Exhibit (10)
JOINT VENTURE AGREEMENT
THIS AGREEMENT ("Agreement") is dated for reference the 30th day of July
1996
BETWEEN:
BEIJING TENGTU CULTURE & EDUCATION ELECTRONIC
DEVELOPMENT CO. LTD. a Chinese Company duly incorporated under
the laws of China and having an office in Beijing China.
("Party A")
AND:
TENGTU ENTERPRISES LIMITED. a Company duly incorporated under
the laws of Barbados with offices at ▇▇▇▇▇▇▇▇ House ▇▇▇▇▇ and Prince
▇▇▇▇▇▇ Streets Bridgetown Barbados.
("Party B")
(Part A and B are collectively called the Parties)
BEIJING TENGTU UNITED ELECTRONICS DEVELOPMENT CO LTD a Chinese
Foreign Joint Tengtu United with offices at ________
(Tengtu United)
WHEREAS:
A. Party A has acquired certain licence and rights as described on Schedule
A (Rights) in connection with its principal business (Business) being the
production and distribution of educational software in China to the
elementary, middle and junior schools (Schools System).
B. Party A is controlled by three Chinese state organizations Legend Group
Co., Taiji Computer Corporation, and Great Wall Computer Group Co (Chinese
Principals).
C. Tengtu United is a Chinese Foreign Joint venture that is authorized to
assume the Business of Party A with foreign investors upon certain
financial commitments being made by Party B as described herein.
D. Blue Lake Industries Ltd a Washington State Company was approved by
MOFTEC as a foreign investor in Tengtu United on June 12th 1995 (Effective
Date) and has under separate agreement effective July 30th 1996 assigned
its interests to Party B.
E. The parties hereto have agreed to form this joint venture upon entering
this agreement which sets out the terms and conditions under which Tengtu
United will operate the Business.
NOW THEREFORE IN CONSIDERATION of the mutual promises contained herein,
the parties hereto agree as follows:
1.2 Purpose and Scope
-----------------
Tengtu United has been formed to carry on the business of Party B to:
(a) produce and distribute in China by the year 2001 5,000 electronic
educational software titles in accordance with the Rights;
(b) produce and distribute animated cartoons in association with
Chinese animation companies and as permitted by law;
(c) be a gateway for electronic publishing in China;
(d) engage in such other activities as are reasonably incidental to the
foregoing.
1.3 Scope of Authority
------------------
Except as otherwise expressly and
specifically provided in this Agreement, neither Party A or Party B shall have
the authority to act for or assume any obligations or responsibility on behalf
of the other or Tengtu United. Neither Party A or Party B shall be liable to
each other for any expense, damage, loss or liability as may be caused by the
gross negligence or willful neglect of that other or by a failure by that other
to carry out the obligations of the other under this Agreement. This Agreement
shall not be deemed to create a general partnership between the Party A or Party
B it respect to any activities whatsoever.
1.4 Principal Place of Business
---------------------------
The principal place of business of the Tengtu United shall be in Beijing China
however the principal place of business may be changed at any time by a
resolution of the Board.
1.5 Term
----
The term of the Tengtu United will commence as of the date hereof and shall
continue, for a term no less than 20 years from the Effective Date unless sooner
terminated, in accordance with other provisions of this Agreement ("Term").
2. Responsibilities of Party A:
(a) To transfer and assign the Rights to Tengtu United;
(b) To transfer and assign the Titles and all work in progress in new
Titles to Tengtu United;
(c) To transfer and assign all material contracts used in the Business
to Tengtu United;
(d) To allow Tengtu United to use all equipment including computer work
stations that Party A used in the business at no cost;
(e) To stop all operational activities in connection with the Business;
and
(f) To assist Tengtu United in securing future rights that relate to
its Business and assist Tengtu United to maintain good relations between
Tengtu United and all governmental and state agencies.
3. Responsibilities of Party B
(a) To pay to Tengtu United the sum of $12,000,000 US as follows:
(i) 6,000,000 on or before July 30th 1996; and
(ii) $6,000,000 on or before July 30th 1997 failing which
interest will be payed to Tengtu at the rate of 1% over the average
Libor rate (Interest) over the period that the said funds are in
default and if the said funds are not paid by January 1st 1998 the
Party B's percentage interest in Tengtu United will reduce by an amount
equivalent to the percentage of the amount actually contributed less
interest over $12,000,000.
