Document:

exv10w7

 

Exhibit 10.7

Reference Translation

Agreement on transfer of exclusive operating right of

Beijing Tsinghua Tongfang Education Training School

Between

Tsinghua Tongfang Co. Ltd

And

Beijing Tongfang Digital Education Technology Limited

15 June 2005

 

 

     This Exculsive Operating Right Agreement (the “Agreement”) is entered into as of 15 June
2005 in the PRC, by and between the following parties (the “Parties”)

	 	 	 	 	 
	(1).

	 	Party A:
	 	Tsinghua Tongfang Co. Ltd. (“Party A”)
	 

	 	Address:
	 	Tsinghua Tongfang Building, Tsinghua Yuan, Haidian District, Beijing.
	 
	 	 	 	 
	(2).

	 	Party B:
	 	Beijing Tongfang Digital Education Technology Limited (“Party B”)
	 

	 	Address:
	 	Tsinghua Tongfang High-tech Plaza, No.1 Wang Zhang Road, Haidian District, Beijing

     WHEREAS:

(1) Beijing Tsinghua Tongfang Education Training School (the “Training School”) was established,
with a registered capital of RMB1 million, solely by Party A in March 2002.

(2) Party A agrees to grant to Party B all the operating rights and obligations of the Training
School enjoyed by and imposed on Party A for being the promoter of the Training School.

(3) Party B agrees to accept all the operating rights and obligations of the Training School
enjoyed by and imposed on Party A for being the promoter of the Training School. Party B shall
become the exclusive operator of the Training School.

(4) the Parties acknowledge that they fully understand their respective rights and obligations
under this Agreement and agree to the execution of this Agreement.

     As governed by and construed in accordance with the laws of the PRC, Party A and Party B,
based on the principles of mutual complementation with their respective advantages and mutual
benefit, and following friendly discussions, hereby enter into this Agreement as follow:

     Article 1 Definitions

     As used in this Agreement, the following terms shall have the following respective meanings:

     “associated companies” means, in respect of any Party, any corporation, company, partnership,
association or other business entity that is owned directly or indirectly as to 20% or above of any
class of its issued share capital by such Party;

     “subsidiaries” means, in respect of any Party, any corporation, company, partnership,
association or other business entity that is controlled by such Party. For purposes of this
Agreement, “control” means ownership of more than 50% of the voting securities or interests in
another corporation, or the ability to direct the management or policies of such corporation,
whether by contract or otherwise;

 

 

     “Audit Report” means the audit report (# XYZH/A805048) issued by Xin Yong Zhong He CPA Ltd for
the year ended 31 December 2004 for the Training School;

     “Related Assets” means all the assets, properties, rights and benefits, as listed out in the
Audited Report or its appendices of the Training School;

     “Related Liabilities” means all the liabilities associated with the Training School, its
assets or its business;

     “Related Business” means all the related business operated by the Training School as at the
date of this Agreement;

     “Related
Period” means the period between 11 February 2005 and the Closing Date (both dates
inclusive);

     “Financial Statements” means the financial statements, including the profit & loss account and
the balance sheet, of the Training School as at 31 May 2005 as provided by Party A;

     “Closing Date” means the date on which the condition set forth in clause 4.1 in Article VI is
satisfied;

     “Delivery Date” means the date on which the condition set forth in clause 4.2 in Article VI is
satisfied;

     “taxation” or “taxes” means all forms of taxation or any additional amounts imposed by any
government, provincial government, local government, municipal government, governmental agency,
statutory body or any revenue authority, whether of the PRC or elsewhere, including, without
limitation, net income tax, gross income tax, sales, intellectual property, license, land use,
property, intangible asset, interest, value added, stamp duty, estate duty, withholding, or charges
of any kind whatsoever, estimated and other taxes, together with any interest and levies and all
penalties, charges, costs, fines and additions to tax.

	 	 	Article II Transfer and Expiry
	 
	2.1	 	Subject to the terms and conditions in this Agreement, Party A hereby confirms the grant to
Party B and Party B hereby confirms its acceptance of the exclusive operating right, together
with the associated rights and obligations enjoyed by and imposed on Party A for being the
promoter of the Training School, of the Training School.
	 
	2.2	 	The Parties hereby confirm that the transfer as stipulated in this Agreement constitutes an
irrevocable undertaking starting from the date of this Agreement. Starting from the Delivery
Date, Party A shall be entitled to all the rights and responsible for all the obligations of
being the exclusive operator of the Training School. Party B shall stop to be entitled to all
the rights and responsible for all the obligations of being the exclusive operator of the
Training School.

 

 

	2.3	 	Party B shall have the exclusive operating right of the Training School for ten years staring
from the Closing Date. The Parties can enter into a new agreement upon expiry.
	 
	 	 	Article III Consideration
	 
	3.1	 	The consideration for the granting of the exclusive operating right (the “Consideration”)
shall be the sum of RMB450,000. The Consideration shall be paid in accordance with Article V
in this Agreement.
	 
	 	 	Article VI Transfer
	 
	4.1	 	The closing of this Agreement shall be conditional on:

	 	(1)	 	Each Party has obtained board resolutions from its board of directors approving
the transfer of the exclusive operating right of the Training School.

	4.2	 	When the condition in Clause 4.1 is satisfied, nominees from Party B shall be appointed as
the principal management staff of the Training School.
	 
	4.3	 	When the condition in Clause 4.1 is satisfied, delivery shall occur:

	 	(1)	 	the Parties shall sign, execute and deliver or cause to be signed, executed and
delivered such documents and instruments in order to complete the granting from Party A
to Party B the exclusive operating right of the Training School;
	 
	 	(2)	 	Party B shall pay, in accordance with clause 5.1 in Article V of this
Agreement, the Consideration.

