Sales Contract of PAS-TM-System for Xian Telecommunication Bureau - UTStarcom (China) Co. Ltd. and Xian Telecommunication Bureau


       SALES CONTRACT OF PAS-TM- SYSTEM FOR XIAN TELECOMMUNICATION BUREAU


Contract Serial No.: UTXAO-199908-1-01        Project Serial No.: XI'AN-PAS

Buyer:                                        Seller:
Xian Telecommunication Bureau                 UTStarcom (China) Co., Ltd.

Address:                                      Address:
No. 28 Lianhu Road                            Fl. 11, Beihaiwantai Building
Xian                                          No. 6 Chaoyangmenbeidajie
                                              Dongcheng District, Beijing 100027

Tel.:  029-3288900                            Tel.:  010-65542030
Fax:  029-3288900                             Fax:  010-66542058

Taxpayer's Registration Number:  110108600045544
Bank of Account Establishment and Account No.:
         Bank of Industry and Commerce, Chaoyang Branch, Ritan Subbranch
         Account Number:  [*]

         This Contract is made between and by the Seller and the Buyer. In
accordance with the provisions of this Contract, the Buyer agrees to buy and the
Seller agrees to sell the following commodities:

1.       Scope of the Contract:

         PAS personal wireless cut-in system equipment (including hardware and
         software) and related materials and services. Please see the attachment
         for details.

2.       Contract Price

         The total price of the 'equipment' and 'services' is as follows:
         [*]
         The rate of conversion was based on the median price of the foreign
         exchange rate of RMB827.74/USD100 published by the Bank of China on
         August 20, 1999.

3.       Country of Production and Name of Manufacturer: UTStarcom (Hangzhou)
         Telecom Co., Ltd.

4.       Schedule of Delivery: The goods shall be delivered in four
         installments, and the last installment of which shall arrive at the
         site designated by the Buyer no later than [*].

5.       Site of Hand over of the Goods: Goods and Materials Supply Center 
         of Xian Telecommunications Bureau
         (Person of Contact: Li Ximin, No. 6 Renhouzhuangbeilu, Xian)


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6.       Site of Delivery of the Goods: Goods and Materials Supply Center of
         Xian Telecommunications Bureau (Person of Contact: Li Ximin, No. 6
         Renhouzhuangbeilu, Xian)

7.       Packaging

         The goods shall be packed in solid wooden boxes, good for long-distance
         transportation and proof from rain, moisture, earthquake and rust. The
         Seller shall be held responsible totally for any damage resulted from
         poor packaging or any damage related to dust caused by inadequate and
         improper protective measures.

8.       Packing Marks

         The Seller shall use fast ink to clearly mark on each packaging case
         the number, size, gross weight and such signs as 'this side up',
         'please handle with care' and 'keep from moisture' along with packing
         marks.

9.       Transportation

         Any cost and risk occurred prior to the official hand-over of the goods
         at the site of delivery designated by the Buyer shall be borne by the
         Seller.

10.      Terms of Payment

         The terms of payment for the equipment are as follows:

         10.1     The Buyer shall make a prepayment to the Seller, equal to [*]
                  of the total Contract price for such equipment within [*]
                  upon execution of the Contract in the amount of [*]. If the 
                  prepayment is delayed, the schedule of delivery for the 
                  last installment of the goods shall be postponed 
                  correspondingly.

         10.2     Within [*] upon delivery of the goods, the Buyer shall, pay 
                  the Seller [*] of the total Contract price for such 
                  equipment in the amount of [*].

         10.3     Within [*] upon qualification of an initial testing of the 
                  equipment, the Buyer shall pay [*] of the total Contract 
                  price in the amount of [*].

         10.4     Within [*] upon the date of final testing (which should 
                  begin within [*] after the initial test), the Buyer shall 
                  pay [*] of the total Contract price for such equipment in 
                  the amount of [*].

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WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT 
TO THE OMITTED PORTIONS.

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11.      Guarantee for Good Repair

         11.1     The Seller guarantees that the devices provided will be 
                  free from faults both in technology and materials. The 
                  period of guarantee for good repair provided by the Seller 
                  for the equipment and materials is [*] beginning from the 
                  date of qualification for the system's initial testing. 
                  During the period of such guarantee for good repair, the 
                  Buyer may opt to have the foregoing unqualified equipment 
                  and materials under guarantee repaired or replaced. If the 
                  Buyer decides that some parts should be returned to the 
                  Seller, then the Seller shall bear the transportation cost 
                  for the returned parts or in the case of repaired or 
                  returned parts, the transportation cost to the site of 
                  installation.

