8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 10, 2010 (March 9, 2010)
CHINA BROADBAND, INC. (Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of incorporation)	000-19644 (Commission File Number)	20-1778374 (IRS Employer Identification No.)
1900 Ninth Street, 3rd Floor Boulder, Colorado 80302 Telephone No.: (303) 449-7733 (Address and telephone number of Registrant's principal executive offices and principal place of business)
(Former name or address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On March 9, 2010, a wholly owned subsidiary of China Broadband Inc. (“China Broadband”), China Broadband, Ltd., a Cayman Islands corporation (“CB Cayman”), entered into a note purchase agreement (the “Note Purchase Agreement”) and a non-binding Letter of Intent (the “LOI”) with Sinotop Group Ltd., a Hong Kong corporation (“Sinotop Hong Kong”).  Through a series of contractual arrangements (“VIE Contracts”) Sinotop Hong Kong controls Beijing Sino Top Scope Technology Co., Ltd. (“Sinotop Beijing”), a corporation established in the People’s Republic of China (“PRC”).  Sinotop Beijing, in turn, is a  party to a joint venture with two other PRC companies to provide integrated value-added service (“VAS”) solutions for the delivery of pay-per-view (“PPV”), video-on-demand (“VOD”), and enhanced premium content for cable providers.

The LOI summarizes the proposed terms of the acquisition by CB Cayman of 100% of the outstanding capital stock of Sinotop Hong Kong from its sole stockholder in consideration for a percentage of China Broadband to be determined in the definitive agreement.  Among other customary closing conditions, the acquisition is contingent upon the (1) the drafting and negotiation of definitive agreements that cover the matters discussed in the LOI, (2) the funding of the Note (as defined below), which has already occurred, (3) the contribution by CB Cayman of at least US$5,000,000 to the capital of Sinotop Hong Kong (or the purchase by CB Cayman of newly issued shares of Sinotop Hong Kong in consideration for the same amount), and (4) the absence of any debts, obligations or encumbrances on the equity or assets of Sinotop Hong Kong and the WFOE other than the Note and the VIE Contracts.  The LOI contains a binding exclusivity provision that prohibits Sinotop Hong Kong and Sinotop Hong Kong’s sole stockholder from soliciting, initiating, entertaining, participating in any discussions or negotiations concerning, or making or accepting any offer or proposed transaction with any third party with regard to, any of the transactions contemplated by the LOI or any similar transaction.    The parties anticipate that the transactions contemplated by the LOI will close on March 15, 2010.

Pursuant to the Note Purchase Agreement, on March 9, 2010, CB Cayman acquired a Convertible Promissory Note (the “Note”) from Sinotop Hong Kong in consideration of CB Cayman’s loan to Sinotop Hong Kong under the Note in the amount of US$580,000 as contemplated by the LOI.

The Note accrues interest at a simple annual rate of 5% and is due on the date (the “Maturity Date”) that is the earlier of the fifth anniversary of the date of issuance of the Note or the day following a change of control (as described in the Note).  The outstanding principal amount of the Note along with all accrued interest is convertible into common shares of Sinotop Hong Kong upon the occurrence of (1) Sinotop Hong Kong consummating a financing transaction (a “Financing”) resulting in aggregate gross proceeds of at least $1 million, in which case the Note would automatically be converted into ordinary shares of Sinotop Hong Kong at a price equal to 70% of the price per share paid by investors in such Financing, or (2) a change of control of Sinotop Hong Kong (as described in the Note), in which case the Note would automatically be converted into ordinary shares that represent 50% of the issued and outstanding capital stock of Sinotop Hong Kong.  The outstanding principal amount of the Note and all accrued interest thereon may also be converted at the option of CB Cayman at any time after the Maturity Date or an event of default into ordinary shares of Sinotop Hong Kong representing 50% of the issued and outstanding voting capital stock of Sinotop Hong Kong.  The Note may not be prepaid prior to the Maturity Date without the consent of the holder of the Note.  The Note contains customary events of default.