	 	 	Article V Payment
	 
	5.1	 	Party B shall pay the Consideration to Party A in the following manner:
	 
	 	 	A sum of FOUR HUNDRED AND FIFTY THOUSAND YUAN (RMB450,000) shall be paid in one lump sum
within seven (7) days after the Closing Day.
	 
	 	 	Article VI Termination
	 
	6.1	 	Party B may terminate this Agreement unilaterally upon the occurrence of the following event:
	 
	 	 	Any material breach of the representations, warranties and undertakings set forth in Article
VII and Article VIII in this Agreement by Party A on or before the Closing Date.
	 
	6.2	 	Upon the occurrence of the event set forth in clause 6.1 of this Agreement and Party B
rescind this Agreement, Party B shall not be liable of any claims or compensation

 

 

	 	 	unless Party A can prove that Party A has incurred additional expenses upon an unreasonable
instruction from Party B. Party A has to provide to Party B supporting documents for those
additional expenses and the compensation borne by Party A shall be limited to the amount of
those additional expenses.
	 
	6.3	 	If Party B shall elect to rescind this Agreement in accordance with clause 6.1 in this
Agreement, Party B shall send a written notice to Party A. Party A shall, within seven days of
the written notice, refund the Consideration paid by Party B in accordance withn clause 5.1 in
this Agreement, plus interest calculated at the interest rate quoted by the Bank of China
retroactive to the funding date (inclusive).
	 
	6.4	 	Party B shall, after gaining the exclusive operating right of the Training School, operate
the Training School in accordance with the law and shall not violate or breach any law causing
damages to Party A. Party A may terminate this Agreement and request for compensation from
Party B upon the occurrence of illegal act of Party B in operating the Training School, which
leads to losses and damages to Party A. Party A has to provide to Party B supporting documents
for those losses and the compensation borne by Party A shall be limited to the amount of those
losses.
	 
	 	 	Article VII Representations, warranties and undertakings
	 
	7.1	 	Party A hereby represents and warrants to Party B that, as at the date of this Agreement and
the Closing Date:

	 	(1)	 	Party A has the right and power to execute and perform this Agreement; and upon
execution and fulfilling the condition set forth in clause 4.1 of this Agreement, this
Agreement shall constitute the valid, lawful, binding and enforceable obligations of
Party A.
	 
	 	(2)	 	The representations and warranties given by Party A are true, accurate and not
misleading.
	 
	 	(3)	 	Party A undertakes that it will procure the existing promoter of the Training
School not to transfer or grant any rights or obligations, except for the exclusive
operating right set forth in this Agreement).
	 
	 	(4)	 	The Training School is a business unit duly organized and validly existing
under and by virtue of the laws of the PRC and has requisite corporate power and
authority, duly qualified, licensed or admitted to carry on its business. No event has
occurred that will lead to the revocation of the above-mentioned corporate power,
authority, license and permit.
	 
	 	(5)	 	Party A has performed its duty under the Article of Association of the Training
School, which includes but not limited to the injection of the registered capital.
Party A has furnished Party B with copies of the Article of Association of the Training
School. Said copies are true, correct, and complete and contain all amendments.
	 
	 	(6)	 	After careful due diligence, Party A is not aware of (except as disclosed in
this Agreement) any litigations related to the Article of Association of the Training

 

 

	 	 	 	School (as amended), any unresolved or potential litigation, or any circumstances that
will lead to litigations or compensation suits.

	7.2	 	Related Assets and Related Liablities

	 	(1)	 	Except as disclosed in this Agreement, as at the date of this Agreement and the
Closing Date, the Related Assets are solely the property of the Training School and are
not subject to any encumbrances (other than possible minor encumbrances of current
assets and accrued expenses arisen in the ordinary course of business) mortgage,
pledge, lease, charges, other liens or the rights, control, restriction of other third
party, which will materially detract from the value of the assets or materially impair
Training School’s ability to use, transfer or dispose of such assets.
	 
	 	(2)	 	The property, vehicles or other equipment (“Related Property and Equipment”) is
validly owned or leased by the Training School under and by virtue of the laws of the
PRC. The Related Property and Equipment is in a good and safe state of repair and
condition and satisfactory working order and have been regularly and properly
maintained as adjusted for the period and the nature of usage. The Related Property and
Equipment is not hazardous, inefficient, obsolete, inappropriate, in need of
replacement or unnecessary to the business of the Training School.
	 
	 	(3)	 	Party A and the Training School have furnished Party B and its legal counsel,
accountant and valuer with the record and information on the Related Assets and Related
Liabilities, which is true, correct, and complete in all material respects.

	7.3	 	Financial information

	 	(1)	 	Audit Report (a true and complete copy has been delivered to Party B)

	 	(A)	 	Affixed to Appendix I of this Agreement is the Audit Report
issued by Xin Yong Zhong He CPA Ltd and provided by Party A(Appendix I:
Training School Audit Report 31 December 2004), which forms an integral part of
this Agreement and has the same legal binding enforceability.
	 
	 	(B)	 	The Audit Report is complete and correct in all material
respects and the content of which constitutes representations and warranties by
Party A in respect of the profitability, assets and liabilities of the Training
School as at 31 December 2004.
	 
	 	(C)	 	The Audit Report has been prepared in accordance with PRC
generally accepted accounting principles (“PRC GAAP”).
	 
	 	(D)	 	Sufficient accrual, payables and disclosure have been
accrued/made, in accordance with the PRC GAAP, in respect of all the
liabilities and commitments (including contingent, unquantifiable and
contesting liabilities) that have not been paid as at 30 May 2005.
	 
	 	(E)	 	Provision or reserve have been made, in accordance with the
principles set out in the notes of the Audit Report, for all the taxation
liable to be assessed on the Training School, or for which the Training School
may

 

 

	 	 	 	be accountable, in respect of the period ended on or before 30 May 2005. Such
provision will be sufficient to cover all taxation assessed or liable to be
assessed on the Training School or for which the Training School, is, may be
or may become accountable in respect of profits, income earnings, receipts,
transfers, events and transactions up to and including the last date to which
they relate.

