Loan Agreement by and between China Cablecom Co. Ltd, (Hong Kong) and Liang Yue Jing June 2007

Article

Page

1.

Definition and Interpretation

1

2.

Loan Amount and Repayment

3

3.

Conditions Precedent

3

4.

Representations and Warranties of Party B

4

5.

Undertakings

5

6.

Event of Default

7

7.

Enforcement

9

8.

Indemnity

9

9.

Confidentiality

9

10.

Supplementary Provisions

11

A

Form of Equity Transfer Agreement

B

Form of Waiver of Right of First Refusal

(1)

China Cablecom Co., Ltd, a liability limited company incorporated under the laws of Hong Kong with its registered address at 12/F RUTTONJEE HSE 11 DUDDLLST CENTRAL HK (Party A)

(2)

▇▇▇▇▇ ▇▇▇ Jing, a PRC citizen, holder of identification card number, 512925196403280023, whose residential address is at ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇.▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Party B).

(A)

Party B intends to establish a company, with its name as (Jinan Youxiantong Network Technology Co., Ltd.) (Jinan Youxiantong), engaged in technical services relate d to the Internet, computer software and hardware in the PRC, according to PRC law. Party B intends to obtain a loan in the amount of RMB 25,500(Loan) from Party A for the purpose of constituting the registered capital of Jinan Youxiantong.

(B)

Party B will hold a 5% equity interest (Equity Interest) in Jinan Youxiantong after its establishment.

(C)

Party A agrees to extend the Loan to Party B directly or through one of its Affiliates.

1.1

Definition

1.2

Interpretation

2.1

Loan Amount

2.2

Repayment Date

2.3

Form of Repayment

2.4

Purpose of Loan

3.1

Simultaneously with this Agreement, the parties have executed an equity option agreement, dated the date hereof (Equity Option Agreement), pursuant to which Party B grants to Party A or its designated person (legal or natural) an exclusive option to purchase all of Party B’s Equity Interest, to the extent permitted under PRC Laws;

3.2

The Equity Option Agreement is in full effect and there is no default thereunder and all relevant filing procedures, approvals, authorizations, registrations and governmental proceedings have been obtained or completed;

3.3

All the representations and warranties provided by Party B in Article 4 are true, complete and correct, and shall remain true, complete and correct on the date of the transfer of the Loan, as if they are provided on such date; and

3.4

Party B shall not have breached any of its undertakings provided in Article 5, and no event which may affect the performance of Party B’s obligations hereunder shall have occurred or is likely to occur.

4.1

Party B has the power to enter into this Agreement and perform this Agreement. Party B has duly obtained all the necessary approvals or authorizations for the execution and performance of this Agreement;

4.2

the execution and performance of this Agreement by Party B will not result in (i) a breach of any laws or regulations or any governmental approval, authorization, notice or other government documents binding or affecting Party B; (ii) a breach of any agreement entered into with any third party or any undertaking provided to any third party by Party B; or (iii) constitute (with or without due notice or lapse of time) a default (or give rise to any right of termination, cancellation, vesting, payment, exercise, acceleration, suspension or revocation) under any note, bond, mortgage, deed of trust, security interest, indenture, licence, contract, agreement, plan or other instrument or obligation (each, an Obligation and collectively, Obligations) to which Party B is a party or by which its property or assets may be bound or affected;

4.3

this Agreement, when executed and delivered by Party A, constitutes the legal, valid and binding obligation of Party B, which is enforceable against Party B in accordance with its terms;

4.4

except for the Equity Pledge Agreement, dated July 20th, 2007, between Heze Cablecom Network Technology Co., Ltd(WFOE) and Party B (Equity Pledge Agreement) and the Equity Option Agreement, Party B has not (i) created any pledge, charge or any other security over Party B’s Equity Interest; (ii) offered to

4.5

no dispute, action, arbitration, administrative procedure or other legal proceeding regarding Party B and/or Party B’s Equity Interest is in existence, and no potential dispute, action, arbitration, administrative procedure or other legal proceeding regarding Party B and/or Party B’s Equity Interest is pending;

4.6

there is no contractual agreement that is binding on Party B or may affect Party B’s assets, and no enforceable court judgment or order that may prevent him from executing or performing this Agreement or may have any material adverse effect on the execution or performance of this Agreement;

4.7

the execution and performance of this Agreement, and realization of any right by Party A under this Agreement will not contravene any lien, contract, judgment, order or law which is binding on Party B or Party B’s assets in a manner that would have a material adverse effect upon the ability of Party A to perform its obligations hereunder; and

4.8

all documents, materials and certificates provided by Party B to Party A hereunder are correct, true, complete and valid.