         11.2     Any damages caused by carelessness, improper handling, 
                  accidents or misuse shall not be included in the list below 
                  of guarantee for good repair under the provisions of 
                  Article 11.1.

                  11.2.1    Any damage caused by a third party's wiring, 
                            repair or replacement other than the Seller and 
                            its agent;

                  11.2.2    Any third party's improper installation, storage, 
                            operations and maintenance other than the Seller
                            and its agent; and

                  11.2.3    Any removal from the site of installation, or 
                            components that are easy to wear and tear such 
                            wire fuses, luminous tubes, electric brushes for 
                            electric motors.

12.      Inspection and Claims

         12.1     Within three (3) business days upon arrival of the goods at
                  the destination, the Buyer shall open the boxes with the
                  Seller present at the site. The representatives of the parties
                  shall make an inventory of the goods and affix their
                  signatures.

         12.2     If, due to the improper packaging on the part of the Seller,
                  some parts are found missing or damaged, the Buyer shall make
                  a detailed record at the site of installation, or may
                  commission China Commodities Inspection Bureau to have another
                  inspection, or the representatives of the Buyer and the Seller
                  may draft and execute a memorandum. Such certificates or
                  memorandum may serve as appropriate documents to make up for
                  the missing parts or repair the damages ones, which shall be
                  implemented according to the terms of guarantee set forth in
                  Article 11.

13.      Installation and Debugging

         It is the responsibility of the Seller to supervise and guide the
         installation of the equipment and it is the responsibility of the Buyer
         to install the equipment. In order to guarantee the progress of
         installation and its quality for such equipment as well as to lay down
         the preparatory work for such project pursuant to the schedule set
         forth in the Contract, the Buyer shall have adequate contingent of
         qualified installation personnel while the Seller shall also have
         adequate and qualified personnel for the guidance of the project and
         the debugging of the system.

14.      Test and Acceptance

         14.1     The Seller shall be responsible for the installation design,
                  supervision and guidance of the equipment and the debugging of
                  the system. During the course of installation and opening, the
                  Buyer shall assist the Seller in technical management and
                  other related work. The installation of equipment and the
                  opening of access shall be carried out in accordance with the
                  schedule of progress set forth in the attachment.


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         14.2     With regard to the specific contents and requirements of the
                  inspection and acceptance, the Seller shall submit them to the
                  Buyer in writing for approval [*] before the test and
                  acceptance work starts. Initial test shall be conducted within
                  [*] after the opening and number release of the system, and
                  the period of time for acceptance upon testing shall not
                  exceed [*] (except for the postponement caused by the Seller).
                  If the testing results are up to the test and acceptance
                  standards mentioned above, they shall be deemed as being
                  qualified for the initial test. If the initial test fails to
                  meet the standards, the Seller shall be responsible for the
                  adjustment and a new 

                  round of test shall be conducted until the 'equipment' reaches
                  the quality index set forth for such work. But minor problems 
                  shall not affect the validity of an initial test certificate.

         14.3     The final test shall start within [*] upon execution of the
                  initial test certificate by the parties. If the final test
                  meets the test and acceptance standards, the parties shall
                  sign the final test certificate within [*]. During the [*]
                  trial operation, the Seller shall ensure the normal operation
                  of the equipment. If, during the period of a final test, the
                  Seller is held accountable for any malfunction occurred as a
                  result of failure to meet the standards during the foregoing
                  trial operations, the final test shall start anew at that
                  time. The final test shall only be completed until all the
                  standards of test and acceptance for the equipment are met.

         14.4     The test and acceptance of the system shall be based on the
                  provisions for terminal equipment illustrated on the book of
                  general technical standards for telephone exchange equipment ,
                  the 'compilation subscribers' cut-in network documents and
                  technical provisions' and 'the book of general technical
                  standards for cut-in network equipment' (Provisional
                  Regulations) set forth by the former Ministry of Post and
                  Telecommunications on cut-in network equipment and other
                  acceptance conditions agreed upon by the parties.

15.      After-Sale Services

         15.1     The Seller shall provide maintenance services [*] for [*]
                  after the final test, and, moreover, [*] technical support
                  shall be provided. A technical support center will be set up
                  in Xian to ensure that any emergency calls shall be answered
                  promptly and technical personnel dispatched to the site within
                  [*].

         15.2     During the period of maintenance for the system, the Seller
                  shall provide such services pursuant to the provisions of
                  Article 11.1.