The foregoing description of the Note Purchase Agreement, the Note, and the LOI does not purport to be complete and is qualified in its entirety by reference to such documents. A copy of the Note Purchase Agreement, the Note and the LOI are attached hereto as Exhibit 10.1, 10.2 and 10.3, respectively, and is incorporated herein by reference.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT

A significant beneficial owner of the Company’s securities advanced the funds necessary for CB Cayman to make the loan to Sinotop described in Item 1.01 above.  The terms of the advance have not yet been documented.  The Company will file an amendment to this Form 8-K to disclose the terms of the advance promptly after it is documented.

ITEM 2.05  COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES.

China Broadband has materially reduced the staff employed for its indirect wholly-owned subsidiary PRC subsidiary, Wanshi Wangjing Media Technologies (Beijing) Co., Ltd., a/k/a Adnet Media Technologies (Beijing) Co., Ltd. (“AdNet”) and, began implementing other cost savings measures with respect to AdNet.

AdNet, which was acquired during the first half of 2009, holds an Internet Content Provider (“ICP”) license with rights to provide delivery of multimedia advertising content to 2000+ internet cafés in the PRC.  AdNet operates and is licensed to operate in 28 provinces in the PRC with servers in five data centers including Wuhan, Wenzhou, Yantai, Yunan and with a master distribution server in Tongshan.

As management has seen limited revenue growth relating to AdNet’s business, AdNet’s full and part time staff, all of which were based in the PRC, were reduced from 20 persons to 2 full time employees.  Nonetheless, China Broadband is maintaining AdNet’s ICP and other licenses, servers and infrastructure, as well as all of its intellectual property, all of which China Broadband intends on using both for AdNet and, in connection with other businesses that China Broadband is contemplating acquiring or entering into, which would require similar technology and infrastructure.  China Broadband does not anticipate terminating additional employees at this time.

China Broadband estimates its costs in taking the above cost cutting measures at approximately $50,000, stemming from one time termination and severance benefits and does not anticipate additional related expenditures at this time.

China Broadband’s management has not made a good faith estimate yet as to the impairment charge, if any, that will be incurred as reflected in China Broadband’s financial statements, as a result of the reduction of AdNet’s internet café advertising business operations.  China Broadband will file an amended Current Report on Form 8-K within four business days after making a determination of such an estimate or range of estimates.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Exhibits	Description
10.1	Note Purchase Agreement, dated March 9, 2010, among CB Cayman and Sinotop Hong Kong.
10.2	Convertible Promissory Note, dated March 9, 2010, by Sinotop Hong Kong in favor of CB Cayman.
10.3	Non-Binding Letter of Intent among CB Cayman and Weicheng Liu

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CHINA BROADBAND, INC.
Date: March 10, 2010	By:	/s/Marc Urbach
		President

INDEX TO EXHIBITS

Exhibits	Description
10.1	Note Purchase Agreement, dated March 9, 2010, among China Broadband, CB Cayman, and Sinotop Hong Kong.
10.2	Convertible Promissory Note, dated March 9, 2010, by Sinotop Hong Kong in favor of CB Cayman.
10.3	Non-Binding Letter of Intent among CB Cayman and Weicheng Liu

EX-10.1

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NOTE PURCHASE AGREEMENT

THIS NOTE PURCHASE AGREEMENT (this “Agreement”) is made as of March 9, 2010, between and among: (a) Sinotop Group Ltd., a Hong Kong company (the “Company”); and (b) China Broadband Ltd., a Cayman Islands company (“Holder”). Each of the foregoing is referred to as a “Party” and together as the “Parties”. Capitalized terms not otherwise defined in this Agreement have the meanings ascribed to them in Section 1 below.

RECITALS

WHEREAS, the Holder intends to provide the Consideration (as defined below) to the Company;

WHEREAS, the Parties wish to provide for the sale and issuance of a convertible promissory note in the form attached as Exhibit A (the “Note”) in return for the provision by the Holder of the Consideration to the Company;

WHEREAS, the Parties intend for the Company to issue the Note in return for the Consideration; and

NOW, THEREFORE, in consideration for the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and adequacy of which is agreed by the Parties, it is agreed as follows.

AGREEMENT

1. Definitions.

1.1 “Charter” means the Articles of Association of the Company in effect as of the date hereof

1.2 “Closing” is defined in Section 3.

1.3 “Consideration” means Five Hundred Eighty Thousand United States Dollars (US$580,000), or its equivalent in another currency acceptable to the Company, paid by the Holder pursuant to this Agreement in exchange for the Note.

