UT Starcom (Hangzhou) Telecommunication Co. Ltd. Joint Venture Contract - Zhejiang Telecommunication Equipment Factory and UT Starcom Inc.


                UT STARCOM (HANGZHOU) TELECOMMUNICATION CO. LTD.


                                    CONTRACT


                                  CHAPTER ONE

                                  GENERAL RULES

         UT Starcom (Hangzhou) Telecommunication Co. Ltd. (abbreviated as 
HUTS) which was established in May 1992, is a branch company set up in China 
by UT Starcom Inc. of USA whose registered capital is 3,500,000 US dollars. 
It has been chosen as the Advanced Enterprises of Hangzhou High-tech Industry 
Development Zone for 1995 and 1996. The sales volume of 1996 is [*], the 
profit is [*], and the tax it paid to the country is [*]. It mainly produces 
OMUX-Optical terminal equipment, HDSL, ACCESS and wireless local loop, etc.

         Zhejiang Yutong Telecommunication Equipment Co. Ltd. (abbreviated as 
UTL) is a joint venture enterprises jointly invested by Zhejiang 
Telecommunication Equipment Factory and UT Starcom Inc. of USA with 2,350,000 
US dollars' registered capital. It has been chosen as the Advanced 
Enterprises of Hangzhou High-tech Industry Development Zone for 1994, 1995 
and 1996 Its sales volume of 1996 is [*], the profits is [*], and the taxes 
paid to the country is [*]. It mainly produces LCS-9/9B access network 
systems incorporating digital loop carrier equipment.

         Since the two companies share the same foreign investor--UT Starcom 
Inc. of USA and the products they produced are all access network systems of 
telecommunication, in order to make one company's superiority in production 
and process, products auxiliary systems, capital running and human resources 
as the complementation of the other company, the leaders in the two companies 
negotiated for several times and applied for the approval of their investor. 
In accordance with the Laws of the People's Republic of China on Joint 
Ventures Using Chinese and Foreign Investment and other relevant Chinese laws 
and regulations, both companies enter into agreement to reorganize the assets 
and merge into establishing a new joint venture company--UT Starcom 
(Hangzhou) Telecommunication Co. Ltd. in Hangzhou, China. 

     [*] = 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.



                                   CHAPTER TWO

                            PARTIES OF JOINT VENTURE

ARTICLE 1:        The parties of this contract:
                  Zhejiang Telecommunication Equipment Factory (hereinafter 
                  referred to as Party A) is registered in Zhejiang Province;
                  Legal residence: No.118 Moganshan Road Gongshu District, 
                  Hangzhou, China. 310005.
                  Legal representative: Zhao Xing-Huang    Title: Director
                  Nationality: China
                  UT Starcom Inc. of USA (hereinafter referred to as Party B) 
                  is registered in Delaware, USA.
                  Legal residence: 1275 Harbor Bay Parkway, Suite 100 Alameda,
                  California 94502 USA.
                  Legal representative: Hong Liang-Lu    Title: Chairman
                  Nationality: USA

                                  CHAPTER THREE

                     ESTABLISHMENT OF JOINT VENTURE COMPANY



ARTICLE 2:        In accordance with the Laws of the People's Republic of
                  China on Joint Ventures Using Chinese and Foreign Investment
                  and other relevant Chinese laws and regulations, Party A and
                  Party B enter into establishing a joint venture company of UT
                  Starcom (Hangzhou) Telecommunication Co. Ltd. in the territory
                  of China.

ARTICLE 3:        Full name of the Joint Venture Company: UT STARCOM
                  (Hangzhou) Telecommunication CO. LTD. (hereinafter referred to
                  as the Joint Venture Company). Legal residence of the Joint
                  Venture Company: Building No.2 and No.3 of Yile Industry Zone,
                  No.129 Wenyi Road, Hangzhou, China. 310012.

ARTICLE4:         The Joint Venture Company is a Chinese legal entity and is
                  governed and protected by Chinese laws. All of its activities
                  shall obey Chinese laws rules and relevant regulations.

ARTICLE 5:        The Company is a limited liability company. Party A and
                  Party B shall undertake responsibilities of the Company's
                  liabilities on the basis of the invested capital of each
                  party, and shall share profits and risks and deficits in
                  proportion to their investment.



