbsp;a tax assistance payment of $2,581,275
in 2005 paid in connection with the Company's tax equalization policy whereby the Company provides qualified employees with tax assistance to mitigate the tax differential arising from an employee's
international work assignment, (iii)&nbsp;a housing and children's education allowance of $68,350 in 2003 paid in connection with Mr.&nbsp;Wu's international work assignment, and (iii)&nbsp;a
tax assistance payment of $12,657 in 2003 paid in connection with the Company's tax equalization policy whereby the Company provides qualified employees with tax assistance to mitigate the tax
differential arising from an employee's international work assignment.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(3)</FONT></DT><DD><FONT SIZE=1>Consists
of a Paid Time Off cash out in the amount of $11,538.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(4)</FONT></DT><DD><FONT SIZE=1>Consists
of a housing allowance of $27,000 in 2005 and $36,000 in 2003 paid in connection with Mr.&nbsp;Chou's international work assignment, (ii)&nbsp;a tax assistance payment of
$116,229 in 2005 and $823,162 in 2003 paid in connection with our tax equalization policy whereby the Company provides qualified employees with tax assistance to mitigate the tax differential arising
from an employee's international work assignment, and (iii)&nbsp;a Paid Time Off cash out payment made in 2005 in the amount of $79,997. $691,771 of the tax assistance payments made in 2003 were
paid in connection with the deferred payment of a tax levied by the People's Republic of China on gains realized from the exercise of stock options in 2001. While U.S. tax regulations require that
these amounts be recorded as income, due to general limitation rules, a portion of Mr.&nbsp;Chou's paid foreign tax has been recovered by the Company pursuant to the Company's tax equalization
policy.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(5)</FONT></DT><DD><FONT SIZE=1>Dollar
value of 100,000 shares of Common Stock granted on August&nbsp;1, 2005 subject to the Company's right of repurchase (the "</FONT><FONT SIZE=1><B>Restricted
Shares</B></FONT><FONT SIZE=1>") and pursuant to the Restricted Stock Agreement (the "</FONT><FONT SIZE=1><B>Restricted Stock Agreement</B></FONT><FONT SIZE=1>") by and between the Company and
Mr.&nbsp;Barton. The closing sales price of $8.82 per share of the Common Stock as listed on the Nasdaq National Market on August&nbsp;1, 2005 was used to determine the value of the Restricted
Shares. Under the Restricted Stock Agreement, the Restricted Shares will vest in equal annual installments over a period of four (4)&nbsp;years beginning on August&nbsp;1, 2005. Dividends are
payable on the Restricted Shares, although historically the Company has never declared or paid cash dividends on the Common Stock.
<BR><BR></FONT></DD><DT style='margin-bottom:-9pt;'><FONT SIZE=1>(6)</FONT></DT><DD><FONT SIZE=1>All
other compensation for 2005 consists of 401(K) match payments, tax and investment advice fees, health insurance premiums and driver's fee paid by the Company on behalf of certain
of the Company's executive officers. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=23,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=874740,FOLIO='19',FILE='DISK127:[06PAL4.06PAL1164]DM1164A.;19',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
<A NAME="page_dm1164_1_20"> </A>

<P><FONT SIZE=2><B>Stock Ownership Guidelines  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective January&nbsp;1, 2006, by the decision of the Nominating and Corporate Governance Committee of the Board, the Company imposed minimum stock ownership
guidelines (the "</FONT><FONT SIZE=2><B>Guidelines</B></FONT><FONT SIZE=2>") for Non-Employee Directors and certain officers of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
officer and Non-Employee Director is expected to acquire the number of shares of Common Stock as set forth below by the Guidelines before the later of
(i)&nbsp;4&nbsp;years after the effective date of the Guidelines and (ii)&nbsp;4&nbsp;years after an officer's appointment to such office or a Non-Employee Director's appointment
to the Board, as the case may be. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="LEFT"><FONT SIZE=1><B>Position<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="25%" ALIGN="CENTER"><FONT SIZE=1><B>Minimum Share<BR>
Ownership Requirements</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Chief Executive Officer and President</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Executive Vice Presidents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="RIGHT"><FONT SIZE=2>25,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Senior Vice Presidents/Division Presidents</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="RIGHT"><FONT SIZE=2>10,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Non-Employee Directors</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="25%" ALIGN="RIGHT"><FONT SIZE=2>10,000</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company will review compliance with the Guidelines annually. Failure to comply with the Guidelines may result in a reduction in future long-term incentive grants and/or
payment of future annual and/or long-term incentive payouts in the form of Common Stock. The Nominating and Corporate Governance Committee has the discretion to waive the Guidelines, if
compliance would create severe personal hardship for an officer or Non-Employee Director or prevent an officer or Non-Employee Director from complying with a court order. The
Nominating and Corporate Governance Committee expects that such instances will be rare. </FONT></P>


<P><FONT SIZE=2><B>Option Grants  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information with respect to stock option grants to the Company's executive officers during the fiscal year ended
December&nbsp;31, 2005. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dm1164_option_grants_in_last_fiscal_year"> </A>
<A NAME="toc_dm1164_3"> </A>
<BR></FONT><FONT SIZE=2><B>Option Grants in Last Fiscal Year    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>Potential Realizable<BR>
Value at Assumed<BR>
Annual Rates<BR>
of Stock Price Appreciation<BR>
for Option Term(3)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>% of Total<BR>
Options<BR>
Granted to<BR>
Employees in<BR>
Fiscal Year<BR>
2005(2)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Options<BR>
Granted(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercise<BR>
Price<BR>
Per Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Expiration<BR>
Date</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>5%</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>10%</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Hong Liang Lu</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" 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="9%" 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="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Ying Wu</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" 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="9%" 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="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>William Huang</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>75,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.38</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.29</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>11/30/2015</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>391,015</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>990,909</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Francis Barton</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>400,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7.34</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.82</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8/1/2015</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>2,218,740</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>5,622,723</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Michael Sophie*</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>100,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1.84</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8.29</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>11/30/2015</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>521,354</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,321,212</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Shao Ning J. Chou</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" 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="9%" 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="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Total Grants in 2005</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>575,000</FONT></TD>
<TD WIDTH="1%"><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="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><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="9%"><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="9%"><FONT SIZE=2>&nbsp;</FONT></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>*</FONT></DT><DD><FONT SIZE=2>Pursuant
to the Severance Agreement and Release dated April&nbsp;13, 2006, all options granted to Mr.&nbsp;Sophie that were not vested as of May&nbsp;5, 2006 have been canceled or
terminated. For more discussion on the Severance Agreement and Release, please see the section entitled "Severance Benefits" under "Certain Relationships and Related Transactions" in this Proxy
Statement.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>All
options were granted pursuant to the 1997 Plan. The options have a ten-year term and vest and become exercisable over four years as follows: 25% of the shares
underlying the options vest 12&nbsp;months after the grant date and 1/48 of the shares underlying the options vest each month thereafter, subject to the optionee's continuing employment with the
Company. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=24,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=528050,FOLIO='20',FILE='DISK127:[06PAL4.06PAL1164]DM1164A.;19',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
<A NAME="page_dm1164_1_21"> </A>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Based
on an aggregate of 5,448,073 shares subject to options granted to the Company's employees in 2005.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>The
potential realizable value represents amounts, net of exercise price before taxes, which may be realized upon exercise of the options immediately prior to the expiration of the
terms of such options, assuming appreciation of 5% and 10% over the option term. The 5% and 10% rates are calculated based on rules promulgated by the SEC based upon a per share market price of the
Common Stock underlying the options at the time the options were granted and do not reflect the Company's estimate of future stock price growth. The actual value realized may be greater or less than
the potential realizable value set forth in the table. </FONT></DD></DL>

<P><FONT SIZE=2><B>Option Exercises and Values  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information for the Company's executive officers relating to the number and value of securities underlying exercisable and
unexercisable options they held at December&nbsp;31, 2005, and sets forth the number of shares of Common Stock acquired and the value realized upon exercise of stock options held as of
December&nbsp;31, 2005 by the executive officers. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dm1164_aggregate_option_exercises_in___agg03219"> </A>
<A NAME="toc_dm1164_4"> </A>
<BR></FONT><FONT SIZE=2><B>Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="28%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>Number of Securities<BR>
Underlying Unexercised<BR>
Options at<BR>
December 31, 2005</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="28%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=4 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Value of Unexercised<BR>
in-the-Money Options at<BR>
December 31, 2005(2)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="28%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Shares<BR>
Acquired on<BR>
Exercise</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="28%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Value<BR>
Realized(1)<BR>
($)</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>Hong Liang Lu</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,292,813</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>52,187</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,424,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>Ying Wu</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>663,756</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>36,244</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>284,800</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>William Huang</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>336,251</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>98,749</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>Francis Barton</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>400,000</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>Michael Sophie</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>353,350</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>133,328</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>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="28%"><FONT SIZE=2>Shao Ning J. Chou</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>539,376</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" 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="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></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>The
"Value Realized" is based on the closing price of the Common Stock as quoted on The Nasdaq National Market on the date of exercise, minus the per share exercise price, multiplied
by the number of shares issued upon exercise of the option.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>The
value of unexercised in-the-money options is calculated based on the difference between the closing price of $8.06 per share as quoted on The Nasdaq
National Market on December&nbsp;31, 2005, and the exercise price for the shares, multiplied by the number of shares underlying the option. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=25,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=921232,FOLIO='21',FILE='DISK127:[06PAL4.06PAL1164]DM1164A.;19',USER='DHOLBRO',CD='21-JUN-2006;06:20' -->
<A NAME="page_dm1164_1_22"> </A>

<P><FONT SIZE=2><B>Equity Compensation Plan Information  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information, as of December&nbsp;31, 2005*, about equity awards under our equity compensation plans: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="31%" ALIGN="LEFT"><FONT SIZE=1><B>Plan Category<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="21%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Securities to<BR>
Be Issued upon<BR>
Exercise of<BR>
Outstanding Options,<BR>
Warrants and Rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted Average<BR>
Exercise Price of<BR>
Outstanding Options,<BR>
Warrants and Rights</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Securities<BR>
Remaining Available for<BR>
Future Issuance under<BR>
Equity Compensation<BR>
Plans (excluding securities<BR>
reflected in column (a))</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="31%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="21%" ALIGN="CENTER"><FONT SIZE=1><B>(a)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(b)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>(c)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="31%"><FONT SIZE=2>Equity compensation plans approved by security holders(1)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>18,868,666</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>17.80</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>7,939,418</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>(3)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="31%"><FONT SIZE=2><BR>
Equity compensation plans not approved by security holders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1,073,086</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2><BR>
28.55</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(5)</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2><BR>
470,540</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(6)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="31%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><FONT SIZE=2>19,941,752</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>18.35</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2>8,409,958</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="21%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></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>*</FONT></DT><DD><FONT SIZE=2>As
of March&nbsp;31, 2006, the number of shares of the Common Stock available for issuance but remained unissued under existing plans which will be rolled into the 2006 Equity
Incentive Plan, if adopted by the Company's shareholders, was 3,933,333. As of March&nbsp;31, 2006, options to purchase 22,848,484 shares of the Common Stock were outstanding under the existing
plans. Such outstanding options had a weighted average exercise price of $15.707 and an average remaining term of 7.5&nbsp;years as of March&nbsp;31, 2006. There were also 200,000 shares of
restricted stock awards outstanding as of March&nbsp;31, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
the 1997 Plan which provides for an annual increase in the number of shares available for issuance under the plan equal to the lesser of (i)&nbsp;4% of the outstanding
Shares on such date, (ii)&nbsp;6,000,000 shares or (iii)&nbsp;a lesser amount determined by the Board, and the 2000 Employee Stock Purchase Plan, which provides for an annual increase in the
number of shares available for issuance under the plan equal to (i)&nbsp;2% of the outstanding shares on such date, (ii)&nbsp;2,000,000 shares or (iii)&nbsp;a lesser amount determined by the
Board.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Includes
shares of Common Stock to be issued upon exercise of options granted under the Company's 1997 Plan and Director Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Includes
1,914,934 shares of Common Stock available for issuance under the 2000 Employee Stock Purchase Plan, 5,272,484 shares of Common Stock available for issuance under the 1997
Plan and 752,000 shares of Common Stock available for issuance under the Director Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
1,021,510 options outstanding under the 2003 Non-Statutory Stock Option Plan, a maximum of 36,312 performance shares outstanding under the Advanced Communication
Devices Corporation Incentive Program and a maximum of 15,264 performance shares outstanding under the Issanni Communications,&nbsp;Inc. Incentive Program. Does not include 9,254 shares and 8,580
shares of Common Stock subject to outstanding options with a weighted-average exercise price of $2.67 that were assumed in our acquisitions of Advanced Communication Devices Corporation and
RollingStreams Systems,&nbsp;Ltd., respectively.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Represents
the average weighted exercise price of 1,021,510 options outstanding under the 2003 Non-Statutory Stock Option Plan. Excludes performance shares outstanding
under the Advanced Communication Devices Corporation Incentive Program and the Issanni Communications,&nbsp;Inc. Incentive Program because performance shares do not have an exercise price.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Includes
470,540 shares of Common Stock available for issuance under the Company's 2003 Non-Statutory Stock Option Plan. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_dm1164_1_23"> </A>

<P><FONT SIZE=2><B>Employment Contracts, Termination of Employment and Change of Control Arrangements  </B></FONT></P>

<UL>

<P><FONT SIZE=2><I> Change of Control Arrangements in Employment Contracts  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has entered into Change of Control Severance Agreements with each of Messrs.&nbsp;Lu, Wu and Huang dated January&nbsp;17, 2003, January&nbsp;31,
2003 and January&nbsp;31, 2003, respectively (the "</FONT><FONT SIZE=2><B>Lu Agreement</B></FONT><FONT SIZE=2>," the "</FONT><FONT SIZE=2><B>Wu Agreement</B></FONT><FONT SIZE=2>" and the
"</FONT><FONT SIZE=2><B>Huang Agreement</B></FONT><FONT SIZE=2>," respectively) and a Change of Control/Involuntary Termination Severance Agreement with Mr.&nbsp;Barton dated September&nbsp;6,
2005 (the "</FONT><FONT SIZE=2><B>Barton Agreement</B></FONT><FONT SIZE=2>" and, together with the Lu Agreement, the Wu Agreement and the Huang Agreement, the "</FONT><FONT SIZE=2><B>Employment
Agreements</B></FONT><FONT SIZE=2>"). On June&nbsp;20, 2006, the Board approved amendments, as described below, to all of the Employment Agreements other than the Lu Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Lu Agreement provides that if the employee's employment with the Company terminates as a result of involuntary termination at any time within 12&nbsp;months after a change of
control (the "</FONT><FONT SIZE=2><B>Determination Period</B></FONT><FONT SIZE=2>"), (i)&nbsp;such employee will be entitled to 24&nbsp;months of base salary as in effect as of the date of such
termination payable in a lump sum within 30&nbsp;days of termination and 100% of the bonus for the year in which termination occurs, and (ii)&nbsp;the Company will continue to provide such
employee the same level of health coverage as in effect on the day immediately preceding the termination date until the earlier of the date such employee is no longer eligible to receive continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or 12&nbsp;months from the termination date. The Wu Agreement, Huang Agreement and Barton Agreement
initially provided the same rights to Messrs.&nbsp;Wu, Huang and Barton. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally,
in connection with any such termination following a change of control, the Lu Agreement provides that all stock options granted to such employee will become fully vested
and exercisable as of the date of termination and the Company's right to repurchase any stock that was purchased by such employee prior to the change of control shall lapse. The Wu Agreement and Huang
Agreement initially provided the same rights to Messrs.&nbsp;Wu and Huang. Similarly, the Barton Employment Agreement
initially provided that all stock options granted to the employee will become fully vested and exercisable as of the date of termination, any share purchase rights granted to such employee will become
fully vested and exercisable to the extent such share purchase rights are outstanding and unexercisable at the time of such termination and the Company's right to repurchase any stock that was
purchased by such employee prior to the change of control shall lapse. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the June&nbsp;20, 2006 amendments, the Determination Period for Messrs.&nbsp;Wu, Huang and Barton in their respective Employment Agreements was extended from
12&nbsp;months to 18&nbsp;months, such that, if the applicable employee's employment with the Company terminates as a result of involuntary termination at any time within 18&nbsp;months after a
change of control, such employee will be entitled to the benefits provided in the respective Employment Agreement, as amended. In addition, the Wu Agreement, Huang Agreement and Barton Agreement were
amended to provide that (i)&nbsp;all equity awards granted to such employee, including without limitation option grants, restricted stock and stock purchase rights, will become fully vested and/or
exercisable to the extent such equity awards are outstanding and/or unexercisable at the time of such termination, and (ii)&nbsp;such equity awards will remain exercisable for a period of
12&nbsp;months following such termination. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event that the severance and other benefits provided to employees pursuant to the Employment Agreements constitute "parachute payments" within the meaning of Section&nbsp;280G
of the Internal Revenue Code and would be subject to the excise tax imposed by Section&nbsp;4999 of the Internal Revenue Code, such employee's benefits under the Employment Agreements shall be
either delivered in full or delivered as to such lesser extent which would result in no portion of such benefits being subject to the excise tax, whichever results in the receipt by the employee, on
an after-tax basis, of the greatest amount of benefits. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of the Employment Agreements, "involuntary termination" includes (i)&nbsp;without the employee's express written consent, a significant reduction of the employee's
duties, position or </FONT></P>

