Sichuan Lanbeisi Kid Castle Education Development Co., Ltd
Equity Transfer Agreement

Party A: Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd
(hereinafter “Party A” in this agreement)
Address:
 
Legal Representative:
Tel:

 
Party B: Shanghai Kid Castle Educational Info Constitution Company Limited
(hereinafter “Party B” in this agreement)
Address: Room 408, 1277 Beijing West Road, Shanghai
 
Legal Representative: Min Tan Yang  
Tel: 02162893482

Whereas:
 
1) The Sichuan Lanbeisi Kid Castle Education Development Co., Ltd (hereinafter
“Sichuan Kid Castle” or the “company”) invested and established by Sichuan
Province Lanbeisi Education & Culture Industrial Co., Ltd on 23 June 2004 is the
educational company established according to the law; the registered capital of
the company is RMB0.8 million, and management scope of company covers the
educational administration, training, consultancy service, enterprise image
design, marketing design, cultural articles for use and toy sale, retail of
books, periodicals and electronic publications; the company is registered at 262
Shuncheng Street, Qingyang District, Chengdu City, Sichuan; Party A is the
shareholder the company and owns 45% equity, and is actually responsible for the
comprehensive management of the company.
 
2) Party A and Party B negotiate to sign this equity transfer agreement, which
states that Party A shall transfer all its equity of Sichuan Kid Castle to Party
B according to the terms and conditions of agreement, and Party B shall agree to
accept all the equity of Sichuan Kid Castle owned by Party A according to the
terms and conditions of agreement.
 
The both parties hereby agree as follows:
 
Article 1: Transfer Object
 
1.1 Party A is the shareholder of Sichuan Kid Castle and enjoys all rights of
the company stated by the Company Law, and this transfer has been ratified by
the power authority of Sichuan Kid Castle.
 

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1.2 Party B accepts 45% equity of Sichuan Kid Castle owned by Party A.
 
1.3 The Chengdu Lanbeisi Foreign Language Training School invested and
established by Sichuan Kid Castle (hereinafter the “school” in this agreement)
is the school fully-owned, established and managed by Sichuan Kid Castle
according to the law; for the establishing capital and school address, refer to
the appendix of this agreement.
 
Article 2: Equity Transfer Price and Payment
 
2.1 The both parties agree that the total equity transfer fee in this agreement
is RMB0.32 million.
 
2.2 Party B shall pay the first equity transfer fee of RMB200000 to Party A
within 2 days upon the signature of this agreement; Party B shall pay the second
equity transfer fee of RMB60000 within 5 days after the documents required for
the industrial and commercial alteration stated in article 5.1.4 of this
agreement are submitted to and accepted by the relevant competent authorities
such as the industrial and commercial administration formally;
 
Party B shall pay the third equity transfer fee of RMB60000 within 5 days after
all the above-mentioned alteration registrations/references are finished and the
corresponding licenses and certificates are issued.
 
2.3 Payment of Equity Transfer Fee
Party B shall transfer the above-mentioned equity transfer fee to the following
account specified by Party A:
 
Account Name: Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd
Bank: Bank of China Shujing Avenue Branch
Account Number: 39435388091001
 
Article 3: Transfer and Handover
 
3.1 Party A hereby transfers the equity of Sichuan Kid Castle and all related
rights, interests and obligations to Party B according to the terms and
conditions stated in this agreement. Party B hereby accepts the equity and all
related rights, interests and obligations transferred by Party A according to
the terms and conditions stated in this agreement, unless otherwise stated in
this agreement.
 
3.2 The both parties agree together as follows: the both parties will deal with
the detailed handover affair of the company and school according to the
agreement about the time, content and other aspects: Party A specify
                 (autographical signature of assignee) as the check and handover
principal of Party A, the company and school; Party B1 specifies
                         (autographical signature of assignee) as the check and
handover principal of Party B; the handover behaviors of principals specified by
the both parties represent the behaviors of consigner and have the legal
effectiveness.
 

