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Yile Industrial Park (Hangzhou, China) Leasing Contract of Factory Premises - Yile VIllage and UTStarcom (Hangzhou) Telecom Co. Ltd.


Party A:          Yile Village, Gudang Township (hereinafter referred to as 
                  Party A)

Party B:          UTStarcom (Hangzhou) Telecom Co., Ltd. (hereinafter referred
                  to as Party B)

         Party A and Party B reach the following agreement with regard to the
leasing of factory premises on the basis of equality and mutual benefit and
through friendly consultation:

         1.       Party B will lease from Party A the first, third and fourth 
                  floors with an area of 2,282 M TO THE POWER OF 2, 2,757.8 M 
                  TO THE POWER OF 2 and 2,757.8 M TO THE POWER OF 2, 
                  respectively at No. 3 Building, Yile Industrial Park inside 
                  the Yile Village having a total area of 7,797.6 M TO THE 
                  POWER OF 2 at a monthly price of RMB14 YUAN per M TO THE 
                  POWER OF 2 with an aggregated monthly rent of 109,166.40 
                  YUAN and a aggregated yearly rent of 1,309,996.80 YUAN. The 
                  lease is set for five (5) years from September 6, 1997 to 
                  March 1, 2002. The rent shall remain unchanged for the 
                  first three years, and, thereafter, it will increase 
                  according to the price increase index. An adjustment will 
                  be made every three (3) years.

         2.       Method of Payment: Party B shall pay Party A half a year's
                  rent within fifteen (15) days upon execution of this Contract.
                  After that, Party B shall make monthly payment for the rent of
                  a given month. It shall take the initiative to make onetime
                  payment at Party A's financial department on or prior to the
                  fifteenth day of every month. In case the rent is not paid on
                  time and the due date is over a month, the overdue fine shall
                  be 2% of the monthly rent per day. If it is overdue for more
                  than two (2) months, Party A has the right to take necessary
                  measures or unilaterally terminate this Contract and be
                  compensated by the breaching party for the liabilities.

         3.       Party A shall provide water for normal daily consumption, 450
                  kilowatts of electricity for industrial use and six
                  telephones. The cost for the water, electricity and telephones
                  shall be covered by Party B itself.

         4.       Under the premises of not adversely affecting the
                  infrastructure of the premises, Party A shall allow Party B to
                  make internal decoration and adjustments towards the leased
                  property, but Party B is required to submit a proposal for
                  such decoration and obtain Party's prior approval. If Party B
                  needs to renew the lease upon expiration of this Contract,
                  Party A shall give the priority to Party B.


         5.       During the leasing period, Party B shall bear the cost by
                  ratio of maintenance for public utilities and general
                  management of Building No. 3.

         6.       During the leasing period, Party B shall engage in lawful
                  operations, rigorously observe various regulations and
                  policies formulated by the central and local governments and
                  the various authorities concerned. In the meantime, it shall
                  pay taxes and management fees related to the enterprise
                  pursuant to the relevant provisions.

         7.       During the term of the Contract, the parties shall stand by
                  their rights and obligations set forth in the Contract. If any
                  party fails to implement its obligations and causes damages
                  toward the other party, it shall compensate for all of the
                  other party's claims.

         8.       If, due to some special circumstances, any party desires to
                  terminate the Contract prior to its expiration, it shall
                  notify the other party of such decision six (6) months ahead
                  of time. In case of amendment or termination of the Contract
                  due to force majeure, the parties shall hold discussion to
                  solve the problem.

         9.       Upon expiration of the leasing period, Party B shall have the
                  priority to renew the lease. The rent for the renewed lease
                  shall be decided by the parties through consultation based on
                  the price increase index.

         10.      This Contract shall become effective immediately upon
                  execution with legal interests. In case any dispute occurs
                  upon its validity, the parties shall take positive approach
                  trying to solve such dispute. If the parties fail to solve
                  such dispute by means of consultation, they may submit it to
                  the local economic arbitration organization or judicial organ
                  for arbitration.

         11.      Matters that are not dealt with in this Contract shall be
                  discussed and solved through friendly consultation, and
                  supplementary agreements shall be signed.

         12.      This Contract has four (4) original copies with each party in
                  possession of two having equal legal power, which will
                  supervise the other party to carry out the Contract and
                  protect its own rights.

       Party A:                                 Party B:

       Economic Cooperative of Yile Village,    UTStarcom (Hangzhou) Telecom Co.,
       Gudang Township                          Ltd.
       (Official Seal)                          (Official Seal)
       Date:  December 15, 1996

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