Contract on Xian Broadband Multi-Media Business System - China Xian Machinery Import & Export Corp., China Telecom Group, Shanxi Telecommunications Corp. and UTStarcom Inc.


                                CONTRACT NUMBER:
                                 20MKK-0320022US


                                       ON

                   XIAN BROADBAND MULTI-MEDIA BUSINESS SYSTEM

                                      AMONG

                CHINA XIAN MACHINERY IMPORT & EXPORT CORPORATION

                                       AND

           CHINA TELECOM GROUP, SHANXI TELECOMMUNICATIONS CORPORATION

                                       AND

                              U.S. UTSTARCOM, INC.





                     TABLE OF CONTENTS OF PURCHASE CONTRACT

1.       Definition
2.       Subject Matter of Contract
3.       Price
4.       Payment and Terms of Payment
5.       Terms of Transportation
6.       Packing and Shipping Marks
7.       Shipment
8.       Installation, Testing, Test Run and Final Test
9.       Warranty
10.      Spare Parts
11.      Claims
12.      Force Majeure
13.      Arbitration
14.      Notice
15.      Amendment of Contract
16.      Customs Duties, Taxes and Other Expenses
17.      Miscellaneous
18.      Validity of Contract

                  Signature Page

         Appendices

         Appendix 1        List of Quotation for Equipment
         Appendix 2        Technology Proposal
         Appendix 3        Training Plan
         Appendix 4        Manual of Products
         Appendix 5        Reply to Questions re Quotation





                                PURCHASE CONTRACT

1.       Purchase Contract

         (a) This purchase contract of Xian broadband multi-media business
system equipment and other related service contracts (hereinafter referred to as
the "Contract") are made among China Xian Machinery Import & Export Corporation
(hereinafter referred to as the "Buyer"), registered under the laws of the
People's Republic of China and having its legal address at Building No. 4
(East), Jian Hua Hotel, No. 6 East Section, Huan Cheng Road (South), Xian, China
Telecom Group, Shanxi Telecommunications Corporation (hereinafter referred to as
the "End User"), registered under the laws of the People's Republic of China and
having its legal address at No. 1 Gao Xin Road, Xian and U.S. UTStarcom, Inc.
(hereinafter referred to as the "Seller"), having its address at 1275 Harbour
Bay Parkway, Suite 100, Alameda CA 94502 by adhering to the principle of mutual
benefits and friendly cooperation, through discussions and pursuant to the
following terms and conditions:

         Chapter 1         Definition

         1.1      "Authorized representatives" shall mean people who exercise
                  the rights on behalf of the parties to this Contract.

         1.2      "Contract Equipment" shall mean system equipment, spare parts
                  and related software listed in Appendix 1 attached to this
                  Contract.

         1.3      "Technical Services" shall mean services provided within the
                  boundaries of [*] by the Seller to the Buyer and the End User.

         1.4      "Site" shall mean the spot where contract equipment is
                  installed.

         1.5      "Readiness for Preparation of the Site" shall mean that prior
                  to the arrival of the contract equipment at the Site, the Site
                  provided by the Buyer and the End User is equipped with the
                  conditions required by the Seller for the installation of the
                  contract equipment; thus, the work for such installation may
                  start.

         1.6      "Amended Application Forms" shall mean forms on the amendment
                  of the scope, plan or price of the Contract.

         Chapter 2         Subject Matter of Contract

         2.1      The Buyer agrees to buy from the Seller the equipment and
                  technical services provided in accordance with Appendix Nos. 1
                  and 2 attached to this Contract, and the Seller agrees to sell
                  such equipment and services. Please refer to Appendix 2
                  attached to this Contract for detailed explanation of the
                  equipment and the related technical services pursuant to this
                  Contract.


         Chapter 3         Price

         3.1      The Buyer shall pay the Seller a total contract price of [*].

                           The contract price is [*].

         3.2      The contract price listed in 3.1 is based on the provisions of
                  [*], and the expenses for shipping and insurance are paid up
                  till to [*].

         3.3      The prices listed in 3.1 are fixed. Any amendment of the
                  relevant contracts shall be unanimously made in writing by the
                  parties to the Contract.

         Chapter 4         Payment and Terms of Payment

         4.1      The computation and display of prices listed in the Contract
                  and the preparation and payment of all the invoices shall be
                  carried out in [*].