MANAGEMENT
----------
3.1 Directors
(a) The parties agree that the Board of Directors (Board) of Tengtu
United will consist of equal representation where Party A selects the
Chairman of Tengtu United and Party B selected the President of Tengtu
United.
(b) The Parties agree that the Board of Directors will create a Board
composed of an equal representative of each Party or so many more
thereafter as the Tengtu Uniteds agree.
(c) The quorum at any meeting of the Board shall be two persons,
provided each of party A and B is represented by its
representative(s).
(d) A resolution of the Board shall be passed by a majority vote
and each representative is entitled to one vote.
3.2 Meetings of the Board
---------------------
(a) The board shall convene and meet as needed.
(b) Any action required to be taken by the Board may be taken without a
meeting if all the members of the Board entitled to vote thereon consent in
writing to such action, whether such written consent shall be in the form
of a handwritten, typewritten or in the form of a telecopy of a signed
copy.
(c) The Board in conducting any meeting may, in lieu of a face to fact
meeting, conduct such meeting by conference telephone or other
communications facility by means of which all persons participating in the
meeting can hear and speak to each other.
3.3 Duties of the Board
-------------------
Except as otherwise expressly provided, the overall management and control of
the affairs of the Tengtu United shall be vested in the Board which shall have
control over the day to day business of the Tengtu United, including the power
to assign duties, approve budgets, sign contracts, pay accounts and assume
direction of business operations subject to the specific control of the Tengtu
Uniteds.
3.4 Manager of the Tengtu United
----------------------------
Except as otherwise expressly provided herein, the day to day management of the
Tengtu United may be undertaken by the President and a General Manager who will
be appointed from time to time by the Board.
3.7 Other Business Activities
-------------------------
The Tengtu China many engage in or possess any interest in any other business of
any nature or description EXCEPT any business that competes directly or
indirectly with Tengtu United independently or with others..
4. Proprietary Rights
------------------
The parties agree that Tenngtu United absolutely retains ownership to the Rights
and any rights or technologies hereafter acquired and or developed.
5. Confidentiality
---------------
(a) Each Party from time to time shall disclose to the other and to Tengtu
United orally or in writing, any Confidential Information which is necessary for
the Business. If such disclosure is made in writing, it shall be marked with a
legend "Confidential".
(b) Each Party will also treat all Confidential Information developed within the
Tengtu United as if it were the Tengtu United's own Confidential Information.
6. CAPITAL, DISTRIBUTIONS AND COSTS
--------------------------------
6.1 Percentage Interest
-------------------
Except as hereinafter provided, the Parties agree tht they have the following
interests ("Percentage Interest") in Tengtu United:
Party A - 51%
Party B - 49%
and that, save and except as otherwise provided herein, they shall each share in
the profits or losses of the Tengtu United and in all distributions of assets of
the Tengtu United in accordance with their respective Percentage Interests.
6.2 No Interest on Capital
----------------------
No interest shall be paid upon any contributions to the capital of the Tengtu
United nor upon any undistributed or reinvested income or profits of the Tengtu
United.
6.3 Withdrawals of Capital
----------------------
Except as otherwise provided herein, no portion of any capital of the Tengtu
United may be withdrawn at any time without the express consent of the Board to
be given by resolution. Upon the termination of the Tengtu United, the Tengtu
United's capital shall be distributed pursuant to this agreement.
6.4 Distributions
-------------
(a) Not more than 30 days following the end of each fiscal quarter the Board
shall, by resolution, determine from the net cash flow of the Tengtu United the
cash available for distribution (the "Cash Available for Distribution").
(b) The Cash Available for Distribution shall be distributed to the Parties by
resolution of the Board in accordance with each parties Percentage Interest.
7.0 ACCOUNTING ---------- 7.1 Books and Records ----------------- The Board
shall appoint an international outside audit firm to report on the affairs of
Tentgtu United. Internally it shall cause accurate books and records of account
to be prepared and maintained and in which shall be entered all matters relating
to the Tengtu United, including all income, expenditures, assets and liabilities
thereof. Such books and records of account shall be kept in accordance with
generally accepted accounting principals and practices and shall be adequate to
provide each Party with all financial information as may be needed by them or an
affiliate for purposes of satisfying the financial reporting obligations of each
Party or its respective affiliate which in the case of Party B requires
quarterly reporting. Said books and records of account shall be open to
examination and/or audit by any of the Partys or their authorized
representatives at all reasonable times during the normal business hours. Any
expense for such examination and/or audit shall be borne by the Tengtu United
causing it to be conducted.