5.1

Affirmative Undertakings

5.1.1

that if, according to PRC Laws, the said Equity Interest is deemed to be common property, he shall obtain a written statement from his spouse indicating that the Equity Interest is not common property between himself and his spouse but his own personal property;

5.1.2

after the execution of this Agreement, to promptly:

5.1.2.1

provide to Party A the following ancillary documents (Ancillary Documents): (i) signed (but undated) equity transfer agreement substantially in the form of Appendix A (Equity Transfer Agreement) and (ii) all other necessary signed (but undated) documents for the Equity Interest to be effectively transferred to Party A or the Designated Party (Equity Transfer), including the waiver letter in the form of Appendix B; and

5.1.2.2

provide all information relating to Jinan Youxiantong’s operations and financial affairs to Party A upon the request of Party A.

5.1.3

at any time to defend claims and assertion regarding the Equity Interest made by any third party who claims interest in the same, provided that Party B shall not be obligated to defend any such claim or assertion unless it is at Party A’s cost;

5.1.4

to take or procure to take all necessary actions to execute or procure to execute all necessary documents, carry out necessary registrations and make all necessary or appropriate defenses to ensure that the repayment of the Loan, the Equity Transfer and all transactions to be carried out under the Agreement (including but not limited to the undertaking in the aforesaid Article 5.1.2.2) can be legally and effectively carried out and to maintain Party B’s proprietary interest in Jinan Youxiantong;

5.1.5

to cooperate with Party A at its request by consenting to or adopting in his capacity as a shareholder of Jinan Youxiantong, Party A’s instructions or requests relating to the operation of Jinan Youxiantong;

5.1.6

to treat as Confidential Information the existence of the Agreement and its provisions, and any correspondence, resolutions, attached agreements and other documents in connection with this Agreement;

5.1.7

to immediately carry out the Equity Transfer strictly in accordance with Party A’s instruction;

5.1.8

to immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceeding relating to Jinan Youxiantong’s assets, business operation or revenues of which Party B may become aware;

5.1.9

to immediately notify Party A in writing of the occurrence of any event which may materially affect Jinan Youxiantong’s assets, liabilities, financial condition or results of operations;

5.1.10

that, at Party A’s written request, Party B will, as a shareholder of Jinan Youxiantong, approve any action of Jinan Youxiantong that is not in violation of applicable laws;

5.1.11

upon the exercise of the right to purchase the Equity Interest under Article 7.1.3 by Party A, unconditionally and forthwith to transfer the entire Equity Interest owned by Party B in Jinan Youxiantong to Party A or its designated representative (legal or natural). Party B shall also make his best efforts to ensure that the other shareholders of Jinan Youxiantong waive their right to first refusal over the said interest to be transferred to Party A; and

5.1.12

in the event that Party A purchases Party B’s Equity Interest pursuant to the Equity Option Agreement, Party B shall first apply any proceeds therefrom to repay the Loan to Party A.

5.2

Negative Undertakings

5.3

Appointment of Directors and Senior Management Personnel

6.1

Party B fails to repay the Loan and any other arrears, if applicable, within 10 days after Party A has issued a Repayment Notice in accordance with Article 7.1;

6.2

Party B breaches any of its covenants or other obligations under this Agreement, and such breach has not been remedied within 10 days after receiving Party A’s written notice requiring remedy;

6.3

The representations and warranties made by Party B prove to be false or misleading in any material respect;

6.4

Party B is unable to perform his obligations under this Agreement because of his death, emigration, change of citizenship, loss of capacity to act, or any other reason;

6.5

A judgment is entered against Party B according to applicable law involving an amount over 1 million USD, and such judgment could have an adverse effect on the performance of Party B’s obligations under this Agreement;

6.6

Party B is charged with a criminal offence;

6.7

Any third party threatens or institutes a court action against Party B claiming an amount more than 1 million USD;

6.8

Foreign investors are permitted to invest in the business of value-added telecommunications and the relevant authorities approve the establishment of such businesses in accordance with PRC Laws;

6.9

The commencement of a proceeding against Party B under any applicable bankruptcy, insolvency, reorganization, court mediation or other similar law;

6.10

Party B makes or attempts to make any fraudulent transfer of the Equity Interest;

6.11

Party B relinquishes all or any part of the Equity Interest or transfers or assigns all or any part of the Equity Interest without the prior written consent of Party A (except the transfers or assigns permitted hereunder and under the Equity Option Agreement);

