Exhibit 10.8
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made as of the 31st day of
January, 1999, by and between CBCOM, INC., a Delaware corporation (the
"Company"), and Sinoway, Ltd., a China company with headquarters in Shanghai,
China ("Purchaser").
WHEREAS, the Purchaser wishes to purchase shares of the Company's Stock (as
defined below) in exchange for cash and as consideration for entering into a
joint venture agreement with the Company and transferring certain assets to the
joint venture to be formed thereby;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
1.1 Purchase of Shares. Subject to the terms and conditions of
this Agreement, Purchaser hereby purchases, and the Company
agrees to sell and issue to Purchaser, 1,250,000 shares of the
Company's Common Stock, par value $0.001 per share ("Stock").
The consideration for the purchase is (a) $1,250 in cash,
receipt of which is hereby acknowledged, and (b) the
Purchaser's affiliated company, Shanghai Stock Exchange
Communications Company, entering into a Sino-foreign joint
venture with the Company (or the Company's affiliate) and
transferring to that joint venture certain assets described
below ("Assets"). The Company's Board of Directors has agreed
that the consideration expressed herein is sufficient for the
purchase of the Stock.
1.2 Escrow of Shares. Purchaser and the Company agree that the
Company shall hold the Stock in escrow at the Company's
offices until (a) the Shanghai Stock Exchange Communications
Company has entered into a Sino-foreign joint venture ("Joint
Venture") with the Company, (b) the Joint Venture has been
approved by the applicable Chinese governmental authorities
and permitted and licensed to do business, and (c) the Assets
have been duly and validly transferred into the joint venture.
1.3 Assets. The Assets are agreed to be the following: (a) an
exclusive license to use the satellite network and
communications system and other assets of the Shanghai Stock
Exchange Communications Company for joint venture projects
("Projects," as further defined in the letter of intent
between the Company and the Shanghai Stock Exchange
Communications Company dated 1/31,1999, a copy of which is
attached as Exhibit B).
1.4 Failure of Escrow. In the event that the conditions listed in
subsections (a) - (c) of Section 1.2 are not met on or before
6/30/00, the Stock shall be canceled and the Company shall
return the $1,250 cash consideration to the Purchaser.
2. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to the Company that:
2.1 Authorization. Purchaser represents that it has full power and
authority to enter into and perform this Agreement. If the
Purchaser is an individual, the Purchaser has reached the age
of majority according to the laws of the jurisdiction in which
he resides. The Purchaser, if executing this Agreement in a
representative or fiduciary capacity, has full power and
authority to execute and deliver this Agreement in such
capacity and on behalf of the subscribing individual,
partnership, trust, estate, corporation or other entity for
whom or which the Purchaser is executing this Agreement, and
the above representations and warranties shall be deemed to
have been made on behalf of the person or persons for whom the
Purchaser is so purchasing. If the signatory of this Agreement
on behalf of the Purchaser is not the Purchaser or an
authorized officer or partner of the Purchaser, the signatory
represents and warrants to the Company that the signatory is a
professional fiduciary of the Purchaser, acting solely in its
capacity as holder of such account, as a fiduciary, executor
or trustee.
2.2 Valid and Binding Agreement. This Agreement constitutes its
valid and legally binding obligation, enforceable in
accordance with its terms. If the Purchaser is a corporation,
the Purchaser is duly and validly organized, validly existing
and in good tax and corporate standing as a corporation under
the laws of the jurisdiction of its incorporation, and
qualified to do business in the jurisdiction in which it is
located, with full power and authority to purchase the Stock
and to execute and deliver this Agreement. If the Purchaser is
a partnership, the partnership is duly and validly formed and
existing in good standing under the laws of its jurisdiction
of formation and qualified to do business in the jurisdiction
in which it is located, with full power and authority to
purchase the Stock and to execute and deliver this Agreement,
and the representations, warranties, agreements and
understandings set forth above are true with respect to all
partners in the Purchaser (and if any such partner is itself a
partnership, all persons holding an interest in such
partnership, directly or indirectly, including through one or
more partnerships), and the person executing this Agreement
has made due inquiry to determine the truthfulness of the
representations and warranties made hereby. If the Purchaser
is any other form of business entity, the Purchaser is duly
and validly organized, validly existing and in good standing
as such entity under the laws of the jurisdiction of its
incorporation, and qualified to do business in the
jurisdiction in which it is located, with full power and
authority to purchase the Stock and to execute and deliver
this Agreement.