7.2 Fiscal Year
-----------
The fiscal year end of the Tengtu United shall be determined by resolution of
the Board. If the Tengtu United shall terminate for any reason provided herein,
the period following the last day of the fiscal year of the Tengtu United first
preceding the date of such termination and ending on the date of such
termination, shall also be deemed to be a fiscal year of the Tengtu United.
7.3 Bank Accounts
-------------
Funds of the Party B shall be deposited in an account(s) in the name of the
Tengtu United and in a bank(s) approved by the Board. The designate of the Board
may draw against such accounts for any purpose permitted by this Agreement in
accordance with a Board resolution.
8.0 Sale and Transfer
-----------------
8.1 General
-------
Except as expressly permitted herein no Party may mortgage, charge or otherwise
encumber, or suffer any third party to mortgage, charge or otherwise encumber,
any part or all of its interest in the Tengtu United ('Interest") unless
approved by the other Party such approval not to be unreasonably withheld.
8.2 Sale to Affiliate
-------------------
A Party may sell, transfer or otherwise dispose of the whole or any part of its
Interest to an affiliate provided that the Party and the affiliate enter into an
agreement with the other Tengtu United that:
(a) an affiliate will remain such so long as the affiliate holds the
Interest or any part thereof;
(b) prior to the affiliate ceasing to be such, the affiliate will
transfer its Interest back to the Party or to another affiliate of the
Party provided that such other affiliate enters into a similar agreement
with the other Party; and
(c) the affiliate will otherwise be bound by and have the benefit of
the provisions of this Agreement.
9.0 DEFAULT AND DISSOLUTION
-----------------------
9.1 Events of Default
-----------------
The occurrence of any of the following events shall constitute an event of
default ("Event of Default") hereunder:
(a) the failure by a Party to make any capital contribution as required
in herein;
(b) any transfer by a Party of its Interest hereunder, except as may be
permitted herein;
(c) a general assignment by a Party for the benefit of creditors;
(d) the filing by a Party of a petition of Bankruptcy which petition
remains undismissed and undischarged for a period of 90 days.
(e) default in performance of any other material agreements of a Party
herein if the default continues for a period of 60 days following written
notice of such default, except that an Event of Default shall not be deemed
to have occurred if any such default is of a non material nature or that it
reasonably requires more than 60 days to cure, and is capable of being
fully cured within a reasonable time, and the defaulting Party is
diligently proceeding to cure said default.
9.2 Causes of Dissolution
---------------------
The Tengtu United shall be dissolved in the event that:
(a) an Event of Default has occurred and the non-defaulting Party
elects to dissolve the Tengtu United as provided herein;
(b) the Board determines by resolution to terminate the Tengtu United;
(c) the Tengtu United by its terms is terminated.
9.3 Election
--------
(a) If an Event of Default has occurred, the non-defaulting Party, if
it so notifies the defaulting Party within thirty (30) days after acquiring
knowledge of such Event of Default, may elect to terminate the said Party
pursuant to this Agreement;
(b) The election shall be exercised by written notice. No waiver of any
right to so elect upon a subsequent or continuing default of the same or
different nature shall be implied from any failure on the part of a
non-defaulting Party to make the election permitted by agreement as a
result of any prior Event of Default.
9.4 Procedure in Dissolution and Liquidation
----------------------------------------
(a) Upon the election of a Party to dissolve the Tengtu United pursuant
to this agreement or upon the occurrence of any other event Tengtu United
shall immediately commence to wind up its affairs and the Party shall
proceed with reasonable promptness to liquidate the business of Tengtu
United. To the extent the Tengtu United is not completely liquidated within
a reasonable time (not to exceed 36 months) from the date of the election
to dissolve, the remaining assets shall forthwith be disposed of at a
public sale.
(b) During the period of the winding up of the affairs of the Tengtu
United, the Board shall continue to manage the affairs of the Tengtu
United.
(c) Profits and losses of the Tengtu United shall be determined as of
the end of the period of winding up in accordance with the provisions of
this Agreement and shall be credited or charged to each Party in the same
manner as profits and losses of each Party would have been credited or
charged if there were no dissolution, liquidation and termination.
