**EXHIBIT10.88**

 

 

**$402,500,000**

 

**UTSTARCOM,INC.**

 

**7/8%Convertible Subordinated Notes Due 2008**

 

**REGISTRATIONRIGHTS AGREEMENT**

 
| March 12,  2003                                    |
|---------------------------------------------------------|
| Banc of America Securities LLC                          |
| 9 West 57th Street, 40th Floor                          |
| New York, New York 10019                                |
| and                                                     |
| Credit Suisse First Boston LLC                          |
| Eleven Madison Avenue                                   |
| New York, New York 10010-3629                           |
| and                                                     |
| Merrill Lynch, Pierce, Fenner & Smith  Incorporated |
| North Tower                                             |
| World Financial Center                                  |
| New York, New York 10281-1201                           |

 

Ladies and Gentlemen:

 

UTStarcom, Inc., aDelaware corporation (the “**Company**”),proposes to issue and sell to the Initial Purchasers (as defined herein), uponthe terms set forth in a purchase agreement dated March 7, 2003 (the “**Purchase Agreement**”), $402,500,000aggregate principal amount of its 7/8% Convertible Subordinated Notes Due 2008(the “**Notes**”).  The Notes will be issued pursuant to anIndenture, dated as of March 12, 2003 (the “**Indenture**”), between the Company and U.S. Bank NationalAssociation, as trustee (the “**Trustee**”).  The Notes will be convertible into shares ofCommon Stock at the Conversion Price. As an inducement to the Initial Purchasers to enter into the PurchaseAgreement, the Company agrees with the Initial Purchasers, for the benefit ofthe beneficial owners (including the Initial Purchasers) from time to time ofthe Notes and of the Underlying Common Stock (as defined herein) issued uponconversion of the Notes (each of the foregoing, a “**Holder**” and, collectively, the “**Holders**”), as follows:

 

1.                                       *Shelf Registration.*

 

(a)                                  TheCompany shall prepare and file with the Securities and Exchange Commission (the“**Commission**”) not later than 120days (such 120th day being a “**Filing Deadline**”)after the first date on which the Initial Purchasers purchase the Notespursuant to the Purchase Agreement (the “**ClosingDate**”), a Shelf Registration Statement for an offering to be made ona delayed or continuous basis pursuant to Rule 415 of the Securities Actof 1933, as amended (the “**Securities Act**”),registering the resale from time to time by Holders thereof (who satisfycertain conditions relating to the provision of information in connection withthe Shelf Registration Statement) of all of the Registrable Securities (definedherein) (the “**Shelf Registration Statement**”).  The Shelf Registration Statement shall be filedon Form S-3, or its successor, under the Securities Act permitting registrationof such Registrable Securities for resale by such Holders from time to time inaccordance with the methods of distribution elected by the Holders and setforth in the Shelf Registration Statement. The Company shall use its reasonable efforts to cause the ShelfRegistration Statement to be declared effective under the Securities Act notlater than 210 days after the Closing Date (the “**Effectiveness Deadline Date**”); *provided*, *however*,that the Company may, upon written notice to all Holders, postpone having theShelf Registration Statement declared effective for a reasonable period not toexceed 90 days if the Company possesses material non-public information, thedisclosure of which would have a material adverse effect on the Company and itssubsidiaries taken as a whole.  TheCompany shall also use its reasonable efforts to keep the Shelf

 

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Registration Statement continuously effective under the Securities Actin order to permit the prospectus included therein to be lawfully delivered bythe Holders of the Registrable Securities for a period of two years from thelast date on which the Initial Purchasers purchase Notes pursuant to thePurchase Agreement or such shorter period that will terminate when all theRegistrable Securities covered by the Shelf Registration Statement(i) have been sold pursuant thereto or (ii) are, with respect to suchsecurities held by non-affiliates, eligible to be sold to the public pursuantto Rule 144(k) under the Securities Act (“**Rule 144**”), or any successor rule thereof (such period, the “**Effectiveness Period**”).  Subject to Section 2(b)(vi), the Companyshall be deemed not to have used its reasonable efforts to keep the ShelfRegistration Statement effective during the requisite period if it voluntarilytakes any action that would result in Holders of Registrable Securities coveredthereby not being able to offer and sell such Registrable Securities duringthat period, unless such action is (i) required by applicable law or (ii) takenby the Company in good faith and contemplated by Section 2(b)(v) below, and theCompany thereafter complies with the requirements of Section 2(i).  At the time the Shelf Registration Statementis declared effective, each Holder who has provided the Company with anappropriately completed Notice and Questionnaire (as defined herein) on orprior to the deadline for response set forth therein and who holds RegistrableSecurities, shall be named as a selling securityholder in the ShelfRegistration Statement and the related prospectus in such a manner as to permitsuch Holder to deliver such prospectus to purchasers of Registrable Securitiesin accordance with applicable law.  Noneof the Company’s securityholders (other than the Holders of RegistrableSecurities) shall have the right to include any of the Company’s securities inthe Shelf Registration Statement.

 

(b)                                 TheCompany may suspend the use of the prospectus for a period not to exceed 45days in any 90-day period or an aggregate of 90 days in any 365-day period ifthe Board of Directors of the Company, or the Chief Executive Officer or theChief Financial Officer of the Company, shall have determined in good faiththat because of valid business reasons (not including avoidance of theCompany’s obligations hereunder), including, without limitations, theacquisition or divestiture of assets, pending corporate developments, publicfilings with the Commission and similar events, it is in the interest of theCompany to suspend such use, and prior to suspending such use the Companyprovides the Notice Holders with written notice of such suspension, whichnotice need not specify the nature of the event giving rise to such suspension.

 

(c)                                  Notwithstandingany other provisions of this Agreement to the contrary, the Company shall causethe Shelf Registration Statement and the prospectus and any amendment orsupplement thereto, as of the effective date of the Shelf RegistrationStatement, amendment or supplement, (i) to comply in all material respects withthe applicable requirements of the Securities Act and the rules and regulationsof the Commission and (ii) not to contain any untrue statement of a materialfact or omit to state a material fact required to be stated therein ornecessary in order to make the statements therein, in light of thecircumstances under which they were made, not misleading.

 

(d)                                 Asused in this Agreement, the following terms shall have the following meanings:

 

“**Applicable Conversion Price**” as of any dateof determination means the Conversion Price in effect as of such date ofdetermination or, if no Notes are then outstanding, the Conversion Price thatwould be in effect were Notes then outstanding.

 

“**Business Day**” means each Monday, Tuesday,Wednesday, Thursday and Friday that is not a day on which banking institutionsin The City of New York are authorized or obligated by law or executive orderto close.

 

“**Common Stock**” means the shares of commonstock, $0.00125 par value per share, of the Company and any other shares ofcommon stock as may constitute “Common Stock” for purposes of the Indenture,including the Underlying Common Stock.

 

“**Conversion Price**” has the meaning assignedto such term in the Indenture.

 

“**Exchange Act**” means the Securities ExchangeAct of 1934, as amended, and the rules and regulations of the SEC promulgatedthereunder.

 

“**Effective Date**” means the date the ShelfRegistration Statement is declared effective.

 

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“**Initial Purchasers**” means Banc of AmericaSecurities LLC, Credit Suisse First Boston LLC and Merrill Lynch, Pierce,Fenner & Smith Incorporated.

 

“**Notice and Questionnaire**” means a SellingSecurityholder Notice and Questionnaire substantially in the form of AppendixA hereto.