2.3 Purchase Entirely for Own Account. This Agreement is made with
Purchaser in reliance upon Purchaser's representation to the
Company, which by Purchaser's execution of this Agreement
Purchaser hereby confirms, that the Stock to be received by
Purchaser will be acquired for investment for Purchaser's own
account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof; and that Purchaser
has no present intention of selling, granting any
participation in, or otherwise distributing the same. By
executing this Agreement, Purchaser further represents that
Purchaser does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with
respect to any of the Stock.
2.4 Disclosure of Information. Purchaser believes it has received
all the information it considers necessary or appropriate for
deciding whether to purchase the Stock. Purchaser further
represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and
conditions of the offering of the Stock.
2.5 Investment Experience. Purchaser is an investor in securities
of companies in the development stage and acknowledges that it
is able to fend for itself, can bear the economic risk of its
investment and has such knowledge and experience in financial
or business matters that it is capable of evaluating the
merits and risks of the investment in the Stock. Purchaser
understands that the Company is a development company,
proposing to engage in a high-technology based business in
China, with all the attendant business risks of a development
stage company, the risks of engaging in a high technology
business, and the risks of doing business in China, as well as
other business risks. If other than an individual, Purchaser
also represents it has not been organized for the purpose of
acquiring the Stock.
2.6 Non-US Person. Purchaser is not a "U.S. person" as that term
is defined in Regulation S (a copy of which definition is
attached as Exhibit C). If Purchaser is a business
organization, it is organized under the laws of a country
other than the U.S. Purchaser is not acquiring the Stock for
the account of or for the benefit of a U.S. person.
2.7 Offshore Transaction. The Stock was not offered to the
Purchaser in the U.S. At the time of execution of this
Agreement, the Purchaser was physically outside of the U.S.
Purchaser has no prearranged agreement or scheme to resell the
Stock to any U.S. person or buyer in the U.S.
2.8 No Distributor, Dealer or Underwriter. Purchaser is not a
distributor or dealer of the Stock. Purchaser is not taking
the Stock with the intent to make a distribution of the Stock,
as such terms are defined in the Act and the Securities
Exchange Act of 1934 (the "1934 Act"). In any event, if
Purchaser is deemed to be a distributor of the Stock,
Purchaser will act in accordance with applicable law.
2.9 No Directed Selling Efforts. To the best knowledge of the
Purchaser, neither the Company nor any distributor
participating in the sale of the Stock has conducted "directed
selling efforts" (including any activity undertaken for the
purpose of, or that could reasonably be expected to have the
effect of, conditioning the market in the U.S. for the Stock),
including without limitation mailing of printed material to
investors residing in the U.S., the holding of promotional
seminars in the U.S., the placing of advertising with radio or
television stations broadcasting in the U.S. or in
publications with a general circulation in the U.S. Purchaser
knows of no public solicitation or advertisement of any offer
in connection with the offering of the Stock.
2.10 Restricted Securities. Purchaser understands that the shares
of Stock it is purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not
involving a public offering and that under such laws and
applicable regulations such securities may be resold without
registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this
connection, Purchaser represents that it is familiar with SEC
Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
2.11 Further limitation on Disposition. Without in any way limiting
the representations set forth above, Purchaser further agrees
not to make any disposition of all or any portion of the Stock
unless and until (a) there is then in effect a Registration
Statement under the Act covering such proposed disposition and
such disposition is made in accordance with such Registration
Statement; or (b) Purchaser shall have (i) notified the
Company of the proposed disposition and shall have furnished
the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and (ii) furnished the
Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require
registration of such shares under the Act.
