ChinaNet Online Holdings, Inc. has signed an exclusive agreement with Shanghai Rural Commercial Bank (SRCB) to deploy its online banking and display advertising kiosks in all 300 existing and all future SRCB branches.

Under the agreement, ChinaNet plans to deploy kiosks in SRCB’s 300 branches in Shanghai by the end of September 2010. The SRCB agreement brings ChinaNet’s total number of kiosks currently contracted for deployment to 500, which includes 200 kiosks at China Construction Bank Henan Branch (CCB), under an exclusive and renewable eight-year agreement with CCB. In addition to the SRCB and CCB deployments, ChinaNet expects to deploy by year-end 2010 400 more kiosks in Henan province as well as 600 additional kiosks in other cities such as Hangzhou, Suzhou and Wuxi in the highly developed and rapidly growing Yangtze River Delta area around Shanghai. By year-end 2010, ChinaNet plans to have a total of 1,500 installed online kiosks, and expects these 1,500 kiosks to generate contract fees and online ad sale revenues totaling approximately $1.0 million in 2010.

Through the cooperative agreement between SRCB and ChinaNet, SRCB will facilitate deployment of the kiosks and be responsible for developing the information management system, while ChinaNet will be responsible for providing content and for hardware and software maintenance. All advertising content, which will consist of third party advertisements for both PRC and global companies, must be related to finance, banking, personal loans, insurance, stock, and online banking, and will be subject to approval by SRCB. This content will be accompanied by at least two hours per day of SRCB advertising. The term of the agreement is for two years with automatic one-year renewals upon mutual consent of ChinaNet and SRCB.

ChinaNet estimates a payback of one and a half years for all bank kiosk equipment deployed, with above-average margins and a recurring, growing stream of advertising revenue. ChinaNet plans to use next-generation, 42-inch high-resolution screens in its kiosks in SRCB branches and all other future deployments, which could result in lower deployment costs per branch. In addition, ChinaNet will be integrating new technology patented by the Company that provides centralized control of every kiosk screen and enables uploading of customized content to different branch locations from its Beijing headquarters.

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