 

“**Notice Holder**” means any Holder that hasdelivered a properly completed and signed Notice and Questionnaire to theCompany in accordance with this Agreement and holds Registrable Securities asof such date.

 

“**Registrable Securities**” means the Notes, untilsuch Notes have been converted into or exchanged for the Underlying CommonStock and, at all times subsequent to any such conversion or exchange, theUnderlying Common Stock and any securities into or for which such UnderlyingCommon Stock have been converted or exchanged, and any security issued withrespect thereto upon any stock dividend, split or similar event until, in thecase of any such security, the earliest of (i) its effective registrationunder the Securities Act and resale in accordance with the Shelf RegistrationStatement covering it, (ii) expiration of the holding period that would beapplicable thereto under Rule 144(k) under the Securities Act were it notheld by an Affiliate of the Company, or (iii) it has been transferredpursuant to Rule 144.

 

“**Underlying Common Stock**” means the sharesof Common Stock into which the Notes are convertible or issued upon any suchconversion.

 

2.                                       *Registration Procedures*.  In connection with the Shelf RegistrationStatement contemplated by Section 1 hereof, the following provisions shallapply:

 

(a)                                  Notless than 30 calendar days prior to the Effective Date, the Company shall mailthe Notice and Questionnaire to the Holders of Registrable Securities.  No Holder shall be entitled to be named as aselling securityholder in the Shelf Registration Statement as of the EffectiveDate, and no Holder shall be entitled to use the prospectus forming a partthereof for offers and resales of Registrable Securities at any time, unlesssuch Holder has returned a completed and signed Notice and Questionnaire to theCompany by the deadline for response set forth therein; provided, however,Holders of Registrable Securities shall have at least 28 calendar days from thedate on which the Notice and Questionnaire is first mailed to such Holders toreturn a completed and signed Notice and Questionnaire to the Company.  Notwithstanding the foregoing, upon therequest of any Holder of Registrable Securities that did not return a Notice andQuestionnaire on a timely basis or did not receive a Notice and Questionnairebecause it was a subsequent transferee of Registrable Securities after theCompany mailed the Notice and Questionnaire, (x) the Company shall distribute aNotice and Questionnaire to such Holders at the address set forth in therequest and (y) upon receipt of a properly completed Notice and Questionnairefrom such Holder, the Company shall use its reasonable efforts to name suchHolder as a selling securityholder in the Shelf Registration Statement by meansof a pre-effective amendment or, if permitted by the Commission, by means of aprospectus supplement to the Shelf Registration Statement; provided, however,that the Company shall have no obligation to pay Additional Interest to suchHolder for its failure to file a pre-effective amendment or prospectussupplement and; provided, further, that the Company will have noobligation to add a Holder to the Shelf Registration Statement if apost-effective amendment would be necessary to name such Holder as a sellingsecurityholder.

 

(b)                                 TheCompany shall (i) furnish to the Initial Purchasers, prior to the filingof the Shelf Registration Statement, a copy of the Shelf Registration Statementas proposed to be filed and each amendment thereto and, after the filing of anyprospectus supplement, if any, and upon the request of an Initial Purchaser, acopy of such prospectus supplement.  TheCompany shall use its reasonable efforts to take into account and reflect inthe Shelf Registration Statement, when so filed with the Commission, suchcomments as the Initial Purchasers reasonably may propose; and(ii) subject to the conditions set forth in Section 2(a) hereof includethe names of the Holders who propose to sell Registrable Securities pursuant tothe Shelf Registration Statement as selling securityholders.

 

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(c)                                  TheCompany shall give written notice to the Initial Purchasers and the NoticeHolders (which notice pursuant to clauses (ii) through (vi) hereof shall beaccompanied by an instruction to suspend the use of the prospectus until therequisite changes have been made, if applicable):

 

(i)                                     whenthe Shelf Registration Statement or any amendment thereto has been filed withthe Commission and when the Shelf Registration Statement or any post-effectiveamendment thereto has become effective;

 

(ii)                                  ofany request by the Commission for amendments or supplements to the ShelfRegistration Statement or the prospectus included therein or for additionalinformation;

 

(iii)                               of the issuance by theCommission of any stop order suspending the effectiveness of the ShelfRegistration Statement or the initiation of any proceedings for that purpose;

 

(iv)                              ofthe receipt by the Company or its counsel of any notification with respect tothe suspension of the qualification of the Registrable Securities included inthe Shelf Registration Statement for sale in any jurisdiction or the initiationof any proceeding for such purpose;

 

(v)                                 ofthe happening of any event (but not as to the substance of any such event) thatrequires the Company to make changes in the Shelf Registration Statement or theprospectus in order that the Shelf Registration Statement or the prospectusdoes not contain an untrue statement of a material fact or omit to state amaterial fact required to be stated therein or necessary to make the statementstherein (in the case of the prospectus, in light of the circumstances underwhich they were made) not misleading; and

 

(vi)                              ofthe occurrence or existence of any pending corporate development with respectto the Company that the Company believes may be material and that, in thedetermination of the Company, makes it inadvisable and not in the best interestof the Company to allow continued availability of the Shelf RegistrationStatement and the related prospectus.

 

(d)                                 TheCompany shall use its reasonable efforts to obtain the withdrawal at theearliest possible time, of any order suspending the effectiveness of the ShelfRegistration Statement or the lifting of any suspension of the qualification(or exemption from qualification) of any of the Registrable Securities for salein any jurisdiction in which they have been qualified for sale.

 

(e)                                  TheCompany shall furnish to each Notice Holder, without charge, at least one copyof the Shelf Registration Statement and any post-effective amendment thereto,including financial statements and schedules, and, if the Holder so requests inwriting, all exhibits thereto (including those, if any, incorporated byreference).

 

(f)                                    TheCompany shall, during the Effectiveness Period, deliver to each Notice Holder,without charge, as many copies of the prospectus (including each preliminaryprospectus) included in the Shelf Registration Statement and any amendment orsupplement thereto as such Notice Holder may reasonably request.  The Company consents, subject to theprovisions of this Agreement, to the use of the prospectus or any amendment orsupplement thereto by each Notice Holders in connection with the offering andsale of the Registrable Securities covered by the prospectus, or any amendmentor supplement thereto, during the Effectiveness Period.

 

(g)                                 Priorto any public offering of the Registrable Securities pursuant to any ShelfRegistration Statement, the Company shall register or qualify or cooperate withthe Notice Holders and their respective counsel in connection with theregistration or qualification of the Registrable Securities for offer and saleunder the securities or “blue sky” laws of such states of the United States asany Notice Holder reasonably requests in writing and do any and all other actsor things necessary or advisable to enable the offer and sale in suchjurisdictions of the Registrable Securities covered by such Shelf RegistrationStatement; provided, however, that the Company shall not berequired to (i) qualify generally to do business or as a dealer insecurities in any jurisdiction where it is not then so qualified or would nototherwise be required to qualify but for this Section 2(g) or (ii) takeany action which would subject it to general service of process or to taxationin any jurisdiction where it is not then so subject.

 

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(h)                                 Unlessany Registrable Securities shall be in book-entry only form, the Company shallcooperate with the Notice Holders to facilitate the timely preparation anddelivery of certificates representing the Registrable Securities to be soldpursuant to any Shelf Registration Statement free of any restrictive legendsand in such permitted denominations and registered in such names as the NoticeHolders may request a reasonable period of time prior to sales of theRegistrable Securities pursuant to such Shelf Registration Statement.

