Contractual Joint Venture Contract

EXHIBIT 10.6


CONTRACTUAL JOINT VENTURE CONTRACT
FOR
SICHUAN HUAYU BIG SKY NETWORK LTD.


PRELIMINARY STATEMENTS


In accordance with the " Law of the People's Republic of China on Chinese Foreign Contractual Joint Ventures" and other relevant Chinese laws and regulations of Chengdu, Chengdu Huanyu Information Industry Co., Ltd. and Big Sky Network Canada Ltd., adhering to the principle of equality and mutual benefits, spirit of friendship and cooperation, agreed to jointly set up a Contractual Joint Venture to manage the project at Chengdu, Sichuan Province, the People's Republic of China. The Contract hereunder is concluded by both parties on July 8, 2000.


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CHAPTER 1
GENERAL PROVISIONS


ARTICLE 1.1 DEFINITIONS


In the Contract (as hereinafter defined) the following words and expressions shall have the meanings hereby assigned to them, except where the context otherwise requires:


1. "Approval Authority" means the Chengdu Municipal Government and its
functional departments.


2. "Articles of Association" means the "Articles of Association for Sichuan
Huayu Big Sky Network Ltd.


3. "Board of Directors" means the Board of Directors of the Company.


4. "Business License" means the business license of the Company issued by the
State Administration for Industry and Commerce.


5. "Company" means Sichuan Huayu Big Sky Network Ltd.


6. "Contract" means this Contractual Joint Venture Contract For Sichuan Huayu
Big Sky Network Ltd.


7. "Effective Date" means the date on which the approval documents of this
Contract is issued by the Approval Authority.


8. "Parties" means Party A (Chengdu Huayu Information Industry Co., Ltd.,
[Chinese Characters Appear Here] and Party B (Big Sky Network Canada Ltd.).


9. "RMB" means the currency of the People's Republic of China.


10. "Foreign Currency" means the currencies of foreign countries (including
paper money) and foreign payment orders (including commercial instruments
and bank deposit certificates, etc.).


11. "Senior Officers" means the members of the Directors of Board, the General
Manager, the Deputy General Manager, the Chief Engineer and the Chief
Accountant.


12. "ITSP" means the Internet Technology Service Provider.


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CHAPTER 2
PARTIES OF THE CONTRACTUAL JOINT VENTURE


ARTICLE 2.1 JOINT VENTURE PARTIES Parties to this Contract are as follows: Party A: Chengdu Huayu Information Industry Co., Ltd. [Chinese Characters Appear Here] " hereinafter referred to as Party A). Registration Place: Chengdu, The People's Republic of China Legal Address: 14F, Jinyu Building, 191, Section Bei Si, Yihuan
Road., Chengdu, Sichuan, the People's Republic of China Legal Representative: Name:Wang Yuan Lin Position: Chairman Nationality: Chinese Telephone: 86-28-3372468 Fax: 86-28-3315758


Party B: Big Sky Network Canada Ltd. [Chinese Characters Appear Here], hereinafter referred to as Party B). Registration Place: British Virgin Islands Legal Address: 2080, 440 2nd Ave., SW, Calgary, Alberta, Canada Legal Representative: Name: Matthew Heysel Position: Chairman Nationality: Canadian Telephone: 1-403-708-5962 Fax: 1-403-708-0823


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CHAPTER 3
REPRESENTATIONS AND WARRANTIES


ARTICLE 3.1 REPRESENTATIONS AND WARRANTIES BY PARTY A.


Party A hereby represents and warranties as of the date hereof as follows:


1. Party A is a company duly organized and validly existing with the status of
a legal person under the laws of the People's Republic of China.


2. The execution and performance by Party A of this Contract and its
appendices (i) are within its corporate power and business scope, (ii) have
been duly authorized by necessary corporate resolution, (iii) do not
contravene its Articles of Association and (iv) do not contravene any law
or contractual restriction binding on or affecting part A.


3. Party A owns and controls Huayu HFC network and its entire software and
hardware platform, and the rights to use the Facilities ("the Facilities")
and equipment for the data transmission and Internet related business in
Chengdu area.


4. Party A ensures to hire the Company as its exclusive Internet Technology
Service Provider ("ITSP") in Chengdu area during the life of the Company.
Party A promises not to appoint other companies located either in Chengdu
or outside China for the purpose of offering the above-mentioned services
to Party A without the written consent of the Company.


5. Party A understands and promises to be held responsible for the prohibition
of business strife in bad faith and Party A shall ensure the Joint Venture
all relevant permission and approvals (including approval for Internet
business operation) by the relevant government authorities. Party A ensures
not to permit and transfer its ownership, operating rights to use the said
network Facilities and equipment to any third party without a written
permission from the Company.


6. All authorizations, consents or approvals or actions by, and all notices to
or filings with, any governmental authority required for the due execution
and performance by Party A of this


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Contract have been obtained, except for the approval of this Contract by
the Approval Authority.