1.4 “Governmental Authority” means any court, administrative agency, tribunal, department, bureau or commission or other governmental authority, instrumentality or arbitral body, domestic or foreign, federal, state, local or provincial.

1.5 “Maturity Date” is defined in the Note.

1.6 “Note” is defined in the Recitals.

1.7 “Transaction Documents” means this Agreement, the Note, and the other documents and instruments contemplated therein.

1.8 “VIE Agreements” is defined in Section 4.7.

1.9 “WFOE” is defined in Section 6.1.

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2. Terms of the Note. In return for the Consideration paid by the Holder, the Company will sell and issue the Note to the Holder. The Note will have a principal balance equal to the Consideration. The principal amount of the Note will bear interest, will be payable on the Maturity Date, and will be convertible into shares of the capital stock of the Company, all as provided in the Note.

3. Closing. The closing of the sale and issuance of the Note by the Company to the Holder, in exchange for the Consideration, (the “Closing”) will take place on March 9, 2010, at the Shanghai, China offices of Pillsbury Winthrop Shaw Pittman LLP, or such other time and place as the parties may agree in writing. At the Closing, (a) the Holder will deliver the Consideration to the Company by wire transfer of immediately available funds, to an account or accounts specified in writing by the Company and delivered to the Holder at least one (1) day before the Closing, such specification to be in sufficient detail to permit the Holder to complete such wire transfer; and (b) the Company will deliver an executed original of the Note to the Holder.

4. Representations and Warranties of the Company. The Company represents and warrants to the Holder, as of the date of this Agreement, as set forth below.

4.1 Organization, Good Standing and Qualification. The Company is a company duly organized, validly existing and in good standing under the laws of Hong Kong. The Company is not required to be qualified, authorized, registered or licensed to do business as a foreign corporation in any jurisdiction other than the jurisdiction of its incorporation.

4.2 Corporate Authority. The Company has the absolute and unrestricted corporate right, power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery thereof by it have been duly authorized by all necessary action on the part of its board of directors or other governing body. This Agreement, when executed and delivered to the other Parties, will constitute the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms and will not result in any breach of its memorandum and articles of association or other similar charter document.

4.3 Charter. A true and correct copy of the Company’s Charter is attached as Exhibit B.

4.4 Subsidiaries. The Company does not own or control any equity security or other interest of any other corporation, partnership, limited liability company or other business entity. The Company is not a participant in any joint venture, partnership, limited liability company or similar arrangement. Except as set forth in this Section 4.4, since its inception, the Company has not consolidated or merged with, acquired all or substantially all of the assets of, or acquired the stock of or any interest in any corporation, partnership, limited liability company or other business entity.

4.5 Capitalization; Voting Rights.

(a) Authorized Shares. The Company is authorized to issue a maximum of 10,000 shares, par value HK$1.00 each, of which 1 ordinary share will be issued and outstanding immediately prior to the Closing.

(b) Options, Warrants, etc. There are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities, except for rights contained in this Agreement.

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4.6 Financial Condition; No Operations. The Company was formed on January 15, 2010. It does not have and has never had any operations.

4.7 VIE Agreements. The Company has entered into certain agreements with a PRC company under common control with the Company (together, the “VIE Agreements”) in substantially the form attached collectively hereto as Exhibit C, and such agreements have been duly executed and delivered by the Company and each other party thereto.

4.8 Other Agreements.Except for the VIE Agreements, the Company does not have and has never had any agreements or arrangements with, has no debts to, and is not obligated in any way, to any other party.

4.9 Property, Assets, etc.The Company does not own, lease or license any real or personal property, including any intangible or intellectual property.

4.10 Litigation. The Company has not ever been a party to any litigation and to its and that of the Guarantor no grounds exist for the assertion of any claims against it.

4.11 Employees. The Company does not have and has never had any employees.

4.12 Disclosure. To the best knowledge of Company, all information provided to the Holder relating to the Company is true and accurate in all material respects and not materially misleading.

5. Conditions to the Obligations of the Holder. The obligation of the Holder to purchase the Note at the Closing is subject to the satisfaction of the following conditions, unless waived in writing by the Holder, in the exercise of its sole discretion, at or before the Closing:

5.1 Accuracy of Representations and Warranties. All representations and warranties made by the Company in this Agreement shall be true and correct in all material respects (except for those representations and warranties that are qualified as to materiality, which shall be true and correct in all respects) when made and as of the date of the Closing (except for those representations and warranties that are as of a specific date), with the same effect as if such representations and warranties had been made on the date of each Closing.