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

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<P><FONT SIZE=2>responsibilities
relative to the employee'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, (ii)&nbsp;without the employee'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'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's overall benefits package is significantly reduced, (v)&nbsp;the relocation of the employee to a facility or a location more
than 50 miles from his current location without the employee's express written consent, (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 Company's failure to obtain the assumption of the Change of Control Agreements by any successor to the Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of the Employment Agreements, "change of control" is defined as (i)&nbsp;the approval by the Company's stockholders of a merger or consolidation with any other
corporation, other than a merger or consolidation which would result in the Company's voting securities outstanding immediately prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the Company's voting securities or such surviving entity outstanding
immediately after such merger or consolidation, (ii)&nbsp;the approval by the Company's stockholders of a plan to complete liquidation or an agreement for the sale or disposition by the company of
all or substantially all of the Company's assets, (iii)&nbsp;any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becoming the "beneficial owner" (as defined in
Rule&nbsp;13d-3 under said Exchange Act), directly or indirectly, of the Company's securities representing 50% or more of the total voting power represented by the Company's then
outstanding voting securities, or (iv)&nbsp;a change in the composition of the Board, as a result of which fewer than a majority of the directors are incumbent directors. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Severance Payment Arrangements for Termination Apart from Change of Control  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the June&nbsp;20, 2006 amendments referenced above under "</FONT><FONT SIZE=2><I>Change of Control Arrangements in Employment
Contracts</I></FONT><FONT SIZE=2>," the Wu Agreement and the Huang Agreement did not provide for severance benefits to be paid to the employee even if such employee's employment with the Company is
terminated without cause (as defined below) except in the case of an involuntary termination following a change of control (as described above). Prior to the June&nbsp;20, 2006 amendments, the
Barton Employment Agreement provided that if such employee's employment with the Company is terminated without cause, even if such termination does not result from a change of control, the employee
would be entitled to (i)&nbsp;12&nbsp;months of his base salary as in effect as of the date of such termination, less applicable withholding, payable in a lump sum within 30&nbsp;days of such
termination and 100% of his bonus for the year in which such termination occurs and (ii)&nbsp;continued vesting in stock options and share purchase rights granted to such employee prior to the date
of such termination, for a period of 12&nbsp;months from the date of such termination, with the right to exercise said stock options and share purchase rights within 90&nbsp;days from the end of
said 12-month period; however, in the event of a termination for cause, the terminated employee shall not be entitled to any of the foregoing benefits. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the June&nbsp;20, 2006 amendments, the Wu Agreement, Huang Agreement and Barton Agreement were amended to provide that if the applicable employee's employment with
the Company terminates without cause, even if such termination does not result from a change of control, (i)&nbsp;such employee will be entitled to 12&nbsp;months (24&nbsp;months, in the case of
the Barton Agreement) of such employee's base salary as in effect as of the date of such termination, less applicable withholding, payable in a lump sum within 30&nbsp;days of such termination and
100% of such employee's bonus for the year in which such termination occurs, (ii)&nbsp;all equity awards, including without limitation option grants, restricted stock and stock purchase rights,
granted to such employee will become fully vested and/or </FONT></P>

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

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<P><FONT SIZE=2>exercisable
to the extent such equity awards are outstanding and/or unexercisable at the time of such termination, (iii)&nbsp;such equity awards will remain exercisable for a period of
12&nbsp;months following such termination, and (iv)&nbsp;the Company will continue to provide such employee the same level of health coverage as in effect on the day immediately preceding the
termination date until the earlier of the date such employee is no longer eligible to receive continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
or 12&nbsp;months from the termination date. However, in the event of a termination for cause, the terminated employee shall not be entitled to any of the foregoing benefits. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of the Wu Agreement, Huang Agreement and Barton Agreement, "cause" is defined as (i)&nbsp;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, (ii)&nbsp;employee's conviction of a felony which the Board reasonably believes has
had or will have a material detrimental effect on the Company's reputation or business, (iii)&nbsp;a willful act by the employee which constitutes misconduct and is injurious to the Company, and
(iv)&nbsp;continued willful violations by the employee of the employee's obligations to the Company after a delivery of a written demand by the Company to the employee for performance which
describes the basis of the Company's belief that the employee has not substantially performed his duties. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;13, 2006, the Company and Mr.&nbsp;Sophie entered into a Severance Agreement and Release (the "</FONT><FONT SIZE=2><B>Severance Agreement</B></FONT><FONT SIZE=2>") in
connection with Mr.&nbsp;Sophie's resignation effective May&nbsp;5, 2006. The Severance Agreement replaces and supersedes all prior agreements concerning Mr.&nbsp;Sophie's employment
relationship with the Company, with the exception of the confidentiality agreement and any applicable stock option agreement entered into by and between the Company and Mr.&nbsp;Sophie under the
Company's existing stock plans. Under the terms of the Severance Agreement, the Company paid Mr.&nbsp;Sophie the equivalent of 6&nbsp;months of regular base salary in a lump sum of $220,000, less
applicable withholdings. Mr.&nbsp;Sophie also received payments for his accrued but unpaid Paid Time Off and Floating Holiday Benefits (as described in the Severance Agreement). In addition, the
Company paid the approximate equivalent of 6&nbsp;months of Mr.&nbsp;Sophie's COBRA premiums in a lump sum of $6,000, less applicable withholdings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the terms of the Severance Agreement, Mr.&nbsp;Sophie's stock options that were not vested as of May&nbsp;5, 2006 were canceled or terminated. Mr.&nbsp;Sophie will have
the right to exercise vested options at any time within 120&nbsp;days after May&nbsp;5, 2006, but no later than the option expiration date. The Severance Agreement also provides for a mutual
release of claims by the Company and Mr.&nbsp;Sophie. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Change of Control Arrangements in Restricted Stock Agreement  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;6, 2005, the Company entered into a restricted stock agreement (the "</FONT><FONT SIZE=2><B>Restricted Stock
Agreement</B></FONT><FONT SIZE=2>") with Mr.&nbsp;Barton. The Restricted Stock Agreement provides for the purchase by Mr.&nbsp;Barton of 100,000 shares of the Common Stock (the
"</FONT><FONT SIZE=2><B>Restricted Shares</B></FONT><FONT SIZE=2>") which will be released from the Company's repurchase right in equal annual installments over a period of 4&nbsp;years beginning
on August&nbsp;1, 2005. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Restricted Stock Agreement provides that, if, as a result of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividends,
split-up, share combination, or other change in the corporate structure of the Company affecting the Common Stock, (i)&nbsp;the Restricted Shares will be increased, reduced or otherwise
changed, (ii)&nbsp;Mr.&nbsp;Barton will be entitled to new or additional or different shares of stock, cash or securities (other than rights or warrants to purchase securities), and
(iii)&nbsp;such new or additional or different shares, cash or securities will be considered to be the Restricted Shares not yet released from the Company's repurchase right and will be subject to
all the restrictions of the Restricted Stock Agreement. </FONT></P>

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

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<UL>

<P><FONT SIZE=2><I> Change of Control Arrangements in 2001 Director Option Plan and 1997 Stock Plan  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Director Plan provides that, in the event of a proposed dissolution or liquidation of the Company, each outstanding option granted under the Director Plan
that has not been exercised shall terminate immediately prior to the consummation of such proposed dissolution or liquidation. The Director Plan also provides that in the event of a merger of the
Company with or into another corporation or the sale of substantially all of the assets of the Company, each outstanding option granted under the Director Plan may be assumed or substituted by the
successor corporation. Following such assumption or substitution, if the optionee's status as a director or director of the successor corporation is terminated involuntarily, the option will become
fully exercisable for a period of 3&nbsp;months from the date of such termination. In the event the successor corporation refuses to assume or substitute the outstanding option, such option will
become fully exercisable for a period of 30&nbsp;days from the date the optionee is notified of such refusal by the Board. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
1997 Plan provides that, in the event of a proposed dissolution or liquidation of the Company, the Board must notify each optionee under the 1997 Plan as soon as practicable prior to
the effective date
of such proposed dissolution or liquidation. The Board has the discretion to allow the optionee to exercise his or her option or stock purchase right until 15&nbsp;days prior to the effective date
of such dissolution or liquidation. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding option or
stock purchase right under the 1997 Plan will be assumed or substituted by the successor corporation. In case the successor corporation refuses to assume or substitute the outstanding option or stock
purchase right, such outstanding option or stock purchase right will become fully exercisable for a period of 15&nbsp;days from the date the optionee is notified of such refusal by the Board. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, both the 1997 Plan and the Director Plan (collectively, the "</FONT><FONT SIZE=2><B>Plans</B></FONT><FONT SIZE=2>") provide, in general, that an optionee whose status as a
Service Provider (as defined in the 1997 Plan) or a director (as defined in the Director Plan) is terminated is entitled to exercise his or her option, to the extent such option has vested as of the
date of termination, until the earlier of (i)&nbsp;expiration of the option according to its terms, (ii)&nbsp;expiration of a period of 3&nbsp;months following termination, or
(iii)&nbsp;expiration of a period of 12&nbsp;months following termination as a result of death or disability (the "</FONT><FONT SIZE=2><B>Post-Termination Exercise
Period</B></FONT><FONT SIZE=2>"). The 1997 Plan, unlike the Director Plan, allows the Post-Termination Exercise Period to extend beyond the default term, if the stock option agreement
entered into by the Company and the optionee pursuant to the 1997 Plan provides for a longer term. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Change of Control Arrangements in Option Agreements for Use under the 1997 Stock Plan  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to October&nbsp;28, 2005, the Board had approved a form of stock option agreement (the "</FONT><FONT SIZE=2><B>Existing Option
Agreement</B></FONT><FONT SIZE=2>") for use under the 1997 Plan in connection with stock option grants to the Company's (i)&nbsp;Service Providers (as defined in the 1997 Plan),
(ii)&nbsp;executive officers, and (iii)&nbsp;directors, which provides for the default Post-Termination Exercise Period designated in the 1997 Plan of 3&nbsp;months or
12&nbsp;months for termination as a result of death or disability. On October&nbsp;28, 2005, the Board approved a plan to modify the Existing Option Agreement, to the extent that the Existing
Option Agreement applies to the executive officers and directors, to provide for a longer Post-Termination Exercise Period of 12&nbsp;months for termination following a Change of Control
(as defined below) (such modified Existing Agreement, the "</FONT><FONT SIZE=2><B>Officer and Director Option Agreement</B></FONT><FONT SIZE=2>"). On November&nbsp;30, 2005, the Compensation
Committee of the Board approved the use of the Officer and Director Option Agreement in conjunction with granting Mr.&nbsp;Huang and Mr.&nbsp;Sophie options to purchase 75,000 shares and 100,000
shares of the Common Stock, respectively. Then on December&nbsp;2, 2005, the Compensation Committee of the Board formally adopted the Officer and Director Option Agreement for use exclusively in
connection with option grants to executive officers and directors of the Company. The Existing Option Agreement will continue to be used for option grants to Service Providers other than executive
officers and directors. </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;Under
the Officer and Director Option Agreement, if the optionee's status as a Service Provider or director is terminated following a Change of Control (as defined below), the optionee
shall be entitled to exercise his or her option, to the extent such option has vested as of the date of such termination, until the earlier of (i)&nbsp;expiration of the option according to its
terms, or (ii)&nbsp;expiration of a period of 12&nbsp;months following the termination of the optionee's status as a Service Provider or director. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of the Officer and Director Option Agreement, a "Change of Control" means (i)&nbsp;any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) is or becomes the "beneficial owner" (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's then outstanding voting securities; or (ii)&nbsp;the date of the consummation of a merger or consolidation of the Company with any
other corporation that has been approved by the stockholders of the Company, 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 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; or (iii)&nbsp;the date of the consummation of the sale or disposition by the
Company of all or substantially all the Company's assets. All options granted to officers or directors are subject to the foregoing terms of the Plans and the applicable forms of option agreement. For
information on options granted to officers or directors under the Plans during 2005, please see sections entitled "Director Compensation" under "Board of Directors" and "Option Grants" under
"Management" in this Proxy Statement. </FONT></P>

<P><FONT SIZE=2><B>Compensation Committee Interlocks and Insider Participation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee consisted of Messrs.&nbsp;Toy and Horner throughout the 2005 fiscal year, and Mr.&nbsp;Lenzmeier joined the Compensation Committee
in April&nbsp;2005. Ms.&nbsp;Atkins also served on the Compensation Committee from the beginning of 2005 to May&nbsp;2005, when her term as a director expired. All members of the Compensation
Committee during 2005 were independent directors in accordance with the applicable independence requirements of the Nasdaq Marketplace Rules, and none were employees or officers or former employees of
the Company. During 2005, no executive officer of the Company served on the compensation committee (or equivalent) or board of directors of another entity whose executive officer(s) served on the
Company's Compensation Committee or Board. </FONT></P>

<P><FONT SIZE=2><B>Section&nbsp;16(a) Beneficial Ownership Reporting Compliance  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the
Company's equity securities ("</FONT><FONT SIZE=2><B>Section&nbsp;16 Filers</B></FONT><FONT SIZE=2>"), to file with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Such Section&nbsp;16 Filers are required by SEC regulations to furnish the Company with copies of all Section&nbsp;16(a) forms they file. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
the Company's knowledge, based solely on its review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the
fiscal year ended December&nbsp;31, 2005, all Section&nbsp;16 Filers complied with all Section&nbsp;16(a) filing requirements except for the following inadvertent late filings:
(i)&nbsp;Mr.&nbsp;Horner filed a Form&nbsp;4 on November&nbsp;2, 2005 reporting one transaction late; (ii)&nbsp;Mr.&nbsp;Toy filed a Form&nbsp;4 on November&nbsp;2, 2005 reporting one
transaction late; (iii)&nbsp;Mr.&nbsp;Clarke filed an amendment to a previously filed Form&nbsp;4 on November&nbsp;2, 2005 reporting one transaction late; and (iv)&nbsp;Mr.&nbsp;Wu filed a
Form&nbsp;5 on December&nbsp;29, 2005 reporting one transaction late. </FONT></P>

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

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<BR></FONT><FONT SIZE=2><B>REPORT OF THE COMPENSATION COMMITTEE    <BR>    </B></FONT></P>


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

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee of the Board of the Company was established on January&nbsp;31, 1997. Mr.&nbsp;Toy, the Chairman of the Compensation Committee, and
Mr.&nbsp;Horner served on the Committee throughout 2005, and Mr.&nbsp;Lenzmeier joined the Compensation Committee on April&nbsp;11, 2005. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2005, the Compensation Committee was comprised solely of Non-Employee Directors who were each: (i)&nbsp;independent as defined under the Nasdaq Marketplace Rules,
(ii)&nbsp;a Non-Employee Director for purposes of Rule&nbsp;16b-3 of the Securities Exchange Act of 1934, as amended, and (iii)&nbsp;an outside director for purposes of
Section&nbsp;162(m) of the Internal Revenue Code. During 2006, the Committee will be comprised of directors who meet these same standards. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
primary purpose of the Compensation Committee is to discharge the responsibilities of the Board of Directors relating to all compensation, including equity compensation, of the
Company's executives. The Compensation Committee also has overall responsibility for evaluating and making recommendations to the Board regarding equity-based and cash variable compensation plans,
policies and programs of the Company. </FONT></P>

<P><FONT SIZE=2><B>Compensation Philosophy  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The philosophy of the Compensation Committee is to create a system in which employee compensation is tied to the performance of the Company, thereby promoting
stockholder value. The Company's compensation program consists of two principal components: cash-based compensation, both fixed and variable, and equity-based compensation. These two
principal components are intended to attract, retain, motivate, increase the productivity of and reward, in a cost-effective
manner, executives who are expected to manage both the short-term and long-term success and competitiveness of the Company. In addition, the Compensation Committee attempts to
structure the compensation program to be regarded positively by the Company's stockholders, employees, the financial community and the public in general. </FONT></P>

<P><FONT SIZE=2><B>Cash-based Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee believes that the annual cash compensation paid to executives should be commensurate with the performance of both the Company as a
whole and the individual executive in question. For this reason, the Company's executive cash compensation consists of base compensation (salary) and variable incentive compensation (annual bonus). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Base
salaries for executive officers are established considering a number of factors, including the Company's profitability, the individual performance and measurable contribution to the
Company's success of the executive in question and pay levels of similar positions with comparable companies in the industry. The Compensation Committee supports the Company's philosophy by providing
for moderation in fixed elements of compensation, such as base salary and benefits. Base salary decisions are made as part of the Company's formal annual review process. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
amount of an executive's annual bonus generally depends on the financial performance of the Company relative to profit targets and the executive's individual performance with respect
to the successful completion of objectives and goals deemed by the Compensation Committee to be important in maximizing long-term return to the Company's stockholders. The Compensation
Committee reviews these targets, objectives and goals at least annually to meet the changing nature of the Company's business. The incentive (bonus) portion of total cash compensation is set at a
higher percentage for more senior officers, with the result that such officers have a higher percentage of their potential total cash compensation at risk. </FONT></P>

