Tarena International, Inc.
Annual Report 2016

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 20-F (Mark One) ¨REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2016. OR ¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ¨SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report ___________ For the transition period from ___________ to ___________ Commission file number: 001-36363 Tarena International, Inc.(Exact name of Registrant as specified in its charter) N/A(Translation of Registrant’s name into English) Cayman Islands(Jurisdiction of incorporation or organization) Suite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian DistrictBeijing 100098, People’s Republic of China(Address of principal executive offices) 1/F, Block A, Training Building, 65 Kejiyuan Road, Baiyang Jie Dao, Economic Development District,Hangzhou 310000, People’s Republic of China(Address of principal executive offices) Yuduo Yang, Chief Financial OfficerE-mail: yangyd@tedu.cnSuite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian DistrictBeijing 100098, People’s Republic of ChinaTelephone: +86 10-6213 8109(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)  Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredAmerican Depositary Shares, each The NASDAQ Stock Market LLCrepresenting one Class A ordinary share, (The NASDAQ Global Select Market)par value US$0.001 per share Class A ordinary shares, The NASDAQ Stock Market LLCpar value US$0.001 per share (The NASDAQ Global Select Market)* *Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American depositary shares, each representing oneClass A ordinary share. Securities registered or to be registered pursuant to Section 12(g) of the Act: None(Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None(Title of Class) Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.As of December 31, 2016, there were 56,055,497 ordinary shares outstanding, par value $0.001 per share, being the sum of 47,160,248 Class A ordinaryshares and 8,895,249 Class B ordinary shares. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.¨ Yes x No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934. ¨ Yes x No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. x Yes ¨ No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).x Yes ¨ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. Seedefinition of “accelerated filer,” “large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ¨Accelerated filer þ Non-accelerated filer ¨Emerging growth company þ If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected notto use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of theExchange Act. þ † The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5, 2012. Indicate by check mark which basis of accounting the registrant has been to prepare the financial statements included in this filing: U.S. GAAPxInternational Financial Reporting Standards as issued bythe International Accounting Standards Board ¨ Other¨ If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.¨ Item 17 ¨ Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court.¨ Yes ¨ No  TABLE OF CONTENTS INTRODUCTION4 FORWARD-LOOKING INFORMATION4 PART I.5 ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS5 ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE5 ITEM 3.KEY INFORMATION5 ITEM 4.INFORMATION ON THE COMPANY45 ITEM 4.A.UNRESOLVED STAFF COMMENTS74 ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS75 ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES93 ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS104 ITEM 8.FINANCIAL INFORMATION106 ITEM 9.THE OFFER AND LISTING107 ITEM 10.ADDITIONAL INFORMATION108 ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK118 ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES119 PART II.120 ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES120 ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS120 ITEM 15.CONTROLS AND PROCEDURES122 ITEM 16.A.AUDIT COMMITTEE FINANCIAL EXPERT123 ITEM 16.B.CODE OF ETHICS123 ITEM 16.C.PRINCIPAL ACCOUNTANT FEES AND SERVICES123 ITEM 16.D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES123 ITEM 16.E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS124 ITEM 16.F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT124 ITEM 16.G.CORPORATE GOVERNANCE124 ITEM 16.H.MINE SAFETY DISCLOSURE124 PART III.125 ITEM 17.FINANCIAL STATEMENTS125 ITEM 18.FINANCIAL STATEMENTS125 ITEM 19.EXHIBITS125 3  INTRODUCTION In this annual report, except where the context otherwise requires and for purposes of this annual report only: ·“we,” “us,” “our company,” “our” and “Tarena” refer to Tarena International, Inc., a Cayman Islands company, and its subsidiaries, and, in thecontext of describing our operations, risk factors and financial results, also include our variable interest entity; ·“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau; ·“shares” or “ordinary shares” refers to our ordinary shares, par value US$0.001 per share, which include both Class A ordinary shares and Class Bordinary shares; ·“ADSs” refers to our American depositary shares, each of which represents one Class A ordinary share; the ADSs are evidenced by Americandepositary receipts, or “ADRs”; ·“IT” refers to information technology; ·“variable interest entity,” or “VIE,” refers to Beijing Tarena Jinqiao Technology Co., Ltd., which is a domestic PRC company in which we do nothave any equity interests but whose financial results have been consolidated into our consolidated financial statements in accordance with U.S.GAAP because we have effective financial control over, and Tarena International, Inc. is the primary beneficiary of such company. As the contextmay require, “variable interest entities” or “VIEs” may also include Shanghai Tarena Software Technology Co., Ltd., which used to a variableinterest entity consolidated by our Group but was wound up in December 2016; and ·all references to “RMB” or “Renminbi” refer to the legal currency of China; all references to “US$,” “dollars” and “U.S. dollars” refer to the legalcurrency of the United States. FORWARD-LOOKING INFORMATION This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historicalfacts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,”“believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections aboutfuture events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Theseforward-looking statements include, but are not limited to, statements about: ·our goals and growth strategies; ·our expectations regarding demand for and market acceptance of our courses; ·our ability to retain and increase our student enrollments; ·our ability to maintain and increase the utilization rate of our learning centers; ·our ability to offer new courses in existing and new subject areas; ·our ability to replicate the success and growth of our adult education services to the kid education market; 4  ·our ability to maintain and increase the tuition fees of our courses; ·our ability to deepen and expand our corporate employer relationships; ·our ability to maintain our relationships with universities and colleges; ·our future business development, results of operations and financial condition; ·the expected growth of, and trends in, the markets for our services in China; ·relevant government policies and regulations relating to our corporate structure, business and industry; and ·assumptions underlying or related to any of the foregoing. You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that our actual future resultsmay be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impactour business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and itis not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent towhich any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualifyall of our forward-looking statements by these cautionary statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise. PART I. ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS Not Applicable. ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE Not Applicable. ITEM 3.KEY INFORMATION A.Selected Financial Data Selected Consolidated Financial Data The following selected consolidated statements of comprehensive income data (other than ADS data) for the years ended December 31, 2014, 2015 and 2016and the selected consolidated balance sheet data as of December 31, 2015 and 2016 have been derived from our audited consolidated financial statementsincluded elsewhere in this annual report. The following selected consolidated statements of comprehensive income data (other than ADS data) for the yearsended December 31, 2012 and 2013 and the selected consolidated balance sheet data as of December 31, 2012, 2013 and 2014 have been derived from ouraudited consolidated financial statements which are not included in this annual report. Our historical results for any period are not necessarily indicative ofresults to be expected for any future period. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety byreference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our auditedconsolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. 5  For the Year Ended December 31, 2012 2013 2014 2015 2016 RMB RMB RMB RMB RMB (in thousands, except for share, per share and per ADS data) Selected Consolidated Statements of ComprehensiveIncome Data: Net revenues 358,667 575,170 836,941 1,178,008 1,579,604 Cost of revenues(1) (112,120) (180,097) (240,084) (333,559) (449,104)Gross profit 246,547 395,073 596,857 844,449 1,130,500 Selling and marketing expenses(1) (106,522) (187,430) (261,489) (384,954) (527,553)General and administrative expenses(1) (62,800) (100,518) (183,998) (251,298) (307,519)Research and development expenses(1) (11,309) (23,588) (33,454) (50,515) (65,594)Operating income 65,916 83,537 117,916 157,682 229,834 Interest income 7,355 9,549 26,802 42,732 23,974 Loss on foreign currency forward contract — — — — (12,898)Foreign currency exchange gains (losses) — — 7,539 (29,499) 3,760 Income before income taxes 74,306 101,105 166,645 182,727 260,630 Net income 60,298 87,033 151,850 178,760 241,854 Net income (loss) attributable to ordinary shareholders (106,558) (183,590) 148,320 178,760 241,854 Cash dividend declared per share(2) — — — — 0.98 Weighted average number of class A and class Bordinary shares outstanding(3): Basic 10,851,287 10,930,412 41,223,389 53,767,810 55,540,670 Diluted 10,851,287 10,930,412 47,770,132 58,750,856 59,005,261 Earnings per Class A ordinary share, and per Class Bordinary share(4) Basic (9.82) (16.80) 3.11 3.32 4.35 Diluted (9.82) (16.80) 2.69 3.04 4.10 Earnings per ADS(5) Basic (9.82) (16.80) 3.11 3.32 4.35 Diluted (9.82) (16.80) 2.69 3.04 4.10 Notes: (1)Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows: (2)On March 7, 2016, the Board of Directors approved to declare a cash dividend of US$0.15 per ordinary share to shareholders as of the close of trading onApril 6, 2016. 6  For the Year Ended December 31, 2012 2013 2014 2015 2016 RMB RMB RMB RMB RMB (in thousands) Cost of revenues — 106 349 664 4,124 Sales and marketing expenses 8 280 1,036 1,959 5,496 General and administrative expenses 788 4,054 22,302 28,274 51,154 Research and development expenses 21 297 1,289 2,022 7,050 (3)The weighted average number of ordinary shares represents the sum of the weighted average number of Class A and Class B ordinary shares. See Note 15to our audited consolidated financial statements included in this annual report for additional information regarding the computation of the per shareamounts and the weighted average numbers of Class A and Class B ordinary shares. (4)As holders of Class A and Class B ordinary shares have the same dividend right and the same participation right in our undistributed earnings, the basicand diluted earnings per Class A ordinary share and Class B ordinary share are the same for all the periods presented. (5)Each ADS represents one Class A ordinary share. For the Year Ended December 31, 2012 2013 2014 2015 2016 RMB RMB RMB RMB RMB (in thousands) Selected Consolidated Balance Sheet Data: Cash and cash equivalents 101,808 159,368 261,035 513,938 810,672 Time deposits, including non-current portion 5,000 74,148 759,662 564,105 475,391 Restricted time deposits — — — 150,000 — Accounts receivable, net of allowance for doubtfulaccounts, including non-current portion 106,748 93,997 150,971 154,770 98,550 Property and equipment, net 51,363 78,074 81,835 127,864 437,337 Long-term investments — — — 24,000 41,760 Total assets 294,603 449,177 1,333,661 1,653,891 2,085,012 Deferred revenue 60,693 94,426 117,954 164,524 266,061 Total liabilities 92,636 155,949 214,575 315,277 486,792 Total mezzanine equity 430,791 700,963 — — — Total shareholders’ equity (deficit) (228,824) (407,735) 1,119,086 1,338,614 1,598,220 Class A and Class B ordinary shares 99 107 355 374 388 Number of outstanding Class A and Class B ordinaryshares 10,851,287 12,226,558 52,445,782 54,563,321 56,055,497 Change in Reporting Currency and Exchange Rate Information Our business is primarily conducted in China and all of our revenues are denominated in RMB. We used to use U.S. dollar as our reporting currenty. Startingfrom the third quarter of 2016, we changed our reporting currency from U.S. dollar to Renminbi. The aligning of the reporting currency with the underlyingoperations will better depict our results of operations for each period. Assets and liabilities of entities with functional currencies other than RMB aretranslated into RMB using the exchange rate on the balance sheet date. Revenues and expenses of entities with functional currencies other than RMB aretranslated into RMB at average rates prevailing during the reporting period. Prior periods’ financial information has been recasted as if we always used RMBas our reporting currency. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at anyparticular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMBinto foreign exchange and through restrictions on foreign trade. On April 25, 2017, the noon buying rate was RMB6.8833 to US$1.00. 7  The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. Noon Buying Rate Period Period-End Average(1) Low High (RMB per U.S. Dollar) 2012 6.2855 6.3123 6.2670 6.3495 2013 6.0969 6.1957 6.0969 6.2898 2014 6.1190 6.1426 6.0930 6.1710 2015 6.4936 6.2266 6.1079 6.4936 2016 6.9370 6.6375 6.4565 6.9508 2017 January 6.8588 6.8863 6.8331 6.9526 February 6.8750 6.8678 6.8456 6.8898 March 6.8993 6.8932 6.8701 6.9125 April (through April 25, 2017) 6.8833 6.8836 6.8651 6.9042 Source: Daily Statistics of People’s Bank of China Note: (1)Annual averages are calculated using the average of month-end rates of the relevant year. Monthly averages are calculated using the average of the dailyrates during the relevant period. B.Capitalization and Indebtedness Not Applicable. C.Reasons for the Offer and Use of Proceeds Not Applicable. 8  D.Risk Factors Risks Relating to Our Business If we are not able to continue to attract students to enroll in our courses, our business and prospects will be materially and adversely affected. The success of our business depends primarily on the number of students enrolled in our courses. Therefore, our ability to continue to attract students toenroll in our courses is critical to the continued success and growth of our business. This in turn will depend on several factors, including our ability todevelop new courses and enhance existing courses to respond to changes in market trends and student demands, expand our learning center network andgeographic footprint, manage our growth while maintaining consistent and high education quality, broaden our relationships with corporate employers andmarket our courses effectively to a broader base of prospective students, including young kids. Furthermore, our ability to attract students also depends onour ability to provide educational content that is perceived as more effective than the standard curricula of universities in China in terms of practical job-oriented training and as complementary to standard curricula of primary and secondary schools in China. If we are unable to continue to attract students toenroll in our courses, our net revenues may decline, which may have a material adverse effect on our business, financial condition and results of operations We may not be able to continue to recruit, train and retain qualified instructors and teaching assistants, who are critical to the success of our business andeffective delivery of our education services to students. Our instructors and teaching assistants are critical to maintaining the quality of our educational services and our reputation. We seek to hire highly qualifiedinstructors with rich industry experience and strong teaching skills. We recruit dedicated teaching assistants primarily from outstanding graduates of ourcourses. There is a limited pool of instructors and teaching assistants with these attributes and we must provide competitive compensation packages to attractand retain them. We must also provide ongoing training to our instructors and teaching assistants to ensure that they stay abreast of changes in curriculum,student demands, industry standards and other trends necessary to teach and tutor effectively. We have not experienced major difficulties in recruiting,training or retaining qualified instructors and teaching assistants in the past. However, we may not always be able to recruit, train and retain enough qualifiedinstructors and teaching assistants in the future to keep pace with our growth and maintain consistent education quality. A shortage of qualified teachingstaff, a decrease in the quality of our teaching staff’s classroom performance, whether actual or perceived, or a significant increase in compensation to retainqualified instructors and teaching assistants would have a material adverse effect on our business, financial condition and results of operations. If we are not able to continually tailor our curriculum to market demand and enhance our courses to adequately and promptly respond to developments inthe professional job market, our courses may become less attractive to students. New trends in the global economy and rapid developments in the professional services industries may change the type of skills required for professionals inthe marketplace. This requires us to continually develop, update and enhance our course materials to adapt to the needs of the professional job market inChina. We may be unable to update our courses in a timely and cost-effective manner, or at all, to keep pace with changes in market requirements. Anyinability to track and respond to these changes in a cost-effective and timely manner or to tailor our courses to the professional services markets in Chinawould render our courses less attractive to students, which may materially and adversely affect our reputation and ability to continue to attract students andcause us to lose market share. If we fail to develop and introduce new courses in anticipation of market demand in a timely and cost-effective manner, our competitive position andability to generate revenues may be materially and adversely affected. Since inception, our primary focus has been on providing IT professional education services. We have since expanded our course offerings to include non-ITtraining courses, including digital art, online sales and marketing and accounting. We have also launched IT and non-IT training courses customized foryoung kids since December 2015, which primarily include computer programming, robot programming and digital arts (including 3D printing). We intend tocontinue developing new courses in anticipation of market demand. The introduction of new courses is subject to risks and uncertainties. Unexpectedtechnical, operational, logistical, regulatory or other problems could delay or prevent the introduction of one or more new courses. Moreover, we cannotassure you that any of these new courses will match the quality or popularity of those developed by our competitors, achieve widespread market acceptanceor generate the desired level of income for our students. 9  Offering new courses requires us to make investments in content development, recruit and train additional qualified instructors and teaching assistants,increase marketing efforts and re-allocate resources away from other uses. We may have limited experience with the content of new courses and may need tomodify our systems and strategies to incorporate new courses into our existing course offerings. In offering courses in new subject areas, we may face newrisks and challenges that we are not familiar with. Furthermore, we may experience difficulties in recruiting or otherwise identifying qualified instructors todevelop the content for these new courses. If we are unable to offer new courses in a timely and cost-effective manner, our results of operations and financialcondition could be adversely affected. We rely on Java, digital art and web front courses for a majority of our total net revenues, and a decrease in the popularity and usage of Java technology,Adobe design or web front technology would have a material adverse effect on our business and results of operations. A majority of our total net revenues are generated from the Java, digital art and web front courses. In 2014, 2015 and 2016, our Java course contributed36.0%, 28.5% and 35.1% of our total student enrollments, our digital art course contributed 31.5%, 30.8% and 27.6% of our total student enrollments, andour web front course contributed nil, 5.5% and 12.2% of our total student enrollments, respectively. The historical rapid growth of our business has beendriven by the popularity and usage of Java technology, Adobe design and web front development, and we expect net revenues from these courses to continueto represent a substantial portion of our total net revenues in the near future. We believe our reliance on Java, digital art and web front courses is mainlyattributable to the wide adoption and popularity of Java technology, Adobe design and web front development. However, whether Java as a programminglanguage, Adobe design technology as a digital art tool or web front development can maintain their popularity is beyond our control. Any factor thatmaterially and adversely affects student enrollment in our Java, digital art, or web front courses, such as a decrease in the popularity and usage of Javatechnology, Adobe design or web front development, would have a material adverse effect on business and our results of operations. Our business depends on the market recognition of our brand, and if we are unable to maintain or enhance our brand recognition, our business, financialcondition and results of operations may be materially and adversely affected. We believe that the market recognition of our “Tarena” (达内) brand has significantly contributed to the success of our business and believe that maintainingand enhancing the reputation of this brand is critical to sustaining our competitive advantage. Our ability to maintain and enhance our brand recognition andreputation depends primarily on the perceived effectiveness and quality of our courses as well as the success of our marketing and promotion efforts. As wecontinue to grow and expand into new course areas, we may not be able to maintain the quality and consistency of our educational services as we did in thepast. We have devoted significant resources to promoting our courses and brand in recent years, including Internet-based marketing and advertising,traditional media advertising and sponsoring industry trade seminars and software design competitions. However, our marketing and promotion efforts maynot be successful or may inadvertently negatively impact our brand recognition and reputation. For example, if any governmental authority or competitorpublicly alleges that any of our advertisements are misleading, our brand reputation may be adversely impacted. If we are unable to maintain and furtherenhance our brand recognition and reputation and increase awareness of our courses, or if we incur excessive marketing and promotion expenses, our resultsof operations may be materially and adversely affected. If we are unable to sustain our brand image, we may not be able to maintain premium tuition fees overour competitors, which may further exacerbate the extent of any adverse effect on our results of operations. Furthermore, any negative publicity relating toour company or our courses and services, regardless of its veracity, could harm our brand image and in turn materially and adversely affect our business andoperating results. 10  We may not be able to maintain our high job placement rate for students, which could harm our ability to attract student enrollments. We gather data on post-course job placement rates by conducting surveys of our graduates. Based on the survey responses, we calculate the six-month post-course job placement rates for a month by dividing (i) the number of job-seeking students enrolled in such month who (A) successfully graduated from ourprograms with graduation certificates awarded and (B) indicated that they had received employment offers within six months of graduation, by (ii) the totalnumber of job-seeking students enrolled in such month who later successfully graduated from our programs with graduation certificates awarded. Wecalculate the average six-month post-course job placement rate for a year by averaging the six-month post-course job placement rates of each month of suchyear. Our average six-month post-course job placement rate for each of 2014 and 2015 was over 90%. When calculating such job placement rates for 2014and 2015, a majority of the employment reported by relevant students were full-time employment, and a majority of the employment reported by relevantstudents were in the fields of their studies with us. All of the students enrolled in 2014 and 2015 who later successfully graduated from our programs withgraduation certificates awarded and who were job-seeking, have filled out our surveys. Among the students enrolled in 2014 and 2015, 89% and 86% of suchstudents, respectively, graduated from our programs with graduation certificates awarded. Among the students enrolled in 2014 and 2015 who latersuccessfully graduated from our programs with graduation certificates awarded, 81% and 77% of such students, respectively, were deemed to be job-seekingstudents. Our student job placement rate depends on a wide range of external and internal factors. External factors include the macroeconomic conditions, theperformance of the professional services sector in China and the recruiting demand of corporate employers. Internal factors include our education quality, theefforts of our career services personnel, our ability to provide adequate staffing to achieve desired results and our relationships with corporate employers. Anumber of such external and internal factors are outside of our control. Our historical job placement rates have been high. However, we cannot assure you thatwe will be able to maintain our current level of job placement rate for our students in the future. Any decrease in our job placement rate could harm ourability to recruit students, which may materially and adversely affect our business, financial condition and results of operations. Our newly launched kid education programs may not be successfully due to our limited experience in providing education services to minors. In December 2015, we launched our new kid education programs Tongcheng and Tongmei featuring IT training courses and non-IT training courses for kidstudents. In March 2016, we rolled out another kid education program Tongchuang to offer kids robotics programming courses. Our new kid educationprograms target students aged between six and eighteen. As we have been primarily engaging in adult vocational training programs since our inception, wehave very limited experience in providing education programs to minors, who have distinct learning preference and mentality as comparing to adult studentsand require tailored courses and dedicated class management. Although the courses offered through our kid education programs are designed based onminors’ learning patterns and interests, we cannot guarantee you that our kid education programs will be able to continue to attract students or be proved toachieve satisfactory education results. If students lose interests in our kid education programs or find the courses offered in our kid education programsineffective, our business, results of operations and financial conditions may be adversely affected. 11  In addition, unlike programs designed for adult students, our courses in our kid education programs are taught by teaching assistants face-to-face in offlineclassrooms. As a result, a large number of minors and their parents attend classes on our premises and/or use our facilities, and they may suffer accidents orinjuries or other harm on our premises, including those caused by or otherwise arise from the actions of our employees or contractors. In the event of accidentsor injuries or other harm caused or perceived to be caused by us, our facilities and/or services may be perceived to be unsafe, which may discourageprospective students from enrolled in our programs. We could also face claims alleging that we should be liable for the accidents or injuries, or we werenegligent, provided inadequate supervision to our employees and therefore should be held jointly liable for harm caused by them. If any of these were tohappen, our reputation, business, results of operations and financial conditions may be adversely affected. Our business, financial condition and results of operations may be adversely affected by a downturn in the global or Chinese economy. Because our student enrollment may depend on our students’ and potential students’ levels of disposable income, perceived job prospects and willingness tospend, as well as the level of hiring demand of professional services positions our business and prospects may be affected by economic conditions in China orglobally. The global macroeconomic environment is facing challenges, including the escalation of the European sovereign debt crisis since 2011, the end ofquantitative easing by the U.S. Federal Reserve, the economic slowdown in the Eurozone in 2014 and and the expected exit of The United Kingdom from theEuropean Union. It is unclear whether the Chinese economy will resume its high growth rate. The Chinese economy has slowed down in recent years.According to the National Bureau of Statistics of China, in 2016, China’s gross domestic product grew at a rate of 6.7%. There have been concerns overunrest in the Middle East and Africa, which have resulted in volatility in oil and other markets, and over the prolonged crisis in Ukraine which contributed tothe collapse in the value of the Russian ruble, and the resulting Russian financial crisis. There have also been concerns about the territorial disputesinvolving China in Asia and the economic effects. Economic conditions in China, including the performance of the IT and other professional servicesindustries, are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overalleconomic growth rate in China. A decline in the economic prospects of IT and other professionals could alter current or prospective students’ spendingpriorities and the recruiting demand from professional service industries. We cannot assure you that professional education spending in general or withrespect to our course offerings in particular will increase, or not decrease, from current levels. Therefore, a slowdown in China’s economy or the globaleconomy may lead to a reduction in demand for professional education services, which could materially and adversely affect our financial condition andresults of operations. If we fail to successfully execute our growth strategies, our business and prospects may be materially and adversely affected. Our growth strategies include growing our student enrollments for existing courses, expanding our course offerings, further enhancing the quality of oureducation services and expanding our corporate employer network. We may not succeed in executing our growth strategies due to a number of factors,including, without limitation, the following: ·we may fail to market our courses in new markets or promote new courses in existing markets effectively; ·we may not be able to replicate our successful business model in other geographic markets or in new course subject areas; ·we may fail to identify new cities with sufficient growth potential to expand our network; ·we may not be able to replicate the success and growth of our adult education services to the kid education market; ·we may not be able to recruit and retain learning center managers, teaching assistants and other key personnel; ·our analysis for selecting suitable new locations may not be accurate and the demand for our services at such new locations may not materialize orincrease as rapidly as we expect; 12  ·we may fail to obtain the requisite licenses and permits necessary to open learning centers at our desired locations from local authorities; ·we may not be able to continue to update our existing courses or offer new courses to adapt to changing market demand and technologicaladvances; and ·we may fail to achieve the benefits we expect from our expansion. If we fail to execute our growth strategies successfully, we may not be able to maintain our growth rate and our business and prospects may be materially andadversely affected as a result. We may not be able to manage our business expansion effectively, which could harm our financial condition and results of operations. We have expanded rapidly and we plan to continue to expand our operations in different geographic areas as we address the growth in our customer base andmarket opportunities. We increased the number of our learning centers from 118 as of December 31, 2014 to 145 as of December 31, 2016. This expansionhas resulted, and will continue to result, in substantial demands on our management, personnel and operational, technological and other resources. Tomanage the expected growth of our operations, we will be required to expand our existing operational, administrative and technological systems and ourfinancial systems, procedures and controls and to expand training and management of our growing employee base. In addition, the geographic dispersion ofour operations requires significant management resources. We cannot assure you that our current and planned personnel, systems, procedures and controlswill be adequate to support our future operations, or that we will be able to effectively and efficiently manage the growth of our operations or recruit andretain qualified personnel to support our expansion. Any failure to effectively and efficiently manage our expansion may materially and adversely affect ourability to capitalize on new business opportunities, which in turn may have a material adverse effect on our financial condition and results of operations. The growth of our business is in part dependent on our continuing access to a broad network of corporate employers. We derive both direct benefits, such as increased enrollment driven by employer-specific customized courses, and indirect benefits, such as higher studentjob placement rate and strengthening of the Tarena brand, from our access to a large number of corporate employers. We believe our access to a large numberof corporate employers in a wide range of industries is one of our core competitive strengths. If our access to these corporate employers were to becomeconstrained or limited, or the benefits we derive from these access were to be diminished, whether by our own actions or actions of our competitors, ourgrowth prospects and our business would be harmed. Our success depends on the continuing efforts of our senior management team and other key personnel and our business may be adversely affected if welose their services. Our future success depends heavily upon the continuing services of our senior management team. If any member of our senior management team leaves usand we fail to effectively manage a transition to new personnel, or if we fail to attract and retain experienced and passionate instructors, regional managersand other key personnel on acceptable terms, our business, financial conditions and results of operations could be adversely affected. We will need tocontinue to hire additional personnel, especially qualified instructors and regional managers, as our business grows. A shortage in the supply of personnelwith requisite skills or our failure to attract and retain high quality executives or key personnel could impede our ability to increase revenues from ourexisting courses, to launch new course offerings and to expand our operations and would have an adverse effect on our business and financial results. Mr. Shaoyun Han, our founder, chairman and chief executive officer, has played an important role in the growth and development of our business since itsinception. To date, we have relied heavily on Mr. Han’s expertise in, and familiarity with, our business operations, his leadership, and his reputation in theprofessional education services industry. If Mr. Han is unable or unwilling to continue in his present positions, we may not be able to easily replace him andmay incur additional expenses to identify and train his successor. We do not maintain key man insurance on Mr. Han. 13  The operations of certain of our learning centers are, or may be deemed by relevant PRC government authorities to be, beyond their authorized businessscope or without proper license or registration. If the relevant PRC government authorities take actions against such learning centers, our business andoperations could be materially and adversely affected. The principal regulations governing private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education and theImplementation Rules for the Law for Promoting Private Education. Under these PRC laws and regulations and related administrative requirements, toprovide professional education services, a company may, in the capacity of a school sponsor, establish a private school which obtains a school permit fromthe human resources and social security authorities under the Law for Promoting Private Education, and such school can then establish and operate learningcenters within the approved districts to provide professional education services, provided that learning centers located outside the registered address of theprivate schools shall be registered with original approving authorities. Alternatively, a company may obtain approval from the competent industry andcommerce administration authorities to include the relevant professional education services in the authorized scope of business as specified in its businesslicenses. A company with “professional education services” or an equivalent statement included in its approved scope of business can operate learningcenters by itself or through its registered branches. On November 7, 2016, the Standing Committee of the PRC National People's Congress, or NPC, releasedthe amendment of the Law for Promoting Private Education, which will be effective on September 1, 2017, pursuant to which private schools are classifiedas either non-profit private schools or for-profit private schools. On December 30, 2016, the Implementation Rules for Private School ClassificationRegistration was issued by the Ministry of Education, or the MOE, and other relevant authorities, which requires all private schools, including non-profitprivate schools and for-profit private schools, to obtain a “school permit”. Existing private schools that choose to register as for-profit private schools shouldapply for new school permits and complete the re-registration process. The Regulatory Implementation Rules for Profitable Private School issued onDecember 30, 2016 further indicates that for-profit private training institutions shall be regulated with reference to such rules. The implementation ofabovementioned regulations will also rely on detailed rules of local government authorities. However, many local government authorities have different views on the relevant rules and regulations and have adopted different practices in grantingschool permits to private schools or issuing business licenses to companies that provide professional education services. Although some cities, such asBeijing, Shanghai and Hangzhou, allow companies to include “professional education services” in their business scope, the industry and commerceadministration authorities in certain other areas have adopted regional policies of not allowing “professional education services” or similar statement to beincluded in the business scope of any company. In addition, when we applied for school permits or registrations of learning centers, the local humanresources and social security authorities in some cities in China have either informed us that no school permits will be issued to new private schools in theirjurisdictions or that they do not permit new learning centers established by private schools to be registered. These regional policies and practices havecreated significant obstacles for us to comply with all applicable rules and regulations for all of our local operations. We use both ways discussed above to establish learning centers. As of December 31, 2016, we had a total of 145 learning centers, of which 49 were managedby schools and 96 were managed by our subsidiaries. Among the learning centers operated by our subsidiaries, 49 have neither professional educationservices nor education information related consultation as an authorized scope of business in the licenses of our subsidiaries or their registered branchesoperating these learning centers as of December 31, 2016, and these learning centers in the aggregate accounted for 27.1% of our student enrollments in2016. We were not able to include professional education services in these companies’ authorized business scope mainly because the industry and commerceadministration authorities in these areas have a general local policy prohibiting the inclusion of “professional education services” in the business scope ofany company. In addition, nine learning centers operated by our subsidiaries only have “education information related consultation” rather than“professional education services” in their respective authorized scopes of business, and these learning centers in the aggregate accounted for 4.0% of ourstudent enrollments in 2016. The difference between “educational services” and “education information related consultation” is not very clear underapplicable PRC laws and regulations, and it is possible that the relevant PRC government authorities may determine that operating learning centers in theway as currently conducted by our relevant subsidiaries is beyond the scope of “education information related consultation.” For these learning centers, wehave been communicating, and will continue to communicate, with the competent industry and commerce administration authorities to expand theauthorized business scope of the relevant subsidiaries to include “professional education services” or similar statement. For regions where it becomesapparent that we will not be able to expand the authorized business scope of the relevant subsidiaries, we will also explore the possibility of obtainingapproval from the competent authorities to set up private schools to take over the operations of the relevant subsidiaries. If the relevant PRC governmentauthorities discover or determine that our subsidiaries operate beyond their authorized business scope, they may order the relevant subsidiaries to completethe registration for change of business scope within a given period, failing which each company is subject to a one-time fine of RMB10,000 to RMB100,000,or may be ordered to cease its operation. We have been fined once for RMB50,000 for conducting business outside the authorized business scope since 2011. 14  For our learning centers operated by schools, we are also required to obtain and maintain various licenses and permits and make filings for each learningcenter with the competent human resources and social security authorities and civil affairs authorities. As of December 31, 2016, one of our learning centersare operated by schools outside their approved districts without obtaining relevant licenses and permits, and eight of our learning centers are operated byschools outside their registered address without being registered with the original approving authorities, which may subject us to fines of RMB10,000 toRMB50,000, confiscation of the gains derived from the noncompliant operations or the suspension of the noncompliant learning centers. These eightlearning centers in the aggregate accounted for 4.4% of our total student enrollments in 2016. We were unable to obtain the requisite permits or make therequired filings in some districts because the local authorities discontinued granting permits or accepting filings for administrative reasons for a period oftime. Although we have not been subject to any material fines or other penalties in relation to any non-compliance of licensing requirements in the past withrespect to our learning centers operated by schools, if we fail to cure any non-compliance in a timely manner, we may be subject to fines, confiscation of thegains derived from our noncompliant operations or the suspension of our noncompliant learning centers, which may materially and adversely affect ourbusiness and results of operation. We may lose market share and our profitability may be materially and adversely affected, if we fail to compete effectively with our present and futurecompetitors or to adjust effectively to changing market conditions and trends. The professional education services market in China is fragmented, rapidly evolving and highly competitive. We face competition in our offered courses andin many of the geographic markets in which we operate. As the IT professional education market in China matures, there is increased demand for highlyspecialized IT labor, and we may face competition from IT professional education providers that offer specialized training programs targeting certain nichejob markets in the IT industry. In the future, we may also face competition from new entrants into the Chinese IT professional education market. As weexpand beyond IT education into other fields of professional education, we also face competition for student enrollment from existing online and offlineproviders of professional education services, as well as smaller regional professional education services providers in China. Furthermore, we also facecompetition from providers of IT and non-IT education programs to kids. Some of our competitors may be able to devote more resources than we can to the development, promotion and provision of their education services andrespond more quickly than we can to changes in student needs, market trends or new technologies. In addition, some of our competitors may be able torespond faster to changes in student preferences in some of our geographic markets and engage in price-cutting strategies. We cannot assure you that we willbe able to compete successfully against current or future competitors. If we are unable to maintain our competitive position or otherwise respond tocompetitive pressure effectively, we may be forced to reduce our tuition fees and lose our market share, which will adversely impact our profitability. Our business and financial results may be materially and adversely affected if we are unable to maintain our cooperative relationships with financingservice providers for student loans. In 2014, 2015 and 2016, a substantial portion of our students relied on loans provided or arranged by a number of financing service providers to pay ourtuition fees. In 2014, the financing service providers involved in tuition financing include Bank of China Consumer Finance Co., Ltd., or BOC CFC,CreditEase Business Consulting (Beijing) Co., Ltd., or CreditEase, and Bank of Beijing Consumer Finance Company, or BOB CFC. In 2015 and 2016, inaddition to the above mentioned tuition financing services provided by those financing service providers, our students also took out loans facilitatedthrough Baidu Small Loan Co., Ltd., or Baidu Small Loan, RenRenDai and ShiTuDai, consumer financing services provided by an independent third parties,to pay our tuitions. In 2014, 2015 and 2016, approximately 55.0%, 50.4% and 55.1% of our students took out loans provided or arranged by financingservice providers to pay for our tuition fees. 15  We have entered into cooperative agreements with Baidu Small Loan Co., Ltd, BOC CFC and BOB CFC pursuant to which they provide loans to our studentsfor the payment of our tuition fees. We have also entered into agreements with CreditEase and RenRenDai, whereby they assisted our students in obtainingloans to pay for our tuition fees. Our cooperative agreement with BOC CFC has expired in March 2017 and we are in the process of renewing our cooperativeagreement with BOC CFC. However, we may not be able to renew our cooperative agreement with BOC CFC on commercially reasonable terms or at all.Moreover, Baidu Small Loan Co., Ltd., RenRenDai, BOC CFC, CreditEase, and ShiTuDai have full discretion in deciding whether or not to extend or arrangefor loans to a particular student. Furthermore, macroeconomic conditions in China may force the financing service providers to decrease or eliminate theamount of credit available for our students, making it difficult for our prospective students to afford our education. In addition, if the default rates on theloans provided or arranged by these and other financing service providers were to increase, they may raise the interest rates on the student loans, making suchfinancing options less attractive to our students. Although peer-to-peer lending is generally protected as private loans between individuals under PRC lawand has flourished in recent years in China, there are uncertainties as to the licensing requirements and the nature of business provided by thoseintermediaries, such as CreditEase, RenRenDai and ShiTuDai, in facilitating the peer-to-peer lending. If one or more new PRC laws and/or regulations arepassed in the future prohibiting peer-to-peer lending facilitated by, or imposing significant licensing requirements on, intermediaries such as CreditEase,RenRenDai and ShiTuDai, we cannot assure you that CreditEase, RenRenDai or ShiTuDai will be able to obtain relevant licenses and continue facilitatingpeer-to-peer lending in the future. If CreditEase, RenRenDai or ShiTuDai ceases to facilitate peer-to-peer lending to our students in the future, if ourcooperative relationships with the financing service providers are damaged or lost, or if the financing service providers significantly increase their interestrates, our business and financial results would be adversely affected. If we fail to protect our intellectual property rights, we may lose our competitive advantage and our brand and operations may suffer. We consider our copyrights, trademarks, trade names and domain names invaluable to our ability to continue to develop and enhance our brand recognition.Unauthorized use of our copyrights, trademarks, trade names and domain names may damage our reputation and brand. Our major brand names and logos areregistered trademarks in China. Our proprietary curricula and course materials, together with our Tarena Teaching System, or TTS, are protected bycopyrights. However, preventing copyright, trademark and trade name infringement or misuse could be difficult, costly and time-consuming, particularly inChina. The measures we take to protect our copyrights, trademarks and other intellectual property rights are currently based upon a combination of trademarkand copyright laws in China and may not be adequate to prevent unauthorized uses. Furthermore, application of laws governing intellectual property rightsin China is uncertain and evolving, and could involve substantial uncertainties to us. There had been several incidents in the past where third parties usedour “Tarena” (达内) brand without our authorization, and we had to resort to litigation to protect our intellectual property rights. These proceedings were allresolved in our favor and our brand and business were not materially harmed. However, if we are unable to adequately protect our trademarks, copyrights andother intellectual property rights in the future, we may lose our competitive advantage, our brand name may be harmed and our business may suffermaterially. Furthermore, our management’s attention may be diverted by violations of our intellectual property rights, and we may be required to enter intocostly litigation to protect our proprietary rights against any infringement or violation. We may be subject to intellectual property rights claims or other claims which could result in substantial costs and diversion of our financial andmanagement resources away from our business. We cannot assure you that our course materials, other educational contents or other intellectual properties developed or used by us do not or will not infringeupon patents, valid copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to timerelating to the intellectual property of others. In addition, some of our employees were previously employed at other companies, including our current andpotential competitors. To the extent these employees are involved in content development at our company similar to content development in which theyhave been involved at their former employers, we may become subject to claims that such employees or we may have used or disclosed trade secrets or otherproprietary information of the former employers of our employees. In addition, our competitors may file lawsuits against us. Although we are not aware of anypending or threatened claims, if any such claim arises in the future, litigation or other dispute resolution proceedings may be necessary to retain our ability tooffer our current and future course materials or other content, which could result in substantial costs and diversion of our financial and management resources.Furthermore, if we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property rights, incuradditional costs to license or develop alternative intellectual property rights and be forced to pay fines and damages, any of which may materially andadversely affect our business. 16  We recruit a significant portion of our students directly from our network of cooperative universities and colleges. If we lose these relationships, or thebenefits we derive from these relationships diminish, our growth and our business may be harmed. We have established various kinds of cooperative relationships with over 690 universities and colleges in China. We enroll a significant percentage of ourstudents directly from these universities and colleges through jointly offered majors, on-campus learning sites and university recruiting promotional events.We recruited approximately 14.8% of our students in 2016 from these universities and colleges. If our relationships with any of these universities andcolleges were to be damaged or lost, or the benefits we derive from these relationships were to be diminished, whether by our own actions, actions of one ormore governmental entities or actions of our competitors, our growth and our business may be harmed. Failure to control rental costs, obtain leases at desired locations at reasonable prices or protect our leasehold interests could materially and adverselyaffect our business. A majority of our offices and learning centers are located on leased premises. At the end of each lease term we must negotiate an extension of the lease. If weare not able to negotiate an extension on terms acceptable to us, we will be forced to move to a different location, or the rent may increase significantly. Thiscould disrupt our operations and adversely affect our profitability. All of our leases are subject to renewal at market prices, which could result in a substantialrent increase each renewal period. We compete with many other businesses for sites in certain highly desirable locations. As a result, we may not be able toobtain new leases at desirable locations or renew our existing leases on acceptable terms or at all, which could adversely affect our business. As of December31, 2016, we had received from our lessors copies of title certificates or proof of authorization to lease the properties to us for all leased properties. However,we cannot assure you that we will be able to obtain copies of title certificates or proof of authorization to lease any properties that we may lease in the futureor the title to these properties we currently lease or any properties that we may lease in the future will not be otherwise challenged. Furthermore, several of ourleased properties are owned by universities or built on allocated land in China. Such properties may not be legally leased to us under PRC law. Our leaseholdinterest in these properties may be challenged by relevant PRC governmental authorities to be invalid, and we may be forced to move out of such premises. In addition, we have not registered most of our lease agreements with relevant PRC governmental authorities as required by PRC law, and although failure todo so does not in itself invalidate the leases, we may not be able to defend these leases against bona fide third parties. As of the date of this annual report, weare not aware of any actions, claims or investigations being contemplated by governmental authorities against us or our lessors with respect to the defects inour leased real properties or any challenges by third parties to our use of these properties. However, if any of our leases are terminated as a result of challengesby third parties or governmental authorities for lack of title certificates or proof of authorization to lease, we may not be able to protect our leasehold interestand may be forced to relocate the affected learning centers and incur additional expenses relating to such relocation. If we fail to find suitable replacementsites in a timely manner or on terms acceptable to us, our business and results of operations could be materially and adversely affected. 