Document:

EX-10.1 Shea Stadium Advertising Agreement

THROUGHOUT THIS AGREEMENT, WHERE INFORMATION HAS BEEN REPLACED BY AN ASTERISK (*), THAT INFORMATION HAS BEEN OMITTED PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE OMITTED INFORMATION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

                                                                                    January 12, 2007

 

 

Penny Perfect

AlphaTrade.com

1820-1111 West Georgia St.

Vancouver, BC

Canada V6E-M3

 

            Re:  Shea Stadium Advertising Agreement 

 

Dear Ms. Perfect:

 

            I am writing to confirm the agreement reached between Sterling Mets, L.P. (“Sterling”), owner and operator of the New York Mets National League Baseball team (the “Mets”), and AlphaTrade.com (“AlphaTrade”), for sponsorship and advertising rights during the 2007 and 2008 baseball seasons.

 

Per the agreement, AlphaTrade will receive the following advertising and sponsorship rights during each of the 2007 and 2008 baseball seasons:  

 

1.  The right to advertise AlphaTrade’s online investment management services during Mets home games on two permanent 4’ by 38’ signs on the press level facade at Shea Stadium (the “Stadium”), one located in right field, and the other located in left field, next to the two auxiliary matrix LED scoreboards (the “Pitch Speed LED Scoreboards”) that indicate speed of pitch. AlphaTrade shall be responsible for the cost of fabrication of its signage.

 

2.  The right to display customized messages, provided by AlphaTrade, promoting AlphaTrade’s online investment management services, which will scroll on the Pitch Speed LED Scoreboards during inning breaks during Mets regular home games.

 

3.  One 15-second announcement on the Stadium public address system during each Mets home game, promoting either AlphaTrade’s online investment management services or AlphaTrade’s sponsorship of an in-stadium text messaging contest (“TMC”), which TMC shall be subject to the prior approval of Major League Baseball Advanced Media (“MLBAM”).  The TMC announcement shall be made on or before the bottom of the fifth (5th) inning.  AlphaTrade’s logo will be prominently displayed on the Stadium scoreboard during any such announcement.  TMC winners will receive either (i) two tickets to a 2007 or 2008 Mets home game, provided by Sterling, or (ii) a prize to be mutually agreed to by AlphaTrade and Sterling in advance of the TMC.  AlphaTrade will have the option to award an additional grand prize, to be mutually agreed to by the parties.  AlphaTrade will be announced as the provider of any such grand prize.

 

4.  Advertising inventory with a value of $50,000, based on the applicable rate card, each season during the Term, during Mets and/or other programming on SportsNet New York, with details to be mutually agreed to between the parties.

 

5.  Sponsorship by AlphaTrade of a mutually agreed upon sweepstakes or TMC (collectively referred to herein as the “Sweepstakes”) to be featured on the official New York Mets website (www.mets.com) (the “Website”), subject to the terms and conditions set forth in Exhibit A hereto. The Sweepstakes and AlphaTrade’s sponsorship thereof shall be promoted in rotating banner advertisements on the Website that will be posted by MLBAM for the duration of the Sweepstakes (approximately 6 to 8 weeks) (the “Sweepstakes Period”), and in one promotional email distributed by MLBAM during the Sweepstakes Period.  The Sweepstakes, banner advertisements and promotional email are subject to the prior approval of MLBAM.  The official rules of the Sweepstakes shall be provided by MLBAM or Sterling, subject to the reasonable approval of AlphaTrade.  The Sweepstakes prize(s) will be provided by Sterling and mutually agreed to between the parties.

 

6.  Four field level tickets to each Mets regular season home game at the Stadium (and the right to purchase the same seats for any Mets post season games at the Stadium) during the Term.  Such rights shall be limited to the Term hereof, and are not subject to renewal.

 

7.  Use of one 15-person Diamond View Suite, including food and beverages for 15 guests, on two mutually agreed upon Mets regular season home game dates. AlphaTrade shall be responsible for compliance with all usage rules issued by Sterling applicable to suite holders. 

 

8.  The right to advertise AlphaTrade’s online investment management services in one full page, four-color, print advertisement in the annual New York Mets Yearbook. 

 

9.  Opportunity to use the field at KeySpan Park to play a softball game on one mutually agreed upon date.  AlphaTrade shall secure releases of liability in favor of Sterling and Brooklyn Baseball Company, L.L.C., in a form acceptable to Sterling in its sole discretion, from each individual who will be permitted to enter the field at KeySpan Park for this event.  AlphaTrade will have the right to have up to forty (40) people to participate in the softball game and as many spectators in the seating bowl at KeySpan Park as BBC allows for similar events.

 

10.  Four tickets to each of five Mets Spring Training home games at Tradition Field, Florida.

 

11.  The right for AlphaTrade to use the designation “Official Sponsor of the New York Mets” to promote AlphaTrade’s online investment management services, subject to the conditions set forth below.

 

(a)  Such right is specifically limited to the Term and to the Mets Home Television Territory, as may be amended.  The current Home Television Territory is shown on Exhibit B (see attached).

 

(b)  Use of the Mets name is non-exclusive and shall be subject to any rules, regulations, agreements, or guidelines of the MLB Entities (as defined herein), as may be amended.  

 

(c)  All materials containing the Mets name must be submitted to Sterling for its prior written approval, in its reasonable discretion. 

 

(d)  AlphaTrade shall indemnify, hold harmless and defend Sterling from and against any and all actions, claims, demands, liabilities, damages or expenses (including attorneys’ fees) arising out of its use of the Mets name. 

 

(e)  Nothing herein shall be construed to convey to AlphaTrade any rights in Sterling’s trademarks, except as expressly granted herein.

 

12.  Within three days of the execution of the Agreement, a public announcement will be made by both parties as to the completion of a binding agreement that gives AlphaTrade official sponsor status with the Mets.  Further announcements will be made as agreed to by AlphaTrade and the Mets.  If any approvals are required for AlphaTrade from Sterling for the public announcements, such approval shall not be unreasonably delayed or withheld.  AlphaTrade will be able to create and utilize a boilerplate statement about its official sponsor status on its public new announcements, distributed only within the Mets Home Television Territory, in the form attached hereto as Exhibit C.

 

For the foregoing goods and services, AlphaTrade will pay $* in 2007 and $* in 2008 to Sterling.  (These are net figures and will not be reduced by any commissions or other amounts.)  The 2007 fee shall be due and payable, as follows: $* on April 1, 2007, $* on July 1, 2007, and $* on September 1, 2007. The 2008 fee shall be due and payable, as follows: $* on April 1, 2008, $* on July 1, 2008, and $* on September 1, 2008.  

 

            In the event of a default by AlphaTrade in making any payment due pursuant to this Agreement, which default shall not have been remedied within  five (5) working days after notice of default has been given in writing to AlphaTrade by Sterling, then, in addition to any other remedies which may under the circumstances be available to Sterling, which are expressly reserved, AlphaTrade shall be obligated to pay Sterling, on demand, interest on all unpaid sums at a rate equal to the lesser of twelve (12%) per annum, or the highest rate of interest allowed under New York law.

 

            Notwithstanding any other provision of this Agreement, this Agreement and any rights or exclusivities granted by Sterling hereunder shall in all respects be subordinate to each of the following, as may be amended from time to time (collectively, “MLB Documents”):  (i) any present or future agreements entered into by, or on behalf of, any of the Major League Baseball (“MLB”) entities or affiliates, or the member Clubs acting collectively (“MLB Entities”), including, without limitation, agreements entered into pursuant to the Major League Constitution, the American and National League Constitutions, the Professional  Baseball Agreement, the Major League Rules, the Interactive Media Rights Agreement, and each agency agreement and operating guidelines among the Major League Baseball Clubs and an MLB Entity, or (ii) the present and future mandates, rules, regulations, policies, bulletins or directives issued or adopted by the Commissioner or the MLB Entities.  The issuance, entering into, amendment, or implementation of any of the MLB Documents shall be at no cost or liability to any MLB entity or affiliate or to any individual or entity related thereto. The territory within which AlphaTrade is granted rights is limited to, and nothing herein shall be construed as conferring on AlphaTrade rights in areas outside of, the Home Television Territory of the Mets, as established and amended from time to time.  No rights, exclusivities or obligations involving the Internet or any interactive or on-line media (as defined by the MLB Entities) are conferred by this Agreement, except as are specifically approved in writing by the applicable MLB entity.

 

            Additionally, this Agreement shall be subject and subordinate to the lease agreement for Shea Stadium between Sterling and the City of New York.

 

            Sterling acknowledges and agrees that AlphaTrade may be required by law to file a current report on Form 8-K with the Securities and Exchange Commission (the “SEC”), upon the execution of this Agreement, setting forth the terms of this Agreement.  AlphaTrade undertakes to apply with the SEC for confidential treatment of the fee terms of this Agreement.  Furthermore, AlphaTrade shall have the right to make any filings with the SEC, without the prior approval of Sterling, if such disclosure is required by law, by SEC rules and/or regulations.

 

            I will forward to you a more complete contract in the near future.  However, please sign below to indicate your assent to the foregoing material terms and return the signed letter to my attention.