5.2 Absence of Litigation. There shall not be (a) any order of any nature issued by a Governmental Authority with competent jurisdiction directing that the transactions provided for herein or any aspect of them not be consummated as herein provided, or (b) any proceeding before any Governmental Authority pending wherein an unfavorable order would prevent the performance of this Agreement, or the consummation of any aspect of the transactions or events contemplated hereby, declare unlawful any aspect of the transactions or events contemplated by this Agreement, cause any aspect of the transactions contemplated by the Transaction Documents to be rescinded or have a material adverse effect on the Company.

5.3 Required Consents. All consents, approvals and other actions of, and notices and filings with, all Governmental Authorities and all other entities and Persons as may be necessary or required with respect to the execution and delivery by the Parties (other than the Purchasers) of any of the Transaction Documents, and the consummation by such Parties of the transactions contemplated thereby, shall have been obtained or made.

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6. Covenants of the Company. As long as any portion of the Notes remains outstanding (i.e., prior to maturity or conversion thereof), the Company will ensure that:

6.1 The VIE Agreements are assigned by the Company to a new wholly-owned subsidiary to be established by the Company under the laws of the People’s Republic of China (the “WFOE”) as soon as practicable after the establishment of that entity.

6.2 Each of the Company and the WFOE will not, directly or indirectly:

(a) amend its charter documents, including without limitation, the certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

(b) agree to, or consummate, a Change of Control, as that term is defined in the Note;

(c) enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom, unless the proceeds of such borrowed money are used at least in part to repay the full amount of the Note then outstanding;

(d) enter into, create, incur, assume or suffer to exist any liens or encumbrances of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom

(e) repay, repurchase or offer to repay, repurchase or otherwise acquire any shares of its common stock or other equity securities;

(f) enter into any agreement with respect to any of the foregoing;

(g) pay cash dividends or distributions on any equity securities of the Company;

7. Binding Arbitration. All disputes arising out of or relating to this Agreement or any of the other Transaction Documents will be resolved by mandatory, binding arbitration in Hong Kong under 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 (“HKIAC”). The arbitration will be conducted by a panel of three arbitrators, one chosen by each party to any matter to be submitted for arbitration (or, if there are more than two such parties, by agreement of all such parties), and the third by agreement of the parties; failing agreement within 30 days of commencement of the arbitration proceeding, the HKIAC will appoint any required arbitrator(s). The proceedings will be confidential and conducted in English. The arbitral tribunal will have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a disputed matter, and its award will be final and binding on the parties. The arbitral tribunal will determine how the parties will bear the costs of the arbitration. 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. During the pendency of any arbitration or other proceeding relating to a dispute between the parties, the parties will continue to exercise their remaining respective rights and fulfill their remaining respective obligations under this Agreement, except with regard to the matters under dispute.

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8. Miscellaneous.

8.1 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement will inure to the benefit of and be binding upon the respective successors and assigns of the parties, provided, however, that each of the parties may not assign its rights and/or obligations under this Agreement without the prior written consent of the other party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. The Company hereby agrees and acknowledges that, notwithstanding the foregoing, if at any time or from time to time there will be a recapitalization, reclassification, subdivision, combination or merger or sale of assets transaction or similar transaction (including without limitation the any restructuring resulting in a new entity that will either (i) be owned in substantially the same proportions by the persons who held the Company’s securities immediately prior to such transaction or (ii) own substantially the same assets and/or property held by the Company immediately prior to such transaction (such entity the “New Entity”), the Holder will have the unconditional right, in its sole discretion, to have the Company’s obligations and the Holder’s rights hereunder, including without limitation such rights and obligations under the Note, assumed by the New Entity.

8.3 Governing Law. This Agreement and the Note will be governed by and construed under the laws of Hong Kong without giving effect to any choice of law rule.

8.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

8.6 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

8.7 Notices. All notices and other communications given or made pursuant hereto will be in writing and will be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not so confirmed, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications will be sent to the respective parties at the respective addresses shown on the signature pages hereto (or at such other addresses as will be specified by notice given in accordance with this Section 8.7).