17  Our accounts receivable have been relatively high. Inability to collect our accounts receivable on a timely basis, if at all, could materially and adverselyaffect our financial condition, liquidity and results of operations. Understanding the difficulty for recent college graduates to afford the tuition fees of our courses, we offered qualified students the post-graduation tuitionpayment option beginning in 2006, which led to our relatively high accounts receivable. As of December 31, 2014, 2015 and 2016, our outstanding accountsreceivable, net of allowance for doubtful accounts, were RMB151 million, RMB155 million and RMB99 million, respectively. Although we conductfinancial evaluations of our students applying to use our post-graduation tuition payment option, we do not require collateral or other security from ourstudents. Adverse changes in the macroeconomic environmental and the earnings capacity of our students may negatively impact our ability to collect ouraccounts receivable. Furthermore, as time passes, it might be more difficult for us to collect historical accounts receivables. Our bad debt allowance increasedsignificantly between 2014 and 2015. In 2015, we observed an increase in the overall account aging for students enrolled between 2010 and 2014 who usedthe post-graduation payment option, as well as an increase in the cumulative default amount of accounts receivable from such students. As a result, wedetermined that the delinquency risk for the corresponding accounts receivable has increased as well. In 2016, our bad debt allowance decreasedconsiderably from RMB63.1 million in 2015 to RMB33.6 million in 2016. However, there is no guarantee that our bad debt allowance and delinquency riskwill keep decreasing in the following years. Our inability to collect our accounts receivable on a timely basis, if at all, could cause our bad debt allowance toincrease or remain relatively high in the future, and materially and adversely affect our financial condition, liquidity and results of operations. Capacity constraints of our learning centers could cause us to lose students to our competitors. Our learning centers are limited in size and number of classrooms. We may not be able to admit all students who would like to enroll in our courses due to thecapacity constraints of our learning centers. If we fail to expand our physical capacity as quickly as the demand for our classroom-based services grows, wecould lose potential students to our competitors, which could adversely affect our results of operations and business prospects. We may not be able to recoup the capital expenditures or investments we make to expand and upgrade our teaching, administrative, research and othercapabilities. We purchased two office buildings in Beijing for an aggregate price of RMB231.9million in 2016. The office buildings are mainly for teaching purpose, andto a lesser extent for administrative function. We also purchased a building in Qingdao and another one in Haikou for an aggregate price of RMB49.6 millionin 2016. The purpose of these two buildings is for teaching purposes as learning centers to accommodate the growing demand in local market and enjoy localfavorable policies. We may continue to invest in our teaching, administrative, research and other capabilities as our business further develops. Although wewill evaluate the feasibility of each property purchase for the good of business operation, we are likely to incur costs associated with these investments earlierthan some of the anticipated benefits and the return on these investments may be lower, or may develop more slowly, than we expect. We may not be able torecover our capital expenditures or investments, in part or in full, or the recovery of these capital expenditures or investments may take longer than expected.As a result, the carrying value of the related assets may be subject to an impairment charge, which could adversely affect our profitability. Our strategy of investments and acquiring complementary businesses and assets may fail. As part of our business strategy, we have pursued, and intend to continue to pursue, selective strategic investments and acquisitions of businesses and assetsthat complement our existing business. Investments and acquisitions involve uncertainties and risks, including: ·potential ongoing financial obligations and unforeseen or hidden liabilities, including liability for infringement of third-party copyrights or otherintellectual property; ·failure to achieve the intended objectives, benefits or revenue-enhancing opportunities; ·costs and difficulties of integrating acquired businesses and managing a larger business; ·potentially significant goodwill impairment charges; ·high acquisition and financing costs; ·possible loss of key employees of a target business; 18  ·potential claims or litigation regarding our board’s exercise of its duty of care and other duties required under applicable law in connection with anyof our significant acquisitions or investments approved by the board; ·diversion of resources and management attention; and ·in the case of acquisitions of businesses or assets outside of China, the need to integrate operations across different business cultures and languagesand to address the particular economic, currency, political, and regulatory risks associated with specific countries. Any failure to address these risks successfully may have a material and adverse effect on our financial condition and results of operations. Investments andacquisitions may require a significant amount of capital investment, which would decrease the amount of cash available for working capital or capitalexpenditures. In addition, if we use our equity securities to pay for investments and acquisitions, we may dilute the value of our ADSs and the underlyingordinary shares. If we borrow funds to finance investments and acquisitions, such debt instruments may contain restrictive covenants that could, among otherthings, restrict us from distributing dividends. Moreover, acquisitions may also generate significant amortization expenses related to intangible assets. Wemay also incur impairment charges to earnings for investments and acquired businesses and assets which are determined to be impaired, and recognize theproportional share of the net losses of the investees to the extent of the amount of the investments for the equity method investments. Geographic concentration of our learning centers may unfavorably impact our operations. We derive a substantial portion of our net revenues from our entities in Hangzhou and Beijing. Revenue derived from the entities in Hangzhou accounted for25.5%, 33.0% and 31.9% of our net revenues in 2014, 2015 and 2016, respectively. Revenue derived from the entities in Beijing accounted for 15.5%,12.3% and 12.4% of our net revenues in 2014, 2015 and 2016, respectively. As a result of this geographic concentration, our results of operations aresignificantly affected by economic conditions in Hangzhou and Beijing. Furthermore, any natural disaster or health epidemics affecting the Hangzhou andBeijing regions could significantly impact our operations. Although we have been and will be exploring opportunities of setting up additional learningcenters in second tier or third tier cities, we expect that we will continue to derive a substantial portion of our net revenues from Hangzhou and Beijing in thenear future. Deterioration in economic conditions and the professional services industries in these markets could decrease the demand for our courses, whichin turn could negatively impact our operations and business prospects. Our historical financial and operating results, growth rates and profitability may not be indicative of future performance. Although we commenced operations in 2002, our significant business growth and expansion began in 2009. Our business and our prospects must beevaluated in light of the risks and uncertainties encountered by companies at a comparable stage of development. In addition, the professional educationservices market in China is still at an early stage of development, which makes it difficult to evaluate our business and future prospects. Furthermore, ourresults of operations may vary from period to period in response to a variety of other factors, including general economic conditions and regulations,government actions pertaining to the professional education services sector in China, changes in spending on professional education services, our ability tocontrol cost of revenues and operating expenses, and non-recurring charges incurred in connection with acquisitions or other extraordinary transactions orunder unexpected circumstances. Due to the above factors, some of which are beyond our control, our historical financial and operating results, growth ratesand profitability may not be indicative of our future performance and you should not rely on our past results or our historic growth rates as indicators of ourfuture performance. Our ability to broadcast our lectures live and to offer online learning modules on TTS depends upon the performance and reliability of our systems and theInternet infrastructure and telecommunications networks in China. We deliver live broadcasts of our lectures via a dedicated network provided by China Telecom and China Unicom to terminals located in selected learningcenters with high student enrollment and via public Internet infrastructure to other learning centers. Any unscheduled service interruption of the Internetinfrastructure and telecommunications networks in China could cause us to be unable to deliver these live broadcasts, forcing us to resort to using pre-recorded lectures in the event of such service interruptions. Our inability to broadcast live lectures during service interruptions may damage the quality of oureducation and student experience, which may hurt our reputation and negatively impact our financial condition and results of operations. Furthermore, ourgross profit and net income could be adversely affected if the prices that we pay for telecommunications and Internet services rise significantly. 19  Our ability to offer online learning modules also depends on the performance and reliability of the Internet infrastructure in China. Disruptions to the Internetinfrastructure of China may deny our students access to the learning functionalities on our TTS or TMOOC.cn, which may hinder students from effectivelylearning our education contents. Furthermore, increases in the traffic on TTS or TMOOC.cn could also strain the capacity of our existing computer systems,which could lead to slower response times or system failures. This would cause a disruption or suspension in our course offerings, which would hurt our brandand reputation and negatively affect our revenue growth. We may need to incur additional costs to improve our systems in order to accommodate increaseddemand if we anticipate that our systems cannot handle higher traffic volume in the future. Our new CRM system may not function properly, which may materially and adversely affect our operations We switched to a new customer relationship management, or CRM system, in August 2015. The new CRM system is developed in-house and is intended toimprove functionality and information flow. As with any major new software system, there are inherent risks in the design, construction, implementation andoperation of our new CRM system. These risks include the potential failures to properly design the system, to efficiently construct and implement the systemand to effectively operate the system. While we believe that our new CRM system will provide the anticipated IT and customer service enhancements weexpect, no assurances can be given in this regard. The failure to properly and efficiently operate the new CRM system could disrupt our operations andadversely affect our financial results. Accidents or injuries suffered by our students or other people on our premises may adversely affect our reputation, subject us to liability and cause us toincur substantial costs. We do not carry liability insurance for most of our students at our learning centers. In the event of accidents, injuries or other harm to students or other peopleon our premises, including those caused by or otherwise arising from the actions of our employees on our premises, our facilities may be perceived to beunsafe, which may discourage prospective students from attending our classes. We could also face claims alleging that we were negligent or providedinadequate supervision to our employees and therefore should be held jointly liable for harm caused by them or are otherwise liable for injuries suffered byour students or other people on our premises. A liability claim, even of unsuccessful, against us or any of our employees could adversely affect our reputation,enrollment and revenues, causing us to incur substantial expenses and divert the time and attention of our management. If we fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail tomeet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected. We are subject to reporting obligations under the U.S. securities laws. Among other things, the Securities and Exchange Commission, or the SEC, as requiredby Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, adopted rules requiring every public company, including us, to include a managementreport on the company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of thecompany’s internal control over financial reporting. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JumpstartOur Business Startups Act of 2012 (as amended by the Fixing America’s Surface Transportation Act of 2015), or the JOBS Act, our independent registeredpublic accounting firm may be required to report on the effectiveness of our internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2016. See “Item 15. Controls andProcedures.” In the future, however, if we fail to maintain effective internal control over financial reporting, our management may not be able to concludethat we have effective internal control over financial reporting at a reasonable assurance level. A failure to achieve and maintain effective internal controlsover financial reporting could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financialreporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, aswell as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting could exposeus to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatoryinvestigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods. 20  Furthermore, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accountingfirm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which ourcontrols are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company, ourreporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We maybe unable to timely complete our evaluation testing and any required remediation. If we fail to maintain an effective internal control environment, we couldsuffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence inour reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the tradingprice of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assetsand subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We have limited insurance coverage for our operations in China. Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies do in more developed economies.We have determined that the risks of disruption or liability from our business, the loss or damage to our fixed assets, including our equipment and officefurniture, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially reasonable terms render itcommercially impractical for us to have such insurance. As a result, we do not have any business interruption, litigation or property insurance coverage forour operations in China. Any uninsured occurrence of personal injury, loss or damage to fixed assets, or litigation or business disruption may result in theincurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results. Our business is subject to seasonal fluctuations, which may cause our operating results to fluctuate from quarter to quarter. This may result in volatility inand adversely affect the price of our ADSs. We have experienced, and expect to continue to experience, seasonal fluctuations in our net revenues and results of operations, primarily due to seasonalchanges in student enrollment. Historically, our courses tend to have the largest student enrollment, cash collection and net revenues in the third and fourthquarters. We generally generate less tuition fees in the first quarter of each year due to the Chinese New Year holiday. Our expenses, however, varysignificantly and do not necessarily correspond to changes in our student enrollment and net revenues. We make investments in marketing and promotion,instructor recruitment and training and course development throughout the year. We expect quarterly fluctuations in our net revenues and results ofoperations to continue. These fluctuations could result in volatility and adversely affect the price of our ADSs. As our net revenues grow, these seasonalfluctuations may become more pronounced. Higher labor costs and inflation in China may adversely affect our business and our profitability. Labor costs in China have risen in recent years. We employed 6,257 employees in China as of December 31, 2016. The increases in labor cost may erode ourprofitability and materially harm our business, financial condition and results of operations. In addition, PRC government have promulgated some new lawsand regulations to enhance labor protection in recent years, such as the Labor Contract Law and the Social Insurance Law, which are also expected to causeour labor costs to increase. As the interpretation and implementation of these new laws and regulations are still evolving, our employment practice may notbe at all times be deemed in compliance with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in connectionwith labor disputes or investigation, our business and profitability may be adversely affected. 21  Although we have not in the past been materially affected by inflation since our inception, we can provide no assurance that we will not be affected in thefuture by higher rates of inflation in China. We have granted share-based awards and may grant more share-based awards in the future, which may materially reduce our net income. We adopted a share plan in 2008, or the 2008 Plan, that permits granting of options to purchase our ordinary shares, restricted shares (or share appreciationrights or other similar awards) and rights to purchase restricted shares. Under the 2008 Plan, the maximum aggregate number of ordinary shares that may beissued pursuant to all awards under our share plan is 8,184,990 shares. In February 2014, we adopted a 2014 share incentive plan, or the 2014 Plan. Pursuantto the 2014 Plan, we may issue options, restricted shares and restricted share units to our qualified employees, directors and consultants on a regular basis.The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided thatthe shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued sharesreserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each suchincrease shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendaryear. As a result of grants and potential future grants under the 2008 Plan and the 2014 Plan, we have incurred and will continue to incur share-basedcompensation expenses. As of December 31, 2016, the unrecognized compensation cost related to unvested options and non-vested shares amounted toRMB71.3 million and RMB0.2 million, respectively, which will be recognized over a weighted average period of approximately 2.18 years and 0.25 year.Expenses associated with share-based compensation awards granted under our share plan may materially reduce our future net income. However, if we limitthe size of grants under our share plan to minimize share-based compensation expenses, we may not be able to attract or retain key personnel. Any natural catastrophes, severe weather conditions, health epidemics and other extraordinary events could severely disrupt our business operations. The occurrence of natural catastrophes such as earthquakes, floods, typhoons, tsunamis or any acts of terrorism may result in significant property damages aswell as loss of revenues due to interruptions in our business operations. Health epidemics such as outbreaks of Zika, Ebola, avian influenza, severe acuterespiratory syndrome (SARS) or the influenza A (H1N1), and severe weather conditions such as snow storm and hazardous air pollution, as well as thegovernment measures adopted in response to these events, could require the temporary closure of our learning centers. Furthermore, our ability to broadcast live lectures and provide our education services through TTS or TMOOC.cn depends on the continuing operation of ourtechnology system, which is vulnerable to damage or interruption from natural catastrophes and other extraordinary events. Our disaster recovery planningcannot account for every conceivable possibility. Any damage to or failure of our technology system could result in interruptions in our services, and ourbrand could be damaged if students believe our systems are unreliable. Such disruptions could severely interfere with our business operations and adverselyaffect our results of operations. Risks Relating to Our Corporate Structure If the PRC government finds that the agreements that establish the structure for holding our ICP license do not comply with applicable PRC laws andregulations, we could be subject to severe penalties. Prior to 2012, we conducted a substantial portion of our operations through our consolidated VIEs and their subsidiaries and schools. On January 30, 2012,the PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed professional education service as anindustry for which foreign investments are “encouraged” by the government. On April 10, 2015, the new PRC Catalogue for the Guidance of ForeignInvestment Industries (amended) became effective, which listed non-accredited professional education service as an industry for which foreign investmentsare “encouraged” by the government. In light of such change of law, starting from the second half of 2012, we began to transfer the operations, includingrelated assets and liabilities, of our consolidated VIEs to Tarena Tech and its subsidiaries and schools. All of our learning center operations of VIEs had beentransferred to Tarena Tech and its subsidiaries and schools. In December 2016, we would up Shanghai Tarena, one of our VIEs. Pursuant to the Provisions onAdministration of Foreign Invested Telecommunications Enterprises promulgated by the State Council on December 11, 2001 and amended on September10, 2008, the ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50%. Moreover, for a foreigninvestor to acquire any equity interest in a value-added telecommunication business in China, it must satisfy a number of stringent performance andoperational experience requirements, including demonstrating good track records and experience in operating value-added telecommunication businessoverseas. Foreign investors that meet these requirements must obtain approvals from the MIIT and the Ministry of Commerce, or the MOFCOM, or theirauthorized local counterparts, which retain considerable discretion in granting approvals. Pursuant to publicly available information, the PRC governmenthas issued telecommunications business operating licenses to only a limited number of foreign invested companies, all of which are Sino-foreign jointventures engaging in the value-added telecommunication business. Although the Guidance Catalog of Industries for Foreign Investment amended in 2015and Circular 196 promulgated by MIIT in June 2015 allows a foreign investor to own up to 100% of the total equity interest in an E-Commerce business, wehave not engaged in any E-Commerce business. Due to the foreign ownership restriction on Internet content and other value-added telecommunicationservices, we operate our TMOOC.cn website through our VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held byBeijing Tarena. Beijing Tarena is 70% owned by Mr. Shaoyun Han, our founder, chairman and chief executive officer, and 30% owned by Mr. Jianguang Li,our director. Mr. Han and Mr. Li are both PRC citizens. We entered into a series of contractual arrangements with Beijing Tarena and its shareholders, whichenable us to: 22  ·exercise effective financial control over Beijing Tarena; ·receive substantially all of the economic benefits and bear the obligation to absorb substantially all of the losses of Beijing Tarena; and ·have an exclusive option to purchase all or part of the equity interests in Beijing Tarena when and to the extent permitted by PRC law. Because of these contractual arrangements, we are the primary beneficiary of Beijing Tarena and consolidate its financial results in our consolidated financialstatements in accordance with U.S. GAAP. For a detailed discussion of these contractual arrangements, see “Item 4. Information on the Company—C.Organizational Structure.” Han Kun Law Offices, our PRC legal counsel, is of the opinion that (i) the ownership structure of Beijing Tarena and Tarena Tech will not result in anyviolation of PRC laws or regulations currently in effect; and (ii) the contractual arrangements among Tarena Tech, Beijing Tarena and its shareholdersgoverned by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. There are,however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations concerning foreign investmentin the PRC, and their application to and effect on the legality, binding effect and enforceability of the contractual arrangements. In particular, we cannot ruleout the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view thatis inconsistent with the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to VIE will be adopted or ifadopted, what they would provide. In or around September 2011, various media sources reported that the China Securities Regulatory Commission, or theCSRC, had prepared a report proposing regulating the use of VIE structures, such as ours, in industries subject to foreign investment restrictions in China andoverseas listings by China-based companies. However, it is unclear whether the CSRC officially issued or submitted such a report to a higher levelgovernment authority or what such report provides, or whether any new PRC laws or regulations relating to the VIE structures will be adopted or if adopted,what they would provide. In January 2015, the MOFCOM published a discussion draft of the proposed Foreign Investment Law for public review andcomments. Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actualcontrol” in determining whether a company is considered a foreign-invested enterprise, or an FIE. Under the draft Foreign Investment Law, variable interestentities would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors, and be subject to restrictions on foreign investments. However,the draft law has not taken a position on what actions will be taken with respect to existing companies with the “variable interest entity” structure, whether ornot these companies are controlled by Chinese parties. It is uncertain when the draft would be signed into law and whether the final version would have anysubstantial changes from the draft. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Value–Added Telecommunications Services—The Discussion Draft PRC Foreign Investment Law” and “—Risks Relating to Doing Business in China—Substantialuncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impactthe viability of our current corporate structure, corporate governance and business operations.” 23  If we or Beijing Tarena is found to be in violation of any existing or future PRC laws or regulations, or such arrangement is determined as illegal and invalidby the PRC court, arbitral tribunal or regulatory authorities, or fail to obtain, maintain or renew any of the required permits or approvals, the relevant PRCregulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ·revoking the business and operating licenses of our PRC subsidiaries and Beijing Tarena; ·discontinuing or restricting the conduct of any transactions between our PRC subsidiaries and Beijing Tarena; ·imposing fines, confiscating the income from Beijing Tarena, or imposing other requirements with which we or Beijing Tarena may not be able tocomply; or ·requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with Beijing Tarena andderegistering the equity pledges of Beijing Tarena. We launched our TMOOC.cn online learning platform in March 2015 to cover a broader customer base. TMOOC.cn features sample lecture videos and classmaterials covering our course subjects. We offer our part-time class students the opportunity to complete a portion of lessons online using TMOOC.cn.TMOOC.cn is also important for our marketing efforts. Therefore, the imposition of any of these penalties could result in a material and adverse effect on ourability to provide online education services and conduct our marketing and promotional activities through TMOOC.cn. Beijing Tarena has added ourTMOOC.cn website under its ICP license. However, we cannot guarantee that Beijing Tarena will be successful in applying for the ICP license annualinspection. If we fail to go through the ICP annual inspection, our continued operation of TMOOC.cn may subject us to penalties, including confiscation ofillegal income and fines, and we may be ordered to shut down our TMOOC.cn website. If the relevant PRC authorities determine that we can no longer own and operate certain of our learning centers through our PRC subsidiaries, we mayneed to restructure the ownership and operation of these learning centers (including possibly transferring these learning centers to our consolidated VIE),our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE. Prior to 2012, we operated a substantial portion of our learning centers through our consolidated VIE and their subsidiaries and schools. After the PRCCatalogue for the Guidance of Foreign Investment Industries (amended) became effective on January 30, 2012 and as amended on April 10, 2015, non-accredited foreign investment in professional education services is now “encouraged” in China and there is no limitation with respect to maximumpercentage of foreign ownership in a company conducting business in this area. In light of such change of law, starting from the second half of 2012, we began to transfer the operations, including related assets and liabilities, of ourconsolidated VIEs to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries. All of our learning center operations of VIEs had been transferred toTarena Tech and its subsidiaries and schools. As of December 31, 2016, we operated 49 of our learning centers through private schools owned by subsidiariesof Tarena Tech. These 49 learning centers in the aggregate accounted for 31.6% of our total student enrollments in 2016. 24  However, there are still uncertainties under current PRC laws as to whether a wholly foreign owned enterprise (such as Tarena Tech) is allowed to indirectlyinvest in and own private schools through its PRC subsidiaries. On the one hand, the PRC Catalogue for the Guidance of Foreign Investment Industries(Amended) encourages and permit 100% foreign ownership of non-accredited professional training business in China and the Law for Promoting PrivateEducation does not expressly prohibit a subsidiary of a foreign-invested enterprise from investing in private schools. On the other hand, according to the Lawfor Promoting Private Education, Chinese-foreign cooperation in operating schools is specifically governed by the Regulations on Operating Chinese-foreign Schools and its implementing rules, which requires specific approvals from those governmental authorities in charge of either human resources andsocial security or education and requires any foreign party to such Chinese-foreign cooperation in operating schools to be an educational institution withrelevant experience in providing educational services outside of China. In addition, the Regulations on Operating Chinese-foreign Schools prohibits foreigninstitutions or individuals from independently establishing schools which provide educational services mainly for Chinese citizens in China. In practice,different local authorities have different views and administrative policies on whether foreign institutions or individuals are permitted to use their direct orindirect wholly-owned subsidiary incorporated in China to establish a school under the Law for Promoting Private Education without violating theRegulations on Operating Chinese-foreign Schools. 24 private schools sponsored by our wholly-owned subsidiaries in China have obtained private schooloperating permits, and based on the results of oral inquiries with the relevant governmental authorities of human resources and social security or education,we believe that the relevant government authorities have not challenged and are unlikely to challenge the ownership structure of our schools. However, if therelevant PRC government authorities determine in the future that we can no longer own and operate our schools and their related learning centers through ourPRC subsidiaries, which are considered ineligible to act as sponsors of private schools, we may need to transfer these schools and the related learning centersto our consolidated VIE, which may severely disrupt our business and expose us to increased risks associated with the contractual arrangements relating toour consolidated VIE. See “—Risks Relating to Our Corporate Structure.” If we fail to restructure the ownership and operation of these schools or otherwiseaccommodate requests from the relevant PRC human resources and social security or education regulatory authorities in a timely manner or to theirsatisfaction, we may be subject to fines, the suspension or ceasing of our operations or other penalties, which may materially and adversely affect our businessand results of operations. Any failure by Beijing Tarena or its shareholders to perform their obligations under our contractual arrangements with them would have an adverse effecton our business. If Beijing Tarena or its shareholders fail to perform their obligations under their contractual arrangements with us, we may have to incur substantial costs andexpend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specificperformance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if the shareholders of Beijing Tarena wereto refuse to transfer their equity interest in Beijing Tarena to us or our designee if we exercise the exclusive option agreements pursuant to these contractualarrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractualobligations. All the agreements under our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China.Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures.The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal systemcould limit our ability to enforce these contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards within aprescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, whichwould require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effectivefinancial control over Beijing Tarena, and our ability to conduct our business may be negatively affected. If we had direct ownership of Beijing Tarena, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of BeijingTarena, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level. However, under the current contractualarrangements, we rely on the performance by Beijing Tarena and its shareholders of their obligations under the contracts to exercise control over BeijingTarena. Therefore, our contractual arrangements with Beijing Tarena may not be as effective in ensuring our control over the relevant portion of our businessoperations as direct ownership would be. The shareholders of Beijing Tarena may have potential conflicts of interest with us, which may materially and adversely affect our business and financialcondition. We have designated individuals who are PRC nationals to be the shareholders of Beijing Tarena. The equity interests of Beijing Tarena are held by Mr.Shaoyun Han and Mr. Jianguang Li. The interests of these individuals as the shareholders of Beijing Tarena may differ from the interests of our company as awhole. These shareholders may breach, or cause Beijing Tarena to breach, or refuse to renew, the existing contractual arrangements we have with them andBeijing Tarena, which would have a material and adverse effect on our ability to effectively control Beijing Tarena. We cannot assure you that when conflictsof interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. 25  Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we couldexercise our purchase option under the purchase option agreement with these shareholders to request him to transfer all of his equity ownership in BeijingTarena to a PRC entity or individual designated by us. We rely on Mr. Shaoyun Han and Mr. Jianguang Li, who are both our directors and who owe afiduciary duty to our company, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act in goodfaith and in the best interests of the company and not to use their positions for personal gains. If we cannot resolve any conflict of interest or dispute betweenus and the shareholders of Beijing Tarena, we would have to rely on legal proceedings, which could result in disruption of our business and subject us tosubstantial uncertainty as to the outcome of any such legal proceedings. Our contractual arrangements with our consolidated VIE may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additionaltaxes could substantially reduce our consolidated net income and the value of your investment. Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. Wecould face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among Tarena Tech and ourconsolidated VIE did not represent an arm’s-length price and adjust our consolidated VIE’ income in the form of a transfer pricing adjustment. A transferpricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by our consolidated VIE, whichcould in turn increase their tax liabilities without reducing our tax liabilities. In addition, the PRC tax authorities may impose late payment fees and otherpenalties to our consolidated VIE for under-paid taxes. Our consolidated net income may be materially and adversely affected if our tax liabilities increase orif we are found to be subject to late payment fees or other penalties. If Beijing Tarena becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy its assets, which could materiallyand adversely affect our business. Due to foreign ownership restrictions in the online value-added telecommunications business, we hold our ICP license through contractual arrangements withBeijing Tarena as well as its shareholders. As part of these arrangements, Beijing Tarena holds assets that are important to the operation of our business,including the domain name and ICP license for our TMOOC.cn website. We do not have priority pledges and liens against Beijing Tarena’s assets. As a contractual and property right matter, this lack of priority pledges and lienshas remote risks. If Beijing Tarena undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets and wemay not have priority against such third-party creditors on Beijing Tarena’s assets. If Beijing Tarena liquidates, we may take part in the liquidationprocedures as a general creditor under the PRC Enterprise Bankruptcy Law and recover any outstanding liabilities owed by Beijing Tarena to Tarena Techunder the applicable service agreements. To ameliorate the risks of an involuntary liquidation proceeding initiated by a third-party creditor, we closelymonitor the operations and finances of Beijing Tarena through carefully designed budgetary and internal controls to ensure that Beijing Tarena is wellcapitalized and is highly unlikely to trigger any third party monetary claims in excess of its assets and cash resources. Furthermore, Tarena Tech has theability, if necessary, to provide financial support to Beijing Tarena to prevent such an involuntary liquidation. If the shareholders of Beijing Tarena were to attempt to voluntarily dissolve or liquidate Beijing Tarena without obtaining our prior consent, we couldeffectively prevent such unauthorized voluntary liquidation by exercising our right to request Beijing Tarena’s shareholders to transfer all of their equityownership interest to a PRC entity or individual designated by us in accordance with the exclusive option agreements with the shareholders of BeijingTarena. In the event that the shareholders of Beijing Tarena initiates a voluntary liquidation proceeding without our authorization or attempts to distributethe retained earnings or assets of Beijing Tarena without our prior consent, we may need to resort to legal proceedings to enforce the terms of the contractualagreements. Any such legal proceeding may be costly and may divert our management’s time and attention away from the operation of our business, and theoutcome of such legal proceeding would be uncertain. The uncertainties in legal proceedings to enforce the terms of the contractual agreements are mainlycaused by PRC laws that prohibit domestic companies holding ICP licenses from assisting foreign investors in conducting value-added telecommunicationsbusiness in China. Under the MIIT Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license toforeign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in China. 26  If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, ormisappropriate or misuse these assets, our business and operations could be materially and adversely affected. In China, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our business relies on, aretypically executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed withthe relevant local branch of the State Administration for Industry and Commerce, or the SAIC. We generally execute legal documents by affixing chops orseals, rather than having the designated legal representatives sign the documents. We have three major types of chops—corporate chops, contract chops and finance chops. We use corporate chops generally for documents to be submitted togovernment agencies, such as applications for changing business scope, directors or company name, and for legal letters. We use contract chops for executingleases and commercial contracts. We use finance chops generally for making and collecting payments, including but not limited to issuing invoices. Use ofcorporate chops and contract chops must be approved by our legal department and administrative department, and use of finance chops must be approved byour finance department. The chops of our subsidiaries and our consolidated VIE are generally held by the relevant entities so that documents can be executedlocally. Although we usually utilize chops to execute contracts, the registered legal representatives of our PRC subsidiaries and our consolidated VIE havethe apparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. All designated legalrepresentatives of our PRC subsidiaries and our consolidated VIE have signed employment agreements with us under which they agree to abide by dutiesthey owe to us. In order to maintain the physical security of our chops, we generally store them in secured locations accessible only to the department heads of the legal,administrative or finance departments. Our designated legal representatives generally do not have access to the chops. Although we monitor our employees,including the designated legal representatives of our PRC subsidiaries and our consolidated VIE, the procedures may not be sufficient to prevent all instancesof abuse or negligence. There is a risk that our employees or designated legal representatives could abuse their authority, for example, by binding therelevant subsidiary or consolidated VIE with contracts against our interests, as we would be obligated to honor these contracts if the other contracting partyacts in good faith in reliance on the apparent authority of our chops or signatures of our legal representatives. If any designated legal representative obtainscontrol of the chop in an effort to obtain control over the relevant entity, we would need to have a shareholder or board resolution to designate a new legalrepresentative and to take legal action to seek the return of the chop, apply for a new chop with the relevant authorities, or otherwise seek legal remedies forthe legal representative’s misconduct. If any of the designated legal representatives obtains and misuses or misappropriates our chops and seals or othercontrolling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legalaction, which could involve significant time and resources to resolve while distracting management from our operations. Risks Relating to Doing Business in China Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us. The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In thelate 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters. The overall effect oflegislation over the past three decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China.Our PRC subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. However, since these laws and regulationsare relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform andenforcement of these laws, regulations and rules involve uncertainties. 27  From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and courtauthorities have significant discretion in interpreting and implementing statutory terms, it may be more difficult to evaluate the outcome of administrativeand court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part ongovernment policies and internal rules (some of which are not published in a timely manner or at all) some of which may have retroactive effect. As a result,we may not be aware of our violation of these policies and rules until some time after the violation. Such uncertainties, including uncertainty over the scopeand effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatoryenvironment in China could materially and adversely affect our business and impede our ability to continue our operations. Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations. All of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects may be influencedto a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole. China’s economy differs from the economies of most developed countries in many respects, including the level of government involvement, level ofdevelopment, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment ofimproved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition,the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government alsoexercises significant control over the PRC economic growth through allocating resources, controlling payment of foreign currency-denominated obligations,setting monetary policy, and providing preferential treatment to particular industries or companies. While China’s economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectorsof the economy, and the rate of growth has been slowing. Some of the government measures may benefit the overall Chinese economy, but may have anegative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capitalinvestments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which couldadversely affect our results of operations and financial condition. We may be subject to significant limitations on our ability to operate private schools, or otherwise be materially and adversely affected by changes in PRClaws governing private education providers. Under the Law for Promoting Private Education and the Implementation Rules for The Law for Promoting Private Education, a private school may elect tobe a school that does not require reasonable returns or a school that requires reasonable returns. At the end of each fiscal year, every private school is requiredto allocate a certain amount to its development fund for the construction or maintenance of the school or procurement or upgrade of educational equipment.In the case of a private school that requires reasonable returns, this amount shall be no less than 25% of annual net income of the school, while in the case of aprivate school that does not require reasonable returns, this amount shall be equivalent to no less than 25% of the annual increase in the net assets of theschool, if any. A private school that requires reasonable returns must publicly disclose such election and additional information required under theregulations. A private school shall consider factors such as the school’s tuition, ratio of the funds used for education-related activities to the course feescollected, admission standards and educational quality when determining the percentage of the school’s net income that would be distributed to the investorsas reasonable returns. However, none of the current PRC laws and regulations provides a formula or guidelines for determining “reasonable returns.” Inaddition, the amendment of the Law for Promoting Private Education released on November 7, 2016, which will become effective on September 1, 2017,allows for-profit private schools to obtain returns, which will be further regulated by the PRC corporate law and other relevant laws and regulations. 28  As of December 31, 2016, we had five schools registered as schools requiring reasonable returns, while 20 schools are registered as schools not requiringreasonable returns. Unlike typical schools which grant diplomas to students upon graduation, we provide professional education and do not grant anydiploma to our students. However, the current PRC laws and regulations governing private education may be amended or replaced by new laws andregulations that (i) impose significant limitations on the ability of our schools to operate their business, charge course fees or make payments to relatedparties for services, (ii) specify the formula for calculating “reasonable returns,” or (iii) change the tax treatment policies applicable to private schools. Wecannot predict the timing and effects of any such amendments or new laws and regulations. Changes in PRC laws and regulations governing privateeducation could materially and adversely affect our business prospects and results of operations. For example, if the PRC government imposes additionalrestrictions on private schools’ ability to operate their business or restricts private schools from making payments to related parties for services, our ability toreceive service fees from our schools may be limited. Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Suchclassification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results ofoperations and the value of your investment. Under the PRC Enterprise Income Tax Law, or the EIT Law, that became effective on January 1, 2008, an enterprise established outside the PRC with “defacto management bodies” within the PRC is considered a PRC “resident enterprise” for PRC enterprise income tax purposes and is generally subject to auniform 25% enterprise income tax rate on its worldwide income. Under the Implementation Rules to the EIT Law, a “de facto management body” is definedas a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, financesand properties of an enterprise. In addition, a circular, known as Circular 82, issued in April 2009, as amended in January 2014, by the State Administration ofTaxation, or the SAT, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRCresident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for dailyproduction, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes ofboard meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Circular 82 also clarified thatdividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at arate of 10%, when recognized by shareholders that are non-PRC resident enterprises. Further to Circular 82, the SAT issued a bulletin, known as Bulletin 45,which took effect on September 1, 2011, to provide more guidance on the implementation of Circular 82 and clarify the reporting and filing obligations ofsuch “Chinese-controlled offshore-incorporated resident enterprises.” Bulletin 45 provides procedures and administrative details for the determination ofPRC resident enterprise status and administration on post-determination matters. Although both Circular 82 and Bulletin 45 only apply to offshoreenterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals like us, the determiningcriteria set forth in Circular 82 and Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied indetermining the tax resident enterprise status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups orby PRC or foreign individuals. We do not believe that Tarena International, Inc. meets all of the conditions above and thus we do not believe that Tarena International, Inc. is a PRC residententerprise, despite the fact that all of the members of our management team as well as the management team of our offshore holding company are located inChina. However, if the PRC tax authorities determine that Tarena International, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, anumber of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income,which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Second, althoughdividends paid by one PRC tax resident to another PRC tax resident should qualify as “tax-exempt income” under the EIT Law, we cannot assure you thatsuch dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax ondividends, and the PRC tax authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are not controlledby any PRC enterprise or enterprise group and treated as resident enterprises for PRC enterprise income tax purposes. 29  Finally, dividends we pay to our non-PRC enterprise shareholders and gains derived by our non-PRC shareholders from the sale of our shares may be becomesubject to a 10% PRC withholding tax. In addition, future guidance may extend the withholding tax to dividends we pay to our non-PRC individualshareholders and gains derived by such shareholders from transferring our shares. In addition to the uncertainty in how the new “resident enterprise”classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If PRC income tax were imposed ongains realized through the transfer of our ADSs or ordinary shares or on dividends paid to our non-resident investors, the value of the investment in our ADSsor ordinary shares may be materially and adversely affected. Furthermore, our ADS holders whose jurisdictions of residence have tax treaties or arrangementswith China may not qualify for benefits under such tax treaties or arrangements. We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of our operating company’s equityinterests. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursuein the future. In connection with the EIT Law, the Ministry of Finance and the SAT jointly issued a Circular 59 in April 2009, and the SAT issued a Circular 698 inDecember 2009. Both Circular 59 and Circular 698 became effective retroactively on January 1, 2008. According to Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equityinterests of an overseas holding company, or an Indirect Transfer, and the overseas holding company is located in a tax jurisdiction that: (i) has an effectivetax rate less than 12.5% or (ii) does not impose tax on foreign income of its residents, the non-resident enterprise, being the transferor, must report to therelevant tax authority of the PRC “resident enterprise” this Indirect Transfer. Using a “substance over form” principle, the PRC tax authority may disregardthe existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding ordeferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%. Circular 698 alsoprovides that, where a non-PRC resident enterprise transfers its equity interests in a PRC “resident enterprise” to its related parties at a price lower than the fairmarket value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. In addition, the PRC“resident enterprise” is supposed to provide necessary assistance to support the enforcement of Circular 698. On February 3, 2015, the SAT issued a Public Notice [2015] No.7, or Public Notice 7, to supersede the existing tax rules in relation to the Indirect Transfer,while the other provisions of Circular 698 remain in force. Public Notice 7 introduced a new tax regime that is significantly different from that under Circular698. Public Notice extend its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer ofimmovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreignintermediate holding company. Public Notice 7 also addresses the term transfer of the equity interest in a foreign intermediate holding company widely. Inaddition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenariosapplicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as theyhave to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. Since Public Notice 7was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will be interpreted, amended andimplemented by the relevant governmental authorities. Where non-resident investors were involved in our private equity financing, if such transactions weredetermined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Circular698 and Public Notice 7 and may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we shouldnot be taxed under Circular 698 and Public Notice 7, which may have a material adverse effect on our financial condition and results of operations or thenon-resident investors’ investments in us. By promulgating and implementing these circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interestsin a PRC resident enterprise by a non-resident enterprise. The PRC tax authorities have the discretion under Circular 59, Circular 698 and Public Notice 7 tomake adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment.Although we currently have no confirmed plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future thatmay involve complex corporate structures. If we are considered a non-resident enterprise under the EIT Law and if the PRC tax authorities make adjustmentsunder Circular 59 or Circular 698 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have anadverse effect on our financial condition and results of operations. 