         4.2      The total contract price set forth in 3.1 shall be paid by the
                  Buyer by the following means and ratio:

                  4.2.1    Within [*] upon the official validity of this
                           Contract, the Buyer shall pay [*] of the total
                           contract price or [*]. The Buyer shall wire transfer
                           such payment through the Buyer's bank within [*] upon
                           receipt of the following documents:

                           a.  Export license issued by the government
                               authorities of the Seller's country or a
                               certificate indicating no need of such export
                               license;

                           b.  Five (5) copies of [*] pro forma invoices;

                           c.  Five (5) copies of [*] commercial invoices;

                           d.  Two (2) copies of [*] sight draft;

                           e.  Original copy of air waybill indication "freight
                               paid", and notification to China Xian Machinery
                               Import & Export Corporation;

                           f.  Three (3) copies of a detailed packing list;

                           g.  An original and a copy of the insurance policy
                               covering all risks for [*] of the contract price;
                               and

                           h.  Two (2) copies of inspection certificates of
                               quality and quantity or weight.

                  4.2.2    2nd Payment: [*] of the Contract Price

                                      -2-


                                  Upon arrival of the goods and after confirming
                           without error the following documents submitted by
                           the Seller, the Buyer shall wire transfer [*] of the
                           total contract price or [*] to the bank designated by
                           the Seller in accordance with the provisions of the
                           contractual clauses:

                           a.  Three (3) originals and three (3) copies of
                               commercial invoices for [*] of the total contract
                               price indicating the contract number and the
                               names of the goods.

                  4.2.3    Final Payment: [*] of the Total Contract Price

                                  The final payment, i.e. [*] of the total
                           contract price or [*], shall be paid via T/T by the
                           Buyer to the Seller's designated bank upon arrival of
                           the goods and against the following documents
                           presented by the Seller:

                           a.  Three (3) originals and three (3) copies of
                               commercial invoices for [*] of the total contract
                               price indicating the contract number and the
                               names of the goods.

         4.3      Any bank expenses in connection with the aforementioned
                  procedures for such payment occurred inside the People's
                  Republic of China shall be borne by [*]; and any bank expenses
                  occurred outside the People's Republic of China shall be borne
                  by the [*].

         Chapter 5         Terms of Transportation

         5.1      All the equipment under this Contract shall be shipped to Xian
                  pursuant to the provisions of [*].

         5.2      With [*] upon shipment of the contract equipment, the Seller
                  shall notify the Buyer and the End User by fax of the contract
                  number, date, commodities, quantities, value of invoices,
                  gross weight, flight number and other information.

         5.3      The port of destination for the goods is Xianyang
                  International Airport in Xian, and the [*] shall be
                  responsible for the domestic transportation and insurance.

         Chapter 6         Packing and Shipping Marks

         6.1      All the equipment and materials supplied under this Contract
                  shall be carefully packed in strong cases suitable for
                  long-distance transportation by air, sea or land and well
                  protected against changes of weather, dampness, rain, rust,
                  shook on loading and unloading and erosions. If necessary,
                  they should be shipped in well-sealed containers.

                                      -3-


         6.2      The Seller shall mark packing cases for loose spare parts,
                  indicating in English the contract number, names of the
                  equipment and spare parts. In addition, spare parts and tools
                  shall be marked with letters of "parts" or "tools".

         6.3      The Seller shall mark, in conspicuous English, the following
                  contents on both sides of each packing case:

                  1)   Contract number;

                  2)   Shipping Mark: 20MKK-0320022US;

                  3)   Recipient;

                  4)   Port of Destination: Xian;

                  5)   Case number;

                  6)   Gross weight; and

                  7)   Measurement (length x width x height).

                       Based on the characteristics and different requirements
         of each packing case during the course of transportation, the Seller
         shall mark in English such cautions as "Handle with Care", "This Side
         Up", "Keep Dry" and any other conspicuous signs customarily used in the
         trade.

         6.4      The Seller shall enclose a set of packing list inside each
                  packing case.

         Chapter 7         Shipment

         7.1      The Seller shall make one-time delivery of all the goods at
                  the delivery date stipulated in the performance schedule
                  (within [*] upon execution of the Contract).

         7.2      The Seller shall be liable for any delay of the delivery of
                  the contract goods caused by its own fault.

         Chapter 8         Installation, Testing, Test Run and Final Test

         8.1      The [*] shall be responsible for the installation of the
                  contract equipment under the supervision of the [*]
                  technicians, and the [*] shall be responsible for the
                  supervisory work of installation and system debugging, whereby
                  the [*] technicians shall render assistance. The Seller's
                  technical support shall comply with the integrated technology
                  standards of engineering system for Xian broadband multi-media
                  business system.

                                      -4-


         8.2      Installation, testing and acceptance of the contract equipment
                  shall be carried out in accordance with the performance
                  schedule listed in Appendix 4 to this Contract.