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3.3 Party A shall prepare the handover list before 10 May 2007 according to the
relevant regulations of this agreement and the detailed contents of agreement
appendix, and the handover principals specified by the both parties shall deal
with all the handover works, sign the handover list together and conclude this
agreement at the same time properly and completely. Party A guarantees that the
company management specified shall not invade and occupy the property of the
company/school arbitrarily before that.
 
3.4 Party A shall hand over all the official seals, financial seal, accounting
books and vouchers, invoices, checks and bank vouchers of the company and school
to the person specified by Party B for storage, and the financial works such as
income and expense shall be controlled together till the third equity transfer
fee is paid. The legal representative seals of the company and school preset in
the bank (the company is                       , and the school is
                      ) shall be kept by Party A during this period.
 
Article 4: Company Assets, Equities, Investments, Debts or Liabilities
 
4.1 For the detailed category of existing assets, category and amount of
loans/debts and list of investments and invested institutions of the company,
the contingent debts of the company, the current condition of company customers
and business, company employees, advance expense/expanse receivable (including
tuition) and the detailed information of students list, refer to the appendix of
this agreement “current conditions list of the company”.
 
4.2 For the category and amount of company licenses, certificates and official
seals, the company accounting books, vouchers (including the annual auditing
report original and attached financial statement of each year), invoices,
checks, bank vouchers, tax returns, the company statement till the end of April
2007 (including but not limited to the balance sheet and income statement of the
company), company systems and regulations, company memorandum (signed by the
former shareholders), resolutions of each board meeting and general meeting of
shareholders, the exterior economic agreements and interior administrative
agreements (such as the labor agreement) of the company, refer to the appendix
of this agreement “list of licenses, certificates, official seals, accounting
books, system documents and agreements”.
 
4.3 For the detailed information such as the establishing fund and school
address of Chengdu Lanbeisi Foreign Language Training School, refer to the
appendix of this agreement. For the copy of the school running license of
private school and license for private non-enterprise corporation of the school,
the list of current conditions of school, the list of certificates, licenses,
official seals, accounting books, system documents and agreements of school (the
detailed content of list shall be confirmed by article 4.1 and 4.2), refer to
the appendix.
 

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4.4 Party A promises that contents stated in article 4.1, 4.2 and 4.3 and all
the lists and data provided according to that agreement, the handover list
agreed in the above articles and the recorded information such as the assets of
the company or school are true, precise, complete and timely, and it shall be
responsible for them.
 
Article 5: Promises
 
5.1 Party A hereby promises:
 
5.1.1 to be responsible to urge the relevant personnel to sign the legal
documents required to transact the alteration of legal
representatives/principals, directors, supervisors, and schoolmaster of Sichuan
Kid Castle and the school and provide the data required by the relevant
competent authorities;
 
5.1.2 to assist Party B to implement all the rights and obligations related with
the equity transfer and those owned by Party A in the memorandum of Sichuan Kid
Castle, recall all the directors and supervisors dispatched to the company and
school and the legal representatives/principals of school, and these positions
shall be succeeded by the relevant personnel dispatched by Party B; this work
shall be implemented at the same time according to the regulation of article 3.3
of this agreement about the handover work, and the duty handover will become
effective since the handover day;
 
5.1.3 Party A shall stop implementing the shareholder rights of Sichuan Kid
Castle interiorly after the handover is completed according to article 3.3 of
this agreement, unless otherwise stated in this agreement;
 
5.1.4 to be responsible to transact the full transfer/alteration
registration/reference affair of shareholders, directors, supervisors, legal
representative related with this equity transfer, the annual inspection/annual
auditing of school, the alteration registration/reference work of legal
representative, preschool masters/schoolmaster, directors and supervisors and
the signature of all documents required at the relevant competent authorities
including the industrial and commercial administration; the above-mentioned work
shall be completed properly within 20 days after the signature of this agreement
at latest;
 

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5.1.5 to be responsible to transact the annual inspection/annual auditing 2006
of the school and guarantee the validity of school running licenses.
 