         15.3     Upon expiration of the maintenance period for the equipment,
                  the Seller shall continue providing services for the repair of
                  such equipment in case of malfunction, and the Seller further
                  guarantees that backup or substitute equipment be provided at
                  a preferential price.

16.      Force Majeure

         The Seller shall not be held liable for any losses, damages or delay of
         delivery of or functional damages to the goods caused, whether directly
         or indirectly, by such act which is beyond the scale of reasonable
         control by the Seller and which is not limited to the laws and
         regulations imposed by the authorities of any government. If the
         delivery of goods under this Contract is delayed for more than two
         months 


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         due to any one of the above-mentioned reasons, either the Seller
         or the Buyer shall be entitled to terminate this Contract by notifying
         the other party in writing.

17.      Arbitration

         The parties shall implement this Contract rigorously in accordance with
         the relevant laws and regulations of the People's Republic of China.
         Any dispute arising from or in connection with the execution of the
         Contract shall be settled through consultation on the basis of mutual
         understanding and friendliness. If such consultation fails to reach an
         agreement, any party may apply for an arbitration at Xian Arbitration
         Commission. The arbitral cost shall be covered by the losing party.

18.      Limited Liability

         18.1     In case the Seller breaches the Contract or the Buyer suffers
                  from any losses or damages under this Contract due to the
                  Seller's fault, the total aggregated amount for such breach,
                  losses or damages that the Seller is liable for shall be lower
                  than the following:

                  18.1.1   The actual value afflicted upon the Buyer by such
                           losses or damages.

                  18.1.2   The total amount paid to the Seller.

         18.2     The Seller shall not be responsible for any indirect or
                  supplementary losses or damages arising out of this Contract.

19.      Patents

         The Sellers guarantees that the 'equipment' does not infringe upon any
         third party's patents or ownership. If a third party lodges a claim
         upon the 'equipment' used by the Buyer, the Buyer has the right to
         refuse it, and then notify the Seller immediately. The Seller shall
         take the responsibility to solve such problems, and the Buyer shall be
         bear any legal and economic responsibilities. The Seller shall
         compensate any direct losses caused therefrom to the Buyer.

20.      Confidentiality

         Unless permitted by the Seller in writing, the Buyer agrees that it
         shall not disclose any technical document or data related to this
         Contract including this Contract to any party that has nothing to do
         with this Contract, nor shall it transfer any equipment out of the
         People's Republic of China. These confidential principles shall apply
         to any other party related to this Contract. Likewise, the 


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         Seller shall also observe the provisions of this Article with regard 
         to the confidential information about the Buyer or its subscribers.

21.      Validity and Termination of the Contract and Supplementary Provisions

         21.1     This Contract shall come in force upon affixation of the
                  parties' official seals and signatures of their
                  representatives.

         21.2     This Contract shall be terminated upon completion of the
                  parties' responsibilities and obligations.

         21.3     Any amendment to this Contract shall be based on the written
                  document executed by the representatives of the parties and
                  affixed with their official seals.

         21.4     All notices dispatched by the parties in the course of
                  executing this Contract shall be in the reliable forms of
                  telexes, faxes or letters.

22.      Supplementary Note:

         This Contract is written in four originals, each party in possession of
         two copies. This Contract consists of 22 Articles and the documents
         listed in the attachments. These documents listed in the attachments
         are attached thereafter its text and shall be treated as an inseparate
         part of this Contract with equal legal power.


Buyer:                                   Seller:

Xian Telecommunications Bureau           UTStarcom (China) Co., Ltd.

Legal Representative or Representative:  Legal Representative or Representative:
(Signature)                              (Signature)

Date: August 23, 1999                    Date: August 23, 1999

                     WIRELESS MUNICIPAL TELEPHONE (PAS-TM-)
                                       OF
                          XIAN TELECOMMUNICATION BUREAU


                               TABLE OF CONTENTS


                                 
         (1)      Contract

         (2)      Appendix 1        Total Price and List of Equipment (Omitted)

         (3)      Appendix 2        Memorandum


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         (4)      Appendix 3        PAS-TM-Technical Proposal for the Wireless Municipal
                                    Telephone of Xian Telecommunications Bureau (Omitted)

         (5)      Appendix 4        Schedule of Progress and the Parties' Responsibilities

         (6)      Appendix 5        Training Program (Omitted)

         (7)      Appendix 6        Technical Manual of Wireless Municipal Telephone
                                    (PAS-TM-) (Omitted)

         (8)      Appendix 7        Reply to the Price Inquiry with regard the PAS Project in
                                    Xian (Omitted)




                                   APPENDIX II

                                   MEMORANDUM


Party A:                                    Party B:

Xian Telecommunications Bureau              UTStarcom (China) Co., Ltd.

