SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported):
NOVEMBER 12, 1996
TENGTU INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
DE 33-27707 77-0407366
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
19105 36th Avenue, Suite 207
Linwood, Washington 98037
Address of principal executive offices
Registrant's telephone number: (604)685-3234
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 15, 1996, the Company, through its wholly-
owned subsidiary, Tengtu Enterprises Limited, a Barbadian
corporation, finalized the acquisition of a 49% interest in the
profits of the Tengtu United Joint Venture, which, by agreement,
was made retroactive to September 30, 1996. Effective as of
September 30, 1996, Tengtu China ceased business activities and
transferred to Tengtu United the business referred to in the Tengtu
United Joint Venture Agreement dated June 30, 1996.
The Joint Venture Agreement, and the Purchase Agreement
pursuant to which the Company acquired its interest in the Tengtu
United Joint Venture, initially required that the Company provide
a minimum of $6,000,000 of capital to Tengtu United on or before
July 30, 1996, in order to cause the Joint Venture to be activated.
The parties to the Joint Venture Agreement subsequently agreed to
reduce the minimum initial investment required to activate the
Joint Venture from $6,000,000 to $3,000,000, and to postpone the
due date for completion of the minimum initial investment. As of
November 15, 1996, the Company had provided approximately
$4,800,000.00 in capital to the Joint Venture.
The funds used by the Company for completion of the
acquisition of its Joint Venture interest were net proceeds received
by the Company from sale of units consisting of two common
shares and one warrant to purchase an additional share. Under the
terms of the Joint Venture Agreement, the Company is obligated,
on or before July 30, 1997, to provide a minimum of not less
than $12,000,000 in capital to the Tengtu United Joint Venture.
As of the date of this report on Form 8-K, the Company is
continuing with an offering of its securities to raise the additional
funds needed for purposes of completion of its investment in the
Joint Venture.
Disclosure is included in Item 5 of this report on Form 8-K
concerning recent sales of equity securities by the Company that
were not registered under the Securities Act, other than
unregistered sales made in reliance on Regulation S. Disclosure
concerning recent unregistered sales of equity securities by the
Company made in reliance on Regulation S is included in Item 9.
Reference is made to the Company's report on Form 10-
KSB for the fiscal year ended June 30, 1996, for additional
disclosure concerning the terms of the Tengtu United Joint
Venture.
ITEM 5. OTHER EVENTS.
The Company has made recent sales of equity securities that were
not registered under the Securities Act, other than unregistered
sales made in reliance on Regulation S. No underwriter or
placement agent was involved, and no underwriting discounts or
commissions were paid. All sales were made directly by the
Company, through its officers and directors in reliance on
exemptions from registration provided by Section 4(2) and by
Regulation D under the Securities Act of 1933.
The securities sold were units. Each unit consisted of two (2)
shares of the Company's common stock, and one (1) warrant to
buy common stock at a price of $4.50 per share. The warrant
expires on August 30, 1997. The units were offered and sold for
a price of $4.50 per unit, payable in cash upon subscription, and
each of the transactions was completed on November 21, 1996.
The name of each subscriber, the amount of securities sold, and
the aggregate consideration received by the Company are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Number Aggregate
Name of Units Consideration
Lancer Partners L.P. 450,000 $2,025,000
Michael Lauer 20,000 $ 90,000
Totals 470,000 $2,115,000
</TABLE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
It is impracticable at this time for the Company to provide
the required audited financial statements for the joint venture
business interest it has acquired.
The required audited financial statements will be filed with
the Securities and Exchange Commission as soon as practicable but
not later than sixty (60) days after the due date of this report.
(b) Pro forma financial information
It is impracticable at this time for the Company to provide
the required pro forma financial information for the joint venture
business interest it has acquired.
The required pro forma financial information will be filed
with the Securities and Exchange Commission as soon as
practicable, but not later than sixty (60) days after the date of this
report.
(c) Exhibits
Exhibit 2.1 - Joint Venture Agreement
Exhibit 2.2 - Purchase Agreement
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO
REGULATION S.