(d) The assets of the Tengtu United shall be applied or distributed in
liquidation in the following order of priority:
(i) to creditors of the Tengtu United other than Tengtu Uniteds in
payment of debts and obligations of the Tengtu United;
(ii) to each Party as return of any capital; and
(iii) to each party in accordance with their Percentage Interest.
10 SETTLEMENT OF DISPUTES AND GOVERNING LAW
----------------------------------------
10.1. In the event a dispute arises in connection with the interpretation or
implementation of this Agreement, the parties to the dispute shall attempt in
the first instance to resolve such dispute through amicable consultations If the
dispute cannot be resolved in this manner within thirty (30) days after first
conferring, then any or all parties to the dispute may refer the dispute to
arbitration in Beijing International Arbitration Committee ("Committee"). The
number of arbitrators shall be three. The arbitration proceedings shall be
conducted in the Chinese language.
10.2 Any award of the arbitrators shall be final and binding on the parties. The
costs of arbitration shall be borne by the losing party, unless the arbitrators
determine that this would be inequitable. The parties agree and recognize that
any award of the arbitrators shall be recognizable and enforceable in any court
having jurisdiction over the party against whom the award was rendered, and also
wherever assets of such party are located.
10.3 The legal relations between the parties under this contract shall be
interpreted in accordance with the substantive laws of China. Any disputes
between the parties concerning their legal obligations arising under this
contract which are submitted to arbitration pursuant to this clause shall be
decided pursuant to the substantive laws of China.
11.0 GENERAL PROVISIONS
------------------
11.1 Complete Agreement
------------------
This agreement constitutes the entire agreement between the Parties and
supersedes all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof, and neither Party shall be bound by or charged with any oral or written
agreements, representations, warranties, statements, promises or understandings
not specifically set forth in this agreement. This Agreement may not be amended,
altered or modified except in writing, signed by each of the Parties.
12.0 Notice
-------
12.1 Notices as to disputes or termination to be given under this Agreement
shall be signed by the party giving such notice and mailed by certified or
registered mail, addressed to the party to be notified at its then current
business address as set forth at the beginning of this Agreement or as
subsequently changed by giving notice. Notice as to address changes, pricing
changes, warranty changes and other matters relating to policy and business may
by given to such addresses, by facsimile transmission, telex, telegram or first
class mail. Notices by mail shall be deemed given three days after mailing.
12.3 Lawyers Fees
------------
Should any litigation be commenced between the Parties or their representatives
or should any Party institute any proceedings in a bankruptcy court which has
jurisdiction over any other Party or any or all of its property or assets
concerning any provision of this Agreement or the rights and duties of any
person or entity in relation thereto, the Party prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorny's fees and court costs in such litigation
which shall be determined by the court in such litigation or in a separate
action brought for that purpose.
12.4 Validity
--------
In the event that any provision of this Agreement shall be held to be invalid,
the same shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.
12.5 Survival of Rights
------------------
Except as provided herein to the contrary, this Agreement shall be binding upon
and enure to the benefit of the Parties their respective successors, heirs and
permitted assigns.
12.6 Governing Law
-------------
This Agreement has been entered into in the China and all questions with respect
to the Agreement and the rights and liabilities of the Parties shall be governed
by the laws of China and this agreement shall be written in both Chinese and
English and both contracts shall had equal force and if an inconsistency then
such shall be resolved by arbitration under the arbitration provision hereunder
12.7 Waiver
------
No consent to or waiver of, express or implied, by any Party of any breach or
default in the performance by a Party of any term of this Agreement shall be
deemed to be a waiver of the same or any other obligations of such Party
hereunder. Failure on the part of any Party to complain of any act or failure to
act of the other Party or to declare the other Party in default, irrespective of
how long such failure continues, shall not constitute a waiver by such Party of
its rights hereunder.
