EXHIBIT 10(k)
COOPERATION AGREEMENT
     This Cooperation Agreement (this “Agreement”) is entered into by and amongthe following parties (together, the “Parties”) in Beijing in the People’sRepublic of China (“China” or “PRC”) on February 27, 2004:
Party A: e-Smart Technologies, Inc., a corporation incorporated under the lawsof the State of Nevada, U.S.A.;
Party B: Guo Xin Well-tel Technology Co., Ltd., a limited liabilitycompany organized and registered in Beijing, China;
Party C: EarthNetMedia Trading Corporation, a limited liability companyorganized and registered in Shanghai, China, or its Chinese nominees.
     WHEREAS, Party A has the exclusive license to promote and operate theBiometric Verification Security SystemTM (the “System”), which utilizes certaincore technologies including the Super Smart CardTM and prontDOUGHTM as well asother related technologies (the “Technologies”) in China (the “Project”), andthe ability to obtain the financing necessary for the Project;
     WHEREAS, Party B is a company organized by and majority owned by an agencyof the Ministry of Information Industry, and has the ability, resource andexperience in working with the Chinese government to assist with the entranceof party A’s products and technologies into the Chinese market;
     WHEREAS, Party C has the ability to assist Party A and Party B with thecooperation contemplated by this Agreement and the ability to facilitate thepromotion of Party A’s products and technologies in China by Party A, Party Band the Joint Venture (as defined below); and
     WHEREAS, the Parties agree to establish a Sino-foreign cooperative jointventure (the “Joint Venture”) in Beijing, China in connection with the Projectunder this Agreement.
     NOW, THEREFORE, the Parties agree as follows after friendly consultationwith each other:
I. The Purpose of the Joint Venture shall be to:
1. operate a value added network or networks that allow forthe nationwide roaming and operation of Party A’s Biometrically poweredmulti-application smart cards(i.e., the Super Smart CardTM) in China; 2. provide the Systems and Technologies to Chinese customersand promote, to the maximum extent practicable, the use of the Systemsand Technologies in the financial sector;
 

 

3. promote the System and Technologies to the maximum extentpossible in China so as to maximize the usage of same in as many fields aspossible; and 4. establish The rights and responsibilities of the Partiesin the Joint Venture.
II. Rights and responsibilities of the parties:
1. Party A shall have the following rights and responsibilities:
(1) Party A shall, pursuant to the Chinese law,contribute 15% of theregistered capital of the Joint Venture, i.e., the amount ofU.S. dollars in cash equivalent to 3.75 million Chinese Yuan, aspart of the registered capital that Party A has agreed to pay,within three months after the date on which the Joint Ventureobtains a legal and effective business license. Party A shallcontribute the remaining registered capital pursuant to the timelineprovided by the relevant Chinese laws, or earlier depending on theoperational needs of the Joint Venture. (2) After the establishment of the Joint Venture, theJoint Venture shall hire Party A to provide products suitable for sale inChina, and technologies, technology support and after-salesservices on terms to be agreed upon between Party A and the JointVenture. (3) Party A shall assist Party B in negotiations withChinese government agencies and enterprises to cause them to useParty A’s products and technologies. (4) If, in the future, it becomes necessary for PartyA to enter into additional Sino-foreign cooperative joint ventures for thegoals of this Project, Party B and Party C shall have the right to beincluded as partners in such joint ventures. (5) Party A owns the exclusive licenses to provideand operate the System and the Technologies in China and the Joint Venture,Party B and Party C shall respect and protect the rights ofParty A related to such licenses in China. (6) Party A has the right to supervise the JointVenture’s use of the funds. (7) After consultation with Party B, Party A has theright to set the Joint Venture’s strategies and guidelines for its operationsin the Chinese market, and supervise the execution of suchstrategies and guidelines.
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(8) Party A shall pay Party B US$10,000 per month for the threemonths after the effective date of this Agreement. This amountshall be used to pay for the cost of providing the initial officepremises to the Joint Venture on an adequately staffed andequipped basis at the offices of Party B, organizing and obtainingthe necessary and required government approvals for the creationof the Joint Venture, conducting relevant research and feasibilitystudy for the Joint Ventureand, generally, to do all thingsnecessary and proper prior to the establishment of the JointVenture necessary to facilitate its earliest possible creation ofandthe business of the Joint Venture. In the event that the JointVenture is created in three months or less after the effectivedateof this Agreement, Party A shall extend its payment ofUS$10,000 per month to Party B until such time as the JointVenture receives its initial capitalization. Upon creation andcapitalization of the Joint Venture, the Joint Venture shall payParty B US$10,000 per month to compensate Party B for itscooperation under this Project.   Notwithstanding the foregoing, however, if the Joint Venture isnot able to obtain the required temporary business license withinthree months after the effective date of this Agreement, Party Ahas the right to decide how to proceed and Party B and Party Cshall cooperate accordingly. (9) Party A has the right to receive 20% of the Joint Venture’sgross operating income as compensation for the products, technologiesand services that Party A shall provide to the Joint Venture.