8.8 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

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8.9 Entire Agreement; Amendments and Waivers. This Agreement and the other Transactional Documents constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. Nonetheless, any term of the Transaction Documents may be amended and the observance of any term thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of all Parties thereto.

8.10 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision will be excluded from this Agreement and the balance of the Agreement will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms.

8.11 Covenants of the Company to Deliver Information and Financial Statements. The Company will deliver to the Holder such financial statements or information as the Company provides to its stockholders simultaneously with the delivery thereof to the stockholders.

8.12 Further Assurances. From time to time, the Company will execute and deliver to the Holder such additional documents and will provide such additional information to the Holder as any Holder may reasonably require to carry out the terms of any of the Transaction Documents.

8.13 Publicity. No party hereto will disclose the source, existence and contents of this Agreement or the transactions contemplated hereby to any person (other than its respective key officers, members of the board of directors, accountants or attorneys provided that such persons agree to maintain the confidentiality of the source, existence and contents of this Agreement or the transactions contemplated hereby) without the prior written consent of the other parties.

[The Remainder of this Page is Intentionally Left Blank]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

“COMPANY”		“HOLDER”
SINOTOP GROUP LTD., a Hong Kong		CHINA BROADBAND LIMITED, a
company		Cayman company
By:		By:
Name:	Weicheng Liu	Name:	Marc Urbach
Its:	Sole Director	Its:

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

“COMPANY”		“HOLDER”
SINOTOP GROUP LTD., a Hong Kong		CHINA BROADBAND LIMITED, a
company		Cayman company
By:		By:
Name:	Weicheng Liu	Name:	Marc Urbach
Its:	Sole Director	Its:

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EXHIBIT A

Form of Note

(attached)

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EXHIBIT B

Charter of Company

(attached)

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EXHIBIT C

Copies of VIE Agreements

(attached)

EX-10.2

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THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY OTHER JURISDICTION.  NO SALE OR DISPOSITION OF THIS NOTE MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS

CONVERTIBLE PROMISSORY NOTE

US$580,000.00	March 9, 2010
	Hong Kong, S.A.R.

For value received Sinotop Group Ltd., a Hong Kong company (“Payor”) promises to pay to China Broadband Ltd.,a Cayman Islands company or its assigns (collectively, “Holder”) the principal sum of Five Hundred Eighty Thousand United States Dollars and No Cents (US$580,000.00) with interest on the outstanding principal amount at the rate of five percent (5%) simple interest per annum.  Interest will commence with the date hereof and will continue on the outstanding principal until paid in full.

1.            This note (the “Note”) is issued pursuant to the terms of that certain Note Purchase Agreement (the “Note Purchase Agreement”) dated as the date hereof between the Payor and Holder.

2.            All payments of interest and principal under this Note will be in lawful money of the United States of America, in accordance with written payment instructions delivered by Holder to Payor. All payments will be applied first to accrued interest, and thereafter to principal.

3.            The principal and all other amounts outstanding under this Note will be convertible into shares of the Payor in accordance with this Section 3.

(a)           In the event the Payor sells shares of its capital stock (“Shares”) in a transaction or series of related transactions resulting in aggregate gross proceeds to the Payor (excluding amounts related to conversion of the Note) of at least One Million United States Dollars ($1,000,000) (a “Qualified Financing”), the outstanding principal hereunder and all interest accrued thereon shall automatically be converted into the Shares sold in such Qualified Financing at a price equal to seventy percent (70%) of the price per share generally paid for such Shares by other investors in such Qualified Financing.

(b)           In the event the Payor undergoes a Change in Control (as defined below), the outstanding principal hereunder and all interest accrued thereon shall automatically be converted into ordinary shares of the Payor representing fifty percent (50%) of the issued and outstanding capital stock of the Payor. For purposes of this Note, “Change in Control” means a merger, consolidation or other acquisition in which the shareholder(s) of the Payor immediately prior to the merger, consolidation or other acquisition do not continue to own more than fifty percent (50%) of the voting power of the surviving or acquiring entity, or the sale of all or substantially all of the assets of the Payor.