 

(i)                                     Uponthe occurrence of any event contemplated by paragraphs (ii) through (v) ofSection 2(c) above during the period for which the Company is required tomaintain an effective Shelf Registration Statement, the Company shall, aspromptly as reasonably practicable, prepare and file a post-effective amendmentto the Shelf Registration Statement or a supplement to the related prospectusand any other required document so that, as thereafter delivered to Holders orpurchasers of Registrable Securities, the prospectus will not contain an untruestatement of a material fact or omit to state any material fact required to bestated therein or necessary to make the statements therein, in light of thecircumstances under which they were made, not misleading ; *provided*, *however*,that the Company shall not be required to file such amendment, supplement ordocument if the Board of Directors of the Company (or the Chief ExecutiveOfficer or the Chief Financial Officer of the Company) has made a determinationpursuant to Section 1(b), for so long as the suspension pursuant toSection 1(b) is continuing.  If theCompany notifies the Initial Purchasers and the Holders of RegistrableSecurities in accordance with paragraphs (ii) through (v) ofSection 2(c) above to suspend the use of the prospectus until therequisite changes to the prospectus have been made, then the Initial Purchasersand the Holders of Registrable Securities shall suspend use of such prospectus(such period during which the availability of the Shelf Registration Statementand any related prospectus is suspended being a “**Deferral Period**”).  TheCompany will use its reasonable efforts to ensure that the use of theprospectus may be resumed as promptly as is reasonably practicable, except thatin the case of suspension of the availability of the Shelf RegistrationStatement and related prospectus pursuant to Section 2(b)(vi) above, theCompany shall not be required to take such action until such time as it shallno longer determine that continued availability of the Shelf RegistrationStatement and the related prospectus is inadvisable and not in the bestinterests of the Company.

 

(j)                                     Notlater than the effective date of the Shelf Registration Statement, the Companywill provide a CUSIP number for the Registrable Securities that are debtsecurities and provide the applicable trustee with printed certificates for theNotes in a form eligible for deposit with The Depository Trust Company.

 

(k)                                  TheCompany will use its reasonable efforts to comply with all rules andregulations of the Commission to the extent and so long as they are applicableto the Shelf Registration Statement and will make generally available to itssecurityholders (or otherwise provide in accordance with Section 11(a) ofthe Securities Act) an earnings statement satisfying the provisions ofSection 11(a) of the Securities Act, no later than 45 days after the endof a 12-month period (or 90 days, if such period is a fiscal year) beginningwith the first month of the Company’s first fiscal quarter commencing after theeffective date of the Shelf Registration Statement, which statement shall coversuch 12-month period.

 

(l)                                     Notlater than the effective date of the Shelf Registration Statement, the Companyshall cause the Indenture to be qualified under the Trust Indenture Act of1939, as amended (the “**Trust Indenture Act**”),and to contain such changes, if any, as shall be necessary for suchqualification.  In the event that suchqualification would require the appointment of a new trustee under theIndenture, the Company shall appoint a new trustee thereunder pursuant to theapplicable provisions of the Indenture.

 

(m)                               TheCompany may require each Notice Holder to furnish to the Company suchinformation regarding the such Holder and the distribution of the RegistrableSecurities as the Company may from time to time reasonably require forinclusion in the Shelf Registration Statement, and the Company may exclude fromsuch registration the Registrable Securities of any Holder that unreasonablyfails to furnish such information within a reasonable time after receiving suchrequest.

 

(n)                                 TheCompany shall use its reasonable efforts to cause the Underlying Common Stockto be listed on any securities exchange or any automated quotation system onwhich similar securities issued by the Company are then listed, to the extentthe Underlying Common Stock satisfies applicable listing requirements.

 

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(o)                                 TheCompany shall enter into such customary agreements (including, if requested, anunderwriting agreement in customary form) and take all such other actions, ifany, as any Holder shall reasonably request in order to facilitate thedisposition of the Registrable Securities pursuant to the Shelf RegistrationStatement.

 

(p)                                 TheCompany shall (i) make reasonably available for inspection by the Holders,any underwriter participating in any disposition pursuant to the ShelfRegistration Statement and any attorney, accountant or other agent retained bythe Holders or any such underwriter, all relevant financial and other records,pertinent corporate documents and properties of the Company and (ii) causethe Company’s officers, directors, employees, accountants and auditors tosupply all relevant information reasonably requested by the Holders or any suchunderwriter, attorney, accountant or agent in connection with the ShelfRegistration Statement, in each case, as shall be reasonably necessary toenable such persons, to conduct a reasonable investigation within the meaningof Section 11 of the Securities Act; provided, however, thatthe foregoing inspection and information gathering shall be coordinated onbehalf of the Initial Purchasers by you and on behalf of the other parties, byone counsel designated by and on behalf of such other parties as described inSection 3 hereof.

 

(q)                                 TheCompany, if requested by any Holder of Securities covered by the ShelfRegistration Statement, shall cause (i) its counsel to deliver an opinion andupdates thereof relating to the Registrable Securities in customary formaddressed to such Holders and the managing underwriters, if any, thereof, anddated, in the case of the initial opinion, the effective date of such ShelfRegistration Statement (it being agreed that the matters to be covered by suchopinion shall include, without limitation, the due incorporation and goodstanding of the Company and its subsidiaries; the qualification of the Companyand its subsidiaries to transact business as foreign corporations; the dueauthorization, execution and delivery of the relevant agreement of the typereferred to in Section 2(p) hereof; the due authorization, execution,authentication and issuance, and the validity and enforceability, of the Notes;the absence of material legal or governmental proceedings involving the Companyand its subsidiaries; the absence of governmental approvals required to beobtained in connection with the Shelf Registration Statement, the offering andsale of the Registrable Securities, or any agreement of the type referred to inSection 2(p) hereof; the compliance as to form of the Shelf RegistrationStatement and any documents incorporated by reference therein and of theIndenture with the requirements of the Securities Act and the Trust IndentureAct, respectively; and, as of the date of the opinion and as of the effectivedate of the Shelf Registration Statement or most recent post-effectiveamendment thereto, as the case may be, the absence from the Shelf RegistrationStatement and the prospectus included therein, as then amended or supplemented,and from any documents incorporated by reference therein of an untrue statementof a material fact or the omission to state therein a material fact required tobe stated therein or necessary to make the statements therein not misleading(in the case of any such documents, in the light of the circumstances existingat the time that such documents were filed with the Commission under theExchange Act of 1934, as amended (the “**ExchangeAct**”)); (ii) its officers to execute and deliver all customarydocuments and certificates and updates thereof requested by any underwriters ofthe Registrable Securities and (iii) its independent public accountants and theindependent public accountants with respect to any other entity for whichfinancial information is provided in the Shelf Registration Statement to provideto the selling Holders of the applicable Registrable Securities and anyunderwriter therefor a comfort letter in customary form and covering matters ofthe type customarily covered in comfort letters in connection with primaryunderwritten offerings, subject to receipt of appropriate documentation ascontemplated, and only if permitted, by Statement of Auditing Standards No. 72.