                                  CHAPTER FOUR

             THE PURPOSE, SCOPE AND SCALE OF PRODUCTION AND BUSINESS

ARTICLE 6:        The purposes of the Joint Venture Company: With the purpose
                  to strengthen economic cooperation and technology exchange,
                  The Joint Venture Company shall apply advanced and proper
                  technology and scientific operation and management methods,
                  develop new products, enhance its competitive ability in
                  international market in quality and price, and achieve
                  satisfactory economic profits.

ARTICLE 7:        The production and business scope of the Joint Venture
                  Company: Designs, develops, assembles, produces, sells and
                  installs high-tech telecommunication hardware and software,
                  including digital integration of telecommunication access
                  network systems (including wireless and cable access network),
                  optical transmission equipment, intelligent network systems,
                  personal communication and multi-media, data and information
                  network systems and other telecommunication systems (with the
                  exception of the programs restricted or banned by the
                  country), and provides maintenance and technical consultation
                  services of its own products.

ARTICLE 8:        The production scale:

        1.        [*]  of OMUX serial optical terminal machines;

        2.        [*]  of digital integration access network systems;

        3.        [*]  of subscriber digital loop;

        4.        [*]  of wireless local loop;

        5.        [*]  of HDSL;

        6.        Other telecommunication products and equipment. 

                                  CHAPTER FIVE

                     TOTAL INVESTMENT AND REGISTERED CAPITAL

ARTICLE 9:        The total investment of the Joint Venture Company is [*].

ARTICLE 10:       The investment of Party A and Party B is [*] and it is the 
                  registered capital of the Joint Venture Company
                  in which Party A invests [*], accounting for 12% of
                  shares, and Party B invests [*], accounting for 88%
                  of shares.

     [*] = 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.




ARTICLE 11:       The investment of Party A and Party B is the following.
                  Party A:  materials and cash amount to [*].
                  Party B: materials and cash amount to [*].

                  The exchange rate of RMB and US dollar shall be determined on
                  the basis of the exchange quotation published by the State
                  Administration Bureau of Foreign Currency of the PRC for the
                  date of concern.

ARTICLE 12:       The registered capital of the Joint Venture Company shall
                  be paid off within six months from the date when the business
                  license of the Joint Venture Company is signed and issued in
                  proportion to the investment of Party A and Party B.

ARTICLE 13:       In case any of the two parties transfers part or all of
                  its investment to a third party, it shall be agreed by the
                  other party and shall be submitted to examination and approval
                  authority for approval. The other party shall have priority to
                  buy the transferred investment.


                                   CHAPTER SIX

                         RESPONSIBILITIES OF THE PARTIES

ARTICLE 14:       Party A and Party B shall be responsible for the following 
                  matters:
                  Duties of Party A:

         1.       Assisting the Joint Venture Company to apply for approval of
                  relevant Chinese authorities concerned, register the Joint
                  Venture Company and receive business license, etc.;

         2.       Providing cash and materials according to Chapter Five;

         3.       Assisting to handle with the import declaration procedures of
                  machine equipment and instruments provided by Party B as
                  investment and to transport them in the territory of China;

         4.       Assisting the Joint Venture Company to purchase or rent
                  equipment, materials, office appliances, means of
                  transportation, telecommunication facilities, etc. in the
                  territory of China;

         5.       Assisting the Joint Venture Company to implement
                  infrastructures for water, electricity, transportation and
                  facilities for meals, health, activity, etc.;

         6.       Assisting the Joint Venture Company to recruit and employ
                  Chinese operation and management staff, technical staff and
                  workers and others;

     [*] = 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.



         7.       Assisting foreign staff to handle entry visas, working
                  certificates and travel procedures;

         8.       Assisting foreign staff to handle accommodation and
                  transportation problems;

         9.       Handling the other matters appointed by the Joint Venture
                  Company.

                  Duties of Party B:

         1.       Providing cash and materials according to Chapter Five, and
                  transporting the machine equipment and other materials which
                  are part of its investment to Chinese port;

         2.       Handling the purchasing of machines, instruments, materials,
                  parts outside of Chinese territory appointed by the Joint
                  Venture Company;

         3.       Assisting to install, adjust, test, maintain the newly
                  purchased equipment;

         4.       Training the technical staff and workers of the Joint Venture
                  Company;

         5.       Being responsible for steadily producing qualified products in
                  accordance with the designed capacity within the time limits;