2.12 Legends. It is understood that the certificates
evidencing the Stock may bear one or all of the
following legends:
(a) THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE
U.S. SECURITIES AND EXCHANGE COMMISSION UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")
OR ANY OTHER SECURITIES AUTHORITIES, AND WERE ISSUED
PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER
REGULATION S PROMULGATED UNDER THE ACT. THEY MAY NOT
BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION TO
THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES
LAWS.
(b) Any legend required by applicable securities laws of
the Purchaser's jurisdiction of domicile.
2.13 Title to Assets. Purchaser has full right, title and interest
in and to the assets listed at Exhibit B. The assets listed at
Exhibit B are owned by Purchaser free of arty liens, claims,
encumbrances or other rights of third parties in or to those
assets or any interest therein. Purchaser's conveyance of the
assets under Section 1.2 is valid and binding against
Purchaser and any third party.
3. Miscellaneous.
3.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied
to agreements among California residents entered into and to
be performed entirely within California. Any dispute arising
under this Agreement shall be adjudicated by the appropriate
state or federal court in the County of Los Angeles, State of
California. The Company and Purchaser consent to submit to
jurisdiction of such court for the purposes of resolving any
dispute under this Agreement. In the event of a dispute, the
prevailing party shall be entitled to recover attorneys fees
and costs.
3.2 Asset Transfer Documents. Purchaser is tendering herewith the
necessary documents under applicable law to transfer title of
the assets listed as Exhibit B to the Company.
3.3 Further Assurances. The parties to this Agreement will execute
such other documents and perform such other actions as are
reasonably necessary to implement this Agreement.
3.4 Purchaser Information. Purchaser shall complete and deliver to
the Company Exhibit A hereto, which information shall be used
by the Company only for purposes of compliance with applicable
law and regulations.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CBCOM, INC.
By ____________________________
Max Sun, President
PURCHASER:
For and on behalf of
SINOWAY LIMITED
-------------------------------
(Authorized Signature(s)
Zuu Yi Wel
Executive Director
Shanghai Xingtonq Telecommunication Science & Technology Co., Ltd.
<PAGE>
EXHIBIT A
PURCHASER INFORMATION
1. Address of Purchaser (business address):
Unit 2502, 25/F, K. Wah Centre
191 Java Road
North Point, Hong Kong
2. Telephone Number
3. Type of Entity (Check One and Initial)
Individual
C Corporation
Partnership
Other (Please describe) ________________________
For all purchasers other than individuals, please include evidence of
legal existence, such as articles of incorporation or other constituent
documents, and good standing certificate or similar document, each certified by
the appropriate governmental authority.
4. Name and position of authorized signatory: For and on behalf of SINOWAY
LIMITED.
The above information is true, correct and complete as of the date hereof.
-------------------
Authorized Signature(s)
Zuu Yi Wel
Executive Director
--------------------------------
Authorized Signatory
<PAGE>
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THE INTERNATIONAL BUSINESS COMPANIES ACT
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(CAP.291)
CERTIFICATE OF INCORPORATION (SECTIONS 14 AND 15)
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No. 239085
The Registrar of Companies of the British Virgin Islands HEREBY CERTIFIES
pursuant to the International Business Companies Act, Cap. 291 that all the
requirements of the Act in respect of incorporation having been satisfied,
SINOWAY LIMITED
is incorporated in the British Virgin Islands as an International Business
Company this 3rd day of July, 1997.
(Seal) Given under my hand and seal at
Road Town, in the Territory of the
British Virgin Islands
CRTI0017 REGISTRAR OF
COMPANIES
<PAGE>
EXHIBIT B
LETTER OF INTENT
Confidential
MEMORANDUM OF UNDERSTANDING
Parties Party A: CBCom Inc.
