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[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED
PORTIONS. 

CONFIDENTIAL  

EXHIBIT 10. 11  

 
 

ETHANOL MARKETING AGREEMENT    
    

This
Ethanol Marketing Agreement ("Agreement") is made and entered into as the 22nd day of February 2005 by and between Aventine Renewable Energy, Inc., a Delaware
corporation ("AREI) and VeraSun Fort Dodge, LLC, a Delaware corporation ("VeraSun Fort Dodge"). 

In
consideration of the mutual terms and conditions contained herein, the Parties agree as follows: 

	1.
	Terms and Termination

	A.
	The
term of this Agreement shall commence on the first day of ethanol sales and continue for a primary term ending March 31, 2007 and thereafter, renewing for consecutive two
(2) year terms, unless terminated by either party at the end of the primary term or any subsequent two (2) year anniversary thereof with at least six (6) months prior written
notice.

	B.
	In
addition, this Agreement may be terminated under the circumstances set out below.

	(1)
	Termination for Intentional Misconduct.    If either party engages in intentional misconduct reasonably likely to result in
significant adverse consequences to the other party, the party harmed or likely to be harmed by the intentional misconduct may terminate this Agreement immediately, upon written notice to the party
engaging in the intentional misconduct.

	(2)
	Termination for Uncured Breach.    If one of the parties breaches the terms of this Agreement, the other party may give the
breaching party a notice in writing which specifically sets out the nature and extent of the breach, and the steps that must be taken to cure the breach. After receiving the written notice, the party
will than have thirty (30) days to cure the breach, if the breaching does not involve a failure to make any payments which are required by this Agreement.

	

	If
breach involves lack of payment beyond the established delinquency period, as specified in this Agreement, VeraSun Fort Dodge may terminate this
Agreement immediately and without prior written notice.

	(3)
	Change of Control.    Based on a change of majority interest in AREI, VeraSun Fort Dodge shall have six (6) months to
terminate this Agreement following the receipt of written notice regarding such change of ownership. AREI must notify VeraSun Fort Dodge of said event in writing within two (2) weeks of event.
VeraSun Fort Dodge may terminate Agreement with (30) days written notice within said six (6) month period.

	(4)
	Termination by Mutual Written Agreement.    This Agreement may also be terminated upon any terms and under any condition,
which are mutually agreed upon in writing by AREI and VeraSun Fort Dodge.

	(5)
	Termination by Bankruptcy, etc.    This Agreement may also be terminated immediately and without prior notice by a party as a
result of the other party's bankruptcy, assignment for the benefit of creditors, admission in writing of its inability to pay debts generally, or its liquidation, insolvency or dissolution. 

1

 

	2.
	Quantity and Quality

	A.
	VeraSun
Fort Dodge shall sell to AREI the total output of fuel grade ethanol ("Ethanol") produced at the VeraSun Fort Dodge, Iowa, facility ("Plant"), currently anticipated to be one
hundred (110) million gallons per year. Ethanol shall be delivered FOB the Plant, and title shall pass as the Ethanol is loaded into transport vessels.

	B.
	Such
Ethanol shall meet or exceed all industry standards, including but not limited to ASTM D.4806 specifications and Magellan Pipeline Company specifications for E-Grade
Denatured Fuel Ethanol

	C.
	Ethanol
produced at the Plant and marketed by VeraSun Fort Dodge, directly or indirectly, to the E-85 fuel market is excluded from this Agreement.

	3.
	AREI shall:

	A.
	Purchase
all of the Ethanol produced by VeraSun Fort Dodge, at the price outlined in Section 5;

	B.
	Remit
payment to VeraSun Fort Dodge for the Ethanol as provided in Section 5: and

	C.
	Schedule
all loads with VeraSun Fort Dodge.

	D.
	Extend
any alliance volume buying power of discounting to VeraSun Fort Dodge.

	E.
	Extend
railcar freight rates negotiated by AREI to VeraSun Fort Dodge.

	F.
	Participate
with VeraSun Fort Dodge in a monthly sales strategy call.

	4.
	VeraSun Fort Dodge shall:

	A.
	Provide
to AREI quarterly production forecasts, monthly updates, daily plant inventory balances and shipment information;

	B.
	Provide
to AREI specifications and certificates of analysis of the Ethanol produced;

	C.
	Provide
for a minimum of eight days storage on the VeraSun Fort Dodge premises;

	D.
	Have
meters that provide both gross and net 60° Fahrenheit temperature compensated gallons; and

	E.
	Establish
and participate in monthly sales strategy meetings with AREI.

	5.
	Pricing and Commission

	A.
	Sales Price.    The sale price VeraSun Fort Dodge shall receive for its Ethanol shall be the Pooled Net Price, as defined
below.