	 	(2)	 	Financial Statements

	 	(A)	 	Affixed to Appendix II of this Agreement is the Financial
Statements provided by Party A (Appendix II: Training School Financial
Statements 31 May 2005), which forms an integral part of this Agreement and has
the same legal binding enforceability.
	 
	 	(B)	 	The Financial Statements are complete and correct in all
material respects and the content of which constitutes representations and
warranties by Party A in respect of the profitability, assets and liabilities
of the Training School as at 31 May 2005.
	 
	 	(C)	 	Since 31 May 2005 and up to the Closing Date, there has been no
material adverse change to the financial status and the business of the
Training School as compared to the financial status as at 31 May 2005. Changes
are considered to be material adverse if they lead to a 20% reduction in the
asset or a 20% increase in the liability.

	7.4	 	Financial record

	 	(1)	 	The Training School has kept duly made up all requisite books of account
relating to the Related Business, Related Assets and Related Liabilities and the
changes of the Related Business, Related Assets and Related Liabilities within the
Related Period (reflecting in accordance with good accounting principles all the
financial transactions of the Training School) minute books, registers, records and
these and all other deeds and documents (properly stamped where necessary) belonging to
or which ought to be in the possession of the Training School are in the possession of
the Training School.
	 
	 	(2)	 	All accounts, books, ledgers, financial records and any records mentioned in
clause 7.4(1) above,

	 	(A)	 	contain due and accurate records;
	 
	 	(B)	 	do not contain or reflect any material inaccuracies or
discrepancies; and
	 
	 	(C)	 	give and reflect a true and fair view of the Related Business
and all the transactions, contracts and trades of the Training School.

	 	(3)	 	All documents required to be filed with the authority have been properly made
up and filed.

	7.5	 	Taxation

	 	(1)	 	The Training School has duly compiled and will until Closing continue duly to
comply with its obligations to account to the relevant tax authorities for all

 

 

	 	 	 	amounts for which it is or may become accountable in respect of taxation, whether of the
PRC or elsewhere, as a result of the Related Business, Related Assets and Related
Liabilities.
	 
	 	(2)	 	All returns in connection with taxation that should have been made by the
Training School relating to the Related Business, Related Assets and Related
Liabilities have been made currently and on a proper basis and will until the Closing
Date continue to be so made. The returns mentioned above have not (and will not) led to
any disputes. To the best of the knowledge of Party A after reasonable enquiry, no
event has occurred that will lead to dispute or any tax penalty or the loss of any tax
holiday or incentive.

	7.6	 	Related Business

	 	(1)	 	During the Related Period:

	 	(A)	 	the Training School has carried on its business in the ordinary
and usual course;
	 
	 	(B)	 	there has been no materially adverse change in the financial
condition, prospects, and profitability of the Related Business, Related
Assets and Related Liabilities of the Training School. In the Related Period,
there will be no events, facts or affairs that will lead to such materially
adverse change. For the purposes this clause, any depreciation of the Related
Assets in accordance with PRC GAAP and any disposal or reduction in inventory
or raw material in the ordinary course of business shall not be considered to
be material adverse change;
	 
	 	(C)	 	there has been no disposal and no agreement to dispose of any
Related Assets (including inventory, machinery or equipment, account
receivable, other receivable or any other asset and benefits) in circumstances
where non-standard commercial terms are involved or it is not in the ordinary
course of business.

	 	(2)	 	Party A and its subsidiaries or associated companies do not have any direct or
indirect interest in any business that is in competition or similar to the Related
Business.
	 
	 	(3)	 	The granting of the exclusive operating right, together with the associated
rights and obligations of the promoter of the Training School will not directly lead to
the following event, which will have a material adverse effect of the business and
financial condition of the Training School:

	 	(A)	 	any suppliers of the Related Business terminating or starting
to have the right to terminate or materially varying the terms of supply.
	 
	 	(B)	 	any customers of the Training School Business terminating or
starting to have the right to terminate or materially reducing the business
transactions with the Training School.
	 
	 	(C)	 	any credit facilities, loan or financing available to the
Training School being terminated, affected or hindered.

 

 

	 	(4)	 	Performing of the obligations of this Agreement will not resulted in the
following event, which will have a material adverse effect of the business and
financial condition of the Training School:

	 	(A)	 	Party A and the Training School violating or breaching any
clause, condition or arrangement in any agreements or contracts of Party A or
the Training School.
	 
	 	(B)	 	relieving of any party of any obligations in the agreement and
arrangement as mentioned in 7.6(3) above; or any party terminating any
agreement and arrangement as mentioned in 7.6(3) above.

	7.7	 	Compliance with laws

	 	(1)	 	The Training School has conducted its business in all material respects in
accordance with all applicable laws and regulations of the PRC and the Training School
has not committed, or omitted to do, any act or thing the commission or omission of
which is, or could be, in contravention of any ordinance, order, regulation, enactment,
statute or the like in the PRC, which may have a material adverse effect upon the
assets or business of the Training School.
	 
	 	(2)	 	All necessary licences, consents, permits and authorities from anyone,
authority or organization have been obtained by the Training School to enable the
Training School to carry on the Related Business and all such licences, consents,
permits and authorities are valid and subsisting and the Training School knows of no
reason why any of them should be suspended, cancelled or revoked or should not be
renewed or reissued upon or prior to their expiry, which may have a material adverse
effect upon the assets or business of the Training School.

	7.8	 	Contract

	 	(1)	 	As at the Closing Date, there is not claims against the Training School in
relation to any agreement or arrangement under which the Training School is in default
nor are there any circumstances likely to give rise to such a default after the Closing
Date.
	 
