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SUMMARY OF TERMS
 
PURCHASE OF SINOTOP GROUP, LTD.

 
This document (“Term Sheet”) describes, for negotiation purposes only, some key
terms of the proposed agreement between China Broadband Ltd., a Cayman Islands
company, and LIU Weicheng, an individual, with regard to the proposed purchase
of Sinotop Group, Ltd., a Hong Kong company, by China Broadband Ltd. This
document is not intended to be a binding agreement between China Broadband Ltd.
and LIU Weicheng with respect to the subject matter hereof, except for the
provisions under the headings “Exclusivity,” “Confidentiality,” “Fees and Costs”
and “Disputes,” which will be binding upon the parties when this Term Sheet is
executed by both of them. A binding agreement will not occur unless and until
the parties have executed and delivered the appropriate definitive agreements
(the “Definitive Documentation”). Until execution and delivery of such
Definitive Documentation, both parties will have the absolute rights to
terminate all negotiations for any reason or for no reason.
 
Company
Sinotop Group, Ltd., a Hong Kong company (the “Company”)

 
Seller
LIU Weicheng, an individual, and/or one or more other persons or entities which
together hold 100% of the equity interests in the Company (collectively, the
“Seller”)

 
Purchaser
China Broadband Ltd., a Cayman Islands company, (the “Buyer”) and wholly-owned
subsidiary of China Broadband Inc. (“CBBD”)

 
Transaction; Purchase Price
Buyer will purchase 100% of the issued and outstanding shares of the Company
from the Seller at the Closing, free and clear of any liens or encumbrances (the
“Transaction”), in consideration for a percentage of the common stock of CBBD to
be agreed upon and specified in the Definitive Documentation (the “Purchase
Price”).

 
Conditions to Closing
The closing of the Transaction (the “Closing”) will be conditioned upon the
following:

 
 
•
The establishment by the Company of a wholly foreign-owned enterprise in the
People’s Republic of China (the “WFOE”) on terms satisfactory to Buyer;

 
 
•
The execution by the WFOE and by Beijing Sino Top Scope Technology Co., Ltd., a
PRC company (“Beijing Sinotop”), of one or more agreements pursuant to which the
WFOE will assume control over, and receive the economic benefit of all
operations of, Beijing Sinotop, in form satisfactory to Buyer (collectively, the
“VIE Agreements”), or the effective assignment of VIE Agreements already
executed by the Company to the WFOE with the consent of Beijing Sinotop;

 
 
•
The closing and funding of a convertible promissory note in the principal amount
equal to at least RMB 3,900,000 (about US$573,500) with Buyer as lender and the
Company as borrower, on terms satisfactory to both parties (the “Convertible
Note”);

 

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•
At or before the Closing, the contribution by Buyer of an amount equal to at
least RMB 34,000,000 (about US$5,000,000) to the capital of the Company (or the
purchase by Buyer of newly issues shares of the Company in consideration for the
same amount);

 
 
•
As of the Closing, each of the Company and the WFOE shall have no debts,
obligations or encumbrances upon any of its equity or assets of any kind, except
as created by, or as required by, the Convertible Note and the VIE Agreements;

 
 
•
Such other and other customary conditions as may be agreed between the parties
and included in the Definitive Documentation.

 
Representations and Warranties
The Definitive Documentation will include representations and warranties of the
Buyer and the Seller customary in transactions of this type, including with
regard to the WFOE and the VIE Agreements.

 
Closing
It is the intention of the parties that the Closing will occur not later than
March 15, 2010 (the “Anticipated Closing Date”).

 
Exclusivity
Unless earlier agreed in writing between the parties, prior to the Anticipated
Closing Date, neither Seller nor the Company, nor any of their shareholders,
agents or representatives, will solicit, initiate, entertain, participate in any
discussions or negotiations concerning, or make or accept any offer or proposed
transaction with any third party with regard to any of the transactions
contemplated in this Term Sheet or any similar transaction.

 
Confidentiality
Neither party will make any public disclosure concerning the matters set forth
in this Term Sheet or negotiations regarding the Transaction without the consent
of the other party (which consent shall not be unreasonably withheld) unless
required by applicable law, in which case the party required to make any such
public disclosure shall use reasonable efforts to give the other party prior
notice of such disclosure and an opportunity to review any such disclosure in
advance of public release. This restriction does not prohibit the disclosure of
information to employees, legal counsels, accountants, and other professional
advisors of the parties, on a need-to-know basis, provided that the same agree
to be bound by the same or equivalent requirement of confidentiality as set
forth herein.

 
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Fees and Costs
The Buyer and the Seller will each bear its own fees and expenses in connection
with the Transaction.

 
Disputes
Any disputes arising under or in connection with this Term Sheet will be
resolved by mandatory binding arbitration, conducted in English, in Hong Kong,
pursuant to the Arbitration Rules of the United Nations Commission on
International Trade Law, by one or more arbitrators appointed in accordance with
such rules. The arbitration and appointing authority will be the Hong Kong
International Arbitration Centre. Notwithstanding the foregoing, each party will
have the right at any time to immediately seek injunctive relief, an award of
specific performance or any other equitable relief against the other party in
any court or other tribunal of competent jurisdiction.

 
Governing Law
Hong Kong

 
Non-Binding Effect
Except for the provisions titled “Exclusivity,” “Confidentiality,” “Fees and
Costs” and “Disputes,” this Term Sheet does not create any legally binding
obligations on the parties, and no such obligations will be created unless and
until definitive documents are executed and delivered by the parties.

 
AGREED TO, subject to the provision titled “Non-Binding Effect,” by the
following parties: 
 
“SELLER”
  “BUYER”       LIU WEICHENG, an individual      
CHINA BROADBAND LTD., a Cayman Islands
company
     
[ex10-3_sig1.jpg]
             
Name:  
         
Title:    

 
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Fees and Costs
The Buyer and the Seller will each bear its own fees and expenses in connection
with the Transaction.

 
Disputes
Any disputes arising under or in connection with this Term Sheet will be
resolved by mandatory binding arbitration, conducted in English, in Hong Kong,
pursuant to the Arbitration Rules of the United Nations Commission on
International Trade Law, by one or more arbitrators appointed in accordance with
such rules. The arbitration and appointing authority will be the Hong Kong
International Arbitration Centre. Notwithstanding the foregoing, each party will
have the right at any time to immediately seek injunctive relief, an award of
specific performance or any other equitable relief against the other party in
any court or other tribunal of competent jurisdiction.

 
Governing Law
Hong Kong

 
Non-Binding Effect
Except for the provisions titled “Exclusivity,” “Confidentiality,” “Fees and
Costs” and “Disputes,” this Term Sheet does not create any legally binding
obligations on the parties, and no such obligations will be created unless and
until definitive documents are executed and delivered by the parties.

 
AGREED TO, subject to the provision titled “Non-Binding Effect,” by the
following parties: 
 
“SELLER”
  “BUYER”       LIU WEICHENG, an individual      
CHINA BROADBAND LTD., a Cayman Islands
company
     
 
  [ex10-3_sig2.jpg]           
Name:  Marc Urbach
         
Title:    Director

 
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