The Company has made recent unregistered sales of equity
securities in reliance upon the exemption from registration
provided by Regulation S under the Securities Act. All of such
sales made by the Company on or after November 3, 1996, are
required to be reported on Form 8-K. Regulation S sales made
prior to November 3, 1996, are not required to be reported, but
are included in the table below.
No underwriter or placement agent was involved in any of the
sales, and no underwriting discounts or commissions were paid.
All sales were made directly by the Company, through its officers
and directors.
The securities sold were units. Each unit consisted of two (2)
shares of the Company's common stock, and one (1) warrant to
buy common stock at a price of $4.50 per share. The warrant
expires on August 30, 1997. The units were offered and sold for
a price of $4.50 per unit, payable in cash upon subscription.
Each of the following sales of units was completed by the
Company on November 12, 1996. The name of each subscriber,
the amount of securities sold, and the aggregate consideration
received by the Company from such sales, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Number Aggregate
Name of Units Consideration
Andrew Petrick 17,000 $ 76,500
Brain-Bride, Ltd. 33,333 $150,000
Gerlach & Co 11,000 $ 49,500
Parslee Holdings, Inc. 33,333 $150,000
Jones Gable & Company 50,000 $225,000
Worldsec Nominees
Int'l #1 11,000 $ 49,500
Worldsec Nominees
Int'l #2 11,000 $ 49,500
Cyril M.F. Yap 22,000 $ 99,000
Michael Roderick
MacKenzie 22,000 $99,000
Origin Capital
Investment Club 50,000 $225,000
827376 Ontario Ltd 33,333 $150,000
Totals 293,999 $1,223,000
</TABLE>
Each of the following sales of units made by the Company in
reliance on Regulation S, was completed prior to date upon which
the Company became obligated to report such sales on Form 8-K.
The name of each subscriber, the date of the transaction, the
amount of securities sold, and the aggregate consideration received
by the Company from such sales, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Number of Aggregate
Date Units Consideration
Lancer Offshore Inc
9/16/96 150,000 $675,000
Gerlach & Co
9/16/96 100,000 $450,000
Royter Nominees
9/27/96 111,111.5 $500,000
Strategic Lines
Asset Management
Limited
10/11/96 200,000 $900,000
Beacon Trading
Limited
10/11/96 66,000 $297,000
Royter Nominees
10/23/96 111,111.5 $500,000
Commercial Union
Trust S.A.
10/23/96 80,000 $360,000
Totals 818,223 $3,682,000
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the
undersigned hereunto duly authorized.
TENGTU INTERNATIONAL
CORP.
(Registrant)
November 12, 1996 /s/ Pak Cheung, Chairman
(Date) (Signature)*
*Print name and title of signing officer under his signature.<PAGE>
EXHIBIT 2.1 JOINT VENTURE AGREEMENT
THIS AGREEMENT ("Agreement") is dated for reference the
30th day of July, 1996
BETWEEN:
BEIJING TENGTU CULTURE & EDUCATION ELECTRONIC
DEVELOPMENT CO. LTD. a Chinese Company duly
incorporated under the laws of China and having an office in
Beijing China. ("Party A")
AND:
TENGTU ENTERPISES LIMITED, a Company duly incorporated
under the laws of Barbados with offices at Beckwith House Hinks
and Prince Albert Streets Bridgetown Barbados. ("Party B")
(Party A and Party B are collectively called "the Parties")
BEIJING TENGTU UNITED ELECTRONICS DEVELOPMENT
CO LTD a Chinese Foreign Joint Tengtu United with offices at
___ (Tengtu United)
WHEREAS;
A. Party A has acquired certain license and rights as described on
Schedule A (Rights) in connection with its principal business
(Business) being the production and distribution of educational
software in China to the elementary, middle and junior schools
(Schools System).
B. Party A is controlled by three Chinese state organizations
Legend Group Co., Taiji Computer Corporation, and Great Wall
Computer Group Co (Chinese Principals).
C. Tengtu United is a Chinese Foreign Joint venture that is
authorized to assume the Business of Party A with foreign
investors upon certain financial commitments being made by Party
B as described herein.