	

	"Pooled Net Price" shall mean the net sales per gallon calculated by subtracting the Pooled Costs on a per
gallon basis from the Alliance Ethanol Average Market Price.

	

	"Alliance Ethanol Average Market Price" shall mean the monthly average price received by AREI for Pooled
Market Alliance Volumes sold during such month on a per gallon basis.

	

	"Pooled Market Alliance Volumes" shall mean, with respect to any given period, aggregate fuel grade ethanol
volumes purchased by AREI from all sellers who have agreed to receive the Pooled Net Price and aggregate fuel grade ethanol volumes produced by AREI during such period. 

2

 

	

	"Pooled Costs" shall mean, with respect to any given period, all direct costs incurred by AREI in handling
Pooled Market Alliance Volumes during such period, including by not limited to terminal lease charges, throughput charges, terminal shrinkage costs, freight charges, tariffs, costs of leasing railcar
and trucks, government taxes and assessments, insurance, inspection fees, inventory carrying costs, purchased ethanol cost incurred due to lost production and other such costs, but excluding direct
costs incurred in marketing such ethanol. AREI shall use commercially reasonable efforts to contain Pooled Costs so as to maximize the ultimate net price payable to VeraSun Fort Dodge for its Ethanol.

	B.
	Commission.    AREI shall deduct from the Pooled Net Price a commission equal to [*] percent
[*] of the Pooled Net Price. The total commission shall not exceed [*] for the first [*] gallons of ethanol produced and sold to
AREI during each twelve (12) calendar month period commencing on December 1st of each calendar year (the "12 Month Period") under this Agreement and under that certain
Ethanol Marketing Agreement between AREI and VeraSun Energy Corporation, dated February 21, 2005 (the "Other Agreement"). If the total gallons of ethanol produced and sold to AREI during any 12
Month Period under this Agreement and the Other Agreement exceeds [*] gallons, the commission of [*] percent [*] shall be
reduced to [*] percent [*] for all gallons of ethanol in excess of [*] gallons produced and sold to AREI during such 12 Month
Period under this Agreement and the Other Agreement."

	C.
	Payment.    For all quantities of ethanol purchased by AREI from VeraSun Fort Dodge during a one-week period
beginning on Monday and ending on the following Sunday, AREI shall pay the estimated Pooled Net Price referred to in Section 5.A. less commissions referred to in Section 5.B., to VeraSun
Fort Dodge by ACH or wire no later than ten (10) business days following the end of said one-week period. If at calendar month's end, the actual Pooled Net Price exceeds the
estimated Pooled Net Price, AREI shall pay VeraSun Fort Dodge on or before the 15th day of the following calendar month an amount equal to the product of (x) the difference
between the actual and estimated Pooled Net Price less commissions and (y) the aggregate quantity of Ethanol purchased during such month. AREI shall pay interest on any delinquent payments at
the rate of nine percent (9%) per annum, for the duration of the delinquency. In addition, AREI shall reimburse VeraSun Fort Dodge for any attorney fees or other cost incurred by VeraSun Fort Dodge
collecting delinquent amounts owed by AREI hereunder. AREI is considered in breath of this Agreement if the delinquency period extends beyond thirty (30) days.

	D.
	Quarterly Meetings.    VERASUN and AREI agree to hold quarterly meetings (by telephone or in person) to formulate a market
outlook and perspective for the purpose of establishing pricing parameters and sales strategy for a given period (the "Guidelines"). For any period to which such Guidelines are agreed upon and apply,
AREI agrees to use its commercially reasonable efforts to execute deals consistent with these guidelines and when possible AREI will solicit feedback from VERASUN before executing deals outside such
Guidelines. AREI will, to the extent it deems it necessary or appropriate, utilize VERASUN to participate on customers calls.

	E.
	Supporting Records.    AREI shall keep a set of accurate and complete books and records in accordance with generally accepting
accounting principles with respect to all ethanol purchased and sold by AREI, including ethanol sold under AREI's Purchase and Resale business, and all costs and commissions associated therewith, and
shall make such books and records reasonably available to mutually agreeable independent outside accounting representatives at AREI's office at anytime by appointment during normal business hours upon
at least five (5) business days prior written notice; provided, however, there shall be no more than two such review of AREI's books and records in any twelve (12) month period and prior
to such review the independent outside accounting representatives shall executive a mutually agreeable confidentiality agreement with AREI. AREI agrees to pay fifty percent (50%) of the expenses of
such independent outside accounting representatives in conducting such review, provided that AREI's share of such expenses shall not exceed $15,000. All other costs and expenses of such review are the
sole responsibility of VeraSun Fort Dodge. In addition, AREI shall provide VeraSun Fort Dodge, by e-mail or fax, a monthly report regarding Pooled Market Alliance Volumes, Alliance Ethanol
Average Market Price, and a breakdown of Pooled Costs in sufficient detail to arrive at calculated Pooled Net Price. 