IN WITNESS WHEREOF the Parties have executed or caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BLUE LAKE INDUSTRIES LIMITED . )
in the presence of: )
)
__________________________________ )
Authorized Signatory
BEIJING TENGTU CULTURE &
EDUCATION ELECTRONIC
DEVELOPMENT CO LTD )
in the presence of: )
)
________________________________ )
Authorized Signatory
BEIJING TENGTU UNITED
ELECTRONICS DEVELOPMENT CO LTD )
in the presence of: )
)
____________________________________ )
Authorized Signatory
Exhibit (
Note 3:
List of Education Softwares
List of Education Softwares and the Current Condition
No Name of Projects Item Cooperative Condition Cost (RMB 10,000)
1 Legend maths for elementary school Book I 1 Legend completed 30
2 Legend maths for elementary school Book II 1 Legend completed 30
3 Legend maths for elementary school Book III, IV 1 Legend completed 50
4 Legend maths for elementary school Book V, VI, VII 1 Legend completed 80
5 Legend maths for elementary school - comprehensive exercise 1 Legend completed 50
6 Collection of Difficult Questions-conditions of sinking & floating as
well as their applications-junior high physics
7 Collection of Difficult Questions-image of lens-junior high physics 1 school completed 28
8 Collection of Difficult Questions-regular instruments for measurement
and survey-junior high physics
9 Collection of Difficult Questions-five elements for leverage-junior
high physics 1 school completed 23
10 Collection of Difficult Questions-Oscilloscope-senior high physics
Grade 10 1 school completed 38
11 Collection of Difficult questions-▇▇▇▇▇ movement-senior high physics
Grade 10 1 school completed 39
12 Collection of Difficult Questions-Nature of Gas-senior high physics
Grade 10 1 school completed 37
13 Collection of Difficult Questions-tests on nature of gas senior high
physics Grade 10
14 Collection of Difficult Questions-law of Boma-senior high physics
Grade 10 1 school completed 32
List of Education Softwares and the Current Condition
15 Collection of Difficult Questions-exercises for high-energy atomic
core-senior 1 school completed 39 high physics Grade 11
16 Collection of Difficult Questions-teaching of high atom-senior high
physics Grade 1 school completed 30 11
17 Collection of Difficult Questions-effects of light and
electricity-senior high 1 school completed 25 Grade 11
18 Collection of Difficult Questions-light interference-senior high
Grade 11 1 school completed 28
19 Collection of Difficult Questions-functional image of electric
circuits-senior 1 school completed 40 high Grade 11
20 Collection of Difficult Questions-waves-senior high Grade 11 1 school
completed 38
21 Collection of Difficult Questions-Equilibrium of electromagnetic
mechanics-senior 1 school completed 49 high Grade 11
22 Collection of Difficult Questions-nature of static electric
field-senior high 1 school completed 46 Grade 11
23 Collection of Difficult Questions-general knowledge of use of
electricity-senior 1 school completed 49 high Grade 11
24 Collection of Difficult Questions-alternate current-senior high Grade
11 1 school completed 45
25 Collection of Difficult Questions-making charts by using five
points-senior high 1 school completed 45 algebra
26 Collection of Difficult Questions-functional curves of sine 1 school completed 46
27 Collection of Difficult Questions-equation of index 1 school completed 48
28 Collection of Difficult Questions-biology (structure of heart) 1 school completed 54
29 Collection of Difficult Questions-biology (respiratory system) 1 school completed 50
30 Collection of Difficult Questions-curves-senior high algebra 1 school completed 28
List of Education Softwares and the Current Condition
31 1+1 paradise 1 Legend completed 15
32 Funny games-international chess 1 Zili completed 20
33 Funny games-toy bricks building 1 Legend completed 16
34 Funny games-loan carrier 1 Legend completed 12
35 Funny games-brick builder 1 Legend completed 18
36 Extracurricular assistance for elementary school-charts of numbers
and arrays 1 school completed 20
37 Extracurricular assistance for elementary school-maths games 1 school completed 30
38 Extracurricular assistance for elementary school-numbers, lines, and
sections 1 school completed 20
39 Extracurricular assistance for elementary school-spelling games 1 school completed 26
40 Extracurricular assistance for elementary school-games of Chinese
characters 1 school completed 38
41 Extracurricular assistance for elementary school-exercise of Chinese
idioms 1 school completed 36
42 Extracurricular assistance for elementary school-▇▇▇▇ test 3Q test
software 1 school completed 20
43 The ABC of computer-keyboard tutor 1 school completed 14
44 The ABC of computer-extrance to computer 1 school completed 15
45 Question bank of intelligence-senior high English family-staple
product of Legend 1 Legend completed 65
46 Question bank of intelligence-senior high English family-staple
product of Legend 1 Legend completed 60
47 Question bank of intelligence-senior high English family-staple
