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Contract - UTStarcom (China) Ltd. and Zhejiang Telecommunications Corp.


Contract No.: UTPAS-H22Kii1206                                   Project No. 

The Buyer:                                The Seller:

Zhejiang Telecommunications Corporation,  UTStarcom (China) Ltd.
Shaoxing Branch                           11th Floor, CNT Manhattan Building,
                                          No. 6 Chao Yang Men Bei Da Jie Street,
                                          Beijing, 100027

Tel:  0575-5134567                        Tel: (010)-65542030
Fax:  0575-5124855                        Fax: (010)-65542058

         This contract is made between the Buyer and the Seller, whereby the
Buyer agrees to buy and the Seller agrees to sell the under-mentioned
commodities according to the terms and conditions as stipulated hereinafter:

     1.   Total Contract Price: [*]

     2.   Name of Commodities: PAS Wireless Access System

               (Please refer to the attached list for quantity, specifications
               and unit price.)

     3.   Date of Shipment: [*].

     4.   Place of Destination: Shaoxing Telecommunications Corporation (He He
          Qiao), Zhuji Telecommunications Bureau, Xinchang County
          Telecommunications Bureau, Bianzhou Telecommunications Bureau and
          Shangyu Telecommunications Bureau.

     5.   Packing:

               The goods shall be packed in new strong cases suitable for long
          distance transportation and well protected against dampness, moisture,
          shook and rust. The Seller shall be liable for any damage to the goods
          on account of improper packing.

     6.   Shipping Marks:

               The Seller is required to mark clearly on the surface of each
          package the package number, measurements and such cautions as "This
          Side Up", "Handle with Care" and "Keep Away from Moisture" in unfading
          ink and put on shipping marks.

     7.   Transportation:

          7.1  [*] shall bear all the expenses and risks involved in the
               handling of the goods until the moment when the goods have
               officially been handed over to the relevant transportation unit
               designated by the Buyer.

          7.2  The transportation and insurance costs from Hangzhou or Huizhou
               Railway Stations (or from the Sellers' warehouse, if shipped by
               highway) to the place of destination designated by the Buyer
               shall be borne by [*].

     8.   Acceptance of Goods:

          8.1  Upon arrival of the goods, the Buyer shall check the goods
               immediately in the presence of the Seller's representative and
               sign on the shipping list as a certificate of acceptance of the
               goods. If shipped by air, railway or postal service, the
               carrier's shipping list shall serve as a certificate of
               acceptance of the goods.

          8.2  In case of missing parts or damages due to the Seller's improper
               packing, the Buyer shall make a detail record, or commission the
               China Commodity Inspection Bureau for a reexamination and
               issuance of a certificate, or require the representatives of the
               Buyer and the Seller to sign a memorandum to serve as a
               certificate for the replacement of missed or damaged parts. If
               the Buyer opens the cases by itself or fails to make a written
               claim on missing or damaged parts within [*] upon arrival of the
               goods, the Buyer shall be deemed to have accepted the goods.

     9.   Terms of Payment:

               General Provisions:

               If the payment by the Buyer to the Seller is made in [*], the
          exchange rate shall be based on the average price of a given foreign
          currency published by the People's Bank of China on the same day when
          the Seller receives such payment.

               The payment shall be made by T/T to Beijing Industry and Commerce
          Bank of China, Chao Yang Branch, Ri Tan Lu Office, for the account 
          number [*].

          9.1  Terms of Payment for the Equipment as Follows:

               9.1.1 Amount Paid on Arrival of the Goods

                     [*] of the total contract price, or [*] shall be paid by 
                     the Buyer within [*] upon arrival of the goods.


               9.1.2 [*] of the total contract price, or [*] shall be paid by
                     the Buyer within [*] upon connection and a test run of the

               9.1.3 [*] of the total contract price, or [*] shall be paid by
                     the Buyer within [*] upon certification of quality of final
                     test (The final test is set for [*] upon connection of the

          9.2  In the event that a payment required by Section 9.1 is not made
               by the Buyer within the stipulated time, the Buyer shall pay to
               the Seller, in addition to the amount owned, a late payment
               penalty equal to [*] of the amount owned per week. Any fractional
               part of a week is to be considered as a full week. The total
               amount of late payment penalty shall not, however, exceed [*] of
               the total amount owned.