 

            The parties intend to execute a formal contract, and agree to do so in good faith.  However, the parties agree that this letter shall be a binding and enforceable agreement and that absent execution of the more formal contract, a court may supply consistent additional terms as necessary to carry out the parties' intent.

 

                                                                                    Sincerely,

 

 

 

 

Agreed to and Accepted by:

 

AlphaTrade.com

 

/s/ Penny Perfect                                                                   Date   01/12/2007

By:  Penny Perfect

Title:  Chairman and CEO

 

 

 

 

Sterling Mets, L.P.

 

 

/s/ Paul Danforth                  

By:  Paul Danforth

Title:  Senior Vice President of Corporate Sales & Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

 

Terms and Conditions for Mets.com Promotions

 

1.  AlphaTrade (the “Applicable Sponsor”) will be the Sweepstakes (as defined in the attached Agreement) sponsor, and solely responsible and liable for all aspects of the Sweepstakes, including, but not limited to the Sweepstakes administration, fulfillment, and compliance with applicable law.  Major League Baseball Advance Media (“MLBAM”) will create and operate a landing page and a registration page (the “Promotion Registration Page”) for the Sweepstakes on the New York Mets-branded pages within the MLB.com World Wide Web portal (the “Portal”).  All end user data collected by MLBAM pursuant to the Sweepstakes shall be owned by MLBAM; provided that such data submitted by those end users who shall opt to receive marketing/promotional materials from the Applicable Sponsor via the Promotion Registration Page shall be shared with Sterling and AlphaTrade, subject to applicable law and the MLB.com Privacy Policy and Terms of Use.  

 

2.  Subject to the prior written approval of MLBAM and Sterling as to each such use, the Applicable Sponsor shall have the non-exclusive, non-transferable, non-sublicenseable limited right and license to display the Licensed Properties (defined below) during the Sweepstakes Period on the Applicable Sponsor’s primary corporate website solely for the purpose of promoting the Sweepstakes.  The Licensed Properties (defined below) shall function as a link to the New York Mets-branded pages of the Portal and/or the Promotion Registration Page.

 

a.  Prohibited Uses.   The Applicable Sponsor must not use the New York Mets word mark or logo (“Licensed Properties”) in any way that: (a) states or implies that the Applicable Sponsor or any third party, cause, belief, product, or service is an agency or branch of any MLB Indemnitee (as defined below), or that, any MLB Indemnitee, or their respective employees endorses, is endorsed by, is affiliated with, sponsors or is sponsored by the Applicable Sponsor, the Applicable Sponsor’s products or services, or any third party, cause, belief, product or service (or any product or service, cause or belief of any Operator affiliate), without the express written permission of the applicable MLB Indemnitee; or (b) reflects adversely on the reputation of any MLB Indemnitee or its respective general or limited partners, members, shareholders, directors, officers, employees, agents or representatives. In addition, the Applicable Sponsor shall not, without the prior written permission of MLBAM, use the Licensed Properties or any other MLB trademark or service mark in connection with any event or in any manner other than in connection with use authorized in the Agreement.  The “MLBAM Indemnitees” shall mean Sterling, MLBAM, the Office of the Commissioner of Baseball, its Bureaus, Committees, Subcommittees and Councils, SportsOnEarth, LLC, Tickets.com, Inc., Major League Baseball Enterprises, Inc., Major League Baseball Properties, Inc. (doing business in its own name and as Major League Baseball Productions), Baseball Television, Inc. (d/b/a Major League Baseball International), the Major League Baseball Clubs, and each of their subsidiaries or affiliated entities, any entity which, now or in the future, controls, is controlled by, or is under common control with the Major League Baseball Clubs or the Office of the Commissioner of Baseball, and the directors, officers and employees of the above entities.

 

b.  Acknowledgment of Rights.  The MLB Indemnitees reserve all rights in the Licensed Properties not expressly granted to the Applicable Sponsor.  The Applicable Sponsor hereby acknowledges the proprietary nature of all trademarks, service marks, and copyrights (“Property Rights”) owned, controlled, first used, and/or applied for in and/or registered with the U.S. Patent and Trademark Office and/or the Copyright Office, by the MLB Indemnitees, and acknowledges that all rights, title and interest to Property Rights belong to the individual MLB Indemnitees, as the case may be, including any rights under United States and foreign trademark and copyright laws, in all media whether or not known.  The Applicable Sponsor acknowledges that a license from the MLB Indemnitees is required in order to use such Property Rights, and agrees that it will during and after the Term make no use of any such Property Rights, other than as provided in this Agreement, without the prior written consent of the applicable MLB Indemnitee.  Any use the Applicable Sponsor has made or will make of such Property Rights has not conferred or will not confer, as the case may be, any rights or benefits upon it whatsoever, and any rights created by such use shall inure to the benefit of the individual MLB Indemnitees, as the case may be.  The Applicable Sponsor shall obtain no Property Rights in any combination or composite trademark or service mark that may be created or used 

pursuant to the Agreement.

 

c.  No Contest; Cooperation.  The Applicable Sponsor must neither contest the validity or scope of the appropriate MLB Indemnitees’ Property Rights nor commit or permit any act or omission by it or any third party that may impair the appropriate MLB Indemnitees’ rights.  The Applicable Sponsor must use reasonable efforts to prevent any third party from infringing or violating the appropriate MLB Indemnitees’ rights in the Property Rights, and must immediately notify MLBAM of any infringement or other act in violation of them.  The Applicable Sponsor must use reasonable efforts to cooperate with MLBAM and the appropriate MLB Indemnitees in the prosecution of any such violations.

 

d.  Credit.  The Applicable Sponsor must provide the following credit line in an appropriate place in/on any Licensed Use:  “Major League Baseball trademarks and copyrights are used with permission of MLB Advanced Media, L.P.  All rights reserved.”

 

e.  Except as set forth herein, this Agreement does not authorize the Applicable Sponsor to use any Property Right of any MLB Indemnitee.

 

3.  The Applicable Sponsor grants to MLBAM during the Sweepstakes Period, a limited, royalty-free, non-exclusive, non-transferable, non-sublicenseable, and revocable license to use, reproduce, and display all of its trade names, trade marks, service marks, merchandise, banners and logos included in the Sweepstakes (collectively, the “Materials”) solely for the purpose of performing the terms and conditions of the Agreement.  No right, property, license, or interest in any Materials owned by the Applicable Sponsor or any of its affiliates is intended to be given to or acquired by Sterling or MLBAM by the execution or the performance of this Agreement.

 

4.  Except as expressly granted in this Agreement, absolutely no rights for contests, sweepstakes and/or giveaways, involving Major League Baseball-related games or events (including, but not limited to, through the use of tickets thereto as prizes) or other Major League Baseball-related consumer promotions, with or without the use of any of the MLB Indemnitees' trademarks, shall be conveyed by the Agreement to the Applicable Sponsor, and the Applicable Sponsor shall not engage in any such commercial activities.  This section will survive any termination or expiration of this Agreement.

 

5.  The Applicable Sponsor shall not use any "spyware" or "adware" in connection with the services to be rendered for MLBAM in connection with this Agreement.  The Applicable Sponsor will not distribute any commercial message, or authorize any third party to distribute any commercial message, by means of "spyware" or "adware" in connection with the Portal.  "Spyware" or "adware" is any software which has been downloaded to and/or installed on an Internet user's computer, without the user's active consent, and facilitates the distribution of any commercial message to the user.

 

6.  Prior to releasing any Materials to Sterling, or authorizing Sterling to use any Materials, Applicable Sponsor will obtain all necessary releases, licenses, permits and other authorizations required to use them.  Applicable Sponsor will indemnify, defend and hold harmless Sterling from all damages, fees, expenses, and costs (including reasonable attorneys’ fees and expenses) resulting from any actual or alleged claim made, or action or suit instituted, arising out of or related to: (a) any actual or alleged unauthorized use of or infringement of any third party trademark, service mark, copyright, patent, right of publicity, right of privacy or other proprietary right of a third party, however denominated, with respect to any Materials; (b) false advertising, fraud or misrepresentation with respect to any Materials, except to the extent such claim action or suit arises from any alteration of the materials by Sterling or MLBAM after they have been approved by MLBAM, Advertiser and the Applicable Sponsor; (c) the Sweepstakes, except for Sterling’s or MLBAM’s activities relating to the Sweepstakes as set forth in the Agreement.  This section will survive any termination or expiration of this Agreement.

 

7.  In no event will the MLB Indemnitees be liable for any consequential, incidental, punitive, special or indirect damages of any kind.  This section will survive any termination or expiration of this Agreement.  In no event will the MLB Indemnitees’ liability arising from or in connection with the Sweepstakes exceed one hundred ($100) dollars.

