UNDERSTANDING BETWEEN TENGTU CHINA AND TENGTU
INTERNATIONAL CORP. GOVERNING ACTIVITIES IN CHINA
RELATING TO OPERATION MORNING SUN, NATIONAL CENTRE FOR
AUDIO/VISUAL EDUCATION AND THE MINISTRY OF EDUCATION
1. All activities of Tengtu China, investments, agreements, contracts and
undertakings entered into with the Ministry of Education for the purposes of
Operation Morning Sun, NCAVE, China Broadband Education Resources Centre, Local
Broadband Education Resources Centres and as otherwise contemplated in the
understandings with the Ministry, will be conducted on behalf of TIC and TUC
according to the joint venture agreement.
2. Tengtu China will operate in these activities as the joint- venture partner
of TIC and all investments and revenues will be accounted for under the joint
co-operation and management of Tengtu China and Tengtu International Corp., its
controller and auditors. Tengtu China and TIC will establish systematic
reporting and access to the accounts established for the business activities
related to the Ministry of Education initiatives. This is most important for
purposes of complying with the SEC Audit Regulations.
3. Tengu's partnership in the China Education Resources Centre will be
understood to be 70% interest held by Tengtu China on behalf of the TUC
joint-venture and 30% held by the Ministry of Education. Of the 70% held by
Tengtu China, 57% will be held for and assigned to TIC and which will account
for TIC's holding in the China Broadband Education Resources Centre of
approximately 40% of the joint-venture with the Ministry.
4. It is the understanding of TC and TIC that both TUC parties will work towards
consolidating the joint-venture into a single operating and incorporated entity
as soon as conditions are favorable and compliance of such an undertaking can be
met under the respective jurisdictions. In the meantime, both TC and TIC will
operate on behalf of and in the interests of the TUC joint- venture, its
partners and investors.
5. TIC agrees to raise 00 Xxxxxxx XXX which is the planned initial capital
needed for the "Morning Sun Broadband Education Resources Centre" project to be
established jointly with the NCAVE of the Ministry of Education of China. Above
terms and conditions will become effective immediately upon the completion of
the eighty million RMB financing to be raised by TIC on or before December 31,
2001.
/s/ ZHANG FANQI /S/ PAK XXXXXX
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Zhang Fanqi Pak Xxxxxx
Chairman and CEO Chairman and CEO
Tengtu Culture & Education Tengtu International Corp.
Electronics Development Co., Ltd.
April 25.2001 April 25.2001