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

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<P><FONT SIZE=2><B>Equity-based Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee administers the Company's equity incentive program, pursuant to which members of management, including the Company's executive
officers, may receive annual stock option grants and/or restricted stock purchase rights from a pool of shares set aside by the Company on an annual basis. The purpose of the equity incentive program
is to provide additional incentive to executives and other key employees of the Company to work to maximize long-term
return to the Company's stockholders. The allocation of stock options and restricted stock purchase rights to the Company's employees, other than the President and Chief Executive Officer, are
recommended by the President and Chief Executive Officer for approval by the Compensation Committee. The allocation of stock options and restricted stock purchase rights to the President and Chief
Executive Officer is determined solely by the Compensation Committee. In granting equity incentive awards to the executive officers and the President and Chief Executive Officer, the Compensation
Committee considers a number of objective and subjective factors, including the executive's position and responsibilities at the Company, such executive's past and anticipated individual performance,
current market survey data with respect to equity compensation practices at other peer companies in the Company's industry and the level of achievement by such executive of the performance objectives
(as described below) set by the Compensation Committee. Options and restricted stock purchase rights generally vest over a four-year period to encourage executive officers to continue in
the employ of the Company. Beginning in 2006, options and restricted stock purchase rights granted to executive officers may also be subject to performance vesting, such that the shares underlying the
equity award will only vest if the performance objectives set by the Compensation Committee are achieved, as described further below. The exercise price of options is the market price on the date of
grant, ensuring that the option will acquire value only to the extent that the price of the Company's common stock increases relative to the market price at the date of grant. The restricted stock
purchase rights entitle the executive officers to purchase the Company's common stock at par value. </FONT></P>

<P><FONT SIZE=2><B>Management Performance Objectives  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Starting in 2006, the Compensation Committee will establish annual management performance objectives tailored for each executive officer. Under this regime,
options or restricted stock awards granted to each executive officer will vest, or stock purchase rights will be granted, only to the extent that the established performance objectives for such
officer have been achieved, upon achievement of pre-established performance objectives for each such executive officer, as determined by the Compensation Committee. The criteria for
management performance objectives include (i)&nbsp;achievement of corporate financial measures such as bookings, gross margin, revenue, operating profit, cash flow, inventory turns, contribution
margin and cash collections, (ii)&nbsp;achievement of corporate objectives relating to quality and organization, including improvement as to the Company's compliance efforts under Section&nbsp;404
of the Sarbanes-Oxley Act of 2002, and (iii)&nbsp;achievement by executive officers of additional individualized performance objectives reviewed and approved by the Compensation Committee. </FONT></P>


<P><FONT SIZE=2><B>President and Chief Executive Officer Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee generally uses the same factors and criteria described above for compensation decisions regarding the President, Chief Executive
Officer and Chairman of the Board. During the fiscal year ended December&nbsp;31, 2005, Mr.&nbsp;Lu received a base salary of $700,000 for serving as the President, Chief Executive Officer and
Chairman of the Board of the Company. No bonus was awarded to Mr.&nbsp;Lu with respect to the fiscal year ended December&nbsp;31, 2005. As with the other executives of the Company, Mr.&nbsp;Lu's
compensation was determined by the Compensation Committee, based on the achievement of certain performance objectives of the Company. Criteria considered in the determination of Mr.&nbsp;Lu's
compensation included such factors as (i)&nbsp;the compensation provided to </FONT></P>

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

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<P><FONT SIZE=2>chief
executive officers of companies comparable to the Company, (ii)&nbsp;specific benchmarks tied to the revenue, growth or profitability of the Company, (iii)&nbsp;decisions made by
Mr.&nbsp;Lu in the past fiscal year that improved the business prospects or financial condition of the Company, and (iv)&nbsp;Mr.&nbsp;Lu's leadership role in accomplishing specific goals set
for the Company in the past fiscal year. The performance objectives are reviewed annually by the Compensation Committee to ensure that they are consistent with the Company's compensation philosophy. </FONT></P>

<P><FONT SIZE=2><B>Compliance with Internal Revenue Code Section&nbsp;162(m)  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;162(m) of the Internal Revenue Code generally disallows a federal tax deduction to publicly held companies for compensation in excess of
$1&nbsp;million paid to the Company's President and Chief Executive Officer and to each of the other four most highly compensated executive officers. For this purpose, compensation can include, in
addition to cash compensation, the gain realized upon exercise of stock options and the vesting of restricted stock. The Company's policy is to qualify, to the extent reasonable, its executive
officers' stock option grants for deductibility under applicable tax laws. However, the Compensation Committee believes that its primary responsibility is to provide a compensation program that will
attract, retain and reward the executive talent necessary for the Company's success because the Compensation Committee feels such objective is in the best interest of the Company's stockholders.
Consequently, the Compensation Committee recognizes that the loss of a tax deduction may be necessary in some circumstances. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent
to the annual stockholder meeting of 2004, awards granted under the Stock Plan no longer qualify as performance-based compensation for 162(m) purposes and therefore are
subject to the $1,000,000 limit. Assuming the stockholders approve the 2006 Equity Incentive Plan, the Company will again be able to issue options and other forms of equity compensation that qualify
as performance-based compensation for 162(m) purposes and therefore excluded from the calculation of compensation for purposes of the $1,000,000 limit. </FONT></P>

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

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee believes that its compensation program to date has been fair and motivating, and has been successful in attracting and retaining
qualified employees and in linking compensation directly to the Company's success. The Compensation Committee intends to review this program on an ongoing basis to evaluate its continued
effectiveness. </FONT></P>

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Thomas Toy, Chairman<BR>
Larry Horner<BR>
Allen Lenzmeier</FONT></TD>
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<BR></FONT><FONT SIZE=2><B>REPORT OF THE AUDIT COMMITTEE    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is the report of the Audit Committee with respect to the Company's audited financial statements for the fiscal year ended December&nbsp;31, 2005.
The information contained in this report shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the information by reference in such
filing. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Established
on January&nbsp;31, 1997, the Audit Committee is currently comprised of four Non-Employee Directors. Mr.&nbsp;Horner, the Chairman of the Audit Committee, and
Mr.&nbsp;Toy served on the Audit Committee throughout 2005. Mr.&nbsp;Clarke joined the Audit Committee on January&nbsp;17, 2005 and Mr.&nbsp;Lenzmeier joined the Audit Committee on
March&nbsp;15, 2005. The Board of Directors has determined that each of the members of the Audit Committee is independent as defined by Nasdaq Marketplace Rules and the SEC. The Board also
determined that each member of the Audit Committee is "financially literate" and has accounting or related financial management expertise. The Board also determined that each of Messrs.&nbsp;Horner,
Clarke and Lenzmeier is an "audit committee financial expert" as defined by SEC rules through his business and professional experience. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
purpose of the Audit Committee is to assist the Board of Directors in its general oversight of the Company's financial reporting, internal controls and audit functions. The Audit
Committee is directly responsible for the appointment, retention, evaluation, compensation, oversight and termination of the Company's independent registered public accounting firm. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee reviews the results and scope of audit and other services provided by the independent auditors and reviews the accounting principles and auditing practices and
procedures to be used in the Company's financial reporting process, including its systems of internal control, and in the preparation of consolidated financial statements in accordance with generally
accepted accounting principles. The Company's independent registered public accounting firm for the last fiscal year, PricewaterhouseCoopers LLP
("</FONT><FONT SIZE=2><B>PricewaterhouseCoopers</B></FONT><FONT SIZE=2>"), is responsible for performing an independent audit of those financial statements. As more fully explained in the Audit
Committee's charter, the Audit Committee's responsibility is to provide oversight of and to review those processes. The Audit Committee does not conduct auditing or accounting reviews or procedures,
and relies on information and representations provided by management and the independent auditors. The Audit Committee has relied on management's representation that the financial statements have been
prepared with integrity and objectivity and in conformity with accounting principles generally accepted
in the United States of America and on the representations of the independent auditors included in their report on the Company's financial statements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee held 30 meetings during the last fiscal year. The Audit Committee operates pursuant to a charter that it reviews annually. </FONT></P>


<P><FONT SIZE=2><B>Audited Financial Statements  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has reviewed the audited financial statements prepared for the fiscal year ended December&nbsp;31, 2005. The Audit Committee has discussed
the audited financial statements with various members of the management of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
is responsible for maintaining adequate internal control over financial reporting and for assessing the effectiveness of internal control over financial reporting. In addition
to its independent audit of the Company's financial statements, PricewaterhouseCoopers has the responsibility for auditing management's assessment of, and the effectiveness of, internal control over
financial reporting and expressing an opinion thereon based on its audit. The Audit Committee was kept apprised of the progress of management's assessment of the Company's internal control over
financial reporting and </FONT></P>

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<P><FONT SIZE=2>provided
oversight to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by management and PricewaterhouseCoopers at meetings
throughout the year. At the conclusion of the process, management provided the Audit Committee with a report on the effectiveness of the Company's internal control over financial reporting. The Audit
Committee reviewed this report of management and Item 9A, "Control and Procedures," contained in the Company's Annual Report on Form&nbsp;10-K for the fiscal year ended
December&nbsp;31, 2005 filed with the SEC, as well as PricewaterhouseCoopers' report of independent registered public accounting firm (included in the Company's Annual Report on
Form&nbsp;10-K) relating to its audit of (i)&nbsp;the consolidated financial statements, (ii)&nbsp;management's and the independent auditors' assessment of the effectiveness of
internal control over financial reporting and (iii)&nbsp;the effectiveness of internal control over financial reporting. The Audit Committee also reviewed with management and PricewaterhouseCoopers
(a)&nbsp;the Company's completed, current and planned initiatives to remediate material weaknesses in the Company's internal control over financial reporting as required by Section&nbsp;404 of the
Sarbanes-Oxley Act of 2002 and (b)&nbsp;the additional analyses undertaken and procedures performed by the Company to support certifications by the Company's Chief Executive Officer and Chief
Financial Officer that are required by the SEC and the Sarbanes-Oxley Act to accompany the Company's periodic filings with the SEC. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, the Audit Committee has discussed the audited financials with PricewaterhouseCoopers, including such items as Statement on Auditing Standards No.&nbsp;61 and PCAOB
Auditing Standard No.&nbsp;2,
"An Audit of Internal Control Over Financial Reporting Conducted in Conjunction with an Audit of Financial Statements." The Audit Committee has also received from PricewaterhouseCoopers a letter and
other written disclosures required under Independence Standards Board Standard No.&nbsp;1, and has had discussions with PricewaterhouseCoopers regarding the independence of PricewaterhouseCoopers as
the Company's independent registered public accounting firm. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
review of all discussions and all written correspondence described above, as well as such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee
recommended to the Board of Directors that the audited financial statements for the last fiscal year be included in the Company's Annual Report on Form&nbsp;10-K. </FONT></P>

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&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
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Larry Horner, Chairman<BR>
Jeff Clarke<BR>
Allen Lenzmeier<BR>
Thomas Toy</FONT></TD>
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<BR></FONT><FONT SIZE=2><B>PROPOSAL NO. 2<BR>  APPROVAL OF THE 2006 EQUITY INCENTIVE PLAN    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The stockholders are being asked to approve a new employee equity incentive plan, the 2006 Equity Incentive Plan (the "</FONT><FONT SIZE=2><B>Incentive
Plan</B></FONT><FONT SIZE=2>"). The Company's 1997 Plan is set to expire in January&nbsp;2007. The Company also maintains the Director Plan and the 2003 Nonstatutory Stock Option Plan (the
"</FONT><FONT SIZE=2><B>2003 Plan</B></FONT><FONT SIZE=2>"). The Board has approved the Incentive Plan, subject to approval from the stockholders at the Annual Meeting. If the stockholders approve
the Incentive Plan, it will replace the Company's 1997 Plan, Director Plan and 2003 Plan and no further awards will be made under such plans, but they will continue to govern awards previously granted
thereunder. If the stockholders do not approve the Incentive Plan, the 1997 Plan, Director Plan and 2003 Plan will remain in effect through the remainder of their respective terms. Approval of the
Incentive Plan requires the affirmative vote of the holders of a majority of the shares of the Common Stock that are present in person or by proxy and entitled to vote on the proposal at the Annual
Meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board believes that long-term incentive compensation programs align the interests of management, employees and the stockholders to create long-term
stockholder value. The Board believes that plans such as the Incentive Plan increase the Company's ability to achieve this objective, especially, in the case of the Incentive Plan, by allowing for
several different forms of long-term incentive awards, which the Board believes will help the Company to recruit, reward, motivate and retain talented personnel. The recent changes in the
equity compensation accounting rules, which became effective for the Company on January&nbsp;1, 2006, also make it important for the Company to have greater flexibility under its employee equity
incentive plan. As the new equity compensation accounting rules come into effect for all companies, competitive equity compensation practices may change materially, especially as they pertain to the
use of equity compensation vehicles other than stock options. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board believes strongly that the approval of the Incentive Plan is essential to the Company's continued success. In particular, the Company believes that its employees are its most
valuable assets and that the awards permitted under the Incentive Plan are vital to the Company's ability to attract and retain outstanding and highly skilled individuals in the extremely competitive
labor markets in which it competes. Such awards also are crucial to the Company's ability to motivate employees to achieve the Company's goals. </FONT></P>

<P><FONT SIZE=2><B>Vote Required; Recommendation of the Board of Directors  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Approval of the Incentive Plan requires the affirmative vote of the holders of a majority of the shares of the Common Stock that are present in person or by proxy
and entitled to vote on the proposal at the Annual Meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE ADOPTION OF THE 2006 EQUITY INCENTIVE PLAN AND THE NUMBER OF SHARES RESERVED FOR ISSUANCE
THEREUNDER.</B></FONT></P>

<P><FONT SIZE=2><B>Summary of the 2006 Equity Incentive Plan  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the principal features of the Incentive Plan and its operation. The summary is qualified in its entirety by reference to Incentive
Plan itself set forth in Annex&nbsp;A. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Incentive Plan provides for the grant of the following types of incentive awards: (i)&nbsp;stock options, (ii)&nbsp;stock appreciation rights, (iii)&nbsp;restricted stock,
(iv)&nbsp;restricted stock units, (v)&nbsp;performance shares and performance units, and (vi)&nbsp;and other stock or cash awards. (each, an
"</FONT><FONT SIZE=2><B>Award</B></FONT><FONT SIZE=2>," collectively, "</FONT><FONT SIZE=2><B>Awards</B></FONT><FONT SIZE=2>"). Those who will be eligible for Awards under the Incentive Plan include
employees, directors and consultants who provide services to the Company and its affiliates. As of June&nbsp;1, 2006, </FONT></P>

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

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<P><FONT SIZE=2>the
Company had approximately 6540 employees, directors and consultants, all of whom would be eligible to participate in the Incentive Plan</FONT><FONT SIZE=2><B>.</B></FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of Shares of Common Stock Available Under the Incentive Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The maximum aggregate number of shares that may be
awarded and sold under the Incentive Plan is 4,500,000 shares plus (i)&nbsp;any shares that have been reserved but remain unissued under the 1997 Plan, Director Plan, and 2003 Plan as of the date of
stockholder approval of the Incentive Plan, and (ii)&nbsp;any shares subject to stock options or similar awards granted under the 1997 Plan, Director Plan, and 2003 Plan that expire or become
exercisable without having been exercised in full and shares issued pursuant to awards granted under the 1997 Plan, Director Plan, and 2003 Plan that are forfeited to or repurchased by the Company.
The shares may be authorized, but unissued, or reacquired Common Stock. As of March&nbsp;31, 2006, the number of shares that were reserved and available for issuance but remained unissued under the
1997 Plan, Director Plan and 2003 Plan was 3,933,333. As of March&nbsp;31, 2006, options to purchase 22,848,484 shares of the Common Stock were outstanding under the 1997 Plan, Director Plan and
2003 Plan. Also
as of March&nbsp;31, 2006, there were 200,000 shares of restricted stock awards outstanding under these plans. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Company declares a stock dividend or engages in a reorganization or other change in its capital structure, including a merger, the Board will have the discretion to adjust
(i)&nbsp;the number of shares available for issuance under the Incentive Plan, (ii)&nbsp;the number of shares subject to outstanding Awards, and (iii)&nbsp;the number of shares specified as
per-person limits on Awards, as appropriate, to reflect the change. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration of the Incentive Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Board, or a committee of directors or of other individuals satisfying applicable
laws and appointed by the Board, will administer the Incentive Plan. To make grants to certain of the Company's officers and key employees, the members of the committee must qualify as
"Non-Employee Directors" under Rule&nbsp;16b-3 of the Securities Exchange Act of 1934, and as "outside directors" under Section&nbsp;162(m) of the Internal Revenue Code (so
that the Company can receive a federal tax deduction for certain compensation paid under the Incentive Plan). Subject to the terms of the Incentive Plan, the Board or its committee has the sole
discretion to select the employees, consultants, and directors who will receive Awards, determine the terms and conditions of Awards, and to interpret the provisions of the Incentive Plan and
outstanding Awards. Notwithstanding the foregoing, the Board or committee may not modify or amend an option or stock appreciation right to reduce the exercise price of that Award after it has been
granted or to cancel any outstanding option or stock appreciation right and replace it with a new option or stock appreciation right with a lower exercise price. The Board or other committee
administering the Incentive Plan is referred to below as the "</FONT><FONT SIZE=2><B>Administrator</B></FONT><FONT SIZE=2>." </FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator is able to grant nonstatutory stock options and incentive stock options under the Incentive Plan.
The Administrator determines the number of shares subject to each option, although the Incentive Plan provides that a participant may not receive options for more than 1,000,000 shares in any fiscal
year, except in connection with his or her initial service with the Company, in which case he or she may be granted an option to purchase up to an additional 2,000,000 shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Administrator determines the exercise price of options granted under the Incentive Plan, provided the exercise price must be at least equal to the fair market value of the Common
Stock on the date of grant. In addition, the exercise price of an incentive stock option granted to any participant who owns more than 10% of the total voting power of all classes of the Company's
outstanding stock must be at least 110% of the fair market value of the Common Stock on the grant date. </FONT></P>