No. 28, Lianhu Road                         Fl. 11, Beihaiwantai Building
Xian                                        No. 6 Chaoyangmenbeidajie
                                            Dongcheng District, Beijing 100027

This memorandum consists of three parts and nineteen (19) clauses.

I.       Supply and Maintenance of PAS Handsets

         The price of a PS handset currently provided by Party B to Party A 
is [*], and the PS models are comprised of two kinds, 702-S and 702-P.

         Party B is committed to decrease the supply price of a handset by [*]
within [*] on the basis of the current price, and [*] within [*]. Moreover, 
Party B guarantees that, within [*], the maintenance will be provided [*], 
and that after [*], [*] maintenance of handsets and services for component 
and spare parts be provided. Party B plans to set up a maintenance and repair 
center in Xian in cooperation with the Telecommunications Bureau in the near 
future. (The explanation of this section is aimed at PS handsets provided by 
Party B in both Chinese and English.)

         Party B shall open up the air interface protocol for handsets within 
[*] upon execution of the Contract. Party A may independently purchase PS 
handsets directly from the manufacturers, and by the time, there will be 
three Japanese manufacturers, [*] that will provide STEPHII standard handsets 
to Party B's subscribers.

II.      Explanation on the Equipment Given as [*] (See the list for details)

         1.       When the local wireless telephone network in Xian enters into
                  the stage of network adjustment and optimization, Party B
                  shall [*] to Party A (including interface boards in
                  relation to the corresponding RPC) to cover the vast border
                  area in Xian. The goods will arrive by the end of the year.

         2.       Party B is committed to provide a set of data application
                  business without any charge, whereby [*] can log
                  on simultaneously when the second-generation data application
                  business of PAS system is commercialized (the rate of speed
                  for communication is [*], and the system is scheduled to
                  open within [*]). At the time of opening, Party


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                  B shall provide Party A [*] a set of first-generation data
                  application equipment used in the PAS system, the capacity of
                  which can [*] to log on in the interconnected network.

         3.       Party B shall contribute [*] to Party A [*] of RPC and other
                  backup device. The backup device shall be used to maintain
                  equipment in the future. The goods will arrive by the end of
                  the year.

         4.       Party B shall give Party A [*] a set of [*], and the schedule
                  of delivery is set by the end of the year.

         5.       110 and 119 Alarm Signal System:  The function of such 
                  system involves the coordination and cooperation of 110 and 
                  119 centralized monitoring center, including the necessity 
                  for the monitoring center to set up a data bank and a 
                  retrieval system correspondingly in relation the PAS system 
                  in Xian.  In the meantime, the network management center of 
                  the PAS system can provide the related information of 110 
                  and 119 alarm signal telephones to the monitoring center, 
                  which will eventually determine the location of the 
                  subscriber through the retrieval data bank.  The interface 
                  standards between PAS network management center and the 
                  monitoring center will be provided to Party A within a 
                  month upon execution of the Contract.  The said system will 
                  be jointly developed by Party A and Party B in their 
                  concerted efforts and provided to Party A for use [*] 
                  (including software and hardware).

         6.       With regard to RP antenna adversity system, Party B is
                  committed to provide the Bureau 10 sets of such equipment to
                  conduct tests at selected points within three (3) months upon
                  execution of the Contract.

         7.       Based on the terms of network operations, Party B 
                  undertakes to give Party A [*] of COT (containing the 
                  function of indicating the caller's number) and [*] of RPC 
                  and [*] of RP. All the equipment contributed [*] shall have 
                  frames.

         8.       Party B is committed to Party A that [*] shall be given [*],
                  and their models are of 702-S and 702-P.

         9.       The collocation of soft- and hardware for the system's
                  indicator of calling subscriber's number has been included in
                  the quoted price. Depending on the operation of the network,
                  Party B is committed to increase the software and hardware of
                  the calling subscriber's indicators [*] if the current
                  collocation does not meet the subscribers' requirements.


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III.     Other Items

         1.       Party B is committed to provide [*] technical training for 60
                  people from Party A, 30 of whom shall have their technical
                  training program in China, 12 outside of China and 18 at
                  overseas manufacturers for practical experience. The training
                  cost includes round trip airline tickets of the personnel and
                  other related expenses such as transportation and
                  accommodation.