6.12

any indebtedness, guarantee or other obligation of Party B, whether pursuant to a contract or otherwise, (i) is accelerated as a result of a default thereunder and is required to be repaid or performed prior to the scheduled date; or (ii) has become due and is not repaid or performed as scheduled and thereby causes Party A to regard Party B’s capacity to perform the obligations specified herein as having been adversely affected;

6.13

Party B is incapable of repaying his debts as they become due;

6.14

The Agreement is illegal as a result of any applicable laws or Party B is restricted from continuing to perform its obligations as specified herein;

6.15

any approval, permits, licenses or authorization from any applicable governmental entity (and registration or filing procedure) required for Jinan Youxiantong to provide value added telecommunications services in respect of its information services business via the Internet in the PRC are withdrawn, suspended, invalidated or materially amended;

6.16

Any approval, permits, licenses or authorization from any applicable government authority required to perform this Agreement or make this Agreement enforceable, legal and valid are withdrawn, suspended, invalidated or materially amended;

6.17

Any property owned by Party B is altered or damaged and thereby causes Party A to deem that the capability of Party B to perform the obligations stated herein have been adversely affected; or

6.18

Party B defaults under either of the Equity Pledge Agreement or the Equity Option Agreement.

7.1

Repayment of Loan

7.1.1

Upon the occurrence of either an Event of Default or a decision by Party A, in its sole discretion, to demand repayment of the Loan or any portion of the Loan, Party A may at its discretion issue a notice (Repayment Notice) to Party B requiring repayment of the Loan or any portion of the Loan and any other payment in arrears under this Agreement.

7.1.2

If Party B fails to comply with its repayment obligations under this Agreement, late payment interest shall be assessed at the rate of 0.05% per day upon the outstanding amount of the Loan and shall be payable from the Repayment Date until the date on which the total amount of the overdue loan, overdue interest and other monies payable to Party A are fully settled.

7.2

Notification

8.1

Indemnification

9.1

Confidential Information Each party (Receiving Party) shall keep confidential and not disclose to any third party in any manner whatsoever, in whole or in part, any information, including any information obtained by any of its directors, officers, employees, agents, consultants, advisors or other representatives, including legal counsel, accountants, tax specialists and financial advisors in connection with the exercise of such party’s rights under this Agreement, information developed and relating to new products, product plans, product designs, customers, technology, computer codes, trade secrets, pricing, know-how, inventions, techniques, programs, algorithms, schematics,

9.1.1

is proven by reasonable objective evidence to have been already in the Receiving Party’s possession before such disclosure, provided that such information is not known by the Receiving Party to be subject to another confidentiality agreement with, or other obligation of confidentiality to, a party to this Agreement;

9.1.2

becomes generally available to the public other than as a result of a disclosure by the disclosing or Receiving Party;

9.1.3

becomes available to the Receiving Party on a non-confidential basis from a source which is not known by the Receiving Party to be bound by a confidentiality agreement with, or other obligation of confidentiality to, a party to this Agreement; or

9.1.4

is required to be disclosed in connection with compliance with any applicable law or the rules of any governmental entity, provided that the Receiving Party shall cooperate with the disclosing party to minimize the disclosure to the extent practicable, and provided further, that Party A must give prior written consent to any disclosure required of Party B, and Party B will make its best efforts not to comply with any such request for information from any governmental entity in any case in which Party B is notified by Party A that Party A has a good faith belief that such disclosure is not required by PRC law.

9.2

Duty to Protect. Each party shall deal with Confidential Information so as to protect it from disclosure with a degree of care not less than that used by it in dealing with its own information intended to remain exclusively within its knowledge (and in no event shall it exercise less than reasonable care) and shall take reasonable steps to minimize the risk of disclosure of such Confidential Information and information concerning this Agreement by ensuring that only its officers, directors and employees and the officers, directors and employees of its professional advisers (and no other persons) who have a bona fide “need to know” such Confidential Information for purposes permitted or contemplated hereby (Authorized Persons), shall have access thereto, and shall cause such Authorized Persons to treat such Confidential Information in confidence as provided herein. All Confidential Information remains the property of the disclosing party. Upon expiry or termination for any reason of this Agreement, the Receiving Party shall promptly return to the disclosing party all originals and copies of any material in any form containing or representing the Confidential Information, including all computer codes, discs, drawings, specifications, manuals and other printed or reproduced material (including information stored

9.3

Permitted Disclosure This Agreement or its contents may be disclosed as required by law or the rules of any securities exchange or any governmental entity to which the disclosing party is subject, as contemplated by Article 9.1.4, or submits or as necessary for confirming the application of such law or rules, provided that the disclosing party shall use its reasonable efforts to secure that its contents be held confidential and will only disclose such information after notice to, and consultation with, the other party, to the extent practicable.