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

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
term of an option may not exceed seven years, except that, with respect to any participant who owns 10% of the voting power of all classes of the Company's outstanding capital stock,
the term of an incentive stock option may not exceed five years. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
a termination of service with the Company, a participant will be able to exercise the vested portion of his or her option for the period of time stated in the Award agreement. If
no such period of time is stated in the participant's Award agreement, the participant will generally be able to exercise his or her option for (i)&nbsp;three months following his or her termination
for reasons other than death or disability, and (ii)&nbsp;twelve months following his or her termination due to death or disability. In no event may an option be exercised later than the expiration
of its term. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will be able to grant stock appreciation rights, which are the rights to receive
the appreciation in fair market value of Common Stock between the exercise date and the date of grant. The Company can pay the appreciation in either cash or shares of Common Stock. Stock appreciation
rights will become exercisable at the times and on the terms established by the Administrator, subject to the terms of the Incentive Plan. The Administrator, subject to the terms of the Incentive
Plan, will have complete discretion to determine the terms and conditions of stock appreciation rights granted under the Incentive Plan, provided, however, that the exercise price may not be less than
100% of the fair market value of a share on the date of grant and the term of a stock appreciation right may not exceed seven years. No participant will be granted stock appreciation rights covering
more than 1,000,000 shares during any fiscal year, except that a participant may be granted stock appreciation rights covering up to an additional 2,000,000 shares in connection with his or her
initial service as an employee with the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After
termination of service with the Company, a participant will be able to exercise the vested portion of his or her stock appreciation right for the period of time stated in the Award
agreement. If no such period of time is stated in a participant's Award agreement, a participant will generally be able to exercise his or her stock appreciation right for (i)&nbsp;three months
following his or her termination for reasons other than death or disability, and (ii)&nbsp;twelve months following his or her termination due to death or disability. In no event will a stock
appreciation right be exercised later than the expiration of its term. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Awards of restricted stock are rights to acquire or purchase shares of the Common Stock, which vest in
accordance with the terms and conditions established by the Administrator in its sole discretion. For example, the Administrator may set restrictions based on the achievement of specific performance
goals. The Award agreement will generally grant the Company a right to repurchase or reacquire the shares upon the termination of the participant's service with the Company for any reason (including
death or disability). The Administrator will determine the number of shares granted pursuant to an Award of restricted stock, but no participant will be granted a right to purchase or acquire more
than 300,000 shares of restricted stock during any fiscal year, except that a participant may be granted up to an additional 600,000 shares of restricted stock in connection with his or her initial
employment with the Company. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock Units.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Awards of restricted stock units result in a payment to a participant only if the vesting criteria
the Administrator establishes is satisfied. For example, the Administrator may set restrictions based on the achievement of specific performance goals. Upon satisfying the applicable vesting criteria,
the participant will be entitled to the payout specified in the Award agreement. Notwithstanding the foregoing, at any time after the grant of restricted stock units, the Administrator may reduce or
waive any vesting criteria that must be met to receive a payout. The Administrator, in its sole discretion, may pay earned restricted stock units in cash, shares, or a combination thereof. Restricted
stock units that are fully paid in cash will not reduce the number of shares available for grant under the Incentive Plan. On the date set forth in the Award agreement, all unearned restricted stock
units will be forfeited to the Company. The Administrator determines the number of restricted </FONT></P>

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

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<P><FONT SIZE=2>stock
units granted to any participant, but during any fiscal year of the Company, no participant may be granted more than 300,000 restricted stock units during any fiscal year, except that the
participant may be granted up to an additional 600,000 restricted stock units in connection with his or her initial employment to the Company. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Units and Performance Shares.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will be able to grant performance units and performance shares,
which are Awards that will result in a payment to a participant only if the performance goals or other vesting criteria the Administrator may establish are achieved or the Awards otherwise vest. The
Administrator will establish performance or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance
units and performance shares to be paid out to participants. Notwithstanding the foregoing, after the grant of performance units or shares, the Administrator, in its sole discretion, may reduce or
waive any performance objectives or other vesting provisions for such performance units or shares. During any fiscal year, no participant will receive more than 300,000 performance shares and no
participant will receive performance units having an initial value greater than $2,000,000, except that a participant may be granted performance shares covering up to an additional 600,000 shares in
connection with his or her initial employment with the Company. Performance units will have an initial dollar value established by the Administrator on or before the date of grant. Performance shares
will have an initial value equal to the fair market value of a share of the Common Stock on the grant date. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Performance Goals.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Awards of restricted stock, restricted stock units, performance shares, performance units and other
incentives under the Incentive Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of Section&nbsp;162(m) of the Internal
Revenue Code and may provide for a targeted level or levels of achievement including: annual revenue; cash collections; customer satisfaction MBOs; earnings per share; net income; new orders;
operating profit; pro forma net income; return on designated assets; return on equity; return on sales; and product shipments. The performance goals may differ from participant to participant and from
Award to Award and may be used to measure the performance of the Company as a whole or a business unit of the Company and may be measured relative to a peer group or index. Any criteria used may be
measured in absolute terms, compared to another company or companies, measured against the performance of the Company as a whole or a segment of the Company, and/or measured on a pre-tax
or post-tax basis. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grants to Non-Employee Directors.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Incentive Plan gives the Administrator authority to grant discretionary
awards to Non-Employee Directors, but it does not provide for automatic or nondiscretionary awards to Non-Employee Directors. Prior to April&nbsp;27, 2006, it was the
Company's policy to provide each Non-Employee Director an annual grant of an option to purchase 25,000 shares under the 1997 Plan. Non-Employee Directors were also eligible to
receive non-discretionary stock option grants under the Director Plan, as described in the section entitled "Director Compensation" in this Proxy Statement. On April&nbsp;27, 2006,
concurrently with the effectiveness of the Company's compensation plan for the Non-Employee Directors in the year 2006, the Board suspended until further action all future grants of stock
options under the Director Plan. On April, the Board also suspended the policy of granting annual option grants to the Non-Employee Directors under the 1997 Plan, choosing instead to issue
a specific number of options as part of each Non-Employee Director's annual compensation package. The absence of provisions in the Incentive Plan allowing automatic or nondiscretionary
awards reflects the Board's current policy of favoring discretionary awards. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transferability of Awards.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Awards granted under the Incentive Plan are generally not transferable, and all rights with
respect to an Award granted to a participant generally may be exercised during a participant's lifetime only by the participant; provided, however, that with the Administrator's approval, a
participant may (i)&nbsp;transfer an Award to a participant's spouse or former spouse pursuant to a court-approved domestic relations order which relates to the provision of child support, alimony
payments or </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<BR>

<P><FONT SIZE=2>marital
property rights, or (ii)&nbsp;transfer an Award by gift to or for the benefit of the participant's immediate family. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change of Control.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a change of control of the Company, each outstanding Award will be assumed or an
equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation, or the parent or subsidiary of
the successor corporation, refuses to assume or substitute for the Award, the participant will fully vest in and have the right to exercise all of his or her outstanding options or stock appreciation
rights, including shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on restricted stock will lapse, and, with respect to restricted stock units, performance
shares and performance units, all performance goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an option or stock
appreciation right is not assumed or substituted for in the event of a change of control, the Administrator will notify the participant in writing or electronically that the option or stock
appreciation right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion, and the option or stock appreciation right will terminate upon the
expiration of such period. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination of the Incentive Plan.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will have the authority to amend, alter, suspend or
terminate the Incentive Plan, except that stockholder approval will be required for any amendment to the Incentive Plan to the extent required by any applicable laws. No amendment,
alteration, suspension or termination of the Incentive Plan will impair the rights of any participant, unless mutually agreed otherwise between the participant and the Administrator and which
agreement must be in writing and signed by the participant and the Company. The Incentive Plan will terminate in June&nbsp;2016, unless the Board terminates it earlier. </FONT></P>

<P><FONT SIZE=2><B>Number of Awards Granted to Employees, Consultants, and Directors  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>Number of Awards Employees, Directors or Consultants Would Have Received since January&nbsp;2005 to March&nbsp;2006 under the
Incentive Plan</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the Incentive Plan were in place last year, its terms would not have resulted in a different number of Awards being granted between the beginning of 2005 to March&nbsp;31, 2006. The
following table sets forth (i)&nbsp;the aggregate number of shares of Common Stock subject to options granted under the 1997 Plan, Director Plan, and 2003 Plan during this period, (ii)&nbsp;the
average per share exercise price of such options, (iii)&nbsp;the aggregate number of shares issued pursuant to awards of restricted stock granted </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<BR>

<P><FONT SIZE=2>under
the 1997 Plan during this period, and (iv)&nbsp;the dollar value of such shares based on $7.64 per share. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>New Plan Benefits Table  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=1><B>Name of Individual or Group<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Options&nbsp;Granted</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>(Weighted)<BR>
Average&nbsp;Per&nbsp;Share<BR>
Exercise Price</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Shares<BR>
of&nbsp;Restricted&nbsp;Stock(1)</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Dollar&nbsp;Value&nbsp;of&nbsp;Shares<BR>
of Restricted Stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2>Hong Liang Lu(2)<BR>
President, Chief Executive Officer and Chairman of the Board</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>260,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>6.25</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>130,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>812,500</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
Ying Wu(3)<BR>
Executive Vice President and Vice Chairman</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
100,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
6.25</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
50,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
312,500</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
Francis Barton<BR>
Executive Vice President and Chief Financial Officer</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
492,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(4)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
8.34</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
146,000</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(8)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1,169,500</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>(12)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
William Huang<BR>
Senior Vice President and Chief Technology Officer</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
141,667</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(5)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7.33</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
33,333</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(9)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
208,331</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
Michael Sophie<BR>
Executive Vice President and Chief Operating Officer</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
183,600</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(6)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
7.36</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
41,800</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>(10)</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
261,250</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
Shao-Ning Chou<BR>
Former Senior Vice President</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
All executive officers, as a group</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1,177,267</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(7)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
7.43</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2><BR>
401,133</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>(11)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2><BR>
2,764,081</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>(13)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
All directors who are not executive officers, as a group</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
300,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
11.60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="20%" VALIGN="TOP"><FONT SIZE=2><BR>
All employees who are not executive officers, as a group</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2><BR>
8,657,879</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>$</FONT></TD>
<TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE=2><BR>
7.83</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="19%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></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>Represents
stock purchase rights that were originally granted on February&nbsp;28, 2006 as restricted stock purchase rights. Except for the award of 100,000 shares of
the restricted stock granted on August&nbsp;1, 2005 to Mr.&nbsp;Barton, the restricted stock purchase rights were allowed to lapse unexercised, and in their place the stock purchase rights may be
granted following the 2006 fiscal year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Lu
did not receive any Award during the fiscal year 2005. The figures reflect the options to purchase 260,000 shares of the Common Stock granted on
February&nbsp;28, 2006 and the right to purchase 130,000 shares of the restricted stock granted on February&nbsp;28, 2006, which expired </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_ds1164_1_39"> </A>
<UL>

<P><FONT SIZE=2>unexercised
on March&nbsp;31, 2006, and the stock purchase rights may be granted in their place following the 2006 fiscal year-end, based upon management performance objectives. </FONT></P>

</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Wu
did not receive any Award during the fiscal year 2005. The figures reflect the options to purchase 100,000 shares of the Common Stock granted on
February&nbsp;28, 2006 and the right to purchase 50,000 shares of the restricted stock granted on February&nbsp;28, 2006, which expired unexercised on March&nbsp;31, 2006, and the stock purchase
rights may be granted in their place following the 2006 fiscal year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Reflects
options to purchase (i)&nbsp;400,000 shares of the Common Stock granted on August&nbsp;1, 2005 and (ii)&nbsp;92,000 shares of the Common Stock granted on
February&nbsp;28, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Reflects
options to purchase (i)&nbsp;75,000 shares of the Common Stock granted on November&nbsp;15, 2005 and (ii)&nbsp;66,667 shares of the Common Stock granted
on February&nbsp;28, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Reflects
options to purchase (i)&nbsp;100,000 shares of the Common Stock granted on November&nbsp;15, 2005 and (ii)&nbsp;83,600 shares of the Common Stock granted
on February&nbsp;28, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Reflects
options to purchase (i)&nbsp;575,000 shares of the Common Stock granted during the fiscal year 2005 and (ii)&nbsp;602,267 shares of the Common Stock granted
on February&nbsp;28, 2006.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Reflects
awards of (i)&nbsp;100,000 shares of the restricted stock granted on August&nbsp;1, 2005 and (ii)&nbsp;the right to purchase 46,000 shares of the
restricted stock granted on February&nbsp;28, 2006, which expired unexercised on March&nbsp;31, 2006, and the stock purchase rights may be granted in their place following the 2006 fiscal
year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>Reflects
the restricted stock purchase right granted on February&nbsp;28, 2006, which expired unexercised on March&nbsp;31, 2006, and the stock purchase rights may
be granted in their place following the 2006 fiscal year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD><FONT SIZE=2>Reflects
the restricted stock purchase right granted on February&nbsp;28, 2006, which expired unexercised on March&nbsp;31, 2006, and the stock purchase rights may
be granted in their place following the 2006 fiscal year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(11)</FONT></DT><DD><FONT SIZE=2>Reflects
awards of (i)&nbsp;100,000 shares of restricted stock granted on August&nbsp;1, 2005 and (ii)&nbsp;the right to purchase 301,133 shares of restricted
stock granted on February&nbsp;28, 2006, which expired unexercised on March&nbsp;31, 2006, and the stock purchase rights may be granted in their place following the 2006 fiscal
year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(12)</FONT></DT><DD><FONT SIZE=2>The
closing sales prices of (i)&nbsp;$8.82 per share of the Common Stock as listed on the Nasdaq National Market on the grant date of 100,000 shares of the restricted
stock to Mr.&nbsp;Barton, August&nbsp;1, 2005, and (ii)&nbsp;$6.25 per share as listed on the Nasdaq National Market on the grant date of the right to purchase 46,000 shares of the restricted
stock, February&nbsp;28, 2006, have been used to determine the total dollar value of the restricted stock award granted Francis Barton from the beginning of 2005 to present.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(13)</FONT></DT><DD><FONT SIZE=2>The
closing sales prices of (i)&nbsp;$8.82 per share of the Common Stock as listed on the Nasdaq National Market on the grant date of 100,000 shares of the restricted
stock to Mr.&nbsp;Barton, August&nbsp;1, 2005, and (ii)&nbsp;$6.25 per share as listed on the Nasdaq National Market on the grant date of the right to purchase 301,133 shares of the restricted
stock to the named officers, February&nbsp;28, 2006, have been used to determine the total dollar value of the restricted stock award granted to the named officers from the beginning of 2005 to
present. </FONT></DD></DL>
<BR>
<UL>

<P><FONT SIZE=2><I> Number of Awards Non-Employee Directors May Receive in 2006 under the Incentive Plan  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The number of Awards that an employee or consultant may receive under the Incentive Plan in 2006 is in the discretion of the Administrator and therefore cannot be
determined in advance. </FONT></P>

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

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<P style='page-break-before:always'></p>
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<A NAME="page_ds1164_1_40"> </A>

<P><FONT SIZE=2><B>Federal Tax Aspects  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and the Company of Awards granted under the Incentive
Plan. Tax consequences for any particular individual may be different. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nonstatutory Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No taxable income is reportable when a nonstatutory stock option with an exercise price equal to
the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the
fair market value (on the exercise date) of the shares purchased over the exercise price of the option. Any taxable income recognized in connection with an option exercise by an employee of the
Company is subject to tax withholding by the Company. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. </FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incentive Stock Options.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No taxable income is reportable when an incentive stock option is granted or exercised (except for
purposes of the alternative minimum tax, in which case taxation is the same as for nonstatutory stock options). If the participant exercises the option and then later sells or otherwise disposes of
the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss.
If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or
she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;No taxable income is reportable when a stock appreciation right with an exercise price equal to
the fair market value of the underlying stock on the date of grant is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the
amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Restricted Stock, Restricted Stock Units, Performance Units and Performance Shares</I></FONT><FONT SIZE=2>. A participant generally will not have taxable income
at the time an Award of restricted stock, restricted stock units, performance shares or performance units are granted. Instead, he or she will recognize ordinary income in the first taxable year in
which his or her interest in the shares underlying the Award becomes either (i)&nbsp;freely transferable, or (ii)&nbsp;no longer subject to substantial risk of forfeiture. However, the recipient
of a restricted stock Award may elect to recognize income at the time he or she receives the Award in an amount equal to the fair market value of the shares underlying the Award (less any cash paid
for the shares) on the date the Award is granted. </FONT></P>