Party B: Shanghai Stock Exchange Communication Ca
Party C: Shanghai Xingtong Telecommunications Science &
Technology Co. Ltd.
I. COMPANY OVERVIEW
CBCom Inc. is a Los Angeles based high-tech communication and investment firm.
It is especially keen on the design, development, operation and investment
activities surrounding the completion of an intelligent communication network In
addition the firm also provides research and development in accessory items used
by the network such as servers or end user platform. Both the management team
and the technical personnel have extensive experience of constructing and
operating communication networks in North America and Asia. Representative and
branch offices have been set up in Shanghai as well as Beijing.
Shanghai Stock Exchange Communication Co is a joint venture formed by Shanghai
Stock Exchange and Shanghai Stock Central Clearing Company. The staff primarily
came from the department of communications of the Shanghai Stock Exchange. The
company's services largely centers around its two-way satellite system, which
serves as a back up to DDN, to ensure uninterrupted transmission of stock data
and information. The company also provides satellite network related technology
development management and other services. The following systems are part of the
network operation and management projects that the company is currently engaged:
one one-way broadcast satellite system, three two-way satellite systems, one
2000-line switch, Utilizing the above network equipment the company provides
connection to over 2600 brokerages to ensure daily transmission of stock
information.
Shanghai Xingtong Telecommunications Science and Technology, Ltd is a
telecommunications company held by China Broadcast Satellite Communication
Company, which belongs to Ministry of Information Industry. As a subsidiary of
China Broadcast Satellite Communication Company, Xingtong can tap into the
unique satellite resources and operating license owned by China Broadcast
Satellite Communication Company to provide specialized satellite communication
services to its customers. At the present Shanghai Xingtong Telecommunications
Science and Technology, Ltd has helped numerous companies to build national
networks that service thousands of customers. Among them are Hong Kong Digital
Communications Ltd, Shanghai Stock Exchange Communications Ltd, and Zhenzhou
Jicheng Information Technology Ltd. Furthermore, Xingtong has invested in a
<PAGE>
joint effort with America based Wood Company to provide wide band digital TV
transmission to ABC, NBC, FOX, HBO, CCFV, STV and other Television related
companies. Xingtong specializes in design as well as construction of
communication networks.
II. OBJECTIVE OF THIS MOU
The aforementioned three parties have used over a year to perform a detailed
research and analysis on the potential and policy with regard to Chinese
Internet market This research reviewed the historical development of the
Internet in other mature markets around the globe such as the United States, and
compiled an enormous database on the content provision services within the
information industry. Consequently, all three parties have reached consensus on
the following areas:
1. The current and future potential of Chinese Internet market
2. The service standard of Shanghai Stock Exchange's satellite network
3. Key factors to building a successful commercial ISP in China
4. Initial concept and proposal for China Financial Network (CFN) as a joint
effort of the three parties
This MOU is hereby to record the consensus to establish a firm foundation for
future cooperation.
III. THE CURRENT AND FUTURE POTENTIAL OF CHINESE INTERNET MARKET
The rise of Internet popularity in the past few has generated an exceptional
growth rate of 162% per annum that astounded the world. With moth than 50
million users, hundreds of billions of dollars of revenue are generated by new
opportunities associated with the Internet. Internet usage has become a key
indicator for national governments in assessing their competitiveness against
other nations in the information industry. Moreover, the Internet has left
indelible marks in reforming the social structure and forced revolutionary
changes. As information technology rapidly develops, information becomes readily
available, which creates a wealth of opportunities while improving qualities of
life. Geographical and economical barriers are broken through the process of
information transfer. The forces of free market will finally champion making all
aspects of life such as employment, education, medicine, easily accessible to
everyone.
The Chinese Internet development came in at a later stage of the global
development Nevertheless is has been growing with an amazing fervor. The
development process can be broken into three phases.