[*]
CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS. 

3

 

In
addition to the foregoing, set forth on Exhibit "A" attached hereto and incorporated herein by reference, are the business guidelines and related obligations AREI agrees to follow in managing its
Purchase/Resale Program (as defined in Exhibit "A") in conjunction with this Agreement. 

6.    Indemnity:    AREI shall indemnify, defend, and hold VeraSun Fort Dodge and its affiliates, subsidiaries, parents, directors,
officers, employees, customers, contractors, subcontractors and agents harmless from and against any an all claims, losses, awards, judgments, settlements, fines, penalties, liabilities, damages,
costs or expenses (including reasonable Attorney's fees) alleged or incurred on account or any injury to or death of persons or damages to property or any other claim to the extent caused by or
arising out of the negligence or willful miscount of AREI, its officers, employees, customers, contractors, subcontractors or agents. 

VeraSun
Fort Dodge shall indemnify, defend and hold AREI and its affiliates, subsidiaries, parents, directors, officers, employees, and agent harmless from and against any and all claims, losses,
awards, judgments, settlements, fines, penalties, liabilities, damages, costs or expenses (including reasonable Attorney's fees) alleged or incurred on account of any injury to or death of persons or
damages to property or any other claim to the extent caused by or arising out of the negligence or willful misconduct of VeraSun Fort Dodge, its officers, employees, customers, agents, or contractors.
VeraSun Fort Dodge shall indemnify and hold AREI and its affiliates, subsidiaries, parents, directors, officers, employees, customers and agents harmless from and against any and all claims, losses,
awards,
judgments, settlements, fines, penalties, liabilities, damages, costs or expenses (including reasonable Attorney's fees) from any defects in the Ethanol caused by VeraSun Fort Dodge. 

7.    Independent Contractor:    It is expressly understood that the relationship of AREI to VeraSun Fort Dodge is that of an
independent contractor and nothing contained herein shall be construed to create any partnership, agency, or employer/employee relationship. AREI may freely choose the customers from whom business
shall be solicited and the time and place for solicitation, except as otherwise provided in this Agreement. 

8.    Notices:    Any notices required to be given under this Agreement shall be in writing and shall be deemed given upon personal
delivery to the party to be notified; on the third day after deposit with the United State Postal Service, by registered or certified mail, postage prepaid; or upon confirmation if sent by telex,
facsimile machine or other means of telecommunication that transmits or produces a written record of the message so sent. Notices shall be sent addressed as follows: 

	 	VeraSun Fort Dodge:	 	VeraSun Fort Dodge, LLC

1930 Hayes Avenue

Fort Dodge, IA 50501

Attn: Donald Endres, CEO

Telephone: 515-955-7370
	

 	

AREI:	
 	

Aventine Renewable Energy, Inc.

P.O. Box 10

Pekin, IL 61555

Attn: Ronald Miller, President and CEO

Telephone: 309-347-9388

Fax: 309-347-8541

9.    Insurance:    The Parties shall maintain, at all times while this Agreement is in effect, and each at its own sole cost and
expense, comprehensive general liability insurance with a combined single limit for bodily injury and property damage of not less than $1,000,000 for any one occurrence. Each party shall promptly
after execution of this Agreement furnish the other party a Certificate of Insurance evidencing the foregoing insurance coverage, and containing a clause specifying that no reduction, cancellation or
expiration of the policies shall become effective until thirty (30) days from the date 

4

 

written
notice is provided to the other Party. The insurance requirements set forth herein are minimum coverage requirements and are not to be constructed in any way as a limitation on liability under
this Agreement. 

10.    Entire Agreement:    This Agreement contains the entire agreement between the Parties and supersedes all previous agreements,
either oral or written, between the Parties. No modifications hereof shall be valid unless made in writing and signed by both Parties. 

11.    Waiver:    The failure of either Party to enforce any of its rights hereunder on any particular occasion shall not constitute
a waiver of such rights on any subsequent occasion. 

12.    Assignment:    This Agreement may not be assigned by either party without the prior written consent of the other party, which
consent shall not be unreasonably withheld. 

13.    Headings:    Any paragraph headings are used for convenience only and are not intended and shall not be used in interpreting
any provisions of this Agreement. 