<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax Effect for the Company.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company generally will be entitled to a tax deduction in connection with an Award under the
Incentive Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option).
Special rules limit the deductibility of compensation paid to the Company's Chief Executive Officer and to each of its four most highly compensated executive officers. Under Section&nbsp;162(m) of
the Internal Revenue Code, the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, the Company can preserve
the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section&nbsp;162(m) are met. These conditions include stockholder approval of the Incentive Plan, setting
limits on the number of Awards that any individual may receive and for Awards other than certain stock options, establishing performance criteria that must be met before the Award actually will vest
or be paid. The Incentive Plan has been designed to permit the Administrator to grant Awards that qualify as performance-based for purposes of satisfying the conditions of Section&nbsp;162(m), </FONT></P>

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

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<A NAME="page_ds1164_1_41"> </A>
<BR>

<P><FONT SIZE=2>thereby
permitting the Company to continue to receive a federal income tax deduction in connection with such Awards. </FONT></P>


<P><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;409A.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;409A of the Internal Revenue Code, which was added by the American Jobs Creation Act of
2004, provides certain new requirements on non-qualified deferred compensation arrangements. These include new requirements with respect to an individual's election to defer compensation
and the individual's selection of the timing and form of distribution of the deferred compensation. Section&nbsp;409A also generally provides that distributions must be made on or following the
occurrence of certain events (e.g., the individual's separation from service, a predetermined date, or the individual's death). Section&nbsp;409A imposes restrictions on an individual's ability to
change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are officers, Section&nbsp;409A requires that such individual's distribution
commence no earlier than six months after such officer's separation from service. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Awards
granted under the Plan with a deferral feature will be subject to the requirements of Section&nbsp;409A. If an Award is subject to and fails to satisfy the requirements of
Section&nbsp;409A, the
recipient of that award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when the compensation is actually or constructively received.
Also, if an Award that is subject to Section&nbsp;409A fails to comply with Section&nbsp;409A's provisions, Section&nbsp;409A imposes an additional 20% federal income tax on compensation
recognized as ordinary income, as well as interest on such deferred compensation. The Internal Revenue Service has not issued final regulations under Section&nbsp;409A and, accordingly, the
requirements of Section&nbsp;409A (and the application of those requirements to Awards issued under the Plan) are not entirely clear. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THE
FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE INCENTIVE PLAN. IT
DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P>

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<P style='page-break-before:always'></p>
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NAME="page_du1164_1_42"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="du1164_proposal_no._3_ratification_of__pro03602"> </A>
<A NAME="toc_du1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROPOSAL NO. 3<BR>  RATIFICATION OF APPOINTMENT OF INDEPENDENT<BR>  REGISTERED PUBLIC ACCOUNTING FIRM    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee of the Board has selected PricewaterhouseCoopers LLP, independent registered public accounting firm, to audit the financial statements of the
Company for the fiscal year ending December&nbsp;31, 2006 and recommends that the stockholders ratify this selection. PricewaterhouseCoopers LLP also audited the Company's financial statements for
its fiscal year ended December&nbsp;31, 2005. The Board expects that representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting, will be given an opportunity to make a
statement at the meeting and will be available to respond to appropriate questions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholder
ratification of this selection of PricewaterhouseCoopers LLP as the Company's Independent Public Accounting Firm is not required by the Bylaws or otherwise. However, the
Board has elected to seek such ratification as a matter of good corporate practice. Should the stockholders fail to ratify the selection of PricewaterhouseCoopers LLP as independent registered public
firm, the Audit Committee and the Board will consider whether to retain that firm for the year ended December&nbsp;31, 2006. Even if the selection is ratified, the Audit Committee, at its
discretion, may direct the appointment of a different independent registered public accounting firm at anytime during the year if it determines that such a change would be in the best interests of the
Company and its stockholders. </FONT></P>

<P><FONT SIZE=2><B>PricewaterhouseCoopers LLP Fees for the Fiscal Year Ended December&nbsp;31, 2005  </B></FONT></P>

<UL>

<P><FONT SIZE=2><I> Audit Fees  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fees for the fiscal year ended December&nbsp;31, 2005 audit and interim reviews were $11,900,000. Fees for the fiscal year ended December&nbsp;31, 2004 audit
and interim reviews were $8,424,000. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Audit-Related Fees  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit-related fees were $1,000,000 and $773,000 for fiscal years ended December&nbsp;31, 2005 and December&nbsp;31, 2004, respectively. Such services included
due diligence and other procedures performed surrounding certain of the Company's acquisitions and accounting consultation. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Tax Fees  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the fiscal year ended December&nbsp;31, 2005, fees related to tax advice, compliance and planning were $275,000. For the fiscal year ended
December&nbsp;31, 2004 fees for tax advice, compliance and planning totaled $3,135,000. </FONT></P>

<UL>

<P><FONT SIZE=2><I> All Other Fees  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other fees during the year ended December&nbsp;31, 2005 totaled $7,000 and consisted entirely of fees related to research tools. For the fiscal year ended
December&nbsp;31, 2004 other fees totaled $5,000 and consisted entirely of fees related to training. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee has determined that the provision by PricewaterhouseCoopers LLP of non-audit services to us in 2005 is compatible with PricewaterhouseCoopers LLP
maintaining its independence. </FONT></P>

<UL>


<P><FONT SIZE=2><I> Audit Committee Pre-Approval Policies and Procedures  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Audit Committee has direct responsibility for the appointment, retention, evaluation, compensation, oversight and termination of the independent registered
public accounting firm </FONT></P>

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

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<P style='page-break-before:always'></p>
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<A NAME="page_du1164_1_43"> </A>

<P><FONT SIZE=2>employed
by the Company. In October&nbsp;2003, the Audit Committee of the Board established a Non-Audit Services Subcommittee. The Non-Audit Services Subcommittee, consisting
of Mr.&nbsp;Horner, is authorized to preapprove non-audit services to be performed by the Company's independent public accountants in amounts not to exceed $50,000 per engagement.
Non-audit services to be performed by the Company's independent registered public accounting firm in amounts to exceed $50,000 per engagement will be approved by the Audit Committee. For
the fiscal year 2005, there were no audit-related fees, tax fees, or any other non-audit fees that were approved by the Audit Committee pursuant to the "de minimis" exception under
Regulation&nbsp;S-X Rule&nbsp;2-01(c)(7)(i)(C). </FONT></P>

<P><FONT SIZE=2><B>Required Vote  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending
December&nbsp;31, 2006 requires the affirmative vote of the holders of a majority of the shares of the Common Stock that are present in person or by proxy and entitled to vote on the proposal at the
Annual Meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></FONT><FONT SIZE=2>. </FONT></P>

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

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dw1164_company_s_stock_performance"> </A>
<A NAME="toc_dw1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>COMPANY'S STOCK PERFORMANCE    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Set forth below is a line graph comparing the annual percentage change in the cumulative return to the stockholders of the Company's Common Stock with the
cumulative return of the Nasdaq composite (U.S. and foreign) index and the S&amp;P Wireless Telecommunication Services index for the period commencing on December&nbsp;29, 2000 and ending on
December&nbsp;31, 2005. The information contained in the performance graph shall not be deemed to be "soliciting material" or to be "filed" with the SEC, nor shall such information be incorporated
by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
graph assumes that $100 was invested on December&nbsp;29, 2000 in the Company's Common Stock and in each index (based on the sales closing price of $15.50 per share on
December&nbsp;29, 2000), and that all dividends were reinvested. No cash dividends have been declared or paid on the Company's Common Stock. Stockholder returns over the indicated period should not
be considered indicative of future stockholder returns. The Company operates on a 52-week fiscal year that ended on Friday, December&nbsp;31, 2005. Under the assumptions stated above,
over the period from December&nbsp;29, 2000 to December&nbsp;31, 2005 the total return on an investment in the Company would have been -48.00% as compared to 4.53% for the Nasdaq
composite (U.S. and foreign) index and -10.05% for the S&amp;P Wireless Telecommunication Services index shown below. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dw1164_stock_price_performance_graph___sto08363"> </A>
<A NAME="toc_dw1164_2"> </A>
<BR></FONT><FONT SIZE=2><B>STOCK PRICE PERFORMANCE GRAPH FOR<BR>  UTSTARCOM,&nbsp;INC.    <BR>    <BR>    COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*<BR>  AMONG UTSTARCOM,&nbsp;INC., THE NASDAQ STOCK MARKET (U.S.&nbsp;&amp; FOREIGN) INDEX<BR>  AND
THE S&nbsp;&amp; P WIRELESS TELECOMMUNICATION SERVICES INDEX    <BR>    </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>
<IMG SRC="g409655.jpg" ALT="CHART" WIDTH="547" HEIGHT="316">
  </B></FONT></P>

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>$100
invested in stock or in index on December&nbsp;29, 2000&#151;including reinvestment of dividends. Fiscal year ending December&nbsp;31, 2005. </FONT></DD></DL>
<BR>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="99%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="40%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=17 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Period Ending</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="40%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Index<BR> </B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/00</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/01</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/02</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/03</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/04</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>12/05</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="40%"><FONT SIZE=2>UTSTARCOM, INC.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>183.87</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>127.94</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>239.16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>142.90</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>52.00</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="40%"><FONT SIZE=2>NASDAQ STOCK MARKET (U.S. &amp; FOREIGN)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>83.93</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>63.03</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>84.88</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>87.28</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>104.53</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="40%"><FONT SIZE=2>S &amp; P WIRELESS TELECOMMUNICATION SERVICES</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.00</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>78.35</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>31.57</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>56.11</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>88.28</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>89.95</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>44</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dy1164_certain_relationships_and_related_transactions"> </A>
<A NAME="toc_dy1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS    <BR>    </B></FONT></P>

<UL>

<P><FONT SIZE=2><I> Indemnification Agreements  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During 2005, the Company was party to indemnification agreements with certain of its directors and executive officers. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SOFTBANK
CORP. is an affiliate of SOFTBANK America,&nbsp;Inc., one of the Company's significant stockholders. Since the beginning of the 2005 financial year, the Company has engaged,
continues to engage or proposes to engage in the following transactions with entities affiliated with SOFTBANK CORP.: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>On
December&nbsp;26, 2005, the Company and SOFTBANK CORP. entered into a Stock Purchase Agreement, pursuant to which the Company agreed to sell, and SOFTBANK CORP. agreed
to purchase, the Company's 10% ownership interest in SB CHINA HOLDINGS PTE&nbsp;LTD ("</FONT><FONT SIZE=2><B>SBCH</B></FONT><FONT SIZE=2>"), an investment fund established by SOFTBANK CORP.,
represented by 8,022 ordinary shares of SBCH (the "</FONT><FONT SIZE=2><B>Shares</B></FONT><FONT SIZE=2>"), for a purchase price of $56.9&nbsp;million. The closing of the sale and purchase of the
Shares occurred on December&nbsp;28, 2005 (the "</FONT><FONT SIZE=2><B>Closing</B></FONT><FONT SIZE=2>"). Upon the Closing, the Company no longer held an ownership interest in SBCH, which caused
the Joint Venture Agreement between the Company and SOFTBANK CORP., entered into as of May&nbsp;29, 2000 to govern the parties' respective shareholdings in SBCH, to terminate pursuant to its terms
effective as of December&nbsp;28, 2005.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>On
July&nbsp;17, 2003, the Company entered into a Mezzanine Loan Agreement with BB Modem Rental PLC ("</FONT><FONT SIZE=2><B>BB Modem</B></FONT><FONT SIZE=2>"), an
affiliate of SOFTBANK CORP. Under the terms of the agreement, the Company loaned BB Modem $10.1&nbsp;million at an effective interest rate of 12.01% per annum, for the purpose of investing in a
portfolio of ADSL modems and associated modem rental agreements, from Softbank BB Corporation ("</FONT><FONT SIZE=2><B>Softbank BB</B></FONT><FONT SIZE=2>"), formerly BB Technologies, an affiliate of
SOFTBANK America,&nbsp;Inc.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
Company has 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. The investment balance as of December&nbsp;31, 2005 was $2.0&nbsp;million.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>In
December&nbsp;2002, a venture capital fund affiliated with SOFTBANK CORP. made a capital investment in MDC Holding Limited ("</FONT><FONT SIZE=2><B>MDC
Holding</B></FONT><FONT SIZE=2>"). In December&nbsp;2004, the Company exercised a warrant for ordinary shares of MDC Holding for which it paid approximately $0.8&nbsp;million. In 2004, the Company
received payments from Beijing MDC Telecommunications Co.,&nbsp;Ltd. ("</FONT><FONT SIZE=2><B>Beijing MDC</B></FONT><FONT SIZE=2>"), an affiliate of MDC Holding, of approximately
$0.8&nbsp;million for purchases of equipment and the provision of consulting services, and in 2004 the Company paid to Beijing MDC approximately $0.5&nbsp;million for PAS value added services and
as rental payments. During the period from January&nbsp;2005 to March&nbsp;2005, the Company entered into an agreement to sell equipment to Beijing MDC with a value of approximately
$2.3&nbsp;million.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
Company recognized aggregate revenue of $394.1&nbsp;million during 2005 with respect to sales to affiliates of SOFTBANK CORP., including (i)&nbsp;sales of
telecommunications equipment to Softbank BB, (ii)&nbsp;sales of equipment and services to Japan Telecom Co.,&nbsp;Ltd, a wholly owned subsidiary of SOFTBANK CORP., and (iii)&nbsp;sales of
equipment to BB Cable and BB Hikari Dept KK, affiliates of SOFTBANK CORP. </FONT></DD></DL>

<P><FONT SIZE=2><I> Starcom Products,&nbsp;Inc.  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yulan Wu, the spouse of Ying Wu, Executive Vice President and Vice Chairman of the Board, is the beneficial owner of approximately 31% of Starcom
Products,&nbsp;Inc. ("</FONT><FONT SIZE=2><B>Starcom Products</B></FONT><FONT SIZE=2>"). In 2005 </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=49,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=18853,FOLIO='45',FILE='DISK127:[06PAL4.06PAL1164]DY1164A.;10',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_dy1164_1_46"> </A>

<P><FONT SIZE=2>and
during the period from January&nbsp;2006 to March&nbsp;2006, the Company paid Starcom Products approximately $0.7&nbsp;million for engineering consulting and employee placement services. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Acoustek Int'l Corp.  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company obtains consulting services from Acoustek Int'l Corp. ("</FONT><FONT SIZE=2><B>Acoustek</B></FONT><FONT SIZE=2>"), which employs Minnie Huang, spouse
of William Huang, our Senior Vice President and Chief Technology Officer. The Company paid to Acoustek $0.1&nbsp;million in 2005 and $0.1&nbsp;million in 2004 for consulting services provided by
Ms.&nbsp;Huang. </FONT></P>

<UL>

<P><FONT SIZE=2><I> 2006 Executive Officer Equity Grants  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;28, 2006, the Compensation Committee granted stock options and committed to grant rights to purchase stock to the executive officers as
follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="24%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="40%" ALIGN="CENTER"><FONT SIZE=1><B>Title</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Shares<BR>
Underlying<BR>
Option Grants</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Shares<BR>
Underlying Stock<BR>
Purchase Rights<BR>
to Be Granted(1)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2>Hong Lu</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="40%"><FONT SIZE=2>Chief Executive Officer and President</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2>260,000</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2>130,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2><BR>
Ying Wu</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%"><FONT SIZE=2><BR>
Executive Vice President; Chairman and Chief Executive Officer of China Operations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
100,000</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
50,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2><BR>
Francis Barton</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%"><FONT SIZE=2><BR>
Executive Vice President and Chief Financial Officer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
92,000</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
46,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2><BR>
Michael Sophie(2)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%"><FONT SIZE=2><BR>
Former Executive Vice President and Chief Operating Officer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
83,600</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
41,800</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="24%"><FONT SIZE=2><BR>
William Huang</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%"><FONT SIZE=2><BR>
Executive Vice President and Chief Technology Officer</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
66,667</FONT></TD>
<TD WIDTH="2%" VALIGN="BOTTOM"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT" VALIGN="BOTTOM"><FONT SIZE=2><BR>
33,333</FONT></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>Represents
stock purchase rights that were originally granted on February&nbsp;28, 2006 as restricted stock purchase rights. The restricted stock purchase rights were allowed to
lapse unexercised, and in their place the stock purchase rights may be granted following the 2006 fiscal year-end, based upon management performance objectives.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Effective
May&nbsp;5, 2006, the Securities granted to Mr.&nbsp;Sophie have been canceled or terminated pursuant to the Severance Agreement and Release dated April&nbsp;13, 2006.
For more information on the Severance Agreement and Release, see the section entitled "Severance Benefits" under "Certain Relationships and Related Transactions" in this Proxy Statement. </FONT></DD></DL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
options were issued to each executive officer under the 1997 Plan pursuant to the form of Stock Option Agreement approved for use under the 1997 Plan with respect to stock option
grants to the Company's directors and executive officers, as previously filed with the Securities and Exchange Commission. Each option has an exercise price of $6.25 per share, which equals the
closing price of the Common Stock on the Nasdaq Stock Market on the date of grant. The stock purchase rights, if granted, will entitle the executive officers to purchase Common Stock at par value. The
options will vest, and the stock purchase rights will be granted, to each executive officer based upon management performance objectives established and tailored for such executive officer by the
Compensation Committee for the Company's 2006 fiscal year, including (i)&nbsp;achievement of corporate financial measures such as bookings, gross margin, revenue, operating profit, cash flow,
inventory turns, contribution margin and cash collections, (ii)&nbsp;achievement of corporate objectives relating to quality and organization and (iii)&nbsp;achievement by such executive officer
of additional individualized </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=50,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=709339,FOLIO='46',FILE='DISK127:[06PAL4.06PAL1164]DY1164A.;10',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_dy1164_1_47"> </A>

