Exhibit 10.5

 

JOINT SCHOOL-RUNNING AGREEMENT

 

Party A: Education Bureau of Tianquan County, Sichuan Province

 

Party B: Changsha Huanqiu Vocational Secondary School

 

For the purposes of further fulfilling the Decision Concerning Further
Implementation of Reform and Development of Vocational Education promulgated by
the State Council, further strengthening one-to-one aiding and assistance of
vocational education, accelerating the development of county economy,
strengthening and magnifying the brand of vocational education, after sufficient
consultations, Party A (Education Bureau of Tianquan County) and Party B
(Changsha Huanqiu Vocational Education Group) make and enter into this Agreement
concerning school running cooperation, as follows:

 

I Term of Cooperation: 15 years, from Feb 20th 2006 to July 15th 2021. When the
term expires, Party A and Party B shall liquidate the school and finish the
handing-over of the school, and then their rights and obligations shall
terminate.

 

II Duties to be fulfilled and Rights to be enjoyed by Party A and Party B

 

1.Party A’s Duties and Rights

 

1.1The wage of Party A’s teachers and staff members continuing to be employed by
Party B (including retired veteran cadres and retired persons ) shall be paid by
Party A on a monthly basis. Party A shall be responsible for purchasing
insurances for them.

 

1.2Party A shall be responsible for the proper arrangement of teachers and staff
members (recruited by Party A) in accordance with relevant regulations who are
dismissed by Party B by reason of the work, and the operations of the school
shall not be affected due to such dismissal.

 

1.3The number of the students studying at the school shall be 800 to 1000, and
Party A shall warrant providing 65 qualified state-recruited teachers and staff
members to Party B. then for each newly-increased 100 students, Party A shall
warrant providing 3 qualified state-recruited teachers and staff members to
Party B.

 

1.4Party A agrees that Party B recruit teachers and staff members on the basis
of competitive selection from the county, however, those newly-recruited
teachers and staff members shall be mainly consist of college and university
graduates.

 

1.5As Party B enlarges the scale of the school, the newly-built and enlarged
houses will be equally treated pursuant to the government policy equivalent to
the establishment and investment of Tianquan Middle School, and Party A shall
coordinate and settle the disputes in the course of the construction.

 

1.6During the term of Agreement, all the policy-based funds Party A applies for
and obtains from the superior authorities shall be allocated to Party B to be
used for school running cooperation. Party A shall enjoy the supervision power
over the use of policy-based funds from the superior authorities, the use and
availability of capitals invested by Party B and the school operations.

 

1.7Party A shall be responsible for settling the creditor’s rights, debts and
outstanding problems occurred to Tianquan Vocational High School before the
cooperation ( the debts incurred by the newly-built teaching buildings shall be
settled through both parties’ mutual coordination and in accordance with
relevant agreements.)

 

1.8Party A will provide, free of charge, the schoolhouses, school premises,
equipments and facilities to Party B for teaching purpose.

 

1.9Party A shall enjoy the ownership and supervision power over the school’s
assets, and the fixed-assets, equipments and facilities contributed by Party B
during the term of Agreement shall be owned by Party A ( other than the
equipments and facilities purchased by Party B for the use of daily life and
work).

 

1.10Party A shall ensure that the teaching buildings in construction be
completed in accordance with the contracts formerly signed with the construction
organization (including the houses decoration and the water and power
supply   installment.).

 

1.11During the term of Agreement, in principle Party A will not review and
approve new vocational education schools and similar schools.

 

1.12Party A shall develop enrollment policy and positively cooperate with Party
B to carry out enrollment propaganda. Party A shall implement the review,
approval and filling system concerning enrollment of schools in other regions
and prohibit the teaching staff members of the county to introduce students to
schools in other regions.

 

1.13Party A shall positively optimize the environment of the school (including
the requirement that net-cafes, KTV, poolrooms shall not be established within
200 meters from the school and the requirement that vendors shall not set their
stands, etc.).

 

1.14Party A shall have the power to adapt macro adjustment and control policy to
ensure the coordinated development of general education and vocational
education.

 

 

 

 

1.15Party A shall, before September 2007, separate junior high school education
segment and kindergarten from the present vocational high school. And before
such separation, on the basis that the junior high school education segment
enjoys the equal financial supports equivalent to other public junior high
schools, Party A shall grant Party B cash subsidies of RMB 50 Yuan for each
student every year.

 

2Party B’s Duties and Rights

 

2.1Achieve the objective of school running cooperation set in this Agreement.

 

2.2Enjoy the right to independently operate the school granted by the State and
report to Party A the specific management plans. Party B shall give full play to
the school Party branch, labor union and Teacher's Representative Committee to
protect the legitimate rights and interests of school teachers, students and
parents of students.

 

2.3Enjoy the right of independent operations and management and the right of
accrual and distribution of operational funds, the rights of using and planning
Party A’s schooling premises, schoolhouses, equipments and facilities (however,
the planning schemes can be implemented only after Party A’s approval). During
the operations of the school, Party B will enjoy the policies concerning
preferential tax and exemption equivalent to public schools.