D. Blue Lake Industries Ltd a Washington State Company was
approved by MOFTEC as a foreign investor in Tengtu United on
June 12th 1995 (Effective Date) and has under separate agreement
effective July 30th 1996 assigned its interests to Party B.
E. The parties hereto have agreed to form this joint venture upon
entering this agreement which sets out the terms and conditions
under which Tengtu United will operate the Business.
NOW THEREFORE IN CONSIDERATION of the mutual
promises contained herein, the parties hereto agree as follows:
1.2 PURPOSE AND SCOPE
Tengtu United has been formed to carry on the Business of Party
B to:
(a) produce and distribute in China by the year 2001 5,000
electronic educational software titles in accordance with the Rights;
(b) produce and distribute animated cartoons in association with
Chinese animation companies and as permitted by law;
(c) be a gateway for electronic publishing in China;
(d) engage in such other activities as are reasonably incidental to
the foregoing.
1.3 SCOPE OF AUTHORITY
Except as otherwise expressly and specifically provided in this
Agreement, neither Party A or Party B shall have the authority to
act for or assume any obligations or responsibility on behalf of the
other or Tengtu United. Neither Party A or Party B shall be liable
to each other for any expense, damage, loss or liability as may be
caused by the gross negligence or willful neglect of that other or
by a failure by that other to carry out the obligations of the other
under this Agreement. This Agreement shall be not deemed to
create a general partnership between Party A or party B it respect
to any activities whatsoever.
1.4 PRINCIPAL PLACE OF BUSINESS
The principal place of business of the Tengtu United shall be in
Beijing China however the principal place of business may be
changed at any time by a resolution of the Board.
1.5 TERM
The term of the Tengtu United will commence as of the date
hereof and shall continue, for a term no less than 20 years from
the Effective Date unless sooner terminated, in accordance with
other provisions of this Agreement ("Term").
2. Responsibilities of Party A:
(a) To transfer and assign the Rights to Tengtu United;
(b) To transfer and assign the Tiles and all work in progress in
new titles to Tengtu United;
(c) To transfer and assign all material contracts used in the
Business to Tengtu United;
(d) To allow Tengtu United to use all equipment including
computer work stations that Party A used in the Business at no
cost;
(e) To stop all operational activities in connection with the
Business; and
(f) To assist Tengtu United in securing future rights that relate to
its Business and assist Tengtu United to maintain good relations
between Tengtu United and all governmental and state agencies.
3. Responsibliites of Party B:
(a) To pay to Tengtu United the sum of $12,000,000 US as
follows:
(i) 6,000,000 on or before July 30th 1996; and
(ii) $6,000,000 on or before July 30th 1997 failing which
interest will be paid to Tengtu at the rate of 1% over the average
Labor rate (Interest) over the period that the said funds are in
default and if the said funds are not paid by January 1st 1998 then
Party B's percentage in Tengtu United will reduce by an amount
equivalent to the percentage of the amount actually contributed less
interest over $12,000,000.
MANAGEMENT
3.1 DIRECTORS
(a) The Parties agree that the Board of Directors (Board) of
Tengtu Unite will consist of equal representation where Party A
selects the Chairman of Tengtu United and Party B selected the
President of Tengtu United.
(b) The Parties agree that the Board of Directors will create a
Board composed of an equal representative of each Party or so
many more thereafter as the Tengtu United agree.
(c) The quorum at any meeting of the Board shall be two persons,
provided each of Party A and B is represented by its
representative(s).
(d) A resolution of the Board shall be passed by a majority vote
and each representative is entitled to one vote.
3.2 MEETINGS OF THE BOARD
(a) The Boardshall convene and meet as needed.
(b) Any action required to betaken by the Board may be taken
without a meeting if all the members of the Board entitled to vote
thereon consent in writing to such action, whether such written
consent shall be in the form of a handwritten, typewritten or in the
form of a telecopy of a signed copy.