7. Subject to the approval of this Contract and its appendices by the
relevant Authority, this Contract is the legal, valid and binding
obligation of Party A, enforceable against Party A in accordance with its
terms.


ARTICLE 3.2 REPRESENTATIONS AND WARRANTIES BY PARTY B.


PARTY B hereby represents and warranties as of the date hereof as follows:


1. Party B is a corporation duly incorporated, validly existing and in good
standing under the laws of British Virgin Island. 2. The execution and performance by Party B of this Contract and its
appendices (i) are within its corporate power and business scope, (ii)
have been duly authorized by all necessary corporate resolution, (iii) do
not contravene its Articles of Association and (iv) do not contravene any
law or contractual restriction binding on or affecting Party B. 3. The investment funds and equipment, contribution manners and time
arrangement stipulated in the Contract shall be observed Party B to
guarantee operation of the project. 4. All authorization, consent or approval or other action by, and notice to or
filng with, any governmental authority is required for the due execution,
delivery and performance by Party B of this Contract and its appendices,
except for the approval of this Contract by the Approval Authority. 5. Subject to the approval of this Contract and its appendices by the Approval
Authority, this Contract is the legal, valid and binding obligation of
Party B, enforceable against Party B in accordance with its terms.


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CHAPTER 4
ESTABLISHMENT OF THE CONTRACTUAL
JOINT VENTURE COMPANY


ARTICLE 4.1 ESTABLISHMENT OF THE COMPANY. The Company shall be established as a limited liability Contractual Joint Venture company in accordance with the Law of the People's Republic of China on Chinese Foreign Contractual Joint Ventures and other relevant Chinese laws and regulations, and after completion of the Feasibility Study.


ARTICLE 4.2 THE NAME AND LEGAL ADDRESS OF THE COMPANY 1. The Name of the Company in Chinese is: [Chinese Characters Appear Here]
(hereinafter referred to as the "Company"). 2. The name of the Company in English is: Sichuan Huayu Big Sky Network Ltd. 3. Registration. Place: Chengdu, Sichuan Province, the People's Republic of
China. 4. Legal Address: 2 Gulou North 3rd Street, Chengdu, Sichuan, the People's
Republic of China.


ARTICLE 4.3 LAW OF THE PEOPLE'S REPUBLIC OF CHINA The Company is a Contractual Joint Venture registered in Chengdu, approved by the authorities of the Government of Chengdu. As a legal entity, the Company shall follow the laws and regulations of the People's Republic of China. All activities of the Company shall be governed and protected by the laws and pertinent rules and regulations of the People's Republic of China.


ARTICLE 4.4 LIMITED LIABILITY The Company is a limited liability company. The funds or /and cooperative conditions and terms provided by both Parties of the Company shall constitute part of the property of the Company. The Company shall be responsible for its own liability and under all its own assets. Both Parties of the Company have reached consensus in the Contract on the following: the terms and conditions of the


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cooperation and investment, profit distribution, manner of the business management anal operation, and asset distribution on termination of the Contract.


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CHAPTER 5
OBJECTIVE AND SCOPE OF BUSINESS


ARTICLE 5.1 PURPOSE The objective of the Company is using Huayu's HFC network to develop an advanced broadband software and hardware platform for data transmission and Internet related business in Chengdu area. This will be accomplished by economic cooperation and technical exchanges as well as through adopting advanced technology and scientific management expertise, in order to achieve favourable economic results and ensure a satisfactory rate of return for the Parties.


ARTICLE 5.2 SCOPE OF BUSINESS The business scope of the Company shall include: to provide a software and hardware platform for broadband data transmission network, data transmission and network value-added business, information network services, related development of software applications, technical consulting and training services.


ARTICLE 5.3 BUSINESS ACTIVITIES The Company and Party A shall jointly provide Internet access services to customers as follows:


1. The Company shall purchase and install multi-user modems and related equipment to connect the computers or other equipment of customers to Party A's network.


2. Customers who desire to obtain Internet access will be required to pay an installation and monthly maintenance fee (including monthly equipment fee and the Internet access .fee payable to Party A for being permitted to connect to the Internet through Party A's network).


3. After collecting the above said fees from customers and paying an interconnection provider the inter-connection charges, Party A and Party B will share the profits in accordance with Article 9.1 of the Contract.


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CHAPTER 6
TOTAL AMOUNT OF INVESTMENT AND REGISTERED
CAPITAL AND OTHERS


ARTICLE 6.1 TOTAL INVESTMENT 1. The total amount of investment in the Company shall be US$5,500,000(say US
Dollars five million five hundred thousand). 2. The unit of currency for the total investment, registered capital and
contributions shall be the U.S. dollar. The exchange rate used shall be the
average exchange rate announced by the China State Administration of
Exchange Control for U.S. dollars and RMB for the date on which the
respective capital contributions are made. 3. All capital contributions in cash shall be made to the account of the
Company at the office of an authorized bank in Chengdu or, if approved by
the appropriate PRC authorities pursuant to the relevant foreign exchange
control regulations,to a bank designated by the Company outside of the PRC. 4. All capital contributions to the Company, whether in cash or kind, shall be
for the exclusive use of the Company.