The first phase (199874994) can be called the Email phase. During this period,
Email became a popular communication tool The ability to communicate with
<PAGE>
European and North American countries through dial up service and email was
realized. The second phase (1994-1995) began by farther investment from the
Department of Education on the existing education and research network,
astonishingly similar to the early stages of development in the us. TCP/IP
connection was eventually established on this network, thus realizing the full
functionality of the Internet. The third phase (1995 to present) came soon after
Internet became accessible not only to the research and educational institution,
but also to private customers through commercial 151's. In 1998, Chinese
Internet users stood at 1.2 million and is projected to growth at 220% per annum
in the coming years. China has family become an official member of the world
Internet family.
Presently, there are thirteen international gateways in China. They belong to
four networks.
Despite the promising growth, many Chinese Internet users and ISP become
increasingly concerned with the future development of Internet in China. Chinese
Internet development is unique in many aspects. Specifically, Chinese Internet
leapfrogged a number of development stages as the other countries have, such as
PC penetration. It can be said that China Internet came prematurely without all
the necessary infrastructure elements in place. Therefore, Chinese Internet is
missing some basic characteristics of the Internet Yet the demand for further
development and maturity continues to collect momentum. As we examined the
potential of commercial 151's, a set of barriers for continued development of
Chinese Internet becomes evident.
1. High operating expenses:
-------------------------
All ISPs in China that do not belong to China Telecom must pay outrageous
fees for leased lines thus incurring high cost and make it difficult for ISPs to
maintain profitability. International connections are particularly expensive.
DDN lines are charged not only at a monthly rental fee, but also additional
charge according to the amount of information transmissions If an ISP intend to
build a national network, the long distance rental charges are prohibitively
high. This creates the dilemma for many ISPs: they are unable to invest in
expanding the network as the number of customers increases. While line lease
charges only consists of 5% of the total operating cost for a typical ISP in the
US, it often accounts for 70-80% of total operating cost for a ISP in China. The
financial stress leaves very little room for the Chinese ISP to invest in
further development of the network
2. Technology investment
----------------------
The information industry characterizes itself through the close link
between investment and technology. It is projected that Chinese Internet
development will require over 100 billion EMB by year 2000. The investment gap
that many ISP confront is daunting. On the other hand, much of the information
on the Internet is in English. The center of technology development and
application is also located in the US. The insufficient funds and backward
technology caused by language barriers bode ill for the future Chinese Internet
development.
<PAGE>
3. Content market opportunities:
------------------------------
Many Chinese Internet portals (with Chinese languages) have been
unsuccessful in attracting customers due to lackluster content design. For
instance, in the US on-line banking, stock trading and purchasing have long
become popular among the users to provide additional convenience to the
customers. Currently, similar Chinese web sites are nearly non-existent As the
content of the Chinese web sites become more aggressive and creative, the market
potential will provide highly lucrative opportunities for ISPs.
IV. THE SERVICE STANDARD OF SHANGHAI STOCK EXCHANGE SATELLITE NETWORK
Shanghai Stock Exchange (SSE) became fully operations in 1990 and is the
largest, most well equipped, and best organized stock exchange in China today
with the widest reach in community (nearly 19 million customers). SSE's daily
transaction volume exceeds 10 million. Furthermore, SSE operates a satellite
network with more than 3100 receiving stations and owns the largest exchange
lobby in Asia.
SSE's satellite system is the most advanced satellite system with the widest
geographical coverage as well as largest customer base in China. It has been
approved and licensed with the right to operate VSAT related services and other
value adding communication services.
SSE's satellite system includes three systems: VAST, SCPC and TDM/TDMA. It also
provides backup for DDN. Since the stock exchange only operates four hours each
day, the utilization of this network is especially low. In addition, the network
offers the following features:
1. Network topology: The main station and the _________. This method of
-----------------
satellite network is beat used for digital communication and exactly meets the
requirement of Internet communication.
