EXHIBIT 10.2
ENGLISH LANGUAGE SUMMARY OF
JOINT VENTURE AGREEMENT
BY AND BETWEEN
21ST CENTURY PUBLISHING COMPANY
AND
KID CASTLE EDUCATIONAL SOFTWARE DEVELOPMENT
COMPANY LIMITED
[ENGLISH LANGUAGE SUMMARY OF ORIGINAL AGREEMENT WHICH IS IN SIMPLIFIED CHINESE]
The Joint Venture Agreement (the "JV Agreement") was entered into by and
between 21st Century Publishing Company of Jiangxi Province, China ("Party A")
and Kid Castle Educational Software Development Company Limited ("Party B") on
July 8, 2003 for the purpose of forming a joint venture company called 21st
Century Kid Castle Cultural Media Co. Ltd. under the laws of the Republic of
China (the "JV").
The JV Agreement provides that the JV will have a total capitalization and
registered capital of Rmb 1 million. Party A will contribute the right to use
the office space for 50% of the capital stock, and Party B will contribute Rmb
500,000 in cash for the other 50% of the capital stock. The transfer of all or
part of the shares of capital stock of the JV to any third party requires the
written consent from the other party, and the other party has the right of first
refusal to purchase such shares from the selling party. The approval of the
appropriate government authorities is also required for the transfer.
The scope of business to be conducted by the JV includes: publication and
distribution of books, magazines, audio-visual products; sales of educational
products and office supplies; advertisement; education administrative, training
and advisory services; advise on corporate image; and marketing planning. Its
business will be conducted in the following manner: franchising, sales of
teaching materials, supply of teachers to assist schools in using the JV's
education products, installation of Kid Castle educational and administrative
systems, publication of audio-visual products and operation of schools.
Under the JV Agreement, the JV will have an office in Shanghai that will
be managed by Party B. Party A shall be responsible for publishing, in
compliance with applicable laws, the books to which Kid Castle Internet has
copyrights ("Party B Copyrighted Books"). Party A has no obligation to publish
any Party B Copyrighted Books that compete with Party A's existing products.
Party A is prohibited under the terms of the JV Agreement from publishing
anything that competes with the Party B Copyrighted Books that have been
published by Party A. Party B will also provide advisory, production and other
services pursuant to an agreement entered into simultaneously with the JV
Agreement.
Party A agrees that the JV shall act as an external business unit of Party
A and is authorized to engage in the publishing business conducted by Party A.
As soon as Party A is granted the right to use and publish the copyrighted
materials of Kid Castle Internet Technology, Party A shall contract with the JV
to produce such materials, and the JV may contract with a qualified printing
company to print the materials. The printing contract shall be entered into by
Party A, the JV, and the printing company. Party A undertakes to publish no less
than 50 Party B Copyrighted Books annually.
The shareholders' meeting is the highest authority of the JV. The board of the
JV shall consist of 6 directors, of which 2 shall be appointed by Party A and 4
shall be appointed by Party B. The term of each of the directors shall be for 3
years. Unanimous board approval is required for the increase or decrease in the
authorized number of shares of the JV, amendment to the articles of association
of the JV, merger, reorganization or restructuring of the JV, termination or
dissolution of the JV and any issuance of shares or other securities by the JV.
The chairman of the board shall also act as the general manager of the JV.
The duration of the JV shall be 10 years. Within the 6-month period prior to the
expiration date of the JV, if either party wishes to continue the business
contemplated by the JV, the other party shall have a right of first refusal to
enter to an agreement with such party under the same terms and conditions of the
JV Agreement.
The JV Agreement also contains provisions with respect to other obligations of
the parties to each other and the JV, matters that require approval by the
shareholders' meeting and the board, the duties and powers of the management of
the JV, procedures for fixed asset purchasing, labor administration, taxation
and accounting procedures, use of office space, procedures for dissolving and
liquidating the JV, insurance and duties of fiduciary and loyalty of directors
and officers, amendment to the JV Agreement and liabilities for breaches of the
JV Agreement, force majeure, governing law and other miscellaneous matters.
The articles of association adopted by the JV have substantially the same
provisions as in the JV Agreement.