	 	(2)	 	The Training School is not a party to any contract, transaction, or arrangement
in which it:

	 	(A)	 	is in any way otherwise than in the ordinary and proper course
of the Company’s business;
	 
	 	(B)	 	cannot readily be fulfilled or performed by the Training School
on time without undue or unusual expenditure of money and effort;

	 	(3)	 	The Training School is not a party to any contract or arrangement related to
the Related Business that is not prepared on a fair basis and the profit and financial
condition of the Training School for the period from 31 May 2005 to the Delivery Date
has not been affected by such contract or arrangement.

	7.9	 	Employees

 

 

	 	 	There have been no claims, contingent right, compensation, or any other benefits in
accordance with the employment or service contract raised by any employee or other staff of
the Training School or their estate receiver or their guidance, nor are there any
circumstances likely to give rise to such claims.
	 
	7.10	 	Litigations

	 	(1)	 	Save as disclosed in this Agreement, the Training School is not engaged in
(whether as plaintiff or defendant) any legal proceedings (including litigation,
arbitration and prosecution) relating to the Related Business, Related Assets or
Related Liabilities and no such proceedings are pending or threatened, nor are there
any facts likely to give rise to such proceedings known or which would on reasonable
enquiry be known to the Training School.
	 
	 	(3)	 	The Training School does not have any disputes with the tax authority or other
governmental or regulatory department (whether of the PRC or elsewhere) on the Related
Business, Related Assets or Related Liabilities, nor are there any facts likely to give
rise to such disputes.

	7.11	 	The representations, warranties and undertakings set out in clause 7.1 to 7.10 above are
considered to be applicable to the period between the date of this Agreement and the Closing
Date (both dates inclusive). If any representations, warranties and undertakings is correct as
at the date of this Agreement but becomes untrue and incorrect before the Closing Date for
whatever the reason, it is still a breach of this Agreement.
	 
	7.12	 	Party B hereby represents and warrants to Party A that, as at the date of this Agreement and
the Closing Date:

	 	(1)	 	Party B has the right and power to execute and perform this Agreement; and upon
execution and fulfilling the condition set forth in clause 4.1 of this Agreement, this
Agreement shall constitute the valid, lawful, binding and enforceable obligations of
Party B.
	 
	 	(2)	 	The representations and warranties given by Party B are true, accurate and not
misleading.
	 
	 	(3)	 	The signing and execution of this Agreement will not result in Party B
violating or breaching any clause, condition or arrangement in any agreements or
contracts of Party B.
	 
	 	(4)	 	The representations, warranties and undertakings set out in clause 7.12(1) to
7.12(3) above are considered to be applicable to the period between the date of this
Agreement and the Closing Date (both dates inclusive). If any representations,
warranties and undertakings is correct as at the date of this Agreement but becomes
untrue and incorrect before the Closing Date for whatever the reason, it is still a
breach of this Agreement.

 

 

	 	(5)	 	Party B undertakes that, after gaining the exclusive operating right of the
Training School, it will oblige with the laws and regulations in the PRC in operating
the Training School.
	 
	 	(6)	 	To guarantee the performance of 7.12(5) above, Party B agrees that the
operation of the Training School will be subject to the monitoring of Party A and Party
A will have the right to inspect any related financial records of the Training School.

	 	 	Article VIII Managerial staff arrangement
	 
	8.1	 	After the Closing Date, Party B shall be entitled to nominate managerial staff to operate the
Training School
	 
	 	 	Article IX Non-competition restriction
	 
	9.1	 	Party A undertakes to Party B that any time hereafter and until the expiration of five years
from the Delivery Date, it will use its best effort to avoid carrying on or being engaged in
any business (including the business of its associated companies and subsidiaries) similar to,
or competing with the business of the Training School. If, within five years from the Delivery
Date, Party A, its associated companies or its subsidiaries carry on or is engaged in any
business similar to the Training School and has lead to the Training School suffering losses
and damages, Party A agrees to compensate Party B for the losses and damages suffered.
	 
	 	 	Article X Breach of agreement responsibility
	 
	10.1	 	Each Party hereto shall perform its obligations arising under the representations, warranties
and undertakings made and shall fully indemnify the other Party from and against all losses
(including economical damages and expenses) resulting from, arising out of, or in connection
with its breach of this Agreement.
	 
	 	 	Article XI Force Majeure
	 
	11.1	 	If one Party’s performance of any obligation or any part of such obligation under this
Agreement is prevented, restricted or disturbed by any event or situation beyond the
reasonable control of such Party, including earthquakes, storms, floods and wars (“Force
Majeure Event”), the Party shall inform the other Party immediately through telex or fax and
shall provide supporting documents with details on the Force Majeure Event and reason of
non-performance of any obligation or any part of such obligation under this Agreement. The
supporting documents shall have to be counter-signed by a Notary Public
	 
	11.2	 	Upon the occurrence of Force Majeure Events, the affected Party shall use its best efforts to
resume performing its obligation under this Agreement until the termination of this Agreement.
However, if the effect of any Force Majeure Event lasts for more than 3 months, Party A shall
have the right to terminate this Agreement after delivering a written notice to Party B. The
termination under this

 

 

	 	 	clause shall not affect the rights of any Party as a result of any previous breach of this
Agreement.
	 
	 	 	Article XII Governing law
	 
	12.1	 	This Agreement shall be governed by, and construed in accordance with, the laws of the PRC.
	 
	 	 	Article XIII Dispute Resolution
	 
	13.1	 	Any dispute arising out of or in connection with the interpretation or performance of this
Agreement shall be settled through friendly negotiations. In the event that such dispute
cannot be so resolved, the Parties shall submit the dispute for arbitration to The PRC
International Economic and Trade Arbitration Committee. Any arbitral award rendered under the
arbitration procedures as provided above shall be final and binding upon both Parties. Any
fees in connection with the arbitration procedure shall be borne by the losing Party.
	 