(c)           This Note may be converted, at any time after the Maturity Date or upon the occurrence of an Event of Default, in the sole discretion of the Holder, into ordinary shares of the Payor representing fifty percent (50%) of the issued and outstanding capital stock of the Payor, calculated on a fully diluted basis, assuming all outstanding options and other convertible instruments are exercised and converted.

4.            Unless this Note has been converted in accordance with the terms of Section 3 above, the entire outstanding principal balance and all unpaid accrued interest shall become fully due and payable on the earlier of (a) the fifth annual anniversary of the date first set forth above; or (b) the date which is one day before the closing of a Change in Control (in either case, the “Maturity Date”).

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5.            This Note may not be prepaid prior to the Maturity Date unless the Holder consents to such prepayment in writing.

6.            This Note may be assigned by the Holder in its sole discretion. It may not be assigned, nor may any of Payor’s obligations hereunder be delegated, without the advance written consent of the Holder, which may be given or withheld in its sole discretion.

7.            The Payor hereby represents that its directors, in the exercise of their fiduciary duty, have approved the Payor’s execution of this Note based upon a reasonable belief that the principal provided hereunder is appropriate for the Payor after reasonable inquiry concerning the Payor’s financing objectives and financial situation. In addition, the Payor hereby represents that it intends to use the principal of this Note for the purposes set forth in the Note Purchase Agreement.

8.            In case one or more of the following events (“Events of Default”) (whatever the reason for such Event of Default and whether it will be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) will have occurred and be continuing:

(a)           default in the payment of all or any part of the principal of any of this Note as and when the same will become due and payable, at maturity, upon any redemption, by declaration or otherwise;

(b)           a default in the payment of all or any part of the interest on any of this Note as and when same will become due and payable and the default continues without being cured for a period of three days;

(c)           failure on the part of Payor duly to observe or perform any other of the covenants or agreements on the part of Payor contained in this Note or the Note Purchase Agreement (other than those covered by clauses (a) and (b) above) for a period of thirty (30) days after the date on which written notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and demanding that Payor remedy the same, will have been given by registered or certified mail, return receipt requested, to Payor;

(d)           any event or condition will occur which results in the acceleration of the maturity of any Debt or enables or, with the giving of notice or lapse of time or both, would enable the holder of such Debt or any Person acting on such holder’s behalf to accelerate the maturity thereof;

(e)           Payor pursuant to or within the meaning of any applicable insolvency or bankruptcy law (“Bankruptcy Law”): (i)  commences a voluntary case or proceeding, (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) admits in writing its inability to pay its debts as the same become due;

(f)           a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against Payor in an involuntary case, (ii) appoints a custodian of Payor or for all or substantially all of the property of Payor, or (iii) orders the liquidation of Payor; and such order or decree remains unstayed and in effect for sixty (60) days; or

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(g)           all or substantially all of Payor’s assets or business (whether by sale, exclusive license or otherwise) will have been sold or transferred to any Person who does not control Payor on the date of this Note;

then, in each case where an Event of Default occurs, the Holder, by notice in writing to Payor (the “Acceleration Notice”), may, at its option, declare the principal hereunder and all accrued and unpaid interest hereon to be due and payable immediately, and upon any such declaration the same will become immediately due and payable; provided that if an Event of Default specified in Sections 8(e) or 8(f) occurs, the principal hereunder and all accrued and unpaid interest hereon will become and be immediately due and payable without any declaration or other act on the part of the Holders.

9.            Payor hereby waives demand, notice, presentment, protest and notice of dishonor.

10.          All disputes arising out of or relating to this Note will be resolved in accordance with the Dispute Resolution provisions of the Note Purchase Agreement.

11.          If one or more provisions of this Note are held to be unenforceable under applicable law, such provision will be excluded from this Note and the balance of the Note will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms, and the Holder and the Payor will endeavor to take such action as necessary to achieve the same purpose of such provision held to be unenforceable.

12.          The terms of this Note will be construed in accordance with the laws of Hong Kong.

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Execution copy

Any term of this Note may only be amended or waived with the written consent of the Holder in its sole and absolute discretion.

SEALED with the Common Seal of

Sinotop Group, Ltd. and

signed by

Name : LIU Weicheng

Title : Sole Director

in the presence of:-

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EX-10.3

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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
	Name:
	Title:

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Execution Copy

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
	Name:  Marc Urbach
	Title:    Director

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