         2.       Party B is committed to fulfil the goals set forth in Article
                  1.3 of Appendix 3. If such goals cannot be achieved, Party B
                  is committed to provide equipment to Party A [*] to meeting
                  the foregoing requirements.

         3.       Party B is committed to co-operate with Party A in further
                  optimizing the reliability of operations for S-ATC equipment.
                  Party B undertakes to meet the Bureau's following requirement
                  within three months after the opening of the system:

                  (1)      The service unit is equipped with [*] CPU cards, and
                           may expand into [*] cards.

                  (2)      The capacity of storage is no less than [*].

                  (3)      The RAID memory unit will have the backup of [*], and
                           the disk controller will have the backup of [*].

                  (4)      The use of LAN-SWITCH (and equipment with [*] single
                           mould optical fiber interface to facilitate remote
                           backup). Party B will join Party A in its further
                           efforts to improve the stability of the whole
                           network.

         4.       Party B is committed to continuously optimize the network
                  infrastructure of S-ATC, ATC and COT. When the network
                  subscribers reach [*] or within a period of [*], Party B will
                  replace S-ATC, ATC and COT with the equipment having Party B's
                  latest technology.

         5.       Party B guarantees to Party A that adequate indoors base
                  stations and directive antennas will be provided during the
                  engineering period, and that adjustments be made based on the
                  actual needs for area coverage.

         6.       Party B guarantees that sales of PAS will only be made
                  available to Party A in the Xian area, and that no other
                  subscribers shall be provided.

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         7.       Party B will [*] concerning new businesses that are 
                  not listed in this Contract but will be provided to the
                  Bureau; however, it will charge the related hardware cost.



         Party A:                           Party B:

         Xian Telecommunications Bureau     UTStarcom (China) Co., Ltd.

         Legal Representative or            Legal Representative or
         Representative: (Signature)        Representative: (Signature)
         Date: August 23, 1999              Date: August 23, 1999












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                                  APPENDIX IV

                     SCHEDULE OF PROGRESS FOR THE PROJECT
                                      AND
                         THE PARTIES' RESPONSIBILITIES


                I Proposed Schedule of Progress for the Project


                                      [*]















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                       II The Parties' Responsibilities


         Party A: Xian Telecommunications Bureau

         Party B: UTStarcom (China) Co., Ltd.

               In order to guarantee the success of cooperation between and
         by the parties during the implementing stage of the project, the
         parties hereby clearly define the following matters in connection with
         the project:

               I.       The parties' responsibilities;

               II.      Survey, design and preparation of the project;

               III.     Materials and interface for the installation of the
                        project;

               IV.      Testing and trial operations of the system; and

               V.       Supplementary facilities.

         I.    The Parties' Responsibilities

               1.1      Prior to the start of the project, Party A must be
                        equipment with the necessary conditions available for
                        installation. If such conditions are unavailable or
                        inadequate, Party B shall rearrange the schedule of
                        progress for the project and set a new date to start
                        the operations.

               1.2      Party A shall be responsible to supply stable direct
                        and alternate power sources, and transfer them to the
                        locations designated at the project site. In addition,
                        Party A shall guarantee the quality and capacity of
                        electric supply.

               1.3      Party B shall supply the equipment necessary for the
                        project, and guarantees that the quality of such
                        equipment is up to the technical standards.

               1.4      The installation of all the equipment provided by
                        Party B shall be completed jointly by the parties.
                        Party B shall be responsible for the debugging and
                        opening of the system, and Party A shall provide
                        assistance and coordination. Any wiring, installation,
                        setup or debugging that involve Party A's facilities
                        shall be Party A's responsibilities whereby Party B
                        will provide assistance and coordination.


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               1.5      Any matters occurred during the course of this project
                        and not defined in this appendix shall be solved
                        through discussions by the parties.

         II.   Survey, Design and Preparation of the Project

                        Party B shall be responsible for the project survey
               and the network plan whereas Party A shall coordinate with
               Party B in its survey and network plan as well as relevant
               data and information in connection with such work.

               2.1      Party A shall provide equipment rooms at the central
                        office's and the far-end terminals as well as the
                        site for construction. In addition, it will provide
                        Party B detailed information with regard to the
                        equipment rooms (including draft of the locations and
                        information about the environmental conditions and
                        available facilities). Party B shall work out a
                        master plan, make proposals and requests in
                        connection with Party A's preparatory conditions on
                        equipment rooms.