	 	 	Article IX Miscellaneous
	 
	14.1	 	All notices and other communications required or permitted hereunder from one Party to the
other Party shall be in writing and shall be delivered by hand or by a courier, sent by
facsimile or electronic mail or mailed by registered or certified mail, prepaid postage.
Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (i) in the case of delivery by hand or by courier, on the date
delivery arrival;(ii) in the case of facsimile or electronic mail, on the date the sender
received an electronic receipt signal; and (iii) in the case of mailing, on the second
business day following the deposit of such mail.
	 
	14.2	 	Party B does not have the right to assign any of its rights and obligations under this
Agreement to any third party, unless Party A has agreed in writing or any clauses in Agreement
has allowed it.
	 
	14.3	 	Any amendment, addition or variation to this Agreement shall be valid and binding only if in
writing and signed by each of the Parties hereto. Any amendment, addition or variation to this
Agreement shall be submitted, after execution by both Parties, to the relevant authority for
approval or filing and is considered to be effective on the signing date or the approval
date, whichever is later.
	 
	14.4	 	This Agreement is written in Chinese and has six original signed copies. Each of Party A and
Party B shall keep 3 copies, each of which will be of equal force and effect.
	 
	14.5	 	If there is any delay or inaction by any Party to enforce its power, rights or remedies under
this Agreement, the enforceability of such power, rights or remedies shall not in any way be
affected or impaired. If any Party waives its rights against a particular breach by the other
Party of any clause in this Agreement, the rights of such Party

 

 

	 	 	relating to any other breach, whether of the same nature or not, by the other Party shall
not in any way be affected or impaired. If any Party has enforce its power, rights or
remedies under this Agreement for any one time, the ability of such Party to enforce its
power, rights or remedies again shall not be not in any way be affected or impaired. If any
Party has partially enforce its power, rights or remedies under this Agreement, the ability
of such Party to enforce its other power, rights or remedies shall not be not in any way be
affected or impaired.
	 
	14.6	 	Any power, rights or remedies given to the Parties under this Agreement shall not affect or
impair any other power, rights or remedies and shall be cumulative. It should also be
supplemental to the power, rights or remedies offered by existing and future laws, contractual
arrangement or any other arrangements.
	 
	14.7	 	Both Parties agree that if any Party breaches the clauses in this Agreement, the
non-breaching Party shall have the right to terminate this Agreement and seek compensation
from the breaching Party.
	 
	14.8	 	If any representations or warranties in Article VII is proved to be untrue or incorrect or
any undertakings non-fulfilled, Party B shall have the right to terminate this Agreement and
seek compensation from Party A.
	 
	14.9	 	All the taxes and fees related to the signing and the execution of this Agreement shall be
processed in accordance with the laws and regulations provided that clause 3.1 in Article III
is not affected.

In witness whereof, the Parties have caused this Agreement to be signed by their duly authorized
representatives in Beijing on the date as written in the first page.

Tsinghua Tongfang Co. Ltd, as Party A

Representative:

Date:

Beijing Tongfang Digital Education Technology Limited, as Party B

Representative:

Date:exv10w8

 

Exhibit 10.8

TECHNICAL SERVICES AGREEMENT

By and Among

CHINACAST TECHNOLOGY (SHANGHAI) LIMITED

THE CCL SHAREHOLDERS

and

CHINACAST CO., LTD.

Dated as of November 15, 2000

 

 

     This TECHNICAL SERVICES AGREEMENT (“Agreement”) is entered into as of November 15, 2000, by
and among ChinaCast Technology (Shanghai) Limited, a wholly foreign-owned limited liability
enterprise organized and existing under the laws of the People’s Republic of China (“PRC”) (“CCT
Shanghai”); CHINACAST CO. LTD., a limited liability company organized and existing under the laws
of the PRC (“CCL”); and BEIJING COL NETWORK TECHNOLOGY CO., LTD, a limited liability company
organized and existing under the laws of the People’s Republic of China (“PRC”), (“Beijing Col”);
SHENZHEN ZHONGXUN TENG INVESTMENT DEVELOPMENT CO., LTD., a limited liability company organized and
existing under the laws of the PRC (“Shenzhen Zhongxun”); TIBET TIANTAI INVESTMENT MANAGEMENT CO.,
LTD., a limited liability company organized and existing under the laws of the PRC (“Tibet
Tiantai”) (Beijing Col, Shenzhen Zhongxun and Tibet Tiantai are referred to collectively as the
“CCL Shareholders”). CCL and CCT Shanghai are each individually referred to herein as a “Party” and
both are collectively referred to herein as the “Parties”.

RECITALS

     WHEREAS, CCL wishes to secure the assistance of CCT Shanghai to assist CCL in the
implementation of CCL’s Turbo 163, DDN Enhancement and Cablenet businesses in the PRC;

     AND WHEREAS, CCT Shanghai wishes to assist CCL to implement CCL’s Turbo 163, DDN Enhancement
and Cablenet businesses in the PRC

     NOW THEREFORE, in consideration of the foregoing and the mutual promises, covenants and
agreements contained in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are acknowledged expressly, the Parties hereby agree as follows:

ARTICLE I.     PROVISION OF SERVICES AND ANCILLARY EQUIPMENT

     Section 1.1     Services. CCT Shanghai will, during the term of this Agreement and to the
extent of CCL’s need, provide and CCL will take and pay for the Services set forth in Appendix A,
with respect to CCL’s Turbo 163 business, DDN Enhancement business and Cablenet business all as
contemplated in the Business Plan dated as of August, 2000. CCT Shanghai will provide the Services
solely in the capacity of an independent contractor and consultant to CCL. The General Manager of
CCL will retain all authority and responsibility to conduct the affairs of and to manage CCL. CCT
Shanghai may, at its option, assign any of its rights hereunder and/or delegate the performance of
the Services described in this Section 1.1 to a subcontractor or affiliate of CCT Shanghai,
provided that any such assignment, delegation, or subcontract will not relieve CCT Shanghai of its
obligations hereunder. CCL shall not assign this Agreement without the prior written approval of
CCT Shanghai.