14.    No Third Party Beneficiary:    Except as otherwise provided herein, nothing contained in this Agreement shall be considered
or construed as conferring any right or benefit on a person not a party to this Agreement and neither this Agreement nor the performance hereunder shall be deemed to have created a joint venture or
partnership between the Parties. 

15.    Governing Law:    This Agreement shall be governed by the laws of the State of Illinois, without regard to the conflict of
laws provisions thereof. 

	

	In
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first written above. 

	Aventine Renewable Energy, Inc	 	VeraSun Fort Dodge, LLC
	

By:	

/s/  RONALD H. MILLER      
 Ronald H. Miller, President & CEO	
 	

By:	

/s/  BRUCE A. JAMERSON      
 Bruce A. Jamerson, President & CFO
	Date:	2/22/05	 	Date:	3/11/05

5

  

 
 

EXHIBIT "A"    
    

	1.
	Commercial Objective:    To the extent commercially feasible as determined in AREI's good faith judgment in accordance with
the provisions of this Exhibit "A", AREI will not disadvantage the Pooled Net Price to be paid VeraSun Fort Dodge under the Agreement, as a result of its Purchase/Resale Program.

	2.
	Defined Terms

	

	"Alliance Partners"—shall mean the group of ethanol producers that have agreed to exclusively
commit substantially all of their ethanol production to AREI for purposes of AREI marketing their ethanol.

	

	"Purchase/Resale Program"—shall mean the program administrated by AREI, independent of VeraSun
Fort Dodge or other Alliance Partners, whereby AREI purchases ethanol from non-Alliance Partners for the purpose of selling to customers, independent of the Pooled Market Alliance Volume.

	

	"Contract Segment"—shall mean the type of ethanol contract used in selling ethanol. Contracts
are segmented into the following categories:

	

	Fixed Contracts—whereby a buyer agrees to purchase a volume of ethanol from AREI at a particular
time, over a period of time, for a fixed price;

	

	Spot—whereby a buyer agrees to buy a volume of ethanol from AREI at a specific time, or over a
period of time, for a price that varies over the term of the contract and is based on a mutually agreed upon market index;

	

	Gas Plus—whereby a buyer agrees to buy a volume of ethanol from AREI at a particular time, or
over a period of time, for a price that is determined by the sum of: a gasoline market index (e.g. NYMEX, CARE), plus a fixed amount. The gas plus segment is further segmented by the gasoline market
index used in determining the price.

	3.
	Business Rules

	

	The
following describes the business rules AREI will follow and the methodology AREI will employ to measure its performance against the commercial objective
set forth above with contracts in effect and established after the date of this Agreement.

	A.
	To
the extent commercially feasible, AREI will attempt to maintain its total mix of Alliance Partner sales contracts, as follows: 

	 
	Contract Segment
 
	 	Low
	 	Target % of

Total Gallons

Sold
	 	High

	 	Fixed Price	 	20%	 	33%	 	55%
	 	Gas Plus	 	20%	 	33%	 	45%
	 	Spot	 	20%	 	33%	 	45%

	B.
	Prior
to entering into a contract for the sale of ethanol of a Contract Segment type specified in 3.A. above originating from the Purchase/Resale Program (a "New Resale Contract") AREI
will compare the average netback price (on a cents per gallon basis) being realized from the sale of that portion of the Pooled Market Alliance Volumes being sold under then existing contracts of the
same Contract Segment (with such average netback price to be calculated on the same basis as the Net Pooled Price, except limited to the specific Contract Segment type at issue) (herein the "Alliance
Contract Segment Net Pooled Price") against the average net back price (on a cents per gallon basis before purchase/resale margin) being realized from the 

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sale
of that portion of the quantities of ethanol being purchased under the Purchase/Resale Program and being sold under then existing contracts of the same Contract Segment under the Purchase/Resale
Program (with such average netback price to be calculated on a basis similar to that used in calculating the Net Pooled Price except using Purchase/Resale Program volumes rather than Pooled Market
Alliance Volumes). Where a New Resale Contract will be a Gas Plus Contract Segment type, only contracts having the same gasoline index will be used in making the above comparison. Whenever possible
and to the extent commercially feasible, AREI will only enter into a New Resale Contract of a particular Contract Segment type when the then existing Purchase/Resale Contract Segment Net Pooled Price
before purchase/resale margin (after including such New Resale Contract) will be less than or equal to the then existing Alliance Contract Segment Net Pooled Price, both as determined on the basis of
then existing contracts of the same Contract Segment type. 