5.2 Party B hereby promises:
 
5.2.1 to support Party A to transact the full transfer/alteration affair of
shareholders, directors, supervisors, legal representative related with this
equity transfer, the annual inspection/annual auditing of school, the alteration
registration work of legal representative/principal and directors and the
signature of all documents required at the relevant competent authorities
including the industrial and commercial administration;
 
5.2.2 Party B satisfies the conditions to accept the agreement object regulated
by the law before transacting the equity alteration registration;
 
5.2.3 Party B has adequate capital capacity to purchase the agreement object;
 
5.2.4 to implement all the rights and obligations related with the equity and
those owned by Party A in the memorandum of Sichuan Kid Castle prudently in the
interior before the alteration procedures are completed.
 
Article 6: Statements and Guarantees
 
6.1 Party A hereby makes the following statements and guarantees:
 
6.1.1 The company/school involved in this agreement are the company/school that
are founded and established according to the local laws or governmental rules
and effective and sustaining before the annual inspection/annual auditing agreed
in article 5.1, and are consistent with the laws and regulations upon the
registration and the requirement of government rules.
 
6.1.2 Party A has the adequate right capacity and behavior capacity to make the
transfer and has taken all necessary steps and actions to implement this
transfer. The company/school has not any activity except for the normal
management activity from the signature date to the handover complete day.
 
6.1.3 Party A hereby guarantees and states that Party A is the only owner of
transferred equity and the there is not any dispute on the transferred equity
owned by Party A; any other guarantee, mortgage, pledge, lien or compensation
claim right is not set on the equity to be transferred.
 
6.1.4 Party A has stated the assets, loans and debts of Sichuan Kid
Castle/Chengdu Lanbeisi Foreign Language Training School faithfully (for the
details, refer to the list agreed in article 4), and has not set any guarantee,
mortgage, pledge, lien or compensation claim right on the assets or loans under
the name of the company/school; i.e. it has the full ownership.
 

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6.1.5 Party A shall neither urge Sichuan Kid Castle to transfer the full or part
capital of invested school in any mode nor set any mortgage on the capital nor
change the establishing capital and capital of school by any mode without the
written consent of Party B before the content of this agreement is implemented
properly; it shall neither decrease or be possible to decrease the value of
school (including the intangible assets, commodity credit and reputation of the
school)nor change the current operating status of school (including but not
limited to the properties and students of school).
 
6.1.6 Party A shall implement the following obligation unless with the written
consent of Party B before the content of this agreement is implemented properly:
(1) it shall not transfer or set any mortgage or pledge on the assets of school;
(2) it shall not sign any document or conclude any understanding to give up the
rights of school; (3) it shall not modify the memorandum, systems or similar
documents of the school; (4) it shall not sign, supplement or implement any
merger or transfer agreement with similar tenet or content to this agreement
with any third party; (5) it shall support Party B to implement the normal
management.
 
6.1.7 Party A promises there is not any following affairs: (1) the school has
not been managed illegally and has paid the tax legally; (2) the school neither
have any external debt/liability nor default any money of staff or students nor
have other significant liability (the economic loss amounts to over RMB20000);
(3) it has not extracted the capital of school or embezzled/invaded and occupied
the capital or other properties of school; (4) the school has not bee involved
into any tortious or breaching dispute of lawsuit/arbitration mode till the
signature date.
 
6.1.8 Party A promises and guarantees that Party A shall implement the same
obligations to Party B upon Sichuan Kid Castle according to the promise and
guarantee contents of above-mentioned article 6.1.4, 6.1.5, 6.1.6 and 6.1.7.
 
6.2 Party B hereby makes the following statements and guarantees:
 
6.2.1 All the obligations related with Party B stated in this agreement are
binding to it before the alteration registration procedure required for the
equity transfer is completed.
 
6.2.2 Party B has adequate right and capacity to make the acceptance and has
taken all necessary steps and actions to implement this transfer.
 
6.2.3 It shall neither transfer the equity under the name of Sichuan Kid Castle
to the third party nor make the guarantee externally with the properties of
company before the alteration registration procedure required for the equity
transfer is completed.
 

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6.2.4 Party B is obligated to keep secret for all the information of Party A
known by Party B in this equity transfer agreement, which includes but is not
limited to the management condition, financial condition, business secret and
know-how, unless otherwise stated definitely by the law or required compulsively
by the judiciary authority, while those required for the normal management of
the company and school are excluded.
 
