Management Agreement

Management Agreement


Exhibit 10.7

                              MANAGEMENT AGREEMENT


This Agreement is dated this 29th day of June, 1999


BETWEEN

         CathayOnline Technologies (Hong Kong) Ltd., a company duly incorporated
         under the laws of the Hong Kong Special  Administrative  Region  ("Hong
         Kong"), the People's Republic of China ("PRC") (the "Company")

AND

         Owen Li LI, a  Canadian  citizen,  having an  address  at 10831  Anahim
         Drive, Richmond, B.C., V7A 3C6 Canada (the "General Manager")


WHEREAS:






A.   The  Company  is  wholly  owned  beneficially  by  CathayOnline  Inc.  (the
     "Parent");

B.   The  Company  wholly  owns  Sichuan  CathayOnline   Technologies  Co.  Ltd.
     ("WOFE"), which is a wholly foreign-owned enterprise duly established under
     the laws of the PRC;

C.   The Parent is a limited liability company duly incorporated  under the laws
     of Nevada,  the United States of America and is currently a publicly traded
     company on NASDAQ OTC: BB (Stock Symbol: CAOL);

D.   The Company intends,  through the WOFE, to invest up to US$1,000,000 in the
     first phase of its projected business operations in internet-related sector
     in the PRC (the "PRC Project");

E.   For the first phase operation, the WOFE entered, in June, 1999 with Sichuan
     Guo Xun Xin Xi  Chan  Ye You  Xian  Gong  Si("Sichuan  Guo  Xun."),  into a
     management  and  consultancy  service  agreement   ("Management/Consultancy
     Agreement"),  pursuant to which the WOFE will provide  certain  management,
     consultancy  and  technical  assistance  services  to  Sichuan  Guo  Xun in
     relation to the Project; and

F.   The  Company  wishes to retain  the  services  of the  General  Manager  in
     relation  to the  carrying  out  the  business  and  affairs  of the  WOFE,
     implementing the Management/Consultancy  Agreement, the Project, as well as
     the PRC Project and the General  Manager wishes to provide such services to
     the Company.

IN  CONSIDERATION  OF mutual  promises and other  valuable  considerations,  the
receipt and sufficiency of which are hereby  acknowledged,  the Parties agree as
follows:


                           ARTICLE I - INTERPRETATION

1.1      In this Agreement, the following definitions apply:

(1)               "Working Day" in relation to  performance of any obligation by
                  a  party  means  a day  other  than a  Saturday,  Sunday  or a
                  statutory  holiday in the place where such obligations will be
                  performed;

(2) "Services" means the following managerial and other services:

(a)  Recruiting and training personnel for the WOFE in relation to the Project;

(b)                        Managing  the day to day  business and affairs of the
                           WOFE,  including  keep monthly report and accounts of
                           the WOFE;

(c)      Marketing the services of the Project to customers; and

(d)                        Any other reasonable service requested by the Company
                           from time to time in  relation to the Project and the
                           PRC Project in general.

(3)  "Term" means a period of three (3) years,  commencing from the date of this
     Agreement; and

(4)               Where   applicable,   the   definitions   contained   in   the
                  Management/Consultancy  Agreement  and the WOFE's  Articles of
                  Association  are  hereby   incorporated  by  reference  as  an
                  integral part of this  Agreement and shall have the same legal
                  effect as other parts of this Agreement.

1.2  Words  importing  the singular  only also include the plural and vice versa
     where the context so requires.

1.3  Headings  used herein are for ease of  reference  only and shall not affect
     the interpretation of this Agreement.


                       ARTICLE II - PROVISION OF SERVICES

2.1      Subject to the terms and  conditions  of this  Agreement,  the  Company
         hereby  retains the General  Manager for the  provision of the Services
         and the General  Manager  agrees to provide  such  Services  during the
         Term.

2.2      The Company reserves the rights to adjust the scope of the Services and
         to perform part or all of the Services by itself, when and if necessary
         and practical.


              ARTICLE III - THE PARTIES' OBLIGATIONS AND COVENANTS

3.1 The Company  agrees with the General  Manager  throughout  the Term that the
Company will:

(1)  Support the General  Manager in its efforts to provide the  Services to the
     Company;

(2)               Supply the General Manager with  information in its possession
                  as permitted by law and/or regulatory  authorities to which it
                  may be  subject  which  may  assist  the  General  Manager  in
                  providing the Services; and

(3)               Indemnify  the  General  Manager  from and against any and all
                  loss,  damage or liability  whether criminal or civil suffered
                  and  legal  fees and costs  incurred  by the  General  Manager
                  resulting  from the breach of this  Agreement  by the  Company
                  including any act,  neglect or default of the Company provided
                  that such liability has not been incurred  through any default
                  by the General  Manager in relation to his  obligations  under
                  this Agreement.