 

2.4Party B will enjoy the right to independently employ teaching staff members.
From the year following the jointly schooling cooperation, under the
instructions of Party A, Party B shall be responsible for assessing the teaching
staff members recruited on a semester or annual basis, and dismiss any teaching
staff members unsuitable for their job, provided that the such teaching staff
members (supplied by Party A) dismissed by Party B shall not be exceed 2.

 

2.5Party B shall accept Party A’s unified management, supervision and business
instructions.

 

2.6With gradual expansion of the scale of the school, in addition to the
teaching staff members of Party A, Party B shall employ other sufficient
teaching staff members in accordance with the teacher-student ratio required by
the State.

 

2.7Party B shall warrant that the welfare of Party A’s teaching staff members
who are continuing to be employed is not lower than the present welfare level of
Tianquan Vocational High School, the welfare and treatment of teaching staff
members shall also gradually increases annually.

 

2.8Party B shall be responsible for recommending qualified students to be
employed and warrant the employment rate reaches 95% with two-year track
management.

 

2.9Party B shall be responsible for the creditor’s rights and debts accrued
during the cooperation.

 

2.10Party B shall be responsible for the safety of the school during the
cooperation.

 

2.11Party B will continue to fulfill the duties of current vocational education
training centre and undertake to provide place, examination supervisors and
examination room arrangements to higher education self-study examination, the
national higher education exams for self-taught adults and other
examinations.(the education training expenses shall be borne by the relevant
organizations who organize such trainings, the expenses incurred by examinations
shall be borne by Party A).

 

2.12Party B shall be responsible for constructing and managing the school in
accordance with the standards required for the key provincial vocational high
school and ensuring that the school pass the government review (in case the
school fails to pass the acceptance check due to that school areas do not reach
to the construction standards required for provincial key vocational high
schools by Sichuan Province, Party B shall not take the responsibility).

 

2.13During the cooperation, Party B shall invest a total sum of more than RMB 12
million used in the fixed assets, equipments and facilities of Tianquan
Vocational High School, with more than 6 million of which shall be invested
within the first six years. Within one month after this Agreement, Party B shall
remit 500 thousand to the account designated by Party A which shall be used in
the teaching buildings in construction. Party B shall be responsible for paying
the principal and interest of 800 thousand borrowed by the former Tianquan
Vocational High School from credit cooperatives through teachers, the payment
method of which shall be coordinated by Party A. Party B shall repay 10 thousand
of principal every year and pay off the 80 thousand within eight years with
corresponding interest incurred every year (including the teacher bonus).

 

III Scale of School

 

Party B will warrant achieving the following schooling objectives and scale:

 

1The school plans to newly recruit vocational school students of 400 in 2006,
500 in 2007 and 600 in 2008.

 

2The number of students studying in the school amounts to 1,500 after 2008,
1,700 after 2009 and 2,000 after 2010.

 

3The recruit target of the school running cooperation shall be the students of
Tianquan County.

 

IV Incentive Method

 

Party A will grant Party B certain form of incentives when Party B accomplishes
the task of recruitment and achieves excellent economic results.

 

 

 

 

V Charge Standard

 

1The charge standard will be determined by Party B pursuant to relevant
policies, school costs, and combing with actual income status of local
residents, and Party A will cooperate with Party B to report such charge
standard to the price authorizes for review and approval.

 

2Original charge standard shall be still adapted to those students who were
recruited before the school running cooperation, while new charge standard shall
be adapted to those students who are recruited after the school running
cooperation.

 

VI Liability for Breach of Contract

 

In case Party A and Party B breach the terms of and conditions of this
Agreement, the defaulting party shall pay RMB 300 thousand to the other party as
the penalty for breach of contract.

 

VII Settlement of Disputes

 

Any dispute arising from the implementation of this Agreement, Party A and Party
B shall settle it through friendly consultations. In case such consultations
fail, at either party’s request, the People’s Court at either party’s location
will govern the dispute.

 

X Supplemental Rules

 

1.Appendix of this Agreement: Filling wage schedule of Tianquan County
Vocational High School, relevant insurance schedules stipulated by the State,
current welfare conditions, total schedule of school assets, muster rolls of
teaching staff members, school operations certificates, Legal Representative
qualifications certificates, the agreements concerning junior school education
segment and kindergarten separation, the debt repayment agreements of the
teaching buildings in construction and the construction contracts of the
teaching buildings in construction are all the integral parts of this Agreement
and have equal legal effects of this Agreement.

 

2.This Agreement will become effective after Party A and Party B set their hands
and seal.

 

3.There exist ten copies of this Agreement and each Party shall retain one copy,
the rest copies shall be filed with relevant authorities. Matters not covered
shall be subject to the supplementary agreements signed by Party A and Party B
separately.

 

Party A: Education Bureau of Tianquan County, Sichuan Province   (Stamp)

Legal Representative: Renkang Yang    (Signature)

 

Party B: Changsha Huanqiu Vocational Secondary School      (Stamp)

Legal Representative: Guangwen He    (Signature)

 

Date: February 20, 2006