 

 

     Section 1.2     Equipment. In connection with provision of the Services hereunder, CCT
Shanghai will supply to CCL for its use ancillary Equipment as set forth in Appendix A hereto
together with associated software and technical documentation. Such use of ancillary Equipment by
CCL will be without additional charge.

     Section 1.3     Obligation to Return Equipment. Upon the occurrence of any of the
following events in the determination of CCT Shanghai, CCL will promptly take all action to deliver
and return the Equipment and the related software and documentation in the possession of CCL to CCT
Shanghai, except to the extent CCT Shanghai has waived its right to the return of such Equipment as
contemplated in Section 2.3 hereof : (i) termination of this Agreement, or (ii) material breach by
CCL of this Agreement or the Pledge Agreement among certain shareholders of CCL and CCT Shanghai of
even date herewith (the “Pledge Agreement”). In the event CCL fails to promptly and fully return
the Equipment in good operating condition and the related software and documentation to CCT
Shanghai it its sole determination, such event shall be an equipment return default (“Equipment
Return Default”), and CCT Shanghai shall be entitled to immediately avail itself of any and all
legal actions and proceedings to recover the Equipment and/or to foreclose upon the Pledged
Collateral pursuant to the Pledge Agreement.

     Section 1.4     Rights to Use Equipment and Software. CCT Shanghai hereby grants to CCL
the non-exclusive, non-transferable right to use all Equipment and software provided by CCT
Shanghai under this Agreement solely in the conduct of CCL’s Turbo 163, DDN Enhancement and
Cablenet businesses.

     Section 1.5     Warranty. CCT Shanghai warrants that the Services will be provided in a
good and workmanlike manner, exercising that degree of skill, diligence, prudence and foresight
which would reasonably be expected from a fully skilled, experienced and competent contractor
and/or operator engaged in the same type of undertaking under the same or similar conditions in the
same or a similar location. CCL’s sole and exclusive remedy for breach of this warranty will be the
provision of replacement Services by CCT Shanghai. CCT Shanghai makes no other warranty, express or
implied, relating to the Services, ancillary Equipment, software, know how or other things
delivered under this Agreement.

ARTICLE II.     COMPENSATION

     Section 2.1     Compensation. As compensation for the performance of the Services,
including the provision of ancillary Equipment, CCL will pay to CCT Shanghai on the tenth business
day of each calendar month, in Renminbi and in immediately available funds in an account designated
by CCT Shanghai, service fees in an amount equal the difference between the total cash revenue CCL
has received in the preceding month and CCL’s cash paid out or allocated to pay for operating
expenses (including without limitation cost reimbursements and taxes as contemplated in Section 2.2
and 2,4), as set forth in Appendix B, for that preceding month in amounts not exceeding the
applicable monthly operating expenses budget in the current CCL business plan approved by the Board
of Directors of CCL (“Service Fee”). Any operating expense not set forth in Appendix B must be
approved by the Board of Directors prior to payment if such

3

 

operating expense is (i) not incurred in the ordinary course of business, (ii) a non-recurring
cost, or (iii) an expense that CCT Shanghai deems inappropriate to be paid as an operating expense.

     Section 2.2     Cost Reimbursement. CCL will, within 30 days of receipt of CCT Shanghai’s
invoice with reasonable supporting documentation, reimburse CCT Shanghai for all costs and fees
incurred in connection with the exportation, importation, shipping and delivery of the Equipment,
including, but not limited to, freight, customs duties, taxes, warehousing, and insurance costs.

     Section 2.3     CCT Shanghai Right to Decline Return of Equipment. CCT Shanghai may, from
time to time, subject only to applicable PRC law and to the terms of the Pledge Agreement, elect to
decline the return of any item of equipment (the “Transferred Equipment”) to CCL and cause
Relinquishment (as defined in the Pledge Agreement). Upon receipt of notice of Relinquishment (as
specified below), the CCL Shareholders shall assign, transfer and deliver to CCT Shanghai, or its
designated Affiliate (as defined in the Pledge Agreement) or third party, free from any interest of
the CCL Shareholders all of their respective right, title and interest in and to the corresponding
amount of Ownership Rights (as defined in the Pledge Agreement) to be transferred as set forth in
the notice of Relinquishment. The CCL Shareholders shall promptly take all actions to execute any
documents or instruments necessary to initiate and complete all proceedings and procedures required
to transfer their respective Ownership Rights. Such Relinquishment, once effected, shall terminate
CCL’s obligation under Section 1.3 above to return such Transferred Equipment to CCT Shanghai.

     CCT Shanghai will make such election by providing to CCL a written notice of Relinquishment
together with a calculation of the average of the replacement cost of the Transferred Equipment and
the original cost of such Transferred Equipment (such average being the “Cost of Transferred
Equipment”) together with a calculation of the number of shares in CCL which are of equal value to
such the Cost of Transferred Equipment, such calculation to be made by dividing the net asset value
of CCL (as determined by CCL’s accountants based on CCL’s books of the close of the most recent
calendar quarter increased by the Cost of Transferred Equipment), by the total number of Ownership
Certificates as of the close of the most recent calendar quarter. In the event CCL disputes in good
faith any of the foregoing calculations, CCT Shanghai may retain an internationally-recognized
independent accounting firm selected by CCT Shanghai to make such calculations and the Parties will
be bound by the calculations of such accounting firm. CCL will pay for the services of the
accounting firm if such firms binding calculations. are no more favorable to CCL than
CCT Shanghai’s calculations, which CCL challenged, otherwise, CCT Shanghai will pay for the
services of the accounting firm.