         6.       Assisting the Joint Venture Company to providing American
                  documents and materials necessary for the staff who go abroad;

         7.       Assisting the settlement of accommodation and transportation
                  of the company's staff abroad outside Chinese territory;

         8.       Providing information of telecommunication market outside of
                  Chinese territory for the Joint Venture Company;

         9.       Assisting the establishment and management of branch
                  organizations of the Joint Venture Company outside of Chinese
                  territory, and provide business convenience for the branch
                  organizations; Being responsible of the selling of the
                  products of the Joint Venture Company for sale abroad and
                  providing services after the sale of products outside of
                  Chinese territory;

         10.      Handling other matters appointed by the Joint Venture Company.

                                  CHAPTER SEVEN

                               TECHNOLOGY TRANSFER

ARTICLE 15:       Party A and Party B enter into agreement that the new
                  technologies and products studied and developed by Party B
                  shall be produced in the joint Venture Company. The Joint
                  Venture Company and Party B shall stipulate contract of
                  transferring 



                  technologies with the purpose of gaining the advanced 
                  technologies necessary for achieving the production and 
                  business purpose and scale stipulated in Chapter Four,
                  including designs of products, part of production crafts,
                  testing methods, quality standard and training staff, etc.
                  (The items relevant to technology transfer shall be separately
                  submitted to examination and approval authority.)

ARTICLE 16:       Party B shall be responsible for the following duties in 
                  technology transfer:

         1.       Guaranteeing that the designs, production technologies, flow
                  process of crafts and tests of the new technologies and
                  products provided for the Joint Venture Company are complete,
                  accurate, and reliable, fitting the operation purpose and
                  requirement of the Joint Venture Company and achieving the
                  quality and production capacity required by the contract;

         2.       Listing out in detail the technologies and technical services
                  provided at each stage stipulated by the agreement on
                  technology transfer as a supplement to the agreement, and
                  guaranteeing its implementation;

         3.       Guaranteeing to submit on time the drawings, technical
                  conditions and other detailed materials which are part of the
                  transferred technologies;

         4.       Timely providing improvements of technologies, information of
                  improvements and technical materials for the Joint Venture
                  Company with no additional charge within the valid term of the
                  agreement on technology transfer;

         5.       Guaranteeing that the technical staff and workers in the Joint
                  Venture Company are able to grasp the technology transferred
                  within the time limits stipulated by the agreement on
                  technology transfer.

ARTICLE 17:       The expenses of transferring technologies shall be paid by
                  means of [*]. The [*] rate shall be [*]. In case the foreign 
                  currency is imbalance, the part lacked shall be settled 
                  by RMB.

ARTICLE 18:       The term of the agreement on technology transfer is [*]. 
                  After it expires, the Joint Venture Company shall have
                  the rights to continue using, studying and developing the
                  transferred technologies. The Joint Venture Company may use,
                  amend, and develop the technologies transferred by Party B.
                  The Joint Venture Company shall not transfer part or all of
                  the technologies to the enterprises besides Party A and Party
                  B.

     [*] = 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.



                                  CHAPTER EIGHT

                              THE SALES OF PRODUCTS

ARTICLE 19:       The products of the Joint Venture Company shall be sold to
                  the markets inside and outside of [*] after the products are
                  put into production formally.

ARTICLE 20:       With the purpose of selling products inside or outside of
                  [*] and providing maintenance and repair services after the
                  sale of products, the Joint Venture Company may establish
                  branch organizations for sale and repair services inside and
                  outside of the [*].

ARTICLE 21:       The trademark used by the products of the Joint Venture
                  Company shall be trademarks determined by the Joint Venture
                  Company.

                                  CHAPTER NINE

                               BOARD OF DIRECTORS

ARTICLE 22:       The Board of Directors of the Joint Venture Company shall
                  be established from the date when the Joint Venture Company is
                  registered.

ARTICLE 23:       The Board of Directors shall be composed of six Directors,
                  two appointed by Party A and four appointed by Party B. The
                  Chairman shall be appointed by Party B, and the Vice Chairman
                  shall be appointed by Party A. The Chairman and Vice Chairman
                  shall hold the office for a period of four years and may be
                  reappointed consecutively.