product of Legend 1 Legend completed 40
48 Question bank of intelligence-senior high English family-staple
product of Legend 1 Legend completed 46
49 Composition master-Legend magic cube 1 legend completed 50
50 Collection of Difficult Questions-ancient Rome senior high history 1 school completed 20
51 Collection of Difficult Questions-ancient drifting senior high
geography 1 school completed 15
List of Education Softwares and the Current Condition
52 24 points 1 Legend completed 15
53 Nature of gas 1 school completed 18
54 Numbers, arrays and charts (I) 1 school completed 23
55 Numbers, arrays and charts (II) 1 school completed 22
56 Numbers, arrays and charts (III) 1 school completed 22
57 Visiting labyrinth 1 school completed 18
58 Monkey King fights out 1 school completed 18
59 Question on sums and difference 1 school completed 10
60 Cute brain 1 school completed 10
61 Comprehensive shapes 1 school completed 10
62 Nature of condensor 1 school completed 10
63 Question of chasing 1 school completed 14
64 Story of ▇▇▇▇ ▇▇▇▇ 1 school completed 15
65 Electric circuits 1 school completed 17
66 Arrangements of arrays 1 school completed 18
67 Intelligence challenge 1 school completed 12
68 Triangles 1 school completed 18
69 Intelligence test (I) 1 school completed 10
70 Intelligence test (II) 1 school completed 10
71 Introduction to plane geometry 1 school completed 18
72 Contest on applied questions 1 school completed 18
List of Education Softwares and the Current Condition
73 Contest on addition and subtraction 1 school completed 18
74 Contest on multiplication and division 1 school completed 18
75 Equation solution 1 school completed 18
76 Four mixed calculations for fractions 1 school completed 15
77 Four mixed calculations for decimals 1 school completed 15
78 Four mixed calculations for whole numbers 1 school completed 15
79 Additions 1 school completed 15
80 Questions of 2-4 1 school completed 15
81 Shapes for elementary school (I) 1 school completed 15
82 Shapes for elementary school (II) 1 school completed 18
83 Shapes for elementary school (III) 1 school completed 18
84 Arithmetics for BCS 1 school completed 15
85 Questions of arithmetics for elementary school 1 school completed 10
86 Quadrilateral 1 school completed 18
87 Rotating substance 1 school completed 16
88 Multi-facet substance 1 school completed 16
89 Volume 1 school completed 16
90 Cubic plane 1 school completed 15
91 The ABC of computer 1 People's
Ed P completed 9.4
92 Asking for directions 1 school completed 18
93 History 1 school completed 28
List of Education Softwares and the Current Condition
94 Conditions of sinking and floating in physics 1 school completed 28
95 Cubic geometry (straight lines in different planes) 1 school completed 16
96 Texts of Classical Chinese 1 school completed 15
97 Dictionary of basic Chinese characters 1 People's
Ed P completed 160
98 An old Beijing hand 1 Zili completed 110
99 Textbook series for junior high physics 2 ▇▇▇▇▇▇▇
▇▇ P uncomplete 80
100 Textbook series for junior high chemistry 2 ▇▇▇▇▇▇▇
▇▇ P uncomplete 90
101 Textbook series for junior high maths 6 ▇▇▇▇▇▇▇
▇▇ P uncomplete 180
102 Textbook series for junior high English 6 ▇▇▇▇▇▇▇
▇▇ P uncomplete 100
103 Textbook series for junior high biology 3 ▇▇▇▇▇▇▇
▇▇ P uncomplete 60
104 Textbook series for junior high geography 3 ▇▇▇▇▇▇▇
▇▇ P uncomplete 60
105 Textbook series for junior high history 6 ▇▇▇▇▇▇▇
▇▇ P uncomplete 60
106 Textbook series for junior high Chinese 1 ▇▇▇▇▇▇▇
▇▇ P uncomplete 120
107 Comprehensive review of English for exam 1 ▇▇▇▇▇▇▇
▇▇ P uncomplete 20
108 Memory of English words 1 Zili completed 8
List of Education Softwares and the Current Condition
109 English for elementary pupils 4 ▇▇▇▇▇▇▇▇ ▇▇ P uncomplete 85
110 Cartoons and VCD 26 Artist Studio completed 800
111 Animation cartoon books 12 Artist studio completed 480
112 Chinese conversations 1 Taiwan completed 60
113 Family beauty expert 1 Zili completed 80
114 English prepositions 1 TV education completed 10
115 Comprehensive review of Chinese for entrance exam 1 People's ed P uncomplete 25
116 Comprehensive review of history for entrance exam 1 People's ed P uncomplete 25
117 Comprehensive review of biology for entrance exam 1 People's ed P uncomplete 25
118 Comprehensive review of maths for entrance exam 1 People's ed P uncomplete 25
119 Comprehensive review of chemistry for entrance exam 1 People's ed P uncomplete 25
120 Comprehensive review of physics for entrance exam 1 People's ed P uncomplete 25
Total Costs: RMB 52,174,000
Exhibit (10)
AMENDMENT AND EXPLANATION OF RESTATED
AGREEMENT EFFECTIVE RETROACTIVELY TO JUNE 1, 1995
WHEREAS, the parties of the Joint Venture Contract dated as of June 1,
1995, as restated by amendment, have agreed to incorporate the following
amendments and explanations into this contract to restate and clarify certain
items, including (i) the terms upon which the parties have agreed to contribute
to the Joint Venture; and (ii) the relationship among the parties and the Joint
Venture.