               2.2      Party A shall be responsible to provide a map (at the
                        scale of [*]) outing the service area under the
                        project. Party B shall conduct on-the-site wireless
                        survey based on such map and determine the exact
                        locations for the corresponding base stations, and
                        provide a list of locations for base stations as well
                        as detailed schedule of installation.

               2.3      Party A shall arrange engineering and technical
                        personnel concerned to assist and coordinate such
                        wireless survey.

               2.4      Party A shall be responsible to coordinate with the
                        local authorities and institutions to fix the locations
                        for the installation of such base stations.

               2.5      Party B shall be responsible to put forward specific
                        requirements for the preparation of the project, and
                        Party A shall be responsible to carry out such
                        preparatory work for the project and to timely feed
                        back the progress to Party B.

         III.  Materials and Interface for the Installation of the Project

               3.1      Party A shall be responsible to provide the interface,
                        technical information and necessary technical
                        assistance for the switchboard.

               3.2      If the [*] is adopted, Party A shall be responsible for
                        the connection of [*] from [*]


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                        to Party B's equipment.  The adapter of [*] on the
                        side of Party B's equipment shall be provided and
                        installed by Party B. If the [*] is adopted, Party A
                        shall be responsible for the [*] to [*] and that from 
                        [*] to [*], and shall also be responsible for the clock
                        line at the precision of [*].

               3.3      Party A shall be responsible for the wiring of
                        connection from the [*] at the base stations [*] to [*].
                        The interface on the side of [*] shall be provided and
                        installed by Party A whereas the interface on the side
                        of [*] shall be provided and installed by Party B.

               3.4      Party A shall be responsible to fasten the frame body
                        and extend the [*] power source and ground wire to the
                        main distribution frame [*] of Party B's equipment.

               3.5      Party B shall be responsible for the installation of the
                        machine frame in the rack, power source line and ground
                        lines.

               3.6      Party A shall be responsible for the remaining wiring at
                        the equipment rooms whereas Party B shall provide
                        assistance and coordination. If the [*] frame is used,
                        Party A shall provide [*]; Party A shall also be
                        responsible for the [*] among the main distribution
                        frames.

               3.7      The manufacturing of fastening pieces and the
                        installation of the base stations as well as the
                        inspection of the related lines shall be Party A's
                        responsibility. The testing of the base stations and
                        fault correction shall be performed through the joint
                        efforts of the parties.

               3.8      Party A shall be responsible to provide vehicles, 
                        tools, materials and personnel required for the 
                        installation of the project.

               3.9      Party A shall be responsible to provide number 
                        sources required for this network of wireless 
                        connection.

         IV.   Testing and Trial Operations of the System

               4.1      The testing of various parts of the system and 
                        general combined debugging shall be completed by the 
                        joint efforts of the parties. Party A shall conduct 
                        testing in coordination with the tests on Party B's 
                        equipment, confirm the results of such testing on the 
                        function of the system, and provide necessary tools 
                        for such


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                        testing. Party B shall be responsible for technical
                        guidance and support.

               4.2      Party B shall provide a plan for trial operations as
                        well as maintenance and technical guidance during the
                        period of trial operations, and in the meantime,
                        provide training on maintenance for Party A's personnel
                        so as to enable them to master the knowledge for
                        maintenance. Party A shall work out the plan for trial
                        operations.

               4.3      If faults or errors are discovered in the software or
                        hardware of the equipment or technical information
                        that result in failures to reach the standard and
                        targets set forth in the Contract, Party B shall be
                        responsible for the repair of such equipment, the
                        replacement of hardware materials and the upgrade of
                        software.

               4.4      As Party A is Party B's key subscriber, Party B shall 
                        make tract records on the operations and maintenance 
                        of the equipment and keep them in the files for key 
                        subscribers.

         V.    Supplementary Facilities

                        The supplementary facilities provided for the
implementation of the project are defined as follows:

               5.1      The Bureau will provide supplementary facilities and 
                        equipment for the installation of equipment such as  
                        computer desks and chairs, sites for the storage of 
                        tools, equipment and goods.

               5.2      Party A shall provide PS handsets and telephone 
                        numbers required for testing.

               5.3      The communication facilities required for the project 
                        such as IDD direct dial telephones and faxes for 
                        domestic use shall be provided by Party A, and Party 
                        B will use them in accordance with Party A's 
                        management regulations. Party A shall provide 
                        sockets, plugs and cables used for power sources of 
                        general purpose and extend them to where the 
                        equipment is located when the equipment is installed.


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