ARTICLE 24:       The Board of Directors shall be the highest authority of
                  the Company, determining all important matters of the Company.
                  The Board meetings shall be held with the participation of
                  two-thirds of the Directors (including at least one from Party
                  A). The determination of important issues shall be unanimously
                  approved by the Directors attending the meeting or all
                  Directors:
               
         1.       Amendment of the regulations of the Joint Venture Company;
               
         2.       Termination and dismissal of the Joint Venture Company;
               
         3.       Increases and transfers of the registered capital of the Joint
                  Venture Company;
               
         4.       Mergers of the Joint Venture Company with other economic
                  organizations.

                  Other matters shall be determined by majority's approval (at
                  least with the approval of one Directors from Party A).

     [*] = 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.



ARTICLE 25:       In case the Chairman cannot fulfill his duties, he shall
                  appoint the Vice Chairman or other Directors to temporarily
                  carry out his duties.
             
ARTICLE 26:       The Board meetings shall be held at least once a year and
                  shall be organized by the Chairman. The Chairman may convene a
                  special meeting with the proposal of one-third of the
                  Directors. The minutes of Board meetings shall be written in
                  Chinese and English and shall be filed in the Joint Venture
                  Company.

ARTICLE 27:       The Chairman shall inform Party A and Party B of the
                  important matters and resolutions of the Joint Venture Company
                  within the term of joint venture.

                                   CHAPTER TEN

                           BUSINESS MANAGEMENT OFFICE

ARTICLE 28:       The Joint Venture Company shall set up a business
                  management office, in charge of daily operational management.
                  The Joint Venture Company shall have one General Manager
                  nominated by Party B. One Deputy General Manager shall be
                  nominated by Party A and another Deputy General Manager shall
                  be nominated by Party B. The General Manager and the Deputy
                  General Managers shall be appointed by the Board of Directors
                  and shall hold office for a period of three years.

ARTICLE 29:       The duties of General Manager is executing the resolutions
                  of the Board meetings, organizing the routine operation and
                  management of the Joint Venture Company. The Deputy General
                  Manager shall assist the work of General Manager.

                  The business management office may have several department
                  managers who are being responsible to General Manager and
                  Deputy General Manager. The number and candidates of
                  department managers shall be nominated by General Manager and
                  Deputy General Manager, and shall be appointed and dismissed
                  by General Manager. If necessary, department managers may be
                  recruited and employed publicly. The General Manager shall
                  inform the Chairman of the appointment or dismissal of
                  department managers within ten days.

ARTICLE 30:       In case of graft and corruption or serious neglect on the
                  part of the General Manager and the Deputy General Manager,
                  the Board of Directors shall have the rights to dismiss them
                  at any time.



                                 CHAPTER ELEVEN

                             PURCHASES OF EQUIPMENT

ARTICLE 31:       The raw materials, parts, auxiliary parts, means of
                  transportation and office appliances necessary for the Joint
                  Venture Company may be purchased inside or outside of China.

ARTICLE 32:       The Joint Venture Company shall appoint Party B to
                  purchase equipment in foreign market case. The function and
                  price of equipment shall be consulted and approved by the
                  Joint Venture Company. Party B shall invite the
                  representatives of Party A or the Joint Venture Company to
                  participate in the purchasing of machines of big size.

                                 CHAPTER TWELVE

                                LABOR MANAGEMENT

ARTICLE 33:       The employment, dismissal, wages, labor insurance,
                  welfare, rewards and penalties, etc. of the stuff and workers
                  of the joint Venture Company shall be planned by the Board of
                  Directors and stipulated by labor contracts made together or
                  respectively between the Joint Venture Company and the labor
                  union according to the Administration Regulations of the
                  People's Republic of China on Joint Ventures Using Chinese and
                  Foreign Investment and its implementations.

                  After the labor contract is signed, it shall be submitted to
                  local labor management authority to be filed.

ARTICLE 34:       The employment, wages, achievement rewards, insurance, 
                  welfare, standard of travel expenses, etc. shall be determined
                  by the Board of Directors.

                                CHAPTER THIRTEEN

                  TAX, FINANCE ACCOUNTING AND FOREIGN CURRENCY

ARTICLE 35:       The Joint Venture Company shall pay taxes in accordance
                  with the relevant laws and regulations of the PRC.

ARTICLE 36:       The staff and workers of the Joint Venture Company shall
                  pay individual income taxes according to the Individual Income
                  Tax Law of the People's republic of China.