	C.
	AREI
may still enter into Purchase/Resale Program contracts for good commercial reasons.

	4.
	Reporting

	

	AREI
will monitor the activities set forth in 3. above and report monthly by Contract Segment to VeraSun Fort Dodge on:

	•
	Alliance
Ethanol Average Market Price

	•
	Breakdown
of Pooled Costs

	•
	Pooled
Net Price

	•
	Pooled
Market Alliance Volumes

	•
	Average
Purchase/Resale Market Price

	•
	Breakdown
of Purchase/Resale Costs

	•
	Average
Purchase/Resale Net Price Before Margin

	•
	Purchase/Resale
Volume

	•
	Differences
by Contract Segment of Alliance Ethanol Average Market Price and Pooled Net Price compared to Average Purchase/Resale Market Price and Average Purchase/Resale
Net Price

	5.
	Revisions

	

	—AREI
shall have the right to amend or eliminate this Exhibit "A" (a "Contract Change") subject to the following:

	A.
	Any
such Contract Change shall require VeraSun Fort Dodge's written consent, with such consent not to be unreasonably withheld. For purposes of the foregoing, VeraSun Fort Dodge shall
not withhold its consent to any amendment to this Exhibit "A" as long as such amendment will not have an adverse economic effect on VeraSun Fort Dodge under the Agreement.

	B.
	VeraSun
Fort Dodge shall have thirty (30) days from receipt of AREI's written notice of a proposed Contract Change to notify AREI in writing of whether or not VeraSun Fort Dodge
consents to such Contract Change. If VeraSun Fort Dodge notifies AREI in writing within such thirty (30) day period of its consent to such Contract Change or fails to provide written notice to
AREI within such thirty (30) day period of its non-consent to such Contract Change then such Contract Change shall be effective as of the date set forth in AREI's written notice;
provided, however, if such Contract Change will not have an adverse economic effect on VeraSun Fort Dodge under the Agreement it shall also be effective as of the date set forth un AREI's written
notice, whether or not such consent is given by VeraSun Fort Dodge.

	C.
	Subject
to B. above, if VeraSun Fort Dodge provides written notice of its non-consent to the Contract Change within thirty (30) days of its receipt of AREI's written
notice of such Contract Change, then the Contract Change shall not be effective. 

	Aventine Renewable Energy, Inc	 	VeraSun Fort Dodge, LLC
	

By:	

/s/  RONALD H. MILLER      
 Ronald H. Miller, President & CEO	
 	

By:	

/s/  BRUCE A. JAMERSON      
 Bruce A. Jamerson, President & CFO
	Date:	2/22/05	 	Date:	3/11/05

7

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ETHANOL MARKETING AGREEMENT

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EXHIBIT 10.4    
    

UTSTARCOM, INC.  

 
  1997 STOCK PLAN
  
  (AS AMENDED ON DECEMBER 8, 1999)    
    

        1.     PURPOSES
OF THE PLAN.    The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to
provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan. 

        2.     DEFINITIONS.    As
used herein, the following definitions shall apply: 

        (a)   "ADMINISTRATOR"
means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof. 

        (b)   "APPLICABLE
LAWS" means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan. 

        (c)   "BOARD"
means the Board of Directors of the Company. 

        (d)   "CODE"
means the Internal Revenue Code of 1986, as amended. 

        (e)   "COMMITTEE"
means a committee of Directors appointed by the Board in accordance with Section 4 hereof. 

        (f)    "COMMON
STOCK" means the Common Stock of the Company. 

        (g)   "COMPANY"
means UTStarcom, Inc., a Delaware corporation. 

        (h)   "CONSULTANT"
means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity. 

        (i)    "DIRECTOR"
means a member of the Board of Directors of the Company. 

        (j)    "DISABILITY"
means total and permanent disability as defined in Section 22(e)(3) of the Code. 

        (k)   "EMPLOYEE"
means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to
be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or
any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company. 

        (l)    "EXCHANGE
ACT" means the Securities Exchange Act of 1934, as amended. 

        (m)  "FAIR
MARKET VALUE" means, as of any date, the value of Common Stock determined as follows: 

        (i)    If
the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq 

 

SmallCap
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported in THE WALL STREET JOURNAL or such other source as the Administrator deems reliable; 

        (ii)   If
the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high
bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or 

        (iii)  In
the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator. 

        (n)   "INCENTIVE
STOCK OPTION" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code. 

        (o)   "NONSTATUTORY
STOCK OPTION" means an Option not intended to qualify as an Incentive Stock Option. 

        (p)   "OFFICER"
means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder. 

        (q)   "OPTION"
means a stock option granted pursuant to the Plan. 

        (r)   "OPTION
AGREEMENT" means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan. 

        (s)   "OPTION
EXCHANGE PROGRAM" means a program whereby outstanding Options are exchanged for Options with a lower exercise price. 