(c) The Board in conducting any meeting may,in lieu of a face to
face meeting, conduct such meeting by conference telephone or
other communications facility by means of which all persons
participating in the meeting can hear and speak to each other.
3.3 DUTIES OF THE BOARD
Except as otherwise expressly provide, the overall management
and control of the affairs of the Tengtu United shall e vest in the
Board which shall have control over the day to day business faa
the Tengtu United, including the power oft assign duties, approve
budgets, sign contracts, pay accounts and assume direction of
business operations subject to the specific control of the Tengtu
United.
3.4 MANAGER OF THE TENGTU UNITED
Except as otherwise expressly provided herein, the day to day
management of the Tengtu Untied may be undertaken by the
President and a General Manager who will be appointed from time
to time by the Board.
3.7 OTHER BUSINESS ACTIVITIES
The Tengtu China may engage in or possess any interest in any
other business of any nature or description EXCEPT any business
that competes directly or indirectly with Tengtu United
independently or with others.
4. PROPRIETARY RIGHTS
The Parties agree that Tengtu United absolutely retains ownership
to the Rights and any rights or technologies hereafter acquired and
or developed.
5. CONFIDENTIALITY
(a) Each Party from time to time shall disclose to the other and to
Tengtu United orally or in writing, any Confidential Information
which is necessary for the Business. If such disclosure is made in
writing, it shall be marked with a legend "Confidential."
(b) Each Party will also treat all Confidential Information
developed within the Tengtu United as if it were the Tengtu
United's own Confidential Information.
6. CAPITAL, DISTRIBUTIONS AND COSTS
6.1 PERCENTAGE INTEREST
Except as hereinafter provided, the Parties agree that they have the
following interests ("Percentage Interest") in Tengtu United: Party
A - 51% and Party B - 49%
and that, save and except as otherwise provided herein, they shall
each share in the profits or losses of the Tengtu United and in all
distributions of assets of the Tengtu United in accordance with
their respective Percentage Interests.
6.2 NO INTEREST ON CAPITAL
No interest shall be paid upon any contributions to the capital of
the Tengtu United nor upon any undistributed or reinvested income
or profits of the Tengtu United.
6.3 WITHDRAWALS OF CAPITAL
Except as otherwise provided herein, no portion of any capital of
the Tengtu United may be withdrawn at any time without the
express consent of the Board to be given by resolution. Upon the
termination of the Tengtu United, the Tengtu United's capital shall
be distributed pursuant to this agreement.
6.4 DISTRIBUTIONS
(a) Not more than 30 days following the end of each fiscal quarter
the Board shall, by resolution, determine from the net cash flow
of the Tengtu United the cash available for distribution (the "Cash
Available for Distribution").
(b) The Cash Available for Distribution shall be distributed to the
Parties by resolution of the Board in accordance with each parties
Percentage Interest.
7.0 ACCOUNTING
7.1 BOOKS AND RECORDS
The Board shall appoint an international outside audit firm to
report on the affairs of Tengtu United. Internally it shall cause
accurate books and records of account to be prepared and
maintained and in which shall be entered all matters relating to the
Tengtu United, including all income, expenditures, assets and
liabilities thereof. Such books and records of account shall be kept
in accordance with generally accepted accounting principals and
practices and shall be adequate to provide each Party with all
financial information as may be needed by them or an affiliate for
purposes of satisfying the financial reporting obligations of each
Party or its respective affiliate which in the case of Party B
requires quarterly reporting. Said books and records of account
shall be open to examination and/or audit by any of the Partys or
their authorized representatives at all reasonable times during
normal business hours. Any expense for such examination and/or
audit shall be born by the Tengtu United causing it to be
conducted.
7.2 FISCAL YEAR
The fiscal year end of the Tengtu United shall be determined by
resolution of the Board. If the Tengtu United shall terminate for
any reason provided herein, the period following the last day of
the fiscal year of the Tengtu United first preceding the date of such
termination and ending on the date of such termination, shall also
be deemed to be a fiscal year of the Tengtu United.
7.3 BANK ACCOUNTS
Funds of the Party B shall be deposited in an account(s) in the
name of the Tengtu United and in a bank(s) approved by the
Board. The designate of the Board may draw against such
accounts for any purpose permitted by this Agreement in
accordance with a Board resolution.
8.0 SALE AND TRANSFER
8.1 GENERAL
Except as expressly permitted herein no Party may mortgage,
charge or otherwise encumber, or suffer any third party to
mortgage, charge or otherwise encumber, any part or all of its
interest in the Tengtu United ("Interest") unless approved by the
other Party such approval not to be unreasonably withheld.
8.2 SALE TO AFFILIATE
A Party may sell, transfer or otherwise dispose of the whole or
any part of is Interest to an affiliate provided that the Party and the
affiliate enter into an agreement with the other Tengtu United that:
(a) an affiliate will remain such so long as the affiliate holds the
Interest or any part thereof;
(b) prior to the affiliate ceasing to be such, the affiliate will
transfer its Interest back to the Party or to another affiliate of the
Party provided that such other affiliate enters into a similar
agreement with the other Party; and
(c) the affiliate will otherwise be bound by and have the benefit
of the provisions of this Agreement.
9.0 DEFAULT AND DISSOLUTION
9.1 The occurrence of any of the following events shall constitute
an event of default ("Event of Default") hereunder:
(a) the failure by a Party to make any capital contribution as
required in herein;
(b) any transfer by a Party of its Interest hereunder, except as
may be permitted herein;
(c) a general assignment by a Party for the benefit of creditors;
(d) the filing by a Party of a petition of Bankruptcy which petition
remains undismissed and undischarged for a period of 90 days.
(e) default in performance of any other material agreements of a
Party herein if the default continues for a period of 60 days
following written notice of such default, except that an Event of
Default shall not be deemed to have occurred if any such default
is of a non material nature or that it reasonable requires more than
60 days to cure, and is capable of being fully cured within a
reasonable time, and the defaulting Party is diligently proceeding
to cure said default.
9.2 CAUSES OF DISSOLUTION
The Tengtu United shall be dissolved in the event that:
(a) an Event of Default has occurred and the non-defaulting Party
elects to dissolve the Tengtu United as provided herein;
(b) the Board determines by resolution to terminate the Tengtu
United;
(c) the Tengtu United by its terms is terminated.
9.3 ELECTION
(a) If an Event of Default has occurred, the non-defaulting Party,
it it so notifies the defaulting Party within thirty (30) days after
acquiring knowledge of such Event of Default, may elect to
terminate the said Party pursuant to this Agreement;
(b) The election shall be exercised by written notice. No waiver
of any right to so elect upon a subsequent or continuing default of
the same or different nature shall be implied from any failure on
the part of a non-defaulting Party to make the election permitted
by agreement as a result of any prior Event of Default.
9.4 PROCEDURE IN DISSOLUTION AND LIQUIDATION
(a) Upon the election of a Pary to dissolve the Tengtu United
pursuant to this agreement or upon the occurrence of any other
event Tengtu United shall immediately commence to wind up its
affairs and the Party shall proceed with reasonable promptness to
liquidate the business of Tengtu United. To the extent the Tengtu
United is not completely liquidated within a reasonable time (not
to exceed 36 months) from the date of the election to dissolve, the
remaining assets shall forthwith be disposed of at a public sale.
(b) During the period of the winding up of the affairs of the
Tengtu United, the Board shall continue to manage the affairs of
the Tengtu United.
(c) Profits and losses of the Tengtu United shall be determined as
of the end of the period of winding up in accordance with the
provisions of this Agreement and shall be credited or charged to
each Party in the same manner as profits and losses of each Party
would have been credited or charged if there were no dissolution
and termination.
(d) The assets of the Tengtu United shall be applied or distributed
in liquidation in the following order of priority:
(i) to creditors of the Tengtu United other than Tengtu
Uniteds in payment of debts and obligations of the Tengtu United;
(ii) to each Party as return of any capital; and
(iii) to each Party in accordance with their Percentage
Interest.