ARTICLE 6.2 REGISTERED CAPITAL. 1. The registered capital shall be US$2,250,000(say US Dollars two million and
two hundred and fifty thousand) including cash and equipment. The purchase
of the said equipment should be in accordance with CHAPTER 8 of the
Contract. 2. By a unanimous consent of the Parties and the Board of Directors, the total
investment may be increased for the Company's new business development.
Party B shall be assisting fund raising for the new business development.
It needs to be approved by the Approval Authority of the government.


ARTICLE 6.3 TERMS AND CONDITIONS The terms and conditions provided by both Parties are as follows:


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1.By Party A: Huayu's software and hardware data transmission platform on its HFC network and the rights to use all its Facilities and equipment for the high speed Internet access, data transmission and network value-added business.


2.By Party B: Total cash and equipment investment required by the project to a maximum of US$5,500,000(including cash and equipment). Registered capital shall be US$2,250,000. The purchase of the said equipment should be in accordance with CHAPTER 8 of the Contract.


3.CONTRIBUTION MANNERS The contribution stipulated in the Contract shall be made in accordance with the following manner:
(1)Party A shall obtain all regulatory approvals that the Company may
require in order to conduct its business within fifteen (15) days after
the issuing date of the Business License and Party B shall be satisfied
of these approvals by obtaining a legal opinion from Chinese counsel
selected by Party B. If all relevant approvals are not obtained by Party
A within fifteen (15) days after the issuance of the Business License
due to the government policy and delay, Party A shall not be considered
to be in breach of the Contract. Should approvals not be obtained by
Party A, both Parties shall mutually agree on an appropriate extension
to obtain the relevant approvals.
(2)The initial capital contribution of US$500,000 shall be made by Party B
within thirty (30) days after all approval of relevant Approval
Authorities.
(3)All the remaining registered capital and other investment shall be made
based on the Company's operation plan and investment plan as per the
relevant provisions of China.
(4)Party A shall provide the Company with the terms and conditions of
cooperation stipulated in ARTICLE 6.3 of this Contract within fifteen
(15) days after the issuance of the Business License.


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4.During the cooperation, both Parties shall not withdraw any registered capital or vary the terms and conditions of cooperation upon which the Parties have mutually agreed.


ARTICLE 6.4 VERIFICATION OF CAPITAL CONTRIBUTIONS AND TERMS 1. A reputable international accounting firm registered in China shall be
engaged by the Company to verify the contributions of Party B and provide a
certificate of verification. The Company, upon the receipt of a
satisfactory certificate of verification, shall issue a new Certificate of
Capital Contribution to each Party. The Certificate of Capital Contribution
shall include the following items: the name of the Company, the date of
establishment, the names of the Parties and Party B's contributions, the
date on which the capital contributions were made, and the date of issuance
of the Certificate of Capital Contribution. The Certificate of Capital
Contribution shall be the conclusive evidence of Party B's capital
contribution to the Company. The Certificate of Capital Contribution shall
be effective when signed by the Chairman and Vice Chairman and the seal of
the Company is affixed thereon. 2. A law firm registered in China shall be retained by the Company to verify
the contributions of Party A and provide a certifcate of verification. The
Company, upon the receipt of a satisfactory certificate of verification,
shall issue a Certificate of Contribution to each Party. The Certificate of
Contribution shall include the following items: the name of the Company,
the date of establishment, the names of the Parties and their respective
contributions, the date on which Party A's contributions were made, and the
date of issuance of the Certificate of Contribution. The Certificate of
Contribution shall be the conclusive evidence of Party A's contribution to
the Company. The Certificate of Contribution shall be effective when signed
by the Chairman and Vice Chairman and the seal of the Company


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is affixed thereon


Article 6.5 TRANSFER OF INTEREST, RIGHTS AND OBLIGATIONS 1. In case either party to the Contract intends to assign all or part of its
interest, rights and obligations to a third party, a written consent shall
be obtained from the other party (the Non-Transferring Party). Approvals
with regard to the said transfer is required from the examination and
Approval Authority. The application for the said transfer shall be
registered with the State Administration for Industry and Commerce within
one (1) month after the approval from relevant Approval Authority. 2. If a party (the "Transferring Party") desires to transfer all or part of
its interest rights and obligations to any third party other than a
subsidiary of the Party, the Transferring Party shall secure a binding
written offer from such third party (the "Third Party Offer") to purchase
some or all of its interest, rights and obligations and the other Party to
this Contract (the "Non-Transferring Party") shall have an option,
exercisable within fifteen (15) days of the Third Party Offer, to purchase
the Transferring Party's interest, rights and obligations in the Company as
specified in this Article on the same terms and conditions as the Third
Party Offer. Such option shall be exercised by the Non-Transferring Party
giving a written notice to the Transferring Party of its exercise of such
option. 3. If any Non-Transferring Party exercises its option within the fifteen (15)
day period t ...