30  In addition, the State Administration of Taxation promulgated Administrative Measures on the General Anti-Avoidance Rule (Trial), or GAAR Measures, onDecember 12, 2014, which shows the authority’s intention to fight against tax avoidance scheme that is adopted to obtain unwarranted tax benefit withoutreasonable commercial purpose. A press release, made by the State Administration of Taxation to clarify certain issues relating to the application of theGAAR Measures, stated that the GAAR Measures may be applicable if any general tax-avoidance scheme exists in the offshore indirect transfer of equityinterests. Since GAAR Measures was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will beinterpreted, amended and implemented by the relevant governmental authorities, we cannot predict how these regulations will affect our business operation,future acquisitions or strategy. We face risks and uncertainties with respect to the licensing requirement for Internet audio-video programs and human resources intermediary service. In December 2007, the State Administration of Press Publication Radio Film and Television, or SAPPRFT, and the Ministry of Industry and InformationTechnology, or MIIT, issued the Administrative Measures Regarding Internet Audio-Video Program Services, or the Internet Audio-Video Program Measures,which became effective on January 31, 2008. Among other things, the Internet Audio-Video Program Measures stipulate that no entities or individuals mayprovide Internet audio-video program services without a “License for Disseminating Audio-Video Programs through Information Network” issued bySAPPRFT or its local bureaus or completing the relevant registration with SAPPRFT or its local bureaus, and only entities wholly owned or controlled by thePRC government may engage in the production, editing, integration or consolidation, and transmission to the public through the Internet, of audio-videoprograms, or the provision of audio-video program uploading and transmission services. In February 2008, SAPPRFT and MIIT jointly held a pressconference in response to inquiries related to the Internet Audio-Video Program Measures, during which SAPPRFT and MIIT officials indicated thatproviders of audio-video program services established prior to the promulgation date of the Internet Audio-Video Program Measures that do not have anyregulatory non-compliance records can re-register with the relevant government authorities to continue their current business operations. After theconference, the two authorities published a press release that confirmed the above guidelines. There are still significant uncertainties relating to theinterpretation and implementation of the Internet Audio-Video Program Measures, in particular, the scope of “Internet Audio-Video Programs.” Furthermore, on April 1, 2010, SAPPRFT promulgated the Test Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or theCategories, which clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visualprogram services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing ofcertain specialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online. We transmit our audio-video educational programs through our TTS system and TMOOC.cn to enrolled course participants. In addition, we provide audio-video program uploading and transmission services. As a result, we might be subject to the Internet Audio-Video Program Measures. If the governmentalauthorities determine that our provision of lecture videos on TTS and/or TMOOC.cn falls within the Internet Audio-Video Program Measures, we may not beable to obtain the License for Disseminating Audio-Video Programs through Information Network. If this occurs, we may become subject to significantpenalties, fines, legal sanctions or an order to suspend our use of audio-video content, all of which could have a material adverse effect on our business,financial condition, results of operations and prospects. Pursuant to the Provisions on the Administration of Human Resources Markets issued by SAIC in 2001 and as amended in 2005 and 2015, respectively, ahuman resources service intermediary refers to any entity which provides intermediary services for employers and any potential employees, and no entitymay provide such services without a “License for Human Resources Intermediary Resources.” Any internet information service provider which providesintermediary services for employers and any potential employees via internet shall obtain such license. In January 2015, we launched a self-developed jobsearch website called Job Show (www.jobshow.cn), which serves as a dedicated open platform for our students and other job-seeking candidates to connectwith corporate employers more effectively. Although we have not entered into any agreement with corporate employers or any job-seeking candidates, wesource and list job opportunities from both IT and non-IT employers in China through the website, which may be deemed as a human resources serviceintermediary. Currently, we have recorded human resources intermediary services in our business license but we have not obtained the “License for HumanResources Intermediary Resources,” and if the relevant PRC government authorities determine that we shall obtain such license for the operation of Job Showand we fail to obtain such license, they may order us to shut down the website and subject us to a fine of RMB10,000 and if there is any illegal income, wemay be subject a fine of no more than three times of the illegal income, which shall not exceed RMB30,000. 31  PRC regulations establish complex approval procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficultfor us to pursue growth through acquisitions in China. The transfers of our learning centers from our consolidated VIE to our wholly-owned subsidiariesin China may be subject to such approval procedures, in which case we may need to restructure the ownership and operation of the affected learningcenters, and as a result we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE. Six PRC regulatory agencies promulgated regulations effective in September 2006 that are commonly referred to as the M&A Rules. The M&A Rulesestablish procedures and requirements that could make some acquisitions of PRC companies by foreign investors more time-consuming and complex,including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takescontrol of a PRC domestic enterprise. In addition, national security review rules issued by the PRC governmental authorities in 2011 require acquisitions byforeign investors of domestic companies engaged in military-related or certain other industries that are crucial to national security to be subject to priorsecurity review. Moreover, the Anti-Monopoly Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certainthresholds are triggered. We may expand our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rules,security review rules and other PRC regulations to complete such transactions could be time-consuming, and any required approval processes, includingobtaining approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our businessor maintain our market share. In addition, in accordance with the M&A Rules, approval of the MOFCOM is required for acquisitions of PRC domestic enterprises by foreign companiesthat are established or controlled by PRC domestic companies, enterprises or individuals related to the target PRC domestic enterprises, or “Related PartyAcquisitions”, and the parties are not allowed to evade such requirements through investment by foreign investment enterprises in China or other ways.Although M&A Rules have become effective since September 2006, we are not aware of any precedent of approval by the MOFCOM of any Related PartyAcquisition conducted by PRC domestic individuals. Starting from the second half of 2012, we began to transfer our operations, including related assets andliabilities, of our consolidated VIEs to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries, either through transferring the companies that operatelearning centers or that sponsor the schools, or through changing the schools’ sponsors. All of our learning center operations of VIEs had been transferred toTarena Tech and its subsidiaries and schools. As Mr. Shaoyun Han is a shareholder of both Tarena and our consolidated VIEs, even though the transfers of thecompanies, which operated 23 of our learning centers themselves or through schools they established as of December 31, 2016, from our consolidated VIEs toour wholly-owned subsidiaries in China are not “acquisitions by foreign investors of PRC domestic enterprises” under the M&A Rules, and Tarena Tech, ourwholly foreign invested enterprise in PRC, was converted into a wholly foreign invested enterprise before the effective date of M&A Rules, the requirementfor an approval from the MOFCOM may still be required for such transfers because of the above anti-evasion clause. Furthermore, it is unclear whether ourtransfers of the schools which operated 14 learning centers as of December 31, 2016, which are not enterprises, from subsidiaries of our consolidated VIEs toour wholly-owned subsidiaries, could be regarded as Related Party Transactions under the M&A Rules. If the MOFCOM determines that our previoustransfers of learning centers from our consolidated VIEs to our wholly-owned subsidiaries are Related Party Transactions under the M&A Rules and we fail toobtain the MOFCOM’s approvals on such transfers, the effectiveness of such transfers may be challenged and we may be need to transfer these companies andschools, including the related learning centers, back to our consolidated VIE. Under such circumstances, our business may be disrupted and we may beexposed to increased risks associated with the contractual arrangements relating to our consolidated VIE. See “—Risks Relating to Our Corporate Structure.” 32  PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital ordistribute profits to us, limit our ability to inject capital into our PRC subsidiaries, or otherwise expose us to liability and penalties under PRC law. The PRC State Administration of Foreign Exchange, or the SAFE, has promulgated regulations, including the Notice on Relevant Issues Relating toDomestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular No. 37, effective on July 4,2014, and its appendixes, that require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection withtheir direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legallyowned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular No. 37 as a “special purpose vehicle.”SAFE Circular No. 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, suchas increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRCshareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehiclemay be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and thespecial purpose vehicle may be restricted in their ability to contribute additional capital into its PRC subsidiary. Further, failure to comply with the variousSAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion, including (i) the requirement by SAFEto return the foreign exchange remitted overseas within a period specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remittedoverseas and deemed to have been evasive and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount ofremitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at our PRC subsidiaries who are held directly liable for theviolations may be subject to criminal sanctions. On February 28, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign ExchangeAdministration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. In accordance with SAFE Notice 13, entities andindividuals are required to apply for foreign exchange registration of foreign direct investment and overseas direct investment, including those requiredunder the SAFE Circular No. 37, with qualified banks, instead of SAFE. The qualified banks, under the supervision of SAFE, directly examine theapplications and conduct the registration. These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that wemake in the future if our shares are issued to PRC residents. We have requested PRC residents who we know currently hold direct or indirect interests in ourcompany to make the necessary applications, filings and amendments as required under SAFE Circular No. 37 and other related rules. To our knowledge, all of our shareholders who are PRC citizens and hold interest in us, have registered with the local SAFE branch and/or qualified banks asrequired under SAFE Circular No. 37 and SAFE Notice 13. However, in practice, different local SAFE branches and/or qualified banks may have differentviews and procedures on the application and implementation of SAFE regulations. Therefore, we cannot assure you that they can successfully amend theirforeign exchange registrations with the local SAFE branch and/or qualified banks in full compliance with applicable laws. In addition, we may not beinformed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurances that these PRCresidents will comply with our request to make or obtain any applicable registrations or comply with other requirements required by SAFE Circular No. 37,SAFE Notice 13 or other related rules. A failure by any of our current or future shareholders or beneficial owners who are PRC residents to comply with theSAFE regulations may subject us to fines or other legal sanctions, restrict our cross-border investment activities, limit our PRC subsidiaries’ ability to makedistributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects. Furthermore, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended andimplemented by the relevant government authorities. We cannot predict how these regulations will affect our business operations or future strategy. Forexample, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividendsand foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide toacquire a PRC domestic company, either we or the owners of such company, as the case may be, may not be able to obtain the necessary approvals orcomplete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisitionstrategy and could adversely affect our business and prospects. 33  Failure to comply with PRC regulations regarding the registration requirements for employee share ownership plans or share option plans may subject thePRC plan participants or us to fines and other legal or administrative sanctions. In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in StockIncentive Plans of Overseas Publicly-Listed Companies, or the Stock Option Rules. Under the Stock Option Rules and other relevant rules and regulations,PRC residents who participate in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches andcomplete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRCsubsidiary of the overseas publicly-listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration andother procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution tohandle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition,the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan,the PRC agent or the overseas entrusted institution or other material changes. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Stock Incentive Plans.” We and our PRC employees who have been granted share options and restricted shareunits are subject to these regulations and we have completed the registrations of our stock incentive plans, namely the 2008 Plan and the 2014 Plan, with thelocal SAFE as required by PRC law. Failure of our PRC share option holders or restricted shareholders to complete their SAFE registrations may subject thesePRC residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries, limited our PRCsubsidiaries’ ability to distribute dividends to us, or otherwise materially and adversely affect our business. PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control of currency conversion may delayor limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiaries. Any capital contributions or loans that we, as an offshore entity, make to our PRC subsidiaries are subject to PRC regulations. Under PRC laws andregulations, we are permitted to utilize the proceeds from offshore offerings to fund our existing PRC subsidiaries only through loans or capital contributionsor to establish new PRC subsidiaries, subject to applicable government registration and approval requirements. None of our loans to a PRC subsidiary canexceed the difference between its total amount of investment and its registered capital approved under relevant PRC laws, and the loans must be registeredwith the local branch of SAFE. Our capital contributions to our PRC subsidiaries or establishment of new PRC subsidiaries must be approved by theMOFCOM or its local counterpart. We cannot assure you that we will be able to complete the necessary registration or obtain the necessary approval on atimely basis, or at all. If we fail to complete the necessary registration or obtain the necessary approval, our ability to make loans or equity contributions toour PRC subsidiaries may be negatively affected, which could adversely affect our PRC subsidiaries’ liquidity and their ability to fund their working capitaland expansion projects and meet their obligations and commitments. On March 30, 2015, the SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitalsof foreign-invested enterprises nationwide. Circular 19 came into force replacing both previous SAFE Circular 142 and SAFE Circular 36 on June 1, 2015.Circular 19 allows all foreign-invested enterprises established in the PRC to use their foreign exchange capitals to make equity investment and removescertain other restrictions provided under Circular 142 for these enterprises. However, Circular 19 continues to prohibit foreign-invested enterprises from,among other things, using the Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, and providingentrusted loans or repaying loans between non-financial enterprises. The business scopes of Tarena Tech include research and development of computersoftware, hardware, internet technology and products and telecommunications technology, transfer of proprietary technologies, information technologyconsulting, technical services, computer technology training, sales of self-developed products and franchise business operations. The business scopes ofTarena Software Technology (Hangzhou) Co., Ltd., or Tarena Hangzhou, include technology development, technology consulting, technical services,computer software and hardware, network technology, telecommunication technology, services, non-certification computer technology training for adults(excluding business subject to pre-approvals), wholesale and retail of computer software and hardware and telecommunication equipment (excludingequipment subject to national controls and other special controls). Tarena Tech and Tarena Hangzhou may only use Renminbi converted from foreignexchange capital contribution for activities within their respective approved business scope. Therefore, we may not use such Renminbi funds converted tomake equity investments in the PRC through our PRC subsidiaries. In addition, the use of such Renminbi capital may not be altered without SAFE approval,and such Renminbi capital may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. Violations of SAFECircular 19 could result in severe monetary or other penalties. 34  SAFE also promulgated a SAFE Circular 45 in November 2011, which, among other things, restricts a foreign-invested enterprise from using RMB convertedfrom its registered capital to provide entrusted loans or repay loans between non-financial enterprises. Those circulars may significantly limit our ability touse Renminbi converted from the net proceeds of offshore offerings to fund establishment of new PRC subsidiaries by Tarena Tech and Tarena Hangzhou toinvest in or acquire any other PRC companies, or to establish new PRC consolidated affiliated entities. Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidityrequirements. We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries tosatisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any,determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of theirrespective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registeredcapital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds attheir discretion. These reserves are not distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, theinstruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our subsidiaries todistribute dividends to us or may restrict our ability to satisfy our liquidity requirements. In addition, the EIT Law, and its implementation rules provide that withholding tax rate of up to 10% will be applicable to dividends payable by Chinesecompanies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central governmentand governments of other countries or regions where the non-PRC-resident enterprises are incorporated. We may not be able to obtain certain treaty benefits on dividends paid to us by our PRC subsidiary through our Hong Kong Subsidiary. Under the EIT Law, dividends generated from retained earnings after January 1, 2008 from a PRC company and distributed to a foreign parent company aresubject to a withholding tax rate of 10% unless the foreign parent’s jurisdiction of incorporation has a tax treaty with China that provides for a preferentialwithholding arrangement. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance ofDouble Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, or the Hong Kong Tax Treaty, which became effective on December 8,2006, a company incorporated in Hong Kong, such as Tarena HK, will be subject to withholding income tax at a rate of 5% on dividends it receives from itsPRC subsidiary if it holds a 25% or more interest in that particular PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. Pursuant tothe Notice of the SAT on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, the 5% withholding tax rate doesnot automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficialowner of the relevant dividends; and (b) the Hong Kong enterprise must directly hold at least 25% share ownership in the PRC enterprise during the 12consecutive months preceding its receipt of the dividends. However, a transaction or arrangement entered into for the primary purpose of enjoying apreferential tax treatment should not be a reason for the application of the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayerinappropriately is entitled to such preferential tax treatment, the competent tax authority has the power to make appropriate adjustments. The SATpromulgated a tax notice on October 27, 2009, or Circular 601, which provides that tax treaty benefits will be denied to “conduit” or shell companies withoutbusiness substance, and a beneficial ownership analysis will be used based on a “substance-over-the-form” principle to determine whether or not to grant taxtreaty benefits. On June 29, 2012, the SAT further issued the Announcement of the SAT regarding Recognition of “Beneficial Owner” under Tax Treaties, orAnnouncement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status based on various factorssupported by various types of documents including the articles of association, financial statements, records of cash movements, board meeting minutes, boardresolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and other information. In August 2015,the SAT promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or Circular 60, which becameeffective on November 1, 2015. Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority inorder to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmationthat the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supportingdocuments when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. However, if a competent taxauthority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance andadopt corresponding measures for subsequent administration. As a result, although our PRC subsidiary, Tarena Hangzhou, is currently wholly owned by ourHong Kong subsidiary Tarena HK, we cannot assure you that we would be entitled to the tax treaty benefits and enjoy the favorable 5% rate applicable underthe Hong Kong Tax Treaty on dividends. If Tarena HK cannot be recognized as the beneficial owner of the dividends to be paid by Tarena Hangzhou to us,such dividends will be subject to a normal withholding tax of 10% as provided by the EIT Law. Besides, according to Circular 81 and Circular 60, if therelevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a preferential tax treatment, the relevant taxauthorities may adjust the preferential withholding tax in the future. 35  Discontinuation or revocation of any of the preferential tax treatments and government subsidies or imposition of any additional taxes and surchargescould adversely affect our financial condition and results of operations. Our PRC subsidiaries are incorporated in the PRC and governed by applicable PRC tax laws and regulations. The EIT Law and its Implementing Rules, bothbecame effective on January 1, 2008, have adopted a uniform statutory enterprise income tax rate of 25% to all enterprises in China including foreign-invested enterprises. The EIT Law and its Implementation Rules also permit qualified “high and new technology enterprises,” or HNTEs, to enjoy apreferential enterprise income tax rate of 15% upon filing with relevant tax authorities. The qualification as a HNTE generally has a valid term of three yearsand the renewal of such qualification is subject to review by the relevant authorities in China. Tarena Tech obtained its HNTE certificate in 2009 andrenewed its HNTE certificate in 2012 and again in 2015, and is eligible to enjoy a preferential tax rate of 15% until the end of 2017. If Tarena Tech fails tomaintain its HNTE qualification or renew its qualification when its current term expires, its applicable enterprise income tax rate may increase to 25%, whichcould have an adverse effect on our financial condition and results of operations. In addition, Tarena Hangzhou, one of our PRC subsidiaries, was establishedin 2013 and is qualified as a “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% taxexemption, commencing from the year in which its taxable income is greater than zero, which was 2014. Tarena Hangzhou has also received financialsubsidies from PRC local government authority in 2013, 2015 and 2016. In 2016, Tarena Hangzhou acquired Hanru Education & TechnologyCo., Ltd., orHanru Hangzhou, which was qualified as an eligible software enterprise and entitled to a full tax exemption of two years followed by a 50% tax exemption ofthree years, commencing from 2016. Preferential tax treatments and financial subsidies are subject to review and may be adjusted or revoked at any time in the future. The discontinuation of anypreferential tax treatments or financial subsidies or imposition of any additional taxes could adversely affect our financial condition and results of operations. Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economicconditions and China’s foreign exchange policies. The PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar in2005, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. However, the People’s Bank of China regularlyintervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals. During the period between July 2008and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within a narrow range. However, the Renminbi fluctuatedsignificantly during that period against other freely traded currencies, in tandem with the U.S. dollar. Since June 2010, the RMB has fluctuated against theU.S. dollar, at times significantly and unpredictably. In August 2015, the People’s Bank of China changed the way it calculates the mid-point price ofRenminbi against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. The value of the Renminbi depreciated approximately 5.8% against the U.S. dollarin 2015 and further by approximately 6.3% in 2016. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed theregular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016,Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, theJapanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S. dollar andpersistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbiinternationalisation, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that theRenminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC orU.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. 36  Significant revaluation of the RMB may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S.dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of the RMB against the U.S. dollar would have anadverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose ofmaking payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the RMB would have anegative effect on the U.S. dollar amount available to us. In addition, appreciation or depreciation in the value of the RMB relative to U.S. dollars wouldaffect the U.S. dollar equivalent of our earnings, regardless of any underlying change in our business or results of operations. In January 2016, we entered into a foreign currency forward contract with China Merchants Bank Co., Ltd. The notional amounts of the foreign currencyforward contracts were RMB564.1 million and the settlement date was on May 19, 2016. We incurred a loss of RMB12.9 million as a result of such forwardforeign currency contract in 2016, due to the fluctuation in the exchange rate between U.S. dollars and RMB. We may decide to enter into additional foreigncurrency contract in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure orat all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi intoforeign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment. The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, assuch, you are deprived of the benefits of such inspection. Auditors of companies that are registered with the U.S. Securities and Exchange Commission, or the SEC, and traded publicly in the United States, includingour independent registered public accounting firm, must be registered with the U.S. Public Company Accounting Oversight Board (United States), or PCAOB,and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United Statesand professional standards. Because our auditor is located in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conductinspections without the approval of the PRC authorities, our auditor is not currently inspected by the PCAOB. In May 2013, PCAOB announced that it hadentered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes acooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by PCAOB, the CSRCor the PRC Ministry of Finance in the United States and the PRC, respectively. PCAOB continues to be in discussions with the CSRC and the PRC Ministryof Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges. This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditors operating inChina, including our auditor. As a result, investors may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conductinspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures ascompared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information andprocedures and the quality of our financial statements. 37  Proceedings instituted by the SEC against certain China-based accounting firms, including our independent registered public accounting firm, couldresult in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or theExchange Act. On January 22, 2014, Judge Cameron Elliot, an SEC administrative law judge, issued an initial decision suspending the Chinese member firms of the “BigFour” accounting firms, including our independent registered public accounting firm, from, among other things, practicing before the SEC for six months. InFebruary 2014, the initial decision was appealed. While under appeal and in February 2015, the Chinese member firms of the “Big Four” accounting firmsreached a settlement with the SEC. As part of the settlement, each of the Chinese member firms of the “Big Four” accounting firms agreed to settlement termsthat include a censure; undertakings to make a payment to the SEC; procedures and undertakings as to future requests for documents by the SEC; andpossible additional proceedings and remedies should those undertakings not be adhered to. If the settlement terms are not adhered to, Chinese member firms of the “Big Four” accounting firms may be suspended from practicing before the SEC. If ourindependent registered public accounting firm were suspended, from practicing before the SEC and we were unable to timely find another registered publicaccounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with therequirements of the Exchange Act. Such a determination could ultimately lead to our delisting from the NASDAQ Global Select Market or deregistration fromthe SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States. Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and howit may impact the viability of our current corporate structure, corporate governance and business operations. The MOFCOM published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment, replace the trio ofexisting laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative JointVenture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The draftForeign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailinginternational practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. While the Ministry ofCommerce solicited comments on this draft earlier this year, substantial uncertainties exist with respect to its enactment timetable, interpretation andimplementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporategovernance and business operations in many aspects. Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” indetermining whether a company is considered a foreign-invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entitiesestablished in China but “controlled” by foreign investors will be treated as FIEs. Once an entity is determined to be an FIE, it will be subject to the foreigninvestment restrictions or prohibitions set forth in a “negative list” to be separately issued by the State Council later. The “negative list” will consist of a listof industry categories where foreign investments are strictly prohibited and a list of industry categories where foreign investments are subject to certainrestrictions. Foreign investments in business sectors outside of the “negative list” will only be subject to filing procedures, whereas foreign investments in therestricted industries must apply for prior approval from the foreign investment administration authority. In case the underlying business of an FIE falls withinthe foreign investment restricted industries, upon market entry clearance by the MOFCOM, the FIE may file an application for being treated as a PRCdomestic investment if the FIE is “controlled” by PRC entities and/or citizens. In this connection, “control” is broadly defined in the draft law to cover thefollowing summarized categories: (i) holding 50% or more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of thesubject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting powerto exert material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) having the power to exert decisiveinfluence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations. 38  The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licenses andpermits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Relating to Our Corporate Structure—If the PRCgovernment finds that the agreements that establish the structure for holding our ICP license do not comply with applicable PRC laws and regulations, wecould be subject to severe penalties” and “Item 4. Information on the Company—C. Organizational Structure.” Under the draft Foreign Investment Law,variable interest entities that are controlled via contractual arrangement would also be deemed as FIEs, if they are ultimately “controlled” by foreigninvestors. Therefore, for any companies with a VIE structure in an industry category that is on the “negative list,” the VIE structure may be deemed legitimateonly if the ultimate controlling person(s) is/are of PRC nationality (including PRC citizens, PRC governmental authorities and their affiliates, and the PRCcompanies controlled by the foregoing). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variable interest entities will betreated as FIEs and any operation in the industry category on the “negative list” without market entry clearance may be considered as illegal. Through our dual-class share structure, Mr. Shaoyun Han, our founder, chairman and chief executive officer, a PRC citizen, possessed and controlled 67.1%of the voting power of our company as of March 31, 2017. The draft Foreign Investment Law has not taken a position on what actions will be taken withrespect to the existing companies with a VIE structure, whether or not these companies are controlled by Chinese parties. Moreover, it is uncertain whetherthe Internet content and other value-added telecommunication service industry, in which our VIE operates, will be subject to the foreign investmentrestrictions or prohibitions set forth in the “negative list” to be issued. If the enacted version of the Foreign Investment Law and the final “negative list”mandate further actions, such as MOFCOM market entry clearance or certain restructuring of our corporate structure and operations, to be completed bycompanies with existing VIE structure like us, we face substantial uncertainties as to whether these actions can be timely completed, or at all, and ourbusiness and financial condition may be materially and adversely affected. The draft Foreign Investment Law, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliance costs.For instance, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and theapplicable FIEs. Aside from investment implementation report and investment amendment report that are required at each investment and alteration ofinvestment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Anycompany found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminalliabilities, and the persons directly responsible may be subject to criminal liabilities. Risks Relating to Our ADSs The trading prices of our ADSs have fluctuated and may be volatile, which could result in substantial losses to investors. The trading prices of our ADSs have fluctuated since we first listed our ADSs.The trading price of our ADSs has ranged from US$8.35 to US$17.75 per ADS in2016. The last reported trading price on April 24, 2017 was US$18.60 per ADS. The trading prices of our ADSs may continue to fluctuate and be volatile dueto factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices ofother companies with business operations located mainly in China that have listed their securities in the United States. In recent years, the widespreadnegative publicity of alleged fraudulent accounting practices and poor corporate governance of certain U.S. public companies with operations in China werebelieved to have negatively affected investors’ perception and sentiment towards companies with connection with China, which significantly and negativelyaffected the trading prices of some companies’ securities listed in the U.S. Any similar negative publicity or sentiment may affect the performances of ourADSs. A number of PRC companies have recently listed or are in the process of listing their securities on U.S. stock markets. The securities of some of thesecompanies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances ofthese PRC companies’ securities after their offerings may affect the attitudes of investors toward PRC companies listed in the United States in general andconsequently may impact the trading performance of our ADSs, regardless of our actual operating performance. 39  In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations,including the following: ·the financial projections that we may choose to provide to the public, any changes in those projections or our failure for any reason to meet thoseprojections; ·variations in our net revenues, net income and cash flow; ·announcements of new investments, acquisitions, strategic partnerships, or joint ventures; ·announcements of new services and expansions by us or our competitors; ·changes in financial estimates by securities analysts; ·additions or departures of key personnel; ·release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; ·potential litigation, regulatory investigations or other legal proceedings involving us; and ·detrimental negative publicity about us or our industry. Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade. If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding ourADSs, the market price for our ADSs and trading volume could decline. The trading market for our ADSs is influenced by research or reports that industry or securities analysts publish about our business. If one or more analystswho cover us downgrade our ADSs or publish unfavorable research about us, the market price for our ADSs would likely decline. If one or more of theseanalysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the marketprice or trading volume for our ADSs to decline. Our dual class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuingany change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share,while holders of Class B ordinary shares are entitled to ten votes per share, with Class A and Class B ordinary shares voting together as one class on allmatters subject to a shareholders’ vote. As of March 31, 2017, our Class B ordinary shares represent 12.6% of our total outstanding ordinary shares on an as-converted basis and entitle their holders to 59.0% of our total voting power. As a result of the dual class share structure and the concentration of ownership, holders of our Class B ordinary shares have substantial influence over ourbusiness, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significantcorporate actions. They may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage,delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of asale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to influence corporate matters and coulddiscourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs mayview as beneficial. For more information regarding our principal shareholders and their affiliated entities, see “Item 7. Major Shareholders and Related PartyTransactions.” 40  The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price. Sales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of ourADSs and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales ofsecurities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price ofour ADSs. In addition, certain holders of our existing shareholders are entitled to certain registration rights, including demand registration rights, piggybackregistration rights, and Form F-3 or Form S-3 registration rights. Registration of these shares under the Securities Act would result in these shares becomingfreely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the publicmarket, or the perception that such sales could occur, could cause the price of our ADSs to decline. We may be classified as a passive foreign investment company for United States federal income tax purposes, which could result in adverse United Statesfederal income tax consequences to United States investors in the ADSs or ordinary shares. We will be classified as a “passive foreign investment company,” or “PFIC” if, in the case of any particular taxable year, either (a) 75% or more of our grossincome for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of our assets (as determined on the basisof fair market value) during such year produce or are held for the production of passive income. Passive income generally includes dividends, interest,royalties, rents, annuities, net gains from the sale or exchange of passive assets (including property producing passive income) and net foreign currency gains.For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activity are taken intoaccount as a non-passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of anyother corporation in which we own, directly or indirectly, more than 25% (by value) of the stock. Based on our current income and assets and the value of our ADSs and outstanding ordinary shares, we do not believe that we were a PFIC for our taxableyear ended December 31, 2016 and we do not expect to be classified as a PFIC for our taxable year ending December 31, 2017 or in the foreseeable future. While we do not expect to become a PFIC, because the value of our assets for purposes of the asset test will generally be determined by reference to themarket price of our ADSs or ordinary shares, fluctuations in the market price of our ADSs or ordinary shares may cause us to become a PFIC for the current orsubsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets,which will be affected by how, and how quickly, we use our liquid assets. Under circumstances where we determine not to deploy significant amounts of cashfor active purposes, our risk of being classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rulesand PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for thecurrent taxable year or any future taxable year. If we are classified as a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal IncomeTax Considerations—Passive Foreign Investment Company Considerations”) may incur significantly increased United States income tax on gain recognizedon the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain ordistribution is treated as an “excess distribution” under the United States federal income tax rules and such holders may be subject to burdensome reportingrequirements. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue tobe treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares. For more information, see “Item 10. AdditionalInformation—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.” 41  You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we areincorporated under Cayman Islands law. We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles ofassociation, the Companies Law of the Cayman Islands (2016 Revision) and the common law of the Cayman Islands. The rights of shareholders to take actionagainst the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extentgoverned by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicialprecedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding,on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearlyestablished as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a lessdeveloped body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies ofcorporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federalcourt of the United States. The Cayman Islands courts are also unlikely: · to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and · to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities lawsthat are penal in nature. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certaincircumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits. As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, membersof the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. Judgments obtained against us by our shareholders may not be enforceable. We are a Cayman Islands company and almost all of our assets are located outside of the United States. All of our current operations are conducted in China.In addition, most of our current directors and executive officers are nationals and residents of countries other than the United States. As a result, it may bedifficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rightshave been infringed under the United States federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of theCayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class Aordinary shares. As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with theprovisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your votinginstructions, the depositary will vote the underlying Class A ordinary shares in accordance with these instructions. You will not be able to directly exerciseyour right to vote with respect to the underlying shares unless you withdraw the shares. Under our amended and restated memorandum and articles ofassociation, as amended, the minimum notice period required for convening a general meeting is ten clear days. When a general meeting is convened, youmay not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask foryour instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that youwill receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are notresponsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able toexercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested. 42  We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements. We are an “emerging growth company” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various requirements that areapplicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditorattestation requirements of Section 404 for so long as we are an emerging growth company, which may be for as long as five years following our initial publicoffering in April 2014. As a result of our current status as an emerging growth company, our investors may not have access to certain information that theymay deem important. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until suchdate that a private company is otherwise required to comply with such new or revised accounting standards. However, we had elected to “opt out” of thisprovision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. The decision toopt out of the extended transition period under the JOBS Act was irrevocable. We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable toUnited States domestic public companies. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in theUnited States that are applicable to U.S. domestic issuers, including: ·the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ·the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under theExchange Act; ·the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders whoprofit from trades made in a short period of time; and ·the selective disclosure rules by issuers of material nonpublic information under Regulation FD. We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basisas press releases, distributed pursuant to the rules and regulations of the NASDAQ Global Select Market. Press releases relating to financial results andmaterial events are also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC are less extensiveand less timely as compared to that required to be filed with the SEC by United States domestic issuers. As a Cayman Islands company listed on the NASDAQGlobal Select Market, we are subject to the NASDAQ Global Select Market corporate governance listing standards. However, NASDAQ Global Select Marketrules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in theCayman Islands, which is our home country, may differ significantly from the NASDAQ Global Select Market corporate governance listing standards. We relied on the exemption available to foreign private issuers for the requirement that it hold an annual general meeting of shareholders no later thanDecember 31, 2016 in 2016. In this respect, we elected to follow home country practice and did not hold an annual general meeting of shareholders no laterthan December 31, 2016 in 2016. We may also continue to rely on this and other exemptions available to foreign private issuers in the future, and to theextent that we choose to do so in the future, our shareholders may be afforded less protection than they otherwise would under the NASDAQ Global SelectMarket corporate governance listing standards applicable to U.S. domestic issuers. As a result, you may not be afforded the same protections or information,which would be made available to you, were you investing in a United States domestic issuer. 43  You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal orimpractical to make them available to you. The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or otherdeposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class Aordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution availableto any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration underthe Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine thatit is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. Inthese cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinaryshares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs,ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value forthem if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs. You may not be able to participate in rights offerings and may experience dilution of your holdings. We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will notdistribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registrationunder the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is notrequired to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption fromregistration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or toendeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and mayexperience dilution of their holdings as a result. You may be subject to limitations on transfer of your ADSs. Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deemsexpedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including inconnection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its booksfor a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver,transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositarythinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the depositagreement, or for any other reason. We incur increased costs as a result of being a public company, and we cannot predict or estimate the amount of additional future costs we may incur orthe timing of such costs As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, including additional costsassociated with our public company reporting obligations. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC andNASDAQ Global Select Market, impose various requirements on the corporate governance practices of public companies. As a company with less thanUS$1.07 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth companymay take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisionsinclude exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control overfinancial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.However, we had elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they areadopted for public companies. The decision to opt out of the extended transition period under the JOBS Act was irrevocable. 44  We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming andcostly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort towardensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. We are currently evaluating and monitoringdevelopments with respect to these rules and regulations, and we cannot predict or estimate with reasonable certainty the amount of additional costs we mayincur or the timing of such costs. In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the marketprice of that company’s securities. In the fourth quarter of 2015, several law firm in the U.S. announced that they were investigating potential securitiesclaims on behalf of our shareholders against us. We cannot predict whether such investigations will result in lawsuits, including class action suits, being filedagainst us. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our businessand operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whetheror not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we maybe required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations. ITEM 4.INFORMATION ON THE COMPANY A.History and Development of the Company We began our operations in Beijing in September 2002 through Beijing Tarena Technology Co., Ltd. In November 2012, we changed the name of BeijingTarena Technology Co., Ltd. to Tarena Technologies Inc., or Tarena Tech. Tarena International, Inc., an exempted company with limited liability, wasincorporated in the Cayman Islands in October 2003 and became our ultimate holding company. We established Tarena Hong Kong Limited, or Tarena HK,as our wholly-owned subsidiary in October 2012. Tarena HK wholly owns Tarena Software Technology (Hangzhou) Co., Ltd., or Tarena Hangzhou, an entitythat we established in January 2013. On April 3, 2014, our ADSs began trading on the NASDAQ Global Select Market under the ticker symbol “TEDU.” We and certain selling shareholders sold atotal of 15,300,000 ADSs, representing 15,300,000 Class A ordinary shares, at an initial offering price of $9.00 per ADS. Concurrently with our initial publicoffering, we also issued 1,500,000 Class A ordinary shares at a price of US$9.00 per share to New Oriental Education & Technology Group Inc. Ltd. through aprivate placement. Prior to 2012, we conducted a substantial portion of our operations through our consolidated VIEs and their respective subsidiaries and schools. On January30, 2012, the PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed professional education service asan industry for which foreign investments are “encouraged” by the government and On April 10, 2015, the new PRC Catalogue for the Guidance of ForeignInvestment Industries (amended) became effective, which listed non accredited professional education service as an industry for which foreign investmentsare “encouraged” by the government. In light of such change of law, starting from the second half of 2012, we began to transfer the operations, includingrelated assets and liabilities, of our consolidated VIEs to Tarena Tech and its subsidiaries and schools. All of our learning center operations of VIEs had beentransferred to Tarena Tech and its subsidiaries and schools. In December 2016, we wound up Shanghai Tarena, one of our VIEs. We expect to continue tocontrol and consolidate Beijing Tarena, which holds an Internet Content Provider license, or ICP license. Beijing Tarena has added our TMOOC.cn websiteunder the ICP license held by Beijing Tarena. In 2015, we invested RMB24.0 million in five PRC companies which are engaged in the provision ofeducational products and services. In 2016, we invested RMB12.8 million in three companies which are mainly engaged in provision of educationalproducts and services. For a description of the risks relating to our corporate structure and the contractual arrangements we have entered into with our VIE,see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” 45  The table below sets forth the respective revenues and assets of Tarena and our wholly-owned subsidiaries and our consolidated VIEs as of the dates and forthe periods indicated: Net Revenues(1) Total Assets(1) For the yearendedDecember 31,2014 For the yearendedDecember 31,2015 For the yearendedDecember 31,2016 As ofDecember31, 2016 Tarena and its wholly-owned subsidiaries 99.7% 100.0% 100.0% 97.2%Consolidated VIEs(2) 0.3% 0.0%(3) 0.0%(3) 2.8%Total 100% 100% 100% 100% Notes: (1)The percentages exclude the inter-company transactions and balances between Tarena and wholly-owned subsidiaries and the consolidated VIEs. (2)Shanghai Terena, one of our consolidated VIEs, were wound up in December 2016. (3)The net revenues from consolidated VIEs is immaterial and accounted for 0.0% due to rounding. We have dual headquarters in China. Our principal executive offices in Beijing are located at Suite 10017, Building E, Zhongkun Plaza, A18 Bei San HuanWest Road, Haidian District, Beijing, People’s Republic of China. Our telephone number at this address is +86 10 6213 5687. Our principal executive officesin Hangzhou are located at 1/F, Block A, Training Building, 65 Kejiyuan Road, Baiyang Jie Dao, Economic Development District, Hangzhou 310000,People’s Republic of China. Our telephone number at this address is +86 571 5602 0827. Our registered office in the Cayman Islands is located at the officesof Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands. Our agent forservice of process in the United States is Law Debenture Corporate Services Inc. located at 801 2nd Avenue, Suite 403, New York, NY 10017. B.Business Overview We provide professional education services in China. Our core strength is in IT professional education services. Since our inception in 2002, we have trainedover 380,000 students, cooperated with more than 690 universities and colleges and placed students with approximately 90,000 corporate employers in avariety of industries. We currently offer courses in twelve IT subjects, three non-IT subjects and three kid education programs. For our adult students, our education platform combines live distance instruction, classroom-based tutoring and online learning modules. We deliverprofessional education lectures through a group of experienced and passionate instructors based in Beijing to a nationwide network of 145 directly managedlearning centers in 46 cities in China as of December 31, 2016. For each class, instructors deliver lectures from one classroom in Beijing to students in thesame classroom as well as to students at our learning centers across China via simultaneous webcast. To facilitate a disciplined and focused learningenvironment, we staff each classroom at our learning centers with one or two on-site teaching assistants to tutor and supervise students. We complement thelive instruction and tutoring with our proprietary learning management system TTS. TTS has five core functions, featuring course content, self-assessmentexams, student and teaching staff interaction tools, student management tools and an online student community. Through this education platform, weprovide job-oriented education with measurable outcomes, as demonstrated by our high job placement rates and students’ academic performance. In additionto our TTS platform, we launched TMOOC.cn in March 2015, which offers not only regular teaching video contents, but also continuing education coursesand job placement training courses, in order to cover a broader customer base. We offer our part-time class students the opportunity to complete a portion oflessons online using TMOOC.cn. TMOOC.cn is also important for our marketing efforts. In December 2015, we launched new training programs Tongcheng and Tongmei featuring IT training courses and non-IT training courses. In March 2016, wealso rolled out Tongchuang to offer kids robotics programming courses. These new programs target and contain curriculum that are customized for primary tohigh school students aged between six and eighteen. Unlike programs designed for adult students, our courses for primary to high school students are taughtby teaching assistants face-to-face in offline classrooms. In order to build a more vivid and concentrated learning environment, students will watch a series ofinteresting courseware videos step by step, under the lead of on-site teaching assistants. These programs are mainly delivered through the facilities of existinglearning centers to improve the utilization of the facilities. In 2016, we also set up six flagship centers for kid education programs, which have furtherimproved our brand recognition and teaching facilties and brought better learning experience for our students. 46  We have a strong commitment to career services. We had 445 career counselors as of December 31, 2016, who advise students through mandatory job skillseminars, one-on-one interview workshops and systematic career assessment and planning. We had 243 employer cooperation representatives as of December31, 2016, who liaise closely with employers, alumni, human resources websites and other employment recruiters to maximize job opportunities for ourstudents. In January 2015, we launched a self-developed job search website called Job Show (www.jobshow.cn), which serves as a dedicated open platformfor our students and other job-seeking candidates to connect with corporate employers more effectively. Through Job Show, we source and list jobopportunities from both IT and non-IT employers in China. We have a track record of producing qualified, job-ready candidates for many corporateemployers in China, including global Fortune 500 companies and leading technology companies. We are a holding company with no material operations of our own. We conduct our operations primarily through our wholly-owned subsidiaries in China.We also control and consolidate a VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena as ofDecember 31, 2016. Our wholly-owned subsidiaries in China are currently not eligible as wholly-owned foreign-invested enterprises to hold ICP licenses. Our Education Platform For our adult students, our education platform combines three key components: live distance instruction, classroom-based tutoring and online learningmodules. Live distance instruction From our headquarters in Beijing, our instructors deliver live courses primarily via live webcast to our learning centers across China. Students attending classwatch live audio-video broadcasts of lectures delivered using streaming media and other Internet-based technologies. Our full-time students typically watchlive lectures for approximately five hours a day and work on practice exercises assigned by instructors for approximately two hours every day during theclassroom sessions, which generally last from 9:00 a.m. to 6:00 p.m. five days a week. Our live broadcast method of lecture delivery ensures consistency in teaching quality across all our centers. All of our instructors to deliver the lecturethrough webcasting system are located in Beijing, where we centralize our training support. Our headquarter-level quality control department monitors theperformance of each lecturer on a daily basis. We typically have multiple instructors for each course, with each instructor focusing on separate topic areas. Webelieve this allows our instructors to focus, and offer more in-depth teaching, on their specific areas of expertise within a subject. Classroom-based tutoring Our students are generally required to physically attend classes at our learning centers. We believe physical attendance is important as it creates a disciplinedand focused learning environment for students to effectively master the course content. Requiring students to physically attend classes also facilitates thedelivery of personalized and systematic tutoring and job placement services to our students. Our classrooms are equipped with computers for each student, as well as projectors and other equipment necessary for the live broadcast of our lectures. Ourclassroom technology infrastructure allows students to interact with instructors online to receive help on course materials and to use online modules in TTSto take notes and conduct practice exercises. Our learning centers function both as classrooms for delivering lectures and self-study rooms after class hours. As of December 31, 2016, we directly manageda total of 145 learning centers in 46 major cities across China. Our learning centers vary in terms of size, typically having between 5 and 20 classrooms, witheach classroom typically able to host between 20 and 100 students. In addition to the learning centers that we operate directly, we also have one franchisedlearning center in Xi’an, and the franchise fee from such learning center was immaterial in 2016. 47  The following table provides an overview of our national network of learning centers that we manage directly and the courses offered in each city as ofDecember 31, 2016 and student enrollments in each city in 2016: Cities Number ofLearningCenters Java C++ Digital art Softwaretesting PHP Embedded Android NET iOS Linux andnetworkengineering Online salesandmarketing Accounting Web front-enddevelopment Bigdata VR/ARBeijing 15 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●Hangzhou 9 ● — ● — — ● ● — ● — ● ● ● — —Shenzhen 9 ● ● ● ● ● ● ● — ● ● ● ● ● — —Shanghai 8 ● ● ● ● ● ● ● — ● ● ● ● ● — —Guangzhou 8 ● ● ● ● ● ● ● — ● ● ● ● ● — —Chengdu 7 ● ● ● ● ● — ● — ● — ● ● ● — —Nanjing 6 ● ● ● ● — ● ● — ● — ● ● ● — —Wuhan 6 ● ● ● ● ● ● ● — ● — — ● ● — —Hefei 6 ● ● ● — — — — — ● — — ● ● — —Zhengzhou 5 ● — ● — ● ● ● — ● — — ● — — —Chongqing 4 ● — ● — ● ● ● — — — ● ● ● — —Changsha 4 ● — ● — — — — — — — ● — — — —Jinan 4 ● ● ● — ● — ● — ● — ● ● — — —Qingdao 4 ● ● ● — ● — — — — — ● ● — — —Taiyuan 4 ● — ● — ● — ● — — — ● ● — — —Shenyang 3 ● — ● — — — — — — — ● — — — —Changchun 3 ● — ● — — — ● — — — ● — — — —Shijiazhuang 3 ● — ● — — — — — ● — — — — — —Xi’an 2 — — ● ● ● — ● — ● — ● — — — —Wuxi 2 ● — — — — — — — — — — — — — —Suzhou 2 ● ● — — — — — — — — — — — — —Harbin 2 ● — ● — — — — — — — ● — ● — —Xiamen 2 ● — ● — — — — — — — — — — — —Nanchang 2 ● ● ● — — — — — ● — — — — — —Dalian 2 ● — ● — — — — — — — ● ● — — —Kunming 2 ● — ● — — — — — — — ● — — — —Tianjin 2 ● — ● — — — — — ● — ● — — — —Nanning 1 ● — ● — — — — — — — ● — — — —Ningbo 1 ● — ● — — — — — — — — — — — —Fuzhou 1 ● — ● — — — — — — — — — — — —Zhuhai 1 ● — ● — — — ● — — — — — — — —Daqing 1 ● — ● — — — — — — — — — — — —Yantai 1 ● — ● — — — — — — — — — — — —Dongguan 1 ● — ● — — — — — — — — — — — —Guiyang 1 ● — — — — — — — — — — — — — —Haikou 1 ● — — — — — — — — — — — — — —Lanzhou 1 ● — — — — — — — — — — — — — —Weifang 1 ● — ● — — — — — — — — — — — —Luoyang 1 ● — — — — — — — — — — — — — —Linyi 1 ● — — — — — — — — — — — — — —Yuncheng 1 ● — ● — — — — — — — ● — — — —Wenzhou 1 ● — ● — — — — — — — — — — — —Hohhot 1 ● — ● — — — — — — — — — — — —Qinhuangdao 1 ● — ● — — — — — — — — — — — —Nanyang 1 ● — ● — — — — — — — — — — — —Zibo 1 ● — ● — — — — — — — — — — — — Notes: ●currently offered —not currently offered In 2016, we have entered 46 cities in China and recruited 107,493 students, approximately 62.0% of whom are from top 10 cities, namely Beijing, Shenzhen,Shanghai, Hangzhou, Chengdu, Nanjing, Guangzhou, Wuhan, Zhengzhou and Qingdao. Other cities accounted for 38.0% of total student enrollments. Online learning modules Our live distance instruction and classroom-based tutoring are supplemented by our proprietary online learning modules featured on our TTS platform. TTShas the following five core functions: ·Course content. TTS contains lecture slides, key lecture video recordings, case studies, practice exercises and supplemental reading materials. Inaddition to recordings of past lectures, TTS also features exclusive online videos on key course materials. Students may view lecture videos usingthe computers at our learning centers. To foster effective learning of our course lecture materials, especially theoretical knowledge points, TTSfeatures software development case studies and practice exercises. TTS contains supplemental reading materials on areas in which we havehistorically received frequent questions from students. TTS also allows students to download coding materials and study notes that they haveprepared for reference in their future jobs. 48  ·Self-assessment exams. TTS features daily and weekly interactive mock examinations to measure learning outcomes. Students use the mock exams toassess their learning results and gauge their grasp of course content. After students complete a self-assessment exam, TTS automatically providesstudents with detailed explanations on each of the exam questions. ·Student and teaching staff interaction. TTS allows students to interact with instructors and teaching assistants. In class, students may raise questionsfor instructors and teaching assistants using the messaging tools on TTS. After class, students can post questions to the teaching assistants throughthe online question and answer board in TTS. Teaching assistants are able to provide timely and accurate responses typically within 30 minutes aftera question is submitted. To ensure the accuracy of responses and to identify questions of common interest, our instructors also actively reviewquestions posted on TTS and regularly provide answers. Students are given the opportunity to provide feedback for each answer or tutorial serviceprovided by teaching assistants using the evaluation functions on TTS. ·Student management tools. TTS allows instructors to receive daily ratings and feedback from students. Instructors may then adjust their lecture paceand coverage of course materials each day. TTS enables teaching assistants to evaluate each student’s academic performance. The teaching assistantinterface of TTS contains each student’s monthly performance test scores, as well as each student’s ranking within the class and nationally. Teachingassistants are required to follow-up with underperforming students regarding their academic status and to adopt concrete action plans with suchstudents to improve their future performance. TTS also allows teaching assistants to monitor each student’s attendance and to log their daily tutoringactivities. ·Online student community. TTS serves as an online student community that fosters academic collaboration among students. We encourage studentsto post course-related articles and comments sharing their study experiences on the bulletin board forum. In addition to our TTS platform, we launched TMOOC.cn in March 2015 to cover a broader customer base. TMOOC.cn offers two types of online learningproducts: continuing education courses and job placement training courses. Continuing education courses, composed of a library of video clips that focus onon-the-job practical skills, target working professionals and others with continuing education needs. Job placement training courses are full length programsthat target job seekers. These recruitment-oriented courses are carefully chosen from existing courses at our learning centers and redesigned to be moresuitable for online learning environment. Users who finish all modules in a job placement training course and pass the relevant Tarena certificationexamination will receive the same job placement services that we offer to students at learning centers. We also offer our part-time class students theopportunity to complete a portion of lessons online using TMOOC.cn. The number of registered TMOOC.cn users has reached more than 195,000 as ofDecember 31, 2016, and our proprietary content library offers more than 22,000 hours of video content. Our Course Offerings Our courses provide students with practical education to prepare them for jobs in industries with significant growth potential and strong hiring demand. Wecurrently offer courses in twelve IT subjects, three non-IT subjects and three kid education programs. For adult students, we generally offer the following two types of classes in order to accommodate the different scheduling and training needs of our students: ·Full-time class. The term for a full-time class is typically four months and includes approximately 1,000 learning hours. Full-time classes meet fromMonday to Friday. In 2016, we also implemented “teaching at appropriate level” strategy and launched advanced courses with terms of one to fivemonths. In 2016, approximately 80.6% of our enrolled students attended our full-time classes. 49  ·Part-time class. Part-time classes typically have terms of three to five months. We allow students to attend part-time classes either exclusively duringweekends or on a combination of weekday nights and weekends, as these students typically have full-time jobs. We offer our part-time class studentsthe opportunity to complete a portion of lessons online by watching videos available on TTS through TMOOC.cn. In 2016, approximately 19.4% ofour enrolled students attended our part-time classes. We have adopted stringent quality control procedures to ensure that we produce high quality graduates. We use entrance exams to assess the level of ourstudents. Prospective full-time students with low entrance exam scores are recommended to enroll in preparatory training camps. We have a total of fourmonthly closed-book performance tests to evaluate the learning status of our students. For underperforming students who have failed the first monthlyperformance test, we offer them the opportunity to re-take the first month classes at no extra cost. We believe physical class attendance is important, andstudents with low attendance rates are generally not given graduation certificates and job opportunities referrals at the end of our program. Our full-time classes also include short term, project-based training programs designed for college students to gain practical IT experience, which are notmaterial for our business as a whole. IT education courses We offer education courses covering the following twelve IT subjects: SubjectYear ofLaunchFocus of Course ContentJava 2002 Programming for Windows and Linux-based desktop software and web-based software.NET 2007 Development of software based on the .NET framework that runs primarily on WindowsC++ 2009 Programming for Windows and Linux-based desktop softwareSoftware testing 2009 Practical software testing and quality assurance trainingEmbedded 2009 Development of software to control machines and devicesPHP 2010 Web-based software development for e-commerce industriesAndroid 2011 Programming for Android-based applicationsiOS 2012 Programming for iOS-based applicationsLinux and network engineering 2013 Linux operating system and network management technologyBig Data 2015 Hadoop, HBase, Hive, ZookeeperWeb front-end development 2015 HTML5, CSS3, JavaScript, jQuery, AJAX, Bootstrap, AngularJS, Web APPVR/AR 2016 Programming for developing a full range of VR/AR projects Graduates of our IT education courses receive Tarena Certified Software Developer certificates, or TCSD certificates. Holders of TCSD certificates arequalified to obtain the intermediate-advanced software engineer certificate issued by the Ministry of Industry and Information Technology of China, or theMIIT, for their respective field of study, subject to such graduates passing our internal examination. Graduates of our Java courses are granted ORACLECertified Java Programmer certificates by ORACLE Corporation after passing the relevant exams. Our Linux and network engineering course graduates mayalso sign up for Red Hat certification exams at our learning centers. Graduates of our embedded course are awarded the Embedded Engineer Certificate issuedby ARM upon passing the relevant exams. Pursuant to our strategic partnership agreement with Alibaba Cloud Computing Co., Ltd., or Aliyun, Aliyun willprovide two opportunities to take the ACF (Ali Cloud Foundation) certification exams to each Tarena student. 50  Non-IT education courses We began offering courses in non-IT subjects in 2013. We launched our digital art course in February 2013, our online sales and marketing course inNovember 2013 and our accounting course in October 2014. The following table describes the three non-IT courses that we currently offer: SubjectYear ofLaunchFocus of Course ContentDigital art 2013 Latest Adobe user interface design technology for graphic, webpage and mobile sites designOnline sales and marketing 2013 Search engine marketing, search engine optimization, and other Internet based marketing,including microblog marketingAccounting 2014 Accounting certificate, and chief accountant practice Since its launch in February 2013, our digital art course has registered strong growth in student enrollments and has become one of the largest courses interms of net revenue contribution in 2016. Our accounting course helps us target a broader student base. Graduates of our online sales and marketing coursesare awarded the Certificate issued by Baidu without additional examination. Kid Education Programs In December 2015, we launched new training programs Tongcheng, Tongmei and Tongchuang featuring IT training courses and non-IT training courses.Compared with the curriculum for adult students, the IT and non-IT courses offered under the Tongcheng, Tongmei and Tongchuang programs featurematerials that are customized for young kids. Both new programs target and contain curriculum that are customized for primary to high school students agedbetween 6 and 18. Unlike programs designed for adult students, our courses for primary to high school students are taught by teaching assistants face-to-facein offline classrooms. In order to build a more vivid and concentrated learning environment, students will watch a series of interesting courseware videos stepby step, under the lead of on-site teaching assistants. Tongcheng, Tongmei and Tongchuang programs each has three to four levels, with each level consisting of 120 learning hours per year. Students begin fromlevel 1 and attend a 3-hour class per week. Depending on the age group, it generally takes approximately one year to complete each level. As of December31, 2016, our Tongcheng, Tongmei or Tongchuang programs are offered in 15 cities in China. Our Teaching Staff Our instructors As of December 31, 2016, we employed 204 full-time instructors based in Beijing. Most of our instructors for IT education courses have industrybackgrounds in global and domestic technology companies. Instructors for non-IT education courses are typically experts or veterans in their respectivespecialized fields. Our instructors also provide us with unique access to a large pool of experts on industry trends that is especially valuable in our decision-making and development process for new courses. We believe we attract highly qualified instructors by virtue of our respected brand, our well-establishedteaching infrastructure and sales team and our competitive compensation. We believe that developing and maintaining highly capable and motivated instructors is critical to our success. We seek qualified instructor candidates whohave extensive industry experience or come from other professional education service providers. These candidates are subject to multiple rounds ofinterviews conducted by our director of teaching, vice-president for teaching and the chief executive officer. All instructors are required to undergo trainingin teaching skills and techniques. We require our instructors to regularly update their course materials to remain current with evolving employer needs,industry developments and other key trends necessary to teach effectively. We typically have a backup instructor assigned to each course to meet anyemergency needs. To align incentives, instructors receive bonuses based on students’ ratings and the number of class sessions taught, in addition to their base compensation. Our teaching assistants We believe that our dedicated teaching assistants are essential to the success of our education model. Our teaching assistants interact with and tutor ourstudents on a daily basis, and are instrumental in facilitating a disciplined and focused learning environment. Each classroom is staffed with one or twoteaching assistants, who attend lectures together with students. Teaching assistants are available during class hours to answer student questions in person, andafter class hours to address inquiries online via TTS or on-site until 8:30 p.m. Teaching assistants are also responsible for offering focused tutoring services tounderperforming students and continuously monitoring their academic results. We have adopted a comprehensive set of key performance indicators, or KPIs,to evaluate the performance of our teaching assistants. Such KPIs include student satisfaction, exam scores of students on monthly performance tests, theimprovement of underperforming students and employment results after graduation, among other indicators. 51  We primarily seek teaching assistant candidates from our graduates who have demonstrated strong command of materials in the relevant subject areas. Weprovide necessary training to newly hired teaching assistants to tutor effectively. Our teaching assistants are frequently evaluated by students on the qualityof their assistance. We had a total of 1,344 teaching assistants as of December 31, 2016. Course Content Development In addition to teaching, our instructors also develop the course content in their respective subject areas. We regularly update our existing courses, typicallyevery six months, to stay abreast of the latest technology developments and industry trends. Our instructors are also responsible for producing practiceexercises and exam questions for monthly performance tests to evaluate the effectiveness of our student self-assessment tests in TTS. We regularly engage in new course development in order to capture demands created by evolving job market and industry trends. We have a set ofprocedures for new course development. Prior to developing a new course, we gather market intelligence by collecting job market demand information toensure that we are developing relevant and up-to-date courses. We conduct a series of surveys, each with clear parameters, to determine various aspects of theproposed new course. Once we gather enough market intelligence, we recruit, or identify from within Tarena, instructors with the appropriate industry andacademic background to form a course-specific development task team. All of our new courses are then pilot tested in selected learning center in Beijing forstudent satisfaction, training practicality and employment outcomes. In 2016, we launched one new course in VR/AR and one kid program in kid robotprogramming. Our software research and development department is tasked with improving the technical performance and user experience of TTS. Since introducing TTSstudent version 1.0 in 2006, we have produced eight upgrades to TTS. The current version that our students use is TTS student version 9.0. Our Students The majority of our students are college students and graduates. In 2016, approximately 81.3% of our enrolled students were either studying towards, oralready held, a post-secondary degree. We have experienced significant growth in student enrollment in recent years. Our student enrollment reached107,493 in 2016. Student recruitment We rely primarily on Internet-based marketing to attract students and increase enrollments. We advertise on the Internet using search engine keywords onleading search engines. We also use banners and other advertising placements on targeted sites, such as education portals, career sites and industry-specificwebsites. We actively monitor the effectiveness of our advertising and adjust marketing spending accordingly. Our learning centers also host seminars,information sessions and preparatory training camps for prospective students. When a prospective student responds to our advertisements, an enrollment advisor generates a prospective student profile and advises the candidate, eitheronline or in a face-to-face meeting, on various aspects of our courses and educational experience. As of December 31, 2016, we had a total of 1,746enrollment advisors nationally. To promote brand awareness, we place advertisements in industry trade publications and present at industry trade seminars and conventions. We also beganto host our annual Tarena-Discovery Cup Chinese University Students Software Design Competition in April 2012. In 2015, we changed our logo from“Tarena Technology” (达内科技) to “Tarena Education” (达内教育) to better showcase our professional image in education. We also encourage our students at school to introduce their friends or classmates who are interested in taking professional education courses. Student referralhas become one of the key channels we access to new students. 52  In addition to our marketing efforts and student referrals, we recruit a significant portion of our students directly from universities and colleges. As ofDecember 31, 2016, we have cooperated with over 690 universities and colleges in China under one of the three following modes of cooperation: ·Joint-majors. We offer joint-majors with 103 universities and colleges in China. These universities offer students the option to include our selectedcourses in their standard undergraduate curriculum. Students in selected majors at these universities take our courses full-time for one semester andreceive academic credits from these universities and colleges after successfully completing our courses. ·On-campus learning sites. We have established over 144 on-campus learning sites with over a number of universities and colleges in China to offerour courses, without live broadcast, to students attending these universities and colleges. Students enrolled in our on-campus learning sites typicallyattend part of our course in the on-campus learning sites and part of the course at our learning centers. We pay universities and colleges for the costof classroom facilities used in the learning sites but do not share revenue with these universities and colleges. ·Enrollment cooperation. We have enrollment cooperation with over 690 universities and colleges in China. These universities and colleges allow usto organize marketing and promotional events on campus in order to attract students. We had a total of 283 university cooperation representatives as of December 31, 2016. Our university cooperation representatives are responsible forestablishing new and maintaining current cooperative relationships between us and universities in China. In 2016, we enrolled approximately 14.8% of ourstudents from universities and colleges with which we cooperated. Student job placement services We have an effective job placement program for our adult students. Each learning center retains full-time career counselors who meet with students on thefirst day of class to discuss their career goals and to build an employment profile for each student. Our career counselors host a series of mandatory careerdevelopment seminars for students throughout the term. During the final weeks of each course, our career counselors meet with students one-on-one to offertraining on interview and résumé preparation. In addition to the scheduled career service activities, our career counselors are generally available to meet withstudents one-on-one during office hours. Our career counselors also monitor the employment results of our students and actively offer personalized assistanceto students facing difficulties in securing job offers. We had a total of 445 career counselors as of December 31, 2016. Each learning center offering courses for adult students also retains full-time employer cooperation representatives who routinely collaborate with employers,alumni, human resources websites and other employment recruiters to maximize opportunities for job placements. We had a total of 243 employercooperation representatives as of December 31, 2016. We invite corporate employers to host recruiting events and interviews at our learning centers and offerstudents with interview opportunities across the country. In January 2015, we launched a self-developed job search website called Job Show (www.jobshow.cn), which serves as a dedicated open platform for ourstudents and other job-seeking candidates to connect with corporate employers more effectively. Through Job Show, we source and list job opportunitiesfrom both IT and non-IT employers in China. 53  We gather data on post-course job placement rates by conducting surveys of our graduates. Based on the survey responses, we calculate the six-month post-course job placement rates for a month by dividing (i) the number of job-seeking students enrolled in such month who (A) successfully graduated from ourprograms with graduation certificates awarded and (B) indicated that they had received employment offers within six months of graduation, by (ii) the totalnumber of job-seeking students enrolled in such month who later successfully graduated from our programs with graduation certificates awarded. Wecalculate the average six-month post-course job placement rate for a year by averaging the six-month post-course job placement rates of each month of suchyear. Our average six-month post-course job placement rate for each of 2014 and 2015 was over 90%. When calculating such job placement rates for 2014and 2015, a majority of the employment reported by relevant students were full-time employment, and a majority of the employment reported by relevantstudents were in the fields of their studies with us. All of the students enrolled in 2014 and 2015 who later successfully graduated from our programs withgraduation certificates awarded and who were job-seeking, have filled out our surveys. Among the students enrolled in 2014 and 2015, 89% and 86% of suchstudents, respectively, graduated from our programs with graduation certificates awarded. Among the students enrolled in 2014 and 2015 who latersuccessfully graduated from our programs with graduation certificates awarded, 81% and 77% of such students, respectively, were deemed to be job-seekingstudents. Our Network of Employers We have a track record of producing job-ready and highly qualified candidates for many corporate employers. Since our inception, our network of potentialemployers for our students covered approximately 90,000 corporate employers, including Global Fortune 500 companies, and leading technology, ITservices and Internet companies in China. We offer the following recruiting services to corporate employers: ·General recruiting services. We offer corporate employers candidate referral services and other recruitment-related services. Once an employercommunicates its hiring needs to us, we direct the relevant learning centers to produce a list of student candidates that meet the hiring criteria ofsuch employer, and refer such candidates to the employer for interviews and assessments. We also offer space at our learning centers for employers tohost recruiting events targeting our students and to conduct interviews. ·Customized courses. We offer customized courses targeting specific employers with large demands for trained professionals. Prospective students forour customized courses generally undergo interviews conducted by the employers before the start of classes. In addition to our standard curriculum,students enrolled in customized courses must participate in additional training provided by employers at our learning centers. Such additionaltraining is tailored according to the particular skill requirements of the employers. Successful graduates of our customized courses who have passedthe relevant qualifying exams are granted job offers by the employers. While we currently do not generate any material revenue from any of our recruiting services for corporate employers, we believe such services enhance ourbrand recognition and are instrumental in our ability to help students achieve high job placement rates. Tuition Fees For our full-time classes for adult students, our standard tuition fees generally range from RMB16,800 to RMB20,800 per course. We raised the standardtuition fees on selected courses offered in certain large cities by RMB1,000 to RMB 2,000 per course in March 2016. We also increased our tuition fees forpart-time classes on selected courses offered in certain large cities by RMB1,000 to RMB2,000 per course in 2016. For our kid education programs, ourstandard tuition fees are between RMB15,000 and RMB19,200. Each kid education program is composed of four levels, with each level consisting of 120learning hours in one year. We primarily offer two payment options for our adult students, including one-time full payment upon enrollment and multiple payments within two monthsof enrollment. We also offer an option whereby qualified adult students can pay our tuition fees within a period of time after graduation. 54  To assist our students in paying our tuition fees, we offered the following five credit sources to provide financing services for our students to make one-time,up-front tuition payments in 2016: ·Baidu Small Loan Co., Ltd. We launched the Baidu student loan program in November 2015. ·Bank of China Consumer Finance Co., Ltd. We launched the BOC CFC student loan program in April 2014. ·RenRenDai. We began to cooperate with RenRenDai, a third-party peer-to-peer lending service provider, in arranging loans for our students to payfor their tuition fees in January 2015. ·CreditEase. CreditEase, a credit management and microfinancing company in China, assists our students in obtaining loans to pay for their tuition.CreditEase began to offer this service to our students in July 2013. ·ShiTuDai. We have cooperated with ShiTuDai, a peer-to-peer lending service provided by an independent third party, in arranging loans for ourstudents to pay for their tuition fees since the second quarter of 2015. Approximately 55.1% of our students enrolled in 2016 obtained financing from one of the five abovementioned sources. Such financing arrangements arebilateral in nature, and are carried out between our students and the respective financing institution directly. Technology Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, TMOOC.cn andthe various services that we provide to our students. We manage our lecture delivery system, TTS and TMOOC.cn using a combination of commerciallyavailable software and hardware systems. Since 2006, we have established a powerful online platform that enables thousands of students to simultaneouslylog onto our TTS and participate in activities online. All of our servers and routers, including backup servers, are currently hosted at our learning centers or by third-party service providers in multiple cities inChina. We regularly back up our databases. Our network administration department regularly monitors the performance of our websites and infrastructure toenable us to respond quickly to potential problems. We deliver live broadcast of audio and video of the lectures given in Beijing via the dedicated networkof China Telecom and China Unicom to terminals located in selected learning centers with high student enrollment, and via public Internet infrastructure toour other learning centers. We developed our CRM software in-house to manage our student and corporate employer information, as well as to integrate our key administrativefunctions. We will rely on our internal IT resources to upgrade the CRM system as needed. Seasonality Seasonal fluctuations have affected, and are likely to continue to affect, our business. Historically, we typically generate the highest net revenues in the thirdand fourth quarters because of the increased student enrollments during summer vacation. We generally generate less tuition fees in the first quarter of eachyear due to the Chinese New Year holiday. Our quarterly cost of revenue, selling and marketing expenses, general and administrative expenses and researchand development expenses have generally been increasing in absolute amounts since 2012 as we expanded our network of learning centers, increased thenumber of our personnel, enhanced our marketing efforts and offered more courses. 55  Intellectual Property Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of ourcompetitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protectionand confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we requirecertain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utilitymodels, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to jobassignments or using our materials and technology, or during the two years after their employment that relates to their employment with us, are our propertyand they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights. As of December 31, 2016, we had registered 192 domain names relating to our business, including our www.tedu.cn, TMOOC.cn, jobshow.cn, www.IT61.cnand www.art61.cn websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center. Tarena Techholds 21 registered software copyrights, 35 trademarks and 190 registered domain names including www.tedu.cn. Beijing Tarena holds the domain nameTMOOC.cn. Competition The professional education services market in China is fragmented, rapidly evolving and highly competitive. We face competition in our offered courses andin many of the geographic markets in which we operate. For our IT training courses, we face competition from IT professional education providers that offerspecialized training programs targeting certain niche job markets in the IT industry. In the future, we may also face competition from new entrants into theChinese IT professional education market. For our non-IT training courses, we face competition for student enrollment from existing online and offlineproviders of professional education services, as well as smaller regional professional education services providers in China. As we enter the kid professionaleducation services market, we also face competition from other national and regional providers of kid education services. We believe that the principal competitive factors in our markets include the following: · scope and quality of course offerings and services; ·student placement and employer satisfaction with our graduates; ·brand recognition; ·ability to effectively market course offerings and services to a broad base of prospective students; ·cost effectiveness of the education; and ·ability to align course offerings and services to specific needs of students and employers. We believe that we are well-positioned to effectively compete in markets in which we operate on the basis of our innovative education platform, scalable andefficient business model, unparalleled access to corporate employers, training quality, strong content development capabilities and experienced managementteam. However, some of our current or future competitors may have longer operating histories, greater brand recognition, or greater financial, technical ormarketing resources than we do. For a discussion of risks relating to competition, see “Item 3. Key Information—D. Risk Factors—Risks Relating to OurBusiness—We may lose market share and our profitability may be materially and adversely affected, if we fail to compete effectively with our present andfuture competitors or to adjust effectively to changing market conditions and trends.” Insurance We do not maintain any property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood orany other disaster. Consistent with customary industry practice in China, we do not maintain business interruption insurance, nor do we maintain key-manlife insurance. We maintain accident injury insurance and accident injury medical insurance for our employees based in our headquarters in Beijing, and wemaintain liability insurance for our students enrolled through university and college cooperation channel. Uninsured injury or death to our students or staff,or damage to any of our equipment or buildings could have a material adverse effect on our results of operations. See “Item 3. Key Information—D. RiskFactors—Risks Relating to Our Business—We have limited insurance coverage for our operations in China.” 56  Government Regulations Regulations on Private Education The principal regulations governing private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education and theImplementation Rules for the Law for Promoting Private Education, or the PE Implementation Rules and the Regulations on Chinese-Foreign Cooperationin Operating Schools. Education Law of the PRC On March 18, 1995, the NPC promulgated the Education Law of the PRC, or the Education Law. On December 27, 2015, the Standing Committee of the NPCreleased the Amendment of the Education Law of the PRC. Pursuant to the Education Law, enterprises, social organizations and individuals are generallyencouraged to operate schools and other types of educational organizations in accordance with PRC laws and regulations. Our new kid education programs launched in December 2015 are currently operated through our learning centers in fifteen cities in China. The kid educationprograms contain IT training courses and non-IT training courses, both of which fall within the category of professional education training. Under PRCregulations, the kid education programs offered through professional education training entities shall not be subject to supplemental governmental pre-approval. The governmental authorities that have approved the establishment of the professional education training entities shall be the same authorities thatcontinue to regulate new programs launched by such training entities. In the case of our learning centers operating our kid education programs, theirestablishments are approved by the relevant governmental authorities in charge of labor and social welfare, and as such, the kid education programs will beunder the governance of the same governmental authorities. Furthermore, current PRC laws and regulations do not specifically distinguish between adultprofessional education training and minor professional education training. Thus, from a regulatory prospective, the kid education programs do not havematerial difference as compared with adult professional education training programs and shall follow the same PRC regulations that apply to our adultprofessional education training programs. According to the Regulation on Prohibiting Primary to High Schools and Their Teachers from Paid Teachingafter School issued by the MOE on June 29, 2015 and the implementation documents issued by local education authorities, only teachers of primary to highschools are not allowed to teach paid lessons after school nor act in a separate capacity as private tutors or teachers. None of teachers in our kids educationprograms are teachers of primary to high schools, and most of such teachers are our full-time employees. The Law for Promoting Private Education and its Implementation Rules On December 28, 2002, the Standing Committee of the NPC promulgated the Law for Promoting Private Education, or the Private Education Law, whichbecame effective on September 1, 2003 and was amended on November 7, 2016. The latest amendment will become effective on September 1, 2017. OnMarch 5, 2004, the PRC State Council promulgated the Implementation Rules for the Law for Promoting Private Education, which became effective on April1, 2004, or the PE Implementation Rules. Under the Private Education Law and the Private Education Law Implementation Rules, “private schools” aredefined as schools established by social organizations or individuals using non-government funds. Private schools providing certifications, pre-schooleducation, education for self-study aid and other academic education shall be subject to approval by the education authorities, while private schoolsengaging in professional qualification training and professional education training shall be subject to approvals from the authorities in charge of labor andsocial welfare. Private schools are classified as either non-profit private schools or for-profit private schools. A duly approved private school engaging inprofessional qualification training and professional education training shall (i) be granted a Permit for Operating a Private School by the authorities in chargeof human resources and social security, (ii) be registered with the Ministry of Civil Affairs or its local counterparts as a privately run non-enterprise institutionand (iii) pass the annual inspection with the Ministry of Civil Affairs or its local counterparts. As of December 31, 2016, we operated 24 schools, all of whichare engaged in professional education training. Each has (i) obtained a Permit for Operating a Private School issued by the authorities in charge of humanresources and social security or education, (ii) been registered with the relevant local counterpart of the Ministry of Civil Affairs and (iii) passed the annualinspection, as applicable, with the Ministry of Civil Affairs or its local counterparts. 57  The types and amounts of fees charged by a private school providing certifications shall be approved by the governmental pricing authority and be publiclydisclosed. A private school that does not provide certifications shall file its pricing information with the governmental pricing authority and publiclydisclose such information. A private school shall file its advertisement and school enrollment brochure with the relevant governmental authorities of humanresources and social security or education. None of our schools provides a diploma or certification to students, and 12 of our schools have filed their pricinginformation with the governmental pricing authority and publicly disclose such information. 9 of our schools have filed their advertisement and schoolenrollment brochure with the relevant governmental authorities of human resources and social security or education. See “Item 3. Key Information—D. RiskFactors—Risks Relating to Our Business—The operations of certain of our learning centers are, or may be deemed by relevant PRC government authorities tobe, beyond their authorized business scope or without proper license or registration. If the relevant PRC government authorities take actions against suchlearning centers, our business and operations could be materially and adversely affected.” Private schools are divided into two categories: for-profit private schools, which may obtain returns, and non-profit private schools, which may not obtainreturns. The obtaining of returns of for-profit private school should be regulated by the PRC corporate law and other relevant laws and regulations. The election to establish a for-profit private school shall be provided in the articles of association of the school. The percentage of the school’s annual netbalance that can be distributed as a reasonable return shall be determined by the school’s board of directors, taking into consideration the following factors:(i) school fee types and collection criteria, (ii) the ratio of the school’s expenses used for educational activities and improving the educational conditions tothe total fees collected, and (iii) the admission standards and educational quality. The relevant information relating to the above factors shall be publiclydisclosed before the school’s board determines the percentage of the school’s annual net balance that can be distributed as reasonable returns. Suchinformation and the decision to distribute reasonable returns shall also be filed with the approval authorities within 15 days from the decision made by theboard. However, none of the current PRC laws and regulations provides a formula or guidelines for determining “reasonable returns”. In addition, theamendment of the Law for Promoting Private Education released on November 7, 2016, which will become effective on September 1, 2017, allow the for-profit private school to obtain returns, which will be further regulated by the PRC corporate law and other relevant laws and regulations At the end of each fiscal year, every private school is required to allocate a certain amount to its development fund for the construction or maintenance of theschool or procurement or upgrade of educational equipment. In the case of a private school that requires reasonable returns, this amount shall be no less than25% of the annual net income of the school, while in the case of a private school that does not require reasonable returns, this amount shall be equal to noless than 25% of the annual increase in the net assets of the school, if any. Private schools that do not require reasonable returns shall be entitled to the samepreferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall beformulated by the finance authority, taxation authority and other authorities under the State Council. To date, however, no regulations have beenpromulgated by the relevant authorities in this regard. The distribution of residual properties upon termination and liquidation of a for-profit private school should be regulated by PRC corporate law and relevantregulations. Except for aforementioned differences, the “sponsorship interest” that a sponsor holds in a private school is, for all other practical purposes, substantiallyequivalent under PRC law and practice to the “equity interest” a shareholder holds in a company. A sponsor of a private school has the obligation to makecapital contributions to the school in a timely manner. The contributed capital can be in the form of tangible or non-tangible assets such as materials in kind,land use rights or intellectual property rights. The capital contributed by the sponsor becomes assets of the school and the school has independent legalperson status. In addition, the sponsor of a private school has the right to exercise ultimate control over the school by becoming the member of andcontrolling the composition of the school’s decision making body. Specifically, the sponsor has control over the private school’s constitutional documentsand has the right to elect and replace the private school’s decision making bodies, such as the school’s board of directors, and therefore controls the privateschool’s business and affairs. As of December 31, 2016, we had five schools registered as schools requiring reasonable returns, while all other schools are registered as schools notrequiring reasonable returns. 58  Regulations on Chinese-Foreign Cooperation in Operating Schools Chinese-foreign cooperation in operating schools or training programs is specifically governed by the Regulations on Operating Chinese-foreign Schools,promulgated by the State Council in 2003 in accordance with the Education Law, the Occupational Education Law and the Private Education Law. TheImplementing Rules for the Regulations on Operating Chinese-foreign Schools, or the Implementing Rules, were issued by the MOE in 2004. TheRegulations on Chinese-Foreign Cooperation in Operating Schools and its Implementing Rules encourage substantive cooperation between overseaseducational organizations with relevant qualifications and experience in providing high-quality education and Chinese educational organizations to jointlyoperate various types of schools in the PRC. Cooperation in the areas of higher education and occupational education is especially encouraged. Chinese-foreign cooperative schools are not permitted, however, to engage in compulsory education or military, police, political and other kinds of education that areof a special nature in China. The Regulations on Operating Chinese-foreign Schools prohibits foreign institutions or individuals from independentlyestablishing schools in China, which provide educational services mainly for Chinese citizens. The Ministry of Human Resources and Social Security (formerly known as Ministry of Labor and Social Security) also promulgated the Regulations onOperation Chinese-foreign Cooperation School in Professional Education Training to implement the Regulations on Operating Chinese-foreign Schools onJuly 26, 2006, which took effect on October 1, 2006. The Regulations on Operation Chinese-foreign Cooperation School in Professional Education Trainingprohibits foreign institutions or individuals from independently establishing professional education training institutions in China, which provideeducational services mainly for Chinese citizens. We have not operated or applied for any Chinese-foreign schools. Prior to 2012, we operated a substantial portion of our learning centers through subsidiariesof our consolidated VIEs and schools to which our consolidated VIEs or their respective subsidiaries are sponsors. Starting from the second half of 2012, webegan to transfer our operations to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries. All of our learning center operations of VIEs had beentransferred to Tarena Tech and its subsidiaries and schools. As of December 31, 2016, we operated 49 of our learning centers through private schools ownedby subsidiaries of Tarena Tech. However, there are still uncertainties under the current PRC laws as to whether a wholly foreign owned enterprise (such asTarena Tech) is allowed to indirectly invest in and own private schools through its PRC subsidiaries. See “Item 3. Key Information—D. Risk Factors—RisksRelating to Our Business—If the relevant PRC authorities determine that we can no longer own and operate certain of our learning centers through our PRCsubsidiaries, we may need to restructure the ownership and operation of these learning centers (including possibly transferring these learning centers to ourconsolidated VIE), our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating to ourconsolidated VIE.” Regulations on Professional Education On May 15, 1996, the Standing Committee of the NPC promulgated the Professional Education Law of the PRC, or the Professional Education Law whichbecame effective on September 1, 1996. Pursuant to the Professional Education Law, professional training includes training pre-employment, training formilitary personnel transferring to civil positions, training for apprentices, on-the-job training, job-transfer training and other professional training.Professional training may be classified as junior, middle or senior level according to the actual situations. It shall be conducted by either professional traininginstitutions or professional schools, which may develop various professional training to satisfy the needs of the society. The PRC government encouragesinstitutional organizations, social organizations, other social groups and citizens to establish professional schools and professional training institutions, andthe financial allocation for professional schools and professional training institutions from the governments at various levels shall be gradually increased.The PRC government also encourages financial institutions to support and develop professional education by means of credit facilities. On August 3, 2007, the Standing Committee of the NPC promulgated the Employment Promotion Law of the PRC, or the Employment Promotion Law whichbecame effective on January 1, 2008. Pursuant to the Employment Promotion Law, the PRC government at and above the county level shall encourage andsupport professional schools, professional training institutions and corporations to carry out pre-employment training, employment training, re-employmenttraining and entrepreneurship training, and encourage workers to attend various types of training programs. Corporations in China are requested to set asidefinancial resources for the training and continued education of their employees. 