10. SETTLEMENT OF DISPUTES AND GOVERNING LAW
10.1 In the event a disput arises in connection with the
interpretation or implementation of this Agreement, the parties to
the disputed shall attempt in the first instance to resolve such
dispute through amicable consulations. If the dispute cannot be
resolved in this manner within thirty(30) days after first
conferring, then any of all parties to the dispute may refer the
dispute to arbitration in beijing Internation Arbitration Committee
("Committee"). The number of arbitrators shall be three. The
arbitration proceedings shall be conducted in the Chinese language.
10.2 Any award of the arbitrators shall be final and binding on
the parties. The costs of arbitration shall be borne by the losing
party, unless the arbitrators determe that this would be inequitable.
The parties agree and recognize that any award of the arbitrators
shall be recognizable and enforceable in any court having
jurisdiction over the party against whom the award was rendered,
and also wherever assets of such party are located.
10.3 The legal relations between the parties under this contract
shall be interpreted in accordance with the substantive laws of
China. Any disputes between the parties concerning their legal
obligations arising under this contract which are submitted to
arbitration pursuant to this clause shall be decided pursuant to the
substantive laws of China.
11.0 GENERAL PROVISIONS
11.1 COMPLETE AGREEMENT
This Agreement constitutes the entire agreement between the
Parties and supersedes all agreements, representations, warranties,
statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof, and neither Party shall
be bound by or charged with any oral or written agreements,
representations, warranties, statements, promises or understandings
not specifically set forth in this Agreement. This Agreement may
not be amended, altered or modifies except in crititn, signed by
each of the Parties.
12.0 NOTICE
12.1 Notices as to disputes or termination to be given under this
Agreement shall be signed by the party giving such notice and
mailed by certified or registered mail, addressed to the party to be
notified at its then current business adress as set forth at the
beginning of this Agreement or as subsequently changed by giving
notice. Notice as to address changes, priocing changes, warranty
changes and other matters relating to policy and business may by
given to such addresses, by facsimile transmission, telex, telegram
or first class mail. Notices by mail shall be deemed given three
days after mailing.
12.3 LAWYERS FEES
Should any litigation be commenced between the Parties or their
representatives or should any Party institute any proceedings in a
bankruptcy court which has jurisdiction over any other Party or
any or all of its property or assents concerning any provision of
this Agreement or the rights and duties of any person or entity in
relation thereto, the Party prevailing in such litigation shall be
entitled, in addition to such other relief as may be granted, to a
reasonable sum as and for its attorney's fees and court costs in
such litigation which shall be determined by the court in such
litigation or in a separate action brought for that purpose.
12.4 VALIDITY
In the event that any provision of this Agreement shall be held to
be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.
12.5 SURVIVAL OF RIGHTS
Except as provided herein to the contrary, this Agreement shall be
binding upon and enure to the benifit of the Parties their respective
successors, heirs and permitted assigns.
12.6 GOVERNING LAW
This Agreement has been entered into in the China and all
questions with respect to the Agreement and the rights and
liabilities of the Parties shall be governed by the laws of China and
this agreement shall be written in both Chinese and English and
both contracts shall have equal force and if an inconsistency then
such shall be resolved by arbitration under the arbrittration
provision hereunder
12.7 WAIVER
No consent to or waiver of, express or implied, by any Party of
any breach or default in the performance by a Party of any term
of this Agreement shall be deemed to be a waiver of the same or
any other obligations of such Party hereunder. Failure on the part
of any Party to complain of any act or failure to act of the other
Party or to declare the other Party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such
Party of its rights hereunder.
IN WITNESS WHEREOF the Parties have executed or caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
BLUE LAKE INDUSTRIES LIMITED in the presence of:
/s/
Authorized Signatory
BEIJING TENGTU CULTURE
EDUCATION ELECTRONIC
DEVELOPMENT CO LTD
in the present of:
/s/
Authorized Signatory
BEIJING TENGTU UNITED
ELECTRONICS DEVELOPMENT CO LTD
in the presence of:
/s/
Authorized Signatory<PAGE>
EXHIBIT 2.2 PURCHASE AGREEMENT
PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is dated for reference the
30th day of July, 1996
BETWEEN:
BLUE LAKE INDUSTRIES LIMITED a Washington State
company with offices at #207 19105 36th Ave Lynwood, WA
98037
("Blue Lake")
AND:
TENGTU ENTERPISES LIMITED, a Company duly incorporated
under the laws of Barbados with offices at Beckwith House Hinks
and Prince Albert Streets Bridgetown Barbados.