ARTICLE 37:       The Joint Venture Company shall draw funds in accordance
                  with the relevant regulations of the PRC. The proportion of
                  every year shall be discussed and 



                  determined by the Board of Directors according to the 
                  operation status of the Joint Venture Company.

ARTICLE 38:       The fiscal year of the Joint Venture Company is from the
                  first of January to the thirty-first of December. Vouchers,
                  documents, statements and account books shall be prepared in
                  Chinese. The vouchers and documents of foreign business shall
                  be prepared in Chinese, English or both.

ARTICLE 39:       The Joint Venture Company shall invite accountants and
                  auditors registered in China or other countries to check the
                  finance and accounts, and shall submit the result to the Board
                  of Directors and the General Manager.

ARTICLE 40:       The General Manager shall prepare the balance sheets, the
                  statement of loss and profit and the profits allocation
                  proposal of the previous fiscal year, and submit them to the
                  Board of Directors for examination and approval within the
                  first three months of the present fiscal year. After the
                  profit allocation proposal is decided, the Joint Venture
                  company shall allocate the profits to Party A and Party B
                  immediately in accordance with the relevant laws of the PRC.
                  The foreign currency shall be settled by either RMB or US
                  dollar.

ARTICLE 41:       All the foreign currency matters of the Joint Venture
                  Company shall be handled according to the relevant
                  stipulations of the Regulations of the People's Republic of
                  China on Foreign Currency Administration.

                                CHAPTER FOURTEEN

                             TERMS OF JOINT VENTURE

ARTICLE 42:       The term of the Joint Venture Company shall be 50 years.
                  The establishment of the Joint Venture Company is on the day
                  when the business license of the Joint Venture Company is
                  signed and issued.

                  With the proposal of two parties and the unanimous approval of
                  the Board of Directors, the Joint Venture Company may apply to
                  the Ministry of Foreign Trade and Economic Cooperation of the
                  PRC (or the examination and approval authority it appointed)
                  for prolonging the term of joint venture within six months
                  before the original term expires.



                                 CHAPTER FIFTEEN

           THE DISPOSAL OF ASSETS WHEN THE JOINT VENTURE TERM EXPIRES

ARTICLE 43:       When the term of joint venture expires or is terminated,
                  the Joint Venture Company shall conduct liquidation according
                  to the laws. The assets after liquidation shall be allocated
                  in proportion to the investment of Party A and Party B.

                                 CHAPTER SIXTEEN

                                    INSURANCE

ARTICLE 44:       The insurance of the Joint Venture Company that is inside
                  China shall be underwritten with the insurance companies in
                  China, and insurance outside Chinese territory may be
                  underwritten with the local insurance companies or other
                  insurance companies. The coverage, insurance value and
                  insurance term shall be discussed and decided by the Board of
                  Directors of the Joint Venture Company according to the
                  regulations of the insurance companies in the territory of
                  China and other insurance companies.

                                CHAPTER SEVENTEEN

           THE AMENDMENT, ALTERATION AND CANCELLATION OF THE CONTRACT

ARTICLE 45:       The amendment of the contract shall be signed in writing
                  by Party A and Party B and shall be submitted to the original
                  examination and approval authority for approval to be
                  effective.

ARTICLE 46:       Owing to the failure of fulfilling the contract due to
                  Force Majeure or of continuing operation due to the constant
                  deficits of the Joint Venture Company, the termination of the
                  term of joint venture and the cancellation of the contract
                  before the end of the term shall be unanimously approved by
                  the Board of Directors and shall be submitted to the original
                  examination and approval authority for approval.

ARTICLE 47:       In case one party doesn't fulfill the obligations
                  stipulated in the contract and articles of association or
                  seriously violate the contract and articles of association,
                  which lead to the failure of operating or achieving the
                  business purpose of the Joint Venture Company as stipulated in
                  the contract, it shall be regarded as the Delinquent party's
                  unilateral termination the contract. Besides claiming to the
                  delinquent party for compensation, the observant party also
                  has rights to apply to the original examination and approval
                  authority for the approval of terminating the joint venture
                  contract according the stipulation of the contract. In case
                  Party A and Party B agree to 



                  continue the operation, the delinquent party shall compensate
                  the economical losses of the Joint Venture Company.