 

8.  Any delay in or failure of performance by Sterling or MLBAM relating to the Sweepstakes will not be considered a breach of this Agreement and will be excused to the extent caused by any occurrence beyond the reasonable control of Sterling or MLBAM, including acts of God, acts of terrorism, civil disturbances, power outages and governmental restrictions.  Should Sterling or MLBAM not provide advertising availabilities due to the occurrence of any force majeure event described above, Applicable Sponsor’s sole remedy shall be the grant by Sterling or MLBAM of mutually agreed compensatory or “make good” rights follow the cessation of the force majeure event, for example, additional or extended exposure comparable to the advertising rights originally contemplated at no additional cost to the Applicable Sponsor.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

New York Mets Home Television Territory 

 

 

State of New York

 

 

State of Connecticut

 

 

State of New Jersey, except for the following counties:

 

      Atlantic                   Gloucester

      Burlington               Mercer

      Camden                  Salem

      Cape May               Cumberland

 

 

The following counties in the State of Pennsylvania:

 

      Carbon                   Pike

      Columbia                Schuylkill

      Lackawanna           Snyder

      Luzerne                  Sullivan

      Lycoming                Susquehanna

      Montour                  Union

      Northumberland      Wayne

      Monroe                   Wyoming

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT C

 

 

“AlphaTrade is proud to be an official sponsor of the New York Mets.”Cooperative Agreement on Taishun Yucai Senior School

    EXHIBIT 10.1

     

     

    

      Dated
        the 28th
        day of December 2006

      

      

      

      

      Dong
        Shunsheng

      Zhang
        Xiaoxiao

      Xia
        Weilan

      Cai
        Daqin

      Xia
        Fengling

      Zeng
        Yunwo

       

      

      WENZHOU
        LIREN EDUCATION GROUP CO., LTD. 

      

      

      and

      

      

      AI-ASIA
        INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD. 

      

      

       

      
        
          

        
COOPERATIVE AGREEMENT 

      ON
        TAISHUN YUCAI SENIOR SCHOOL 

      
        
 

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Table
        of Contents

       

      

      
        	
                1

              	
                Definitions

              	
                4

              
	
                2

              	
                Preconditions

              	
                8

              
	
                3

              	
                Assets
                  and Operation of Yucai

              	
                9

              
	
                4

              	
                Sale
                  and Purchase of the Sale Interests

              	
                9

              
	
                5

              	
                Management
                  Contract A and Management Contract B

              	
                10

              
	
                6

              	
                Representations
                  and Warranties

              	
                11

              
	
                7

              	
                Fees
                  and Taxes

              	
                13

              
	
                8

              	
                Registration
                  of the New Company

              	
                13

              
	
                9

              	
                Profit
                  Allocation of the New Joint Venture Company

              	
                13

              
	
                10

              	
                Management
                  of the New Joint Venture Company

              	
                14

              
	
                11

              	
                Business
                  Term of the New Joint Venture Company

              	
                14

              
	
                12

              	
                Confidentiality

              	
                14

              
	
                13

              	
                Breach
                  of the Agreement

              	
                14

              
	
                14

              	
                Dispute
                  Settlement

              	
                14

              
	
                15

              	
                Governing
                  Law and Jurisdiction

              	
                15

              
	
                16

              	
                Effectiveness

              	
                15

              
	
                17

              	
                Miscellaneous

              	
                15

              
	
                Schedule
                  1:

              	
                Amendments
                  of the Article of Association of Yucai

              	
                17

              
	
                Schedule
                  2:

              	
                Primary
                  Terms and Conditions of Letter of Warranty

              	
                18

              
	
                Schedule
                  3:

              	
                Acknowledged
                  Due Diligence Results & Financial Projections

              	
                19

              
	
                Schedule
                  4:

              	
                Primary
                  Terms and Conditions of Management Contract A

              	
                20

              
	
                Schedule
                  5:

              	
                Primary
                  Terms and Conditions of Management Contract B

              	
                21

              
	
                Schedule
                  6:

              	
                Assets
                  List and Property Right Certificate of Yucai

              	
                22

              
	
                Schedule
                  7:

              	
                Employee
                  Payroll and Students Roster of Yucai

              	
                23

              
	
                Schedule
                  8:

              	
                All
                  Licenses & Permits for Running Yucai

              	
                24

              
	
                Schedule
                  9:

              	
                Primary
                  Terms and Conditions of the Sale and Purchase Agreement

              	
                25

              
	
                Schedule
                  10:

              	
                Primary
                  Terms and Conditions of the Share Consideration

              	
                27

              

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      THIS
        AGREEMENT
        is
        entered into on the 28th
        day of
        December 2006 in Wenzhou.

      

      BETWEEN:

      

      
        	(1)	
                Dong
                  Shunsheng, Zhang Xiaoxiao, Xia Weilan, Cai Daqin, Xia Fengling
                  and Zeng
                  Yunwo (described
                  as following and collectively referred to “Dong
                  Shunsheng and His Fellows”;
                  

              

      

      

      Dong
        Shunsheng,
        (Holder
        of PRC ID Number 330329621102001) of No. 117, Taishou Road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      Zhang
        Xiaoxiao,
        (Holder
        of PRC ID Number 330329196505260020) of No. 117, Taishou Road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      Xia
        Weilan,
        (Holder
        of PRC ID Number 330329630427002) of No. 117, Taishou Road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      Cai
        Daqin,
        (Holder
        of PRC ID Number 330329296307181145) of No. 117, Taishou road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      Xia
        Fengling,
        (Holder
        of PRC ID Number 330329700116002) of No. 117, Taishou Road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      Zeng
        Yunwo,
        (Holder
        of PRC ID Number 330105671103001) of No. 117, Taishou Road, Taishun, Wenzhou,
        Zhejiang, People’s Republic of China;

      

      
        	(2)	
                Wenzhou
                  Liren Education Group Co., Ltd., a
                  limited liability company incorporated in Wenzhou with its registered
                  office at No. 117, Taishou Road, City Town, Taishun, Wenzhou, Zhejiangl
                  People’s Republic of China and legal representative of Dong
                  Shunsheng
                  (hereinafter “Liren”);
                  and

              

      

      

      
        	(3)	
                Ai-Asia
                  Information Technology (Shanghai) Co., Ltd.,
                  a wholly-owned foreign company with limited liability and registered
                  office at Room 628-14, Building 2, Guo Shou Jing Road, Zhangjiang
                  Hi-Tech
                  Park, Shanghai, People’s Republic of China and legal representative of
                  Zhou Bizheng. Currently it is in the process of changing its name
                  to
                  Hartcourt
                  Education Investment Management & Consulting (Shanghai) Co.,
                  Ltd.
                  (hereinafter “Hartcourt
                  Education”).

              

      

      

      WHEREAS:

      

      
        	
                1.

              	
                Taishun
                  Yucai Senior School (“Yucai”)
                  is a private school duly incorporated and validly existing and
                  has legally
                  obtained the “License for Sponsoring and Running Private School” (License
                  No. Private Education 3303293200603) and “Registration Certificate of
                  Private Non-Enterprise Unit” (Certificate TAI MIN ZHENG ZI No.
                  2000ó004)
                  in China;

              

      

      

      
        	
                2.

              	
                Dong
                  Shunsheng and His Fellows,
                  all
                  of whom are Chinese natural persons, co-founded Yucai as investors,
                  while
                  Liren acts as the sponsor of Yucai;

              

      

      

      
        	
                3.

              	
                Hartcourt
                  Education is a wholly-owned foreign company duly incorporated and
                  validly
                  existing with limited liability in
                  China;

              

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
        	
                4.

              	
                Liren
                  hereby agrees to sell its 51% sponsorship rights and interests
                  in Yucai
                  indirectly to Hartcourt Education, and Hartcourt Education agrees
                  to
                  purchase it; 

              

      

      

      
        	
                5.

              	
                Dong
                  Shunsheng and His Fellows have agreed that Hartcourt Education
                  is the sole
                  and exclusive provider of education & consulting management services
                  to Yucai except themselves.

              

      

      

      
        	
                6.

              	
                Yucai
                  signed the Memorandum of Understanding with Hartcourt Companies,
                  Inc, the
                  parent company of Hartcourt Education, on the restructuring and
                  co-sponsoring of Yucai on September 28,
                  2006.

              

      

      

      THEREFORE,
        IT IS HEREBY AGREED BY DONG SHENSHENG AND HIS FELLOWS, LIREN AND HARTCOURT
        EDUCATION AS FOLLOWS:

      

      
        	
                1.

              	
                DEFINITIONS

              

      

      

      In
        this
        Agreement (including the Schedules), unless the context otherwise defines,
        the
        following words and expressions in capital letters shall have the following
        meanings: 

       

      
        	
                “Dong
                  Shunsheng and His Fellows”

              	
                The
                  six Chinese natural persons of Dong Shensheng, Zhang Xiaoxiao,
                  Xia Weilan,
                  Cai Daqin, Xia Fengling and Zeng Yunwo. Dong Shunsheng and His
                  Fellows
                  were the investors of Yucai prior to the execution of the Agreement.
                  

              
	
                “Liren”

              	
                Wenzhou
                  Liren Education Group Co., Ltd. Liren was the sponsor of Yucai
                  prior to
                  the execution of the Agreement. 

              
	
                “Hartcourt
                  Education”

              	
                Ai-Asia
                  Information Technology (Shanghai) Co., Ltd. It is now in the process
                  of
                  changing its name to Hartcourt Education Investment Management
                  and
                  Consulting (Shanghai) Co., Ltd. Hartcourt Education is the wholly
                  owned
                  subsidiary of Hartcourt. 

              
	
                “Hartcourt”

              	
                The
                  Hartcourt Companies, Inc. is incorporated in State of Utah, United
                  States,
                  the shares of which are currently listed on the Over-the-Counter
                  Bulletin
                  Board (“OTCBB”)
                  of the United States. Hartcourt conducts and focuses its business
                  on the
                  education investment and management. 

              
	
                “Yucai”

              	
                Taishun
                  Yucai Senior School. Prior to the execution of the Agreement, Dong
                  Shunsheng and His Fellows are the investors of Yucai, while Liren
                  is the
                  sponsor of Yucai. 

              

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      
        	
                “Investors
                  and Sponsors”

              	
                The
                  entity or individual which invested and/or sponsored Yucai pursuant
                  the
                  regulations of PRC law. 

              
	
                “New
                  Company”

              	
                A
                  limited liability company that Liren will newly establish. Dong
                  Shunsheng
                  and His Fellows will make the New Company become the sponsor of
                  Yucai.
                  

              
	
                “Board”

              	
                The
                  board of directors of Taishun Yucai School.

              
	
                “Related
                  natural persons”

              	
                Natural
                  persons that signed “Letter of Funding” and “Investment Agreement” with
                  the Board of Yucai. The following are generally agreed in such
                  documents:
                  Related Natural Persons would invest in Taishun Yucai Schools (Taishun
                  Yucai Senior School, Taishun Yucai Junior High School, Taishun
                  Yucai
                  Primary School, Taishun Yucai Kindergarten), and become the “Investors” of
                  the schools in respect hereof. Such Related Natural Persons can
                  draw down
                  at not less than 15% dividend at the end of each anniversary year
                  for the
                  three years following the investing date.

              
	
                “Teaching
                  Facility and Assets of Yucai”

              	
                Buildings,
                  equipments and lands, etc. that Yucai applies for its teaching
                  activities.
                  

              
	
                “Financial
                  Due Diligence”

              	
                The
                  Financial Due Diligence conducted by KRC Business & Financial Advisors
                  as entrusted by Hartcourt Education prior to December 20, 2006
                  on Yucai’s
                  financial standing as of October 22, 2006, and the results of which
                  were
                  taken as the financial document for Yucai to change its existing
                  sponsor
                  to the New Company. Detailed Financial Due Diligence results are
                  set out
                  in the Schedule 3. 

              
	
                “Financial
                  Projections”

              	
                In
                  relation to the year ending on December 31, 2007, 2008 and 2009,
                  the
                  Financial Projection on Yucai conducted by KRC Business & Financial
                  Advisors as entrusted by Hartcourt Education prior to December
                  20, 2006.
                  Detailed Financial Projections is set out in the Schedule 3.
                  

              

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      
        	
                “Letter
                  of Warranty”

              	
                The
                  Letter of Warranty made by Dong Shunsheng and His fellows to Hartcourt
                  Education and the New Company, to covenant the commitment to Hartcourt
                  Education and the New Company in respect of the Teaching Facility
                  and
                  Assets of Yucai. The primary terms and conditions of the Letter
                  of
                  Warranty are set out in Schedule 2. 

              
	
                “Management
                  Contract A”

              	
                The
                  management contract executed by Hartcourt Education, Dong Shunsheng
                  and
                  His Fellows and Yucai to agree that Hartcourt Education’s responsibility
                  on education management of Yucai and providing consulting service
                  as such.
                  In exchange for that, Yucai shall pay management fee to Hartcourt
                  Education, with Dong Shunsheng and His Fellows assuming the guarantee
                  liability. 

              
	
                “Management
                  Fee A”

              	
                The
                  management fee defined in aforesaid Management Contract A includes
                  the
                  base management fee and performance management fee, the amount
                  and
                  calculation of which as set out in Clause 5.2. 

              
	
                “Management
                  Contract B”

              	
                The
                  management contract executed by Dong Shunsheng and His Fellows
                  and Yucai
                  to agree on the offering of education management and consulting
                  service by
                  Dong Shunsheng and His Fellows to Yucai. In exchange of that, Yucai
                  shall
                  pay management fee to Dong Shunsheng and His Fellows. 

              
	
                “Management
                  Fee B”

              	
                The
                  management fee defined in aforesaid Management Contract B, the
                  amount and
                  calculation of which as set out in Clause 5.5.

              
	
                “Original
                  Contracts”

              	
                Any
                  contract entered into by Dong Shunsheng and His Fellows and Yucai
                  before
                  the execution of this Agreement. 

              
	
                “Sale
                  Interests”

              	
                51%
                  of the entire interest in the registered capital of the New Company
                  to be
                  sold by Liren to Hartcourt Education.

              

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      
        	
                “Agreement
                  for Sale and Purchase of 

                Certain
                  Interest in the Registered 

                Capital
                  of the New Company”

              	
                The
                  agreement executed by Liren and Hartcourt Education on the sale
                  and
                  purchase of 51% of the entire interest in the registered capital
                  of the
                  New Company.

              
	
                “Consideration”

              	
                The
                  total consideration payable by Hartcourt Education of which includes
                  US$2,000,000 cash and 5,500,000 new Hartcourt Restricted Shares
                  of Common
                  Stock. 

              
	
                “Restricted
                  Shares of Hartcourt Common Stock”

              	
                The
                  ordinary restricted shares of common stock with par value of US$0.001
                  each
                  in the capital of Hartcourt to be allotted and issued in the name
                  of
                  Liren’s nominees. Trading symbol: U.S. HRCT.OB, Frankfurt
                  900009.

              
	
                “Delivery
                  Date of the Sale Interests in the 

                New
                  Company”

              	
                The
                  delivery date of the 51% sale interests in the New Company, on
                  which,
                  pursuant to the PRC law, 51% control of the New Company has changed
                  from
                  Liren to Hartcourt Education. Delivery Date of Sale Interests in
                  the New
                  Company shall be within 30 business days upon obtaining all necessary
                  consents permits and approval from relevant Governmental Agency
                  on Foreign
                  Investment.

              
	
                “Consideration
                  Shares Trading Date”

              	
                The
                  date on which the restricted shares of Hartcourt common stock as
                  share
                  consideration are permitted to be freely traded at the stock exchange.
                  The
                  date shall be the first trading date after one anniversary of the
                  date
                  when Hartcourt issues the consideration shares to the nominees
                  of Liren.
                  

              
	
                “Governmental
                  Education Approval Authority”

              	
                The
                  original education approval authority of Yucai.

              
	
                “Governmental
                  Agency on Foreign Investment”

              	
                Relevant
                  PRC Administrative authority on Foreign Economic &
                  Trade.

              
	
                “Consideration
                  Payment Dates”

              	
                The
                  dates on which Hartcourt Education pays cash consideration and
                  issues
                  Restricted Shares of Hartcourt Common Stock to Liren. 

              
	
                “Net
                  Profit”

              	
                Net
                  Profit = total audited revenue - total audited expenses (all based on U.S.
                  GAAP and audited by independent auditor)

              

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
        	
                2.

              	
                PRECONDITIONS

              

      

      

      
        	
                2.1

              	
                Liren
                  shall establish the New Company before January 31, 2007 and change
                  the
                  sponsor of Yucai to the New Company through amending the Article
                  of
                  Association of Yucai etc, pursuant to the regulations of PRC law.
                  The
                  amendment of the Article of Association of Yucai is set out in
                  Schedule 1.
                  

              

      

      

      
        	
                2.2

              	
                Dong
                  Shunsheng and His Fellows shall present a Letter of Warranty to
                  Hartcourt
                  Education and the New Company, agrees that within twenty years
                  upon which,
                  provided that the Teaching Facility and Assets that are currently
                  being
                  used by Yucai ceases to be so, including but not limit to the changes
                  of
                  the purpose of land usage and obligee of the land and real properties,
                  and
                  which causes that Yucai cannot pay the Management Fee A to Hartcourt
                  Education pursuant to Management Contract A, in this regards, Dong
                  Shunsheng and His Fellows shall indemnify Hartcourt Education against
                  all
                  the losses incurred, including but not limit to the Management
                  Fee A.
                  Moreover, Dong Shunsheng and His Fellows shall provide Teaching
                  Facility
                  and Assets comparable to current property area in use to Yucai
                  free of any
                  charges and obligations. In the event of any loss to the New Company
                  or
                  Yucai, caused by the Letter of Funding and Investment Agreement
                  duly
                  signed by the Board of Yucai and Related Natural Persons, Dong
                  Shunsheng
                  and His Fellows shall fully indemnify against all the losses and
                  liabilities; Whenever Dong Shunsheng and His Fellows obtain reasonable
                  profit/returns from Yucai, they shall assign the profit/returns
                  to the New
                  Company in full amount; Dong Shunsheng and His Fellows agree that
                  Hartcourt Education and the New Company will audit the accounts
                  of Yucai
                  periodically, including without limitation, account vouchers, account
                  books and audit report, etc. The aforesaid warranties made by Dong
                  Shunsheng and His Fellows shall be secured by all their equity
                  interests
                  in Liren in pledge. The primary terms and conditions of the Letter
                  of
                  Commitment are set out in Schedule 2.

              

      

      

      
        	
                2.3

              	
                Hartcourt
                  Education has entrusted independent professionals to perform financial
                  due
                  diligence and financial projection on Yucai. Hartcourt Education,
                  Liren as
                  well as Dong Shunsheng and His Fellows hereby acknowledge the results
                  of
                  the due diligence in writing. Acknowledged results of financial
                  due
                  diligence and financial projection are set out in Schedule 3.
                  

              

      

      

      
        	
                2.4

              	
                Yucai,
                  Dong Shunsheng and His Fellows and Hartcourt Education shall duly
                  execute
                  the Management Contract A, covenanting that Hartcourt Education
                  shall
                  provide education management and consulting services to Yucai,
                  while Yucai
                  shall pay Management Fee A to Hartcourt Education each year. In
                  this
                  regards, Dong Shunsheng shall assume the liability of guarantee.
                  The
                  primary terms and conditions of Management Contract A are set out
                  in
                  Schedule 4. 

              

      

      

      
        	
                2.5

              	
                As
                  at the date of this Agreement, Dong Shunsheng and His Fellows have
                  presented all the Original Contracts duly signed with Yucai to
                  Hartcourt
                  Education, and a Termination Contract has been entered into between
                  Dong
                  Shunsheng and His Fellows and Yucai to terminate all previously
                  executed
                  Original Contracts by all parties. 

              

      

      

      
        	
                2.6

              	
                Yucai
                  and Dong Shunsheng and His Fellows shall enter into Management
                  Contract B
                  in respect thereof to covenant education management and consulting
                  services that Dong Shunsheng and His Fellows shall provide to Yucai
                  and
                  Yucai shall pay Management Fee B to Dong Shunsheng and His Fellows
                  each
                  year for the services rendered. The primary terms and conditions
                  of
                  Management Contract B are set out in Schedule 5.
                  

              

      

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
        	
                3.

              	
                ASSETS
                  AND OPERATIONS OF YUCAI

              

      

      

      
        	
                3.1

              	
                Prior
                  to the Sale and Purchase of the Sale Interests, total amount of
                  operating
                  assets of Yucai, including but not limit to land use right, real
                  property,
                  automobiles, computers, teaching appliances, desks and chairs,
                  lab
                  equipment and facilities and property lease agreements, shall be
                  not less
                  than RMB40,000,000, and net assets of not less than RMB20,000,000.
                  Assets
                  list and Property Right Certificate of Yucai are set out in Schedule
                  6.
                  

              

      

       

      
        	3.2	
                Prior
                  to the Sale and Purchase of the Sale Interests, total number of
                  faculty of
                  Yucai shall be not less than 150 persons, among which full-time
                  teachers
                  of not less than 90 persons, and teachers with senior high school
                  qualifications of not less than 90 persons; and total number of
                  students
                  on campus of not less than 1,700 persons. Employee Payroll and
                  Students
                  Roster of Yucai are set out in Schedule 7.

              

      

      

      
        	
                3.2

              	
                All
                  licenses and permits for running Yucai are set out in Schedule
                  8.
                  

              

      

      

      

      
        	
                4

              	
                SALE
                  AND PURCHASE OF THE SALE
                  INTERESTS

              

      

      

      
        	
                4.1

              	
                Within
                  30 business days upon the Preconditions are satisfied and the
                  prerequisites are met in respect of the Assets and Operations of
                  Yucai
                  referred to in Clause 3, Liren and Hartcourt Education shall sign
                  and
                  execute an Agreement for Sale and Purchase of Certain Interest
                  in the
                  Registered Capital of the New Company. Subject to the terms and
                  conditions
                  of the agreement, Liren shall sell its 51% equity interest in the
                  New
                  Company to Hartcourt Education. The primary terms and conditions
                  of the
                  Agreement for Sale and Purchase of Certain Interest in the Registered
                  Capital of the New Company are set out in Schedule 9.
                  

              

      

      

      
        	
                4.2

              	
                The
                  Consideration for the sale and purchase of the Sale Interests shall
                  be an
                  aggregate of US$2,000,000 cash and 5,500,000 Restricted Shares
                  of
                  Hartcourt Common Stock, based on the assets of Yucai, the capital
                  injected
                  to the New Company from Liren and the financial projections each
                  year in
                  the future years. 

              

      

      

      
        	
                4.3

              	
                Hartcourt
                  Education shall credit the Consideration to the accounts designated
                  by
                  Liren. 

              

      

      

      
        	
                4.4.

              	
                Since
                  the Delivery Date of the Sale Interests in the New Company, Hartcourt
                  Education shall take over the 51% control of the New Company from
                  Liren as
                  shareholder pursuant to the
                  Agreement.

              

      

      

      
        	
                4.5.

              	
                Hartcourt
                  Education shall credit the Consideration to the nominees designated
                  by
                  Liren, satisfied as details
                  hereunder:-

              

      

      

      
        	  	(1)	
                Within
                  30 business days upon the Delivery Date of the Sale Interest in
                  the New
                  Company, Hartcourt Education shall issue and allot the Consideration
                  of
                  total 5,500,000 Restricted Shares of Hartcourt Common Stock to
                  the
                  nominees designated by Liren. Hartcourt and Hartcourt Education
                  shall
                  jointly guarantee the average closing price of the 3 days immediately
                  prior to the Consideration Shares Trading Date at not less than
                  US$0.50
                  per share, otherwise, Hartcourt shall, within 10 business days
                  from the
                  Consideration Shares Trading Date, credit additional cash or issue
                  and
                  allot to the nominees additional new Restricted Shares of Hartcourt
                  Common
                  Stock to make it up. The primary terms and conditions of issuance
                  of
                  Restricted Shares of Hartcourt Common Stock and Consideration Shares
                  Trading Date are set out in Schedule 10.

              

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
        	
              	(2)	
                Within
                  30 business days upon the Delivery Date of the Sale Interests in
                  the New
                  Company, Hartcourt Education shall credit US$1,000,000 cash Consideration
                  to the accounts designated by
                  Liren;

              

      

      

      
        	
              	(3)	
                Before
                  July 31, 2007, Hartcourt Education shall credit US$500,000 cash
                  Consideration to the accounts designated by
                  Liren;

              

      

      

      
        	
              	(4)	
                Before
                  January 31, 2008, Hartcourt Education shall credit US$500,000 cash
                  Consideration to the accounts designated by Liren.
                  

              

      

      

      

      
        	
                5.

              	
                MANAGEMENT
                  CONTRACT A AND B

              

      

      

      
        	
                5.1

              	
                Hartcourt
                  Education shall provide education management and consulting services
                  to
                  Yucai, detailed as follows:-

              

      

      

      
        	 	
                (1)

              	
                Assisting
                  to prepare and amend the corporate governance system, financial
                  management
                  policy of Yucai, etc.;

              

      

      

      
        	 	
                (2)

              	
                Assisting
                  to introduce the overseas advanced teaching model and
                  methodology;

              

      

      

      
        	 	
                (3)

              	
                Assisting
                  Yucai to upgrade its financial management, and assign financial
                  expert to
                  instruct and manage the financial department of
                  Yucai;

              

      

      

      
        	 	
                (4)

              	
                Assist
                  to set up the employment guide and coordination committee for graduates,
                  and assign experts to instruct and coordinate the graduates employment;
                  

              

      

      

      
        	 	
                (5)

              	
                To
                  offer the overseas exchange opportunity for students of Yucai as
                  it may
                  practically need; 

              

      

      

      
        	 	
                (6)

              	
                To
                  offer the overseas training opportunity for faculty of Yucai as
                  it may
                  practically need;

              

      

      

      
        	 	
                (7)

              	
                Assisting Yucai
                  to make material strategic decisions and the implementation procedures
                  in
                  detail;

              

      

      

      
        	 	
                (8)

              	
                Assisting
                  to manage Yucai and the New Company in fully compliance with the
                  regulations and rules of the United States Securities Exchange
                  Commission,
                  and offer the consulting service in the aspect of corporate governance,
                  legal, financial management, audit,
                  etc.;

              

      

      

      
        	 	
                (9)

              	
                To
                  provide other related consulting services as it may be required
                  by Yucai.
                  

              

      

      

      
        	
                5.2

              	
                Yucai
                  will pay the Management Fee A to Hartcourt Education, detailed
                  as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Yucai
                  shall pay the annual Base Management Fee of RMB500,000 cash to
                  Hartcourt
                  Education prior to February 1 of that year;

              

      

      

      
        	 	
                (2)

              	
                Yucai
                  shall pay the annual Performance Management Fee of RMB3,825,000
                  cash to
                  Hartcourt Education prior to December 31 of that year, depending
                  on its
                  operating results;

              

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      
        	
              	(3)	
                Dong
                  Shunsheng and His Fellows shall jointly guarantee that the Net
                  Profit of
                  Yucai can meet at least the payment of the Management Fee A specified
                  in
                  Clause 5.2.(1) and 5.2.(2) in the year of 2007, 2008 and 2009,
                  and in the
                  event of the Net Profit less than the Management Fee A, Dong Shunsheng
                  and
                  His Fellows shall make up the discrepancy to Hartcourt Education
                  before
                  December 31 of each year in respect thereof. The Management Fee
                  A shall be
                  paid fully depending on Yucai’s actual performance afterwards.
                  

              

      

      

      
        	
                5.3

              	
                The
                  Management Contract A shall have 20 years term, and effective from
                  the
                  date when Hartcourt Education legally obtains the 51% equity interest
                  in
                  the New Company. Yucai and Hartcourt Education may otherwise discuss
                  the
                  renewal as such term expires. 

              

      

      

      
        	
                5.4

              	
                Dong
                  Shunsheng shall provide the education management and consulting
                  services
                  to Yucai, detailed as follows:-

              

      

      

      
        	 	
                (1)

              	
                In
                  charge of making and implementing the general management and financial
                  management policy, etc. of Yucai and providing consulting services
                  in
                  practice;

              

      

      

      
        	 	
                (2)

              	
                In
                  charge of making and implementing the routine teaching management
                  of
                  Yucai, and assigning expert (the Principal) to instruct and lead
                  the
                  management work of Yucai;

              

      

      

      
        	 	
                (3)

              	
                In
                  charge of making and implementing teaching model and methodology
                  of Yucai
                  and providing consulting services in
                  practice;

              

      

      

      
        	 	
                (4)

              	
                To
                  provide consulting services in respect of the financial
                  management;

              

      

      

      
        	 	
                (5)

              	
                Assisting
                  Hartcourt Education to make material strategic decision of Yucai
                  and the
                  implementation procedure, as well as the consulting services as
                  it may
                  require. 

              

      

      

      
        	
                5.5

              	
                Yucai
                  shall pay Management Fee B to Dong Shunsheng and His Fellows, detailed
                  as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Yucai
                  shall pay the Management Fee B to Dong Shunsheng and His Fellows
                  each year
                  of (i) RMB3,675,000 cash, or (ii) Net Profit minus Management Fee
                  A,
                  whichever is lower, before December 31 of that year for 2007, 2008
                  and
                  2009; The Management Fee B shall be paid fully depending on Yucai’s actual
                  performance afterwards.

              

      

      

      
        	
                5.6

              	
                The
                  Management Contract B shall have 20 years term, effective from
                  the date
                  when Hartcourt Education legally obtains the 51% equity interest
                  in the
                  New Company. Yucai and Dong Shunsheng and His Fellows may otherwise
                  discuss the renewal as such term expires.

              

      

      

      
        	
                6

              	
                REPRESENTATIONS
                  AND WARRANTS

              

      

      

      
        	
                6.1

              	
                Dong
                  Shunsheng and His Fellows herby jointly represents and warrants
                  as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Liren
                  shall be the actual beneficial owner of the 51% Sale Interests
                  in the
                  registered capital of the New Company and have full rights, interests,
                  and
                  control in this 51% interest.

              

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      
        	 	
                (2)

              	
                Dong
                  Shunsheng and His Fellows jointly assure that no third-party interest
                  has
                  been put against the Sale Interests such as pledge, lien, etc.
                  from the
                  incorporation of the New Company till the Delivery Date of the
                  Sale
                  Interests in the New Company, and no conflicts or disputes in respect
                  of
                  any interest stand thereon.

              

      

      

      
        	 	
                (3)

              	
                Dong
                  Shunsheng and His Fellows jointly assure that under no circumstances,
                  without the written consent from Hartcourt Education, they shall
                  not sign
                  and execute any documents on behalf of the New Company from its
                  incorporation date till Delivery Date of the Sale Interests in
                  the New
                  Company.

              

      

      

      
        	 	
                (4)

              	
                Dong
                  Shunsheng and His Fellows guarantee that Yucai shall pay the Management
                  Fee A referred to in Clause 5 of this Agreement to Hartcourt Education
                  in
                  full amount with priority. Should Yucai fail to pay the aforesaid
                  management fee in full amount, Dong Shunsheng and His Fellows shall
                  make
                  up the discrepancy to Hartcourt Education before December 31 of
                  that year
                  in respect thereof. 

              

      

      

      
        	 	
                (5)

              	
                No
                  false investment or capital withdrawal happens to Yucai, otherwise,
                  Dong
                  Shunsheng and His Fellows shall take full responsibility and liabilities
                  and indemnify Yucai and Hartcourt Education for all the loss incurred;
                  all
                  the risks and losses before Hartcourt Education obtaining the 51%
                  equity
                  interests in the New Company, except otherwise expressly acceptable
                  by
                  Hartcourt Education, shall be borne by Dong Shunsheng and His Fellows,
                  and
                  provided any losses caused herewith to Yucai or Hartcourt Education,
                  Dong
                  Shunsheng and His Fellows shall assume the liabilities to indemnify.
                  

              

      

      

      
        	 	
                (6)

              	
                Dong
                  Shunsheng and His Fellows guarantee that the “Letter of Funding” and
                  “Investment Agreement” duly signed by the Board and Related Natural
                  Persons and presented to Hartcourt Education are all complete and
                  no
                  omittance or alike, provided any losses caused due to the abovementioned
                  documents or similar herewith to Yucai, Dong Shunsheng and His
                  Fellows
                  shall assume all the liabilities and indemnify Yucai and Hartcourt
                  Education for all the losses incurred.

              

      

      

      
        	 	
                (7)

              	
                As
                  of the date of the Agreement, Dong Shunsheng and His Fellows shall
                  not,
                  directly or indirectly, sponsor or participate in sponsoring any
                  education
                  institutions that might potentially be competitive to Yucai in
                  Zhejiang
                  province. 

              

      

      

      
        	6.2	
                Liren
                  hereby represents and warrants as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Liren
                  shall be the actual beneficial owner of the 51% Sale Interests
                  in the
                  registered capital of the New Company and have full rights, interests,
                  and
                  control in this 51% interest.

              

      

      
        	 	
                (2)

              	
                Liren
                  assure that no third-party interest has been put against the Sale
                  Interests such as pledge, lien, etc. from the incorporation of
                  the New
                  Company till the Delivery Date of the Sale Interests in the New
                  Company,
                  and no conflict and dispute in respect of any interest stands
                  thereon.

              

      

      
        	 	
                (3)

              	
                Liren
                  assure that under no circumstances, without the written consent
                  from
                  Hartcourt Education, it shall not sign and execute any documents
                  on behalf
                  of the New Company from its incorporation date till Delivery Date
                  of the
                  Sale Interests in the New Company.

              

      

      
        	 	
                (4)

              	
                As
                  of the date of the Agreement, Liren shall not, directly or indirectly,
                  sponsor or participate in sponsoring any education institution
                  that might
                  potentially be competitive to Yucai in Zhejiang province.
                  

              

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      
        	6.3	
                Hartcourt
                  Education hereby represents and warrants as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Hartcourt
                  Education is a duly incorporated and validly existing
                  company.

              

      

      

      
        	 	
                (2)

              	
                Hartcourt
                  Education has the corporate powers and authority to sign and execute
                  this
                  Agreement. 

              

      

      

      
        	 	
                (3)

              	
                Hartcourt
                  Education agrees to completely fulfill the obligations as specified
                  in
                  Management Contract A, and any losses resulted from the non-fulfillment
                  of
                  such obligations by Hartcourt Education shall be borne by itself,
                  and it
                  shall indemnify Yucai and Dong Shunsheng and His Fellows for all
                  the
                  losses incurred hereof. 

              

      

      

      
        	 	
                (4)

              	
                Hartcourt
                  Education guarantees to pay the Consideration of the Sale Interests
                  in
                  full when due.

              

      

      

      
        	 	
                (5)

              	
                Hartcourt
                  Education guarantees that all the documents presented to Dong Shunsheng
                  and His Fellows are true, and in the event of any losses caused
                  by the
                  untrue documents, Hartcourt Education shall assume the liabilities
                  and
                  indemnify Yucai and Dong Shunsheng and His Fellows for the losses
                  incurred
                  hereof. 

              

      

       

      
        	
                7

              	
                FEES
                  AND TAXES

              

      

      

      
        	 	
                (1)

              	
                Liren
                  shall bear all the expenses or fees involved in the incorporation
                  of the
                  New Company and undertake all the possible taxes.
                  

              

      

      

      
        	 	
                (2)

              	
                Liren
                  and Yucai shall assume the respective share of the expenses incurred
                  for
                  the Sale Interests in the New Company and be obliged to pay taxes
                  due and
                  payable. 

              

      

      

      
        	
                8

              	
                THE
                  REGISTRATION OF THE OWNERSHIP CHANGE OF THE NEW
                  COMPANAY

              

      

      

      
        	 	
                (1)

              	
                Liren
                  shall complete all the formalities and procedures with Commercial
&
                  Industrial Bureau on the incorporation of the New Company within
                  15
                  business days of the date of the
                  Agreement;

              

      

      
        	 	
                (2)

              	
                Dong
                  Shunsheng and His Fellows, Liren are liable for changing the sponsor
                  of
                  Yucai to the New Company before the Delivery Date of the Sale Interests
                  in
                  the New Company, including but not limit to, obtain the permits
                  from the
                  Governmental Education Approval
                  Authority;

              

      

      
        	 	
                (3)

              	
                In
                  respect of registration of the ownership change with Commercial
&
                  Industrial Bureau related to the Sale Interests, Dong Shunsheng
                  and His
                  Fellows and Liren shall cooperate with the New Company to complete
                  it
                  before the Delivery Date of the Sale Interests in the New Company,
                  Hartcourt Education shall provide necessary assistance
                  thereto.

              

      

      

      
        	9	
                PROFIT
                  ALLOCATION OF THE NEW JOINT VENTURE
                  COMPANY

              

      

      

      
        	
                9.1

              	
                After
                  Hartcourt Education controls the 51% equity interests in the New
                  Company,
                  the net profit, after deducting all the expenses as per the accounting
                  standards, shall be allocated to Liren and Hartcourt Education
                  based on
                  their respective equity percentage in the New Company.
                  

              

      

      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      
        	
                10

              	
                MANAGEMENT
                  OF THE NEW JOINT VENTURE
                  COMPANY

              

      

      

      
        	
                10.1

              	
                After
                  Hartcourt Education controls the 51% equity interest in the New
                  Company,
                  the New Company will become a sino-foreign joint venture; the Chairman
                  of
                  the Board and finance controller of the New Company will be appointed
                  by
                  Hartcourt Education, while the general manager of which will be
                  appointed
                  by Liren. The Board of the New Joint Venture Company shall comprise
                  of 5
                  directors, among which Hartcourt Education is entitled to nominate
                  and
                  appoint 3 directors, and Liren is entitled to nominate and appoint
                  2
                  directors.

              

      

      

      
        	
                10.2

              	
                After
                  Hartcourt Education controls the 51% equity interest in the New
                  Company,
                  the Chairman of the Board and the Principal of Yucai will still
                  be
                  appointed by Liren, while the finance controller of which will
                  be
                  appointed by Hartcourt Education. The Board of Yucai shall comprise
                  of 5
                  directors, among which Hartcourt Education is entitled to nominate
                  and
                  appoint 3 directors, and Liren is entitled to nominate and appoint
                  2
                  directors. 

              

      

      

      
        	11	
                BUSINESS
                  TERM OF THE NEW JOINT VENTURE COMPANY 

              

      

      

      
        	
                11.1

              	
                After
                  Hartcourt Education controls the 51% equity interest in the New
                  Company,
                  the business term of the new joint venture company shall be 50
                  years.
                  

              

      

      

      
        	
                12

              	
                CONFIDENTIALITY

              

      

      

      
        	
                12.1

              	
                Dong
                  Shunsheng and His Fellows, Liren and Hartcourt Education undertakes
                  the
                  responsibilities to keep all the known information and documents
                  in
                  connection with this Agreement strictly
                  confidential;

              

      

      

      
        	
                12.2

              	
                Except
                  legally required by relevant governmental authority or securities
                  supervisory administration in respect hereof, without the consent
                  of all
                  its counterparties, no party shall divulge anything to any third
                  party
                  other than the parties in this Agreement.

              

      

      

      
        	
                13

              	
                BREACH
                  OF THE AGREEMENT

              

      

      

      
        	
                13.1

              	
                Any
                  party of Dong Shunsheng and His Fellows, Liren and Hartcourt Education,
                  when fails to fulfill its obligations specified in this Agreement
                  without
                  legal reasons, shall assume the liabilities of breach to non-breaching
                  party.

              

      

      

      
        	
                14

              	
                DISPUTE
                  SETTLEMENT

              

      

      

      
        	14.1	
                Any
                  dispute, controversy or claim arising out of or relating to this
                  Agreement, shall be settled by negotiation and discussion between
                  Dong
                  Shunsheng and His Fellows, Liren and Hartcourt Education in good
                  faith.
                  This negotiation and discussion shall start immediately after one
                  party
                  sending out the written notice to the other parties in this
                  regards.

              

      

      

      
        	14.2	
                In
                  the event that the dispute, controversy or claim cannot be solved
                  within
                  90 days of the aforesaid written notice, this dispute, controversy
                  or
                  claim, as any parties requires, and after informing the other parties,
                  shall be submitted and settled by China International Economic
                  and Trade
                  Arbitration Commission, Shanghai Branch. Arbitration Rules will
                  be final,
                  and will be binding on Dong Shunsheng, Liren and Hartcourt Education.
                  

              

      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      
        	15	
                GOVERNING
                  LAW AND JURISDICATION

              

      

      

      
        	
                15.1

              	
                This
                  Agreement shall be governed, construed and interpreted in accordance
                  with
                  the laws of the People’s Republic of
                  China.

              

      

      

      
        	16	
                EFFECTIVENESS

              

      

      

      
        	
                16.1

              	
                This
                  Agreement will be effective immediately upon duly signed by Dong
                  Shunsheng
                  and His Fellows, Liren and Hartcourt Education or their authorized
                  representative.

              

      

      

      
        	
                17

              	
                MICELLANEOUS 

              

      

      

      
        	
                17.1

              	
                The
                  headings of the Clause in this Agreement are for reference only
                  and shall
                  not be construed as the interpretation of this Agreement.
                  

              

      

      

      
        	
                17.2

              	
                This
                  Agreement will be in eight original copies, one copy with each
                  party, and
                  each copy shall be deemed as equally authentic.

              

      

      

      
        	
                17.3

              	
                This
                  Agreement will supersede all previous agreements, arrangements,
                  memorandum
                  of understandings between the parties hereto upon signed and executed
                  by
                  all parties. 

              

      

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      

        IN
          WITNESS
          whereof
          this Agreement has been duly executed by all parties hereto the day and
          year
          first above written.

      

      

      SIGNED
        by

      

        /S/
          DONG
          SHUNSHENG

      

      DONG
        SHUNSHENG

      

      

      SIGNED
        by

      

        /S/
          ZHANG
          XIAOXIAO

      

      ZHANG
        XIAOXIAO

      

      

      SIGNED
        by

      

        /S/
          XIA
          WEILAN

      

      XIA
        WEILAN

      

      

      SIGNED
        by

      

        /S/
          CAI
          DAQIN

      

      CAI
        DAQIN

      

      

      SIGNED
        by

      

        /S/
          XIA
          FENGLING

      

      XIA
        FENGLING

      

      

      SIGNED
        by

      

        /S/
          ZENG
          YUNWO

      

      ZENG
        YUNWO

      

      

      SIGNED
        by

      for
        and
        on behalf of 

      

        /S/
          WENZHOU
          LIREN EDUCATION GROUP CO., LTD

      

      WENZHOU
        LIREN EDUCATION GROUP CO., LTD

      

      

      SIGNED
        by

      for
        and
        on behalf of 

      

        /S/
          AI-ASIA
          INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD

      

      AI-ASIA
        INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      Schedule
        1:  Amendments
        of the Article of Associations of Yucai

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      Schedule
        2:  Primary
        Terms and Conditions of Letter of Warranty

      

      
        	1	
                Within
                  twenty years upon the Letter of Warranty, provided that the Teaching
                  Facility and Assets that are currently being used by Yucai ceases
                  to be
                  so, including but not limit to the changes of the purpose of land
                  usage
                  and obligee of the land and real properties, and which causes that
                  Yucai
                  cannot pay the Management Fee A to Hartcourt Education pursuant
                  to
                  Management Contract A, in this regards, Dong Shunsheng and His
                  Fellows
                  shall indemnify Hartcourt Education against all the losses incurred,
                  including but not limit to the Management Fee A. Moreover, Dong
                  Shunsheng
                  and His Fellows shall provide Teaching Facility and Assets comparable
                  to
                  current property area in use to Yucai free of any charges and
                  obligations;

              

      

      

      
        	
                2

              	
                In
                  the event of any loss to the New Company or Yucai, caused by the
                  Letter of
                  Funding and Investment Agreement duly signed by the Board of Yucai
                  and
                  Related Natural Persons, Dong Shunsheng and His Fellows shall fully
                  indemnify against all the losses and
                  liabilities;

              

      

      

      
        	
                3

              	
                Whenever
                  Dong Shunsheng and His Fellows obtain reasonable profit/returns
                  from
                  Yucai, they shall assign the profit/returns to the New Company
                  in full
                  amount;

              

      

      

      
        	
                4

              	
                Dong
                  Shunsheng and His Fellows agree that Hartcourt Education and the
                  New
                  Company will audit the accounts of Yucai periodically, including
                  without
                  limitation, account vouchers, account books and audit report, etc.
                  

              

      

      

      
        	
                5

              	
                The
                  aforesaid warranties made by Dong Shunsheng and His Fellows shall
                  be
                  secured by all their equity interests in Liren in pledge.
                  

              

      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      Schedule
        3:  Acknowledged
        Due Diligence Results & Financial Projections

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      Schedule
        4:Primary
        Terms and Conditions of Management Contract A

      

      
        	1	
                Hartcourt
                  Education shall provide education management and consulting service
                  to
                  Yucai, detailed as follows:-

              

      

      

      
        	 	
                (1)

              	
                Assisting
                  to prepare and amend the corporate governance system, financial
                  management
                  policy of Yucai, etc.;

              

      

      
        	 	
                (2)

              	
                Assisting
                  to introduce the overseas advanced teaching model and
                  methodology;

              

      

      
        	 	
                (3)

              	
                Assisting
                  Yucai to upgrade its financial management, and assign financial
                  expert to
                  instruct and manage the financial department of
                  Yucai;

              

      

      
        	 	
                (4)

              	
                Assist
                  to set up the employment guide and coordination committee for graduates,
                  and assign the expert to instruct and coordinate the graduates
                  employment;
                  

              

      

      
        	 	
                (5)

              	
                To
                  offer the overseas exchange opportunity for students of Yucai as
                  it may
                  practically need; 

              

      

      
        	 	
                (6)

              	
                To
                  offer the overseas training opportunity for faculty of Yucai as
                  it may
                  practically need;

              

      

      
        	 	
                (7)

              	
                Assisting Yucai
                  to make material strategic decisions and the implementation procedures
                  in
                  detail;

              

      

      
        	 	
                (8)

              	
                Assisting
                  to manage Yucai and the New Company in fully compliance with the
                  regulations and rules of the United States Securities Exchange
                  Commission,
                  and offer the consulting service in the aspect of corporate governance,
                  legal, financial management, audit,
                  etc.;

              

      

      
        	 	
                (9)

              	
                Providing
                  other related consulting service as it may be required by Yucai.
                  

              

      

      

      
        	2	
                Yucai
                  will pay the Management Fee A to Hartcourt Education, detailed
                  as
                  follows:-

              

      

      

      (1) 
        Yucai
        shall pay the annual Base Management Fee of RMB500,000 cash to Hartcourt
        Education prior to February 1 of that year;

      (2) 
        Yucai
        shall pay the annual Performance Management Fee of RMB3,825,000 cash to
        Hartcourt Education prior to December 31 of that year, depending on its
        operating results; 

      (3) 
        Dong
        Shunsheng and His Fellows shall jointly guarantee that the Net Profit of
        Yucai
        can meet at least the payment of the Management Fee A specified in Clause
        5.2.(1) and 5.2.(2) in the year of 2007, 2008 and 2009, and in the event
        of the
        Net Profit less than the Management Fee A, Dong Shunsheng and His Fellows
        shall
        make up the discrepancy to Hartcourt Education before December 31 of each
        year
        in respect thereof. The Management Fee A shall be paid fully depending on
        Yucai’s actual performance afterwards. 

      

      
        	3	
                Other
                  expenses that Yucai shall bear, detailed as
                  follows:-

              

      

      

      All
        Expenses for Overseas student exchange of Yucai and overseas training for
        Yucai’s faculty shall be borne by Yucai;

      The
        actual management expenses for Yucai incurred by Hartcourt Education, shall
        also
        be borne by Yucai. 

      

      
        	4	
                The
                  Management Contract A shall have 20 years term, and effective from
                  the
                  date when Hartcourt Education legally obtains the 51% equity interest
                  in
                  the New Company. Yucai and Hartcourt Education may otherwise discuss
                  the
                  renewal as such term expires. 

              

      

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      

      Schedule
        5:  Primary
        Terms and Conditions of Management Contract B

       

      
        	
                1

              	
                Dong
                  Shunsheng shall provide the education management and consulting
                  service to
                  Yucai, detailed as follows:-

              

      

      

      
        	 	
                (1)

              	
                In
                  charge of making and implementing the general management and financial
                  management policy, etc. of Yucai and providing consulting service
                  in
                  practice;

              

      

      

      
        	 	
                (2)

              	
                In
                  charge of making and implementing the routine teaching management
                  of
                  Yucai, and assigning expert (the Principal) to instruct and lead
                  the
                  management work of Yucai;

              

      

      

      
        	 	
                (3)

              	
                In
                  charge of making and implementing teaching model and methodology
                  of Yucai
                  and providing consulting service in
                  practice;

              

      

      

      
        	 	
                (4)

              	
                To
                  provide consulting service in respect of the financial
                  management;

              

      

      

      
        	 	
                (5)

              	
                Assist
                  Hartcourt Education to make material strategic decision of Yucai
                  and the
                  implementation procedure, as well as the consulting service as
                  it may
                  require. 

              

      

      

      
        	
                2

              	
                Yucai
                  shall pay Management Fee B to Dong Shunsheng and His Fellows, detailed
                  as
                  follows:-

              

      

      

      Yucai
        shall pay the Management Fee B to Dong Shunsheng and His Fellows each year
        of
        (i) RMB3,675,000 cash, or (ii) Net Profit - Management Fee A, whichever is
        lower, before December 31 of that year for 2007, 2008 and 2009; The Management
        Fee B shall be paid fully depending on Yucai’s actual performance
        afterwards.

      

      
        	
                3

              	
                The
                  Management Contract B shall have 20 years term, effective from
                  the date
                  when Hartcourt Education legally obtains the 51% equity interest
                  in the
                  New Company. Yucai and Dong Shunsheng and His Fellows may otherwise
                  discuss the renewal as such term expires.

              

      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      Schedule
        6:  
Assets
        List and Property Right Certificates of Yucai

      

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      Schedule
        7:              
Employee
        Payroll and Students Roster of Yucai

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      Schedule
        8: 
All
        Licenses & Permits for Sponsoring and Running Yucai

      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      Schedule
        9:             
Primary Terms and Conditions of the Sale and Purchase
        Agreement

      

        
          	
                  1

                	
                  Liren
                    will sell its 51% equity interest in the New Company to Hartcourt
                    Education. 

                
	 	 
	
                  2

                	
                  The
                    Consideration for the sale and purchase of the Sale Interests
                    Shall be an
                    aggregate of US$2,000,000 cash and 5,500,000 Restricted Shares
                    of
                    Hartcourt Common Stock, based on the assets of Yucai, the capital
                    injected
                    to the New Company from Liren and the financial projections each
                    year in
                    the future.

                
	 	 
	
                  3

                	
                  Hartcourt
                    Education shall credit the Consideration to the accounts designated
                    by
                    Liren.

                
	 	 
	
                  4

                	
                  The
                    Delivery Date of the Sale Interests in the New Company shall
                    be within 30
                    business days upon obtaining the offcial approval from Governmental
                    Agency
                    on Foreign Investment; and Since the Delivery Date of the Sale
                    Interests
                    in the New Company, Hartcourt Education shalll take over the
                    51% control
                    of the New Company from Liren as shareholder pursuant to the
                    Agreement.
                    

                
	 	 
	
                  5

                	
                  Hartcourt
                    Education shall credit the Consideration to the nominees designated
                    by
                    Liren in four installments, satisfied as details
                    hereunder:-

                

        

      

      

      
        	 	
                (1)

              	
                Within
                  30 business days upon the Delivery Date of the Sale Interest in
                  the New
                  Company, Hartcourt Education shall issue and allot the Consideration
                  of
                  total 5,500,000 Restricted Shares of Hartcourt Common Stock to
                  the
                  nominees designated by Liren. Hartcourt and Hartcourt Education
                  shall
                  jointly guarantee the average closing price of the 3 days immediately
                  prior to the Consideration Shares Trading Date at not less than
                  US$0.50
                  per share, otherwise, Hartcourt shall, within 10 business days
                  from the
                  Consideration shares Trading Date, credit additional cash or issue
                  and
                  allot to the nominees additional new Restricted Shares of Hartcourt
                  Common
                  Stock to make it up. 

              

      

      
        	 	
                (2)

              	
                Within
                  30 business days upon the Delivery Date of the Sale Interests in
                  the New
                  Company, Hartcourt Education shall credit US$1,000,000 cash Consideration
                  to the accounts designated by
                  Liren;

              

      

      
        	 	
                (3)

              	
                Before
                  July 31, 2007, Hartcourt Education shall credit US$500,000 cash
                  Consideration to the accounts designated by
                  Liren;

              

      

      
        	 	
                (4)

              	
                Before
                  January 31, 2008, Hartcourt Education shall credit US$500,000 cash
                  Consideration to the accounts designated by Liren.
                  

              

      

      

      
        	6	
                After
                  Hartcourt Education controls the 51% equity interest in the New
                  Company,
                  the New Company will become a sino-foreign joint venture; the Chairman
                  of
                  the Board and finance controller of the New Company will be appointed
                  by
                  Hartcourt Education; The Board of the New Joint Venture Company
                  shall
                  comprise of 5 directors, among which Hartcourt Education is entitled
                  to
                  nominate and appoint 3 directors, and Liren is entitled to nominate
                  and
                  appoint 2 directors. 

              

      

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      
        	7	
                After
                  Hartcourt Education controls the 51% equity interest in the New
                  Company,
                  the Chairman of the Board and the Principal of Yucai will still
                  be
                  appointed by Liren, while the finance controller of which will
                  be
                  appointed by Hartcourt Education. The board of Yucai shall comprise
                  of 5
                  directors, among which Hartcourt Education is entitled to nominate
                  and
                  appoint 3 directors, and Liren is entitled to nominate and appoint
                  2
                  directors. 

              

      

      

      
        	8	
                After
                  Hartcourt Edcuation controls the 51% equity interest in the New
                  Company,
                  the Net Profit shall be allocated to Liren and Hartcourt Education
                  based
                  on their respective equity percentage in the New Company.
                  

              

      

      

      
        	9	
                The
                        business term of the New Joint Venture Company shall be 50
                  years.
                  

              

      

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      Schedule
        10:  Primary
        Terms and Conditions of the Share Consideration

       

       

      27

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