         8.3      Upon completion of the contract equipment installation by the
                  End User and of debugging by the Seller, the Seller should
                  guarantee the requirements of stability performance for the
                  contract equipment be met and that preparation be made for a
                  test run. The Seller shall provide the End User with any
                  written and related information [*] prior to the test run, and
                  confirm the date for such test run. Thereafter, the test run
                  will begin immediately.

         8.4      If, due to the Seller's reasons, the equipment does not comply
                  with the allocation requirements, the Seller will solve the
                  problem of such contract equipment at its own cost until they
                  are up to the standards. The corresponding extension of the
                  period of time for the test run shall be equal to the time
                  spent by the Seller to solve the problem of such contract
                  equipment.

         Chapter 9         Warranty

         9.1      The Seller warrants the equipment supplied hereunder to be
                  free from defects in workmanship. The Seller's warranty for
                  the quality of the equipment will commence upon execution of
                  the certificate of qualification at the final test and
                  continue for a period of [*]. During the warranty period, the
                  Seller will, at its option, either repair or replace any parts
                  not conforming to the above warranty. The Seller shall bear
                  all the expenses for the return of such parts as well as the
                  transportation charges for the return of such repaired or
                  replaced parts to the installation site.

         9.2      If any part is determined to be returned by the parties, the
                  End User shall complete a repair & maintenance form provided
                  by the Seller and return the part, and the [*] shall bear the
                  cost of transportation, insurance, loading and unloading of
                  the faulty party to be returned to the Seller, and also be
                  responsible for the return of the repaired or replaced part to
                  the End User.

         9.3      The Seller shall make its best efforts to ship a replaced part
                  within [*] upon identification by the End User of the faulty
                  essential part affecting the system performance. The End User
                  shall do its best to return the faulty part within [*] upon
                  delivery of a replaced part by the Seller to the End User.

         9.4      If the Seller determines the need to dispatch its technicians
                  to assist the End User in inspecting or repairing a faulty
                  part at the site, any cost occurred during the warranty period
                  shall be [*]. After the end warranty period, the Seller shall
                  provide the Buyer with maintenance services, but the fees
                  shall not exceed [*] of the discount price of the repaired
                  unit.

         Chapter 10        Spare Parts

                                      -5-


         10.1     The Seller agrees that it will exert its best efforts to
                  provide spare parts for [*] upon delivery of the goods. The
                  Seller warrants that it will notify the Buyer [*] ahead of
                  time of any decision to suspend the production of certain
                  parts in order to enable the Buyer to purchase enough parts
                  for its inventory.

         10.2     The Seller agrees not to price any of the spare parts higher
                  than [*].

         Chapter 11        Claims

         11.1     Within [*] upon arrival of the goods at the End User's site,
                  the cases shall be opened by the End User in the presence of
                  the Seller's representatives, and checked jointly by the
                  representatives of both the End User and the Seller.

         11.2     In case of missing parts or damages due to the inadequate
                  packing on the part of the Seller, the Buyer and the End User
                  shall make a detailed record at the site or they may
                  commission the China Commodity Inspection Bureau for a
                  re-inspection. The representatives of the Buyer and the Seller
                  shall draft and sign a proposal with a detailed list of the
                  goods attached. Such proposal may serve proper evidence for
                  the replacement or repair of missed or damaged parts. The
                  replacement of missed parts and the repair of damaged parts
                  shall be carried out in accordance with the provisions of
                  Chapter 9, the warranty clause.

         11.3     In case of delayed shipment due to the Seller's fault, the
                  Buyer may seek compensation from the Seller according to the
                  following ratio: a penalty amounting to [*] of the total value
                  of the goods plus interest shall be imposed per weak. Any
                  fractional part of a week is to be considered as a full weak.
                  The total amount of compensation shall not, however, exceed
                  [*] of the total value of the goods involved in delayed
                  shipment. The payment of compensation will not exclude the
                  Seller from its obligations to execute the Contract. If the
                  delayed shipment exceeds [*], the Buyer and the End User have
                  the right to rescind part or whole of the Contract.

         11.4     The total amount of the aforementioned penalty shall not
                  exceed [*] of the total contract price, which will be deducted
                  at the time of payment due by the Buyer.

         Chapter 12        Force Majeure

         12.1     The Seller, the End User or the Buyer shall not be liable for
                  any lass, damage, delay or failure of performance resulting
                  directly or indirectly from any cause which is beyond their
                  reasonable control including, but not limited to, the laws,
                  regulations, acts or failure to act of any governmental
                  authorities. Under such circumstances, the party affected by
                  the force majeure event shall notify the other party within
                  [*] after the occurrence of such event. If the performance of
                  this Contract is prevented for the aforementioned reasons for
                  a consecutive period of [*] or a longer time, any party has
                  the right to terminate this Contract by way of a written
                  notice.

                                      -6-


         Chapter 13        Arbitration

         13.1     Any dispute arising out of the performance of this Contract
                  shall be settled by the parties through friendly
                  consultations. In case of no settlement through consultations,
                  the said dispute shall be submitted for an arbitration.

         13.2     The place for the arbitration is Xian, China, and the said
                  arbitration should be carried by Xian Arbitration Commission
                  in accordance with its rules. This Contract is governed by the
                  laws of the People's Republic of China.

         13.3     The arbitration award issued by the Arbitration Commission
                  shall be final and binding on the parties. No party shall try
                  to seek legal or any other channels to amend the arbitration
                  award.

         13.4     The arbitration fees shall be covered by the losing party
                  unless otherwise stipulated by the Arbitration Commission.

         13.5     During the arbitration, the parties shall continue to perform
                  this Contract except for the part under arbitration.

         Chapter 14        Notice

         14.1     Any notice hereunder by the parties shall be in writing, and
                  delivered by fax or similar communication means confirmed by
                  the parties or registered mail to the following addresses:

                       The Seller:               U.S. UTStarcom, Inc.
                                Telephone:       001-510-8648800
                                Fax:             001-510-8648802

                       The Buyer:                China Xian Machinery Import
                                                 & Export Corporation
                                Telephone:       0086-29-2239614
                                Fax:             0086-29-2230418

                       The End User:             China Telecom Group, Shanxi
                                                 Telecommunications Corporation
                                Telephone:       86-29-8258899
                                Fax:             86-29-8258809

         14.2     Notices sent by fax or similar communications means shall be
                  deemed as being effectively served on the sending day; notices
                  sent by guaranteed or registered mail shall be deemed as being
                  effectively served on the sending day when the prepaid postage
                  is delivered.

         Chapter 15        Amendment of Contract

                                      -7-


         15.1     Any amendment or memorandum made by the parties in relation to
                  this Contract shall be executed by the authorized
                  representatives of the parties.

         15.2     During the performance of this Contract, any increase,
                  cancellation or amendment relating to the contract price,
                  schedule and progress of the project may be submitted by the
                  parties, and shall come into force only after the confirmation
                  of the parties' approval and signatures.

         15.3     If any party fails to carry out its duties during the
                  performance of this Contract, it shall bear the corresponding
                  cost associated with such failure.

         Chapter 16        Customs Duties, Taxes and Other Expenses

         16.1     The [*] shall be responsible for the payment of any taxes or
                  other financial obligations arising out of this Contract and
                  levied at abroad.

         16.2     The [*] shall be responsible for the payment of any taxes or
                  other financial obligations levied in China in relation to
                  this Contract or import of equipment from abroad.

         16.3     The Seller shall be responsible for the payment of any taxes
                  or other financial obligations levied in China in relation to
                  this Contract or import of equipment from abroad.

         Chapter 17        Miscellaneous

         17.1     This Contract shall be kept confidential, and can only be
                  disclosed or submitted to the government authorities pursuant
                  to the laws.

         17.2     This contract from its main body of Chapter 1 to 18 and
                  appendices 1 to 6 represents the unanimous agreement of the
                  parties and their common understanding on the relevant
                  negotiations and agreements, whether in oral or written form,
                  prior to the execution of this Contract. Unless otherwise
                  specified in this Contract, no other representations,
                  understanding or agreements are contained in this Contract.
                  Any party shall not be liable for anything beyond the terms,
                  conditions, definitions, warranties, understanding or
                  representations provided for in this Contract.

         17.3     This Contract shall be terminated upon completion of each
                  party's duties and obligations.

         17.4     Technical Services

                  17.4.1   The Seller is obliged to provide the following
                           services within [*] after the delivery of the goods:

                                      -8-


                           a.  To provide 24-hour [ILLEGIBLE] online technical
                               consultations, and warrants timely response to
                               eliminate or reduce the occurrence of any
                               breakdown.

                           b.  To send a maintenance team to solve the problem
                               at the site within [*] upon receipt of a notice.

         Chapter 18        Validity of Contract

         This Contract is made in three (3) copies, and shall be jointly entered
into and executed by the representatives of the parties.

         Buyer:       China Xian Machinery Import & Export Corporation



         Authorized Representative: (Signature)
         Date of Signature:         9/29/00


         Seller:      U.S. UTStarcom, Inc.


         Authorized Representative: (Signature)
         Date of Signature:         9/29/00




         End User:    China Telecom Group, Shanxi Telecommunications Corporation


         Authorized Representative: (Signature)
         Date of Signature:         9/29/00



                                      -9-