                                CHAPTER EIGHTEEN

                       LIABILITIES FOR BREACH OF CONTRACT

ARTICLE 48:       In case any of the two parties doesn't pay off its
                  investment in accordance with the Chapter Five of the
                  contract, the delinquent party shall pay penalty fee which
                  amount to 1% of the investment it shall pay a month counted
                  from the first month that exceeds the time limits to the
                  observant party a month counted from the first month that
                  exceeds the time limits. In case the delinquent party doesn't
                  pay off its investment three months after the time limits,
                  besides requiring the delinquent party to pay the penalty fee
                  which accumulated to 3% of the investment it shall pay, the
                  observant party also has rights to terminate the contract
                  according to Chapter Seventeen of the contract and require the
                  delinquent party to compensate its losses.

ARTICLE 49:       The liability of the failure of fulfilling or partially
                  fulfilling the contract due to the faults of one party shall
                  be undertaken by the party who is guilty. In case both parties
                  are guilty, the liabilities for breach of contract shall be
                  undertaken by the two parties respectively according to the
                  actual situations.

                                CHAPTER NINETEEN

                                  FORCE MAJEURE

ARTICLE 50:       Due to earthquake, typhoon, flood, war and other
                  unpredictable and unavoidable Force Majeure accidents which
                  directly influence the fulfillment of the contract on the
                  agreed conditions, the party that suffers from the
                  above-mentioned accident shall inform the other party of the
                  accident by telegram or facsimile in time, and present the
                  detailed minutes of the accident and a valid certificate
                  stating the reasons why it cannot fulfill or partially fulfill
                  the contract or why it needs to prolong the fulfillment of the
                  contract within fifteen days. This certificate shall be
                  presented by local notary authority of where the accident
                  happens. Whether to cancel the contract or partially relieve
                  the responsibilities of fulfilling the contract or prolonging
                  its fulfillment shall be decided through negotiations between
                  the two parties according to the degree of the influence of
                  the accident on the fulfillment of the contract.



                                 CHAPTER TWENTY

                                 GOVERNING LAWS

ARTICLE 51:       The formulation, effect, explanation and execution of the
                  contract and the settlement of disputes shall be governed by
                  the laws of the People's Republic of China.

                               CHAPTER TWENTY-ONE

                             SETTLEMENT OF DISPUTES

ARTICLE 52:       All disputes due to the fulfillment of the contract or
                  related to the contract shall be settled through friendly
                  negotiations of the two parties. In case the negotiation does
                  not work. The dispute shall be submitted to an arbitrary
                  organization agreed by both parties for arbitration.
                  The arbitrary award is final and binding upon both parties.

ARTICLE 53:       During the arbitration, except for the parts that causes
                  the disputes and is being arbitrated, the contract shall
                  continue to be fulfilled.

                               CHAPTER TWENTY-TWO

                              CONTRACTUAL LANGUAGE

ARTICLE 54:       The contract shall be prepared in Chinese.

                              CHAPTER TWENTY-THREE

                    EFFECTIVENESS OF THE CONTRACT AND OTHERS

ARTICLE 55:       The articles of association of the Joint Venture Company
                  formulated in accordance with the principals of the contract
                  shall be regarded as a part of it.

ARTICLE 56:       The contract shall be approved by the Ministry of Foreign
                  Trade and Economic Cooperation of the PRC.(or the examination
                  and approval authority it appointed) and will enter into
                  effect from the day of approval. The contracts of the former
                  UT Starcom (Hangzhou) Equipment Co. Ltd. (Sole proprietorship)
                  and Zhejiang Yutong Telecommunication Equipment Co. Ltd. shall
                  be submitted to the original examination and approval
                  authority for cancellation and termination.

ARTICLE 57:       The ways Party A and Party B dispatch notices, such as by
                  telegram, telex and facsimile, which relate to the rights and
                  obligations of each party, shall be followed 



                  with written letters. The legal residences listed out in the
                  contract are the addresses of Party A and Party B where the 
                  letters are received.

ARTICLE 58:       The contact shall be signed by the representatives
                  appointed by Party A and Party B and is made into five copies.



Zhejiang Telecommunication Equipment Factory         UT Starcom Inc. of USA



Representative:                                      Representative:

/s/ (Signature)                                      /s/ (Signature)

Date of signature: July 31, 1997                     Date of signature: