Document:

EXHIBIT (10)

                           TENGTU INTERNATIONAL CORP.
                 1999 NON-QUALIFIED STOCK OPTION INCENTIVE PLAN

1.       PURPOSE; EFFECTIVENESS OF THE PLAN.

         (a)      The purpose of the 1999 Tengtu International Corp. (the
                  "Company") 1999 Stock Option Incentive Plan (the "Plan")
                  is to advance the interests of the Company and its
                  stockholders by helping the Company obtain and retain the
                  services of employees, officers, consultants, counsel and
                  directors, upon whose judgment, initiative and efforts
                  the Company is substantially dependent, and to provide
                  those persons with further incentives to advance the
                  interests of the Company.

         (b)      The Plan will become effective on the date of its
                  approval by the stockholders of the Company, provided
                  such approval is within twelve months of March 29, 1999,
                  the date of adoption by the Company's Board of Directors.
                  If the Plan is not so approved by the stockholders of the
                  Company, any options granted under this Plan will be
                  rescinded and will be void.  The Plan will remain in
                  effect until it is terminated by the Board or the
                  Committee (as defined hereafter) under section 9 hereof,
                  OR DECEMBER 31, 2000, whichever is earlier.  This Plan

<PAGE>

                  will be governed by, and construed in accordance with,
                  the laws of the State of Delaware.

2.       CERTAIN DEFINITIONS.  Unless the context otherwise requires,
         the following defined terms (together with other capitalized
         terms defined elsewhere in the Plan) will govern the
         construction of the Plan, and of any stock option agreements
         entered into pursuant to the Plan:

         (a)      "1933 Act" means the federal Securities Act of 1933, as
                  amended;

         (b)      "Board" means the Board of Directors of the Company;

         (c)      "Committee" refers to the Board's Compensation Committee
                  consisting of two or more Disinterested and Non-Employee
                  Directors (as defined herein); provided that the term
                  "Committee" will refer to the Board during such times as no
                  Committee is appointed by the Board;

         (d)      "Company" means Tengtu International Corp., a Delaware
                  corporation;

         (e)      "Disinterested Director" means a member of the Board who does
                  not receive Options under the Plan other than the grant of a
                  Formula Option pursuant to section 4(m);

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         (f)      "Eligible Participants" means persons who, at a
                  particular time, are employees, officers, consultants, or
                  directors of the Company or its subsidiaries or counsel
                  to the Company or its subsidiaries;

         (g)      "ESO" means an "Employee Stock Option" which is an Option
                  granted to a director, officer or employee of the
                  Company;

         (h)      "Fair Market Value" means, with respect to the Stock and as of
                  the date an Option or a Formula Option is granted hereunder,
                  the market price per share of such Stock determined by the
                  Committee as follows:

                  (i)      the Fair Market Value will be equal to the last-
                           transaction price quoted by the NASDAQ system for
                           any date; or
                  (ii)     if no trades in the Stock occurred on the date in
                           question, the Fair Market Value will be the last
                           transaction price quoted by the NASDAQ system for the
                           last date on which trades of the Stock occurred.

         (i)      "Formula Option" means an Option granted to non-employee
                  members of the Board of Directors pursuant to section
                  4(m) hereof;

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         (j)      "Non-Employee Director" means a director of the Company
                  who:
                  (i)      is not currently an employee or officer of the
                           Company or a parent or Subsidiary of the Company;

                  (ii)     does not receive compensation, either directly or
                           indirectly, from the Company, or a parent or
                           subsidiary of the Company, for services rendered as a
                           consultant or in any capacity other than as a
                           director, except for an amount that does not exceed
                           $60,000;

                  (iii)    does not possess an interest in a transaction,
                           to which the Company, or a Company Subsidiary
                           is a party, where the amount involved in the
                           transaction exceeds $60,000; and

                  (iv)     is not an owner, executive officer or beneficial
                           owner of in excess of 10% of a business or
                           professional entity:

                           (1)   which during the Company's last fiscal year
                                 has made, or currently proposes to make,
                                 payments to the Company, or a Company
                                 Subsidiary, for property or services in
                                 excess of 5% of the Company's or its
                                 Subsidiaries gross revenues for its last
                                 full fiscal year;

<PAGE>

                           (2)   which during the Company's last fiscal year
                                 has received, or currently proposes to
                                 receive, payments from the Company, or a
                                 Company Subsidiary, for property or services
                                 in excess of 5% of the Company's or its
                                 Subsidiaries gross revenues for its last
                                 full fiscal year; or

                           (3)   to which, at the end of the Company's last
                                 fiscal year, the Company owed a debt in excess
                                 of 5% of the Company's consolidated assets;

                  (v)      during the Company's last fiscal year, has not been
                           a member of, or counsel to, a law firm that the
                           Company retained or currently proposes to retain;
                  (vi)     during the Company's last fiscal year, has not been a
                           partner or executive officer of any investment
                           banking firm that has performed services for the
                           Company, or is currently proposed to perform services
                           for the Company, other than as a participating
                           underwriter in a syndicate.

         (k)      "NSO" means "Non-employee Stock Option" which is any option
                  granted under this Plan which fails to qualify as an ESO
                  because is it granted to someone other than a director,
                  officer or employee of the Company;

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         (l)      "Option" means an option granted pursuant to the Plan
                  entitling the option holder to acquire shares of Stock
                  issued by the Company;

         (m)      "Option Agreement" means an agreement between the Company
                  and an Optionee, in form and substance satisfactory to
                  the Committee in its sole discretion, consistent with the
                  Plan;

         (n)      "Option Price" with respect to any particular Option means the
                  exercise price at which the Optionee may acquire each share of
                  the Option Stock called for under such Option;

         (o)      "Option Stock" means Stock issued or issuable by the
                  Company pursuant to the valid exercise of an Option;

         (p)      "Optionee" means an Eligible Participant to whom Options
                  are granted hereunder, and any transferee thereof
                  pursuant to a transfer authorized under the Plan;

         (q)      "Plan" means this 1999 Stock Option Incentive Plan of the
                  Company;

         (r)      "Stock" means shares of the Company's Common Stock, $.01
                  par value;

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         (s)      "Subsidiary" means any company in which the Company has
                  more than a 30% ownership interest;

         (t)      "Transfer," with respect to and Option or Option Stock,
                  includes, without limitation, a voluntary or involuntary
                  sale, assignment, transfer, conveyance, pledge,
                  hypothecation, encumbrance, disposal, loan, gift
                  attachment or levy of such Option or Option Stock,
                  including without limitation an assignment for the
                  benefit of creditors of the Optionee, a transfer by
                  operation of law, such as a transfer by will or under the
                  laws of descent and distribution, an execution of
                  judgment against the Option Stock or the acquisition or
                  record or beneficial ownership thereof by a lender or
                  creditor, a transfer pursuant to any decree of divorce,
                  dissolution or separate maintenance, any property
                  settlement, any separation agreement or any other
                  agreement with a spouse (except for estate planing
                  purposes) under which a part or all of the shares of
                  Option Stock are transferred or awarded to the spouse of
                  the Optionee or are required to be sold; or a transfer
                  resulting from the filing by the Optionee of a petition
                  for relief, or the filing of an involuntary petition
                  against such Optionee, under the bankruptcy laws of the
                  United States or of any other nation.

3.       ELIGIBILITY.  The Company may grant Options under this Plan

<PAGE>

         only to persons who are Eligible Participants as of the time of such
         grant. Subject to the provisions of sections 4(d), 5 and 6 hereof,
         there is no limitation on the number of Options that may be granted to
         an Eligible Participant.

4.       ADMINISTRATION.

         (a)      COMMITTEE. The Committee will administer the Plan as set forth
                  herein. No grant of Options, except for Formula Options, shall
                  be made under the Plan without approval by the Committee.

         (b)      COMPOSITION OF THE COMMITTEE. The Committee shall be
                  composed of two or more Non-Employee Disinterested
                  Directors.

         (c)      AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have
                  full and final authority in its discretion, at any time and
                  from time to time, subject only to the express terms,
                  conditions and other provisions of the Company's certificate
                  of incorporation and by-laws, the Plan, Delaware law and the
                  specific limitations on such discretion set forth herein:

                  (i)      to select and approve the persons who will be
                           granted Options under this Plan from among the

<PAGE>

                           Eligible Participants, and to grant to any person so
                           selected one or more Options to purchase such number
                           of shares of Option Stock as the Committee may
                           determine;

                  (ii)     to determine the period or periods of time during
                           which Options may be exercised, the Option Price and
                           the duration of such Options, and other matters to be
                           determined by the Committee in connection with
                           specific Option grants and Options Agreements as
                           specified under this Plan;

                  (iii)             to interpret this Plan, to prescribe, amend
                                    and rescind rules and regulations relating
                                    to this Plan, and to make all other
                                    determinations necessary or advisable for
                                    the operation and administration of this
                                    Plan; and

         (d)      LIMITATION ON AUTHORITY.  Notwithstanding the foregoing,
                  or any other provision of this Plan, the Committee will
                  have no authority;

                  (i)      to grant Options to any of its members, whether or
                           not approved by the Board; and

                  (ii)     to determine any matters, or exercise any
                           discretion, in connection with the Formula Options

<PAGE>

                           under section 4(m) hereof.

         (e)      DESIGNATION OF OPTIONS. Except as otherwise granted hereunder,
                  the Committee will designate any Option granted hereunder
                  either as an ESO or an NSO. ESO's may only be granted to
                  persons who are directors, officers or employees of the
                  Company and/or its Subsidiaries.
         (f)      OPTION AGREEMENTS. Options will be deemed granted hereunder
                  only upon the execution and delivery of an Option Agreement by
                  the Optionee and a duly authorized officer of the Company in
                  the form annexed hereto as Exhibit A. Options will not be
                  deemed granted hereunder merely upon the authorization of such
                  grant by the Committee.

5.       SHARES RESERVED FOR OPTIONS.

         (a)      OPTION POOL.  The aggregate number of shares of Option
                  Stock that may be issued pursuant to the exercise of
                  Options granted under the Plan will not exceed three
                  million (3,000,000) (the "Option Pool").1
         (b)      ADJUSTMENTS UPON CHANGES IN STOCK.  In the event of any
                  change in the outstanding Stock of the Company as a
                  result of a stock split, reverse stock split, stock
--------
                       1 As at May 1, 1999 and before giving any effect to any
                  stock split, reserve split, recapitalization, combination or
                  reclassification.

<PAGE>

                  dividend, recapitalization, combination or reclassification,
                  appropriate proportionate adjustment will be made in: (i) the
                  aggregate number of shares of Option Stock in the Option Pool;
                  (ii) the Option Price and the number of shares of Option Stock
                  called for in each outstanding Option granted hereunder; and
                  (iii) other rights and matters determined on a per share basis
                  under the Plan or any Option Agreement hereunder. No such
                  adjustment will be required by reason of the issuance or sale
                  by the company for cash or other consideration of additional
                  shares of its Stock or securities convertible into or
                  exchangeable for shares of its Stock.

6.       TERMS OF STOCK OPTION AGREEMENTS.  Each Option granted
         pursuant to this Plan will be evidenced by an Option
         Agreement.  Without limiting the foregoing, each Option
         Agreement (unless otherwise stated therein) will be deemed to
         include the following terms and conditions:

         (a)      VESTING PERIODS.  Except as otherwise provided herein,
                  each Option Agreement may specify the period of periods
                  of time within which each Option or portion thereof will
                  first become exercisable (the "Vesting Period").
                  (i)      Unless the Option Agreement, in the discretion of
                           the Committee, provides otherwise, for Eligible
                           Participants who are not directors, officers or

<PAGE>

                           employees of the Company or any subsidiary of the
                           Company, any options granted under the Plan shall
                           have no Vesting Period and shall be immediately
                           exercisable.

                  (ii)     For Eligible Participants that are directors,
                           officers or employees of the Company or its
                           Subsidiaries, the Option will become exercisable,
                           as to twenty percent (20%) of the Option Stock on
                           each of the first, second, third, fourth and fifth
                           anniversaries of such date of granting.  Therefore,
                           the Option will only become fully exercisable,
                           subject to the Optionee's remaining an Eligible
                           Participant, on the fifth anniversary of granting.

         (b)      EXERCISE OF THE OPTION.

                  (i)      MECHANICS AND NOTICE.  An Option may be exercised
                           to the extent exercisable by giving written notice
                           of exercise to the Company, specifying the number
                           of full shares of Option Stock to be purchased and
                           accompanied by full payment of the Option Price;
                           and (2) by giving assurances satisfactory to the
                           Company that the shares of Option Stock to be
                           purchased for investment and not with a view to
                           resale in connection with any distribution of such
                           shares in violation of the 1933 Act; provided,

<PAGE>

                           however, that in the event the Option Stock called
                           for under the Option is registered under the 1933
                           Act, or in the event resale of such Option Stock
                           without such registration would otherwise be
                           permissible, this second condition will be
                           inoperative if, in the opinion of counsel for the
                           Company, such condition is not required under the
                           1933 Act, or any other applicable law, regulation or
                           rule of any governmental agency.

         (c)      OPTION PRICE.  Each Option Agreement will specify the
                  Option Price with respect to the exercise of Option Stock
                  thereunder.  The Option Price may not be less than Fair
                  Market Value.

         (d)      PAYMENT OF THE OPTION PRICE. The Option Price will be payable
                  to the Company in United States dollars in cash or by check
                  or, such other legal consideration as may be approved by the
                  Committee in its discretion.

         (e)      TERMINATION OF THE OPTION. Except as otherwise provided
                  herein, each Option Agreement will specify the period of time,
                  to be fixed by the Committee in its discretion, during which
                  the Option granted therein will be exercisable, not to exceed
                  ten years from the date of grant in the case of an ESO (the
                  "Option Period");

<PAGE>

                  provided that the Option Period will not exceed five years
                  from the date of grant in the case of an ESO granted to a 10%
                  Stockholder.

                  (i)      TERMINATION OF EMPLOYMENT. Any Option granted to
                           -------------------------
                           a director, officer or employee under the Plan
                           shall terminate (1) ninety days after the date that
                           the Optionee ceases to be an Eligible Participant
                           for any reason, other than by reason of death or
                           disability or (2) twelve months after the date that
                           the Optionee ceases to be an Eligible Participant
                           by reason of such person's death or disability.

                  (ii)     MERGER OR SALE.  In the event of a sale or all or
                           --------------
                           substantially all of the assets of the Company, or
                           a merger or consolidation or other reorganization
                           in which the Company is not the surviving
                           corporation, or in which the Company becomes a
                           subsidiary of another corporation (any of the
                           foregoing events, a "Corporation Transaction"),
                           then notwithstanding anything else herein, the
                           right to exercise all then outstanding Options will
                           vest immediately prior to such Corporation
                           Transaction and will terminate immediately after
                           such Corporate Transaction; provided, however, that
                           if the Board, in its sole discretion, determines
                           that such immediate vesting of the right to

<PAGE>

                           exercise outstanding Options is not in the best
                           interests of the Company, then the successor
                           corporation must agree to assume the outstanding
                           Options or substitute therefor comparable options of
                           such successor corporation or a parent or subsidiary
                           of such successor corporation.

         (f)      OPTIONS NONTRANSFERABLE.  No Option will be transferable
                  by the Optionee otherwise than by will or the laws of
                  descent and distribution.

         (g)      QUALIFICATION OF STOCK.  If the Board determines that the
                  listing, registration or qualification of the shares of
                  Option Stock is necessary on any securities exchange or
                  under any state or federal law, or the consent or
                  approval of any governmental regulatory authority, is
                  necessary or desirable as a condition of the exercise of
                  an Option, the Option may not be exercised, in whole or
                  in part, unless and until such listing, registration,
                  qualification, consent or approval is effected or
                  obtained free of any conditions not acceptable to the
                  Board.

         (h)      ADDITIONAL RESTRICTIONS ON TRANSFER.  By accepting
                  Options and/or Option Stock under this Plan, the Optionee
                  will be deemed to represent, warrant and agree as

<PAGE>

                  follows:

                  (i)      SECURITIES ACT OF 1933.  The Optionee understands
                           that the shares of Option Stock have not been
                           registered under the 1933 Act, and that such shares
                           are not freely tradeable and must be held
                           indefinitely unless such shares are either
                           registered under the 1933 Act or an exemption from
                           such registration is available.  The Optionee
                           understands that the Company is under no obligation
                           to register the shares of Option Stock.

                  (ii)     OTHER APPLICABLE LAWS.  The Optionee further
                           understands that Transfer of the Option Stock
                           requires full compliance with the provisions of all
                           applicable laws.

                  (iii)    INVESTMENT INTENT.  Unless a registration
                           statement is in effect with respect to the
                           sale of Option Stock obtained through exercise
                           of Options granted hereunder:  (1) Upon
                           exercise of any Option, the Optionee will
                           purchase the Option Stock for his or her own
                           account and not with a view to distribution
                           within the meaning of the 1933 Act, other than
                           as may be effected in compliance with the 1933

<PAGE>

                           Act and the rules and regulations promulgated
                           thereunder and (2) no one else will have any
                           beneficial interest in the Option Stock.

         (i)      COMPLIANCE WITH LAW.  Notwithstanding any other provision
                  of this Plan, Options may be granted pursuant to the
                  Plan, and Option Stock may be issued pursuant to the
                  exercise thereof by an Optionee, only after there has
                  been compliance with all applicable federal and state
                  securities laws, and all of the same will be subject to
                  this overriding condition.  The Company will not be
                  required to register or qualify Option Stock with the
                  Securities and Exchange Commission or any state agency.

         (j)      STOCK CERTIFICATES.  Certificates representing the Option
                  Stock issued pursuant to the exercise of Options will
                  bear all legends required by law and necessary to
                  effectuate this Plan's provisions.  The Company may place
                  a "stop transfer" order against shares of the Option
                  Stock until all restrictions and conditions set forth in
                  this Plan and in the legends referred to in this section
                  6(j) have been complied with.

         (k)      NOTICES.  Any notice to be given to the Company under the
                  terms of an Option Agreement will be addressed to the
                  Company at its principal executive office, Attention:

<PAGE>

                  Corporate Secretary, or at such other address as the Company
                  may designate in writing. Any notice to be given to an
                  Optionee will be addressed to the Optionee at the address
                  provided to the Company by the Optionee. Any such notice will
                  be deemed to have been duly given if and when enclosed in a
                  properly sealed envelope, addressed as aforesaid, registered
                  and deposited, postage and registry fee prepaid, in a post
                  office or branch post office regularly maintained by the
                  United States or Canadian Government.

         (l)      OTHER PROVISIONS.  The Option Agreement may contain such
                  other terms, provisions and conditions, including such
                  special forfeiture conditions, rights of repurchase,
                  rights of first refusal and other restrictions on
                  Transfer of Option Stock issued upon exercise of any
                  Options granted hereunder, not inconsistent with the
                  Plan, as may be determined by the Committee in its sole
                  discretion.

         (m)      FORMULA OPTIONS.  On the date on which the Board appoints
                  a director to the Committee for the first time, such
                  director will be granted a Formula Option to purchase __
                  shares of Stock.  Immediately after the completion of
                  each annual meeting of the stockholders of the Company,
                  each member of the Committee will be awarded a Formula
                  Option to purchase __ shares of Stock.  Formula Options

<PAGE>

                  will have an Option Price equal to the Fair Market Value of
                  the Stock as of the date of such grant. Except as otherwise
                  specifically provided in this section 4(m), the terms of this
                  Plan, including the vesting provisions of section 6(a), will
                  apply to all Formula Options granted pursuant to this section
                  6(m).

7.       PROCEEDS FROM SALE OF STOCK.  Cash proceeds from the sale of
         shares of Option Stock will be added to the general funds of
         the Company and will be used for general corporate purposes.

8.       MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS.  Subject to
         the terms and conditions and within the limitations of the
         Plan, and except with respect to Formula Options, the
         Committee may modify, extend or renew outstanding Options
         granted under this Plan, or accept the surrender of
         outstanding Options (to the extent not theretofore exercised)
         and authorize the granting of new Options in substitution
         therefor (to the extent not theretofore exercised).
         Notwithstanding the foregoing, however, no modification of any
         Option will, without the consent of the holder of the Option,
         alter or impair any rights or obligations under any Option
         theretofore granted under this Plan.

9.       AMENDMENT AND DISCONTINUANCE.  The Board may amend, suspend or
         discontinue this Plan at any time or from time to time;

<PAGE>

         provided that:

         (a)      no such action may, without the approval of the
                  stockholders of the Company, materially increase (other
                  than by reason of an adjustment pursuant to section 5(b)
                  hereof) the maximum aggregate number of shares of Option
                  Stock in the Option Pool that may be issued under Options
                  granted pursuant to this Plan or materially increase the
                  benefits accruing to Plan participants or materially
                  modify eligibility requirements for the participants, and
         (b)      the provisions of section 4(m) hereof may not be amended
                  more often than once during any six (6) month period, and
         (c)      no such action may alter or impair any Option previously
                  granted under this Plan without the consent of the holder of
                  such Option.

10.      PLAN COMPLIANCE WITH RULE 16B-3.  With respect to persons
         subject to Section 16 of the Securities Exchange Act of 1934,
         transactions under this plan are intended to comply with all
         applicable conditions of Rule 16b-3 or its successors under
         the 1934 Act.  To the extent any provision of the Plan or
         action by the Plan administrators fails so to comply, it shall
         be deemed null and void, to the extent permitted by law and
         deemed advisable by the Plan administrators.  In accordance
         with Rule 16b-3, a grant of options to a beneficial owner of
         more than 10% of the Company's Common Stock, who is not an
         officer or director of the Company, will not be exempt under

<PAGE>

         Rule 16b-3.

11.      COPIES OF PLAN.  A copy of this Plan will be delivered to each
         Optionee at or before the time he or she executes an Option
         Agreement.

         Date Plan Adopted by Board of Directors: March 29, 1999

         Date Plan Approved by Stockholders: August 31, 1999.

<PAGE>Exhibit (10)
                             JOINT VENTURE AGREEMENT

     THIS AGREEMENT ("Agreement") is dated for reference the 30th day of July
1996

BETWEEN:

                    BEIJING TENGTU CULTURE & EDUCATION ELECTRONIC
          DEVELOPMENT CO. LTD. a Chinese Company duly incorporated under
          the laws of China and having an office in Beijing China.

          ("Party A")

AND:

                  TENGTU ENTERPRISES LIMITED. a Company duly incorporated under
         the laws of Barbados with offices at Beckwith House Hinks and Prince
         Albert Streets Bridgetown Barbados.

          ("Party B")
          (Part A and B are collectively called the Parties)

                  BEIJING TENGTU UNITED ELECTRONICS DEVELOPMENT CO LTD a Chinese
         Foreign Joint Tengtu United with offices at ________

                                 (Tengtu United)

WHEREAS:

     A. Party A has acquired certain licence and rights as described on Schedule
     A (Rights) in connection with its principal business (Business) being the
     production and distribution of educational software in China to the
     elementary, middle and junior schools (Schools System).

     B. Party A is controlled by three Chinese state organizations Legend Group
     Co., Taiji Computer Corporation, and Great Wall Computer Group Co (Chinese
     Principals).

     C. Tengtu United is a Chinese Foreign Joint venture that is authorized to
     assume the Business of Party A with foreign investors upon certain
     financial commitments being made by Party B as described herein.

     D. Blue Lake Industries Ltd a Washington State Company was approved by
     MOFTEC as a foreign investor in Tengtu United on June 12th 1995 (Effective
     Date) and has under separate agreement effective July 30th 1996 assigned
     its interests to Party B.

     E. The parties hereto have agreed to form this joint venture upon entering
     this agreement which sets out the terms and conditions under which Tengtu
     United will operate the Business.

<PAGE>

NOW THEREFORE IN CONSIDERATION of the mutual promises contained herein,
the parties hereto agree as follows:

     1.2  Purpose and Scope
          -----------------
Tengtu United has been formed to carry on the business of Party B to:

         (a) produce and distribute in China by the year 2001 5,000 electronic
     educational software titles in accordance with the Rights;

         (b) produce and distribute animated cartoons in association with
     Chinese animation companies and as permitted by law;

         (c) be a gateway for electronic publishing in China;

         (d) engage in such other activities as are reasonably incidental to the
     foregoing.

     1.3  Scope of Authority
          ------------------
Except as otherwise expressly and
specifically provided in this Agreement, neither Party A or Party B shall have
the authority to act for or assume any obligations or responsibility on behalf
of the other or Tengtu United. Neither Party A or Party B shall be liable to
each other for any expense, damage, loss or liability as may be caused by the
gross negligence or willful neglect of that other or by a failure by that other
to carry out the obligations of the other under this Agreement. This Agreement
shall not be deemed to create a general partnership between the Party A or Party
B it respect to any activities whatsoever.

     1.4  Principal Place of Business
          ---------------------------
The principal place of business of the Tengtu United shall be in Beijing China
however the principal place of business may be changed at any time by a
resolution of the Board.

     1.5  Term
          ----
The term of the Tengtu United will commence as of the date hereof and shall
continue, for a term no less than 20 years from the Effective Date unless sooner
terminated, in accordance with other provisions of this Agreement ("Term").

<PAGE>

     2.   Responsibilities of Party A:

         (a) To transfer and assign the Rights to Tengtu United;
         (b) To transfer and assign the Titles and all work in progress in new
     Titles to Tengtu United;
         (c) To transfer and assign all material contracts used in the Business
     to Tengtu United;
         (d) To allow Tengtu United to use all equipment including computer work
     stations that Party A used in the business at no cost;
         (e) To stop all operational activities in connection with the Business;
     and
         (f) To assist Tengtu United in securing future rights that relate to
     its Business and assist Tengtu United to maintain good relations between
     Tengtu United and all governmental and state agencies.

     3.   Responsibilities of Party B

         (a) To pay to Tengtu United the sum of $12,000,000 US as follows:

                  (i) 6,000,000 on or before July 30th 1996; and
                  (ii) $6,000,000 on or before July 30th 1997 failing which
         interest will be payed to Tengtu at the rate of 1% over the average
         Libor rate (Interest) over the period that the said funds are in
         default and if the said funds are not paid by January 1st 1998 the
         Party B's percentage interest in Tengtu United will reduce by an amount
         equivalent to the percentage of the amount actually contributed less
         interest over $12,000,000.

          MANAGEMENT
          ----------
          3.1   Directors

         (a) The parties agree that the Board of Directors (Board) of Tengtu
     United will consist of equal representation where Party A selects the
     Chairman of Tengtu United and Party B selected the President of Tengtu
     United.

         (b) The Parties agree that the Board of Directors will create a Board
     composed of an equal representative of each Party or so many more
     thereafter as the Tengtu Uniteds agree.

               (c)  The quorum at any meeting of the Board shall be two persons,
          provided each of party A and B is represented by its
          representative(s).

               (d)  A resolution of the Board shall be passed by a majority vote
          and each representative is entitled to one vote.

          3.2  Meetings of the Board
               ---------------------
         (a) The board shall convene and meet as needed.

         (b) Any action required to be taken by the Board may be taken without a
     meeting if all the members of the Board entitled to vote thereon consent in
     writing to such action, whether such written consent shall be in the form
     of a handwritten, typewritten or in the form of a telecopy of a signed
     copy.

         (c) The Board in conducting any meeting may, in lieu of a face to fact
     meeting, conduct such meeting by conference telephone or other
     communications facility by means of which all persons participating in the
     meeting can hear and speak to each other.

<PAGE>

          3.3  Duties of the Board
               -------------------
Except as otherwise expressly provided, the overall management and control of
the affairs of the Tengtu United shall be vested in the Board which shall have
control over the day to day business of the Tengtu United, including the power
to assign duties, approve budgets, sign contracts, pay accounts and assume
direction of business operations subject to the specific control of the Tengtu
Uniteds.

          3.4  Manager of the Tengtu United
               ----------------------------
Except as otherwise expressly provided herein, the day to day management of the
Tengtu United may be undertaken by the President and a General Manager who will
be appointed from time to time by the Board.

          3.7   Other Business Activities
                -------------------------
The Tengtu China many engage in or possess any interest in any other business of
any nature or description EXCEPT any business that competes directly or
indirectly with Tengtu United independently or with others..

          4. Proprietary Rights
             ------------------
The parties agree that Tenngtu United absolutely retains ownership to the Rights
and any rights or technologies hereafter acquired and or developed.

          5. Confidentiality
             ---------------
(a) Each Party from time to time shall disclose to the other and to Tengtu
United orally or in writing, any Confidential Information which is necessary for
the Business. If such disclosure is made in writing, it shall be marked with a
legend "Confidential".

(b) Each Party will also treat all Confidential Information developed within the
Tengtu United as if it were the Tengtu United's own Confidential Information.

          6.   CAPITAL, DISTRIBUTIONS AND COSTS
               --------------------------------
          6.1  Percentage Interest
               -------------------
Except as hereinafter provided, the Parties agree tht they have the following
interests ("Percentage Interest") in Tengtu United:

                                  Party A                  -    51%
                                  Party B                  -    49%

and that, save and except as otherwise provided herein, they shall each share in
the profits or losses of the Tengtu United and in all distributions of assets of
the Tengtu United in accordance with their respective Percentage Interests.

          6.2  No Interest on Capital
               ----------------------
No interest shall be paid upon any contributions to the capital of the Tengtu
United nor upon any undistributed or reinvested income or profits of the Tengtu
United.

          6.3   Withdrawals of Capital
                ----------------------
Except as otherwise provided herein, no portion of any capital of the Tengtu
United may be withdrawn at any time without the express consent of the Board to
be given by resolution. Upon the termination of the Tengtu United, the Tengtu
United's capital shall be distributed pursuant to this agreement.

<PAGE>

          6.4  Distributions
               -------------
(a) Not more than 30 days following the end of each fiscal quarter the Board
shall, by resolution, determine from the net cash flow of the Tengtu United the
cash available for distribution (the "Cash Available for Distribution").

(b) The Cash Available for Distribution shall be distributed to the Parties by
resolution of the Board in accordance with each parties Percentage Interest.

7.0 ACCOUNTING ---------- 7.1 Books and Records ----------------- The Board
shall appoint an international outside audit firm to report on the affairs of
Tentgtu United. Internally it shall cause accurate books and records of account
to be prepared and maintained and in which shall be entered all matters relating
to the Tengtu United, including all income, expenditures, assets and liabilities
thereof. Such books and records of account shall be kept in accordance with
generally accepted accounting principals and practices and shall be adequate to
provide each Party with all financial information as may be needed by them or an
affiliate for purposes of satisfying the financial reporting obligations of each
Party or its respective affiliate which in the case of Party B requires
quarterly reporting. Said books and records of account shall be open to
examination and/or audit by any of the Partys or their authorized
representatives at all reasonable times during the normal business hours. Any
expense for such examination and/or audit shall be borne by the Tengtu United
causing it to be conducted.

          7.2  Fiscal Year
               -----------
The fiscal year end of the Tengtu United shall be determined by resolution of
the Board. If the Tengtu United shall terminate for any reason provided herein,
the period following the last day of the fiscal year of the Tengtu United first
preceding the date of such termination and ending on the date of such
termination, shall also be deemed to be a fiscal year of the Tengtu United.

          7.3  Bank Accounts
               -------------
Funds of the Party B shall be deposited in an account(s) in the name of the
Tengtu United and in a bank(s) approved by the Board. The designate of the Board
may draw against such accounts for any purpose permitted by this Agreement in
accordance with a Board resolution.

          8.0  Sale and Transfer
               -----------------

          8.1  General
               -------
Except as expressly permitted herein no Party may mortgage, charge or otherwise
encumber, or suffer any third party to mortgage, charge or otherwise encumber,
any part or all of its interest in the Tengtu United ('Interest") unless
approved by the other Party such approval not to be unreasonably withheld.

<PAGE>

          8.2   Sale to Affiliate
                -------------------
A Party may sell, transfer or otherwise dispose of the whole or any part of its
Interest to an affiliate provided that the Party and the affiliate enter into an
agreement with the other Tengtu United that:

         (a) an affiliate will remain such so long as the affiliate holds the
     Interest or any part thereof;

         (b) prior to the affiliate ceasing to be such, the affiliate will
     transfer its Interest back to the Party or to another affiliate of the
     Party provided that such other affiliate enters into a similar agreement
     with the other Party; and

         (c) the affiliate will otherwise be bound by and have the benefit of
     the provisions of this Agreement.

          9.0  DEFAULT AND DISSOLUTION
               -----------------------
          9.1  Events of Default
               -----------------
The occurrence of any of the following events shall constitute an event of
default ("Event of Default") hereunder:

         (a) the failure by a Party to make any capital contribution as required
     in herein;

         (b) any transfer by a Party of its Interest hereunder, except as may be
     permitted herein;

         (c) a general assignment by a Party for the benefit of creditors;

         (d) the filing by a Party of a petition of Bankruptcy which petition
     remains undismissed and undischarged for a period of 90 days.

         (e) default in performance of any other material agreements of a Party
     herein if the default continues for a period of 60 days following written
     notice of such default, except that an Event of Default shall not be deemed
     to have occurred if any such default is of a non material nature or that it
     reasonably requires more than 60 days to cure, and is capable of being
     fully cured within a reasonable time, and the defaulting Party is
     diligently proceeding to cure said default.

          9.2 Causes of Dissolution
              ---------------------
          The Tengtu United shall be dissolved in the event that:

         (a) an Event of Default has occurred and the non-defaulting Party
     elects to dissolve the Tengtu United as provided herein;

         (b) the Board determines by resolution to terminate the Tengtu United;

         (c) the Tengtu United by its terms is terminated.

          9.3  Election
               --------
         (a) If an Event of Default has occurred, the non-defaulting Party, if
     it so notifies the defaulting Party within thirty (30) days after acquiring
     knowledge of such Event of Default, may elect to terminate the said Party
     pursuant to this Agreement;

<PAGE>

         (b) The election shall be exercised by written notice. No waiver of any
     right to so elect upon a subsequent or continuing default of the same or
     different nature shall be implied from any failure on the part of a
     non-defaulting Party to make the election permitted by agreement as a
     result of any prior Event of Default.

          9.4  Procedure in Dissolution and Liquidation
               ----------------------------------------
         (a) Upon the election of a Party to dissolve the Tengtu United pursuant
     to this agreement or upon the occurrence of any other event Tengtu United
     shall immediately commence to wind up its affairs and the Party shall
     proceed with reasonable promptness to liquidate the business of Tengtu
     United. To the extent the Tengtu United is not completely liquidated within
     a reasonable time (not to exceed 36 months) from the date of the election
     to dissolve, the remaining assets shall forthwith be disposed of at a
     public sale.

         (b) During the period of the winding up of the affairs of the Tengtu
     United, the Board shall continue to manage the affairs of the Tengtu
     United.

         (c) Profits and losses of the Tengtu United shall be determined as of
     the end of the period of winding up in accordance with the provisions of
     this Agreement and shall be credited or charged to each Party in the same
     manner as profits and losses of each Party would have been credited or
     charged if there were no dissolution, liquidation and termination.

         (d) The assets of the Tengtu United shall be applied or distributed in
     liquidation in the following order of priority:

         (i) to creditors of the Tengtu United other than Tengtu Uniteds in
     payment of debts and obligations of the Tengtu United;

         (ii) to each Party as return of any capital; and

         (iii) to each party in accordance with their Percentage Interest.

          10  SETTLEMENT OF DISPUTES AND GOVERNING LAW
              ----------------------------------------
10.1. In the event a dispute arises in connection with the interpretation or
implementation of this Agreement, the parties to the dispute shall attempt in
the first instance to resolve such dispute through amicable consultations If the
dispute cannot be resolved in this manner within thirty (30) days after first
conferring, then any or all parties to the dispute may refer the dispute to
arbitration in Beijing International Arbitration Committee ("Committee"). The
number of arbitrators shall be three. The arbitration proceedings shall be
conducted in the Chinese language.

10.2 Any award of the arbitrators shall be final and binding on the parties. The
costs of arbitration shall be borne by the losing party, unless the arbitrators
determine that this would be inequitable. The parties agree and recognize that
any award of the arbitrators shall be recognizable and enforceable in any court
having jurisdiction over the party against whom the award was rendered, and also
wherever assets of such party are located.

<PAGE>

10.3 The legal relations between the parties under this contract shall be
interpreted in accordance with the substantive laws of China. Any disputes
between the parties concerning their legal obligations arising under this
contract which are submitted to arbitration pursuant to this clause shall be
decided pursuant to the substantive laws of China.

          11.0  GENERAL PROVISIONS
                ------------------
          11.1  Complete Agreement
                ------------------
This agreement constitutes the entire agreement between the Parties and
supersedes all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof, and neither Party shall be bound by or charged with any oral or written
agreements, representations, warranties, statements, promises or understandings
not specifically set forth in this agreement. This Agreement may not be amended,
altered or modified except in writing, signed by each of the Parties.
          12.0   Notice
                -------
12.1 Notices as to disputes or termination to be given under this Agreement
shall be signed by the party giving such notice and mailed by certified or
registered mail, addressed to the party to be notified at its then current
business address as set forth at the beginning of this Agreement or as
subsequently changed by giving notice. Notice as to address changes, pricing
changes, warranty changes and other matters relating to policy and business may
by given to such addresses, by facsimile transmission, telex, telegram or first
class mail. Notices by mail shall be deemed given three days after mailing.

          12.3  Lawyers Fees
                ------------
Should any litigation be commenced between the Parties or their representatives
or should any Party institute any proceedings in a bankruptcy court which has
jurisdiction over any other Party or any or all of its property or assets
concerning any provision of this Agreement or the rights and duties of any
person or entity in relation thereto, the Party prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorny's fees and court costs in such litigation
which shall be determined by the court in such litigation or in a separate
action brought for that purpose.

          12.4  Validity
                --------
In the event that any provision of this Agreement shall be held to be invalid,
the same shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.

          12.5  Survival of Rights
                ------------------
Except as provided herein to the contrary, this Agreement shall be binding upon
and enure to the benefit of the Parties their respective successors, heirs and
permitted assigns.

          12.6  Governing Law
                -------------
This Agreement has been entered into in the China and all questions with respect
to the Agreement and the rights and liabilities of the Parties shall be governed
by the laws of China and this agreement shall be written in both Chinese and
English and both contracts shall had equal force and if an inconsistency then
such shall be resolved by arbitration under the arbitration provision hereunder

<PAGE>

          12.7  Waiver
                ------
No consent to or waiver of, express or implied, by any Party of any breach or
default in the performance by a Party of any term of this Agreement shall be
deemed to be a waiver of the same or any other obligations of such Party
hereunder. Failure on the part of any Party to complain of any act or failure to
act of the other Party or to declare the other Party in default, irrespective of
how long such failure continues, shall not constitute a waiver by such Party of
its rights hereunder.

IN WITNESS WHEREOF the Parties have executed or caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

BLUE LAKE INDUSTRIES LIMITED .       )
in the presence of:                  )
                                     )
 __________________________________  )
Authorized Signatory

BEIJING TENGTU CULTURE &
EDUCATION ELECTRONIC
DEVELOPMENT CO LTD                   )
in the presence of:                  )
                                     )
________________________________     )
Authorized Signatory

BEIJING TENGTU UNITED
ELECTRONICS DEVELOPMENT CO LTD       )
in the presence of:                  )
                                     )
____________________________________ )
Authorized Signatory

<PAGE>

Exhibit (

Note 3:
List of Education Softwares

<TABLE>
<CAPTION>

              List of Education Softwares and the Current Condition

   No      Name of Projects  Item                                     Cooperative  Condition    Cost   (RMB 10,000)
 <C>      <S>                                                                  <C>  <C>       <C>        <C>
    1      Legend maths for elementary school Book I                            1   Legend    completed   30
    2      Legend maths for elementary school Book II                           1   Legend    completed   30
    3      Legend maths for elementary school Book III, IV                      1   Legend    completed   50
    4      Legend maths for elementary school Book V, VI, VII                   1   Legend    completed   80
    5      Legend maths for elementary school - comprehensive exercise          1   Legend    completed   50
    6      Collection of Difficult Questions-conditions of sinking & floating as
           well as their applications-junior high physics
    7      Collection of Difficult Questions-image of lens-junior high physics  1   school    completed   28
    8      Collection of Difficult Questions-regular instruments for measurement
           and survey-junior high physics
    9      Collection of Difficult Questions-five elements for leverage-junior
           high physics                                                         1   school    completed 23
   10      Collection of Difficult Questions-Oscilloscope-senior high physics
           Grade 10                                                             1   school    completed 38
   11      Collection of Difficult questions-Brown movement-senior high physics
           Grade 10                                                             1   school    completed 39
   12      Collection of Difficult Questions-Nature of Gas-senior high physics
           Grade 10                                                             1   school    completed 37
   13      Collection of Difficult Questions-tests on nature of gas senior high
           physics Grade 10
   14      Collection of Difficult Questions-law of Boma-senior high physics
           Grade 10                                                             1   school    completed 32

<PAGE>

              List of Education Softwares and the Current Condition

   15      Collection of Difficult Questions-exercises for high-energy atomic
           core-senior 1 school completed 39 high physics Grade 11
   16      Collection of Difficult Questions-teaching of high atom-senior high
           physics Grade 1 school completed 30 11
   17      Collection of Difficult Questions-effects of light and
           electricity-senior high 1 school completed 25 Grade 11
   18      Collection of Difficult Questions-light interference-senior high
           Grade 11 1 school completed 28
   19      Collection of Difficult Questions-functional image of electric
           circuits-senior 1 school completed 40 high Grade 11
   20      Collection of Difficult Questions-waves-senior high Grade 11 1 school
           completed 38
   21      Collection of Difficult Questions-Equilibrium of electromagnetic
           mechanics-senior 1 school completed 49 high Grade 11
   22      Collection of Difficult Questions-nature of static electric
           field-senior high 1 school completed 46 Grade 11
   23      Collection of Difficult Questions-general knowledge of use of
           electricity-senior 1 school completed 49 high Grade 11
   24      Collection of Difficult Questions-alternate current-senior high Grade
           11 1 school completed 45
   25      Collection of Difficult Questions-making charts by using five
           points-senior high 1 school completed 45 algebra
   26      Collection of Difficult Questions-functional curves of sine          1   school    completed 46
   27      Collection of Difficult Questions-equation of index                  1   school    completed 48
   28      Collection of Difficult Questions-biology (structure of heart)       1   school    completed 54
   29      Collection of Difficult Questions-biology (respiratory system)       1   school    completed 50
   30      Collection of Difficult Questions-curves-senior high algebra         1   school    completed 28

<PAGE>

              List of Education Softwares and the Current Condition

   31      1+1 paradise                                                         1   Legend    completed 15
   32      Funny games-international chess                                      1   Zili      completed 20
   33      Funny games-toy bricks building                                      1   Legend    completed 16
   34      Funny games-loan carrier                                             1   Legend    completed 12
   35      Funny games-brick builder                                            1   Legend    completed 18
   36      Extracurricular assistance for elementary school-charts of numbers
           and arrays                                                           1   school    completed 20
   37      Extracurricular assistance for elementary school-maths games         1   school    completed 30
   38      Extracurricular assistance for elementary school-numbers, lines, and
           sections                                                             1   school    completed 20
   39      Extracurricular assistance for elementary school-spelling games      1   school    completed 26
   40      Extracurricular assistance for elementary school-games of Chinese
           characters                                                           1   school    completed 38
   41      Extracurricular assistance for elementary school-exercise of Chinese
           idioms                                                               1   school    completed 36
   42      Extracurricular assistance for elementary school-Reda test 3Q test
           software                                                             1   school    completed 20
   43      The ABC of computer-keyboard tutor                                   1   school    completed 14
   44      The ABC of computer-extrance to computer                             1   school    completed 15
   45      Question bank of intelligence-senior high English family-staple
           product of Legend                                                    1   Legend    completed 65
   46      Question bank of intelligence-senior high English family-staple
           product of Legend                                                    1   Legend    completed 60
   47      Question bank of intelligence-senior high English family-staple
           product of Legend                                                    1   Legend    completed 40
   48      Question bank of intelligence-senior high English family-staple
           product of Legend                                                    1   Legend    completed 46
   49      Composition master-Legend magic cube                                 1   legend    completed 50
   50      Collection of Difficult Questions-ancient Rome senior high history   1   school    completed 20
   51      Collection of Difficult Questions-ancient drifting senior high
           geography                                                            1   school    completed 15

<PAGE>

              List of Education Softwares and the Current Condition

   52      24 points                                                            1   Legend    completed 15
   53      Nature of gas                                                        1   school    completed 18
   54      Numbers, arrays and charts (I)                                       1   school    completed 23
   55      Numbers, arrays and charts (II)                                      1   school    completed 22
   56      Numbers, arrays and charts (III)                                     1   school    completed 22
   57      Visiting labyrinth                                                   1   school    completed 18
   58      Monkey King fights out                                               1   school    completed 18
   59      Question on sums and difference                                      1   school    completed 10
   60      Cute brain                                                           1   school    completed 10
   61      Comprehensive shapes                                                 1   school    completed 10
   62      Nature of condensor                                                  1   school    completed 10
   63      Question of chasing                                                  1   school    completed 14
   64      Story of Xiao Ming                                                   1   school    completed 15
   65      Electric circuits                                                    1   school    completed 17
   66      Arrangements of arrays                                               1   school    completed 18
   67      Intelligence challenge                                               1   school    completed 12
   68      Triangles                                                            1   school    completed 18
   69      Intelligence test (I)                                                1   school    completed 10
   70      Intelligence test (II)                                               1   school    completed 10
   71      Introduction to plane geometry                                       1   school    completed 18
   72      Contest on applied questions                                         1   school    completed 18

<PAGE>

              List of Education Softwares and the Current Condition

   73      Contest on addition and subtraction                                  1   school    completed 18
   74      Contest on multiplication and division                               1   school    completed 18
   75      Equation solution                                                    1   school    completed 18
   76      Four mixed calculations for fractions                                1   school    completed 15
   77      Four mixed calculations for decimals                                 1   school    completed 15
   78      Four mixed calculations for whole numbers                            1   school    completed 15
   79      Additions                                                            1   school    completed 15
   80      Questions of 2-4                                                     1   school    completed 15
   81      Shapes for elementary school (I)                                     1   school    completed 15
   82      Shapes for elementary school (II)                                    1   school    completed 18
   83      Shapes for elementary school (III)                                   1   school    completed 18
   84      Arithmetics for BCS                                                  1   school    completed 15
   85      Questions of arithmetics for elementary school                       1   school    completed 10
   86      Quadrilateral                                                        1   school    completed 18
   87      Rotating substance                                                   1   school    completed 16
   88      Multi-facet substance                                                1   school    completed 16
   89      Volume                                                               1   school    completed 16
   90      Cubic plane                                                          1   school    completed 15
   91      The ABC of computer                                                  1   People's
                                                                                    Ed P      completed 9.4
   92      Asking for directions                                                1   school    completed 18
   93      History                                                              1   school    completed 28

<PAGE>

              List of Education Softwares and the Current Condition

   94      Conditions of sinking and floating in physics                        1   school    completed 28
   95      Cubic geometry (straight lines in different planes)                  1   school    completed 16
   96      Texts of Classical Chinese                                           1   school    completed 15
   97      Dictionary of basic Chinese characters                               1   People's
                                                                                    Ed P      completed 160
   98      An old Beijing hand                                                  1   Zili      completed 110
   99      Textbook series for junior high physics                              2   Peoples
                                                                                    Ed P      uncomplete  80
   100     Textbook series for junior high chemistry                            2   Peoples
                                                                                    Ed P      uncomplete  90
   101     Textbook series for junior high maths                                6   Peoples
                                                                                    Ed P      uncomplete 180
   102     Textbook series for junior high English                              6   Peoples
                                                                                    Ed P      uncomplete 100
   103     Textbook series for junior high biology                              3   Peoples
                                                                                    Ed P      uncomplete  60
   104     Textbook series for junior high geography                            3   Peoples
                                                                                    Ed P      uncomplete  60
   105     Textbook series for junior high history                              6   Peoples
                                                                                    Ed P      uncomplete  60
   106     Textbook series for junior high Chinese                              1   Peoples
                                                                                    Ed P      uncomplete 120
   107     Comprehensive review of English for exam                             1   Peoples
                                                                                    Ed P      uncomplete  20
   108     Memory of English words                                              1   Zili      completed    8

<PAGE>

              List of Education Softwares and the Current Condition

   109     English for elementary pupils                                        4  Peopples Ed P   uncomplete     85
   110     Cartoons and VCD                                                    26  Artist Studio   completed     800
   111     Animation cartoon books                                             12  Artist studio   completed     480
   112     Chinese conversations                                                1  Taiwan          completed      60
   113     Family beauty expert                                                 1  Zili            completed      80
   114     English prepositions                                                 1  TV education    completed      10
   115     Comprehensive review of Chinese for entrance exam                    1  People's ed P   uncomplete      25
   116     Comprehensive review of history for entrance exam                    1  People's ed P   uncomplete      25
   117     Comprehensive review of biology for entrance exam                    1  People's ed P   uncomplete      25
   118     Comprehensive review of maths for entrance exam                      1  People's ed P   uncomplete      25
   119     Comprehensive review of chemistry for entrance exam                  1  People's ed P   uncomplete      25
   120     Comprehensive review of physics for entrance exam                    1  People's ed P   uncomplete      25
</TABLE>

           Total Costs: RMB 52,174,000

<PAGE>

Exhibit (10)

                      AMENDMENT AND EXPLANATION OF RESTATED
                AGREEMENT EFFECTIVE RETROACTIVELY TO JUNE 1, 1995

         WHEREAS, the parties of the Joint Venture Contract dated as of June 1,
1995, as restated by amendment, have agreed to incorporate the following
amendments and explanations into this contract to restate and clarify certain
items, including (i) the terms upon which the parties have agreed to contribute
to the Joint Venture; and (ii) the relationship among the parties and the Joint
Venture.

                                  Contribution
                                  ------------

         The total amount of investment to be contributed by the Tengtu
International Corporation ("TIC"), which has been substituted for Tengtu
Enterprises Limited, a proposed subsidiary of TIC which was not utilized for
this transaction, shall be US $12,000,000 in cash. To date, TIC has contributed,
or caused to be contributed, US $6,000,000 contribution to the Joint Venture. It
is intended that the remaining US $6,000,000 contribution to the Joint Venture
to be made, or caused to be made, by TIC shall be through a subsidiary of TIC,
either Transcontinental Multimedia Inc., or CRC Bermuda Corp. (to be formed in
the future) upon the completion of the next major financing by TIC. TIC's equity
interest in the Joint Venture shall be adjusted from 49% to 57% retroactive to
June 1, 1995.

         Beijing Tengtu Culture & Education electronics Development co., Ltd.'s
("Tengtu China") contribution to the Joint Venture shall be the assignment of
its contract with People's Education Press ("PEP") to supply virtually all
textbooks, educational software and other educational materials for use in or by
all elementary, middle and high schools and junior colleges in China. There
shall be no other intangible assets to be contributed by Tengtu China except the
right to the PEP contract. The value of the PEP contract assigned to the Joint
Venture shall be a 43% interest in the Joint Venture. Tengtu China has also
transferred rights to ceratin educational software, both developed or in the
process of being developed, and certain equipment, or the use thereof, as
required by the initial Joint Venture agreement. Due to the rapidly changing
technology and market conditions, the owners of the Joint Venture agree and
acknowledge that this software and this equipment had no fair market value as of
the date(s) of transfer or, where applicable, usage of equipment.

         The contributions from Blue Lake USA (RMB 33,971,683) mentioned in Note
7 to the Financial Statements of Tengtu China (included in the August 1996
Tengtu International Corporation Private Placement Memorandum) will not be
transferred to the Joint Venture. These contributions were not related to the
formulation of the Joint Venture and were not related to the subsequent receipt
by Blue Lake USA of the two million shares and US $100,000 cash received from
TIC in exchange for Blue Lake USA's interest in the Joint Venture in June 1996.

<PAGE>

                     Profits and Losses of the Joint Venture
                 -----------------------------------------------

         The parties have agreed that Tengtu China shall not be required to
share in or be responsible for any losses incurred by the Joint venture.
After-tax profits may not be distributed to TIC until the total US $12,000,000
cash has been contributed to the Joint Venture by TIC. Furthermore, after-tax
profits may not be distributed to any parities unless the losses from previous
years have been recouped and TIC has received back all the cash contributions,
without interest, contributed or caused to be contributed, by it to the Joint
Venture. Thereafter, profits, when and if distributed, shall be allocated 43% to
Tengtu China and 57% to TIC.

                                 Effective Date
                               ------------------

         The Restated Joint Venture Contract and this Amendment and Explanation,
upon execution, shall supersede the previous Joint Venture Contract and be
effective retroactively to June 1, 1995.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
explanation to be executed.

                         TENGTU INTERNATIONAL CORPORATION

                         Date: March 26, 1998     ______________________________
                                                                 By:

                         BEIJING TENGTU CULTURE & EDUCATION
                         ELECTRONICS DEVELOPMENT CO., LTD

                         Date:March 26, 1998      ______________________________
                                                                  By:

<PAGE>

EXHIBIT (10)

DIRECT EFFECT Program Agreement
CONTRACT #    11174
           ------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]