     Section 2.4     Taxes. CCL will pay all import duties, value-added taxes and business
taxes arising from the provision of Services and ancillary Equipment set forth in Appendix A.

4

 

ARTICLE III.     TERM

     This Agreement will be effective upon its execution by the Parties and will continue for a
term of twenty years, provided that CCT Shanghai may terminate this Agreement without cause by
giving CCL notice of termination no less than one year prior to the effective date of termination.

ARTICLE IV.     LIMITATIONS OF LIABILITY

     Section 4.1     Limitation of Liability. Notwithstanding anything to the contrary
contained in this Agreement, neither CCT Shanghai nor its shareholders, nor any of its or their
respective directors, officers, agents, or employees, nor any person or entity controlling any of
the forgoing will be liable to CCL for any claim arising under or in connection with this
Agreement except claims for injury or death caused to persons or damage to tangible personal
property to the extent caused by CCT Shanghai and except for claims based on CCT Shanghai’s gross
negligence or willful misconduct in the performance of its obligations hereunder. No act or
omission which may be the result of an error of judgment or mistake made in good faith will be
considered gross negligence or willful misconduct. Notwithstanding anything to the contrary
contained in this Agreement, CCL will have no right to recover indirect, special, incidental,
consequential, or punitive damages or damages for loss of profits that may result from any action
or inaction of CCT Shanghai in connection with this Agreement.

     Section 4.2     Force Majeure. Failure of either Party to perform any obligations
hereunder will be excused (except that any obligation to pay money will not be excused) to the
extent such failure is attributable to events which are beyond the control of the defaulting Party
including, without limitation, earthquakes, typhoons, flood, fire, war, or the action or inaction
of any governmental authority (events of “Force Majeure”). A Party claiming the event of Force
Majeure will notify the other Party within fifteen (15) days, explaining the nature of such event
of Force Majeure, the anticipated duration and actions required by the affected Party to correct
the deficiencies resulting from such event. Upon an event of Force Majeure, the Parties will
immediately consult with each other to find an equitable solution and will use commercially
reasonable efforts to mitigate the consequences caused by such event.

ARTICLE V.     ADMINISTRATION

     Section 5.1     Representative. Each Party will, by notice to the other Party, appoint one
individual who will represent the appointing Party in all matters relating to this Agreement.
Either Party may change its representative at any time by notice to the other Party.

     Section 5.2     Right to Inspect. CCL will have the right, at its reasonable request and
expense, to inspect any Service or ancillary Equipment provided under this Agreement and to inspect
any records kept by CCT Shanghai as required by this Agreement.

5

 

     Section 5.3     Employees. All personnel used by CCT Shanghai in the performance of this
Agreement will be employed or otherwise retained by CCT Shanghai and will not be deemed employees
of CCL. CCT Shanghai will be responsible for supervising such individuals, for paying all salaries
and benefits and for meeting all government liabilities with respect to such individuals.

     Section 5.4.     Exchange of Information and Confidentiality. The Parties will exchange
information as may be reasonably necessary to implement this Agreement. Each Party will maintain in
confidence and will use solely for the purposes of this Agreement all information disclosed by the
other Party in a writing marked “Confidential” or “Proprietary” provided that:

     a.     The receiving Party may disclose such information in compliance with any requirement of any
governmental authority, provided that the receiving Party uses best reasonable efforts to afford
the disclosing Party notice and an opportunity to object to such disclosure;

     b.     The receiving Party may disclose such information to its agents or employees who have a
need to know such information and who have agreed in writing to protect such information from
further disclosure on terms substantially similar to the terms of this Section 5.4; and

     c.     The receiving Party may disclose such information if such information has entered the
public domain (other than through the unauthorized disclosure of the receiving Party).

ARTICLE VI.     MISCELLANEOUS

     Section 6.1     Authority. Each of the Parties hereby represents and warrants to the other
Party that each has the power to execute and perform this Agreement; and that this Agreement upon
execution will constitute the valid, lawful, binding and enforceable obligations of each Party.

     Section 6.2     Compliance with Law. The Parties will comply with all laws in the
performance of this Agreement and their respective business activities. Without limiting the
foregoing, CCT Shanghai and CCL agree not to pay or promise to pay or give or promise to give
anything of value, either directly or indirectly, to an official of the Chinese or any other
government for the purpose of influencing an act or decision of any such government or its
officials in connection with the performance of this Agreement and their respective business
activities.

     Section 6.3     Relationship of Parties. The Parties will perform their obligations under
this Agreement as independent contractors. Nothing in this Agreement will render the Parties hereto
liable as partners, associates, or joint venturers or to create a partnership, joint venture or
association.

     Section 6.4     Governing Law; Dispute Resolution. This Agreement will be governed by, and
construed in accordance with, the laws of the PRC. The Parties will use

6

 

their best efforts to resolve all disputes arising in connection with this Agreement promptly
through friendly negotiations. In the event that no settlement is reached within thirty days
following notice by one Party to the other of the occurrence of a dispute, the dispute will, at the
request of either Party, be referred to and finally resolved by arbitration in Beijing at the China
International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its Rules
then in effect (which Rules are deemed to be incorporated by reference into this section). Such
arbitration will be conducted in the English and Chinese languages by a panel of three arbitrators.
Each of CCL and CCT Shanghai will appoint one arbitrator. The third arbitrators will be mutually
agreed upon by CCL and CCT Shanghai. In the event CCL and CCT Shanghai fail to agree within 20
days, the third arbitrator will be appointed by CIETAC pursuant to its Rules within 30 days from
the date of receipt of notice to make such appointment. If selected pursuant to the immediately
preceding sentence, the third arbitrator must be chosen from among the CIETAC panel of arbitrators
from one of the following countries: Australia, Canada, Germany, Hong Kong Japan, Singapore,
Sweden, Switzerland and the United States. The arbitrators will decide in their award the
allocation of costs, including the arbitrators’ fees and all other costs to which the dispute may
give rise. The award of the arbitrators will be final and without appeal. Any competent court may
enforce such award.