2. Party B shall have the following responsibilities:
(1) Party B shall use its resources and relationship with therelevant departments and agencies of the Chinese government to promoteParty A’s products and technologies in all relevant Chinesegovernment agencies and relevant industries, and to apply for andobtain all necessary and proper licenses, approvals and permitswithin China for the lawful operation of the Joint Venture. (2) Party B shall assist Party A in negotiations with relevantChinesegovernment agencies and enterprises to cause them to use PartyA’s products and technologies. (3) Party B shall assist Party A in completing the study ofrelevantnetwork infrastructure and all related issues, provide statisticalinformation necessary for the fullest development of the Chinesemarket, and assist the Joint Venture in setting market strategies
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  and related investment plans, and establishing cooperativerelationships with agencies and enterprises in relevant industries. (4) Party B shall respect Party A’s intellectual property, and helpParty A in preventing its technologies from being imitated,copied or stolen by other Chinese enterprises. (5) If, in the future, it becomes necessary for PartyA to enter into additional joint ventures for the goals of this Project,Party B shall have the right to be included as a partner in suchjoint ventures. (6) Party B has the right to send not more than fourpeople to the headquarters of Party A in the United States within 90 daysafter the establishment of the Joint Venture for the purpose oftraining and learning the technologies of Party A. The duration ofsuch trip shall not exceed 12 days and the expenses shall beborne by the Joint Venture. (7) After the signing of this Agreement, Party Bshall immediately start promoting the System and Technologies among therelevant Chinese government agencies and department pursuant to this Agreement.
3. Party C has the following rights and responsibilities:
(1) Party C shall coordinate and expedite thecooperation between Party A and Party B. (2) Party C shall assist Party *A,*Party B and theJoint Venture in obtaining the required documentation for obtaining thefinancing for the Joint Venture and Project. (3) Party C shall fully use its resources to assistParty A, Party B and the Joint Venture to fulfill the Joint Venture’s goals withrespect the Chinese market.
III. Other matters related to the Joint Venture Company
1. The registered capital of the Joint Venture shall be 25million ChineseYuan. 2. Party A shall have 50% of the shares of the Joint Venture,Party B shallhave 30% of the shares of the Joint Venture, and Party C shall have20% of the shares of the Joint Venture. 3. The Joint Venture shall have the right to use Party A’stechnologies inaccordance with the terms of the licensing agreement to be enteredinto by the Joint Venture and Party A.
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4. The composition of the board of directors and management team ofthe Joint Venture shall be determined by the Parties throughconsultation with each other. 5. Expenses incurred by Party A for the establishment of theJoint Venture, including legal fees, should be borne by the Joint Venture inaccordance with the law. The Joint Venture shall reimburse Party A for suchexpenses immediately after the Joint Venture receives the initialcapital contribution. Party A shall present receipts acceptable toaccountants registered in China for such reimbursement.
IV. Other issues
1. This Agreement shall be the only agreement among the Partiesuntil it isreplaced by a new agreement in writing and duly signed by thepartiesduly authorized representatives. No Party shall revise thisAgreementwithout the written consent of all Parties. This Agreement shallbecome legally binding after it is signed by persons authorized by theparties, 2. The Parties shall keep confidential all information containedin this Agreement; Party B and Party C shall keep confidential alltechnologicalinformation that Party A has disclosed to Party B and/or Party Cduring the negotiations leading to this Agreement. However, since Party Ais a U.S. listed public company, Party A shall have the right todisclose any information contained in this Agreement without the written consentof Party B or Party C pursuant to the requirements of the relevantgovernmental and listing obligations. 3. Governing laws; Jurisdiction; Venue
(1) This Agreement will be construed, and the rightsand obligationsunder this Agreement determined, in accordance with the lawsof the PRC. (2) In the event of any dispute arising from, or inconnection with this Agreement, the relevant parties shall first attempt toresolve the dispute through friendly consultations. In the eventthat satisfactory resolution is not reached within sixty (60)days after commencement of such consultations, the dispute shall besubmitted (which submission may be made by any of theParties) for resolution by arbitration administered by the ChinaInternational Economic and Trade Arbitration Commission (the“Commission”) in Beijing, PRC, in accordance with theprocedural rules of the Commission which are in effect atthe time the application for arbitration is made. (3) There shall be three arbitrators, one of whomshall be appointed by party A, one of whom shall be appointed byParty B, andthe
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  third arbitrator, who shall be the presiding arbitrator,shall be appointed according to the mutual decision of PartyA and Party B. In the event the Parties do not mutually agreeon a presiding arbitrator within twenty (20) days after eachParty has been notified by the Commission regarding theselection of the two party-appointed arbitrators, thepresiding arbitrator shall be appointed by the Chairman ofthe Commission. The presiding arbitrator may not be anational of either the PRC or the U.S. but only from aneutral third party nationality. The arbitral award shall befinal and binding upon all parties hereto.
4. This Agreement is prepared in Chinese and English, and theEnglish andChinese versions have equal legal effect. There shall be threeChinese and three English originals. In case of any discrepancy between theChinese and English versions, the Chinese version shall govern. 5. This Agreement is effective as of March 1, 2004, after beingexecuted by persons authorized by the Parties.
Party A: e-Smart Technologies, Inc.   AuthorizedPerson:  /s/    Date: 27/02/2004  
Party B: Guo Xin Well-tel Technology Co., Ltd.   AuthorizedPerson:  /s/