<P><FONT SIZE=2>performance
objectives reviewed and approved by the Compensation Committee. Performance will be measured against the established objectives and the options of each executive officer shall vest, and
the stock purchase rights shall be granted, to the extent the established objectives have been achieved, on the date such a determination is made by the Compensation Committee, in its sole discretion,
provided that such executive officer remains an employee of the Company on the date of determination. The Compensation Committee's determination as to the extent the established objectives have been
achieved shall be made as soon as administratively practicable following the 2006 fiscal year-end. </FONT></P>

<UL>

<P><FONT SIZE=2><I> 2006 Director Compensation  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On April&nbsp;27, 2006, the Nominating and Corporate Governance Committee of the Board recommended to the Board, and the Board approved, the 2006 annual equity
and cash compensation for the Non-Employee Directors, after a review of market trends and the changing level of responsibilities of the Non-Employee Directors. The changes in
cash compensation, effective as of April&nbsp;27, 2006, are as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
and Incidental Compensation by Category: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="63%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="57%" ALIGN="LEFT"><FONT SIZE=1><B>Annual Compensation<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Effective April 27, 2006</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Prior to Change</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Director Retainer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>40,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Lead Director Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>22,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>20,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Audit Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>12,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Compensation Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>7,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Nominating and Governance Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>7,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Audit Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>3,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Compensation Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>4,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>3,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Nominating and Governance Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>3,500</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>2,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="57%"><FONT SIZE=2>Credit towards Company Products</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>1,000</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>None</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=51,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=751629,FOLIO='47',FILE='DISK127:[06PAL4.06PAL1164]DY1164A.;10',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_dy1164_1_48"> </A>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Annual
Cash Compensation by Non-Employee Director: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="63%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Annual Cash Compensation*</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Larry Horner</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Director Retainer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Lead Director Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>&#134;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Audit Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>12,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Compensation Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>4,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Nominating and Corporate Governance Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>3,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>One-time cash award for services in 2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>20,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Thomas Toy</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Director Retainer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Lead Director Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>&#134;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Compensation Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>7,5000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Audit Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Nominating and Corporate Governance Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>3,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>One-time cash award for services in 2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Jeff Clarke</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Director Retainer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Nominating and Corporate Governance Committee Chair Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>7,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Audit Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>One-time cash award for services in 2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>15,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Allen Lenzmeier</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Director Retainer</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>50,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Audit Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>5,000</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Compensation Committee Member Fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>4,500</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>One-time cash award for services in 2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="24%" ALIGN="RIGHT"><FONT SIZE=2>15,000</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>Effective
April&nbsp;27, 2006
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#134;</FONT></DT><DD><FONT SIZE=2>Mr.&nbsp;Horner
will receive a pro-rated portion of the Lead Director Fee for his service as Lead Director prior to June&nbsp;6, 2006. Mr.&nbsp;Toy will
receive a pro-rated portion of the Lead Director Fee for his service as Lead Director from June&nbsp;6, 2006. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to cash compensation, on April&nbsp;27, 2006, the Board granted stock options and preapproved the grant of restricted stock purchase rights (collectively, the
"</FONT><FONT SIZE=2><B>Non-Employee Grants</B></FONT><FONT SIZE=2>") to the Non-Employee Directors as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="67%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="69%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Shares Underlying Option Grants</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="12%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Shares of Restricted Stock*</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Larry Horner</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>20,675</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>11,376</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Thomas Toy</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>19,905</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10,952</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Jeff Clarke</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>20,320</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>11,180</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="69%"><FONT SIZE=2>Allen Lenzmeier</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>20,675</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>11,376</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>The
grant of restricted stock purchase rights was preapproved by the Board to be effective on the second trading day following the date the Company files its Annual Report on
Form&nbsp;10-K for the </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>48</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=52,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=202880,FOLIO='48',FILE='DISK127:[06PAL4.06PAL1164]DY1164A.;10',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_dy1164_1_49"> </A>
<UL>

<P><FONT SIZE=2>year
ended December&nbsp;31, 2005 and any other periodic reports then required to be filed with the SEC, contingent upon each Non-Employee Director's continued service on the Board as of
such date. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Non-Employee Grants were issued to each Non-Employee Director under the Company's 1997 Plan pursuant to the (i)&nbsp;form of Stock Option Agreement approved
for use under the 1997 Plan with respect to stock option grants to the Company's Non-Employee Directors and (ii)&nbsp;form of restricted stock purchase agreement approved for use under
the 1997 Plan, each as previously filed with the SEC. Each option has an exercise price of $7.67 per share, which equals 110% of the closing price of the Company's common stock on the Nasdaq Stock
Market on April&nbsp;27, 2006. The restricted stock purchase rights, as preapproved by the Board, will entitle the Non-Employee Directors to purchase the Company's common stock at par
value. The options vest in equal monthly installments over a 12-month period beginning on April&nbsp;27, 2006. The shares underlying the restricted stock purchase rights, when issued,
will vest in equal quarterly installments over a 12-month period beginning on April&nbsp;27, 2006. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
January&nbsp;1, 2007, Mr.&nbsp;Toy, currently a Non-Employee Director of the Company, will assume the position of Chairman of the Board. To promote and
facilitate a smooth transition of the role of Chairman of the Board, Mr.&nbsp;Toy has assumed greater responsibility on the Board and has been assigned additional duties on the Board during the
transition period. On June&nbsp;20, 2006, the Board approved a cash compensation award of $106,000 to Mr.&nbsp;Toy to compensate Mr.&nbsp;Toy for his additional services on the Board during the
transition period. The compensation award will be payable in three equal payments of approximately $35,434 on each of June&nbsp;30, 2006, September&nbsp;30, 2006 and December&nbsp;31, 2006. The
compensation award is to be paid in addition to the regular annual cash retainer, fees and equity grants previously approved by the Board as compensation for Mr.&nbsp;Toy's services as a member of
the Board and Board committees and as Lead Director of the Board. </FONT></P>

<UL>

<P><FONT SIZE=2><I> Severance Benefits and Change of Control Arrangements  </I></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is a party to certain agreements with each of Messrs. Lu, Wu, Huang and Barton, pursuant to which Messrs. Lu, Wu, Huang and Barton may be entitled to
benefits contemplated by such agreements in case of termination following a change of control of the Company, or, for Messrs. Wu, Huang and Barton, also in case of termination without cause. For
detailed discussion on the benefits contemplated by the agreements with Messrs. Lu, Wu, Huang and Barton, please see the section entitled "Employment Contracts, Termination of Employment and Change of
Control Arrangements" in this Proxy Statement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
April&nbsp;13, 2006, the Company and Mr.&nbsp;Sophie entered into the Severance Agreement in connection with Mr.&nbsp;Sophie's resignation as Executive Vice President and Chief
Operating Officer of the Company effective May&nbsp;5, 2006. The Severance Agreement replaces and supersedes all prior agreements concerning Mr.&nbsp;Sophie's employment relationship with the
Company, with the exception of the confidentiality agreement and any applicable stock option agreement entered into by and between the Company and Mr.&nbsp;Sophie under the Company's existing stock
plans. Under the terms of the Severance Agreement, the Company paid Mr.&nbsp;Sophie the equivalent of six (6)&nbsp;months of regular base salary in a lump sum of $220,000, less applicable
withholdings. Mr.&nbsp;Sophie also received payments for his accrued but unpaid Paid Time Off and Floating Holiday Benefits (as described in the Severance Agreement). In addition, the Company paid
the approximate equivalent of six (6)&nbsp;months of Mr.&nbsp;Sophie's COBRA premiums in a lump sum of $6,000, less applicable withholdings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the terms of the Severance Agreement, Mr.&nbsp;Sophie's stock options that were not vested as of May&nbsp;5, 2006 were canceled or terminated. Mr.&nbsp;Sophie will have
the right to exercise vested options at any time within 120&nbsp;days after May&nbsp;5, 2006, but no later than the option expiration date. The Severance Agreement also provides for a mutual
release of claims by the Company and Mr.&nbsp;Sophie. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>49</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=53,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=992388,FOLIO='49',FILE='DISK127:[06PAL4.06PAL1164]DY1164A.;10',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dz1164_1_50"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dz1164_other_matters"> </A>
<A NAME="toc_dz1164_1"> </A>
<BR></FONT><FONT SIZE=2><B>OTHER MATTERS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company knows of no other matters to be submitted to the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent as the Board may recommend. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><B>BY ORDER OF THE BOARD OF DIRECTORS</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><BR>
/s/ </FONT><FONT SIZE=2>FRANCIS P. BARTON</FONT><HR NOSHADE><FONT SIZE=2> Francis P. Barton<BR></FONT> <FONT SIZE=2><I>Executive Vice President and<BR>
Chief Financial Officer</I></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="49%"><FONT SIZE=2><BR>
Dated: June&nbsp;21, 2006</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="49%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>50</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=54,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=375664,FOLIO='50',FILE='DISK127:[06PAL4.06PAL1164]DZ1164A.;5',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ea1164_1_1"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ea1164_annex_a_utstarcom,_inc._2006_equity_incentive_plan"> </A>
<A NAME="toc_ea1164_1"> </A>
<BR></FONT><FONT SIZE=2><B><I>ANNEX A</I></B></FONT><FONT SIZE=2><B>    <BR>    <BR>    UTSTARCOM,&nbsp;INC.    <BR>    <BR>    2006 EQUITY INCENTIVE PLAN    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Purposes of the Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The purposes of this Plan are: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>to
attract and retain the best available personnel for positions of substantial responsibility,
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>to
provide incentives to individuals who perform services to the Company, and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>to
promote the success of the Company's business. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance
Shares and other stock or cash awards as the Administrator may determine. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Definitions</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;As used herein, the following definitions will apply: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Administrator</I></FONT><FONT SIZE=2>" means the Board or any of its Committees as will be administering the Plan, in accordance with
Section&nbsp;4 of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Affiliate</I></FONT><FONT SIZE=2>" means any corporation or any other entity (including, but not limited to, partnerships and joint ventures)
controlling, controlled by, or under common control with the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Annual Revenue</I></FONT><FONT SIZE=2>" means the Company's or a business unit's net sales for the Performance Period, determined in accordance
with generally accepted accounting principles; provided, however, that prior to the Performance Period, the Administrator shall determine whether any significant item(s) shall be excluded or included
from the calculation of Annual Revenue with respect to one or more Participants. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Applicable Laws</I></FONT><FONT SIZE=2>" means the requirements relating to the administration of equity-based awards under U.S. state corporate
laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or
jurisdiction where Awards are, or will be, granted under the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Award</I></FONT><FONT SIZE=2>" means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units,
Stock Appreciation Rights, Performance Units, Performance Shares and other stock or cash awards as the Administrator may determine. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Award Agreement</I></FONT><FONT SIZE=2>" means the written or electronic agreement setting forth the terms and provisions applicable to each
Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Board</I></FONT><FONT SIZE=2>" means the Board of Directors of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Cash Collections</I></FONT><FONT SIZE=2>" means the actual cash or other freely negotiable consideration, in any currency, received in
satisfaction of accounts receivable created by the sale of any Company products or services. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Change in Control</I></FONT><FONT SIZE=2>" means the occurrence of any of the following events: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule&nbsp;13d-3 of the
Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>A-1</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=55,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=582325,FOLIO='A-1',FILE='DISK127:[06PAL4.06PAL1164]EA1164A.;5',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_ea1164_1_2"> </A>
<UL>
<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;The
consummation of the sale or disposition by the Company of all or substantially all of the Company's assets; </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;A
change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent
Directors. "Incumbent Directors" means directors who either (A)&nbsp;are Directors as of the effective date of the Plan, or (B)&nbsp;are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the Company); or </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;The
consummation 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 or its
parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Code</I></FONT><FONT SIZE=2>" means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a
reference to any successor or amended section of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Committee</I></FONT><FONT SIZE=2>" means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in
accordance with Section&nbsp;4 hereof. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Common Stock</I></FONT><FONT SIZE=2>" means the common stock of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Company</I></FONT><FONT SIZE=2>" means UTStarcom,&nbsp;Inc., a Delaware corporation, or any successor thereto. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Consultant</I></FONT><FONT SIZE=2>" means any person, including an advisor, engaged by the Company or its Affiliates to render services to such
entity. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Customer Satisfaction MBOs</I></FONT><FONT SIZE=2>" means as to any Participant, the objective and measurable individual goals set by a
"management by objectives" process and approved by the Administrator, which goals relate to the satisfaction of external or internal customer requirements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Determination Date</I></FONT><FONT SIZE=2>" means the latest possible date that will not jeopardize the qualification of an Award granted under
the Plan as "performance-based compensation" under Section&nbsp;162(m) of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Director</I></FONT><FONT SIZE=2>" means a member of the Board. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Disability</I></FONT><FONT SIZE=2>" means total and permanent disability as defined in Section&nbsp;22(e)(3) of the Code, provided that in the
case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Earnings Per Share</I></FONT><FONT SIZE=2>" means as to any Performance Period, the Company's Net Income or a business unit's Pro Forma Net
Income, divided by a weighted average number of Shares outstanding and dilutive common equivalent Shares deemed outstanding. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Employee</I></FONT><FONT SIZE=2>" means any person, including Officers and Directors, employed by the Company or its Affiliates. Neither service
as a Director nor payment of a director's fee by the Company will be sufficient to constitute "employment" by the Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Exchange Act</I></FONT><FONT SIZE=2>" means the Securities Exchange Act of 1934, as amended. </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>A-2</FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Fair Market Value</I></FONT><FONT SIZE=2>" means, as of any date, the value of Common Stock as the Administrator may determine in good faith by
reference to the price of such stock on any established stock exchange or a national market system on the day of determination if the Common Stock is so listed on any established stock exchange or a
national market system. If the Common Stock is not listed on any
established stock exchange or a national market system, the value of the Common Stock will be determined by the Administrator in good faith. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Fiscal Year</I></FONT><FONT SIZE=2>" means the fiscal year of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Incentive Stock Option</I></FONT><FONT SIZE=2>" means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive
stock option within the meaning of Section&nbsp;422 of the Code and the regulations promulgated thereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Net Income</I></FONT><FONT SIZE=2>" means as to any Performance Period, the income after taxes of the Company determined in accordance with
generally accepted accounting principles, provided that prior to the Performance Period, the Administrator shall determine whether any significant item(s) shall be included or excluded from the
calculation of Net Income with respect to one or more participants. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>New Orders</I></FONT><FONT SIZE=2>" means as to any Performance Period, the firm orders for a system, product, part, or service that are being
recorded for the first time as defined in the Company's order recognition policy. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;"</FONT><FONT
SIZE=2><I>Nonstatutory Stock Option</I></FONT><FONT SIZE=2>" means an Option that by its terms does not qualify or is not intended to qualify as an
Incentive Stock Option. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;"</FONT><FONT
SIZE=2><I>Officer</I></FONT><FONT SIZE=2>" means a person who is an officer of the Company within the meaning of Section&nbsp;16 of the Exchange Act
and the rules and regulations promulgated thereunder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;"</FONT><FONT
SIZE=2><I>Operating Profit</I></FONT><FONT SIZE=2>" means as to any Performance Period, the difference between revenue and related costs and expenses,
excluding income derived from sources other than regular activities and before income deductions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;"</FONT><FONT
SIZE=2><I>Option</I></FONT><FONT SIZE=2>" means a stock option granted pursuant to the Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;"</FONT><FONT
SIZE=2><I>Parent</I></FONT><FONT SIZE=2>" means a "parent corporation," whether now or hereafter existing, as defined in Section&nbsp;424(e) of the
Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Participant</I></FONT><FONT SIZE=2>" means the holder of an outstanding Award. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;"</FONT><FONT
SIZE=2><I>Performance Goals</I></FONT><FONT SIZE=2>" will have the meaning set forth in Section&nbsp;11 of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;"</FONT><FONT
SIZE=2><I>Performance Period</I></FONT><FONT SIZE=2>" means any Fiscal Year of the Company or such other period as determined by the Administrator in its
sole discretion. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Share</I></FONT><FONT SIZE=2>" means an Award denominated in Shares which may be earned in whole or in part upon attainment of
Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section&nbsp;10. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Performance Unit</I></FONT><FONT SIZE=2>" means an Award which may be earned in whole or in part upon attainment of Performance Goals or other
vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section&nbsp;10. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk)&nbsp;"</FONT><FONT
SIZE=2><I>Period of Restriction</I></FONT><FONT SIZE=2>" means the period during which the transfer of Shares of Restricted Stock are subject to
restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the
occurrence of other events as determined by the Administrator. </FONT></P>