3.2 The General  Manager  agrees with the Company  throughout  the Term that the
General Manager will:

(1)      At all time work diligently to provide the Services to the Company;

(2)               Without the prior written consent of the Company,  not receive
                  any undisclosed,  hidden or illegal profit or benefit, whether
                  in cash, in kind or otherwise,  from any third parties  during
                  the provision of the Services;

(3)      Pay the Company and/or the WOFE promptly all sums due to the Company;

(4)               In all  matters act  loyally  and  faithfully,  as the Company
                  Vice-President   (China  Project  Development)  and  in  other
                  capacity, for the best interest of the Company;

(5) Obey the Company's  reasonable  orders and  instructions  in relation to the
provision of the Services;

(6)               In the  provision  of its  Services  strictly  comply with all
                  applicable laws,  by-laws and requirements of any governmental
                  or regulatory  authorities of every  jurisdiction in which the
                  General Manager, the Company or the Parent operates;

(7)               Not at any time during the Term and for three years thereafter
                  divulge or allow to be divulged to any person any confidential
                  information   concerning  the  Company's   and/or  the  WOFE's
                  business (including  confidential  information protected by or
                  subject to other agreements to which the Parent,  the Company,
                  the WOFE or any  affiliates  of the  Parent is a party)  other
                  than to persons who have signed a confidentiality  undertaking
                  in the form  approved  by the  Company or to  governmental  or
                  judicial authorities under compulsion of law; and

(8)               Indemnify  the  Company  from and  against  any and all  loss,
                  damage or  liability  whether  criminal or civil  suffered and
                  legal fees and costs  incurred by the Company  resulting  from
                  the breach of this Agreement by the General Manager  including
                  any act,  neglect or default of the General  Manager  provided
                  that such liability has not been incurred  through any default
                  by the  Company  in  relation  to its  obligations  under this
                  Agreement.


                            ARTICLE IV - PERFORMANCE

4.1      In providing  the Services,  the General  Manager will try all means to
         achieve  the  following  to the best of his ability for the WOFE during
         the Term:

(1)  To procure  2,500  internet  service  provider  ("ISP")  customers  for the
     Project within 12 months of this Agreement;

(2)  To procure  7,500 ISP  customers  for the Project  within 24 months of this
     Agreement; and

(3)  To procure  16,000 ISP customers  for the Project  within 36 months of this
     Agreement.


                            ARTICLE V - COMPENSATION

5.1      For the General  Manager's  Services,  the Company shall compensate the
         General Manager in accordance with the following terms and conditions:

(1)  pay US$10,000 per month to the General  Manager at the end of each calendar
     month as follows:

(a)      US$6,500 in cash to be paid by the WOFE; and

(b)  US$3,500  equivalent in the form of common shares issued by the Parent (the
     Shares  will be priced at 10%  discount  of the  average bid for the last 5
     trading days of the month);

(2)               to the best of its ability cause the Parent to issue notice to
                  issue  in  trust  for the  General  Manager  its  shares  (the
                  "Shares") in the following numbers and schedules:

(a)                        common shares with a value equal to US$60,000 divided
                           by lower of (i) US$0.50 and (ii) the average  closing
                           price of the  shares of the Parent for three (3) days
                           preceding  the  date  of  this  Agreement  within  15
                           Working Days of the date of this Agreement;

(b)                        common shares with a value equal to US$75,000 divided
                           by lower of (i) US$0.50 and (ii) the average  closing
                           price of the  shares of the Parent for three (3) days
                           preceding  the  date  of  this  Agreement  within  10
                           Working Days after the General  Manager has notified,
                           in writing to the Parent,  that he has brought  2,500
                           ISP subscribers into the Project;

(c)                        common shares with a value equal to US$75,000 divided
                           by lower of (i) US$0.50 and (ii) the average  closing
                           price of the  shares of the Parent for three (3) days
                           preceding  the  date  of  this  Agreement  within  10
                           Working Days after the General  Manager has notified,
                           in writing to the Parent,  that he has brought  7,500
                           ISP subscribers into the Project; and

(d)                        common shares with a value equal to US$90,000 divided
                           by lower of (i) US$0.50 and (ii) the average  closing
                           price of the  shares of the Parent for three (3) days
                           preceding  the  date  of  this  Agreement  within  10
                           Working Days after the General  Manager has notified,
                           in writing to the Parent,  that he has brought 16,000
                           ISP subscribers to the Project.

5.2      The General Manager will distribute or transfer  certain numbers of the
         Shares to other employees of the WOFE as part of employee incentive. In
         such case,  the Company  shall  cause the Parent to complete  necessary
         procedures  to effect such  distribution  or transfer as  permitted  by
         applicable laws and/or regulations.