59  Foreign Investments in Professional Education Services The Catalogue for the Guidance of Foreign Investment Industries, or the Catalogue, as promulgated and amended from time to time by the MOFCOM and theNational Development and Reform Commission, is the principal guide to foreign investors’ investment activities in the PRC. The most updated version ofthe Catalogue, which was promulgated in March 2015 and became effective in April 2015, divides the industries into three categories: encouraged, restrictedand prohibited. Industries not listed in the Catalogue are generally open to foreign investment unless specifically restricted by other PRC laws andregulations. A wholly foreign-owned enterprise is generally permitted for encouraged industries and industries not listed in the Catalogue, while there aresome limitations to the ownership and/or corporate structure of the foreign-invested companies that operate in restricted industries. Industries in theprohibited category are not open to foreign investors. According to the latest Catalogue, foreign investment is encouraged in non-accredited professionaleducation services and there is no limitation with respect to maximum percentage of foreign ownership in a company conducting business in professionaleducation services. Regulations on For-profit Private Training Institutions The Private Education Law provides that the regulations applicable to private training institutions registered with the SAIC and its local counterparts shall beformulated by the State Council separately. On July 29, 2010, the PRC central government promulgated the Outline of China’s National Plan for Medium-and Long-Term Education Reform and Development (2010-2020), which announced the policy that the government will implement a reform to divideprivate schools into two categories: (i) for-profit private schools and (ii) not-for-profit private schools. On October 24, 2010, the General Office of the StateCouncil issued the Notices on the National Education System Innovation Pilot. Under this notice, the PRC government plans to implement a for-profit andnon-profit classified management system for the private schools in Shanghai, Zhejiang, Shenzhen and Jilin Huaqiao Foreign Language School. However, theabove outline and the pilot program is still new and no further national law or regulation has been promulgated to implement them and, except in Shanghai,no other local government of the pilot areas has promulgated relevant regulations on differentiated management of the private schools and for-profit traininginstitutions. On June 20, 2013, Shanghai promulgated the Interim Measures for Administration of Operational Private Training Institutions, or Measure No. 5, whichrequires for-profit private training institutions to register with local counterparts of the SAIC. The local counterparts of the SAIC shall consult with the localhuman resources and social securities authorities before completion of registration of for-profit private training institutions. Measure No. 5 came into effecton July 20, 2013 and will remain effective for two years. On December 30, 2016, the Implementation Rules for Private School Classification Registration was issued by the MOE and other relevant authorities,which requires all private schools, including non-profit private schools and for-profit private schools, to obtain “school permits”. Existing private schoolswhich choose to register as for-profit private schools should apply for new school permits and complete the re-registration process. The RegulatoryImplementation Rules for Profitable Private School issued on December 30, 2016 further indicates that for-profit private training institutions shall beregulated with reference to such rules. The implementation of above regulations will also rely on the detailed rules of local government authorities. As of December 31, 2016, 18 of our PRC subsidiaries, consolidated VIE and subsidiaries of consolidated VIE had computer technology training or training inits approved business scope. Regulations on Online and Distance Education Pursuant to the Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE on July 5, 2000,educational websites and online education schools may provide educational services in relation to higher education, elementary education, pre-schooleducation, teaching education, occupational education, adult education, other education and public educational information services. “Educationalwebsites” refer to organizations providing education or education-related information services to website visitors by means of a database or online educationplatform connected via the Internet or an educational television station through an Internet Service Provider, or ISP. “Online education schools” refer toeducation websites providing academic education services or training services with the issuance of various certificates. 60  Setting up education websites and online education schools is subject to approval from relevant education authorities, depending on the specific types ofeducation. Any education website and online education school shall, upon the receipt of approval, indicate on its website such approval information as wellas the approval date and file number. On June 29, 2004, the State Council promulgated the Decision on Setting Down Administrative Licenses for the Administrative Examination and ApprovalItems Really Necessary to be Retained, pursuant to which the administrative license for “online education schools” was retained, while the administrativelicense for “educational websites” was not retained. Accordingly, Beijing Tarena, our consolidated VIE engaging in online education-related services, is notrequired to obtain approval to operate “educational websites” from the MOE. On January 28, 2014, the State Council promulgated the Decision onAbolishing and Delegating Certain Administrative Examination and Approval Items, pursuant to which the administrative approval for “online educationschools” of higher education was abolished. Beijing Tarena is not required to obtain a license to operate “online education schools,” as it does not directlyoffer government accredited degrees or certifications through its online education or training services. Regulations on Online Publications On February 4, 2016, the State Administration of Press, Publication, Radio, Film and Television of the PRC (formerly the General Administration of Press andPublication), or the SAPPRFT and the Ministry of Industry and Information Technology, or the MIIT jointly promulgated the Internet Publishing ServiceAdministrative Measures, or the Internet Publishing Measures, which took effect on March 10, 2016 and replaced the Tentative Internet PublishingAdministrative Measures jointly promulgated by the General Administration of Press and Publication and MIIT on June 27, 2002. The Internet PublishingMeasures require entities that engage in Internet publishing to obtain an Internet Publishing License for engaging in Internet publishing from the SAPPRFT.Pursuant to the Internet Publishing Measures, the definition of “Internet publishing” is broad and refers to the act of online spreading of articles, whereby theInternet information service providers select, edit and process works created by themselves or others and subsequently post such works on the Internet ortransmit such works to the users’ end through Internet for the public to browse. These works include contents from books, newspapers, periodicals, audio-video products, electronic publications that have already been formally published or works that have been made public in other media. Beijing Tarena has offered videos of lectures on its website TMOOC.cn and has not obtained an Internet Publishing License from the SAPPRFT. However,governmental authorities could determine that Beijing Tarena’s online content services fall within the scope of “internet publishing,” and therefore requireBeijing Tarena to apply for an Internet Publishing License. Beijing Tarena may not be able to obtain such a license, and it may become subject to penalties,fines, legal sanctions or be ordered to suspend the video content on the website. Regulation on Broadcasting Audio-Video Programs through the Internet or Other Information Network The SAPPRFT promulgated the Rules for Administration of Broadcasting of Audio-Video Programs through the Internet and Other Information Networks, orthe Broadcasting Rules, in 2004, which became effective on October 11, 2004. The Broadcasting Rules apply to the activities of broadcasting, integration,transmission, downloading of audio-video programs with computers, televisions or mobile phones as the main terminals and through various types ofinformation networks. Pursuant to the Broadcasting Rules, a Permit for Broadcasting Audio-video Programs via Information Network is required to engage inthese Internet broadcasting activities. On April 13, 2005, the State Council announced a policy on private investments in businesses in China that relate tocultural matters, which prohibits private investments in businesses relating to the dissemination of audio-video programs through information networks. On December 20, 2007, the SAPPRFT and MIIT issued the Internet Audio-Video Program Measures, which became effective on January 31, 2008. Amongother things, the Internet Audio-Video Program Measures stipulate that no entities or individuals may provide Internet audio-video program services withouta Permit for Broadcasting Audio-video Programs via Information Network issued by the SAPPRFT or its local counterparts and only entities wholly owned orcontrolled by the PRC government may engage in the production, editing, integration or consolidation, and transfer to the public through the Internet, ofaudio-video programs, and the provision of audio-video program uploading and transmission services. On September 15, 2009, SAPPRFT promulgated theNotice on Several Issues regarding the Permit for Broadcasting Audio-video Programs via Information Network. The Notice restates the necessity of applyingfor such license and sets forth the legal liabilities for those providing Internet audio-video program services without the license. 61  On April 1, 2010, SAPPRFT promulgated the Test Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories,which clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visual programservices which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certainspecialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online. On April 25, 2016, the SAPPRFT issued the Provisions on the Administration of Private Network and Targeted Communication Audiovisual ProgramServices, or Targeted Communication Rules, which replaced the Broadcasting Rules issued in 2004. The Target Communication Rules mainly focus onnetworks and services such as IPTV and private network mobile TV. In the course of offering our lecture videos, we transmit our audio-video educational programs live through the Internet to enrolled course participants. If thegovernmental authorities determine that our provision of lecture videos falls within the Internet Audio-Video Program Measures, we may not be able toobtain the License for Disseminating Audio-Video Programs through Information Network. If this occurs, we may become subject to significant penalties,fines, legal sanctions or an order to suspend our use of audio-video content. Regulations on Value-Added Telecommunications Services Licenses for Value-Added Telecommunication Services On September 25, 2000, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, were issued by the PRC StateCouncil as the primary governing law on telecommunication services. The Telecom Regulations set out the general framework for the provision oftelecommunication services by PRC companies. Under the Telecom Regulations, it is a requirement that telecommunications service providers procureoperating licenses prior to their commencement of operations. The Telecom Regulations draw a distinction between “basic telecommunications services” and“value-added telecommunications services.” A “Catalog of Telecommunications Business” was issued as an attachment to the Telecom Regulations tocategorize telecommunications services as basic or value-added. In February 2003, the Catalog was updated and the information services such as contentservice, entertainment and online games services are classified as value-added telecommunications services. On March 1, 2009, the MIIT issued the Administrative Measures for Telecommunications Business Operating Permit, or the Telecom Permit Measures, whichtook effect on April 10, 2009. The Telecom Permit Measures confirm that there are two types of telecom operating licenses for operators in China, namely,licenses for basic telecommunications services and licenses for value-added telecommunications services. The operation scope of the license will detail thepermitted activities of the enterprise to which it was granted. An approved telecommunication services operator shall conduct its business in accordance withthe specifications recorded on its value-added telecommunications services operating license, or VATS License. In addition, a VATS License’s holder isrequired to obtain approval from the original permit-issuing authority prior to any change to its shareholders. On September 25, 2000, the State Council promulgated the Administrative Measures on Internet Information Services, or the Internet Measures, which wasamended in January 2011. Under the Internet Measures, commercial Internet information services operators shall obtain an ICP license from the relevantgovernment authorities before engaging in any commercial Internet information services operations within the PRC. The ICP license has a term of five yearsand shall be renewed within 90 days before expiration. Our consolidated VIE, 62  Foreign Investment in Value-Added Telecommunication Services Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises promulgated by the State Council on December 11, 2001and amended on September 10, 2008, the ultimate foreign equity ownership in a value-added telecommunications services provider (except E-Commerce)may not exceed 50%. The Guidance Catalog of Industries for Foreign Investment amended in 2015 allows a foreign investor to own up to 100% of the totalequity interest in an E-Commerce business. Moreover, for a foreign investor to acquire any equity interest in a value-added telecommunication business inChina, it must satisfy a number of stringent performance and operational experience requirements, including demonstrating good track records andexperience in operating value-added telecommunication business overseas. Foreign investors that meet these requirements must obtain approvals from theMIIT and the MOFCOM or their authorized local counterparts, which retain considerable discretion in granting approvals. Pursuant to publicly availableinformation, the PRC government has issued telecommunications business operating licenses to only a limited number of foreign invested companies, all ofwhich are Sino-foreign joint ventures engaging in the value-added telecommunication business. The MIIT Circular issued by the MIIT in July 2006 reiterated the regulations on foreign investment in telecommunications businesses, which require foreigninvestors to set up foreign-invested enterprises and obtain an ICP license to conduct any value-added telecommunications business in China. Under the MIITCircular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and fromproviding any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications businessillegally in China. Furthermore, the relevant trademarks and domain names that are used in the value-added telecommunications business must be owned bythe local ICP license holder or its shareholder. The MIIT Circular further requires each ICP license holder to have the necessary facilities for its approvedbusiness operations and to maintain such facilities in the regions covered by its license. Currently, Beijing Tarena, our consolidated VIE, owns the domainnames www.it211.com.cn and TMOOC.cn and holds the ICP license necessary to operate our www.it211.com.cn website in China, while the trademarksrelating to our operations are held by Tarena Tech, our WFOE. If the relevant PRC government authorities determine in the future that the current ownershipof our trademarks do not comply with the relevant regulations and the trademarks relating to our operations must be held by our VIE, we may need to transferthe trademarks to our VIE, which may severely disrupt our business. The Internet Electronic Messaging Service Administrative Measures promulgated by theMIIT in November 2000 require ICP operators to obtain specific approvals before providing BBS services. BBS services include electronic bulletin boards,electronic forums, message boards and chat rooms. On July 4, 2010, the approval requirement for operating BBS services was terminated by a decision issuedby the PRC State Council. However, in practice, the competent authorities in Beijing still require the relevant operating companies to obtain such approvalfor the operation of BBS services which we have not obtained. In light of the aforesaid restrictions, we rely on Beijing Tarena, our consolidated VIE in China, to hold and maintain the licenses necessary to provide onlineeducation and other value-added telecommunications services in China. We operate our TMOOC.cn website and value-added telecommunications servicesthrough Beijing Tarena. Beijing Tarena, our consolidated VIE in China, holds an ICP license that is valid until March 1, 2017 for the operation ofwww.it211.com.cn. and TMOOC.cn. Beijing Tarena is in the process of annual inspection for ICP license. The Discussion Draft PRC Foreign Investment Law In January 2015, the MOFCOM published a discussion draft of the proposed Foreign Investment Law for public review and comments. The draft ForeignInvestment Law purports to change the existing “case-by-case” approval regime to a “filing or approval” procedure for foreign investments in China. TheMOFCOM, together with other relevant authorities, will determine a catalogue for special administrative measures, or the “negative list,” which will consistof a list of industry categories where foreign investments are strictly prohibited and a list of industry categories where foreign investments are subject tocertain restrictions. Foreign investments in business sectors outside of the “negative list” will only be subject to filing procedures, in contrast to the existingprior approval requirements, whereas foreign investments in the restricted industries must apply for approval from the foreign investment administrationauthority. 63  The draft Foreign Investment Law for the first time defines “foreign investor,” “foreign investment,” “Chinese investor” and “actual control.” A foreigninvestor is not only determined based on the place of its incorporation, but also on the conditions of the “actual control.” The draft Foreign Investment Lawspecifically provides that entities established in China but “controlled” by foreign investors, such as via contracts or trust, will be treated as FIEs, whereasforeign investment in China in the foreign investment restricted industries by a foreign investor may nonetheless apply for being, when approving marketentry clearance by the foreign investment administration authority, treated as a PRC domestic investment if the foreign investor is determined by the foreigninvestment administration authority as being “controlled” by PRC entities and/or citizens. In this connection, “actual control” is broadly defined in the draftForeign Investment Law to cover the following summarized categories: (i) holding 50% of more of the voting rights of the subject entity; (ii) holding lessthan 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision makingbodies, or having the voting power to material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) havingthe power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects ofbusiness operations. According to the draft Foreign Investment Law, variable interest entities would also be deemed as FIEs, if they are ultimately“controlled” by foreign investors, and be subject to restrictions on foreign investments. However, the draft Foreign Investment Law has not taken a positionon what actions will be taken with respect to the existing companies with the “variable interest entity” structure, whether or not these companies arecontrolled by Chinese parties. The draft Foreign Investment Law emphasizes on the security review requirements, whereby all foreign investments concerning national security must bereviewed and approved in accordance with the security review procedure. In addition, the draft Foreign Investment Law imposes stringent ad hoc andperiodic information reporting requirements on foreign investors and the applicable FIEs. In addition to investment implementation report and investmentamendment report that are required at each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investorsmeeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations maypotentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities. The draft Foreign Investment Law is now open for public review and comments. It is still uncertain when the draft would be signed into law and whether thefinal version would have any substantial changes from this draft. When the Foreign Investment Law becomes effective, the trio of existing laws regulatingforeign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law andthe Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations, will be abolished. See “Item 3. KeyInformation—D. Risk Factors—Risks Relating to Doing Business in China—Substantial uncertainties exist with respect to the enactment timetable,interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporategovernance and business operations.” Regulations on Intellectual Property Rights Copyright and Software Products The NPC adopted the Copyright Law in 1990 and amended it in 2001 and 2010, respectively. The amended Copyright Law extends copyright protection toInternet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by theChina Copyright Protection Center. The amended Copyright Law also requires registration of a copyright pledge. To address the problem of copyright infringement related to the content posted or transmitted over the Internet, the National Copyright Administration andthe MIIT jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005. This measure became effectiveon May 30, 2005. The Administrative Measures on Software Products, issued by the MIIT in October 2000 and subsequently amended, provide a registration and filing systemwith respect to software products made in or imported into China. These software products may be registered with the relevant local authorities in charge ofsoftware industry administration. Registered software products may enjoy preferential treatment status granted by relevant software industry regulations.Software products can be registered for five years, and the registration is renewable upon expiration. In order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001 and amended onJanuary 30, 2013, the State Copyright Bureau issued the Computer Software Copyright Registration Procedures on February 20, 2002, which apply tosoftware copyright registration, license contract registration and transfer contract registration. In compliance with, and in order to take advantage of the aboverules, as of December 31, 2016, we had registered 55 software copyrights in China. 64  Trademarks Trademarks are protected by the PRC Trademark Law which was adopted in 1982 and subsequently amended in 1993, 2001 and 2013 as well as theImplementation Regulation of the PRC Trademark Law adopted by the State Council in 2002. The Trademark Office under the SAIC handles trademarkregistrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademarkowner. Trademark license agreements must be filed with the Trademark Office for record. The PRC Trademark Law has adopted a “first-to-file” principle withrespect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has alreadybeen registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application forregistration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained byothers, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree ofreputation” through such party’s use. We have registered 35 trademarks in China as of December 31, 2016. Regulations on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, or the Foreign ExchangeRegulations, as amended on August 5, 2008. Under the Foreign Exchange Regulations, Renminbi is freely convertible for current account items, includingthe distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as directinvestments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the SAFE is obtained and priorregistration with the SAFE is made. Though there are restrictions on the convertibility of Renminbi for capital account transactions, which principallyinclude investments and loans, we generally follow the regulations and apply to obtain the approval of the SAFE and other relevant PRC governmentalauthorities. On March 30, 2015, the SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitalsof foreign-invested enterprises nationwide. Circular 19 came into force replacing both previous SAFE Circular 142 and SAFE Circular 36 on June 1, 2015.Circular 19 allows all foreign-invested enterprises established in the PRC to use their foreign exchange capitals to make equity investment and removescertain other restrictions provided under Circular 142 for these enterprises. However, Circular 19 continues to prohibit foreign-invested enterprises from,among other things, using the Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, and providingentrusted loans or repaying loans between non-financial enterprises. On June 9, 2016, the SAFE promulgated Circular 16, which expands the application scope from only the capital of foreign-invested enterprises to the capital,foreign debt fund and fund from oversea public offering. Furthermore, Circular 16 allows foreign-invested enterprises to use their foreign exchange capitalsunder capital account to the extent permitted by the relevant laws and regulations. These circulars may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiariesand violations of these circulars could result in severe monetary or other penalties. See also “Item 3. Key Information—D. Risk Factors—Risks Relating toDoing Business in China—PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control ofcurrency conversion may delay or limit us from using the proceeds of offshore offering to make additional capital contributions or loans to our PRCsubsidiaries.” Regulations on Dividend Distribution Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from Tarena Tech, which is a whollyforeign owned enterprise incorporated in the PRC, to fund any cash and financing requirements we may have. The principal regulations governingdistribution of dividends of foreign invested enterprises include the Foreign Invested Enterprise Law, as amended on October 31, 2000, and theImplementation Rules of the Foreign Invested Enterprise Law, as amended on April 12, 2001. 65  Under these laws and regulations, wholly foreign owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any,determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign owned enterprises in China are required to allocate atleast 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registeredcapital of the enterprises. Wholly foreign owned companies may, at their discretion, allocate a portion of their after-tax profits based on PRC accountingstandards to staff welfare and bonus funds. These reserves are not distributable as cash dividends. Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents Pursuant to SAFE’s Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through SpecialPurpose Vehicles, or SAFE Circular No. 37, issued and effective on July 4, 2014, and its appendixes, PRC residents, including PRC institutions andindividuals, must register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purposeof overseas investment and financing, with such PRC residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests,referred to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the registration in the event of anysignificant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer orexchange, merger, division or other material event. On February 28, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, orSAFE Notice 13, which became effective on June 1, 2015. In accordance with SAFE Notice 13, entities and individuals are required to apply for foreignexchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE Circular No. 37, with qualifiedbanks, instead of SAFE. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of thatspecial purpose vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent cross-border foreignexchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital into its PRC subsidiary. Further, failureto comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion. Theseregulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions and share transfer that we make inthe future if our shares are issued to PRC residents. We have requested PRC residents currently holding direct or indirect interests in our company to ourknowledge to make the necessary applications, filings and amendments as required under SAFE Circular No. 37 and other related rules. To our knowledge, allof our shareholders who are PRC citizens and hold interest in us, have registered with the local SAFE branch and/or qualified banks as required under SAFECircular No. 37 and SAFE Notice 13. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—PRC regulations relatingto offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, limitour ability to inject capital into our PRC subsidiaries, or otherwise expose us to liability and penalties under PRC law.” Regulations on Stock Incentive Plans In February 2012, SAFE promulgated the Stock Option Rules. Under the Stock Option Rules and other relevant rules and regulations, PRC residents whoparticipate in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and complete certain otherprocedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseaspublicly listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respectto the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connectionwith their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required toamend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseasentrusted institution or other material changes. The PRC agents must, on behalf of the PRC residents who have the right to exercise the employee shareoptions, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of theemployee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted anddividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution tosuch PRC residents. 66  We adopted two share incentive plans, namely the 2008 Plan and the 2014 Plan. Pursuant to the 2008 Plan, we may issue options, restricted shares (or shareappreciation rights or other similar awards) and rights to purchase restricted shares to our qualified employees and directors and consultants on a regularbasis. Pursuant to the 2014 Plan, we may issue options, restricted shares and restricted share units to our qualified employees, directors and consultants on aregular basis. We have advised our employees and directors participating in the employee stock option plan to handle foreign exchange matters inaccordance with the Stock Option Rules, and we have completed the registrations of our stock incentive plans with the local SAFE as required by PRC law. In addition, the State Administration for Taxation has issued circulars concerning employee share options, under which our employees working in the PRCwho exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee shareoptions with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail topay or if we fail to withhold their income taxes as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities orother PRC government authorities. Regulation on Tax PRC Enterprise Income Tax Law On March 16, 2007, the NPC enacted the EIT Law. Both the EIT Law and its Implementing Rules, which was enacted on December 6, 2007 by the StateCouncil, became effective on January 1, 2008. Under the EIT Law, enterprises are classified as PRC resident enterprises and non-PRC-resident enterprises.PRC resident enterprises typically pay an enterprise income tax at the rate of 25%. An enterprise established outside of the PRC with its “de factomanagement bodies” located within the PRC is considered a PRC “resident enterprise,” meaning that it shall be treated in a manner similar to a PRC residententerprise for enterprise income tax purposes. The Implementing Rules to the EIT Law defines “de facto management body” as a managing body that inpractice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of anenterprise. The SAT issued Circular 82 on April 22, 2009, as amended in January 2014. Circular 82 provides certain specific criteria for determining whether the “defacto management body” of a PRC-controlled and offshore-incorporated enterprise is located in China, which include all of the following conditions: (a) thelocation where senior management members responsible for an enterprise’s daily operations discharge their duties; (b) the location where financial andhuman resource decisions are made or approved by organizations or persons; (c) the location where the major assets and corporate documents are kept; and(d) the location where more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. In addition, the SATissued a bulletin on July 27, 2011, effective September 1, 2011, or Bulletin 45, providing more guidance on the implementation of Circular 82. Bulletin 45clarifies matters including PRC resident enterprise status determination, post-determination administration and competent tax authorities etc. Although bothCircular 82 and Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRCindividuals or foreign individuals like us, the determining criteria set forth in Circular 82 and Bulletin 45 may reflect the SAT’s general position on how the“de facto management body” test should be applied in determining the PRC tax resident enterprise status of offshore enterprises, regardless of whether theyare controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals. We do not believe that Tarena International, Inc. meets all of the conditions above, and thus we do not believe that Tarena International, Inc. is a PRCresident enterprise despite the fact that all members of our management team as well as the management team of our offshore holding company are located inChina. However, if the PRC tax authorities determine that Tarena International, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, anumber of unfavorable PRC tax consequences could follow. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classificationwould likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations andthe value of your investment.” 67  Pursuant to the Hong Kong Tax Treaty, and other applicable PRC regulations, if a Hong Kong resident enterprise is determined by the competent PRC taxauthority to have satisfied the relevant conditions and requirements under such Hong Kong Tax Treaty and other applicable regulations, the 10%withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approvalfrom in-charge tax authority. However, based on Circular 81, the 5% withholding tax rate does not automatically apply and certain requirements must besatisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kongenterprise must directly hold at least 25% share ownership in the PRC enterprise during the 12 consecutive months preceding its receipt of the dividends.However, a transaction or arrangement entered into for the primary purpose of enjoying a preferential tax treatment should not be a reason for the applicationof the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayer inappropriately is entitled to such preferential tax treatment, the competenttax authority has the power to make appropriate adjustments. The SAT promulgated Circular 601, which provides that tax treaty benefits will be denied to“conduit” or shell companies without business substance, and a beneficial ownership analysis will be used based on a “substance-over-the-form” principle todetermine whether or not to grant tax treaty benefits. Based on Announcement 30, which provides that a comprehensive analysis should be made whendetermining the beneficial owner status based on various factors supported by various types of documents including the articles of association, financialstatements, records of cash movements, board meeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and riskassumption as well as relevant contracts and other information. Based on Circular 60, non-resident enterprises are not required to obtain pre-approval fromthe relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and filenecessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities.However, if a competent tax authority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation proceduresfor anti-tax avoidance and adopt corresponding measures for subsequent administration. See “Item 3. Key Information—D. Risk Factors—Risks Relating toDoing Business in China—We may not be able to obtain certain treaty benefits on dividends paid to us by our PRC subsidiary through our Hong KongSubsidiary.” In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-residentEnterprises, or the Non-resident Enterprises Measures, pursuant to which, the entities which have the direct obligation to make certain payments to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise. Further, the Non-resident Enterprises Measures provides that in caseof an equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer paymentshall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at the place of the PRC company whose equity has beentransferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise.On April 30, 2009, the MOF and the SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise RestructuringBusiness, or Circular 59. On December 10, 2009, the SAT issued the Notice on Strengthening the Administration of the Enterprise Income Tax concerningProceeds from Equity Transfers by Non-resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer ofequity interests in a PRC resident enterprise by a non-resident enterprise. Under Circular 698, where a non-resident enterprise transfers the equity interests of aPRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holdingcompany is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC“resident enterprise” this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonablecommercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfermay be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the SAT issued a Public Notice [2015] No.7, or Public Notice 7, to supersede theexisting tax rules in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Public Notice 7introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extend its tax jurisdiction to capture not only IndirectTransfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment andplace, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the term transferof the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how toassess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings on. However, it also brings challengesto both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRCtax and to file or withhold the PRC tax accordingly. There is little guidance and practical experience as to the application of Circular 698 and Public Notice7. Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonablecommercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required toexpend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice7. The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gainsbased on the difference between the fair value of the equity interests transferred and the cost of investment. 68  The State Administration of Taxation promulgated Administrative Measures on the General Anti-Avoidance Rule (Trial), or GAAR Measures, on December12, 2014, which shows the authority’s intention to fight against tax avoidance scheme that is adopted to obtain unwarranted tax benefit without reasonablecommercial purpose. A press release, made by the State Administration of Taxation to clarify certain issues relating to the application of the GAAR Measures,stated that the GAAR Measures may be applicable if any general tax-avoidance scheme exists in the offshore indirect transfer of equity interests. Since GAARMeasures was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will be interpreted, amended andimplemented by the relevant governmental authorities, we cannot predict how these regulations will affect our business operation, future acquisitions orstrategy. In addition, the EIT Law and its Implementation Rules permit certain “high and new technology enterprises strongly supported by the state” that holdindependent ownership of core intellectual property and simultaneously meet a list of other criteria, financial or non-financial, as stipulated in theImplementation Rules and other regulations, to enjoy a reduced 15% enterprise income tax rate. The SAT, the Ministry of Science and Technology and theMinistry of Finance jointly issued the Administrative Measures on the Recognition Criteria and Procedures for Advance and New Technology Enterprisedelineating the specific criteria and procedures for the “high and new technology enterprises” certification in April 2008. Enterprises recognized as “high andnew technology enterprises,” or HNTEs, will enjoy a reduced 15% enterprise income tax rate after they go through tax reduction application formalities withrelevant tax authorities. Tarena Tech, renewed its HNTE certificate in 2012 and again in 2015, and is eligible to enjoy a preferential tax rate of 15% until theend of 2017. Tarena Hangzhou was established in 2013 and is qualified as a “newly established software enterprise”, which entitles it to two years of full taxexemption followed by three years of 50% tax exemption, commencing from the year in which its taxable income is greater than zero, which was 2014. OnJanuary 25, 2016, we acquired 100% of the equity interests in Hangzhou Han Ru Education Technology Co., Ltd, which is qualified as a “newly establishedsoftware enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencing from the year in whichits taxable income is greater than zero, which was 2016. PRC Value-added Tax (“VAT”) in lieu of Business Tax (the “VAT Pilot Program”) An enterprise or individual providing taxable service within the territory of China has been historically required to pay BT at the rate of 3% or 5% on therevenues generated from provision of such services in accordance with applicable PRC tax regulations. However, if the services provided are technicaltransfer or technical development, or technical consulting and technical service related to technology transfer or technical development, BT may beexempted subject to approval by the relevant tax authorities. 69  In November 2011, the Ministry of Finance and the SAT promulgated the Notice on the Pilot Program in Shanghai Replacing BT with VAT in Transportationand Some Modern Service Sectors. Pursuant to this circular and other relevant notices, VAT shall be imposed in lieu of BT in transportation and some modernservice sectors firstly in Shanghai starting from January 1, 2012. On August 1, 2013, the VAT Pilot Program was implemented throughout China intransportation and some modern services sectors. On April 29, 2014, the Ministry of Finance and the SAT issued the Circular on the Inclusion ofTelecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax. On March 23, 2016, the Ministry of Finance and the SATissued the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value added Tax in Lieu of Business Tax. Effective from May 1,2016, the PRC tax authorities will collect VAT in lieu of Business Tax on a trial basis within the territory of China, and in industries such as constructionindustries, real estate industries, financial industries, and living service industries. The applicable VAT rates are 6% and 3% for the entities that are generaltaxpayer and small-scale taxpayer, respectively. Local Surcharges The city construction tax and education surcharge are local surcharges imposed as a certain percentage of PRC turnover taxes (i.e., business tax, value-addedtax and consumption tax). The city construction tax is charged at rates of 1%, 5% or 7% (the applicable city construction tax rate depends on the location ofthe taxpayer) of the turnover tax paid while the education surcharge rate is currently at 3% of the turnover tax paid. Though in the past, foreign-investedenterprises, foreign enterprises and foreign individuals were exempted from such surcharges, these entities were required to make such payments fromDecember 1, 2010 according to a notice issued by PRC State Council in October 2010. In addition to the city construction tax and the education surcharge, the China Ministry of Finance issued Circular Caizong (2010) No. 98, or Circular 98,that requires all entities and individuals (including foreign-invested enterprises, foreign enterprises and foreign individuals) to pay a local educationsurcharge, or LES, at 2% on turnover tax paid. Local governments are required to report their implementation measures on LES to the Ministry of Finance.LES became applicable to all entities and individuals in Beijing on January 1, 2012. Employment Laws and Social Insurance We are subject to laws and regulations governing our relationship with our employees, including wage and hour requirements, working and safetyconditions, and social insurance, housing funds and other welfare. The compliance with these laws and regulations may require substantial resources. China’s National Labor Law, which became effective on January 1, 1995, and China’s National Labor Contract Law, which became effective on January 1,2008 and was amended on December 28, 2012, permit workers in both state-owned and private enterprises in China to bargain collectively. The NationalLabor Law and the National Labor Contract Law provide for collective contracts to be developed through collaboration between the labor union (or workerrepresentatives in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work. The laws alsopermit workers and employers in all types of enterprises to sign individual contracts, which are to be drawn up in accordance with the collective contract. TheNational Labor Contract Law has enhanced rights for the nation’s workers, including permitting open-ended labor contracts and severance payments. Thelegislation requires employers to provide written contracts to their workers, restricts the use of temporary labor and makes it harder for employers to lay offemployees. It also requires that employees with fixed-term contracts be entitled to an indefinite-term contract after a fixed-term contract is renewed twice orthe employee has worked for the employer for a consecutive ten-year period. On October 28, 2010, the NPC promulgated the PRC Social Insurance Law, which became effective on July 1, 2011. In accordance with the PRC SocialInsurance Law and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medicalinsurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay the social insurance for its employees inaccordance with the rates provided under relevant regulations and shall withhold the social insurance that should be assumed by the employees. Theauthorities in charge of social insurance may request an employer’s compliance and impose sanctions if such employer fails to pay and withhold socialinsurance in a timely manner. Under the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies mustregister with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and theiremployees are required to contribute to the housing funds. 70  C.Organizational Structure The following diagram illustrates our corporate structure, including our subsidiaries and consolidated VIE and its subsidiaries, as of the date of this annualreport: Notes: 71  (1)Mr. Shaoyun Han, our founder, chairman and chief executive officer, owns 70% of the equity interest in Beijing Tarena. Mr. Jianguang Li, our director,owns 30% of the equity interest in Beijing Tarena. (2)Mr. Shaoyun Han is the principal of Weifang Tarena Professional Education School. (3)Tarena (Wuhan) Technology Co., Ltd., which is a wholly-owned subsidiary of Tarena Tech, wholly owns Wuhan Tarena Software Co., Ltd., which holds100% of the sponsorship interest in Wuhan Tarena Professional Education School. (4)Mr. Shaoyun Han is the principal of Shenyang Tarena Professional Education School, Jinan Tarena Professional Education School, Wuhan TarenaProfessional Education School, Chongqing Jiulongpo Tarena Professional Education School, Kunming Tarena Professional Education School, NanjingTarena Professional Education School, Shenzhen Bao’an Tarena Professional Education School, Harbin Tarena Professional Education School,Zhengzhou Tarena Professional Education School, Dalian High-Tech Zone Tarena Professional Education School, Shenyang Tarena Times ProfessionalEducation School, Zhuhai Tarena Professional Education School, Chengdu High-Tech Zone Tarena Professional Education School, Chengdu TarenaProfessional Education School, Wuhan Technology Tarena Professional Education School, Shenzhen Longhua Xinqu Tarena Professional SkillsEducation School, Chongqing Nanan Tarena Professional Education School; Changchun Tarena Professional Education School and Ningbo TarenaProfessional Education School; De Xun Wang is the principal of Guangzhou Tarena Software Professional Education School; Qian Li is the principal ofQingdao Tarena Professional Education School; Yue Qin Shen is the principal of Nanjing Weishang Tarena Professional Education School; Jing Liu isthe principal of Dalian Shahekou Tarena Accounting Professional Education School. Because of foreign ownership restriction on Internet content and other value-added telecommunication services in China, we operate our TMOOC.cn websitethrough our consolidated VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena. BeijingTarena is 70% owned by Mr. Shaoyun Han, our founder, chairman and chief executive officer, and 30% owned by Mr. Jianguang Li, our director. Mr. Hanand Mr. Li are both PRC citizens. We entered into a series of contractual arrangements with Beijing Tarena and its shareholders, which enable us to: ·exercise effective financial control over Beijing Tarena; ·receive substantially all of the economic benefits and bear the obligation to absorb substantially all of the losses of Beijing Tarena; and ·have an exclusive option to purchase all or part of the equity interests in Beijing Tarena when and to the extent permitted by PRC law. Because of these contractual arrangements, we are the primary beneficiary of Beijing Tarena and consolidate its financial results in our consolidated financialstatements in accordance with U.S. GAAP. The following is a summary of the currently effective contracts by and among Tarena International, our subsidiary Tarena Tech, our VIE, Beijing Tarena, andthe shareholders of Beijing Tarena. Exclusive Business Cooperation Agreement Under the exclusive business cooperation agreement between Beijing Tarena and Tarena Tech, as amended and restated, Tarena Tech has the exclusive rightto provide, among other things, technical support, business support and related consulting services to Beijing Tarena and Beijing Tarena agrees to accept allthe consultation and services provided by Tarena Tech. Without Tarena Tech’s prior written consent, Beijing Tarena is prohibited from engaging any thirdparty to provide any of the services under this agreement. In addition, Tarena Tech exclusively owns all intellectual property rights arising out of or createdduring the performance of this agreement. Beijing Tarena agrees to pay a monthly service fee to Tarena Tech at an amount determined solely by Tarena Techafter taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the Tarena Techemployees providing services to Beijing Tarena, the value of services provided, the market price of comparable services and the operating conditions ofBeijing Tarena. Furthermore, to the extent permitted under the PRC law, Tarena Tech agrees to provide financial support to Beijing Tarena if Beijing Tarenahas any operating loss or suffered any critical operation adversity. The term of the agreement will remain effective unless Tarena Tech terminates theagreement in writing or a competent governmental authority rejects the renewal applications by either Beijing Tarena or Tarena Tech to renew its respectivebusiness license upon expiration. Without the consent of Tarena Tech, Beijing Tarena is not permitted to terminate this agreement in any event unlessrequired by applicable laws. 72  Power of Attorney Pursuant to the power of attorney, as amended and restated, the shareholders of Beijing Tarena each irrevocably appointed Tarena Tech as the attorney-in-factto act on their behalf on all matters pertaining to Beijing Tarena and to exercise all of their rights as a shareholder of Beijing Tarena, including but notlimited to attend shareholders’ meetings, vote on their behalf on all matters of Beijing Tarena requiring shareholders’ approval under PRC laws andregulations and the articles of association of Beijing Tarena, and designate and appoint directors and senior management members. Tarena Tech may assignits rights under this power of attorney to any other person or entity at its sole discretion without prior notice to the shareholders of Beijing Tarena. Eachpower of attorney will remain in force until the shareholder ceases to hold any equity interest in Beijing Tarena. Equity Interest Pledge Agreements Under the equity interest pledge agreements between Tarena Tech, Beijing Tarena and the shareholders of Beijing Tarena, as amended and restated, theshareholders pledged all of their equity interests in Beijing Tarena to Tarena Tech to guarantee Beijing Tarena’s and Beijing Tarena’s shareholders’performance of their obligations under the contractual arrangements including, but not limited to the service fees due to Tarena Tech. If Beijing Tarena orany of Beijing Tarena’s shareholders breaches its contractual obligations under the contractual arrangements, Tarena Tech, as the pledgee, will be entitled tocertain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Beijing Tarena inaccordance with legal procedures. Tarena Tech has the right to receive dividends generated by the pledged equity interests during the term of the pledge. Ifany event of default as provided in the contractual arrangements occurs, Tarena Tech, as the pledgee, will be entitled to dispose of the pledged equityinterests in accordance with PRC laws and regulations. The equity interest pledge agreements became effective on the date when the agreements were dulyexecuted. The pledge was registered with Changping Bureau of Beijing Administration for Industry and Commerce in December 2013 and April 2017,respectively. The pledge will remain binding until Beijing Tarena and its shareholders discharge all their obligations under the contractual arrangements.The registration of the equity pledge enables Tarena Tech to enforce the equity pledge against third parties who acquire the equity interests of Beijing Tarenain good faith. Exclusive Option Agreements Under the exclusive option agreements between Tarena International, Inc., Tarena Tech, each of the shareholders of Beijing Tarena and Beijing Tarena, asamended and restated, each of the shareholders irrevocably granted Tarena International, Inc. or its designated representative(s) an exclusive option topurchase, to the extent permitted under PRC law, all or part of his equity interests in Beijing Tarena. In addition, Tarena International, Inc. has the option toacquire the equity interests of Beijing Tarena for a specified price equal to the loan provided by Tarena Tech to the individual shareholders. If the lowestprice permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Tarena International, Inc. or itsdesignated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Tarena International, Inc.’s prior writtenconsent, Beijing Tarena’s shareholders shall not sell, transfer, mortgage, or otherwise dispose any equity interests in Beijing Tarena. These agreements willremain effective until all equity interests in Beijing Tarena held by its shareholders are transferred or assigned to Tarena International, Inc. or TarenaInternational, Inc.’s designated representatives. Loan Agreements Pursuant to the loan agreements between Tarena Tech and each individual shareholder of Beijing Tarena, as amended and restated, Tarena Tech providedloans with an aggregate amount of RMB5 million to the individual shareholders of Beijing Tarena for the sole purpose of providing capital for BeijingTarena. The loans can only be repaid in a manner determined by Tarena Tech at its sole discretion, which repayment may take the form of transferring theindividual shareholders’ equity interest in Beijing Tarena to Tarena or its designated person pursuant to the exclusive option agreements. The loan shall beinterest-free, unless the transfer price exceeds the principal of the loan when each individual shareholder of Beijing Tarena transfers his equity interests inBeijing Tarena to Tarena or its designated person(s). Such excess over the principal of the loan shall be deemed the interest of the loan to the extent permittedunder PRC law. The term of each loan agreement is ten years from the date of the agreement expiring in 2026 and can be extended with the written consent ofboth parties before expiration. 