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

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<UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll)&nbsp;&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Plan</I></FONT><FONT SIZE=2>" means this 2006 Equity Incentive Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm)&nbsp;"</FONT><FONT
SIZE=2><I>Pro Forma Net Income</I></FONT><FONT SIZE=2>" means as to any business unit for any Performance Period, the Net Income of such business unit,
minus allocations of designated corporate expenses. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn)&nbsp;"</FONT><FONT
SIZE=2><I>Product Shipments</I></FONT><FONT SIZE=2>" means as to any Performance Period, the quantitative and measurable number of units of a particular
product that shipped during such Performance Period. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo)&nbsp;"</FONT><FONT
SIZE=2><I>Restricted Stock</I></FONT><FONT SIZE=2>" means Shares issued pursuant to an Award of Restricted Stock under Section&nbsp;8 of the Plan, or
issued pursuant to the early exercise of an Option. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp)&nbsp;"</FONT><FONT
SIZE=2><I>Restricted Stock Unit</I></FONT><FONT SIZE=2>" means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share,
granted pursuant to Section&nbsp;9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq)&nbsp;"</FONT><FONT
SIZE=2><I>Return on Designated Assets</I></FONT><FONT SIZE=2>" means as to any Performance Period, the Pro Forma Net Income of a business unit, divided
by the average of beginning and ending business unit designated assets, or Net Income of the Company, divided by the average of beginning and ending designated corporate assets. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Return on Equity</I></FONT><FONT SIZE=2>" means, as to any Performance Period, the percentage equal to the value of the Company's or any
business unit's common stock investments at the end of such Performance Period, divided by the value of such common stock investments at the start of such Performance Period, excluding any common
stock investments so designated by the Administrator. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Return on Sales</I></FONT><FONT SIZE=2>" means as to any Performance Period, the percentage equal to the Company's Net Income or the business
unit's Pro Forma Net Income, divided by the Company's or the business unit's Annual Revenue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt)&nbsp;&nbsp;"</FONT><FONT
SIZE=2><I>Rule&nbsp;16b-3</I></FONT><FONT SIZE=2>" means Rule&nbsp;16b-3 of the Exchange Act or any successor to
Rule&nbsp;16b-3, as in effect when discretion is being exercised with respect to the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu)&nbsp;"</FONT><FONT
SIZE=2><I>Section&nbsp;16(b)</I></FONT><FONT SIZE=2>" means Section&nbsp;16(b) of the Exchange Act. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv)&nbsp;"</FONT><FONT
SIZE=2><I>Service Provider</I></FONT><FONT SIZE=2>" means an Employee, Director or Consultant. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww)&nbsp;"</FONT><FONT
SIZE=2><I>Share</I></FONT><FONT SIZE=2>" means a share of the Common Stock, as adjusted in accordance with Section&nbsp;14 of the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx)&nbsp;"</FONT><FONT
SIZE=2><I>Stock Appreciation Right</I></FONT><FONT SIZE=2>" means an Award, granted alone or in connection with an Option, that pursuant to
Section&nbsp;7 is designated as a Stock Appreciation Right. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy)&nbsp;"</FONT><FONT
SIZE=2><I>Subsidiary</I></FONT><FONT SIZE=2>" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section&nbsp;424(f) of
the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz)&nbsp;"</FONT><FONT
SIZE=2><I>Successor Corporation</I></FONT><FONT SIZE=2>" has the meaning given to such term in Section&nbsp;14(c) of the Plan. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Subject to the Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Subject to the Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of Section&nbsp;14 of the Plan, the maximum aggregate
number of Shares that may be awarded and sold under the Plan is 4,500,000 Shares plus (i)&nbsp;any Shares that, as of the date of stockholder approval of this Plan, have been reserved but not issued
pursuant to any awards granted under the Company's 1997 Stock Plan (the "</FONT><FONT SIZE=2><I>1997 Plan</I></FONT><FONT SIZE=2>"), the Company's Amended 2001 Director Option Plan (the
"</FONT><FONT SIZE=2><I>2001 Plan</I></FONT><FONT SIZE=2>"), and the Company's 2003 Non-Statutory Stock Option Plan (the "</FONT><FONT SIZE=2><I>2003 Plan</I></FONT><FONT SIZE=2>") and
are not subject to any awards granted thereunder, and (ii)&nbsp;any Shares subject to stock options or similar awards granted under the 1997 Plan, the 2001 Plan, and the 2003 Plan that expire or
otherwise terminate without having been exercised in full and Shares issued pursuant to awards granted under the 1997 Plan, </FONT></P>

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

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<UL>

<P><FONT SIZE=2>the
2001 Plan, and the 2003 Plan that are forfeited to or repurchased by the Company. The Shares may be authorized, but unissued, or reacquired Common Stock. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Lapsed Awards</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If an Award expires or becomes unexercisable without having been exercised in full, or, with
respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other than Options
and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With
respect to Stock Appreciation Rights, all of the Shares covered by the Award (that is, Shares actually issued pursuant to a Stock Appreciation Right, as well as the Shares that represent payment of
the exercise price) will cease to be available under the Plan. However, Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become
available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are repurchased by the
Company or are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares used to pay the tax and exercise price of an Award will not become available for
future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for
issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section&nbsp;14, the maximum number of Shares that may be issued upon the exercise of Incentive Stock
Options will equal the aggregate Share number stated in Section&nbsp;3(a), plus, to the extent allowable under Section&nbsp;422 of the Code, any Shares that become available for issuance under the
Plan under this Section&nbsp;3(b). </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Administration of the Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Procedure</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Multiple Administrative Bodies</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Different Committees with respect to different groups of Service Providers
may administer the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;162(m)</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;To the extent that the Administrator determines it to be desirable to qualify Awards
granted hereunder as "performance-based compensation" within the meaning of Section&nbsp;162(m) of the Code, the Plan will be administered by a Committee of two or more "outside directors" within
the meaning of Section&nbsp;162(m) of the Code. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Rule&nbsp;16b-3</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;To the extent desirable to qualify transactions hereunder as exempt under
Rule&nbsp;16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule&nbsp;16b-3. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Other Administration</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Other than as provided above, the Plan will be administered by (A)&nbsp;the Board
or (B)&nbsp;a Committee, which committee will be constituted to satisfy Applicable Laws. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Powers of the Administrator</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to the provisions of the Plan, and in the case of a Committee, subject
to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;to
determine the Fair Market Value; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;to
select the Service Providers to whom Awards may be granted hereunder; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;to
construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; </FONT></P>

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

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<UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose
of satisfying applicable foreign laws; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;to
modify or amend each Award (subject to Section&nbsp;19(c) of the Plan). Notwithstanding the previous sentence, the Administrator may not modify or amend an Option
or Stock Appreciation Right to reduce the exercise price of such Option or Stock Appreciation Right after it has been granted (except for adjustments made pursuant to Section&nbsp;14), and neither
may the Administrator cancel any outstanding Option or Stock Appreciation Right and immediately replace it with a new Option or Stock Appreciation Right with a lower exercise price; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;to
authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii)&nbsp;&nbsp;to
allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award pursuant
to such procedures as the Administrator may determine; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;to
make all other determinations deemed necessary or advisable for administering the Plan. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect of Administrator's Decision</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator's decisions, determinations and interpretations will
be final and binding on all Participants and any other holders of Awards. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Eligibility</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights,
Performance Units, Performance Shares and such other cash or stock awards as the Administrator determines may be granted to Service Providers. Incentive Stock Options may be granted only to employees
of the Company or any Parent or Subsidiary of the Company. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Options</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Limitations</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a
Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for
the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as Nonstatutory Stock Options.
For purposes of this Section&nbsp;6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the
time the Option with respect to such Shares is granted. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Number of Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will have complete discretion to determine the number of Options granted
to any Participant, provided that during any Fiscal Year, no Participant will be granted Options covering more than 1,000,000 Shares. Notwithstanding the foregoing limitation, in connection with a
Participant's initial service as an Employee, an Employee may be granted Options covering up to an additional 2,000,000 Shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Term of Option</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will determine the term of each Option in its sole discretion. Any Option
granted under the Plan will not be exercisable after the expiration of seven (7)&nbsp;years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the
case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5)&nbsp;years from the date of grant or such shorter term as may be
provided in the Award Agreement. </FONT></P>

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

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<P><FONT SIZE=2><A
NAME="page_ec1164_1_7"> </A> </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Option Exercise Price and Consideration</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The per share exercise price for the Shares to be issued pursuant to exercise of an Option
will be determined by the Administrator, but will be no less than 100% of the Fair Market Value per Share on the date of grant. In addition, in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section&nbsp;6(c),
Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent
with, Section&nbsp;424(a) of the Code. The Administrator may not modify or amend an Option to reduce the exercise price of such Option after it has been granted (except for adjustments made pursuant
to Section&nbsp;14 of the Plan) nor may the Administrator cancel any outstanding Option and replace it with a new Option, Stock Appreciation Right, or other Award with a lower exercise price,
unless, in either case, such action is approved by the Company's stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Waiting Period and Exercise Dates</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;At the time an Option is granted, the Administrator will fix the period
within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Form of Consideration</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will determine the acceptable form(s) of consideration for
exercising an Option, including the method of payment, to the extent permitted by Applicable Laws. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise of Option</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Procedure for Exercise; Rights as a Stockholder</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Any Option granted hereunder will be exercisable according
to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
Option will be deemed exercised when the Company receives: (i)&nbsp;notice of exercise (in such form as the Administrator specify from time to time) from the person entitled to
exercise the Option, and (ii)&nbsp;full payment for the Shares with respect to which the Option is exercised (together with an
applicable withholding taxes). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section&nbsp;14 of
the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Termination of Relationship as a Service Provider</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If a Participant ceases to be a Service Provider, other
than upon the Participant's termination as the result of the Participant's death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award
Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence
of a specified time in the Award Agreement, the Option will remain exercisable for three (3)&nbsp;months following the Participant's termination. Unless otherwise provided by the Administrator, if
on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Disability of Participant</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If a Participant ceases to be a Service Provider as a result of the
Participant's Disability, the Participant may exercise his or her Option within such </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=61,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=328091,FOLIO='A-7',FILE='DISK127:[06PAL4.06PAL1164]EC1164A.;4',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_ec1164_1_8"> </A>
<UL>
<UL>
<BR>

<P><FONT SIZE=2>period
of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth
in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12)&nbsp;months following the Participant's termination. Unless
otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will
revert to the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Death of Participant</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;If a Participant dies while a Service Provider, the Option may be exercised following
the Participant's death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised
later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant's designated beneficiary, provided such beneficiary has been designated prior to
Participant's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the
Participant's estate or by the person(s) to whom the Option is transferred pursuant to the Participant's will or in accordance with the laws of descent and distribution. In the absence of a specified
time in the Award Agreement, the Option will remain exercisable for twelve (12)&nbsp;months following Participant's death. Unless otherwise provided by the Administrator, if at the time of death
Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Other Termination</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;A Participant's Award Agreement may also provide that if the exercise of the Option
following the termination of Participant's status as a Service Provider (other than upon the Participant's death or Disability) would result in liability under Section&nbsp;16(b), then the Option
will terminate on the earlier of (A)&nbsp;the expiration of the term of the Option set forth in the Award Agreement, or (B)&nbsp;the 10th day after the last date on which such exercise would
result in such liability under Section&nbsp;16(b). Finally, a Participant's Award Agreement may also provide that if the exercise of the Option following the termination of the Participant's status
as a Service Provider (other than upon the Participant's death or disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under
the Securities Act, then the Option will terminate on the earlier of (A)&nbsp;the expiration of the term of the Option, or (B)&nbsp;the expiration of a period of three (3)&nbsp;months after the
termination of the Participant's status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements. </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Grant of Stock Appreciation Rights</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of the Plan, a Stock Appreciation
Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Number of Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will have complete discretion to determine the number of Stock
Appreciation Rights granted to any Participant, provided that during any Fiscal Year, no Participant will be granted Stock Appreciation Rights covering more than 1,000,000 Shares. Notwithstanding the
foregoing limitation, in connection with a Participant's initial service </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=62,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=703766,FOLIO='A-8',FILE='DISK127:[06PAL4.06PAL1164]EC1164A.;4',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
<A NAME="page_ec1164_1_9"> </A>
<UL>
<BR>

<P><FONT SIZE=2>as
an Employee, an Employee may be granted Stock Appreciation Rights covering up to an additional 2,000,000 Shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price and Other Terms</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator, subject to the provisions of the Plan, will have complete
discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan, provided, however, that the exercise price will be not less than 100% of the Fair Market Value of
a Share on the date of grant. The Administrator may not modify or amend a Stock Appreciation Right to reduce the exercise price of such Stock Appreciation Right after it has been granted (except for
adjustments made pursuant to Section&nbsp;14 of the Plan) nor may the Administrator cancel any outstanding Stock Appreciation Right and replace it with a new Stock Appreciation Right, Option, or
other Award with a lower exercise price, unless, in either case, such action is approved by the Company's stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Right Agreement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Each Stock Appreciation Right grant will be evidenced by an Award
Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the
conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Expiration of Stock Appreciation Rights</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;A Stock Appreciation Right granted under the Plan will expire upon
the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section&nbsp;6(e) also will apply to Stock
Appreciation Rights. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Payment of Stock Appreciation Right Amount</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Upon exercise of a Stock Appreciation Right, a Participant will
be entitled to receive payment from the Company in an amount determined by multiplying: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;The
difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;The
number of Shares with respect to which the Stock Appreciation Right is exercised. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof. </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Grant of Restricted Stock</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and provisions of the Plan, the Administrator, at any time
and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock Agreement</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Each Award of Restricted Stock will be evidenced by an Award Agreement that will
specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Notwithstanding the foregoing
sentence, during any Fiscal Year no Participant will receive more than an aggregate of 300,000 Shares of Restricted Stock; provided, however, that in connection with a Participant's initial service as
an Employee, an Employee may be granted an aggregate of up to an additional 600,000 Shares of Restricted Stock. Unless the Administrator determines otherwise, Shares of Restricted Stock will be held
by the Company as escrow agent until the restrictions on such Shares have lapsed. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Transferability</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Except as provided in this Section&nbsp;8, Shares of Restricted Stock may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_ec1164_1_10"> </A>
<UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Other Restrictions</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator, in its sole discretion, may impose such other restrictions on Shares
of Restricted Stock as it may deem advisable or appropriate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Removal of Restrictions</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Except as otherwise provided in this Section&nbsp;8, Shares of Restricted Stock
covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction. The Administrator, in its discretion,
may accelerate the time at which any restrictions will lapse or be removed. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Voting Rights</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;During the Period of Restriction, Service Providers holding Shares of Restricted Stock
granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Dividends and Other Distributions</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;During the Period of Restriction, Service Providers holding Shares of
Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any such dividends or
distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Return of Restricted Stock to Company</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;On the date set forth in the Award Agreement, the Restricted Stock
for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock Units</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Grant</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Restricted Stock Units may be granted at any time and from time to time as determined by the
Administrator. Each Restricted Stock Unit grant will be evidenced by an Award Agreement that will specify such other terms and conditions as the Administrator, in its sole discretion, will determine,
including all terms, conditions, and restrictions related to the grant, the number of Restricted Stock Units and the form of payout, which, subject to Section&nbsp;9(d), may be left to the
discretion of the Administrator. Notwithstanding the anything to the contrary in this subsection (a), during any Fiscal Year of the Company, no Participant will receive more than an aggregate of
300,000 Restricted Stock
Units; provided, however, that in connection with a Participant's initial service as an Employee, an Employee may be granted an aggregate of up to an additional 600,000 Restricted Stock Units. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Vesting Criteria and Other Terms</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will set vesting criteria in its discretion, which,
depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. After the grant of Restricted Stock Units, the
Administrator, in its sole discretion, may reduce or waive any restrictions for such Restricted Stock Units. Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will
specify the vesting criteria, and such other terms and conditions as the Administrator, in its sole discretion, will determine. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Earning Restricted Stock Units</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Upon meeting the applicable vesting criteria, the Participant will be
entitled to receive a payout as specified in the Award Agreement. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may
reduce or waive any vesting criteria that must be met to receive a payout. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Form and Timing of Payment</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Payment of earned Restricted Stock Units will be made as soon as practicable
after the date(s) set forth in the Award Agreement. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_ec1164_1_11"> </A>
<UL>
<BR>

<P><FONT SIZE=2>Shares
represented by Restricted Stock Units that are fully paid in cash again will be available for grant under the Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Cancellation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be
forfeited to the Company. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance Units and Performance Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Grant of Performance Units/Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Performance Units and Performance Shares may be granted to Service
Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of
Performance Units/Shares granted to each Participant provided that during any Fiscal Year, (a)&nbsp;no Participant will receive Performance Units having an initial value greater than $2,000,000, and
(b)&nbsp;no Participant will receive more than 300,000 Performance Shares. Notwithstanding the foregoing limitation, in connection with a Participant's initial service as an Employee, an Employee
may be granted up to an additional 600,000 Performance Shares and additional Performance Units having an initial value up to $2,000,000. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Value of Performance Units/Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Each Performance Unit will have an initial value that is established by
the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance Objectives and Other Terms</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator will set performance objectives or other vesting
provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of
Performance Units/Shares that will be paid out to the Participant. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual
goals, or any other basis determined by the Administrator in its discretion. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period,
and such other terms and conditions as the Administrator, in its sole discretion, will determine. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Earning of Performance Units/Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;After the applicable Performance Period has ended, the holder of
Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may
reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Form and Timing of Payment of Performance Units/Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Payment of earned Performance Units/Shares will be
made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares
(which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Cancellation of Performance Units/Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;On the date set forth in the Award Agreement, all unearned or
unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Performance Goals</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The granting and/or vesting of Awards of Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of
Section&nbsp;162(m) of the Code and may provide for a targeted level or levels of </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_ec1164_1_12"> </A>