 

(r)                                    Inthe event that any broker-dealer registered under the Exchange Act shallunderwrite any Securities or participate as a member of an underwritingsyndicate of selling group or “assist in the distribution” (within the meaningof the Conduct Rules (the “**Rules**”)of the National Association of Securities Dealers, Inc. (“**NASD**”)) thereof, whether as a Holder ofsuch Securities or as an underwriter, a placement or sales agent or a broker ordealer in respect thereof, or otherwise, the Company will assist suchbroker-dealer in complying with the requirement of such Rules, including,without limitation, by (i) if such Rules, including Rule 2720, shall sorequire, engaging a “qualified independent underwriter” (as defined in Rule2720) to participate in the preparation of the Shelf Registration Statementrelating to such Registrable Securities, to exercise usual standards of duediligence in respect thereto and, if any portion of the offering contemplatedby such Registration Statement is an underwritten offering or is made through aplacement or sales agent, to recommend the yield of such RegistrableSecurities, (ii) indemnifying any such qualified independent underwriter to theextent of the indemnification of underwriters provided in Section 5 hereof and(iii) providing such

 

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information to such broker-dealer as may be required in order for suchbroker-dealer to comply with the requirements of the Rules.

 

(s)                                  TheCompany shall use its reasonable efforts to take all other steps necessary toeffect the registration of the Registrable Securities covered by a RegistrationStatement contemplated hereby.

 

3.                                       *Registration Expenses.*

 

Except asotherwise provided herein, the Company shall bear all fees and expensesincurred in connection with the performance of its obligations under Sections 1and 2 hereof and shall bear or reimburse the Notice Holders for the reasonablefees and disbursements of a single counsel selected by at least 25% inprincipal amount of the Notes covered by the Shelf Registration Statement(provided that Holders of Underlying Common Stock issued upon the conversion ofthe Notes shall be deemed to be Holders of the aggregate principal amount ofNotes from which such Common Stock was converted) to act as counsel for theHolders in connection therewith.  EachNotice Holder shall pay all underwriting discounts and commissions and transfertaxes, if any, relating to the sale or disposition of such Notice Holder’sRegistrable Securities pursuant to the Shelf Registration Statement.

 

4.                                       *Indemnification*.

 

(a)                                  TheCompany agrees to indemnify and hold harmless each Notice Holder and eachperson, if any, who controls such Holder within the meaning of the SecuritiesAct or the Exchange Act (each Notice Holder and such controlling persons arereferred to collectively as the “**IndemnifiedParties**”) from and against any losses, claims, damages orliabilities, joint or several, or any actions in respect thereof (including,but not limited to, any losses, claims, damages, liabilities or actionsrelating to purchases and sales of the Registrable Securities) to which eachIndemnified Party may become subject under the Securities Act, the Exchange Actor otherwise, insofar as such losses, claims, damages, liabilities or actionsarise out of, or are based upon, any untrue statement or alleged untruestatement of a material fact contained in the Shelf Registration Statement orprospectus, including any document incorporated by reference therein, or in anyamendment or supplement thereto or in any preliminary prospectus relating tothe Shelf Registration Statement, or arise out of, or are based upon, theomission or alleged omission to state therein a material fact required to bestated therein or necessary to make the statements therein not misleading, andshall reimburse, as incurred, the Indemnified Parties for any legal or otherexpenses reasonably incurred by them in connection with investigating ordefending any such loss, claim, damage, liability or action in respect thereof;provided, however, that the Company shall not be liable in anysuch case to the extent that such loss, claim, damage or liability arises outof or is based upon any untrue statement or alleged untrue statement oromission or alleged omission made in a Shelf Registration Statement orprospectus or in any amendment or supplement thereto or in any preliminaryprospectus relating to a Shelf Registration in reliance upon and in conformitywith written information pertaining to such Holder and furnished to the Companyby or on behalf of such Holder specifically for inclusion therein; provided,further, however, that this indemnity agreement will be inaddition to any liability which the Company may otherwise have to suchIndemnified Party.  The Company shallalso indemnify any underwriters, their officers and directors and each personwho controls such underwriters within the meaning of the Securities Act or theExchange Act to the same extent as provided above with respect to theindemnification of the Notice Holders if requested by such Holders.

 

(b)                                 EachNotice Holder of Registrable Securities, severally and not jointly, willindemnify and hold harmless the Company and each person, if any, who controlsthe Company within the meaning of the Securities Act or the Exchange Act fromand against any losses, claims, damages or liabilities or any actions inrespect thereof, to which the Company or any such controlling person may becomesubject under the Securities Act, the Exchange Act or otherwise, insofar assuch losses, claims, damages, liabilities or actions arise out of or are basedupon any untrue statement or alleged untrue statement of a material factcontained in a Shelf Registration Statement or prospectus or in any amendmentor supplement thereto or in any preliminary prospectus relating to the ShelfRegistration Statement, or arise out of or are based upon the omission oralleged omission to state therein a material fact necessary to make thestatements therein not misleading, but in each case only to the extent that theuntrue statement or omission or alleged untrue statement or omission was madein reliance upon and in conformity with written information pertaining to suchHolder and furnished to the Company by or on behalf of such Holder specificallyfor inclusion therein; and, subject to the limitation set forth immediatelypreceding this clause, shall reimburse, as incurred, the Company for any legalor

 

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other expenses reasonably incurred by the Company or any suchcontrolling person in connection with investigating or defending any loss,claim, damage, liability or action in respect thereof.  This indemnity agreement will be in additionto any liability which such Notice Holder may otherwise have to the Company orany of its controlling persons.

 

(c)                                  Promptlyafter receipt by an indemnified party under this Section 4 of notice ofthe commencement of any action or proceeding (including a governmentalinvestigation), such indemnified party will, if a claim in respect thereof isto be made against the indemnifying party under this Section 4, notify theindemnifying party of the commencement thereof; but the omission so to notifythe indemnifying party will not, in any event, relieve the indemnifying partyfrom any obligations to any indemnified party other than the indemnificationobligation provided in paragraph (a) or (b) above.  In case any such action is brought againstany indemnified party, and it notifies the indemnifying party of thecommencement thereof, the indemnifying party will be entitled to participatetherein and, to the extent that it may wish, jointly with any other indemnifyingparty similarly notified, to assume the defense thereof, with counselreasonably satisfactory to such indemnified party (who shall not, except withthe consent of the indemnified party, be counsel to the indemnifying party),and after notice from the indemnifying party to such indemnified party of itselection so to assume the defense thereof the indemnifying party will not beliable to such indemnified party under this Section 4 for any legal orother expenses, other than reasonable costs of investigation, subsequentlyincurred by such indemnified party in connection with the defense thereof.  Notwithstanding the indemnifying party’selection to assume the defense of the indemnified party in an action, theindemnified party shall have the right to employ separate counsel (includinglocal counsel) and the indemnifying party shall bear the reasonable fees, costsand expenses of such separate counsel (and local counsel) if (i) the useof counsel chosen by the indemnifying party to represent the indemnified partywould present such counsel with a conflict of interest, (ii) the actual orpotential defendants in, or targets of, any such action include both theindemnified party and the indemnifying party and the indemnified party shallhave reasonably concluded that there may be legal defenses available to itand/or other indemnified parties which are different from or additional tothose available to the indemnifying party, (iii) the indemnifying partyshall not have employed counsel satisfactory to the indemnified party torepresent the indemnified party within a reasonable time after notice of theinstitution of such action or (iv) the indemnifying party shall authorizethe indemnified party to employ separate counsel at the expense of the indemnifyingparty.  No indemnifying party shall,without the prior written consent of the indemnified party, effect anysettlement of any pending or threatened action in respect of which anyindemnified party is or could have been a party and indemnity could have beensought hereunder by such indemnified party unless such settlement includes anunconditional release of such indemnified party from all liability on anyclaims that are the subject matter of such action, and does not include astatement as to or an admission of fault, culpability or a failure to act by oron behalf of any indemnified party.

 

(d)                                 Ifthe indemnification provided for in this Section 4 is unavailable orinsufficient to hold harmless an indemnified party under subsections (a)or (b) above, then each indemnifying party shall contribute to the amount paidor payable by such indemnified party as a result of the losses, claims, damagesor liabilities (or actions in respect thereof) referred to insubsection (a) or (b) above in such proportion as is appropriate toreflect the relative fault of the indemnifying party or parties on the one handand the indemnified party on the other in connection with the statements oromissions that resulted in such losses, claims, damages or liabilities (oractions in respect thereof) as well as any other relevant equitableconsiderations.  The relative fault ofthe parties shall be determined by reference to, among other things, whetherthe untrue or alleged untrue statement of a material fact or the omission oralleged omission to state a material fact relates to information supplied bysuch indemnifying party on the one hand or such indemnified party, as the casemay be, on the other, and the parties’ relative intent, knowledge, access toinformation and opportunity to correct or prevent such statement oromission.  The amount paid by anindemnified party as a result of the losses, claims, damages or liabilitiesreferred to in the first sentence of this subsection (d) shall be deemedto include any legal or other expenses reasonably incurred by such indemnifiedparty in connection with investigating or defending any action or claim whichis the subject of this subsection (d). Notwithstanding any other provision of this Section 4(d), theHolders of Registrable Securities shall not be required to contribute anyamount in excess of the amount by which the net proceeds received by suchHolders from the sale of the Registrable Securities pursuant to the ShelfRegistration Statement exceeds the amount of damages which such Holders ofRegistrable Securities have otherwise been required to pay by reason of suchuntrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulentmisrepresentation (within the meaning of Section 11(f) of the SecuritiesAct) shall be entitled to contribution from any person who was not guilty ofsuch fraudulent misrepresentation.  Forpurposes of this subsection (d), each person, if any, who controls suchindemnified party within the meaning of the Securities Act or the Exchange Actshall have the same

 

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rights to contribution as such indemnified party and each person, ifany, who controls the Company within the meaning of the Securities Act or theExchange Act shall have the same rights to contribution as the Company.

 

(e)                                  Theagreements contained in this Section 4 shall survive the sale of theRegistrable Securities pursuant to a Shelf Registration Statement and shallremain in full force and effect, regardless of any termination or cancellationof this Agreement or any investigation made by or on behalf of any indemnifiedparty.

 

5.                                       *Additional Interest Under Certain Circumstances.*

 

(a)                                  Additionalinterest (the “**Additional Interest**”)with respect to the Registrable Securities shall be assessed as follows if anyof the following events occur (each such event in clauses (i) through(iii) below being herein called a “**RegistrationDefault**”):

 

(i)                                     theShelf Registration Statement required by this Agreement is not filed with theCommission on or prior to the Filing Deadline;

 

(ii)                                  theShelf Registration Statement required by this Agreement is not declaredeffective by the Commission on or prior to the Effectiveness Deadline Date; or

 

(iii)                               any Shelf RegistrationStatement required by this Agreement that has been declared effective by theCommission thereafter ceases to be effective or useable (subject to theCompany’s right to suspend the use of the Shelf Registration Statement and theprospectus as set forth in Section 1(b)) in connection with the resale ofthe Registrable Securities and the Common Stock issuable upon the conversion ofthe Notes in accordance with and during the periods specified herein and(A) the Company does not cause the Shelf Registration Statement to becomeeffective within five (5) Business Days (which shall not be deemed to extendthe incurrence and accrual of any obligation to pay Additional Interest beyondthe time provided for in the last sentence of Section 1(b)) after itceases to be effective or useable by a post-effective amendment or additionalShelf Registration Statement being filed and declared effective or a reportfiled pursuant to the Exchange Act or (B) if applicable, the Company doesnot terminate any Deferral Period within the time provided for inSection 1(b).

 

Each of theforegoing will constitute a Registration Default whatever the reason for anysuch event and whether it is voluntary or involuntary or is beyond the controlof the Company or pursuant to operation of law or as a result of any action orinaction by the Commission.

 

AdditionalInterest shall accrue on the Registrable Securities over and above the interestset forth in the title of the Registrable Securities from and including thedate on which any such Registration Default shall occur to but excluding, thedate on which all such Registration Defaults have been cured at a rate of 0.50%of the principal amount per annum.

 

In the case ofNotes that have been converted into or exchanged for Underlying Common Stock,Additional Interest shall accrue at the rate described above, applied to theApplicable Conversion Price of such shares of Underlying Common Stock that areRegistrable Securities.  In the case ofa Registration Default described in clause (iii) above, the Company’s obligationto pay Additional Interest extends only to Registrable Securities of NoticeHolders.  Any Additional Interestaccrued with respect to any Note or portion thereof converted into UnderlyingCommon Stock on a conversion date prior to the interest payment date withrespect to the Notes under the Indenture, shall, in any such event, be paidinstead to the Holder who submitted such Note or portion thereof for conversionon the applicable conversion date, as the case may be, on such date.  Notwithstanding the foregoing, no AdditionalInterest shall accrue as to any Registrable Security from and after the earlierof (x) the date such security is no longer a Registrable Security and(y) the expiration of the Effectiveness Period.  The rate of accrual of the Additional Interest with respect toany period shall not exceed the rate provided for in this paragraphnotwithstanding the occurrence of multiple concurrent RegistrationDefaults.  Following the cure of allRegistration Defaults requiring the payment by the Company of AdditionalInterest to the Holders of Registrable Securities pursuant to this Section, theaccrual of Additional Interest will cease (without in any way limiting theeffect of any subsequent Registration Default requiring the payment of AdditionalInterest by the Company).

 

9

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The Trustee shallbe entitled, on behalf of Holders of Notes or Underlying Common Stock, to seekany available remedy for the enforcement of this Agreement, including for thepayment of any Additional Interest.

 

All of theCompany’s obligations set forth in this Section 5 that are outstandingwith respect to any Registrable Security at the time such security ceases to bea Registrable Security shall survive until such time as all such obligationswith respect to such security have been satisfied in full.

 

The parties heretoagree that the Additional Interest provided for in this Section 5constitutes a reasonable estimate of the damages that may be incurred byHolders of Registrable Securities by reason of the failure of the ShelfRegistration Statement to be filed or declared effective or available foreffecting resales of Registrable Securities in accordance with the provisionshereof, and that the Additional Interest shall be the exclusive remedy at lawor in equity or otherwise available to the Holders of Registrable Securitiesfor such Registration Default.

 

(b)                                 Anyamounts of Additional Interest due pursuant to Section 5(a) will bepayable in cash on the regular interest payment dates with respect to theRegistrable Securities.  The amount ofAdditional Interest will be determined by multiplying the applicable AdditionalInterest Rate by the principal amount of the Registrable Securities or theApplicable Conversion Price of the Registrable Securities, as applicable, andfurther multiplied by a fraction, the numerator of which is the number of dayssuch Additional Interest Rate was applicable during such period (determined onthe basis of a 360-day year comprised of twelve 30-day months), and thedenominator of which is 360.  TheRegistrable Securities entitled to payment of Additional Interest shall bedetermined as of the Business Day immediately preceding the next regularinterest payment date with respect to the Registrable Securities.

 

6.                                       *Rules 144 and 144A*.  The Company shall use its reasonable effortsto file the reports required to be filed by it under the Securities Act and theExchange Act in a timely manner and, if at any time the Company is not requiredto file such reports, it will, upon the request of any Holder, make publiclyavailable other information so long as necessary to permit sales of theirsecurities pursuant to Rules 144 and 144A.  The Company covenants that it will take such further action asany Holder may reasonably request, all to the extent required from time to timeto enable such Holder to sell Registrable Securities without registration underthe Securities Act within the limitation of the exemptions provided byRules 144 and 144A (including the requirements ofRule 144A(d)(4)).  The Company willprovide a copy of this Agreement to prospective purchasers of Notes identifiedto the Company by the Initial Purchasers upon request.  Notwithstanding the foregoing, nothing inthis Section 6 shall be deemed to require the Company to register any ofits securities pursuant to the Exchange Act.

 

7.                                       *Underwritten Registrations*.  No person may participate in anyunderwritten registration hereunder unless such person (i) agrees to sellsuch person’s Registrable Securities on the basis reasonably provided in anyunderwriting arrangements approved by the persons entitled hereunder to approvesuch arrangements and (ii) completes and executes all questionnaires,powers of attorney, indemnities, underwriting agreements and other documentsreasonably required under the terms of such underwriting arrangements.

 

If any of theRegistrable Securities covered by any Shelf Registration are to be sold in anunderwritten offering, the investment banker or investment bankers and manageror managers that will administer the offering (“**Managing Underwriters**”) will be selected by the Holders of amajority in aggregate principal amount of such Registrable Securities to beincluded in such offering (provided that Holders of Common Stock issued uponconversion of the Notes shall not be deemed holders of Common Stock, but shallbe deemed to be holders of the aggregate principal amount of Notes from whichsuch Common Stock was converted), provided, however, that suchManaging Underwriters will be reasonably acceptable to the Company.

 

8.                                       *Miscellaneous.*

 

(a)                                  *Remedies*. Except as provided in Section 5, the Company acknowledges and agreesthat any failure by the Company to comply with its obligations underSection 1 and 2 hereof may result in material irreparable injury to theInitial Purchasers or the Holders for which there is no adequate remedy at law,that it will not be possible to measure damages for such injuries precisely andthat, in the event of any such failure, the Initial Purchasers or any Holdermay obtain such relief as may be required to specifically enforce the Company’sobligations under Sections 1 and

 

10

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2 hereof.  The Company furtheragrees to waive the defense in any action for specific performance that aremedy at law would be adequate.

 

(b)                                 *No Inconsistent Agreements*.  The Company will not on or after the date ofthis Agreement enter into any agreement with respect to its securities that isinconsistent with the rights granted to the Holders in this Agreement orotherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not in any wayconflict with and are not inconsistent with the rights granted to the holdersof the Company’s securities under any agreement in effect on the date hereof.

 

(c)                                  *Amendments and Waivers*.  The provisions of this Agreement may not beamended, modified or supplemented, and waivers or consents to departures fromthe provisions hereof may not be given, except by the Company and the writtenconsent of the Holders of a majority in principal amount of the RegistrableSecurities affected by such amendment, modification, supplement, waiver orconsents (provided that Holders of Common Stock issued upon conversion of Notesshall not be deemed holders of Common Stock, but shall be deemed to be holdersof the aggregate principal amount of Notes from which such Common Stock wasconverted).  Without the consent of theHolder of each Registrable Security, however, no modification may change theprovisions relating to the payment of Additional Interest.

 

(d)                                 *Notices*. All notices and other communications provided for or permitted hereundershall be made in writing by hand delivery, first-class mail, facsimiletransmission, or air courier that guarantees overnight delivery:

 

(i)                                     ifto a Holder of the Registrable Securities, at the most current address given inwriting by such Holder to the Company.

 

(ii)                                  ifto the Initial Purchasers:

 

Banc of America Securities LLC9 West 57th Street, 40th FloorNew York, New York 10019Fax No.: (212) 847-5124Attention: Eric Hambleton

 

 

Credit Suisse First Boston LLCEleven Madison AvenueNew York, NY 10010-3629Fax No.:  (212) 325-8278Attention:  Transactions Advisory Group

 

 

Merrill Lynch, Pierce, Fenner & Smith IncorporatedNorth TowersWorld Financial CenterNew York, New York 10281-1201Fax No.: (212) 449-3207Attention: Legal Department

 

 

with a copy to:

 

 

Davis Polk & Wardwell1600 El Camino RealMenlo Park, CA 94025Attention:  Alan F. Denenberg, Esq.

 

11

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(iii)                               if to the Company, atits address as follows:

 

UTStarcom, Inc.1275 Harbor Bay ParkwayAlameda, CA 94502Fax No.: (510) 864-8802Attention:  Michael J. Sophie, VicePresident of Finance and Chief Financial Officer

 

 

with a copy to:

 

 

Wilson Sonsini Goodrich & Rosati, ProfessionalCorporation650 Page Mill RoadPalo Alto, CA 94304-1050Attention:  Carmen Chang, Esq.

 

All such notices and communications shall be deemed tohave been duly given:  (i) at the timedelivered by hand, if personally delivered, (ii) three business days afterbeing deposited in the mail, (iii) postage prepaid, if mailed; when receipt isacknowledged by recipient’s facsimile machine operator, if sent by facsimile transmissionand (iv) on the day delivered, if sent by overnight air courier guaranteeingnext day delivery.

 

(e)                                  *Third-Party Beneficiaries*.  The Holders shall be third-partybeneficiaries to the agreements made hereunder between the Company, on the onehand, and the Initial Purchasers, on the other hand, and shall have the rightto enforce such agreements directly to the extent they may deem suchenforcement necessary or advisable to protect their rights or the rights ofHolders hereunder.  Any Notice Holdershall be bound by the terms and provisions of this Agreement by reason of itselection with respect to the Registrable Securities to have its RegistrableSecurities included in a Shelf Registration Statement.  All the terms and provisions of this Agreementshall be binding upon, shall inure to the benefit of and shall be enforceableby the respective successors and assigns of the parties hereto and any Holderfrom time to time of the Registrable Securities to the aforesaid extent.  In the event that any transferee of anyHolder of Registrable Securities shall acquire Registrable Securities, in anymanner, whether by gift, bequest, purchase, operation of law or otherwise, suchtransferee shall, without any further writing or action of any kind, be entitledto receive the benefits of and, if a Notice Holder, be conclusively deemed tohave agreed to be bound by and to perform all of the terms and provisions ofthis Agreement to the aforesaid extent.

 

(f)                                    *Successors and Assigns*.  This Agreement shall be binding upon theCompany and its successors and assigns.

 

(g)                                 *Counterparts*.  This Agreement may be executed in any number of counterparts andby the parties hereto in separate counterparts, each of which when so executedshall be deemed to be an original and all of which taken together shallconstitute one and the same agreement.

 

(h)                                 *Headings*. The headings in this Agreement are for convenience of reference only andshall not limit or otherwise affect the meaning hereof.

 

(i)                                     *Governing Law*.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCEWITH, THE LAWS OF THE STATE OF NEW YORK.

 

(j)                                     *Severability*.  If any one or more of the provisions contained herein, or theapplication thereof in any circumstance, is held invalid, illegal orunenforceable, the validity, legality and enforceability of any such provisionin every other respect and of the remaining provisions contained herein shallnot be affected or impaired thereby.

 

(k)                                  *Securities Held by the Company*.  Whenever the consent or approval of Holdersof a specified percentage of principal amount of Registrable Securities isrequired hereunder, Registrable Securities held by the Company or itsaffiliates (other than subsequent Holders of Registrable Securities if suchsubsequent Holders are deemed

 

12

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to be affiliates solely by reason of their holdings of such RegistrableSecurities) shall not be counted in determining whether such consent orapproval was given by the Holders of such required percentage.

 

[Remainder of pageintentionally left blank].

 

13

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If the foregoing is in accordance with yourunderstanding of our agreement, please sign and return a counterpart hereof,whereupon this instrument, along with all counterparts, will become a bindingagreement between the Initial Purchasers and the Company in accordance with itsterms.

 
|                                                                                                                 | Very truly yours,        |
|----------------------------------------------------------------------------------------------------------------------|--------------------------|
|                                                                                                                 |                     |
|                                                                                                                 | UTStarcom, Inc.          |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
|                                                                                                                 | By:                      |   /s/ Michael J. Sophie |
|                                                                                                                 |                     | Michael J. Sophie |
|                                                                                                                 |                     | Vice President of Finance  and Chief Financial  Officer |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| The foregoing  Registration  Rights Agreement is hereby confirmed  and accepted as of the date first  above written. |                     |
|                                                                                                                 |                     |
| Banc  Of America Securities LLC                                                                                      |                     |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| By:                                                                                                                  |   /s/ Derek Dillon  |   |   |
|                                                                                                                 |   Name:        | Derek Dillon |   |
|                                                                                                                 |   Title:       | Managing Director |   |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| Credit  Suisse First Boston LLC                                                                                      |                     |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| By:                                                                                                                  |   /s/ John C. Hodge |   |   |
|                                                                                                                 |   Name:        | John C. Hodge |   |
|                                                                                                                 |   Title:       | Managing Director |   |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| Merrill  Lynch, Pierce, Fenner & Smith Incorporated                                                              |                     |
|                                                                                                                 |                     |
|                                                                                                                 |                     |
| By:                                                                                                                  |   /s/ Gary Kirkham  |   |   |
|                                                                                                                 |   Name:        | Gary Kirkham |   |
|                                                                                                                 |   Title:       | Managing Director |   |
|                                                                                                                      |                          |  |  |  |  |

 

 

[Signature page toRegistration Rights Agreement]

 

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**ANNEX A**

 

FORM OF SELLINGSECURITYHOLDER NOTICE AND QUESTIONNAIRE

 

The undersignedbeneficial holder of 7/8% Convertible Subordinated Notes due 2008 (the “Notes”)of UTStarcom, Inc. (“UTStarcom”), convertible into shares of UTStarcom’s commonstock, par value $0.00125 (the “Common Stock” and together with the Notes, the“Registrable Securities”), understands that UTStarcom has filed or intends tofile with the Securities and Exchange Commission (the “SEC”) a registrationstatement on Form S-3 (the “Shelf Registration Statement”) for theregistration and resale under Rule 415 of the Securities Act of 1933, asamended (the “Securities Act”), of the Registrable Securities in accordancewith the terms of the Registration Rights Agreement (the “Registration RightsAgreement”) dated March 12, 2003 between UTStarcom and the initial purchasersnamed therein.  The Registration RightsAgreement is available from UTStarcom upon request at the address set forthbelow.  All capitalized terms nototherwise defined herein shall have the meanings ascribed thereto in theRegistration Rights Agreement.

 

Each beneficialowner of Registrable Securities is entitled to the benefits of the RegistrationRights Agreement.  In order to sell orotherwise dispose of any Registrable Securities pursuant to the ShelfRegistration Statement, a beneficial owner of Registrable Securities generallywill be required to be named as a selling security holder in the relatedprospectus, deliver a prospectus to purchasers of Registrable Securities and bebound by those provisions of the Registration Rights Agreement applicable tosuch beneficial owner (including certain indemnification provisions asdescribed below).  In order to haveRegistrable Securities included in the Shelf Registration Statement (or asupplement or amendment thereto), this Notice of Registration Statement andSelling Securityholder Questionnaire (“Noticeand Questionnaire”) must be completed, executed and delivered to theCompany at the address set forth herein for receipt ON OR BEFORE [insert datethat is 28 days from the date of the Notice and Questionnaire].  Beneficial owners of Registrable Securitieswho do not complete, execute and return this Notice and Questionnaire by suchdate (i) will not be named as selling securityholders in the ShelfRegistration Statement and (ii) may not use the Prospectus forming a partthereof for resales of Registrable Securities.

 

Notwithstandingthe foregoing, upon the request of any Holder of Registrable Securities thatdid not return a Notice and Questionnaire on a timely basis or did not receivea Notice and Questionnaire because it was a subsequent transferee ofRegistrable Securities after the Company mailed the Notice and Questionnaire,(x) the Company shall distribute a Notice and Questionnaire to such Holders atthe address set forth in the request and (y) upon receipt of a properlycompleted Notice and Questionnaire from such Holder, the Company shall use itsreasonable efforts to name such Holder as a selling securityholder in the ShelfRegistration Statement by means of a pre-effective amendment or, if permittedby the Commission, by means of a Prospectus supplement to the ShelfRegistration Statement; *provided*,*however*, that the Company shallhave no obligation to pay Liquidated Damages to such Holder for its failure tofile a pre-effective amendment or Prospectus supplement and; *provided*, *further*,that the Company will have no obligation to add a Holder to the ShelfRegistration Statement if a post-effective amendment would be necessary to namesuch Holder as a selling securityholder.

 

Certain legalconsequences arise from being named as selling security holders in the ShelfRegistration Statement and the related prospectus.  Accordingly, holders and beneficial owners of RegistrableSecurities are advised to consult their own securities law counsel regardingthe consequences of being named or not being named as a selling security holderin the Shelf Registration Statement and the related prospectus.

 

 

NOTICE

 

The undersignedbeneficial owner (the “Selling Securityholder”) of Registrable Securitieshereby gives notice to UTStarcom of its intention to sell or otherwise disposeof Registrable Securities beneficially owned by it and listed below inItem 3 (unless otherwise specified under Item 3) pursuant to theShelf Registration Statement.  The undersigned,by signing and returning this Notice and Questionnaire, agrees to be bound bythe terms and conditions of

 

 

15

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this Notice and Questionnaire and the Registration Rights Agreement asif the undersigned Selling Securityholder were an original party thereto.

 

Uponany sale of Registrable Securities pursuant to the Shelf RegistrationStatement, the Selling Securityholder will be required to deliver to theCompany and the Trustee the Notice of Transfer (completed and signed) set forthin Exhibit 1 to this Notice and Questionnaire.

 

The undersigned herebyprovides the following information to UTStarcom and represents and warrantsthat such information is accurate and complete:

 

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**QUESTIONNAIRE**

 
| 1.     | (a)    | Full Legal Name of  Selling Securityholder:                                                                                                                                                                    |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   | (b)    | Full Legal Name of  Registered Holder (if not the same as (a) above) through which Registrable  Securities listed in (3) below are held:                                                                       |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   | (c)    | Full Legal Name of DTC  Participant (if applicable and if not the same as (b) above) through which  Registrable Securities listed in (3) below are held:                                                       |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
| 2.     |   | Address for Notices to  Selling Securityholder:                                                                                                                                                                |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |   |
|   |   | Telephone:                                                                                                                                                                                                     |   |
|   |   |                                                                                                                                                                                                           |
|   |   | Fax:                                                                                                                                                                                                           |   |
|   |   |                                                                                                                                                                                                           |
|   |   | Contact Person:                                                                                                                                                                                                |   |
|   |   |                                                                                                                                                                                                           |
| 3.     |   | Beneficial Ownership of  Registrable Securities:                                                                                                                                                               |
|   |   |                                                                                                                                                                                                           |
|   | (a)    | Type and principal  amount of Registrable Securities beneficially owned:                                                                                                                                       |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   | (b)    | CUSIP No(s). of such  Registrable Securities beneficially owned:                                                                                                                                               |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
| 4.     |   | Beneficial Ownership of UTStarcom Securities Owned  by the Selling Securityholder                                                                                                                              |
|   |   |                                                                                                                                                                                                           |
|   |   | *Except as set forth below in this  item (4), the undersigned is not the beneficial or registered owner of any  securities of UTStarcom other than the Registrable Securities listed above in  Item (3).* |
|   |   |                                                                                                                                                                                                           |
|   | (a)    | Type and amount of  other securities beneficially owned by the Selling Securityholder:                                                                                                                         |
|   |   |                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                           |
|        |        |                                                                                                                                                                                                                |  |  |  |

 

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|   | (b)    | CUSIP No(s). of such  Registrable Securities beneficially owned:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 5.     |   | Relationship with UTStarcom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | *Except as set forth below, neither  the undersigned nor any of its affiliates, directors or principal equity  holder (5% or more) has held any position or office or has had any other  material relationship with UTStarcom (or its predecessors or affiliates)  during the past three years.*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | State any exceptions here:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 6.     |   | Plan of Distribution                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | *Except as set forth below, the  undersigned (including its donees or pledgees) intends to distribute the  Registrable Securities listed above in Item (3) pursuant to the Shelf  Registration Statement only as follows (if at all): Such Registrable  Securities may be sold from time to time directly by the undersigned or  alternatively through initial purchasers or broker-dealers or agents.  If the Registrable Securities are sold  through initial purchasers or broker-dealers, the Selling Securityholder will  be responsible for underwriting discounts or commissions or agent’s  commissions.  Such Registrable Securities  may be sold in one or more transactions at fixed prices, at prevailing market  prices at the time of sale, at varying prices determined at the time of sale,  or at negotiated prices.  Such sales  may be effected in transactions (which may involve block transactions)  (i) on any national securities exchange or quotation service on which  the Registrable Securities may be listed or quoted at the time of sale,  (ii) in the over-the-counter market, (iii) in transactions  otherwise than on such exchanges or services or in the over-the-counter market  or (iv) through the writing of options.   In connection with sales of the Registrable Securities or otherwise,  the undersigned may enter into hedging transactions with broker-dealers,  which may in turn engage in short sales of the Registrable Securities, short  and deliver Registrable Securities to close out such short positions, or loan  or pledge Registrable Securities to broker-dealers that in turn may sell such  securities.* |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   | State any exceptions here:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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|   |   | Note:  In no event may such method(s) of  distribution take the form of an underwritten offering of the Registrable  Securities without the prior agreement of UTStarcom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

 

The undersignedacknowledges that it understands its obligation to comply with the provisionsof the Securities Exchange Act of 1934, as amended, and the rules thereunderrelating to stock manipulation, particularly Regulation M thereunder (orany successor rules or regulations), in connection with any offering ofRegistrable Securities pursuant to the Shelf Registration Statement.  The undersigned agrees that neither it norany person acting on its behalf will engage in any transaction in violation ofsuch provisions.

 

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The SellingSecurityholder hereby acknowledges its obligations under the RegistrationRights Agreement to indemnify and hold harmless certain persons set forththerein.

 

Pursuant to theRegistration Rights Agreement, UTStarcom has agreed under certain circumstancesto indemnify the Selling Securityholders against certain liabilities.

 

In the event thatthe Selling Securityholder transfers all or any portion of the RegistrableSecurities listed in Item (3) above after the date on which such information isprovided to the Company, the Selling Securityholder agrees to notify thetransferee(s) at the time of the transfer of its rights and obligations underthis Notice and Questionnaire and the Registration Rights Agreement.

 

In accordance withthe undersigned’s obligation under the Registration Rights Agreement to providesuch information as may be required by law for inclusion in the ShelfRegistration Statement, the undersigned agrees to promptly notify UTStarcom ofany inaccuracies or changes in the information provided herein that may occursubsequent to the date hereof at any time while the Shelf RegistrationStatement remains effective.  Allnotices hereunder and pursuant to the Registration Rights Agreement shall bemade in writing at the address set forth below.

 

By signing thisNotice and Questionnaire, the undersigned consents to the disclosure of theinformation contained herein in its answers to Items (1) through (6) aboveand the inclusion of such information in the Shelf Registration Statement andthe related prospectus.  The undersignedunderstands that such information will be relied upon by UTStarcom inconnection with the preparation or amendment of the Shelf RegistrationStatement and the related prospectus.

 

IN WITNESSWHEREOF, the undersigned, by authority duly given, has caused this Notice andQuestionnaire to be executed and delivered either in person or by its dulyauthorized agent.

 
|   | Dated: |             |
|--------|--------|------------------|
|   |   | Beneficial Owner |   |
|   |   |             |   |
|   |   | By:              |   |
|   |   |             | Name: |
|   |   |             | Title: |
|        |        |                  |  |  |  |

 

PLEASE RETURN THECOMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO:

 

UTStarcom Inc.1275 Harbor Bay ParkwayAlameda, California 94502Attention:  Russell L. Boltwood,General Counsel(510) 864-8800

 

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**Exhibit1to Annex A**

 

NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

 

UTStarcom, Inc.

1275 Harbor Bay Parkway

Alameda, California 94502

Attention: Russell L.Boltwood

General Counsel

 

U.S. Bank NationalAssociation

550 S. Hope Street, Suite500

Los Angeles, California90071

Attention:  Corporate Trust Services

 

Re:                               UTStarcom,Inc. (the “Company”) 7/8% Convertible Subordinated Notes due 2008 (the  “Notes”)

 

Dear Sirs:

 

Please be advised that                                   hastransferred $                         aggregateprincipal amount of the above-referenced Notes or shares of the Company’s commonstock, issued upon conversion or repurchase of the Notes, pursuant to aneffective Registration Statement on Form S-3 (File No.333-            )filed by the Company.

 

We hereby certify that the prospectus deliveryrequirements, if any, of the Securities Act of 1933, as amended, have beensatisfied with respect to the transfer described above and that the above-namedbeneficial owner of the Notes or common stock is named as a sellingsecurityholder in the Prospectus dated                  ,or in amendments or supplements thereto, and that the aggregate principalamount of the Notes or number of shares of common stock transferred are [aportion of] the Notes or shares of common stock listed in such Prospectus asamended or supplemented opposite such owner’s name.

 
| Dated: | Very truly yours, |
|--------|-------------------|
|   |              |
|   |              |   |
|   | (Name)            |
|   |              |
|   | By:               |   |   |
|   |              | (Authorized Signature) |
|        |                   |  |  |

 

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