("Tengtu")
TENGTU INTERNATIONAL CORP. a Delaware company with
offices in Lynwood Washington State
("Company")
WHEREAS;
A. Blue Lake has been contributing financing and management
to BEIJING TENGTU EDUCATION & CULTURE
ELECTRONICS DEVELOPMENT CO. LTD a Chinese State
owned Company (Tengtu China).
B. In consideration of Blue Lake's contribution to Tengtu
China they have formed a foreging joint comany called BEIGJIN
TENGTU UNITED ELECTRONICS DEVELOPMENT CO
(Tengtu United) in which Bluelake owns 49% (Interest).
C. The Company is a public Delaware company that through
its wholly owned subsidiary, Tengtu, has agreed to purcahse from
Bluelake the Interest in accordance with the terms of this
agreement.
NOW THEREFORE IN CONSIDERATION of the mutual
promises contained herein, the parties hereto agree as follows:
1. Blue Lake hereby sels and the Company hereby Agrees to
purchase the Interest in consideration for (I) issuing to Bluelake or
its nominees 2,000,000 fully paid and non assessable common
shares in Tengtu (Shares) (ii) by payment of $100,00 (US) and
covenanting to provide $12,000,000 to Tengtu United as described
in the JV Agreement
2. Blue Lake warrants and represents to Tengtu as follows:
(a) Tentu United has certain rights granted to it as described in
the attached Schedule B (Licenses);
(b) Tengtu United ahs the requisite authority to engage in all
of the business activities of Tengtu China;
(c) Tengtu United is a permitted assignee of the Licences and
upon reciept of no less than $6,000,000 required under the JV
Agreement Tengtu China will cease all of its business activity and
transfer to Tengtu United those assets described in the JB
Agreement; and
(d) BlueLake is the sole party that is authorized by Tengtu
China to raise the capital and negotiate with potential investors.
2. Tengtu hereby agrees to issue and allot 2,000,000 common
shares issued pursuant to Section 4(ii) of the Securities and
Exchange Act of 1993 (Act).
3. The Company warrants and represents to Blue Lake that:
(a) it is duly incorporated under the laws of the State of
Delaware;
(b) it is authorized to issue 500,000,000 common shares
ofwhich no more than 14,000,000 shares have been issued;
(c) it is duly auhtorized to enter this agreement and by so
doing does not breach any other agreement; and
(d) it has raised or has commitments from bona fide persons of
no less than $12,000,000 US for Tengtu United.
4. Tengtu covenants and agrees to enter the JV Agreement
with Tengtu China the form of which is attached hereto and forms
part of this agreement and the Company agrees to provide capital
to Tengtu United of not less than $12,000,000.
5. Blue Lake agrees to enter any further agreements that may
be necessary to give effect to the intent and spirit of this
agreement.
6. This agreement shall enure to the benefit of the parties
ehreto and their permitted successors and assigns.
IN WITNESS WHEREOF the Tengtu United have executed or
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.
BLUE LAKE INDUSTRIES LIMITED was hereunto affixed in the
presence of: /s/ Authorized Signatory
TENGTU ENTERPRISES LIMITED was hereunto affixed in the
presence of: /s/ Authorized Signatory
TENGTU INTERNATIONAL CORP. was hereunto affixed in the
presence of: /s/ Authorized Signatory
SCHEDULE B
(a) to produce and distribute in China by the year 2001 5,000
electronic educational software titles in accordance with the Rights;
(b) to produce and distribute animated cartoons in association
with Chinese animation companies and as permitted by law;
(c) to be a gateway for electronic publishing in China;
(d) to engage in such other activities as are reasonably
incidental to the foregoing.