     Section 6.5     Language. This Agreement is written and executed in both the English and
Chinese languages, each of which will be of equal force and effect.

     Section 6.6     Amendments. This Agreement and its provisions may be amended, interpreted,
waived, discharged or terminated only by a writing signed by each of the Parties hereto.

     Section 6.7     Notices. All notices and other communications required or permitted
hereunder shall be in the English language, in writing and shall be (i) mailed by registered or
certified mail, postage prepaid; (ii) sent by facsimile or electronic mail with electronic
confirmation of receipt; or (iii) delivered by hand or by an internationally-recognized overnight
courier with written confirmation of receipt, addressed (a) if to a party hereto, at such Party’s
address set forth below, or at such other address as such Party shall have furnished to the other
Parties in writing:

	 	 	 
	If to ChinaCast Technology (Shanghai) Limited:
	Address:
	          	25/F Qiang Sheng Plaza
	 
	 	No. 145 Pu Jian Lu
	 
	 	Pu Dong
	 
	 	Shanghai 200127, China
	Attn:
	 	Mr. Luk Chung Po
	Tel:
	 	(86 21) 6864 4666
	Fax:
	 	(86 21) 5873 4554
	E-mail:
	 	terencel@direct163.com

7

 

	 	 	 
	If to CCL:
	Address:
	          	Unit B, 15/F., China Merchants Tower
	 
	 	No. 2 Dong Huan Nan Lu,
	 
	 	Chaoyang District
	 
	 	Beijing 100022, PRC
	Attn:
	 	Lu Ruifeng
	Tel:
	 	(86 10) 6566 7788
	Fax:
	 	(86 10) 6566 9374
	E-mail:
	 	rf.lu@direct 16 3 . com
	 
	 
	If to Beijing Col:
	Address:
	 	No. 48 (B), Baishiqiao Road
	 
	 	Beijing, PRC
	Attn:
	 	Du Wei
	Tel:

	Fax:

	E-mail:

	 
	If to Shenzhen Zhongxun:
	Address:
	 	Rm#1506, Haiyan Building
	 
	 	Jiabin Road, Luohu District,
	 
	 	Shenzhen, PRC
	Attn:
	 	Lu Ruifeng
	Tel:

	Fax:

	E-mail:
	 	rf.lu@direct163.com
	 
	If to Tibet Tiantai Investment:
	Address:
	 	No. 36, Sela Road
	 
	 	Lhasa, PRC
	Attn:
	 	Shi Yuqing Tel:
	Fax:

	E-mail:

Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (x) in the case of personal delivery or delivery by facsimile or by
electronic mail, on the date of such delivery, (y) in the case of an internationally-recognized
overnight courier, on the fifth business day after the date when sent and (z) in the case of
mailing, on the tenth business day following that on which the piece of mail containing such
communication has been deposited in a regularly maintained receptacle for the deposit of mail,
addressed and mailed as aforesaid.

     Section 6.8     Further Assurances. CCT Shanghai and CCL each agree to execute and deliver
such additional documents and to take such additional actions as may be

8

 

necessary or appropriate to effect the provisions of this Agreement and all transactions
contemplated hereby.

     Section 6.9     Severability. If any provision of this Agreement or the application
thereof to any Party or circumstance will be held invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other Parties or circumstances
will not be affected thereby and will be enforced to the greatest extent permitted by law.

     Section 6.10     No Third Party Beneficiary. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than the Parties hereto and their respective
permitted successors and assigns any rights, benefits, or obligations hereunder.

     Section 6.11     Remedies Cumulative. Subject to the limitations set forth in Article IV
hereof, the rights and remedies available under this Agreement or otherwise available will be
cumulative of all other rights and remedies and may be exercised successively.

     Section 6.12     CCL Shareholders. Beijing COL Network Technology Co., Ltd., Shenzhen
Zhongxun Teng Investment Development Co., Ltd. and Tibet Tiantai Investment Management Co., Ltd.
jointly and severally agree to the terms and conditions of this Agreement and shall take any and
all action to ensure the due and prompt performance of this Agreement by CCL and each of the CCL
Shareholders.

     Section 6.13     Counterpart Execution. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together will constitute
one and the same instrument.

     IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to
be signed on the date first above written.

	     	 	 	 	 	 
	 	BEIJING COL NETWORK TECHNOLOGY CO., LTD.

 
	 	By:  	/s/ Lu Ruifeng
 	 
	 	 	Name:  	Lu Ruifeng 	 
	 	 	Title:  	Authorized Signatory 	 
	 

	     	 	 	 	 	 
	 	SHENZHEN ZHONGXUN TEND INVESTMENT DEVELOPMENT CO., LTD
 
	 	By:  	/s/ Lu Ruifeng
 	 
	 	 	Name:  	Lu Ruifeng 	 
	 	 	Title:  	Authorized Signatory 	 

9

 

	     	 	 	 	 	 
	 	TIBET TIANTAI INVESTMENT MANAGEMENT CO., LTD

 	 
	 	By:  	/s/ Lu Ruifeng
 
	 	 	Name:  	Lu Ruifeng 	 
	 	 	Title:  	Authorized Signatory 	 
	 

	     	 	 	 	 	 
	 	CHIINACAST TECHNOLOGY (SHANGHAI) LIMITED

 
	 	By:  	/s/ Terence Luk
 	 
	 	 	Name:  	Terence Luk 	 
	 	 	Title:  	Chairman of the Board 	 
	 

	     	 	 	 	 	 
	 	CHINACAST CO., LTD.

 
	 	By:  	/s/ Lu Ruifeng
 	 
	 	 	Name:  	Lu Ruifeng 	 
	 	 	Title:  	Authorized Signatory 	 
	 

10

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