Contribution
------------
The total amount of investment to be contributed by the Tengtu
International Corporation ("TIC"), which has been substituted for Tengtu
Enterprises Limited, a proposed subsidiary of TIC which was not utilized for
this transaction, shall be US $12,000,000 in cash. To date, TIC has contributed,
or caused to be contributed, US $6,000,000 contribution to the Joint Venture. It
is intended that the remaining US $6,000,000 contribution to the Joint Venture
to be made, or caused to be made, by TIC shall be through a subsidiary of TIC,
either Transcontinental Multimedia Inc., or CRC Bermuda Corp. (to be formed in
the future) upon the completion of the next major financing by TIC. TIC's equity
interest in the Joint Venture shall be adjusted from 49% to 57% retroactive to
June 1, 1995.
Beijing Tengtu Culture & Education electronics Development co., Ltd.'s
("Tengtu China") contribution to the Joint Venture shall be the assignment of
its contract with People's Education Press ("PEP") to supply virtually all
textbooks, educational software and other educational materials for use in or by
all elementary, middle and high schools and junior colleges in China. There
shall be no other intangible assets to be contributed by Tengtu China except the
right to the PEP contract. The value of the PEP contract assigned to the Joint
Venture shall be a 43% interest in the Joint Venture. Tengtu China has also
transferred rights to ceratin educational software, both developed or in the
process of being developed, and certain equipment, or the use thereof, as
required by the initial Joint Venture agreement. Due to the rapidly changing
technology and market conditions, the owners of the Joint Venture agree and
acknowledge that this software and this equipment had no fair market value as of
the date(s) of transfer or, where applicable, usage of equipment.
The contributions from Blue Lake USA (RMB 33,971,683) mentioned in Note
7 to the Financial Statements of Tengtu China (included in the August 1996
Tengtu International Corporation Private Placement Memorandum) will not be
transferred to the Joint Venture. These contributions were not related to the
formulation of the Joint Venture and were not related to the subsequent receipt
by Blue Lake USA of the two million shares and US $100,000 cash received from
TIC in exchange for Blue Lake USA's interest in the Joint Venture in June 1996.
Profits and Losses of the Joint Venture
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The parties have agreed that Tengtu China shall not be required to
share in or be responsible for any losses incurred by the Joint venture.
After-tax profits may not be distributed to TIC until the total US $12,000,000
cash has been contributed to the Joint Venture by TIC. Furthermore, after-tax
profits may not be distributed to any parities unless the losses from previous
years have been recouped and TIC has received back all the cash contributions,
without interest, contributed or caused to be contributed, by it to the Joint
Venture. Thereafter, profits, when and if distributed, shall be allocated 43% to
Tengtu China and 57% to TIC.
Effective Date
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The Restated Joint Venture Contract and this Amendment and Explanation,
upon execution, shall supersede the previous Joint Venture Contract and be
effective retroactively to June 1, 1995.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
explanation to be executed.
TENGTU INTERNATIONAL CORPORATION
Date: March 26, 1998 ______________________________
By:
BEIJING TENGTU CULTURE & EDUCATION
ELECTRONICS DEVELOPMENT CO., LTD
Date:March 26, 1998 ______________________________
By:
EXHIBIT (10)
DIRECT EFFECT Program Agreement
CONTRACT # 11174
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