73  In the opinion of our PRC counsel, Han Kun Law Offices, these contractual arrangements are valid, binding and enforceable under current PRC laws.However, these contractual arrangements may not be as effective in providing control as direct ownership. There are substantial uncertainties regarding theinterpretation and application of current or future PRC laws and regulations. For a description of the risks relating to our contractual arrangements, please see“Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” D.Property, Plants and Equipment We have dual headquarters in China, located in Beijing and Hangzhou. Our principal executive offices in Beijing comprise of approximately 1,338 squaremeters and accommodate certain of our management and general and administrative activities, as well as our research and development activities. We alsohave approximately 25,222 square meters in leased classroom space in Beijing. Our principal executive offices and classrooms in Hangzhou comprise ofapproximately 8,836 square meters of leased space. Our principal executive offices in Hangzhou accommodate certain of our management and general andadministrative activities. In addition to our principal executive offices in Beijing and Hangzhou, we maintain a number of offices, classrooms and student dormitories with anaggregate of approximately 176,749 square meters in 46 cities in the PRC. For our leased facilities, we leased them from unrelated third parties. Our leaseterms range from one to ten years. We purchased two office buildings in Beijing in 2016, mainly for teaching purpose, and to a lesser extent foradministrative function. We paid an aggregate of RMB232 million for these two office buildings. We also purchased a building in Qingdao and another onein Haikou for an aggregate price of RMB50 million in 2016. The purpose of these two buildings is mainly teaching and partly for administration. We believe that the facilities that we currently own or lease are adequate to meet our needs for the foreseeable future, and we believe that we will be able toobtain adequate facilities, principally through leasing of additional properties, to accommodate our future expansion plans. ITEM 4.A.UNRESOLVED STAFF COMMENTS Not Applicable. 74  ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidatedfinancial statements and their related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D.Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks anduncertainties. A.Operating Results Overview Net Revenues We derive substantially all of our net revenues from tuition fees that we charge students. In 2014, 2015 and 2016, we generated net revenues of RMB836.9million, RMB1,178.0 million and RMB1,579.6 million, respectively. We record tuition fees that we collect in advance as deferred revenues. Our net revenuesare presented net of business tax and surcharges. Number of Course and Student Enrollments Our ability to generate and increase revenues is primarily driven by our ability to increase the number of course enrollments and student enrollments. Ourtotal course enrollments increased from 58,264 in 2014 to 78,729 in 2015 and further to 102,298 in 2016. Our total student enrollments increased from59,960 in 2014 to 84,041 in 2015 and further to 107,493 in 2016. Our total student enrollments are affected by the continuing popularity of our existing courses and programs and the number and popularity of new coursesand new programs we offer. In 2016, our Java course was the largest course in terms of revenues and number of student enrollments. Since inception, we havedeveloped and launched fifteen new courses, as well as three new education programs targeting kids. Our total student enrollments are also affected by our ability to maintain our cooperative relationships with financing service providers for student loans. Asignificant portion of our students enrolled in 2016 relied on loans provided or arranged by Baidu Small Loan, RenRenDai, BOC CFC, CreditEase, andShiTuDai to pay for our tuition fees. In 2016, approximately 55.1% of our students took out loans provided or arranged by Baidu Small Loan, RenRenDai,BOC CFC, CreditEase, and ShiTuDai to pay for our tuition fees. Tuition fees Our net revenues are affected by the tuition fees for each of our courses. For our full-time classes for adult students, our standard tuition fees generally rangefrom RMB16,800 to RMB20,800 per course. We raised the standard tuition fees on selected courses offered in certain large cities by RMB1,000 to RMB2,000 per course in February 2016. We also increased our tuition fees for part-time classes on selected courses offered in certain large cities by RMB1,000 toRMB2,000 per course in 2016. For our kid education programs, our standard tuition fees are between RMB15,000 and RMB19,200. Each kid educationprogram is composed of four levels, with each level consisting of 120 learning hours in one year. The actual tuition fees of our courses for adult students may vary according to the recruiting channel through which a student is enrolled. We recruit studentseither through our direct marketing efforts or from our network of cooperative universities and colleges. We generally offer a discount of approximatelyRMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In 2016, we recruitedapproximately 14.8% of our students from these universities and colleges. 75  Our tuition fees of our courses for adult students are also affected by the payment option selected by our students. We primarily offer two payment options forour students, including one-time full payment upon enrollment and multiple payments within two months of enrollment. We also allow qualified students topay our tuition fees within a period of time after graduation. We generally charge RMB1,000 higher in tuition fees to students electing to pay in multiplepayments within two months of enrollment and charge RMB3,980 higher in tuition fees to students qualified and electing to pay in installments postgraduation, as compared to students who elect to pay in full upfront. Our tuition fees for Tongcheng. Tongmei and Tongchuang education programs arerequired to be fully paid up-front. In 2015 and 2016, 77.7% and 83.6% of our enrolled students paid one-time in full upon enrollment, 8.8% and 7.5% of our enrolled students paid multipletimes within two months of enrollment and 13.5% and 8.9% of our enrolled students utilized the option to pay within a period of time after graduation,respectively. For our post-graduation payment option, qualified students are given a grace period of up to six months after graduation to look foremployment, during which time no repayment needs to be made. After such grace period, students are given a ten-month repayment period. In order toqualify for such payment option, students must pass our credit screening by furnishing to us a number of supporting documents, for instance a credit reportfrom the People’s Bank of China. Cost of Revenues Our cost of revenues primarily consists of payroll and employee benefits for our instructors (as apportioned based on the amount of time that they devote toteaching), teaching assistants, career counselors and employer cooperation representatives, as well as rental payments for our learning centers, and to a lesserextent, depreciation relating to property and equipment used at our learning centers. The following table sets forth a breakdown of our cost of revenues inabsolute amounts and as percentages of net revenues for the periods indicated: For the Year Ended December 31, 2014 2015 2016 RMB % of netrevenues RMB % of netrevenues RMB % of net revenues (in thousands, except percentages) Personnel cost and welfare 88,521 10.6 123,341 10.5 173,240 11.0 Rental cost 69,191 8.3 97,927 8.3 125,856 8.0 Others 82,372 9.8 112,291 9.5 150,008 9.4 Total cost of revenues 240,084 28.7 333,559 28.3 449,104 28.4 Our cost of revenues is primarily affected by the number of our learning centers. We had a total of 118, 134 and 145 learning centers as of December 31, 2014,2015 and 2016, respectively. Our cost of revenues as a percentage of net revenues was 28.7%, 28.3% and 28.4% in 2014, 2015 and 2016, respectively. Weexpect our cost of revenues to continue to increase as we plan to open more learning centers. Operating Expenses Our operating expenses consist primarily of selling and marketing expenses, general and administrative expenses and, to a lesser extent, research anddevelopment expenses. The following table sets forth our operating expenses in absolute amounts and as percentages of net revenues for the periodsindicated: For the Year Ended December 31, 2014 2015 2016 RMB % of netrevenues RMB % of netrevenues RMB % of netrevenues (in thousands, except percentages) Selling and marketing expenses 261,489 31.2 384,954 32.7 527,553 33.4 General and administrativeexpenses 183,998 22.0 251,298 21.3 307,519 19.5 Research and developmentexpenses 33,454 4.0 50,515 4.3 65,594 4.1 Total operating expenses 478,941 57.2 686,767 58.3 900,666 57.0 76  Our selling and marketing expenses primarily consist of compensation expenses relating to our personnel involved in selling and marketing, including ourenrollment advisors and our university cooperation representatives based at our learning centers, advertising expenses relating to our marketing activities,and, to a lesser extent, rental expenses relating to our selling and marketing functions. We expect our selling and marketing expenses to increase as we furtherexpand our business. Our general and administrative expenses primarily consist of compensation expenses relating to our management and administrative personnel, includingshare-based compensation, and bad debt allowance associated with our post-graduation tuition installment payment option for qualified students. To a lesserextent, our general and administrative expenses include office expenses relating to administrative functions. We expect our general and administrative expenses to increase in the future on an absolute basis as our business grows and we incur costs related tocomplying with our reporting obligations as a public company under U.S. securities laws. Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time thatthey devote to research and development-related activities, as well as the personnel costs of our software engineers. Seasonality Seasonal fluctuations have affected, and are likely to continue to affect, our business. Historically, we typically generate the highest net revenues in the thirdand fourth quarters because of the increased student enrollments during summer vacation. We generally generate less tuition fees in the first quarter of eachyear due to the Chinese New Year holiday. Our quarterly cost of revenue, selling and marketing expenses, general and administrative expenses and researchand development expenses have generally been increasing in absolute amounts since 2012 as we expanded our network of learning centers, increased thenumber of our personnel and enhanced our marketing efforts. Taxation Cayman Islands We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition,dividend payments are not subject to withholding tax in the Cayman Islands. Hong Kong Our wholly-owned subsidiary in Hong Kong, Tarena Hong Kong Limited, is subject to Hong Kong profits tax on its activities conducted in Hong Kong. Noprovision for Hong Kong profits tax has been made in the consolidated financial statements as Tarena Hong Kong Limited has no assessable income since itsinception on October 22, 2012 to December 31, 2016. China Pursuant to the EIT Law and its Implementation Rules, which became effective on January 1, 2008, foreign-invested enterprises and domestic companies aresubject to enterprise income tax at a uniform rate of 25%. In addition, “high and new technology enterprises,” or HNTEs, will enjoy a preferential enterpriseincome tax rate of 15% under the EIT Law. Tarena Tech qualified as a HNTE under the EIT Law and is eligible for a preferential enterprise income tax rate of15% for the period from 2009 to the end of 2017. Tarena Hangzhou was established in 2013 and qualified as a “newly established software enterprise”, whichentitles it to two years of full exemption followed by three years of 50% exemption, commencing from the year in which its taxable income is greater thanzero, which was 2014. On Jan 25, 2016, we acquired 100% of the equity interests in Hangzhou Han Ru Education Technology Co., Ltd, which is qualified asa “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencingfrom 2016. Certain of our subsidiaries qualified as “Small Profit Enterprises” in 2014, 2015 and 2016, and therefore are subject to the preferential income taxrate of 20%. Subject to the approvals from the tax authorities in certain locations in the PRC, our subsidiaries and consolidated VIE that are based in theselocations are required to use the deemed profit method to determine their income tax. Under the deemed profit method, these subsidiaries are subject toincome tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% to 90% of revenues. 77  Critical Accounting Policies We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect(i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) thereported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on ourown historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on availableinformation, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates isan integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higherdegree of judgment than others in their application. When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertaintiesaffecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. We believe the followingaccounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. Revenue recognition We derive substantially all of our net revenues from tuition fees, a portion of which we allow qualified students to pay on installment for a period of timeexceeding one year. When tuition services are sold on repayment terms that exceed one year beyond the point in time that revenue is recognized, thereceivable, and therefore the revenue is recorded at the present value of the total payments. The difference between the present value of the receivable and thenominal or principal value of the tuition fees is recognized as interest income over the contractual collection period using the effective interest rate method.The interest rate used to determine the present value of the total amount receivable is the rate at which students can obtain financing of a similar nature fromother sources at the date of the transaction. We enter into arrangements with certain students that purchase multiple services, including classroom training and extended on-line case studies, or multiple-element arrangements. We treat training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes andrecognizes revenue during the contract period when each deliverable service is provided. We allocate the contract price among all the deliverables at theinception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Accounting Standard UpdateNo. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. We first use vendor-specific objective evidence (VSOE) of selling price, ifit exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, we use ourbest estimate of selling price for the deliverables. Allowance for doubtful accounts We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our students to make payments according to theirrespective payment plans stipulated on the arrangement. We determine the allowance by analyzing students’ accounts that have known or potentialcollection issues and applying historical loss rates to the aging of the remaining balances of accounts receivable. In the event that we believe an accountreceivable will become uncollectible, we record an additional provision to increase the allowance for doubtful accounts. Long-lived assets Our long-lived assets include property and equipment. We depreciate our property and equipment using the straight-line method over the estimated usefullives of the assets. We make estimates of the useful lives of property and equipment, including the salvage values, in order to determine the amount ofdepreciation expense to be recorded during each reporting period. We amortize leasehold improvements of our learning center facilities and offices over theshorter of the lease term or the estimated useful life of the assets. We estimate the useful lives of our other property and equipment at the time the assets areacquired based on historical experience with similar assets, as well as anticipated technological or other changes. If technological changes were to occur morerapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may be shortened, which would result in therecognition of increased depreciation expense in future periods. There has been no change to the estimated useful lives or salvage values of our property andequipment in 2014, 2015 and 2016. 78  We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may notbe recoverable. We assess recoverability by comparing the carrying amount of a long-lived asset or asset group to the estimated undiscounted future cashflows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cashflows, we recognize an impairment charge based on the amount by which the carrying amount exceeds the estimated fair value of the asset or asset group. Weestimate the fair value of the asset or asset group based on the best information available, including prices for similar assets, and in the absence of anobservable market price, the results of using a present value technique to estimate the fair value of the asset or asset group. No impairment on our long-lived assets was recognized in 2014, 2015 and 2016. Share-based Compensation We measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award andrecognize the cost over the period the employee is required to provide service in exchange for the award, which is generally the vesting period. We haveelected to recognize the compensation cost for an award with only service conditions that have a graded vesting schedule on a straight-line basis over therequisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date atleast equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and futureexpectations of employee turnover rates. On September 22, 2008, we adopted the 2008 Plan, pursuant to which we can issue share options and other share-based awards to our key employees,directors and consultants to purchase up to 6,002,020 of our ordinary shares (being retroactively adjusted to reflect the effect of the share split). On November28, 2012, we increased the number of our ordinary shares authorized for issuance under the 2008 Plan to 8,184,990. Share options issued before September22, 2008 are also administered under the 2008 Plan. In February 2014, we adopted the 2014 Plan, pursuant to which we were authorized to issue options, restricted shares and restricted share units to ourqualified employees, directors and consultants. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, orthe Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing withJanuary 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstandingon a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in theAward Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31of the immediately preceding calendar year. Share options granted prior to initial public offering From January 1, 2004 to February 20, 2014, our board of directors has granted the following options to our executive officers and employees: Number of Options Exercise Price(US$) Fair Value ofOrdinary Shares(US$) Grant date Prior to January 1, 2012 7,117,020 0.058-1.00 0.04-0.83 January 1, 2013 2,029,386 1.83 3.75 September 16, 2013 488,424 1.83 5.69 February 20, 2014 1,805,784 1.83-4.36 8.60 79  Prior to our initial public offering in April 2014, we did not have quoted market prices for our ordinary shares. Accordingly we have considered the guidanceprescribed by the AICPA Audit and Accounting Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or thePractice Aid, which sets forth the preferred types of valuation that should be used. We have followed the “Level B” recommendation, and established the fairvalue of our ordinary shares at the dates of grant using a retrospective valuation for valuation dates prior to September 2013 with the assistance of anindependent valuation firm. We obtained a retrospective valuation instead of contemporaneous valuation for valuation dates prior to September 2013,because at that time, our financial and managerial resources were limited. The valuation as of September 16, 2013 and February 20, 2014 was prepared oncontemporaneous basis. We are ultimately responsible for all the fair value measurements in relation to the options and ordinary shares. In determining the fair value of our ordinary shares for the purpose of determining the fair value of the share options, we followed a two-step process. In thefirst step, the equity value of our company was determined by taking into consideration the income approach, or the discounted cash flow on DCF, method.We considered the market approach and searched for public companies located in China with business nature and in a development stage similar to ours.However, no companies were similar to us in all aspects. We therefore did not apply any weight for the market approach to arrive at the equity value of ourcompany and only used the market approach to corroborate the valuation results based on the income approach. In estimating the total equity value of our ordinary shares, we considered the DCF method, which incorporates the projected cash flow of our management’sbest estimation as of each measurement date. The projected cash flow estimation includes, among others, analysis of projected net revenue growth, grossmargins and terminal value. The assumptions used in deriving the fair value of ordinary shares are consistent with our business plan. The key assumptions used in developing the cash flow forecasts include: (i) compounded annualized growth rates of net revenue range from 19% to 52% forthe forecasted period; (ii) gross margin forecast to improve with increasing economies of scale; and (iii) a terminal growth rate after the projection period. The DCF method of the income approach involves applying appropriate weighted average cost of capital, or WACC, to discount the future cash flowsforecast to present value. WACC comprises a required rate of return on equity plus the current tax effected rate of return on debt, weighted by the relativepercentages of equity and debt in the capital structure of comparable public companies whose business operations are similar to that of ours. The requiredrates of return on equity were based on an estimation of the market required rate of return for investing in business similar to ours, which were derived byusing the capital asset pricing model, or CAPM. Under CAPM, the discount rate was determined with consideration of the risk-free rate, industry-averagecorrelated relative volatility coefficient beta, equity risk premium, size of our company, the scale of our business and our ability in achieving forecastedprojections. The risks associated with achieving the forecasts were assessed in selecting the appropriate WACC, which had been determined to range from 16.5% to 30%.The determined WACC decreased from 30% as of 2004 to 16.5% as of February 20, 2014 due to decrease in uncertainties associated with our financialforecast as we achieved millstones, progressed to later stage of development and developed solid track records. In estimating the fair value of our ordinary shares by the DCF method, our management does not think there would be disproportionate returns of cash flowsto different shareholders. Therefore, neither control premium nor a lack of control discount was considered in our valuations. We also applied a discount for lack of marketability, or DLOM, ranging from 5% to 35%, to reflect the fact that there is no ready market for shares in aclosely-held company like us. When determining the DLOM, the Black-Scholes option pricing model was used. Under this option-pricing method, the cost ofthe put option, which can hedge the price change before the privately held shares can be sold, was considered as a basis to determine the DLOM. This optionpricing method was used because it takes into account certain company-specific factors, including the timing of the expected initial public offering and thevolatility of the share price of the guideline companies engaged in the same industry. 80  The above assumptions used in determining the fair values were consistent with our business plan and major milestones we achieved. We also appliedgeneral assumptions, including the following: ·there will be no major changes in the existing political, legal, fiscal and economic conditions in countries in which we will carry on our business; ·there will be no major changes in the current tax laws in countries in which we operate and, that the rates of tax payable remain unchanged and thatall applicable laws and regulations will be complied with; ·exchange rates and interest rates will not differ materially from those presently prevailing; ·the availability of financing will not be a constraint on the future growth of our operation; ·we will retain and have competent management, key personnel, and technical staff to support our ongoing operations; and ·industry trends and market conditions for related industries will not deviate significantly from economic forecasts. In the second step, since our capital structure comprised convertible redeemable preferred shares and ordinary shares at each grant date, we allocated ourequity value among each class of equity securities using the option-pricing method. The option-pricing method treats ordinary shares and preferred shares ascall options on our company’s equity value and liquidation preference, redemption preference and conversion threshold of the preferred shares as exerciseprice of the call options. The increase in the fair value of our ordinary shares from US$3.75 per share as of January 1, 2013 to US$5.69 per share as of September 16, 2013 wasprimarily attributable to the following factors: ·We offered more courses at our learning centers in 2013. As a result of these offerings, we experienced rapid revenue and student growth in the nine-month period ended September 30, 2013. Our net revenues in the nine-month period ended September 30, 2013 were RMB400.7 million, anincrease of 61.9% from RMB 247.6 million in the nine-month period ended September 30, 2012. The number of learning centers increased from 57as of December 31, 2012 to 86 as of September 30, 2013, and the number of student enrollments increased from 31,340 in 2012 to 33,289 in the ninemonths ended September 30, 2013, respectively. In view of the above, we adjusted our estimated earning upwards when we prepared financialforecast for valuation as of September 16, 2013, and lowered the discount rate used in valuation from 19.5% as of January 1, 2013 to 17.5% as ofSeptember 16, 2013. ·As we progressed towards an initial public offering, or IPO, leading time to an expected liquidity event decreased, resulting in a decrease of DLOMfrom 20% as of January 1, 2013 to 15% as of September 16, 2013. We also increased our estimated probability of IPO from 50% to 60%. As preferredshares would be automatically converted into ordinary shares upon IPO, the increase in estimated probability of IPO results in allocation of a higherportion of our business enterprise value to ordinary shares. The increase in the fair value of our ordinary shares from US$5.69 per share as of September 16, 2013 to US$8.60 per share as of February 20, 2014 wasprimarily attributable to the following factors: ·We adjusted our projections upward when preparing our financial forecast to determine the fair value of our ordinary shares as of February 20, 2014based on the following operational improvements: (i) we expanded our new digital arts course offering nationally in the last quarter of 2013; (ii) we launched a new online sales and marketing course in November 2013; and (iii) in February 2014, we implemented a new pricing strategy resulting in an overall increase in tuition fees. ·We made the first confidential submission of the draft registration statement on Form F-1 in respect of the proposed IPO in November 2013,increasing the probability of a successful IPO. This resulted in a decrease of the DLOM from 15% as of September 16, 2013 to 5% as of February 20,2014. Furthermore, we increased the estimated probability of a successful IPO from 60% as of September 16, 2013 to 90% as of February 20, 2014.Because our preferred shares will be automatically converted into ordinary shares upon the IPO, the increase in the estimated probability of the IPOresulted in the allocation of a higher portion of our business enterprise value to our ordinary shares. 81  ·The determined weighted average cost of capital decreased from 17.5% as of September 16, 2013 to 16.5% as of February 20, 2014 to reflect thedecrease in uncertainties associated with our financial forecast, since we achieved our milestones, progressed to later stage of development andmaintained a solid track record. In determining the fair value of share options granted to executive officers and certain employees, we have used the binomial option pricing model. Underthis option pricing model, certain assumptions, including the risk-free interest rate, the expected dividends on the underlying ordinary shares and theexpected volatility of the price of the underlying shares for the contract term of the options, are required in order to determine the fair value of the options.Changes in these assumptions could significantly affect the fair value of share options and hence the amount of compensation expense we recognize in ourconsolidated financial statements. For the options granted, we used the following assumptions on the date of grant in determining the estimated fair value per option: Options Granted In 2011 2012 2013 2014 Expected volatility 45-46% — 52% 52%Expected dividends yield 0% — 0% 0%Exercise multiple 2.2 — 2.2 2.2 Risk-free interest rate per annum 3.89%-3.93% — 2.27%-3.38% 3.81%Estimated fair value of underlying ordinary shares (per share) US$ 0.63-0.83 — US$3.75-5.69 US$8.60 For the purpose of determining the estimated fair value of our share options, we believe the expected volatility and the estimated fair value of our ordinaryshares are the most critical assumptions since we are a privately-held company when we granted these share options. Since we did not have a trading history at the time the share options were granted and we did not have sufficient share price history to calculate our ownhistorical volatility, expected volatility of our future ordinary share price was estimated based on the price volatility of the shares of comparable publictraded companies engaged in the similar industry. Share options granted after initial public offering From January 1, 2015 to December 31, 2016, our board of directors has granted the following options to our executive officers and employees: Number of Options Exercise Price (US$) Fair Value of OrdinaryShares (US$)Grant date March 1, 2015 to December 6, 2015 615,624 0.89-4.36 9.28-12.85January 1, 2016 to December 31, 2016 1,115,807 0.058-4.36 9.99-16.54 On June 16, 2015, Mr. Shaoyun Han exercised 2,439,014 share options to purchase 2,439,014 Class A ordinary shares. Mr. Shaoyun Han remitted RMB17.0million to us on August 4, 2015. In determining the fair value of share options granted to executive officers and certain employees, we have used the binomial option pricing model. Underthis option pricing model, certain assumptions, including the risk-free interest rate, the expected dividends on the underlying ordinary shares and theexpected volatility of the price of the underlying shares for the contract term of the options, are required in order to determine the fair value of the options.Changes in these assumptions could significantly affect the fair value of share options and hence the amount of compensation expense we recognize in ourconsolidated financial statements. 82  For the options granted, we used the following assumptions on the date of grant in determining the estimated fair value per option: Options Granted In 2015 Options Granted In 2016 Expected volatility 62.3%-70.9% 63.5%-68.8%Expected dividends yield 0% 0%Exercise multiple 2.0 2.0 Risk-free interest rate per annum 2.68%-2.99% 2.15%-3.18%The fair value of underlying ordinary shares (per share) US$9.28-US$12.85 US$9.99-US$16.54 The fair values of underlying ordinary shares are closing prices of our stock traded in the open market as of each grant date. For the purpose of determiningthe estimated fair value of our share options, we believe the expected volatility is the most critical assumption. Since we had a short share price history, expected volatility of our future ordinary share price was estimated with reference to the price volatility of the sharesof comparable public traded companies engaged in the similar industry. Income taxes The realization of the future tax benefits of deferred income tax assets is dependent on future taxable income against which such tax benefits can be appliedor utilized and any tax planning strategies. In assessing the realizability of deferred income tax assets, we consider whether it is more likely than not thatsome portion or all of the deferred income tax assets will not be realized. All available evidence must be considered in determining the realizability of thedeferred income tax assets. Such evidence includes, but is not limited to, the financial performance of subsidiaries and consolidated VIE, the marketenvironment in which these entities operate, the utilization of past tax credits, and the length of relevant carryforward periods. Sufficient negative evidence,such as a cumulative net loss during a three-year period that includes the current year and the prior two years, may require that a valuation allowance beestablished with respect to existing and future deferred income tax assets. In view of cumulative losses sustained by our PRC subsidiaries and consolidatedVIEs, valuation allowances of RMB14.4 million, RMB20.1 million and RMB26.5 million were provided as of December 31, 2014, 2015 and 2016,respectively. If, in the future, taxable incomes are available for each tax-paying component, the valuation allowances against our deferred income tax assetsmay be adjusted. In order to assess uncertain tax positions, we adopt a more likely than not threshold and a two-step approach for the tax position measurement and financialstatement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of availableevidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. Thesecond step is to measure the tax benefit as the largest amount that is greater than 50% likely to be realized upon settlement. The unrecognized tax benefitswere RMB36.9 million, RMB53.4 million and RMB69.8 million as of December 31, 2014, 2015 and 2016, respectively. No interest and penalty expenseswere recorded for the years ended December 31, 2014, 2015 and 2016. Recently Issued Accounting Policies See note 2 to our audited consolidated financial statements included in this annual report for recently issued accounting standards that we believe may haveimplications on our consolidated financial statements for future periods. 83  Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages ofour net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annualreport. The operating results in any period are not necessarily indicative of the results that may be expected for any future period. For the Year Ended December 31, 2014 2015 2016 RMB % of NetRevenues RMB % of NetRevenues RMB % of NetRevenues (in thousands, except percentages) Net revenues 836,941 100.0 1,178,008 100.0 1,579,604 100.0 Cost of revenues(1) (240,084) (28.7) (333,559) (28.3) (449,104) (28.4)Gross profit 596,857 71.3 844,449 71.7 1,130,500 71.6 Operating expenses(1): Selling and marketing (261,489) (31.2) (384,954) (32.7) (527,553) (33.4)General and administrative (183,998) (22.0) (251,298) (21.3) (307,519) (19.5)Research and development (33,454) (4.0) (50,515) (4.3) (65,594) (4.2)Operating income 117,916 14.1 157,682 13.4 229,834 14.6 Interest income 26,802 3.2 42,732 3.6 23,974 1.5 Other income 14,568 1.7 11,812 1.0 15,960 1.0 Loss on foreign currency forward — — — — (12,898) (0.8)Foreign currency exchange gains(losses) 7,359 0.9 (29,499) (2.5) 3,760 0.2 Income before income taxes 166,645 19.9 182,727 15.5 260,630 16.5 Income tax expense (14,795) (1.8) (3,967) (0.3) (18,776) (1.2)Net income 151,850 18.1 178,760 15.2 241,854 15.3 Notes: (1)Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows: For the Year Ended December 31 2014 2015 2016 RMB RMB RMB (in thousands) Cost of revenues 349 664 4,124 Selling and marketing expenses 1,036 1,959 5,496 General and administrative expenses 22,302 28,274 51,154 Research and development expenses 1,289 2,022 7,050 The Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015 Net revenues Our net revenues increased by 34.1% from RMB1,178.0 million in 2015 to RMB1,579.6 million in 2016. This increase was primarily due to increasedstudent enrollments and, to a lesser extent, an increase in the standard tuition fees. The number of total student enrollments grew by 27.9% from 84,041 in2015 to 107,493 in 2016. The number of our total student enrollments is affected by the continuing popularity of our existing courses and programs and thenumber and popularity of new courses and new programs we offer. In the past year, we experienced significant increase in student enrollments for the courses,such as Java, Digital art, and Web front. The number of our learning centers increased from 134 as of December 31, 2015 to 145 as of December 31, 2016 tocater to the increased demand for our courses. The increase in our average revenue per student was primarily a result of an increase in the standard tuition feesand the decrease in the percentage of our students recruited through our network of cooperative universities and colleges. In 2016, we raised the standardtuition fees on selected courses offered in certain large cities by RMB1,000 to RMB 2,000 per course. We generally offer a discount of approximatelyRMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In 2016, the percentage of ourstudents recruited from our network of cooperative universities and colleges was approximately 14.7%, as compared with 16.2% in 2015. Cost of Revenues Our cost of revenues increased by 34.6% from RMB333.6 million in 2015 to RMB449.1 million in 2016. This increase was mainly due to an increase inpersonnel cost and welfare expenses resulting from growing number of teaching and advisory staff at our learning centers, rental cost resulting from higherseat capacity, as well as depreciation expenses for our learning centers. Our instructors, teaching assistants, career counselors and employer cooperationrepresentatives at our learning centers increased from 1,729 as of December 31, 2015 to 2,236 as of December 31, 2016. The number of our learning centersincreased from 134 as of December 31, 2015 to 145 as of December 31, 2016. 84  Gross Profit and Gross Margin As a result of the foregoing, our gross profit increased by 33.9% from RMB844.4 million in 2015 to RMB1,130.5 million in 2016. Our gross profit marginslightly decreased from 71.7% in 2015 to 71.6% in 2016, which was mainly due to higher personnel cost and welfare expenses and higher share-basedcompensation expenses. Operating Expenses Our operating expenses increased by 31.1% from RMB686.8 million in 2015 to RMB900.7 million in 2016 as a result of increases in our selling andmarketing, general and administrative and research and development expenses. Selling and Marketing Expenses Our selling and marketing expenses increased by 37.0% from RMB385.0 million in 2015 to RMB527.6 million in 2016. This increase was partially due toincreased personnel cost and welfare expenses related to growth in our selling and marketing headcount from 2,300 as of December 31, 2015 to 2,717 as ofDecember 31, 2016. The amount of personnel cost and welfare expenses for our selling and marketing staff increased from RMB182.3 million in 2015 toRMB245.1 million in 2016. The increase in selling and marketing expenses was also due to expanded marketing efforts, which increased advertisingexpenses from RMB151.5 million in 2015 to RMB201.3 million in 2016, primarily as a result of increased spending on search engine advertising as weexpanded our network of learning centers. General and Administrative Expenses Our general and administrative expenses increased by 22.4% from RMB251.3 million in 2015 to RMB307.5 million in 2016 primarily due to higherpersonnel costs and welfare expenses for our increased headcount of general and administrative personnel, from 1,015 as of December 31, 2015 to 1,304 as ofDecember 31, 2016 to support our growing operations, and an increase in share-based compensation expenses, which increased from RMB28.3 million in2015 to RMB51.2 million in 2016. Since July 2015, we focused more on tracking and updating the personal information of our alumni who used the post-graduation payment option, and webegan to (i) task our career counselors with accounts receivable collection from their former students in such class and (ii) add accounts receivable collectionrate as a KPI for our regional managers, learning center managers and career counselors. In 2016, as we devote more resources towards accounts receivable management, we observed a decrease in the cumulative default amount of accountsreceivable for students enrolled between 2014 and 2015 who used the post-graduation payment option. We believe that our stricter tracking and managementof accounts receivable have been effective in generally reducing the overall delinquency risk. Research and Development Expenses Our research and development expenses increased by 29.9% from RMB50.5 million in 2015 to RMB65.6 million in 2016 primarily due to increasedpersonnel costs and welfare expenses of our instructors allocated to their content development activities for our new courses, as well as increased number ofresearch and development staff as we expanded our course offerings and operations. Interest Income Our interest income decreased from RMB42.7 million in 2015 to RMB24.0 million in 2016. Our interest income in both periods consisted of interest earnedon our cash and time deposits in commercial banks and interest income recognized in relation to our installment payment plan for students. The decrease ininterest income was primarily due to lower bank deposits and interest rate, as well as lower tuition interest income in relation to our installment payment planfor students. 85  Income Tax Expense Our income tax expense was RMB18.8 million in 2016, compared to RMB4.0 million in 2015. The increase was mainly due to an increase in the effectiveincome tax rate and higher taxable income. The effective income tax rate of 2.2% in 2015 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deductionallowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which wereat cumulative loss position. The effective income tax rate of 7.2% in 2016 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of15% enjoyed by Tarena Tech, (ii) the preferential income tax rate of 12.5% enjoyed by Tarena Hangzhou, (iii) the tax holiday enjoyed by Tarena Hanru, and(iv) the effect of research and development expenses bonus deduction allowed under PRC tax regulations, partially offset by recognition of valuationallowances for deferred income tax assets of certain subsidiaries, which were at cumulative loss position. Net Income As a result of the foregoing, our net income increased by 35.3% from RMB178.8 million in 2015 to RMB241.9 million in 2016. The Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014 Net revenues Our net revenues increased by 40.8% from RMB836.9 million in 2014 to RMB1,178.0 million in 2015. This increase was primarily due to increased studentenrollments and higher average revenue per student. The number of total student enrollments grew by 40.2% from 59,960 in 2014 to 84,041 in 2015. Thenumber of our student enrollments is primarily driven by the number and popularity of our course offerings and programs. We experienced significantincrease in student enrollment for our new courses in the past few years, such as digital art, iOS and accounting. The number of our learning centers increasedfrom 118 as of December 31, 2014 to 134 as of December 31, 2015 to cater to the increased demand for our courses. The increase in our average revenue perstudent was primarily a result of our tuition fees increase in 2015 and the decrease in the percentage of our students recruited through our network ofcooperative universities and colleges. In 2015, we raised the standard tuition fees on most of our courses by RMB1,000 per course. We generally offer adiscount of approximately RMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In2015, the percentage of our students recruited from our network of cooperative universities and colleges was approximately 16%, as compared with 18% in2014. Cost of Revenues Our cost of revenues increased by 38.9% from RMB240.1 million in 2014 to RMB333.6 million in 2015. This increase was mainly due to higher personnelcost and welfare expenses resulting from increased number of teaching and advisory staff at our learning centers, higher rental cost resulting from increasednumber of learning centers and expansion of existing learning centers, as well as higher depreciation expenses for our learning centers. Our instructors,teaching assistants, career counselors and employer cooperation representatives at our learning centers increased from 1,378 as of December 31, 2014 to1,729 as of December 31, 2015. The number of our learning centers increased from 118 as of December 31, 2014 to 134 as of December 31, 2015. Gross Profit and Gross Margin As a result of the foregoing, our gross profit increased by 41.5% from RMB596.9 million in 2014 to RMB844.4 million in 2015. Our gross profit marginincreased from 71.3% in 2014 to 71.7% in 2015. The improvement in gross margin was mainly due to increased operational scale and efficiency for ourlearning centers. Our overall center utilization rate in 2015 increased to 73% from 71% in 2014. 86  Operating Expenses Our operating expenses increased by 43.4% from RMB478.9 million in 2014 to RMB686.8 million in 2015 as a result of increases in our selling andmarketing, general and administrative and research and development expenses. Selling and Marketing Expenses Our selling and marketing expenses increased by 47.2% from RMB261.5 million in 2014 to RMB385.0 million in 2015. This increase was partially due toincreased personnel cost and welfare expenses related to growth in our selling and marketing headcount from 1,773 as of December 31, 2014 to 2,300 as ofDecember 31, 2015. The amount of personnel cost and welfare expenses for our selling and marketing staff increased from RMB117.4 million in 2014 toRMB182.3 million in 2015. The increase in selling and marketing expenses was also due to expanded marketing efforts, which increased advertisingexpenses from RMB102.8 million in 2014 to RMB151.5 million in 2015, primarily as a result of increased spending on search engine advertising as weexpanded our network of learning centers. General and Administrative Expenses Our general and administrative expenses increased by 36.6% from RMB184.0 million in 2014 to RMB251.3 million in 2015 primarily due to higherpersonnel costs and welfare expenses for our increased headcount of general and administrative personnel, from 742 as of December 31, 2014 to 1,015 as ofDecember 31, 2015 to support our growing operations, higher bad debt allowance associated with our post-graduation tuition installment payment option forqualified students enrolled from 2010 to 2014 and higher share-based compensation expenses, which increased from RMB22.3 million in 2014 to RMB28.3million in 2015. The amount of bad debt allowance in 2014 mainly reflects our assessment of the delinquency risk for students enrolled between 2010 and 2013 who used thepost-graduation payment option. In 2015, we observed an increase in the overall account aging for students enrolled between 2010 and 2014 who used thepost-graduation payment option, as well as an increase in the cumulative default amount of accounts receivable from such students. As a result, wedetermined that the delinquency risk for the corresponding accounts receivable has increased as well. As we devote more resources towards accountsreceivable management, we do not believe that the overall delinquency risk for our accounts receivable will continue to increase. Since July 2015, we focused more on tracking and updating the personal information of our alumni who used the post-graduation payment option, and webegan to (i) task our career counselors with accounts receivable collection from their former students in such class and (ii) add accounts receivable collectionrate as a KPI for our regional managers, learning center managers and career counselors. We believe that our stricter tracking and management of accountsreceivable have been effective in generally preventing the overall delinquency risk from increasing. Research and Development Expenses Our research and development expenses increased by 51.0% from RMB33.5 million in 2014 to RMB50.5 million in 2015 primarily due to increasedpersonnel costs and welfare expenses of our instructors allocated to their content development activities for our new courses, as well as increased number ofresearch and development staff as we expanded our course offerings and operations. Interest Income Our interest income increased from RMB26.8 million in 2014 to RMB42.7 million in 2015. Our interest income in both periods consisted of interest earnedon our cash and time deposits deposited in commercial banks and interest income recognized in relation to our installment payment plan for students. Theincrease in interest income was primarily due to higher tuition interest income in relation to our installment payment plan for students and higher bankdeposits generated ultimately from operating activities. Income Tax Expense Our income tax expense decreased by 73.2% from RMB14.8 million in 2014 to RMB4.0 million in 2015. The decrease was mainly due to a decrease in theeffective income tax rate to 2.2% in 2015 from 8.9% in 2014, partially offset by higher taxable income. The decrease in the effective income tax rate wasprimarily due to a tax holiday enjoyed by Tarena Hangzhou as a “newly established software enterprise”, as well as more profit before tax being generated bythis tax-exempt subsidiary. 87  The effective income tax rate of 8.9% in 2014 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deductionallowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which wereat cumulative loss position. The effective income tax rate of 2.2% in 2015 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deductionallowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which wereat cumulative loss position. Net Income As a result of the foregoing, our net income increased by 17.7% from RMB151.8 million in 2014 to RMB178.8 million in 2015. Inflation Since our inception, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, theyear-over-year percent changes in the consumer price index for December 2014, 2015 and 2016 were increases of 1.5%, 1.6% and 2.1%, respectively. Impact of Foreign Currency Fluctuation See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Fluctuations in exchange rates could have a material adverseeffect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—ForeignExchange Risk.” Impact of Governmental Policies See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China” and “Item 4. Information on the Company—B. BusinessOverview—Government Regulations.” B.Liquidity and Capital Resources Cash Flows and Working Capital Our principal sources of liquidity have been cash generated from operating activities and proceeds from the issuance and sale of our shares. As of December31, 2016, we had RMB1,286.1 million in cash and time deposits and we had no bank borrowings. Our cash consists of cash on hand and cash in bank, whichare unrestricted as to withdrawal. Cash of our consolidated VIEs, in the amount of RMB0.6 million as of December 31, 2016, can be used only to settleobligations of our consolidated VIEs. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months whenpurchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term ofgreater than three months when purchased, while the time deposits that mature over one year as of the balance sheet date are included in non-current assets. We believe that our current cash, cash equivalents, time deposits and anticipated cash flow from operations will be sufficient to meet our anticipated cashneeds, including our cash needs for working capital and capital expenditures, for at least the next 12 months. 88  See Cash, cash equivalents, time deposits and restricted time deposits under Note 2(d) to our audited consolidated financial statements included in thisannual report for information regarding the currencies in which cash, cash equivalents and time deposits were held as of December 31, 2016. The following table sets forth a summary of our cash flows for the periods indicated: For the Year Ended December 31, 2014 2015 2016 RMB RMB RMB (in thousands) Net cash provided by operating activities 175,343 347,698 524,030 Net cash used in investing activities (734,539) (72,309) (156,449)Net cash provided by (used in) financing activities 655,026 (26,899) (78,044)Effect of foreign currency exchange rate changes on cash and cash equivalents 5,837 4,413 7,197 Net increase in cash and cash equivalents 101,667 252,903 296,734 Cash and cash equivalents at the beginning of the year 159,368 261,035 513,938 Cash and cash equivalents at end of the year 261,035 513,938 810,672 Operating Activities Net cash provided by operating activities increased to RMB524.0 million in 2016 from RMB347.7 million in 2015, primarily due to an increase ofapproximately RMB546.3 million in cash collected from our students in 2016, which were partially offset by an increase of approximately RMB368.2million in cash operating expenditures, an increase of approximately RMB0.9 million in income tax payment and a decrease of proceeds from tax refund ofapproximately RMB0.9 million in 2016. Net cash provided by operating activities increased to RMB347.7 million in 2015 from RMB175.3 million in 2014, primarily due to an increase ofapproximately RMB400.2 million in cash collected from our students in 2015, a decrease of approximately RMB1.3 million in income tax payment andproceeds from tax refund of approximately RMB1.3 million in 2015, which were partially offset by an increase of approximately RMB230.4 million in cashoperating expenditures. Net cash provided by operating activities decreased to RMB175.3 million in 2014 from RMB183.9 million in 2013, primarily due to an increase ofapproximately RMB158.2 million in cash operating expenditures in 2014, which were partially offset by an increase of approximately RMB141.7 million incash collected from our students and a decrease of approximately RMB7.9 million in income tax payment in 2014. Investing Activities Our cash used in investing activities is primarily related to investments in time deposits, short-term financial products and other entities with a greatdevelopment prospect, and purchase of buildings, property and equipment and leasehold improvements. Net cash used in investing activities was RMB156.4 million in 2016, consisting of purchase of short-term investment of approximately RMB1,937.0 million,purchase of time deposits of approximately RMB421.2 million, purchase of four office buildings, mainly for teaching purpose, and to a lesser extent, foradministrative functions, with a total consideration of RMB282.0 million, purchase of property and equipment, including computers and servers, ofapproximately RMB100.0 million in connection with the expansion of our network of learning centers, and payment for long-term investment andacquisition of Hanru Hangzhou of approximately RMB17.0 million, and net payment for loans to employees of approximately RMB15.4 million; andpartially offset by the maturity of short-term investment of approximately RMB1,937.0 million, and maturity of time deposits of approximately RMB678.7million. Net cash used in investing activities was RMB72.3 million in 2015, consisting of purchase of short-term investment of approximately RMB945.0 million,purchase of time deposits of approximately RMB639.0 million, purchase of property and equipment, including computers and servers, of approximatelyRMB100.0 million in connection with the expansion of our network of learning centers, and payment for long-term investment and acquisition of HanruHangzhou of approximately RMB25.0 million; and partially offset by the maturity of short-term investment of approximately RMB945.0 million, andmaturity of time deposits of approximately RMB690.3 million. 