     10.  Warranty:

          10.1 The Seller warrants the equipment supplied hereunder to be free
               from defects in workmanship and materials. The Seller's warranty
               for equipment and materials will commence upon delivery of the
               goods and will continue for a period of [*]. During the warranty
               period, the Seller will, [*], either repair or replace those
               equipment and materials not in conformity with the aforementioned
               warranty. If the Buyer determines that certain parts be returned
               to the Seller, the [*] shall bear the transportation cost for the
               return of such parts inside China and for the return of the
               repaired or replaced parts to the Buyer's site. 

          10.2 The Seller warrants to eliminating errors from the software it 

          10.3 The foregoing warranty does not extend to any equipment or part
               that has been:

               10.3.1 Damaged due to improper use or accidents;

               10.3.2 Wired, repaired or altered by anyone other than the Seller
                      or its representatives;

               10.3.3 Damaged due to improper installation, storage, handling or
                      maintenance by anyone other than the Seller or its
                      representatives; and

               10.3.3 Removed from its original site of installation, or due to
                      expendable components such as fuses, light bulbs, motor
                      brushes and the like.

               10.2.5 All equipment supplied under this Contract is brand-new.

     11.  Force Majeure


               The Seller shall not be liable for any loss, damage, delay of the
          goods or failure of their performance resulting directly or indirectly
          from any cause which is beyond its reasonable control, which includes
          but is not limited to the laws, regulations, acts of any government

     12.  Late Delivery and Penalty:

               In case of delayed shipment, except for force majeure, the Seller
          shall pay to the Buyer for every week of delay a penalty amounting to
          [*] of the total value of the goods whose shipment has been delayed.
          Any fractional part of a week is to be considered as a full week. The
          total amount of penalty shall not, however, exceed [*] of the total
          value of the goods involved in late shipment and is to be deducted
          from the amount due at the time of payment.

     13.  Arbitration

               The parties shall strictly execute this Contract in accordance
          with the relevant laws and regulations of the PRC. All disputes
          arising out of the execution of the Contract shall be settled through
          mutual understanding and friendly negotiations. In case no settlement
          can be reached through negotiations, either party can apply to the
          appropriate organization for arbitration or medication. The
          arbitration fees shall be borne by the losing party.

     14.  Limitation of Liability

               In the event of any breach of this Contract by the Seller, or of
          any losses or injuries to the Buyer arising out of this Contract for
          which the Seller is liable, the Seller's total cumulative liability
          for such breaches, losses and injuries shall be the lesser of:

          a.   The actual value of the damages or losses caused to the Buyer.

          b.   The Seller shall not be liable for any consequential or
               incidental losses or damages resulting from this Contract.

     15.  Validity and Termination of the Contract and Miscellaneous Matters:

          15.1 This Contract will come into force upon affixation of the seals
               by the parties and execution by the representatives of the

          15.2 This Contract will be terminated upon fulfillment of the
               respective duties and obligations by the parties.

          15.3 This Contract can only be amended by an instrument in writing
               signed and sealed by the duly authorized representatives of the


          15.4 During the course of performance of this Contract, all notices
               between the parties shall be delivered by telex, facsimile or
               certified mail.

          15.5 This Contract is made in both Chinese and English, and the
               versions in two languages shall be equally authentic. In case of
               discrepancy between the two versions, the Chinese version will

     16.  Remarks:

               The Contract is made in two originals, of which each party holds

         The Buyer:

         Zhejiang Telecommunication Corporation,
         Shaoxing Branch

         Representative: (Signature)
         Date:   November 18, 2000

         The Seller:

         UTStarcom (China) Ltd.

         Representative: (Signature)
         Date:   November 18, 2000

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