        (t)    "OPTIONED
STOCK" means the Common Stock subject to an Option or a Stock Purchase Right. 

        (u)   "OPTIONEE"
means the holder of an outstanding Option or Stock Purchase Right granted under the Plan. 

        (v)   "PARENT"
means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. 

        (w)  "PLAN"
means this 1997 Stock Plan. 

        (x)   "RESTRICTED
STOCK" means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below. 

        (y)   "SECTION
16(b) "means Section 16(b) of the Securities Exchange Act of 1934, as amended. 

        (z)   "SERVICE
PROVIDER" means an Employee, Director or Consultant. 

        (aa) "SHARE"
means a share of the Common Stock, as adjusted in accordance with Section 12 below. 

        (bb) "STOCK
PURCHASE RIGHT" means a right to purchase Common Stock pursuant to Section 11 below. 

        (cc) "SUBSIDIARY"
means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 424(f) of the Code. 

2

 

        3.     STOCK
SUBJECT TO THE PLAN.    Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is 5,262,287 Shares, plus an annual increase to be added on the first day of the Company's fiscal year beginning in 2001 equal to 4% of the outstanding Shares on such date,
3,000,000 shares or a lesser amount determined by the Board. The Shares may be authorized but unissued, or reacquired Common Stock. 

        If
an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased
Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock
are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan. 

        4.     ADMINISTRATION
OF THE PLAN. 

        (a)   PROCEDURE.

        (i)    MULTIPLE
ADMINISTRATIVE BODIES.    The Plan may be administered by different Committees with respect to different groups of Service Providers. 

        (ii)   SECTION
162(m).    To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as "performance-based compensation"
within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code. 

        (iii)  RULE
16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. 

        (iv)  OTHER
ADMINISTRATION.    Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall
be constituted to satisfy Applicable Laws. 

        (b)   POWERS
OF THE ADMINISTRATOR.    Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such
Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion: 

        (i)    to
determine the Fair Market Value; 

        (ii)   to
select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder; 

        (iii)  to
determine the number of Shares to be covered by each such award granted hereunder; 

        (iv)  to
approve forms of agreement for use under the Plan; 

        (v)   to
determine the terms and conditions, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or the 

3

 

Common
Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 

        (vi)  to
determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Common Stock; 

        (vii) to
reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since
the date the Option was granted; 

        (viii) to
initiate an Option Exchange Program; 

        (ix)  to
prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax laws; 

        (x)   to
allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock
Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem
necessary or advisable; 

        (xi)  to
modify or amend each Option or Stock Purchase Right (subject to Section 15(c) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is otherwise provided for in the Plan; and 

        (xii) to
construe and interpret the terms of the Plan and awards granted pursuant to the Plan. 

        (c)   EFFECT
OF ADMINISTRATOR'S DECISION.    All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees. 

        5.     ELIGIBILITY.

        (a)   Nonstatutory
Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 

        (b)   Each
Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to
the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans
of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. 

        (c)   The
following limitations shall apply to grants of Options: 

        (i)    No
Service Provider shall be granted, in any fiscal year of the Company, Options to purchase more than 700,000 Shares. 

        (ii)   In
connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 700,000 Shares which shall not count against
the limit set forth in subsection (i) above. 

4

 

        (iii)  The
foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 13. 

        (iv)  If
an Option is canceled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 13),
the canceled Option will be counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of an Option is reduced, the transaction will
be treated as a cancellation of the Option and the grant of a new Option. 

        (d)   Neither
the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause. 

        6.     TERM
OF PLAN.    The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan. 

        7.     TERM
OF OPTION.    The term of each Option shall be stated in the Option Agreement; provided, however, that the term of an Incentive Stock Option shall be no
more than ten (10) years from the date of grant thereof; provided, further, that in the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the
date of grant or such shorter term as may be provided in the Option Agreement. 

        8.     OPTION
EXERCISE PRICE AND CONSIDERATION. 

        (a)   The
per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to
the following: 

        (i)    In
the case of an Incentive Stock Option 

        (A)  granted
to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 

        (B)  granted
to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 

        (ii)   In
the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator. In the case of a Nonstatutory Stock Option intended
to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant. 

        (iii)  Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction. 

        (b)   The
consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in
the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other
Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless
exercise program implemented by the Company in 

5

 

connection
with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the Company. 

        9.     EXERCISE
OF OPTION. 

        (a)   PROCEDURE
FOR EXERCISE; RIGHTS AS A STOCKHOLDER.    Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under
such conditions as determined by the Administrator and set forth in the Option Agreement. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 

        An
Option shall be deemed exercised when the Company receives:    (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of
the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 12 of the Plan. 

        Exercise
of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of
Shares as to which the Option is exercised. 

        (b)   TERMINATION
OF RELATIONSHIP AS A SERVICE PROVIDER.    If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such
period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set
forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee's termination. If, on
the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

        (c)   DISABILITY
OF OPTIONEE.    If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option
as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 

        (d)   DEATH
OF OPTIONEE.    If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of 

6

 

such
Option as set forth in the Option Agreement) by the Optionee's estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in
the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as to the entire
Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan. 

        (e)   BUYOUT
PROVISIONS.    The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 

        10.   NON-TRANSFERABILITY
OF OPTIONS AND STOCK PURCHASE RIGHTS.    Unless otherwise determined by the Administrator, Options and Stock Purchase Rights
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. 

        11.   STOCK
PURCHASE RIGHTS. 

        (a)   RIGHTS
TO PURCHASE.    Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms,
conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept
such offer. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator. 

        (b)   REPURCHASE
OPTION.    Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. 

        (c)   OTHER
PROVISIONS.    The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator in its sole discretion. 

        (d)   RIGHTS
AS A STOCKHOLDER.    Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a stockholder and shall be a
stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the Plan. 

        12.   ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE. 

        (a)   CHANGES
IN CAPITALIZATION.    Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each
outstanding Option or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet
been 

7

 

granted
or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding
Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the
Company. The conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase
Right. 

        (b)   DISSOLUTION
OR LIQUIDATION.    In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as
practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen
(15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be
exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all
such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed action. 

        (c)   MERGER
OR ASSET SALE.    In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to assume or substitute for the Option or Stock Purchase Right, the Optionee shall fully vest in and have the right to exercise the
Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested
and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not
solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of
the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair
market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 

8

 

        13.   TIME
OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS.    The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each
Employee or Consultant to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant. 

        14.   AMENDMENT
AND TERMINATION OF THE PLAN. 

        (a)   AMENDMENT
AND TERMINATION.    The Board may at any time amend, alter, suspend or terminate the Plan. 

        (b)   STOCKHOLDER
APPROVAL.    The Board shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable
Laws. 

        (c)   EFFECT
OF AMENDMENT OR TERMINATION.    No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually
agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 

        15.   CONDITIONS
UPON ISSUANCE OF SHARES. 

        (a)   LEGAL
COMPLIANCE.    Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such
Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

        (b)   INVESTMENT
REPRESENTATIONS.    As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required. 

        16.   INABILITY
TO OBTAIN AUTHORITY.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by
the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained. 

        17.   RESERVATION
OF SHARES.    The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient
to satisfy the requirements of the Plan. 

9

 
 

UTSTARCOM, INC.
  
  STOCK OPTION AGREEMENT    
    

        1.     Grant
of Option.    The Plan Administrator of UTStarcom, Inc., a Delaware corporation (the "Company"), hereby grants to the
Optionee named in the Certificate of Stock Option Grant (the "Optionee"), an option (the "Option") to purchase a total number of shares of Common Stock (the "Shares") as set forth in the Certificate
of Stock Option Grant, at the exercise price per share set forth in the Certificate of Stock Option Grant (the "Exercise Price") subject to the terms, definitions and provisions of the
UTStarcom, Inc. 1997 Stock Plan (the "Plan") adopted by Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option. 

        If
designated in the Certificate of Stock Option Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422A of the Internal Revenue Code (the "Code"). Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO"). 

        2.     Exercise
of Option. 

        (a)   Right
to Exercise.    This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the
Certificate of Stock Option Grant and with applicable provisions of the Plan and this Option Agreement. 

        (b)   Method
of Exercise.    This Option shall be exercisable by delivery of a Cash Letter of Authorization, which shall state the
election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by Company. The Cash Letter
of Authorization shall be accompanied by payment of the aggregate Exercise Price as to All Exercised Shares. This Option shall be deemed to be exercised upon receipt by Company of such fully executed
Cash Letter of Authorization accompanied by the aggregate Exercise Price. 

        No
Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with all relevant provisions of law and the requirements of any stock
exchange upon which the Shares may be listed. Assuming such compliance, for income tax purposes, the Shares shall be
considered transferred to Optionee on the date on which the Option is exercised with respect to such Shares. 

        3.     Optionee's
Representations.    In the event the Shares have not been registered under the Securities Act of 1933, as amended, at
the time this Option is exercised, Optionee shall, if required by Company, concurrently with the exercise of all or portions of the Option, deliver to Company his or her Investment Representations
Statement in the form attached hereto as Exhibit B and shall read the applicable rules of the Commissioner of Corporations attached to such Investment Representations Statement. 