2. Network scale: Currently the network covers all Chinese provinces with
--------------
the exception of Taiwan and has 33 key nodes with over 1000 customer connected.
Each of the nodes has comprehensive satellite communication equipment and
capability including switches, and highly competent technical support personnel
3. Price and performance ratio (compare to X.25 and DDN net): Among similar
----------------------------------------------------------
speeds, satellite network is comparable to XIS and DDN net in data transmission
speed. Because XIS and DDN net use fiber optic cables, satellite transmission
incurs a slightly longer delay. However, the delay bears no significance in data
transmission. The error rate of satellite transmission is between 1(P and 108,
which is similar to that of DDN error rate. Moreover, due to the stock
exchange's particular function, a high degree of reliability was required since
<PAGE>
the design of the network The SSE network has double backup with automatic
switching capability and has proved to be highly reliable in the last five years
of operation The network survived many severe weather conditions, as well as a
number of market irregularities such as sudden volume surge. The operational
expense comparison is attached as well (based on 64 Kbps):
Satellite network 42,000 RMB/ year
DDN net 145,000 RMB/year
X.25 163,000 RMB/ year
V. KEY FACTORS TO BUILDING A SUCCESSFUL COMMERCIAL ISP IN CHINA
This analysis demonstrates not only the factors that would make a successful
commercial ISP in China, but also why SSE satellite network is especially
fitting for such a task
1. Independent national network: an independent network that does not rely on
the network provided by China Telecom, thus avoiding the outrageous fees and
cost is critical to guarantee profitability for any ISP in China. SSE satellite
network was initially designed and constructed precisely for this objective.
After years of development, the network now operates independent and covers all
regions in China.
2. Substantive customer base: customer base is the livelihood of any ISP. There
are currently 17 million investors who have accounts at SSE. The majority of
these investors receive information and trade from various nodes on the SSE
network. The brokerages are direct customers and the investors constitute one
the most substantive and stable customer base. These investors are prone to
adopt new technology as they are generally more educated than the average
population.
3. Attractive content creative and interesting content is a key to the success
of any ISP. Stock trading has become a focal point in the Chinese economic life
Many industries have tapped into this to generate new commercial opportunity for
themselves. For example, in the last few years, the number of stock pagers has
rocketed through the roof to millions. Real time stock quotes, information,
analyst reports and most of web trading will attract millions to visit the site.
VI. INITIAL CONCEPT AND PROPOSAL OF CNN AS A JOINT EFFORT
CFN is the ultimate - for the joint effort It will begin more like an Intranet
then expand to become a true Internet From construction to operations there are
two major phases CEN I, CEN II which are detailed as follows:
CFN I: This is a professional Intranet that is based in Hong Kong. The service
------
collects and compiles global financial market information with real time stock
data as well as historical data for analysis. Most importantly, all information
will be broadcasted through the SSE satellite network in Chinese using
<PAGE>
proprietary software to brokerages and professional investors. It will differ
from Dow Jones and Reuters in that the information will be completely in Chinese
at a much lower rate. Our market research reveals that as China's financial
market develops, ft will eventually become an integral part of the global
financial market Financial information from other parts of the world, especially
Hong Kong Southeast Asia will impact the financial performances of Chinese stock
market Already more than 95% of the brokerages would like to access this
information. However the price tag for Reuters and Dow Jones services are simply
too much to bear. If the existing network allows transmission of similar sorts
of information and it requires no additional installation of other equipment it
sure will be welcomed by many brokerages.
CFN II: This network will create a customer interface directly to the individual
------
customers, thus equivalent to a commercial ISP. The service will include various
value added services such as real time stock data and web trading. Utilizing the
current network with over a thousand connection nodes, the network will be able
to provide Email and other Internet service while allowing real time web trading
to its customers. Web trading is an unique feature that this network offers,
since the SSE is the sole clearing and settlement agency for its stocks. Thus,
only SSE network is able to realize true web trading through SSE.