6.3 The statements and guarantees contained in the above-mentioned article 6.1
and 6.2 shall be made on the signature date of this equity transfer agreement.
 
Article 7: Expenses Undertaking and Others
 
7.1 The administrative fees and statutory expenses due to this equity transfer
and the alteration registration/reference of school (including  but not limited
to the alteration registration fee) shall be undertaken by Sichuan Kid Castle
and the school.
 
7.2 The party breaching the promise, statement and guarantee or whose promise,
statement and guarantee is untrue, imprecise or incomplete shall undertake the
liability or debt corresponding with the promised, stated or guaranteed
contents; if the company/school undertakes in advance according to the law, the
opposing party or the company/school is entitled to claim compensation from it.
 
Article 8: Breaching Liabilities
 
8.1 It will constitute the breach of agreement if any party breaches the
promise, guarantee, limitation or forbidden content of this agreement, and the
breaching party shall pay the penalty to the opposing party based on the
standard equivalent to 20% of total agreement price, and the opposing party is
also entitled to claim the breaching party to keep implementing this agreement.
 
8.2 If the equity transfer agreed in this agreement can not be completed or the
school can not keep running legally due to the cause of Party A, Party A shall
pay the penalty based on the standard equivalent to 20% of total agreement price
and return all the money paid by Party B; if the equity transfer agreed in this
agreement can not be completed due to the cause of Party B, Party B shall pay
the penalty to Party A based on the standard equivalent to 20% of total
agreement price and return the handed-over properties and data.
 
8.3 It will constitute the breach of agreement if any party breaches the
regulation of this agreement and defers implementing the obligations agreed in
this agreement, the breaching party shall pay the penalty of RMB50000 to the
opposing party, and the opposing party is also entitled to claim the breaching
party to keep implementing this agreement; if the deferred implementation
exceeds 1 month, the opposing party is entitled to cancel this agreement; if the
company and school have the loss out of the normal management activity during
the period, it shall be undertaken by Party A if it occurs before the handover
work stated in article 3.3 is completed, or it shall be undertaken by Party B.
 

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8.4 If the loss of innocent party resulted from the breaching behavior of
breaching party is larger than the penalty, the breaching party shall pay the
balance other than the penalty to the innocent party.
 
Article 9: Governing Law and Arbitration
 
9.1 Governing Law
 
The equity transfer agreement shall be only governed by the law of People’s
Republic of China and shall be interpreted according to it, but the conflict law
rules are excluded. If any article or regulation in this agreement is illegal or
invalid wholly or partly according to any law or statute, this
article/regulation or part of it shall not be regarded as a part of this
agreement, and the validity of other part of this agreement won’t be influenced.
 
9.2 Arbitration
 
Any dispute arising from this agreement or related with this agreement shall be
solved by the friendly negotiation of both parties; if the negotiation fails,
the arbitration shall be submitted to Shanghai Arbitration Commission according
to the regulation of Arbitration Law; the arbitration expense and the expense to
implement the arbitration (including the witness fee and attorney fee) shall be
undertaken by the loser, unless otherwise stated in the arbitration verdict; If
the dispute occurs and is submitted to the arbitration, the both parties shall
keep implementing the retaining rights and obligations under this agreement
except for the disputed affair.
 
Article 10: Miscellaneous
 
10.1 This agreement will become effective upon the signature day; this agreement
is in quintuplicate, Party A and Party B hold one respectively, Sichuan Kid
Castle holds one, and one is used for the industrial and commercial
registration.
 
10.2 Appendixes: the appendixes and the handover list agreed in article 3 have
the same legal effectiveness with this agreement.
 
1) the copy of business license of Party A, Party B and Sichuan Kid Castle, the
resolutions of each board meeting and general meeting of shareholders;
 
2) the current conditions list of the company of Sichuan Kid Castle, and the
list of licenses, certificates, official seals, accounting books, system
documents and agreements;
 
3) the school running license of school and license for private non-enterprise
corporation registration, the list of current conditions of school, the list of
certificates, licenses, official seals, accounting books, system documents and
agreements of school.
 