        4.     Lock-Up
Period.    Optionee hereby agrees that, if so requested by Company or any representative of the Underwriters
(the "Managing Underwriter") in connection with any registration of the offering of any securities of Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or
other securities of Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of Company field under the Securities Act. Such restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities to be sold on behalf of Company to the public in an underwritten public offering under the Securities Act. Company may
impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period. 

 

        5.     Method
of Payment.    Payment of the Exercise Price shall be by any of the following, or a combination thereof, at the election of
the Optionee: 

        (a)   cash
or check; b. consideration received by Company under a formal cashless exercise program adopted by Company in connection with the Plan; or c. Surrender of
other shares which (i) either have been owned by Optionee for more than six (6) months on the date of surrender or were not acquired, directly or indirectly, from Company and
(ii) have a fair value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised. 

        6.     Restrictions
on Exercise.    This Option may not be exercised until such time as the Plan has been approved by the shareholders of
Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any applicable federal or state securities or
other law or regulation. 

        7.     Non-Transferability
of Option.    This Option may not be transferred or assigned in any manner otherwise than by will
or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee. 

        8.     Term
of Option.    This Option may be exercised only within the terms set out in the Certificate of Stock Option Grant and may be
exercised during such term only in accordance with the Plan and the terms of this Option. 

        9.     Disability
of Optionee.    Notwithstanding the provisions of Section 7 above, in the event Optionee's Continuous Status as
an Employee or Consultant terminates as a result of total and permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only within twelve (12) months from the
date of termination of employment or consultancy (but in no event later than the date of expiration of the term of this Option as set forth in Section 11 below), exercise the Option to the
extent otherwise so entitled at the date of such termination. To the extent that Optionee was not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified within, the Option shall terminate. 

        10.   Death
of Optionee.    The Option may be exercised at any time within twelve (12) months after Optionee's death (but in no
event later than the date of expiration of the term of this Option), by Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent
Optionee could exercise the Option at the date of death. 

        11.   Tax
Consequences.    Set forth below is a brief summary as of the date of this Option of some of the federal tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. 

        (a)   Exercise
of ISO.    If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of
the Option, although the excess, if any, of the fair market value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject Optionee to the alternative minimum tax in the year of exercise. 

        (b)   Exercise
of ISO Following Disability.    If Optionee ceases to be an Employee as a result of a disability that is not a total and
permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, Optionee must exercise an ISO within three months of such termination for
the ISO to qualify as an ISO. 

        (c)   Exercise
of Nonstatutory Stock Option.    Optionee may have a regular federal income tax liability upon the exercise of a
Nonstatutory Stock Option. Optionee will be treated as having 

2

 

received
compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is
an Employee or a former Employee, Company will be required to withhold from Optionee's compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise. 

        (d)   Disposition
of Shares.    In the case of an NSO, if Shares are held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income tax purposes. In the case of ISO, if Shares transferred pursuant to the Option are held for at least one year after
exercise and are disposed of at least two years after the Date of Grant, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal income
tax purposes. Long-term capital gains are grouped and netted by holding periods. Net capital gains on assets held between twelve (12) and eighteen (18) months is currently
taxed at a maximum federal rate of 28%. Net capital gains on assets held for more than 18 months is capped at 20%. Capital losses are allowed in full against capital gains and up to $3,000.00
against other income. If Shares purchased under an ISO are disposed of within one year after exercise or within two years after the Date of Grant, any gain realized on such disposition will be treated
as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the shares on the date of
exercise or (2) the sale price of the shares. Any additional gain will be taxed as capital gain, short-term or long-term depending on the period that the ISO shares were
held. 

        (e)   Notice
of Disqualifying Disposition of ISO Shares.    If the Option granted to Optionee herein is an ISO, and if Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of
exercise, Optionee shall immediately notify Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income
recognized by Optionee. 

        12.   Entire
Agreement; Governing Law.    The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of Company and Optionee with respect to the subject
matter hereof and may not be modified adversely to Optionee's interest except by means of a writing signed by Company and Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California. 

        OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN
ANY WAY WITH OPTIONEE'S RIGHT OR COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. 

        Optionee
acknowledges receipt of a copy of the Plan and represents that Optionee is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the
terms and provision thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to 

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obtain
the advice of counsel prior to executing this Option and fully understands all provisions of this Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify Company upon any change in the residence address indicated below. 

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EXHIBIT 10.4

1997 STOCK PLAN (AS AMENDED ON DECEMBER 8, 1999)

UTSTARCOM, INC. STOCK OPTION AGREEMENT

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