                          ARTICLE VI - NON-COMPETITION

6.1      The General Manager hereby covenants that,  without written  permission
         of the Parent,  during the Term and three years  thereafter he will not
         carry on any business or activities  which are in competition with that
         of the  Company,  the WOFE,  and/or in  relation  to the  Project  (the
         "Competing  Business") within the territory of PRC provided that during
         the  three  years  after  the Term  the  Parent  will not  unreasonably
         withhold any  permission  to allow the General  Manager to carry on the
         Competing  Business in such areas within the PRC where the Parent,  the
         Company, the WOFE and/or other affiliates of the Parent do not have any
         business interests.  This non-competition clause shall not be deemed to
         include any companies,  ventures, joint ventures, projects or the like,
         with  which the  Parent is a  shareholder  or is  working  with and the
         General Manager's valued input is required.

6.2      The General Manager hereby expressly acknowledges that the restrictions
         contained  in  Article  6.1  above  are  fair  and  reasonable  in  all
         circumstances and may be enforceable by judicial remedies  available to
         the Company  including  injunctions.  The Parties further agree that if
         the  restrictions  in Article 6.1 above shall be adjudicated to be void
         and  ineffective  for whatever  reason but would be  adjudicated  to be
         valid and  effective  should part of the wording  thereof be deleted or
         the restrictive  period or the restrictive  area reduced in scope,  the
         said  restrictions  shall  apply  with  such  modifications  as  may be
         necessary to make the restrictions valid and effective.


                             ARTICLE VII TERMINATION

7.1      The Company may serve a termination  notice on the General  Manager not
         less  than  five  (5)  Working  Days  prior  to the  intended  date  of
         termination to terminate this Agreement if the General Manager fails to
         perform his  obligations  under Article IV hereof and such failure,  if
         capable of remedy, is not remedied within 10 Working Days of receipt of
         a written notice of such failure from the Company.

7.2      The General  Manager may serve a termination  notice on the Company not
         less  than  five  (5)  Working  Days  prior  to the  intended  date  of
         termination to terminate this Agreement if the Company fails to perform
         its obligations  under Article 5.1 hereof and such failure,  if capable
         of remedy, is not remedied within ten (10) Working Days of receipt of a
         written notice of such failure from the General Manager.

7.3      Any right or remedy to which  either  party is or may  become  entitled
         hereunder or in consequence of the other's conduct may be enforced from
         time to time separately or concurrently  with any right or remedy given
         hereby or now or  afterwards  provided  for and arising by operation of
         law so that such rights and remedies are not  exclusive of the other or
         others but cumulative.

7.4      All works,  relationships,  concepts,  business plans, clients,  client
         lists and all  related  information  and  materials  ("Information  and
         Materials") are the property of the Company and not the General Manager
         and in the  event  that  this  Agreement  is  terminated  for  whatever
         reasons,  all  such  Information  and  Materials  are  to  be  returned
         immediately  to the  Company  without  any copies  having  been made or
         taken.


                 ARTICLE VIII - NO PARTNERSHIP OR JOINT VENTURE

8.1      Parties  agree  and  acknowledge  that they are not  partners  or joint
         ventures  and  nothing  herein  shall be  construed  to give  rise to a
         partnership or joint venture relationship between the Parties.

8.2      The  General  Manager  shall  not act or  purport  to act as a  General
         Manager of the Company save as expressly stated in this Agreement.


                         ARTICLE IX - GENERAL PROVISIONS

9.1 This  Agreement is governed by and construed in accordance  with the laws of
Hong Kong.

9.2      The courts of Hong Kong  shall  have  jurisdiction  to  adjudicate  any
         disputes  arising from and in relation to this  Agreement.  The General
         Manager hereby  expressly submit to the  non-exclusive  jurisdiction of
         the courts of Hong Kong and hereby  appoints  _________________________
         in Hong Kong as his agent to  receive  any legal  process  in  relation
         hereto.

9.3  Any provisions hereof held by a competent court or arbitration  tribunal to
     be invalid or illegal  shall not affect the  validity  of other  provisions
     hereof which shall remain  intact and legally  binding.  The Parties  shall
     continue to implement such other provisions.

9.4      This Agreement  shall be binding on and enure to the benefits of heirs,
         executors, administrators, successors and assigns of the Parties hereto
         provided  that the  General  Manager  shall not  assign  his rights and
         obligations  hereunder unless with express prior written consent of the
         Company.


Executed by the Parties at the place and on the date first above mentioned.


Witness                                    CathayOnline Technologies (Hong Kong)
Ltd.



_____________________________             Per:_________________ (corporate seal)

Witness                                       Owen Li LI



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