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Party A (Seal): Sichuan Province Lanbeisi Education & Culture Industrial Co.,
Ltd
Legal Representative:
 
Party B (Seal): Shanghai Kid Castle Educational Info Constitution Company
Limited
Legal Representative: Min-Tan Yang

 

 
Signature Date: 10 May 2007
 

 

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Agreement

As the holding shareholder of Party C1, Party A1 and Party A2 signed the equity
transfer agreement with Party B on 10 May 2007 about the detailed affair of
transferring all the equity of Party C1 to Party B; as the related parties of
the equity transfer behavior, now Party C1 and Party C2 conclude the following
agreement for the 2 equity transfer agreements and other affairs with Party A
and Party B based on the negotiation:
 
1. Party C1 and Party C2 confirm all contents of the above-mentioned 2 equity
transfer agreements and do their best to support Party A and Party B to
implement the relevant power/right and each obligation according to the
above-mentioned agreements; they also issue the relevant documents required to
be issued by Party C1 and Party C2 to realize the equity transfer and relevant
alteration and implement the relevant alteration registration obligation.
 
2. Party C1 and Party C2 promise and guarantee to abide by the article 1, 3.2,
3.3, 4, 5.1, 6.1 7 and 9 of the above-mentioned equity transfer agreement and
agree to undertake the liability for the promise and guarantee according to
article 8 of this agreement.
 
3. Party A, Party B and Party C confirm together this agreement is the
supplementary of above-mentioned 2 equity transfer agreements, which are binding
to Party A, Party B and Party C; the unstated affairs in this supplementary
agreement shall be implemented according to the corresponding articles of equity
transfer agreement.
 
4. This supplementary agreement will become effective upon the signature date;
this agreement is in quintuplicate, each of the 5 subjects of Party A, Party B
and Party C holds one.

Party A (Seal and Signature):
Party A1: Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd
Legal/Authorized Representative:
Party A2: Sichuan Province Education Institutional Service Center
Legal/Authorized Representative:
 
Party B (Seal and Signature):
Shanghai Kid Castle Educational Info Constitution Company Limited
Legal/Authorized Representative: Min-Tan Yang
 

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Party C (Seal and Signature):
Party C1: Sichuan Lanbeisi Kid Castle Education Development Co., Ltd
Legal/Authorized Representative:
Party C2: Chengdu Lanbeisi Kid Castle Foreign Language Training School
Legal/Authorized Representative:

 

 
Signature Date: _________ May 2007
 
 
 

 

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Letter of Announcement

Whereas Sichuan Province Education Institutional Service Center and Sichuan
Province Lanbeisi Education & Culture Industrial Co., Ltd would like to transfer
all their equity in Sichuan Lanbeisi Kid Castle Education Development Co., Ltd
to Shanghai Kid Castle Educational Info Constitution Company Limited, the
announcers hereby announce respectively as follows:
 
1. Sichuan Province Education Institutional Service Center agrees Sichuan
Province Lanbeisi Education & Culture Industrial Co., Ltd to transfer its 45%
equity in Sichuan Lanbeisi Kid Castle Education Development Co., Ltd to Shanghai
Kid Castle Educational Info Constitution Company Limited and gives up the
preferential purchase right of the equity.
 
2. Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd agrees
Sichuan Province Education Institutional Service Center to transfer its 10%
equity in Sichuan Lanbeisi Kid Castle Education Development Co., Ltd to Shanghai
Kid Castle Educational Info Constitution Company Limited and gives up the
preferential purchase right of the equity.
 
3. Shanghai Kid Castle Educational Software Development Company Limited agrees
Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd and Sichuan
Province Education Institutional Service Center to transfer their 45% and 10%
equity in Sichuan Lanbeisi Kid Castle Education Development Co., Ltd to Shanghai
Kid Castle Educational Info Constitution Company Limited and gives up the
preferential purchase right of the equity.
 
It is hereby promised and announced. This letter of announcement is in
quintuplicate.
 

Announcers (Seal and Signature):
Sichuan Province Lanbeisi Education & Culture Industrial Co., Ltd
Sichuan Province Education Institutional Service Center
Kid Castle Educational Software Development Company Limited

Date: 10 May 2007
 
 

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