The roles and responsibilities of the three parties will vary as well.
Party A will be primarily responsible for collecting and compiling global
financial information, providing funds for network reconstruction and assisting
software development in the first phase. In the second phase, party A will
provide funds to modify connection nodes, development of management software,
and operation of the Internet sites (e.g. content design).
Party B will be primarily responsible for network security and operation while
coordinating with various brokerage firms to maintain market position and direct
network design.
Party C will participate in network design and management to ensure efficient
utilization of the satellite network The majority of its operation will focus on
construction of the network in the beginning and software development at a later
stage.
This MOU will serve as the founding principles for the joint effort Formal
feasibility study and business plan will be drawn to establish the actual
structure to realize the proposed network As soon as the structure is finalized,
we will seek professional consulting firms to conduct detailed analysis to
identify optimal marketing, organization and technology management strategies.
All parties have agreed that the interest of each party in this joint venture is
allocated as follow: Party A 70%; party B 20%; party C 10%.
<PAGE>
VII. FINAL REMARKS
As one of the most significant document indicating commitment to form the joint
venture aforementioned, the MOU is only effective after all three parties have
signed.
Party A: CBCCom Inc.
/x/
Party B: Shanghai Stock Exchange Communication Co.
/x/ General Manager
Party C: Shanghai Xingtong Telecommunications Science & Technology Co.
Ltd
/x/ President
January 31, 1999
<PAGE>
EXHIBIT C
DEFINITION OF U.S. PERSON
ss. 230.902 (o) U.S. Person.
(1) "U.S. person" means:
(i) any natural person resident in the United States;
(ii) any partnership or corporation organized or incorporated
under the laws of the United States;
(iii) any estate or which any executor or administrator
is a U.S. person;
(iv) any trust of which any trustee is a U.S. person;
(v) any agency or branch of a foreign entity located in the
United States;
(vi) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person;
(vii) any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the
United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the laws of any
foreign jurisdiction; and
(B) formed by a U.S. person principally for the
purpose of investing in securities not
registered under the Act, unless it is organized or
incorporated, and owned, by accredited investors (as
defined in Rule 501(a) under the Act (ss. 230.50 1(a)
of this chapter)) who are not natural persons,
estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this section, any discretionary
account or similar account (other than an estate or trust) held for the
benefit or account of a non-U.S. person by a dealer or other
<PAGE>
professional fiduciary organized, incorporated, or (if an individual)
resident in the United States shall not be deemed a "U.S. person."
(3) Notwithstanding paragraph (o)(1) of this section, any estate of which
any professional fiduciary acting as executor or administrator is a
U.S. person shall not be deemed a U.S. person if:
(i) an executor or administrator of the estate who is not a
U.S. person has sole or shared investment discretion
with respect to the assets of the estate; and
(ii) the estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this section, any trust of which
any professional fiduciary acting as trustee is a U.S. person shall not
be deemed a U.S. person if a trustee who is not a U.S. person has sole
or shared investment discretion with respect to the trust assets, and
no beneficiary of the trust (and no settlor if the trust is revocable)
is a U.S. person.
(5) Notwithstanding paragraph (o)(1) of this section, an employee benefit
plan established and administered in accordance with the law of a
country other than the United States and customary practices and
documentation of such country shall not be deemed a U.S. Person.
(6) Notwithstanding paragraph (o)(1) of this section, any agency or branch
of a U.S. person located outside the United States shall not be deemed
a "U.S. person" if:
(i) the agency or branch operates for valid business reasons; and
(ii) the agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or banking
regulation, respectively, in the jurisdiction where located.
(7) The international Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank,
the Asian Development Bank, the African Development Bank, the United
Nations, and their agencies, affiliates and pension plans, and any
other similar international organizations, their agencies, affiliates
and pension plans shall not be deemed "U.S. persons."
<PAGE>
(p) United States. "United States" means the United States
of America, its territories and possessions, any State
of the United States, and the District of Columbia.