<P><FONT SIZE=2>achievement
("Performance Goals") including one or more of the following measures: (a)&nbsp;Annual Revenue, (b)&nbsp;Cash Collections, (c)&nbsp;Customer Satisfaction MBOs, (d)&nbsp;Earnings
Per Share, (e)&nbsp;Net Income, (f)&nbsp;New Orders, (g)&nbsp;Operating Profit, (h)&nbsp;Pro Forma Net Income, (i)&nbsp;Return on Designated Assets, (j)&nbsp;Return on Equity,
(k)&nbsp;Return on Sales, and (l)&nbsp;Product Shipments. Any Performance Goals may be used to measure the performance of the Company as a whole or a business unit of the Company and may be
measured relative to a peer group or index. The Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be (i)&nbsp;measured in absolute terms,
(ii)&nbsp;compared to another company or companies, (iii)&nbsp;measured against the performance of the Company as a whole or a segment of the Company and/or (iv)&nbsp;measured on a
pre-tax or post-tax basis (if applicable). Prior to the Determination Date, the Administrator will determine whether any significant element(s) will be included in or excluded
from the calculation of any Performance Goal with respect to any Participant. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Leaves of Absence/Transfer Between Locations</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Unless the Administrator provides otherwise, vesting of Awards
granted hereunder will be suspended during any unpaid leave of absence. A Service Provider will not cease to be an Employee in the case of (i)&nbsp;any leave of absence approved by the Company or
(ii)&nbsp;transfers between locations of the Company or between the Company and its Affiliates. For purposes of Incentive Stock Options, no such leave may exceed ninety (90)&nbsp;days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three
(3)&nbsp;months following the ninety-first (91<SUP>st</SUP>) day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Transferability of Awards</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Unless determined otherwise by the Administrator, an Award may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant,
only by the Participant. With the approval of the Administrator, a Participant may, in a manner specified by the Administrator, (a)&nbsp;transfer an Award to a Participant's spouse or former spouse
pursuant to a court-approved domestic relations order which relates to the provision of child support, alimony payments or marital property rights, and (b)&nbsp;transfer an Option by bona fide gift
and not for any consideration, to (i)&nbsp;a member or members of the Participant's immediate family, (ii)&nbsp;a trust established for the exclusive benefit of the Participant and/or member(s) of
the Participant's immediate family, (iii)&nbsp;a partnership, limited liability company of other entity whose only partners or members are the Participant and/or member(s) of the Participant's
immediate family, or (iv)&nbsp;a foundation in which the Participant and/or member(s) of the Participant's immediate family control the management of the foundation's assets. For purposes of this
Section&nbsp;13, "immediate family" shall mean the Participant's spouse, former spouse, children, grandchildren, parents, grandparents, siblings, nieces, nephews,
parents-in-law, sons-in-law, daughters-in-law, brothers-in-law,
sisters-in-law, including adoptive or step relationships and any person sharing the Participant's household (other than as a tenant or employee). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments; Dissolution or Liquidation; Merger or Change in Control</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;In the event that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be made available under the Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits set forth in Sections 3, 6, 7, 8, 9 and 10. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<A NAME="page_ec1164_1_13"> </A>
<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Dissolution or Liquidation</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;In the event of the proposed dissolution or liquidation of the Company, the
Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate
immediately prior to the consummation of such proposed action. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Change in Control</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;In the event of a Change in Control, each outstanding Award will be assumed or an
equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation (the "</FONT><FONT SIZE=2><I>Successor
Corporation</I></FONT><FONT SIZE=2>"). In the event that the Successor Corporation refuses to assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all
of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse,
and, with respect to Restricted Stock Units, Performance Shares and Performance Units, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and
conditions met. In addition, if the Successor Corporation refuses to assume or substitute an Option or Stock Appreciation Right in the event of a Change in Control, the Administrator will notify the
Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of time determined by the Administrator in its sole discretion,
and the Option or Stock Appreciation Right will terminate upon the expiration of such period. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purposes of this subsection (c), an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the
exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the
Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such
consideration received in the Change in Control is not solely common stock of the Successor Corporation, the Administrator may, with the consent of the Successor Corporation, provide for the
consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for each Share subject to
such Award (or in the case of an Award settled in cash, the number of implied shares determined by dividing the value of the Award by the per share consideration received by holders of Common Stock in
the Change in Control), to be solely common stock of the Successor Corporation equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything in this Section&nbsp;14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will
not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant's consent; provided, however, a modification to such Performance Goals only to
reflect the Successor Corporation's post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Tax Withholding</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Withholding Requirements</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Prior to the delivery of any Shares or cash pursuant to an Award (or exercise
thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes required to be withheld with respect to such Award (or exercise thereof). </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Withholding Arrangements</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator, in its sole discretion and pursuant to such procedures as it
may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (a)&nbsp;paying cash, (b)&nbsp;electing to have the
Company withhold otherwise deliverable cash or Shares having a Fair Market Value equal to the amount required to be withheld, (c)&nbsp;delivering to the Company already-owned Shares having a Fair
Market Value equal to the amount required to be withheld, or (d)&nbsp;selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may
determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount
which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable
to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined
as of the date that the taxes are required to be withheld. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;No Effect on Employment or Service</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Neither the Plan nor any Award will confer upon a Participant any right
with respect to continuing the Participant's relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant's right or the Company's right to terminate
such relationship at any time, with or without cause, to the extent permitted by Applicable Laws. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Date of Grant</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The date of grant of an Award will be, for all purposes, the date on which the Administrator
makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time
after the date of such grant. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Term of Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section&nbsp;22 of the Plan, the Plan will become effective upon its adoption by
the Board. It will continue in effect for a term of ten (10)&nbsp;years unless terminated earlier under Section&nbsp;19 of the Plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination of the Plan</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Administrator may at any time amend, alter, suspend or terminate the Plan. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stockholder Approval</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company will obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Effect of Amendment or Termination</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;No amendment, alteration, suspension or termination of the Plan will
impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.
Termination of the Plan will not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Conditions Upon Issuance of Shares</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Legal Compliance</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;Shares will not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Investment Representations</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;As a condition to the exercise of an Award, the Company may require the person
exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=8,SEQ=68,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=353974,FOLIO='A-14',FILE='DISK127:[06PAL4.06PAL1164]EC1164A.;4',USER='DHOLBRO',CD='21-JUN-2006;06:21' -->
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<UL>
<BR>

<P><FONT SIZE=2>to
sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Inability to Obtain Authority</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority will not have been obtained. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.</FONT><FONT
SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;Stockholder Approval</I></FONT><FONT SIZE=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Plan will be subject to approval by the stockholders of the Company within twelve
(12)&nbsp;months after the date the Plan is adopted. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws. </FONT></P>

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

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<P><FONT SIZE=3><B> <BR>
Proxy &#151; UTSTARCOM,&nbsp;INC.<BR>  </B></FONT></P>

<HR NOSHADE>

<P><FONT SIZE=2>Dear Stockholder: </FONT></P>

<P><FONT SIZE=2>Please
take note of the important information enclosed with this Proxy. The issues discussed herein, related to the operation of the Company, require your immediate attention. </FONT></P>

<P><FONT SIZE=2>Your
vote counts, and you are strongly encouraged to exercise your right to vote your shares. </FONT></P>

<P><FONT SIZE=2>Please
mark the boxes on the proxy card to indicate how your shares will be voted. Then sign the card and return your proxy in the enclosed postage paid envelope. </FONT></P>


<P><FONT SIZE=2>Thank
you in advance for your prompt consideration of these matters. </FONT></P>

<P><FONT SIZE=2>Sincerely,<BR></FONT></P>

<P><FONT SIZE=2>UTStarcom,&nbsp;Inc. </FONT></P>

<P><FONT SIZE=2><B>UTSTARCOM,&nbsp;INC.<BR>
1275 Harbor Bay Parkway<BR>
Alameda, California 94502  </B></FONT></P>

<P><FONT SIZE=2><B>SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS  </B></FONT></P>

<P><FONT SIZE=2>The undersigned hereby appoint(s) Hong Liang Lu and Francis&nbsp;P. Barton, or any one of the two, with the power to appoint their respective substitutes, and hereby
authorize(s) them as proxies to represent and vote as designated on the reverse side, all shares of common stock of the UTStarcom,&nbsp;Inc. (the </FONT> <FONT SIZE=2><B>"Company"</B></FONT><FONT SIZE=2>) held of record by the
undersigned on May&nbsp;25, 2006 at the Annual Meeting of Stockholders to be held on July&nbsp;21, 2006 and any adjournments thereof. </FONT></P>

<P><FONT SIZE=2><B>THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.</B></FONT></P>

<P><FONT SIZE=2><B>PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.</B></FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="13%" ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2><B> SEE REVERSE<BR>
SIDE</B></FONT><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="68%" ALIGN="CENTER"><FONT SIZE=2><B>CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE</B></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="CENTER"><HR NOSHADE><FONT SIZE=2><B> SEE REVERSE<BR>
SIDE</B></FONT><HR NOSHADE></TD>
</TR>
</TABLE>
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<P><FONT SIZE=3><B>Telephone and Internet Voting Instructions  </B></FONT></P>

<P><FONT SIZE=2><B>You can vote by telephone OR Internet! Available 24&nbsp;hours a day 7&nbsp;days a week!<BR>  </B></FONT><FONT SIZE=2>Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
</FONT></P>

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<TR VALIGN="BOTTOM">
<TD COLSPAN=3 VALIGN="TOP"><FONT SIZE=2><B>To vote using the Telephone (within U.S. and Canada)</B></FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 VALIGN="TOP"><FONT SIZE=2><B>To vote using the Internet</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%"><FONT SIZE=2><BR>
Call toll free 1-800-652-VOTE (8683) in the United States or Canada any time on a touch tone telephone. There is </FONT><FONT SIZE=2><B>NO CHARGE</B></FONT><FONT SIZE=2> to you for the call.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="52%"><FONT SIZE=2><BR>
Go to the following web site:<BR></FONT> <FONT SIZE=2><B>WWW.COMPUTERSHARE.COM/EXPRESSVOTE</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="2%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="39%"><FONT SIZE=2><BR>
Follow the simple instructions provided by the recorded message.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>
&#149;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="52%"><FONT SIZE=2><BR>
Enter the information requested on your computer screen and follow the simple instructions.</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2><B>VALIDATION DETAILS ARE LOCATED ON THE FRONT OF THIS FORM IN THE COLORED BAR.  </B></FONT></P>

<P><FONT SIZE=2><B>If you vote by telephone or the Internet, please DO NOT mail back this proxy card.  </B></FONT></P>

<P><FONT SIZE=2><B>Proxies submitted by telephone or the Internet must be received by 1:00&nbsp;a.m., Central Time, on July&nbsp;21, 2006.  </B></FONT></P>


<P><FONT SIZE=2><B>THANK YOU FOR VOTING</B></FONT></P>

<HR NOSHADE>
<P style='page-break-before:always'></p>
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<IMG SRC="g455485.jpg" ALT="GRAPHIC" WIDTH="81" HEIGHT="24">
 </B></FONT><FONT SIZE=2><BR>
<BR>
&nbsp;&nbsp;<BR>
MR A SAMPLE<BR>
DESIGNATION (IF ANY)<BR>
ADD 1<BR>
ADD 2<BR>
ADD 3<BR>
ADD 4<BR>
ADD 5<BR>
ADD 6</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="30%"><FONT SIZE=2>&nbsp;&nbsp;<BR>
&nbsp;&nbsp;<BR>
&nbsp;&nbsp;<BR>
000004<BR>
&nbsp;&nbsp;<BR>
&nbsp;&nbsp;<BR></FONT> <FONT SIZE=3>Least Address Line</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3><FONT SIZE=2>000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
000000000.000 ext<BR>
&nbsp;<BR>
C&nbsp;&nbsp;1234567890&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;J N T</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="30%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="30%"><FONT SIZE=2><BR>
Mark this box with an X if you have made changes to your name or address details above.</FONT></TD>
</TR>
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<HR NOSHADE>

<P><BR><FONT SIZE=3><B>Annual Meeting Proxy
Card&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;123456&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C0123456789&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;12345<BR>  </B></FONT></P>

<HR NOSHADE>

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<TD COLSPAN=3><BR><FONT SIZE=2>A.&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>Election of Directors</B></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD COLSPAN=3><FONT SIZE=2><B><BR>
PLEASE REFER TO THE REVERSE SIDE FOR TELEPHONE AND INTERNET VOTING INSTRUCTIONS.</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=7 VALIGN="TOP"><FONT SIZE=2><BR>
1.&nbsp;&nbsp;&nbsp;&nbsp;The Board of Directors recommends a vote FOR the listed nominees.</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="28%" VALIGN="TOP"><BR><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=1><B><BR>
For</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=1><B><BR>
Withhold</B></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="51%" VALIGN="TOP"><FONT SIZE=1><B><BR>
&nbsp;</B></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="28%" VALIGN="TOP"><BR><FONT SIZE=2> 01&#151;Jeff Clarke</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="51%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="28%" VALIGN="TOP"><FONT SIZE=2><BR>
02&#151;Hong Liang Lu</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="51%" VALIGN="TOP"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>B.&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>Proposals</B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD COLSPAN=9><FONT SIZE=2>The Board of Directors recommends a vote FOR the following proposals.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="3%"><BR><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="67%"><FONT SIZE=1><B><BR>
&nbsp;</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER"><FONT SIZE=1><B><BR>
For</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B><BR>
Withhold</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B><BR>
Abstain</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="3%"><FONT SIZE=2>2.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2>Adoption of the 2006 Equity Incentive Plan.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER"><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=2><FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="3%"><FONT SIZE=2><BR>
3.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="67%"><FONT SIZE=2><BR>
Ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="CENTER"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=2><BR>
<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=9 VALIGN="TOP"><FONT SIZE=2><BR>
In their discretion, the Proxies are authorized to vote upon such other business that may properly come before the meeting.</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>C.&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>Authorized Signatures&#151;Sign Here&#151;This section must be completed for your instructions to be
executed.</B></FONT></P>

<P><FONT SIZE=2>Please
sign exactly as your name appears hereon. Joint owners should each sign. Executors, administrators, trustees, guardians or other fiduciaries should give full title as such. If signing for a
corporation, please sign in full corporate name by a duly authorized officer. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="76%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2><BR>
Signature 1&#151;Please keep signature within the box</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="32%"><FONT SIZE=2><BR>
Signature 2&#151;Please keep signature within the box</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="32%"><FONT SIZE=2><BR>
Date (mm/dd/yyyy)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="32%"><HR NOSHADE><FONT SIZE=5>&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="32%"><HR NOSHADE><FONT SIZE=5>&nbsp;&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=5>&nbsp;</FONT></TD>
<TD WIDTH="32%"><HR NOSHADE><FONT SIZE=5>&nbsp;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/</FONT><HR NOSHADE></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="32%" ALIGN="CENTER"><BR><FONT SIZE=3>0 0 9 6 5 8 1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=3><BR>&nbsp;</FONT></TD>
<TD WIDTH="32%"><FONT SIZE=3><BR>
1 U P X</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=3><BR>&nbsp;</FONT></TD>
<TD WIDTH="32%"><FONT SIZE=3><BR>
C O Y<BR></FONT>
</TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE>
<P style='page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=71,EFW="2171356",CP="UTSTARCOM, INC.",DN="1",CHK=247429,FOLIO='blank',FILE='DISK128:[06PAL5.06PAL1165]PX1165A.;10',USER='CHANSON',CD='16-JUN-2006;16:14' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<BR>
<P><br><A NAME="06PAL1164_1">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_bb1164_1">EXPLANATORY NOTE</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_be1164_1">YOUR VOTE IS IMPORTANT</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_de1164_1">QUESTIONS AND ANSWERS ABOUT THE PROXY STATEMENT AND VOTING AT THE ANNUAL MEETING</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dg1164_1">PROPOSAL NO. 1 ELECTION OF DIRECTORS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_di1164_1">BOARD OF DIRECTORS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dk1164_1">SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dm1164_1">MANAGEMENT</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dm1164_2">Summary Compensation Table</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dm1164_3">Option Grants in Last Fiscal Year</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dm1164_4">Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Values</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_do1164_1">REPORT OF THE COMPENSATION COMMITTEE</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dq1164_1">REPORT OF THE AUDIT COMMITTEE</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ds1164_1">PROPOSAL NO. 2 APPROVAL OF THE 2006 EQUITY INCENTIVE PLAN</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_du1164_1">PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dw1164_1">COMPANY'S STOCK PERFORMANCE</A></FONT><BR>
<FONT SIZE=2><A HREF="#toc_dw1164_2">STOCK PRICE PERFORMANCE GRAPH FOR UTSTARCOM, INC. COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN* AMONG UTSTARCOM, INC., THE NASDAQ STOCK MARKET (U.S. &amp; FOREIGN) INDEX AND THE S &amp; P WIRELESS
TELECOMMUNICATION SERVICES INDEX</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dy1164_1">CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</A></FONT><BR>

<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_dz1164_1">OTHER MATTERS</A></FONT><BR>
<!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ea1164_1">ANNEX A UTSTARCOM, INC. 2006 EQUITY INCENTIVE PLAN</A></FONT><BR>
<!-- SEQ=,FILE='QUICKLINK',USER=DNICHOL,SEQ=,EFW="2171356",CP="UTSTARCOM, INC.",DN="1" -->
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