9.4

Survival of Confidentiality The undertakings in connection with Confidential Information set forth in this Article 9 shall survive for 5 years after the termination or expiration of this Agreement.

10.1

Notice All notices or other communications required or permitted to be given under this Agreement shall be in writing in English and shall be deemed to have been duly given and received on the date delivered by hand or by courier service such as Federal Express, or by other messenger (or, if delivery is refused, upon presentment) or upon receipt by facsimile transmission (provided, that a copy of such facsimile and transmission confirmation is delivered by means other than facsimile within 5 days of the delivery of the facsimile), or upon delivery by registered or certified mail (return receipt requested), postage prepaid, to the parties as follows:

If to Party A:

Address:

[•]

Tel:

[•]

Fax:

[•]

Attn:

[•]

Address:

[•]

Tel:

[•]

Fax:

[•]

Attn:

[•]

10.2

Governing Law

10.3

Dispute Resolution

10.3.1

If any dispute arises out of or in connection with this Agreement, the parties shall attempt in the first instance to resolve such dispute through friendly consultation or mediation.

10.3.2

If the dispute cannot be resolved in the above manner within 30 days after the commencement of consultations, either party may submit the dispute to arbitration as follows:

10.3.2.1

All disputes arising out of, or in regard to this Agreement shall be submitted to China International Economic and Trade Arbitration Commission which shall be conducted by three (3) arbitrators in Beijing in accordance with the Commission’s arbitration rules;

10.3.2.2

The arbitration shall be conducted in the Chinese language, with the arbitral award being final and binding upon the Parties. The cost of arbitration shall be allocated upon the determination of the arbitrators.

10.3.3

When any dispute is submitted to arbitration, the parties shall continue to perform their obligations under this Agreement, unless the disputes are related to the effectiveness or the termination of the Agreement.

10.4

Amendment or Supplement

10.5

No Waiver

10.6

Severability

10.7

Successors

10.8

Assignment

10.9

Entire Agreement

10.10

Counterparts

10.11

Language

Signature:

/s/ ▇▇▇▇▇ ▇▇

Name:

▇▇▇▇▇ ▇▇

Position:

Chairman & CEO

Date:

June 30, 2007

Signature:

/s/ ▇▇▇▇▇ ▇▇▇ Jing

PRC ID No.:

Transferor:

▇▇▇▇▇ ▇▇▇ Jing

Transferee:

China Cablecom Company Limited (Hong Kong)

1.

The Transferor has agreed to transfer its equity interest in the Jinan Youxiantong, representing a capital contribution of RMB 25,500, to the Transferee;

2.

The Transferee has agreed to accept the said equity interest from the Transferor;

3.

The equity transfer shall be completed on July 17th. Upon the completion of the equity transfer, the Transferor shall no longer enjoy any rights in or bear any obligations with respect to the transferred equity interest in the Jinan Youxiantong, and the Transferee shall enjoy all such rights in and shall bear all obligations corresponding to the said equity interest.

Transferor:

Transferee:

1.

Attending shareholders:

2.

The matters related to the transfer of equity interest provided in the equity transfer agreement entered into between ▇▇▇▇▇ ▇▇▇ Jing (Transferring Shareholder) and China Cablecom Co., Ltd (Hong Kong) or its Designee (Equity Transfer Agreement) were discussed at the shareholders’ meeting on July 17^th, 2007.

3.

The shareholders’ meeting unanimously agrees to make the following resolutions:

(i)

confirm and approve the Equity Transfer Agreement;

(ii)

approve Pu Yue to transfer all or a portion of its equity interest in the Company in one or more transfer transactions to China Cablecom Co. Ltd. Hong Kong or its Designee pursuant to the provisions of an Equity Transfer Agreement in the form attached; and

(iii)

the shareholders other than the Transferring Shareholder hereby waive their respective right of first refusal under PRC laws regarding the equity interest to be transferred by the Transferring Shareholder of the Company pursuant to the Equity Transfer Agreement.

Signed by:

          Pu Yue

Date:

Signed by:

          ▇▇▇▇▇ ▇▇▇ Jing

Date:

To:

China Cablecom Co. Ltd. (Hong Kong)

Signed by:

          ▇▇▇▇▇ ▇▇▇ Jing

Date:

        July 17, 2007