89  Net cash used in investing activities was RMB734.5 million in 2014, consisting of purchases of property and equipment, including computers and servers, ofapproximately RMB48.4 million in connection with the expansion of our network of learning centers; purchase of time deposits of approximatelyRMB708.1 million; purchase of short-term investment in the amount of approximately RMB622.8 million; and partially offset by the maturity of short-terminvestment of approximately RMB622.8 million, and maturity of time deposits of approximately RMB22.3million. Financing Activities Net cash used in financing activities in 2016 was RMB78.0 million, which was primarily attributable to the payment for repurchase of treasury stock under ashare repurchase plan in the amount of RMB44.4 million, payment for dividend in the amount of RMB54.0 million, and partially offset by proceeds fromIssuance of Class A ordinary shares in connection with exercise of share options of RMB20.4 million. Net cash used in financing activities in 2015 was RMB26.9 million, which was primarily attributable to the payment for repurchase of treasury stock under ashare repurchase plan in the amount of RMB49.4 million, and partially offset by proceeds from Issuance of Class A ordinary shares in connection withexercise of share options of RMB22.5 million. Net cash provided by financing activities in 2014 was RMB655.0 million, which was primarily attributable to the gross proceeds from our initial publicoffering of approximately RMB592.2 million, payment of costs related to our initial public offering in the amount of RMB21.7 million and net proceedsfrom our concurrent private placement of RMB83.1 million in April. Capital Expenditures Our capital expenditures are primarily related to purchase of office building, property and equipment, leasehold improvements and investments in computers,network equipment and software. Our capital expenditures were RMB48.4 million, RMB100.0 million and RMB382.0 million in 2014, 2015 and 2016,respectively. We have made and may continue to make acquisitions of businesses and properties that complement our operations. We purchased twobuildings in Beijing, two buildings respectively in Qingdao and in Haikou for an aggregate price of RMB282 million in 2016. The office buildings aremainly for teaching purpose, and to a lesser extent for administrative functions. We expect our capital expenditures will continue to be significant for thenear future as we continue to expand our network of learning centers. We expect to fund our future capital expenditures with our current cash, cashequivalents, time deposits and anticipated cash flow from operations. Holding Company Structure We are a holding company with no material operations of our own. We conduct our operations primarily through our wholly-owned subsidiaries in China. Asa result, our ability to pay dividends depends upon dividends paid by our wholly-owned subsidiaries. If our wholly-owned subsidiaries or any newly formedsubsidiaries incur any debt in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly-ownedsubsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards andregulations. Under PRC law, each of our subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory surplusreserve until such reserve reaches 50% of its registered capital. Although the statutory surplus reserves can be used to increase the registered capital andeliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the eventof liquidation. As a result of these PRC laws and regulations, as of December 31, 2016, we had RMB102.1 million in statutory surplus reserves that are notdistributable as cash dividends. Our PRC subsidiaries have not historically paid any dividends to our offshore entities from their accumulated profits.However, we do not expect that the statutory surplus reserve requirement will materially limit our ability to pay dividends to our shareholders or our plan toexpand our business because we are only required to set aside an additional RMB159.6 million to satisfy the maximum requirement of statutory surplusreserves for all of our PRC subsidiaries as of December 31, 2016. In addition, our private schools requiring reasonable returns are required to appropriate noless than 25% of their net income to a statutory development fund, whereas in the case of private schools requiring no reasonable return, this amount shall beno less than 25% of the annual increase of their net assets. As of December 31, 2016, we had RMB13.1 million in statutory development fund that are notdistributable as cash dividends. 90  C.Research and Development, Patents and Licenses, etc. Research and Development Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, TMOOC.cn andthe various services that we provide to our students. We manage our lecture delivery system, TTS and TMOOC.cn using a combination of commerciallyavailable software, hardware systems and proprietary technology. Since 2006, we have established a powerful online platform that enables thousands ofstudents to simultaneously log onto our TTS and participate in activities online. We developed our CRM software in-house to manage our student and corporate employer information, as well as to integrate our key administrativefunctions. We rely on our internal IT resources to upgrade the CRM system as needed. Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time thatthey devote to research and development-related activities, as well as the personnel costs of our software engineers. Our research and development expenseswere RMB33.5 million, RMB50.5 million and RMB65.6 million in 2014, 2015 and 2016, respectively. Intellectual Property Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of ourcompetitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protectionand confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we requirecertain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utilitymodels, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to jobassignments or using our materials and technology, or during the one year after their employment that relates to their employment with us, are our propertyand they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights. As of December 31, 2016, we had registered 192 domain names relating to our business, including our www.tedu.cn, TMOOC.cn, jobshow.cn, www.IT61.cnand www.art61.cn websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center. Tarena Techholds 21 registered software copyrights, 35 trademarks and 190 registered domain names including www.tedu.cn. Beijing Tarena holds the domain nameTMOOC.cn. D.Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period fromJanuary 1, 2016 to December 31, 2016 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capitalresources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. E.Off-Balance Sheet Arrangements Starting from 2011, Chuanbang, a credit-sourcing company in China owned by Mr. Shaoyun Han, our chief executive officer, began to offer person-to-personlending services to our students to help them pay for our tuition fees. Under the person-to-person lending service, we serve as the guarantor of the loans takenout by students. Starting from April 2013, we had stopped providing guarantees for any new student loans arranged by Chuanbang. See “Item 7. MajorShareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Shareholders and Affiliates—Transactions withChuanbang.” As of December 31, 2014, 2015 and 2016, our maximum exposure to guarantees of student loans obtained through Chuanbang was RMB1.3million, nil and nil, respectively. 91  Other than the above, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. Wehave not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity, or that are not reflected in ourconsolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that servesas credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity,market risk or credit support to us or engages in leasing, hedging or research and development services with us. F.Tabular Disclosure of Contractual Obligations The following table sets forth our contractual obligations as of December 31, 2016: Payment due by December 31, Total 2017 2018 2019 2020 2021 2022 andthereafter (in thousands) Operating lease commitments(1) 421,897 116,805 100,736 70,660 47,230 32,542 53,924 Note: (1)Represents our non-cancelable leases for our offices and learning centers. G.Safe Harbor This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historicalfacts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,”“believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections aboutfuture events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Theseforward-looking statements include, but are not limited to, statements about: ·our goals and growth strategies; ·our expectations regarding demand for and market acceptance of our courses; ·our ability to retain and increase our student enrollments; ·our ability to maintain and increase the utilization rate of our learning centers; ·our ability to offer new courses in existing and new subject areas; ·our ability to replicate the success and growth of our adult education services to the kid education market; ·our ability to maintain and increase the tuition fees of our courses; ·our ability to deepen and expand our corporate employer relationships; ·our ability to maintain our relationships with universities and colleges; 92  ·our future business development, results of operations and financial condition; ·the expected growth of, and trends in, the markets for our services in China; ·relevant government policies and regulations relating to our corporate structure, business and industry; and ·assumptions underlying or related to any of the foregoing. You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that our actual future resultsmay be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impactour business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and itis not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent towhich any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualifyall of our forward-looking statements by these cautionary statements. You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise. ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A.Directors and Executive Officers The following table sets forth information regarding our executive officers and directors as of the date of this annual report. Directors and Executive Officers Age Position/TitleShaoyun Han 46 Founder, chairman and chief executive officerJianguang Li 52 DirectorYongji Sun 52 Independent directorXiaosong Zhang 53 Independent directorYa-Qin Zhang 51 Independent directorYuduo Yang 42 Chief financial officerYing Sun 40 Vice presidentYinan Qi 38 Vice president Shaoyun Han is our founder and has served as chairman of our board of directors and chief executive officer since our inception. Before founding Tarena inSeptember 2002, Mr. Han was deputy chief engineer and director of the software division of AsiaInfo-Linkage between 1995 and 2002, responsible forsoftware research and development and corporate management. Mr. Han received a bachelor’s degree in computer application from Jilin University in China. Jianguang Li has served as our director since January 2004. Mr. Li has been a partner of IDG Capital Partners since March 2006, responsible for providingventure capital and private equity investment-related advice. Between 1999 and 2006, Mr. Li served as a vice-president of IDG Technology VentureInvestment Inc. Prior to joining IDG in 1999, Mr. Li worked in Crosby Assets Management Limited as an investment manager. Mr. Li has been a non-executive director of China Binary Sale Technology Limited, a company listed on the Hong Kong Stock Exchange, since April, 2015. Mr. Li received abachelor’s degree in management from Peking University and a master’s of science degree from the University of Guelph. Yongji Sun has served as our independent director since April 2014. Mr. Sun currently serves as the chairman of Dilato Infotech Inc. Between 2011 and 2014,Mr. Sun served as the chief executive officer of Shangxue Education Technology Inc. Between 2005 and 2011, Mr. Sun served as executive vice president ofspecial projects and strategic relationships at HiSoft Technology International Ltd., or HiSoft . Prior to joining HiSoft in November 2005, Mr. Sun foundedBeijing Tianhai Hongye International Software Co., Ltd. (Ensemble) in 2002 and served as its chief executive officer from 2003 to 2005. He founded andserved as chief executive officer of Newland Network Co. from 2000 to 2002. He founded Lotus China in 1993 and served as the head of the research anddevelopment center until 1998. Mr. Sun received a bachelor’s degree from North Eastern Machinery Institute in 1985, a master’s degree in Computer Sciencefrom Nanjing Aerospace & Aeronautic University in 1988, and received a master of business administration from Babson College in 2000. 93  Xiaosong Zhang has served as our independent director since April 2014. Mr. Zhang currently serves as the chief financial officer of Momo Inc., a NASDAQ-listed company. Mr. Zhang served as an independent director and chairman of the audit committee of Sungy Mobile Limited, a NASDAQ-listed mobileinternet company, between November 2013 and July 2014. Mr. Zhang served as the chief financial officer of iSoftStone Holdings Limited, a NYSE-listedcompany, between July 2010 and April 2014, and was an independent director of iSoftStone between February 2010 and July 2010. Prior to joiningiSoftStone, Mr. Zhang served as chief financial officer of BJB Career Education Company Limited from 2009 to June 2010, as chief financial officer ofEmarket Holding Group, Ltd. from 2008 to 2009, as chief financial officer of Chinacars, Inc. from 2007 to 2008 and as chief financial officer of VimicroInternational Corporation, a NASDAQ-listed company, from 2004 to 2007. From 2000 to 2004, Mr. Zhang was a manager and then a senior manager at theBeijing office of PricewaterhouseCoopers. From 1995 to 1999, Mr. Zhang was an auditor and then a senior auditor at the Los Angeles office of KPMG LLP.Mr. Zhang received his master degree in accountancy from University of Illinois, his master degree in professional meteorology from Saint Louis University,and his bachelor degree in meteorology from Peking University. Mr. Zhang is a Certified Public Accountant in the State of California. Ya-Qin Zhang has served as our independent director since April 2014. Mr. Zhang has served as president of Baidu, Inc., a NASDAQ-listed company, sinceSeptember 2014. Mr. Zhang has served as a director of ChinaCache International Holdings Ltd., a NASDAQ-listed company, since September 2010. Mr.Zhang served as an independent director and member of the audit committee of Autohome Inc., a NYSE-listed company, between December 2013 andJanuary 2015. Mr. Zhang served as the chairman of Microsoft Asia-Pacific R&D Group between 2005 and September 2014 and was in charge of the researchand development of Microsoft Corporation in the Asia-Pacific region. Mr. Zhang is one of the founding members of the Microsoft Research Asia lab, wherehe served as managing director and chief scientist, and he also founded the Advanced Technology Center in 2003. Before joining Microsoft in 1999, Mr.Zhang was a director for the Multimedia Technology Laboratory at Sarnoff Corp. and worked as a senior technical staff member for GTE Laboratories Inc. andContel Corp. Mr. Zhang received his bachelor’s and master’s degrees in electrical engineering from the University of Science and Technology of China and aPh.D. in electrical engineering from George Washington University. Yuduo Yang has served as our co-chief financial officer since November 2015 and as our chief financial officer since April 2016. Prior to joining us, Mr. Yangwas a vice president at Beijing Fengshun Lubao Car Auction Company Limited from March 2015 to November 2015. From December 2013 to October 2014,Mr. Yang was a finance director at Bybon Group Company Limited. From June 2010 to December 2013, Mr. Yang was a finance director at South BeautyGroup, a well-known restaurant chain operator in China. Prior to that, Mr. Yang was a finance manager at Google and Lucent Technologies from December2007 to May 2010, and from April 2005 to November 2007, respectively, and an auditing manager at KPMG Beijing Office from July 1997 to April 2005.Mr. Yang received a bachelor's degree in economics from Renmin University of China, as well as an MBA degree from Fordham University. Ying Sun is our vice president. Ms. Sun has served as our vice president since December 2009, responsible for our nation-wide operations. Ms. Sun joined usin June 2005 as the general manager of our Beijing learning centers. Between 2007 and 2009, she was the general manager of our northern region. From 1999to 2005, Ms. Sun worked in Gloria Hotels and Resorts, serving in various sales and human resources-related roles. Ms. Sun received a bachelor’s degree intourism economics management from Dongbei University of Finance and Economics in China. Yinan Qi is our vice president. Mr. Qi has served as our vice president since September 2013, responsible for student recruitment through retail channels. Mr.Qi served as our general manager of northern region between 2010 and 2014, responsible for our operations in Northern China. Mr. Qi joined us in March2007, previously serving in roles including the deputy general manager of northern region, deputy general manager of our Beijing learning centers anddirector of our Hangzhou learning center. Prior to joining us, Mr. Qi served as the general manager of the Beihang campus of GAMFE between 2005 and2006 and as director of technology at Zhonghe Wangxun (Beijing) Information Technology Co., Ltd. between 2002 and 2005. Mr. Qi received a bachelor’sdegree in optoelectronic technology from China Jiliang University and a master’s degree in multimedia technologies from the University of Science andTechnology Beijing. 94  B.Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2016, we paid an aggregate of approximately RMB2.6 million in cash to our executive officers, and we paid anaggregate of RMB0.7 million in cash to our non-executive directors. For share incentive grants to our directors and executive officers, see “—Share IncentivePlan.” Our PRC subsidiaries and consolidated affiliated entities are required by law to make contributions equal to certain percentages of each employee’s salary forhis or her pension insurance, medical insurance, housing fund, unemployment and other statutory benefits. In July 2016, we purchased a health insurancepolicy for Mr. Shaoyun Han with a total premium of RMB31,097 and a sum insured of RMB8.0 million.Other than the above-mentioned statutorycontributions mandated by applicable PRC law and the health insurance policy, we have not set aside or accrued any amount to provide pension, retirementor other similar benefits to our executive officers and directors. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for aspecified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer,such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or afailure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In suchcase of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where theexecutive officer is based. The executive officer may resign at any time with a three-month advance written notice. Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not touse, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any confidential informationor trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we haveconfidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which theyconceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist usin obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment andtypically for two years following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients,customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doingbusiness with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide servicesto any of our competitors, or engage, whether as a principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seekdirectly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in theyear preceding such termination, without our express consent. We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify ourdirectors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being adirector or officer of our company. Share Incentive Plan The 2008 Plan We have adopted the 2008 Plan in September 2008. The purpose of the 2008 Plan is to attract and retain the best available personnel for positions ofsubstantial responsibility, to provide additional incentives to selected directors, officers, employees and consultants and to promote the success of Tarena’sbusiness by offering these individuals an opportunity to acquire a proprietary interest in Tarena. 95  Under the 2008 Plan, the maximum aggregate number of shares which may be issued is 8,184,990. As of March 31, 2017, options to purchase 984,241 ClassA ordinary shares are issued and outstanding, and there are 276,412 Class A ordinary shares available for future issuance upon the exercise of future grantsunder the 2008 Plan. Options to purchase a total of 3,815,000 Class A ordinary shares were granted prior to our adoption of the 2008 Plan. Such options were ratified by our boardand included in the 2008 Plan. The following paragraphs summarize the terms of the 2008 Plan. Types of Awards. The 2008 Plan permits the awards of options, restricted shares (or share appreciation rights or other similar awards) and rights to purchaserestricted shares. Plan Administration. Our board of directors or a committee appointed by our board will administer the 2008 Plan. The committee or the full board ofdirectors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms andconditions of each award grant, among other things. Award Agreement. Awards granted under the 2008 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award,which may include the term of the award and the provisions applicable in the event of the grantee’s employment or service terminates. Eligibility. We may grant awards to our employees, directors and consultants of our company, as well as trusts or companies established in connection withany of our employee benefit plan for the benefit of our employees, directors or consultants. Acceleration. The plan administrator may accelerate the vesting or exercisability of an option or lapsing of a repurchase or redemption right to whichrestricted shares may be subject. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion ofoption will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is thetenth anniversary after the date of a grant. Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or applicable laws of descent and distribution orpursuant to a qualified domestic relations order and by trusts or companies established in connection with any of our employee benefit plan for the benefit ofan employee, director or consultant, except as otherwise provided by the plan administrator. Termination of Employment or Service. In the event that a grantee ceases employment with us or ceases to provide services to us, any vested options willgenerally terminate after a period of time following the termination of employment if the grantee does not exercise the options during this period. Restrictions on Issue of Shares. Options granted under the 2008 Plan can only be exercised and ordinary shares can only be issued upon the occurrence of (i)the consummation of a qualified initial public offering, (ii) the consummation of a liquidation event or (iii) the expiry of the five year period commencingfrom the grant date. Termination of the 2008 Plan. Unless terminated earlier, the 2008 Plan will terminate automatically in 2018. Our board of directors has the authority toamend or terminate the plan subject to shareholder approval if required by applicable law. 96  The 2014 Plan We adopted the 2014 Plan in February 2014. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, orthe Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing withJanuary 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstandingon a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in theAward Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31of the immediately preceding calendar year. The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the2014 Plan was 1,207,867 as of January 1, 2017. As of March 31, 2017, options to purchase 2,340,140 Class A ordinary shares are issued and outstandingunder the 2014 Plan and 121,593 restricted share units were granted and outstanding under the 2014 Plan. The following paragraphs summarize the terms ofthe 2014 Plan. Types of Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units. Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the 2014 Plan can act as the planadministrator. Award Agreement. Options, restricted shares or restricted share units granted under the 2014 Plan are evidenced by an award agreement that sets forth theterms, conditions and limitations for each grant. Eligibility. We may grant awards to our employees, consultants or directors. However, we may grant options that are intended to qualify as incentive shareoptions only to our employees and employees of our parent companies and subsidiaries. Acceleration of Awards upon Change in Control. If a change in control, liquidation or dissolution of our company occurs, the plan administrator may, in itssole discretion, provide for (i) all awards outstanding to terminate at a specific time in the future and give each participant the right to exercise the vestedportion of such awards during a specific period of time, or (ii) the purchase of any award for an amount of cash equal to the amount that could have beenattained upon the exercise of such award, or (iii) the replacement of such award with other rights or property selected by the plan administrator in its solediscretion, or (iv) payment of award in cash based on the value of ordinary shares on the date of the change-in-control transaction plus reasonable interest. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion ofoption will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is thetenth anniversary after the date of a grant. Exercise Price of Options. The exercise price in respect of any option shall be determined by the plan administrator and set forth in the award agreementwhich may be a fixed or variable price related to the fair market value of the shares. The exercise price per share subject to an option may be amended oradjusted in the absolute discretion of the plan administrator, the determination of which shall be final, binding and conclusive. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement. Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, except asotherwise provided by the plan administrator. Termination. Unless terminated earlier, the 2014 Plan will terminate automatically in 2024. 97  The following table summarizes, as of March 31, 2017, the outstanding options granted to our directors and executive officers under our share plan. Name OrdinarySharesUnderlyingOptionsAwarded ExercisePrice(US$/Share) Date of Grant Date of Expiration Shaoyun Han * 4.360 February 20, 2014 February 19, 2024 555,524 1.830 February 20, 2014 February 19, 2024 * 4.360 March 1, 2015 February 28, 2025 * 1.830 December 31, 2016 December 29, 2026 Jianguang Li * 0.058 January 1, 2004 September 21, 2023 Yongji Sun — Xiaosong Zhang — Ya-Qin Zhang — Yuduo Yang * 1.000 May 17, 2016 May 15, 2026 * 1.000 January 1, 2017 December 31, 2026 Ying Sun * 1.830 January 1, 2013 September 21, 2023 * 4.360 February 20, 2014 February 19, 2024 * 4.360 March 1, 2015 February 28, 2025 * 1.000 January 1, 2016 December 31, 2026 * 1.830 December 31, 2016 December 29, 2026 * 1.000 January 1, 2017 December 31, 2026 Yinan Qi * 1.830 January 1, 2013 September 21, 2023 * 4.360 February 20, 2014 February 19, 2024 * 4.360 March 1, 2015 February 28, 2025 * 4.360 July 1, 2015 June 30, 2025 * 1.000 January 1, 2016 December 31, 2025 * 1.000 January 1, 2017 December 31, 2026 Total 1,322,347 * The aggregate number of ordinary shares underlying the outstanding options held by this individual is less than 1% of our total outstanding shares as ofMarch 31, 2017. The following table summarizes, as of March 31, 2017, the outstanding restricted share units we granted to our directors and executive officers under the2014 Plan. Name Number of Class AOrdinary SharesUnderlyingRestricted ShareUnits Date of GrantShaoyun Han — Jianguang Li — Yongji Sun * April 3, 2016Xiaosong Zhang * April 3, 2016Ya-Qin Zhang * April 3, 2016Yuduo Yang * February 28, 2017Ying Sun — Yinan Qi * February 28, 2017Total * * Less than 1% of our total outstanding shares as of March 31, 2017. As of March 31, 2017, other individuals as a group hold outstanding options to purchase a total of 2,002,034 Class A ordinary shares of our company, withexercise prices ranging from US$0.058 to US$4.36 per share. C.Board Practices Board of Directors Our board of directors currently consists of five directors. A director is not required to hold any shares in our company. Subject to the rules of the NASDAQGlobal Select Market and disqualification by the chairman of the relevant board meeting, a director may vote with respect to any contract, proposed contract,or arrangement in which he or she is materially interested. The board may exercise all the powers of the company to borrow money, mortgage its business,property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of anythird party. There is no age limit requirement for directors. The service agreements between us and the directors do not provide benefits upon termination oftheir services. 98  Committees of the Board of Directors We have an audit committee, a compensation committee and a nominating and corporate governance committee under the board of directors. We haveadopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Messrs. Xiaosong Zhang, Yongji Sun and Ya-Qin Zhang and is chaired by Mr. Xiaosong Zhang. Eachmember of our audit committee satisfies the “independence” requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules and meets theindependence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have determined that Mr.Xiaosong Zhang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and theaudits of the financial statements of our company. The audit committee is responsible for, among other things: ·selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed bythe independent registered public accounting firm; ·reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ·reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ·discussing the annual audited financial statements with management and the independent registered public accounting firm; ·reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies; ·reviewing and reassessing annually the adequacy of our audit committee charter; ·meeting separately and periodically with management and the independent registered public accounting firm; ·monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures toensure proper compliance; and ·reporting regularly to the board. Compensation Committee. Our compensation committee consists of Messrs. Ya-Qin Zhang, Yongji Sun and Xiaosong Zhang, and is chaired by Ya-QinZhang. Each member of our compensation committee satisfies the “independence” requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules. Thecompensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to ourdirectors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberatedupon. The compensation committee is responsible for, among other things: ·reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executiveofficers; ·reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ·reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors 99  ·selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’sindependence from management. Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Messrs. Yongji Sun, Xiaosong Zhangand Ya-Qin Zhang, and is chaired by Mr. Yongji Sun. Each member of our nominating and corporate governance committee satisfies the “independence”requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules. The nominating and corporate governance committee assists the board in selectingindividuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governancecommittee is responsible for, among other things: ·recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board; ·reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experienceand availability of service to us; ·selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, aswell as of the nominating and corporate governance committee itself; ·developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significantdevelopments in the law and practice of corporate governance and our compliance with such laws and practices; and ·evaluating the performance and effectiveness of the board as a whole. Duties of Directors Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests. Our directors also have a duty toexercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. Infulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. A shareholder may have the right toseek damages in our name if a duty owed by our directors is breached. Terms of Directors and Officers Our officers are elected by and serve at the discretion of the board. Our directors are not subject to a term of office and hold office until such time as theyresign or are removed from office by ordinary resolution of our shareholders. A director will be removed from office automatically if, among other things, thedirector (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be of unsound mind. D.Employees We have dual headquartered in Beijing and Hangzhou, where our instructors, software engineers and certain general and administrative staff are based. Wehave divided our national network of learning centers into three regions, namely northern region, southern region, and central and western region, and wehave regional offices that are responsible for managing the daily operations of learning centers located within each territory. We had a total of 3,904, 5,066 and 6,257 employees as of December 31, 2014, 2015 and 2016, respectively. As of December 31, 2016, we had 570 employeesin Beijing, 387 employees in Hangzhou and 5,300 employees in other areas within China. The following table sets forth the number of our employees,categorized by function, as of December 31, 2016: Functions Number of Employees Teaching and content development 1,548 Selling and marketing 2,717 Career development 445 Employer cooperation 243 General and administration 1,304 Total 6,257 100  As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments,including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. We are requiredunder PRC law to make contributions from time to time to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances ofour employees, up to a maximum amount specified by the local government. Our employees are not covered by any collective bargaining agreement. We believe that we maintain a good working relationship with our employees, andwe have not experienced any significant labor disputes. E.Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2017by: ·each of our directors and executive officers; and ·each person known to us to own beneficially more than 5% of our ordinary shares. The calculations in the table below are based on 57,313,810 ordinary shares outstanding as of March 31, 2017, comprising of 50,107,751 Class A ordinaryshares and 7,206,059 Class B ordinary shares. Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by aperson and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through theexercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of thepercentage ownership of any other person. Ordinary Shares Beneficially Owned Class A ordinaryshares Class Bordinaryshares Total ordinaryshares on an as-converted basis % of totalordinary shareson an as-converted basis % of aggregatevoting power † Directors and Executive Officers:** Shaoyun Han(1) 10,247,463 7,206,059 17,453,522 30.2 67.1 Jianguang Li(2) * — * * * Yongji Sun(3) * — * * * Xiaosong Zhang(4) * — * * * Ya-Qin Zhang(5) * — * * * Yuduo Yang * — * * * Ying Sun * — * * * Yinan Qi * — * * * All directors and executive officers as a group 10,916,392 7,206,059 18,122,451 31.2 67.5 Principal Shareholders: KKR funds(6) 17,073,726 7,206,059 24,279,785 42.0 72.7 AERO Holdings Limited(7) 5,865,318 — 5,865,318 10.2 4.8 Trafalgar Trading Fund Inc. (8) 3,368,837 — 3,368,837 5.9 2.8 Learningon Limited(9) 500,000 6,060,000 6,560,000 11.4 50.0 Connion Capital Limited(10) 5,308,449 — 5,308,449 9.2 4.3 Techedu Limited(11) 2,439,014 1,146,059 3,585,073 6.3 11.4 101  Notes: * Less than 1%. ** Except for Mr. Jianguang Li, Mr. Yongji Sun, Mr. Xiaosong Zhang and Mr. Ya-Qin Zhang, the business address of our directors and executive officers isSuite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian District, Beijing, 100098, PRC. † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by suchperson or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled toone vote per share and each holder of our Class B ordinary shares is entitled to ten votes per share on all matters submitted to them for a vote. Our Class Aordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise berequired by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. (1)Represents (i) 6,060,000 Class B Ordinary Shares held by Learningon Limited, (ii) 1,146,059 Class B Ordinary Shares held by Techedu Limited, (iii)2,439,014 Class A Ordinary Shares held by Techedu Limited, (iv) 2,000,000 Class A Ordinary Shares held by Moocon Education Limited, (v) 1,272,698Class A Ordinary Shares held by Connion Capital Limited, (vi) 3,594,439 restricted American depositary shares (“ADSs”) representing 3,594,439 Class AOrdinary Shares held by Connion Capital Limited, (vii) 500,000 restricted ADSs representing 500,000 Class A Ordinary Shares held by LearningonLimited, and (viii) 441,312 Class A Ordinary Shares that Connion Capital Limited may purchase upon exercise of options within 60 days of March 31,2017. Each of Connion, Learningon and Techedu is principally an investment holding vehicle. Each of Connion and Learningon is a companyorganized and existing under the laws of the British Virgin Islands, and is ultimately wholly owned by HANQQ Trust. TMF (Cayman) Ltd. is the trusteeof HANQQ Trust, with Mr. Han as settlor and Mr. Han and his family as beneficiaries. Techedu Limited is a company organized and existing under thelaws of the British Virgin Islands and is wholly owned by Mr. Shaoyun Han. Mr. Han is the sole director of each of Connion, Learningon and Techedu,which do not have any executive officer. The registered office address of each of Connion, Learningon and Techedu is the offices of Trident TrustCompany, (B.V.I.) Ltd., Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands. (2)The business address of Mr. Li is 6/F., COFCO Plaza, No.8 Jianguomennei Ave, Jiannei St, Dongcheng District, Beijing, 100020, PRC. (3)The business address of Mr. Sun is 4th Floor, Jingban Xinxigang, No.3, East Yumin Road, Xicheng District, Beijing, PRC. (4)The business address of Mr. Zhang is 20th Floor, Block B, Tower 2, Wangjing SOHO, No.1 Futongdong Street, Chaoyang District, Beijing, PRC. (5)The business address of Mr. Zhang is Baidu Campus, No. 10 Shangdi 10th Street, Haidian District, Beijing 100085 PRC. 102  (6)Consists of (i) 6,826,263 Class A ordinary shares held by Talent Fortune Investment Limited, a Cayman Islands company, as of July 14, 2015 (as reportedin a Schedule 13D amendment filed by KKR & Co. L.P. on July 23, 2015) and (ii) 10,247,463 Class A ordinary shares and 7,206,059 Class B ordinaryshares beneficially owned by Mr. Shaoyun Han as of March 31, 2017 as a result of a convertible bond purchase agreement entered into among, inter alia,Talent Fortune Investment Limited and Mr. Shaoyun Han on July 14, 2015. Talent Fortune Holdings Limited is the sole shareholder of Talent FortuneInvestment Limited. KKR China Growth Fund L.P. is the controlling member of Talent Fortune Holdings Limited. KKR Associates China Growth L.P. isthe sole general partner of KKR China Growth Fund L.P. KKR China Growth Limited is the sole general partner of KKR Associates China Growth L.P.KKR Fund Holdings L.P is the sole shareholder of KKR Associates China Growth L.P. KKR Fund Holdings GP Limited is a general partner of KKR FundHoldings L.P. KKR Group Holdings L.P. is the sole shareholder of KKR Fund Holdings GP Limited and a general partner of KKR Fund Holdings L.P.KKR Group Limited is the general partner of KKR Group Holdings L.P. KKR & Co. L.P. is the sole shareholder of KKR Group Limited. KKRManagement LLC is the general partner of KKR & Co. L.P. The designated members of KKR Management LLC are Messrs. Henry R. Kravis and GeorgeR. Roberts. The business address of Talent Fortune Investment Limited is c/o KKR Asia Limited, Level 56, Cheung Kong Center, 2 Queen’s RoadCentral, Hong Kong. The percentage of beneficial ownership and voting power was calculated based on the total number of our ordinary sharesoutstanding as of March 31, 2017. As disclosed in a Schedule 13D amendment filed by KKR & Co. L.P. and its affiliated entities (collectively, “KKRParties”) on July 23, 2015 (the “KKR 13D”), KKR Parties took the view that they may be deemed to share the beneficial ownership of our ordinary sharesowned by Mr. Shaoyun Han by virtue of a convertible bond purchase agreement (the “CBPA”) entered into on July 14, 2015 among (i) MooconEducation Limited (“Moocon”), a limited liability company incorporated in the British Virgin Islands wholly owned by Mr. Shaoyun Han, (ii) Mr. Han,(iii) Talent Wise Investment Limited (“Talent”), an exempted company with limited liability incorporated in Cayman Islands indirectly controlled byKKR & Co. L.P. and its affiliated entities and (iv) Talent Fortune Investment Limited (“Talent Fortune”, together with Talent, the “Talent Parties”), anexempted company with limited liability incorporated in Cayman Islands indirectly controlled by KKR & Co. L.P. and its affiliated entities. Under theCBPA, neither Mr. Han nor any entity directly or indirectly controlled by him, excluding us (together with Mr. Han, the “Founder Entities”) may agree tohave us take any of the following actions without the approval of Talent Wise, provided that the Talent Parties and their affiliates hold not less than4,195,662 Class A ordinary shares of ours and Moocon has not redeemed the Bond (as defined in the CBPA) in full: (i) issue any securities of any type orclass, carry out any equity financing or undertake any obligation in relation to any of the above, with certain exceptions; (ii) merge, amalgamate orreorganization, or acquisition exceeding US$10 million, or take any action which would result in a change of control or a transfer of an asset valued atUS$10 million or more; (iii) carry out business other than education; or (iv) delist or change its listing place, or take any other actions which may affectthe liquidity of the KKR Parties’ investment. In the event of Talent Wise elects to convert all of the Bond into the shares of the Moocon under the CBPA,following the occurrence of an Event of Default (as define in the CBPA), and therefore acquires the control of Moocon, Talent Wise may be deemed tobeneficially own all of the shares of the Company held by Moocon. As of March 31, 2017, Moocon held 2,000,000 Class A ordinary shares of ours,representing approximately 1.6% of the total outstanding voting power of our company. The calculation of the voting power is based on 57,313,810outstanding ordinary shares as a single class, being the sum of 50,107,751 Class A ordinary shares and 7,206,059 Class B ordinary shares outstanding asof March 31, 2017, assuming conversion of all Class B ordinary shares into Class A ordinary shares. Since Mr. Han would still control more than 50% ofthe total outstanding voting power of our company following the occurrence of an Event of Default, the operation of the CBPA would not result in achange of control. (7)The number of ordinary shares beneficially owned is as of April 26, 2016, as reported in a Schedule 13G filed by AERO Holdings Limited on April 27,2016, and consists of (i) 6,355,741 ADSs, representing 6,355,741 Class A ordinary shares, held by Orchid Asia VI, L.P. and (ii) 318,241 ADSs,representing 318,241 Class A ordinary shares, held by Orchid Asia V Co-Investment Limited. The general partner of Orchid Asia VI, L.P. is OAVIHoldings, L.P., whose general partner is Orchid Asia VI GP, Limited. Orchid Asia VI GP, Limited is wholly owned by Orchid Asia V Group Management,Ltd., which is wholly owned by Orchid Asia V Group, Limited. AERO Holdings Limited is the controlling shareholder of Orchid Asia V Group, Limitedand Orchid Asia V Co-Investment Limited. Ms. Lam Lai Ming is the sole shareholder of AERO Holdings Limited. The business address of AEROHoldings Limited is Suites 6211-12, 62nd Floor, The Center, 99 Queen’s Road, Central, Hong Kong. The percentage of beneficial ownership and votingpower was calculated based on the total number of our ordinary shares outstanding as of March 31, 2017. (8)Represents 3,368,837 Class A ordinary shares held by Trafalgar Trading Fund Inc., a Cayman Islands limited liability company, which is registered withthe Cayman Islands Monetary Authority as a mutual fund. Trafalgar Trading Fund Inc. became our principle shareholder after it acquired 1,679,647 and1,689,190 Class A ordinary shares in December 2016 and February 2017, respectively. The registered office address of Trafalgar Trading Fund Inc. is c/oMourant Ozannes Corporate Services (Cayman) Limited 94 Solaris Avenue, P.O. Box 1348, Grand Cayman, KY1-1108, Cayman Islands. TrafalgarTrading Fund Inc. is managed by Trafalgar Capital Management (HK) Limited, with its business address at 18/F The Workstation, 43 Lyndhurst Terrace,Central, Hong Kong. (9)Represents (i) 6,060,000 Class B ordinary shares and (ii) 500,000 restricted ADSs representing 500,000 Class A ordinary shares. The registered officeaddress of Learingon Limited is the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, the BritishVirgin Islands. Learingon Limited is ultimately owned by Mr. Shaoyun Han through a trust. (10)The registered office address of Connion Capital Limited is the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146,Road Town, Tortola, the British Virgin Islands. Connion Capital Limited is ultimately owned by Mr. Shaoyun Han through a trust. (11)Represents (i) 2,439,014 Class A ordinary shares and (ii) 1,146,059 Class B ordinary shares. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share,while holders of Class B ordinary shares are entitled to ten votes per share. We issued Class A ordinary shares represented by our ADSs in our initial publicoffering in April 2014. Holders of our Class B ordinary shares may choose to convert their Class B ordinary shares into the same number of Class A ordinaryshares at any time. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance. To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legalpersons, severally or jointly. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. 103  To our knowledge, as of March 31, 2017, 34,509,232 of our Class A ordinary shares are held by one record holder in the United States, which is thedepositary of our ADS program, representing 68.9% of our total issued and outstanding Class A ordinary shares as of such date. The number of beneficialowners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. As of March31, 2017, none of our Class B ordinary shares are held by any record holder in the United States. For options and restricted share unit granted to our officers, directors and employees, see “—B. Compensation of Directors and Executive Officers—ShareIncentive Plan.” ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A.Major Shareholders See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.Related Party Transactions Contractual Arrangements with our VIE See “Item 4. Information on the Company—C. Organizational Structure.” Transactions with Shareholders and Affiliates Transactions with Chuanbang. Starting from the second half of 2011, Chuanbang, a company owned by our chief executive officer, Mr. Shaoyun Han, beganto offer person-to-person lending to enable qualified students to borrow unsecured loans from unrelated individuals to pay for our tuition fees. Under theperson-to-person lending service offered by Chuanbang to students enrolled prior to January 1, 2014, a student enters into a loan agreement with Mr. Han, asthe designated representative of Chuanbang, to borrow an amount equal to our tuition fees. Mr. Han then assigns the existing loan agreement to an unrelatedindividual lender identified by Chuanbang, or the person-to-person lender, with us serving as the guarantor of the loan to the student. Upon the receipt ofcash from the person-to-person lenders, Mr. Han remits the cash to us directly on behalf of the student for the payment of such student’s tuition fees.Chuanbang services the student loans by collecting repayments on behalf of the person-to-person lenders from students, made to an account opened in thename of Mr. Han. The “interest spread” between (i) the interest rate under the loan agreement between the student and Mr. Han and (ii) the “anticipatedannual yield” under the assignment agreement between Mr. Han and the person-to-person lender represents compensation for Chuanbang’s estimated costsincurred in originating and servicing the student loans, plus the amount payable to us for guaranteeing the student loans. Chuanbang ceased offering loanservices to our students enrolled since January 1, 2014. As of December 31, 2016, our maximum exposure to guarantees of student loans was nil. All the third-party lenders were repaid. Pursuant to our agreement with Chuanbang, Chuanbang provided cash collection service on our accounts receivable to better manage our cash collectionsince August 2013. The fee is calculated based on 2%~12% of the amount collected. The staff of Chuanbang includes our former employees who joinedChuanbang in July 2013. Chuanbang also provides similar cash collection service to other financial institutions. The cash collection service fees wereRMB0.7 million, RMB2.1 million and RMB6.4 million for 2014, 2015 and 2016, respectively. In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P, or KKR, a shareholder of the Company, provided cashadvances in the amount of RMB1.4 million to us in order to fund its share repurchase plan. We have fully repaid the advances in October 2015. Registration Rights Registration Rights Granted in 2011 In connection with our issuance of Series C preferred shares, we and all our then shareholders entered into an amended and restated shareholders agreementon September 6, 2011. Pursuant to our amended and restated shareholders agreement dated September 6, 2011, we have granted certain registration rights tocertain of our shareholders. Set forth below is a description of the registration rights granted under the agreement. 104  Demand Registration Rights. At any time after the completion of our initial public offering in April 2014, upon a written request from the holders of at least10% of the registrable securities held by our preferred shareholders, we must file a registration statement covering the offer and sale of the registrablesecurities held by the requesting shareholders and other holders of registrable securities who choose to participate in the offering. Registrable securitiesinclude, among others, our ordinary shares issued or to be issued upon conversion of the preferred shares. However, we are not obligated to proceed with a demand registration if we have, within the six-month period preceding the date of such request, alreadyeffected a registration under the Securities Act pursuant to the exercise of the holders’ registration rights, unless the registrable securities of the holders wereexcluded from such registration. We have the right to defer filing of a registration statement for up to 90 days if our board of directors determines in goodfaith that the filing of a registration statement would be materially detrimental to us and our shareholders, but we cannot exercise the deferral right more thanonce in any 12-month period. Form F-3 Registration Rights. When we are eligible for registration on Form F-3, upon a written request from the holders of a majority of the registrablesecurities held by our preferred shareholders, we must file a registration statement on Form F-3 covering the offer and sale of the registrable securities. We are not obligated to effect a Form F-3 registration, among other things, if we already effected a registration under the Securities Act pursuant to theexercise of the holders’ demand or piggyback registration rights, unless the registrable securities of the holders were excluded from such registration. Wehave the right to defer filing of a registration statement for up to 60 days if our board of directors determines in good faith that the filing of a registrationstatement would be materially detrimental to us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period. Piggyback Registration Rights. If we propose to file a registration statement for a public offering of our ordinary shares on a form that would be suitable forregistrable securities, we must offer holders of registrable securities an opportunity to include in that registration all or any part of their registrable securities.The underwriters of any underwritten offering have the right to limit the number of shares with registration rights to be included in the registration statement,subject to certain limitations. Expenses of Registration. We will pay all expenses relating to any demand, Form F-3, or piggyback registration, with certain limited exceptions. Termination of Obligations. We shall have no obligation to effect any demand, Form F-3, or piggyback registration on the earlier of (a) the date that is fiveyears after the completion of our initial public offering, or (b) as to any holder of registrable securities, the time when all registrable securities held by suchholder may be sold in any 90-day period without registration pursuant to Rule 144 under the Securities Act. Registration Rights Granted in 2015 We entered into a registration rights agreement with Talent Fortune Investment Limited, or KKR, an affiliate of KKR & Co. L.P., on July 17, 2015, pursuant towhich we granted certain registration rights to KKR. Set forth below is a description of the registration rights granted under the agreement. Securities Act Registration on Request. Upon a written request from KKR, we must use reasonable best efforts to effect a registration under the Securities Actcovering the registrable securities requested by KKR to register. However, we are not obligated to effect more than a total of three registration requests and at least a period of 180 days shall have elapsed since the previousregistration request and the previous registration in which KKR had an opportunity to participate pursuant to its piggyback registration rights. . 105  Piggyback Registration Rights. If we propose to register our securities under the Securities Act, subject to limited exceptions, we must offer KKR anopportunity to include in that registration all or any part of its registrable securities. The managing underwriter of any underwritten offering have the right tolimit the number of shares with registration rights to be included in the registration statement, subject to certain limitations. Postponements. We have the right to defer filing of a registration statement for up to 90 days if our board of directors determines in good faith that the filingof a registration statement would be materially adversely affect us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period. Expenses of Registration. We will pay all expenses relating to any requested or piggyback registration, with certain limited exceptions. Termination of Obligations. Our obligations under this registration rights agreement shall terminate when all registrable shares of KKR could be sold withoutrestriction under Rule 144(e) under the Securities Act within a 90-day period. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements andIndemnification Agreements.” Share Option Grants See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plan.” C.Interests of Experts and Counsel Not applicable. ITEM 8.FINANCIAL INFORMATION A.Consolidated Statements and Other Financial Information We have appended consolidated financial statements filed as part of this annual report. Legal Proceedings We are currently not a party to, and are not aware of any threat of, any legal, arbitration or administrative proceedings that, in the opinion of our management,are likely to have a material and adverse effect on our business, financial condition or results of operations. From time to time, we have become, and may inthe future become, a party to various legal or administrative proceedings or claims arising in the ordinary course of our business. Regardless of the outcome,legal or administrative proceedings or claims may have an adverse impact on us because of defense and settlement costs, diversion of management attentionand other factors. Dividend Policy On February 28, 2017, we declared a cash dividend of RMB1.10 (US$0.16) per ordinary share. Holders of our ADS, each representing one Class A ordinaryshare, are accordingly entitled to the cash dividend of RMB1.10 (US$0.16) per ADS, subject to the terms of the deposit agreement, including the fees andexpenses payable thereunder. The cash dividend was paid on or about May 30, 2017 to shareholders of record as of the close of trading on March 27, 2017.The aggregate amount of cash dividends paid was approximately RMB64.9 million (US$9.5 million), which was funded by surplus cash on our balancesheet. We are a holding company incorporated in the Cayman Islands. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us.See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Dividend Distribution.” Our board of directors has discretion as to whether to distribute dividends, subject to applicable laws. Subject to our ongoing financial performance, cashposition, budget and business plan and market conditions, we may, on an annual basis, consider paying a special dividend. If we pay any dividends, we willpay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expensespayable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars. 106  B.Significant Changes Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financialstatements included in this annual report. ITEM 9.THE OFFER AND LISTING A.Offering and Listing Details. Our ADSs, each representing one Class A ordinary share, have been listed on the NASDAQ Global Select Market since April 3, 2014 under the symbol“TEDU.” Update until April 24, 2017 (starting from April 3, 2014), the trading price of our ADSs on the NASDAQ Global Select Market ranged from US$6.54to US$20.00 per ADS. The following table provides the high and low trading prices for our ADSs on the NASDAQ Global Select Market for the periods indicated below. Trading Price High Low Annual Highs and Lows 2014 (since April 3, 2014) 15.85 6.54 2015 14.83 6.65 2016 17.75 8.35 Quarterly Highs and Lows First Quarter 2015 12.50 9.26 Second Quarter 2015 14.83 9.28 Third Quarter 2015 13.31 6.65 Fourth Quarter 2015 11.45 8.89 First Quarter 2016 11.38 8.28 Second Quarter 2016 11.61 9.68 Third Quarter 2016 15.19 9.87 Fourth Quarter 2016 17.75 13.92 First Quarter 2017 19.57 14.1 Monthly Highs and Lows October 2016 16.23 14.11 November 2016 17.75 13.92 December 2016 17.26 14.54 January 2017 15.49 14.79 February 2017 15.44 14.10 March 2017 19.57 15.36 April 2017 (through April 24, 2017) 20.00 18.39 B.Plan of Distribution Not applicable. C.Markets Our ADSs, each representing one Class A ordinary share, have been listed on the NASDAQ Global Select Market under the symbol “TEDU” since April 3,2014. D.Selling Shareholders Not applicable. 107  E.Dilution Not applicable. F.Expenses of the Issue Not applicable. ITEM 10.ADDITIONAL INFORMATION A.Share Capital Not applicable. B.Memorandum and Articles of Association The following are summaries of material provisions of our currently effective fifth amended and restated memorandum and articles of association, as well asthe Companies Law (2016 Revision) insofar as they relate to the material terms of our ordinary shares. Registered Office and Objects Our registered office in the Cayman Islands is located at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box2681, Grand Cayman KY1-1111, Cayman Islands. As set forth in article 3 of our fifth amended and restated memorandum of association, the objects for whichour company is established are unrestricted. Board of Directors See “Item 6. Directors, Senior Management and Employees—C. Board Practices.” Ordinary Shares General. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. All of our outstandingordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares. Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, provided that dividends may bedeclared and paid out of funds legally available therefor, namely out of either profit, our share premium account or any other fund or account which can beauthorized for this purpose in accordance with the Companies Law. Holders of Class A ordinary shares and Class B ordinary shares will be entitled to thesame amount of dividends, if declared. Voting Rights. Holders of our ordinary shares are entitled to ten calendar days notice of meetings of our shareholders. In respect of all matters subject to ashareholders’ vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes, voting together as one class.Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or anyshareholder present in person or by proxy. A quorum required for a meeting of shareholders consists of two shareholders who hold at least 50% of all voting power of our share capital in issue at themeeting present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. Shareholders’ meetings may beheld annually. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Extraordinary general meetings maybe called by a majority of our board of directors or our chairman or upon a requisition of shareholders holding at the date of deposit of the requisition not lessthan 1/3 of the aggregate voting power of our company. Advance notice of at least ten calendar days is required for the convening of our annual generalmeeting and other general meetings. 108  An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinaryshares cast at a meeting, while a special resolution requires the affirmative vote of no less than 2/3 of the votes cast attaching to the outstanding ordinaryshares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our fifth amended and restatedmemorandum and articles of association. Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are notconvertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity which isnot an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number of Class A ordinaryshares. Transfer of Ordinary Shares. Subject to the restrictions set out below and the provisions above in respect of Class B ordinary shares, any of our shareholdersmay transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board ofdirectors. Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have alien. Our board of directors may also decline to register any transfer of any ordinary share unless: ·the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as ourboard of directors may reasonably require to show the right of the transferor to make the transfer; ·the instrument of transfer is in respect of only one class of ordinary shares; ·the instrument of transfer is properly stamped, if required; ·in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and ·a fee of such maximum sum as the NASDAQ Global Market may determine to be payable or such lesser sum as our directors may from time to timerequire is paid to us in respect thereof. If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of thetransferor and the transferee notice of such refusal. The registration of transfers may, after compliance with any notice required of the NASDAQ Global Market, be suspended and the register closed at suchtimes and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not besuspended nor the register closed for more than thirty days in any year as our board may determine. Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available fordistribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available fordistribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately.Any distribution of assets or capital to a holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in any liquidation event. Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make calls upon shareholders for any amountsunpaid on their ordinary shares in a notice served to such shareholders at least fourteen calendar days prior to the specified time of payment. The ordinaryshares that have been called upon and remain unpaid are subject to forfeiture. Repurchase and Redemption of Ordinary Shares. The Companies Law and our fifth amended and restated articles of association permit us to purchase ourown shares. In accordance with our fifth amended and restated articles of association and provided the necessary shareholders or board approval have beenobtained, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in suchmanner, including out of capital, as may be determined by our board of directors. 109  Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, be variedwith the written consent of the holders of three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a general meetingof the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly providedby the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class ofshares. Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our list ofshareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements. See “Item 10. AdditionalInformation—H. Documents on Display.” Issuance of Additional Shares. Our fifth amended and restated memorandum of association authorizes our board of directors to issue additional ordinaryshares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares. Our fifth amended and restated memorandum of association also authorizes our board of directors to establish from time to time one or more series of preferredshares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including: ·the designation of the series; ·the number of shares of the series; ·the dividend rights, dividend rates, voting rights; and ·the rights and terms of redemption and liquidation preferences. Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilutethe voting power of holders of ordinary shares. Anti-Takeover Provisions. Some provisions of our fifth amended and restated memorandum and articles of association may discourage, delay or prevent achange of control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors toissue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without anyfurther vote or action by our shareholders. Exempted Company. We are an exempted company with limited liability under the Companies Law. “Limited liability” means that the liability of eachshareholder is limited to the amount unpaid by the shareholder on the shares of the company. The Companies Law distinguishes between ordinary residentcompanies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands mayapply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except thatan exempted company: ·does not have to file an annual return of its shareholders with the Registrar of Companies; ·is not required to open its register of members for inspection; ·does not have to hold an annual general meeting; ·may issue negotiable or bearer shares or shares with no par value; ·may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); 110  ·may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; ·may register as a limited duration company; and ·may register as a segregated portfolio company. Our fifth amended and restated memorandum and articles of association do not provide provisions that are different from those that are applicable to anexempted company as set forth above, except that they do not permit us to issue bearer shares or shares with no par value. C.Material Contracts Commodity Housing Presale Contracts Tarena Technologies Inc., our subsidiary, entered into a commodity housing presale contract, or Housing Presale Contract I, with Beijing Jingkai-gongdaInvestment Management Co., or Beijing Jingkai on May 5, 2016. Pursuant to the Housing Presale Contract I, Beijing Jingkai agreed to sell, and TarenaTechnologies Inc. agreed to purchase, a building numbered as B5 located in D1F1 of Beijing Economic-Technological Development Area, at a total price ofRMB114.6 million, in accordance with the terms and conditions set out in the Housing Presale Contract I. Tarena Software Technology (Hangzhou) Co., Ltd., our subsidiary, entered into a commodity housing presale contract, or Housing Presale Contract II, withBeijing Jingkai on November 5, 2016. Pursuant to the Housing Presale Contract II, Beijing Jingkai agreed to sell, and Tarena Software Technology(Hangzhou) Co., Ltd. agreed to purchase, a building numbered as B7 located in D1F1 of Beijing Economic-Technological Development Area, at a total priceof RMB118.3 million, in accordance with the terms and conditions set out in the Housing Presale Contract II. We have not entered into any material contracts other than in the ordinary course of business and other than those described above and in “Item 4.Information on the Company” or elsewhere in this annual report on Form 20-F. D.Exchange Controls See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Foreign Exchange Registration of OverseasInvestment by PRC Residents,” “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Foreign CurrencyExchange” and “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Dividend Distribution.” E.Taxation The following summary of certain Cayman Islands, PRC and United States federal income tax consequences of an investment in our ADSs or ordinary sharesis based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change or differinginterpretation, possibly with retroactive effect. This summary does not deal with all possible tax consequences relating to an investment in our ADSs orordinary shares, such as the tax consequences under other federal, state, local and other tax laws not addressed herein. To the extent that the discussion relatesto matters of Cayman Islands tax law, it represents the opinion of Conyers Dill & Pearman, our Cayman Islands counsel. To the extent that the discussionrelates to matters of PRC tax law, it represents the opinion of Han Kun Law Offices, our PRC counsel. Cayman Islands Taxation The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in thenature of inheritance tax or estate duty. There are no other taxes levied by the Government of the Cayman Islands that are likely to be material to holders ofADSs or ordinary shares. The Cayman Islands is a party to double taxation treaty with the United Kingdom but otherwise is not party to any double taxtreaties. There are no exchange control regulations or currency restrictions in the Cayman Islands. Pursuant to Section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Council: (i) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or ouroperations; and (ii) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations. The undertaking for us is for a period of twenty years from March 25, 2014. 111  People’s Republic of China Taxation Under the EIT Law, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” forPRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income as well as tax reportingobligations. Under the Implementation Rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall managementand control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, Circular 82issued by the SAT in April 2009, as amended in January 2014, specifies that certain offshore-incorporated enterprises controlled by PRC enterprises or PRCenterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel anddepartments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties,accounting books, company seal, minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors havingvoting rights. Further to Circular 82, the SAT issued the Bulletin 45, which took effect in September 2011, to provide more guidance on the implementationof Circular 82. Bulletin 45 provides for procedures and administration details of determination on PRC resident enterprise status and administration on post-determination matters. We do not believe that Tarena International, Inc. is a PRC resident enterprise. If the PRC tax authorities determine that TarenaInternational, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. Oneexample is that a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived byour non-PRC enterprise shareholders from transferring our shares or ADSs and potentially a 20% of withholding tax would be imposed on dividends we payto our non-PRC individual shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares or ADSs. Under the EIT Law, dividends generated from retained earnings after January 1, 2008 from a PRC company and distributed to a foreign parent company aresubject to a withholding tax rate of 10% unless the foreign parent’s jurisdiction of incorporation has a tax treaty with China that provides for a preferentialwithholding arrangement. Pursuant to the Hong Kong Tax Treaty, which became effective on December 8, 2006, a company incorporated in Hong Kong,such as Tarena HK, will be subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiary if it holds a 25% or moreinterest in that particular PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. However, based on Circular 81, the 5% withholdingtax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong enterprise must be thebeneficial owner of the relevant dividends; and (b) the Hong Kong enterprise must directly hold at least 25% share ownership in the PRC enterprise duringthe 12 consecutive months preceding its receipt of the dividends. However, a transaction or arrangement entered into for the primary purpose of enjoying apreferential tax treatment should not be a reason for the application of the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayerinappropriately is entitled to such preferential tax treatment, the competent tax authority has the power to make appropriate adjustments. The SATpromulgated Circular 601, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance, and a beneficialownership analysis will be used based on a “substance-over-the-form” principle to determine whether or not to grant tax treaty benefits. On June 29, 2012, theSAT further issued the Announcement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status basedon various factors supported by various types of documents including the articles of association, financial statements, records of cash movements, boardmeeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and otherinformation. Based on Circular 60, non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy thereduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribedcriteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents whenperforming tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. However, if a competent tax authority finds outthat it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance and adopt correspondingmeasures for subsequent administration. 112  The State Administration of Tax issued a Public Notice, or Public Notice 16, on March 18, 2015, to further regulate and strengthen the transfer pricingadministration on outbound payments by a PRC enterprise to its overseas related parties. In addition to emphasizing that outbound payments by a PRCenterprise to its overseas related parties must comply with arm’s-length principles, Public Notice 16 specifies certain circumstances whereby such paymentsare not deductible for the purpose of the enterprise income tax of the PRC enterprise, including payments to an overseas related party which does notundertake any function, bear any risk or has no substantial operation or activities, payments for services which do not enable the PRC enterprise to obtaindirect or indirect economic benefits, or for services that are unrelated to the functions and risks borne by the PRC enterprise, or relate to the protection of theinvestment interests of the direct or indirect investor of the PRC enterprise, or for services that have already been purchased from a third party or undertakenby the PRC enterprise itself, and royalties paid to an overseas related party which only owns the legal rights of the intangible assets but has no contributionto the creation of such intangible assets. Although we believe all our related party transactions, including all payments by our PRC subsidiaries andconsolidated affiliated entities to our non-PRC entities, are made on an arm’s-length basis and our estimates are reasonable, the ultimate decisions by therelevant tax authorities may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period orperiods for which such determination is made. It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ADSs would be able to claim the benefit of income tax treaties oragreements entered into between China and other countries or areas. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business inChina—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Suchclassification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results ofoperations and the value of your investment.” The SAT issued a Circular 59 together with the Ministry of Finance in April 2009 and a Circular 698 in December 2009. Both Circular 59 and Circular 698became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced theirscrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holdingcompany, and such overseas holding company is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, must report to therelevant tax authority of the PRC “resident enterprise” this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holdingcompany if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gainsderived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the SAT issued a Public Notice [2015] No.7, orPublic Notice 7, to supersede the existing tax rules in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698remain in force. Public Notice 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extend its taxjurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China andassets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. PublicNotice 7 also addresses the term transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearercriteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonablecommercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required toexpend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice7. The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gainsbased on the difference between the fair value of the equity interests transferred and the cost of investment. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfersof our operating company’s equity interests. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact onpotential acquisitions we may pursue in the future.” 113  United States Federal Income Tax Considerations The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our ADSs or ordinaryshares by a U.S. Holder, as defined below, that holds our ADSs or ordinary shares as “capital assets” (generally, property held for investment) under the UnitedStates Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which issubject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) withrespect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contraryposition. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of theirindividual circumstances, including investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulatedinvestment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners,tax-exempt organizations (including private foundations), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 10%or more of our voting stock, investors that hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integratedtransaction, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantlyfrom those summarized below). In addition, this discussion does not address any state, local, alternative minimum tax, non-United States tax considerations,or the Medicare contribution tax on net investment income. Each potential investor is urged to consult its tax advisor regarding the United States federal,state, local and non-United States income and other tax considerations of an investment in our ADSs or ordinary shares. General For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or ordinary shares that is, for United States federal income tax purposes, (i)an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income taxpurposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which isincludible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject tothe primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisionsof the trust or (B) that has otherwise elected to be treated as a United States person under the Code. If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, thetax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships and partnersof a partnership holding our ADSs or ordinary shares are urged to consult their tax advisors regarding an investment in our ADSs or ordinary shares. Based in part on certain representations from the depositary bank, a U.S. Holder of ADSs will be treated as the beneficial owner for United States federalincome tax purposes of the underlying shares represented by the ADSs. Passive Foreign Investment Company Considerations A non-United States corporation, such as our company, will be classified as a “passive foreign investment company,” or PFIC, for United States federalincome tax purposes, if, in the case of any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of “passive”income or (ii) 50% or more of its average quarterly assets (as determined on the basis of fair market value) during such year produce or are held for theproduction of passive income. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with activebusiness activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, royalties, rents,annuities, net gains from the sale or exchange of passive assets (including property producing passive income) and net foreign currency gains. We will betreated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directlyor indirectly, more than 25% (by value) of the stock. Based on our current income and assets and the value of our ADSs and ordinary shares, we do not believe that we were a PFIC for our taxable year endedDecember 31, 2016 and we do not expect to be classified as a PFIC for our taxable year ending December 31, 2017 or in the foreseeable future. While we do not expect to become a PFIC in the current or future taxable years, the determination of whether we will be or become a PFIC will depend uponthe composition of our income and assets and the value of our assets from time to time, including, in particular the value of our goodwill and other unbookedintangibles (which may depend upon the market value of our ADSs or ordinary shares from time to time, which may be volatile). Among other factors, ifmarket capitalization is less than anticipated or subsequently declines, we may be classified as a PFIC for the current or future taxable years. It is also possiblethat the IRS, may challenge our classification or valuation of our goodwill and other unbooked intangibles, or determine that such assets should not beincluded in the determination of whether we are classified as a PFIC, which may result in our company being, or becoming classified as, a PFIC for the currentor one or more future taxable years. 114  The determination of whether we will be or become a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets. Under circumstanceswhere we determine not to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Becausethere are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year,there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year. If we were classified as a PFIC for any year duringwhich a U.S. holder held our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S.holder held our ADSs or ordinary shares. The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be classified as aPFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are classified as a PFIC for the current taxableyear or any subsequent taxable year are generally discussed below under “Passive Foreign Investment Company Rules.” Dividends Any cash distributions paid on our ADSs or ordinary shares (including the amount of any PRC tax withheld) out of our current or accumulated earnings andprofits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend incomeon the day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary bank, in the case of ADSs. Because wedo not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be treatedas a “dividend” for United States federal income tax purposes. Individuals and other non-corporate recipients of dividend income will generally be subject totax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than the marginal tax rates generally applicableto ordinary income provided that certain holding period and other requirements are met. A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the precedingtaxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with theUnited States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange ofinformation program, or (b) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an establishedsecurities market in the United States. United States Treasury guidance indicates that common or ordinary shares, or ADSs representing such shares, areconsidered for the purpose of clause (b) above to be readily tradable on an established securities market in the United States if they are listed on the NASDAQGlobal Select Market, as are our ADSs. Since we do not expect that our ordinary shares will be listed on established securities markets, it is unclear whetherdividends that we pay on our ordinary shares that are not backed by ADSs currently meet the conditions required for the reduced tax rate. There can be noassurance that our ADSs will continue to be considered readily tradable on an established securities market in later years. In the event we are deemed to be aresident enterprise under the EIT Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Departmenthas determined is satisfactory for this purpose) and we would be treated as a qualified foreign corporation with respect to dividends paid on our ordinaryshares or ADSs. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particularcircumstances. Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received deduction allowed to corporations. For United States foreign tax credit purposes, dividends paid on our ADSs or ordinary shares will generally be treated as income from foreign sources and willgenerally constitute passive category income. In the event that we are deemed to be a PRC resident enterprise under the EIT Law, a U.S. Holder may besubject to PRC withholding taxes on dividends paid, if any, on our ADSs or ordinary shares. A U.S. Holder may be eligible, subject to a number of complexlimitations, to claim a foreign tax credit in respect of any nonrefundable foreign withholding taxes imposed on dividends received on our ADSs or ordinaryshares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for United States federal incometax purposes in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rulesgoverning the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit undertheir particular circumstances. 115  Sale or Other Disposition of ADSs or Ordinary Shares A U.S. Holder will generally recognize capital gain or loss, if any, upon the sale or other disposition of ADSs or ordinary shares in an amount equal to thedifference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or ordinary shares. Any capital gain or loss willbe long-term gain or loss if the ADSs or ordinary shares have been held for more than one year and will generally be United States source gain or loss forUnited States foreign tax credit purposes. In the event that we are treated as a PRC resident enterprise under the PRC Enterprise Income Tax Law, and gainfrom the disposition of the ADSs or ordinary shares is subject to tax in the PRC, such gain may be treated as PRC source gain for foreign tax credit purposesunder the United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their taxadvisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the availability of the foreigntax credit under their particular circumstances. Passive Foreign Investment Company Rules If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether weremain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution received during a taxable year by a U.S.Holder that is greater than 125% of the average annual distributions received by such U.S. Holder during the three preceding taxable years or, if shorter, theU.S. Holder’s holding period for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including, under certaincircumstances, a pledge, of ADSs or ordinary shares. Under the PFIC rules: ·the excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; ·the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which weare classified as a PFIC, or pre-PFIC year, will be taxable as ordinary income; and ·the amount allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate ineffect applicable to the individuals or corporations, as appropriate, for that year, and ·will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such other taxable year. If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and any of our non-United States subsidiaries is also aPFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application ofthese rules. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our subsidiaries. As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to our ADSs,provided that the ADSs are regularly traded on the NASDAQ Global Market. In addition, we do not expect that holders of ordinary shares that are notrepresented by ADSs will be eligible to make a mark-to-market election. We believe that our ADSs qualify as being regularly traded, but no assurances can begiven in this regard. If a mark-to-market election is made, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are aPFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as anordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but only tothe extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs wouldbe adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each yearthat we are a PFIC any gain recognized upon the sale or other disposition of the ADSs will be treated as ordinary income and loss will be treated as ordinaryloss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. 116  If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, theU.S. Holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classifiedas a PFIC. Because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election with respect to our ADSs may continue to be subject to the general PFIC rules with respect to such U.S. Holder’s indirect interest in any of ournon-United States subsidiaries that is classified as a PFIC. We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in taxtreatment different from the general tax treatment for PFICs described above. As discussed above under “Dividends”, dividends that we pay on our ADSs or ordinary shares will not be eligible for the reduced tax rate that applies toqualified dividend income if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S.Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must file an annual report with the IRS. U.S. Holders are urgedto consult their tax advisors concerning the United States federal income tax consequences of purchasing, holding, and disposing ADSs or ordinary shares ifwe are or become a PFIC, including the possibility of making a mark-to-market election and the unavailability of the qualified electing fund election. Information Reporting and Backup Withholding Individual U.S. Holders and certain entities may be required to submit to the IRS certain information with respect to his or her beneficial ownership of theADSs or ordinary shares, if such ADSs or ordinary shares are not held on his or her behalf by a U.S. financial institution. An individual U.S. Holder may besubject to penalties if such U.S. Holder is required to submit such information to the IRS and fails to do so. In addition, U.S. Holders may be subject to information reporting to the IRS and United States backup withholding with respect to dividends on and proceedsfrom the sale or other disposition of our ADSs or ordinary shares. Backup withholding will not apply to you, however, if you furnish a correct taxpayeridentification number and make any other required certification or that are otherwise exempt from backup withholding. U.S. Holders that are required toestablish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding theapplication of the United States information reporting and backup withholding rules to their particular circumstances. Backup withholding is not an additional tax. Amounts withheld as backup withholding can be credited against your United States federal income taxliability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refundwith the IRS and furnishing any required information in a timely manner. F.Dividends and Paying Agents Not Applicable. G.Statement by Experts Not Applicable. H.Documents on Display We previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-194191), as amended, including the prospectus containedtherein, to register our Class A ordinary shares in relation to our initial public offering . We have also filed with the SEC a related registration statement on F-6 (Registration No. 333-194662) to register the ADSs. 117  We are subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F withinfour months after the end of each fiscal year, which is December 31. Copies of reports and other information, when so filed, may be inspected without chargeand may be obtained at prescribed rates at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street, N.E., Room1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regardingregistrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the ExchangeAct prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from thereporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. We will furnish Citibank, N.A., the depositary of our ADSs, with our annual reports, which will include a review of operations and annual auditedconsolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communicationsthat are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and,upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary fromus. In accordance with NASDAQ Stock Market Rules 5250(d), we will post this annual report on Form 20-F on our website at http://ir.tarena.com.cn. I.Subsidiary Information Not applicable. ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Exchange Risk Substantially all of our net revenues, costs and expenses are denominated in Renminbi. The Renminbi is not freely convertible into foreign currencies forcapital account transactions. Our exposure to foreign exchange risk primarily relates to the U.S. dollar proceeds of the offerings of our equity securities. Wehad a net foreign exchange gain of RMB3.8 million in 2016. In January 2016, we entered into foreign currency forward contracts with China Merchants BankCo., Ltd. The notional amounts of the foreign currency forward contracts were RMB564.1 million and the settlement date was on May 19, 2016. We incurreda loss of RMB12.9 million as a result of such contracts in 2016, due to the fluctuation in the exchange rate between U.S. dollars and RMB. The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economicconditions and China’s foreign exchange policies. In 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S.dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, thisappreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the RMB hasfluctuated against the U.S. dollar, at times significantly and unpredictably. In August 2015, the People’s Bank of China changed the way it calculates themid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spotrate, foreign-exchange demand and supply as well as changes in major currency rates. The value of the Renminbi depreciated approximately 5.8% against theU.S. dollar in 2015 and further by approximately 6.3% in 2016. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF)completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect fromOctober 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar,the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S.dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization andRenminbi internationalisation, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you thatthe Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC orU.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. 118  To the extent that we need to convert the U.S. dollars we received from our equity offerings into Renminbi to fund our operations, acquisitions, or for otheruses within the PRC, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from theconversion. To the extent that we seek to convert Renminbi into U.S. dollars, depreciation of the Renminbi against the U.S. dollar would have an adverseeffect on the U.S. dollar amount we receive from the conversion. On the other hand, a decline in the value of the Renminbi against the U.S. dollar couldreduce the value of your investment in the company and the dividends that we may pay in the future, if any, all of which may have a material adverse effecton the prices of our ADS. A hypothetical 10% decrease in the exchange rate of the U.S. dollar against the RMB would have resulted in an increase of RMB41.8 million in the value ofour U.S. dollar-denominated financial assets at December 31, 2016. Interest Rate Risk Our exposure to interest rate risk primarily relates to interest income generated by excess cash invested in demand deposits with original maturities of 6months to 5 years. Interest-earning instruments carry a degree of interest rate risk. We have not used any significant derivative financial instruments tomanage our interest rate risk exposure. We have not been exposed, nor do we anticipate being exposed to, material risks due to changes in interest rates.However, our future interest income may be different from expectations due to changes in market interest rates. ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES A.Debt Securities Not applicable. B.Warrants and Rights Not applicable. C.Other Securities Not applicable. D.American Depositary Shares Fees and Charges Our ADS holders May Have to Pay Holders of our ADSs will be required to pay the following service fees to the depositary bank: Service FeesIssuance of ADSs Up to U.S. 5¢ per ADS issuedCancellation of ADSs Up to U.S. 5¢ per ADS canceledDistribution of cash dividends or other cash distributions Up to U.S. 5¢ per ADS heldDistribution of ADSs pursuant to stock dividends, free stock distributions orexercise of rights Up to U.S. 5¢ per ADS heldDistribution of securities other than ADSs or rights to purchase additionalADSs Up to U.S. 5¢ per ADS heldDepositary Services Up to U.S. 5¢ per ADS held on the applicable record date(s) established bythe depositary bank Holders of our ADSs will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental chargessuch as: ·fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e.,upon deposit and withdrawal of ordinary shares); 119  ·expenses incurred for converting foreign currency into U.S. dollars; ·expenses for cable, telex and fax transmissions and for delivery of securities; ·taxes and duties upon the transfer of securities (i.e., when ordinary shares are deposited or withdrawn from deposit); and ·fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit. Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients)receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank forcancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADSholders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date. The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e.,stock dividend, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSsregistered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable recorddate ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through thesystems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTCaccounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to thedepositary banks. In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service untilpayment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder. The fees and charges holders of our ADSs may be required to pay may vary over time and may be changed by us and by the depositary bank. Fees and Other Payments Made by the Depositary to Us The depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADS program upon suchterms and conditions as we and the depositary may agree from time to time. In 2016, we did not receive any payment from the depository for expensesincurred in connection with the establishment and maintenance of the ADS program. PART II. ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Material Modifications to the Rights of Security Holders See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares” for a description of the rights of securities holders,which remain unchanged. 120  Use of Proceeds The following “Use of Proceeds” information relates to the Registration Statement on Form F-1, as amended (File number: 333-19419) in relation to theinitial public offering of 15,300,000 ADSs representing 15,300,000 of our Class A ordinary shares, at an initial offering price of US$9.00 per ADS. We offeredand sold 11,500,000 ADSs and the selling shareholders offered and sold 3,800,000 ADSs in our initial public offering. Our initial public offering closed inApril 2014. Goldman Sachs (Asia) L.L.C. and Credit Suisse Security (USA) LLC were the representatives of the underwriters for our initial public offering.The aggregate price of the offering amount registered and sold were US$137.7 million. We received net proceeds of approximately US$92.2 million from our initial public offering. Our expenses incurred and paid to others in connection with theissuance and distribution of the ADSs in our initial public offering totaled US$13.6 million, which included US$9.6 million for underwriting discounts andcommissions and US$4.0 million for other expenses. Among the US$13.6 million in expenses, US$4.8 million were paid to Goldman Sachs (Asia) L.L.C., anaffiliate of ours and one of the underwriters for our initial public offering. For the period from April 2, 2014, the date that the F-1 Registration Statement was declared effective by the SEC, to December 31, 2016, we invested the netproceeds from our initial public offering in term deposits and still intend to use the proceeds from our initial public offering for general corporate purposes,which may include investing in course development, expanding our learning center network, sales and marketing activities, technology infrastructure andcapital expenditures, upgrading facilities and other general and administrative matters. We may also use a portion of the net proceeds for investing in, oracquiring, complementary businesses. 121  ITEM 15.CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this annual report, our management, with the participation of our chief executive officer and chief financial officer, hasperformed an evaluation of the effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of the ExchangeAct. Based upon this evaluation, our management has concluded that, as of December 31, 2016, our existing disclosure controls and procedures were effective toprovide reasonable assurance that material information required to be disclosed by us in the reports that we file with, or submit to, the SEC under theExchange Act is recorded, processed, summarized and reported within the time periods specified in by the SEC’s rules, regulations and forms, and that theinformation required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to ourmanagement, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP and includes those policies and procedures that (i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance withgenerally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of acompany’s management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, ordisposition of a company’s assets that could have a material effect on the consolidated financial statements. Our management, with the participation of ourchief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our company’s internal control over financial reporting asof December 31, 2016 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (2013 Framework). Based on this evaluation, our management concluded that our internal control over financial reporting waseffective as of December 31, 2016. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of anyevaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. See “Item 3. Key Information—D. RiskFactors—Risks Relating to Our Business—If we fail to maintain an effective system of internal controls, we may be unable to accurately report our results ofoperations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially andadversely affected.” This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financialreporting as we qualify as an “emerging growth company” under section 3(a) of the Securities Exchange Act of 1934, as amended, and are therefore exemptfrom the attestation requirement. Changes in Internal Control over Financial Reporting We have adopted the following measures during the year ended December 31, 2016, which effectively improved our internal controls over financial reportingin areas subject to financial reporting disclosure. We have (i) executed improved workflow of system upgrade and performed quality control proceduresregarding system design, development, testing and implementation, etc. (ii) reinforced the reasonableness test by accounting personnel over the systemextracted data; and (iii) continuously reinforced the oversight and review procedure over high risk areas subject to significant estimates and judgments. 122  We will continue to implement the necessary procedures and policies, including those outlined above, to improve our internal controls over financialreporting and remediate any potential significant deficiencies as we prepare for our initial Section 404 reporting requirement under the Sarbanes-Oxley Act of2002. Other than those measures mentioned above, there were no changes in our internal controls over financial reporting that occurred during the period coveredby this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 16.A.AUDIT COMMITTEE FINANCIAL EXPERT Our board of directors has determined that Mr. Xiaosong Zhang, an independent director and member of our audit committee, is an audit committee financialexpert. ITEM 16.B.CODE OF ETHICS Our board of directors has adopted a code of ethics that applies to all of the directors, officers and employees of us and our subsidiaries, whether they work forus on a full-time, part-time, consultative, or temporary basis. Certain provisions of the code apply specifically to our chief executive officer, chief financialofficer, senior finance officer, controller, senior vice presidents, vice presidents and any other persons who perform similar functions for us. We have posted acopy of our code of business conduct and ethics on our website at http://ir.tarena.com.cn/phoenix.zhtml?c=253008&p=irol-govhighlights. ITEM 16.C.PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table sets forth the aggregate fees by the categories specified below in connection with certain professional services rendered by KPMGHuazhen LLP, formerly known as KPMG Huazhen (SGP), our independent registered public accounting firm, for the periods indicated. We did not pay anyother fees to our auditors during the periods indicated below. 2014 2015 2016 (in thousands) Audit Fees(1) 5,988 5,720 5,659 Tax Fees(2) - 152 294 All Other Fees(3) 800 - - (1)“Audit fees” means the aggregate fees in each of the fiscal years listed for professional services rendered by our independent registered public accountingfirm for the audit of our annual financial statements or services that are normally provided by the auditors in connection with and regulatory filing orengagements. (2)“Tax fees” consist of fees billed for the aggregate fees for professional services rendered by our independent registered public accounting firm for taxcompliance work and other tax related services. (3)All Other Fees represent the aggregate fees for services rendered by our independent registered public accounting firm for risk management advisoryservices. The policy of our audit committee is to pre-approve all audit and non-audit services provided by KPMG Huazhen LLP, including audit services, tax servicesand other services as described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of theaudit. ITEM 16.D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Not Applicable. 123  ITEM 16.E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS On August 20, 2015, our board of directors authorized a share repurchase plan under which we may repurchase up to US$20 million of our shares over thenext 12 months. The share repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, inblock trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. Forthe period from May 27, 2016 to July 20, 2016, we repurchased 648,867ADSs for an aggregate consideration of RMB44.4 million (US$6.7 million) under ourshare repurchase plan. The following table sets forth a summary of our repurchase of our ADSs made in the year 2016 under the share repurchase programs described in theparagraph above. Period Total Number ofADSs Purchased(1) Average Price PaidPer ADS(1) Total Number ofADSs Purchased asPart of PubliclyAnnounced Plansor Programs Maximum Dollar Valueof ADSs that May YetBe Purchased UnderPlans or Programs(US$)May (from May 27 to May 31) 40,634 10.4304 40,634 US$11,837,327June (from June 1 to June 30) 354,441 10.2474 354,441 US$8,205,228July (from July 1 to July 20) 253,792 10.4230 253,792 US$5,559,954 (1)Each ADS represents one Class A ordinary share. ITEM 16.F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Not applicable. ITEM 16.G.CORPORATE GOVERNANCE As a Cayman Islands company listed on the NASDAQ Global Select Market, we are subject to the NASDAQ corporate governance listing standards. However,NASDAQ rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governancepractices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ corporate governance listing standards. We relied on the exemption available to foreign private issuers for the requirement that it hold an annual general meeting of shareholders no later thanDecember 31, 2016 in 2016. In this respect, we elected to follow home country practice and did not hold an annual general meeting of shareholders in 2016.If we continue to rely on this and other exemptions available to foreign private issuers in the future, our shareholders may be afforded less protection thanthey otherwise would under the NASDAQ corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information—D. RiskFactors—Risks Relating to Our ADSs—We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exemptfrom certain provisions applicable to United States domestic public companies.” ITEM 16.H.MINE SAFETY DISCLOSURE Not applicable. 124  PART III. ITEM 17.FINANCIAL STATEMENTS We have elected to provide financial statements pursuant to Item 18. ITEM 18.FINANCIAL STATEMENTS The consolidated financial statements of Tarena International, Inc. and its subsidiaries are included at the end of this annual report. ITEM 19.EXHIBITS Exhibit Number Description of Document 1.1 Fifth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit 3.2to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 2.1 Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3) 2.2 Registrant’s Specimen Certificate for Class A ordinary shares (incorporated herein by reference to Exhibit 4.2 to the registrationstatement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 2.3 Deposit Agreement, among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated herein byreference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-197226) filed with the SEC on July 3, 2014) 2.4 Second Amended and Restated Shareholders Agreement dated as of September 6, 2011 among the Registrant and certain shareholders ofthe Registrant. (incorporated herein by reference to Exhibit 4.4 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 2.5 Registration Rights Agreement dated as of April 8, 2014 among the Registrant and New Oriental Education & Technology Group Inc.(incorporated herein by reference to Exhibit 2.5 to the annual report on Form 20-F (File No. 001-36363) filed with the SEC on April 15,2015) 2.6 Registration Rights Agreement dated as of July 17, 2015 among the Registrant and Talent Fortune Investment Limited (incorporatedherein by reference to Exhibit 2.6 to the annual report on Form 20-F (File No. 001-36363) filed with the SEC on April 20, 2016) 4.1 2008 Share Incentive Plan, as amended on November 28, 2012 (incorporated herein by reference to Exhibit 10.1 to the registrationstatement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 4.2 2014 Share Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 4.3 Form of Indemnification Agreement with the Registrant’s directors (incorporated herein by reference to Exhibit 10.3 to the registrationstatement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 4.4 Form of Employment Agreement between the Registrant and an Executive Officer of the Registrant (incorporated herein by reference toExhibit 10.5 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27,2014) 125  Exhibit Number Description of Document 4.5 Amended and Restated Exclusive Business Cooperation Agreement dated November 25, 2013 between Tarena Tech and Beijing Tarena(incorporated herein by reference to Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.6 Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Beijing Tarena(incorporated herein by reference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.7 Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Beijing Tarena(incorporated herein by reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.8 Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Shaoyun Han andBeijing Tarena (incorporated herein by reference to Exhibit 10.9 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.9 Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Jianguang Li andBeijing Tarena (incorporated herein by reference to Exhibit 10.10 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.10 Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Shaoyun Han in connection withBeijing Tarena (incorporated herein by reference to Exhibit 10.11 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.11 Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Jianguang Li in connection withBeijing Tarena (incorporated herein by reference to Exhibit 10.12 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.12 Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Shaoyun Han and Beijing Tarena(incorporated herein by reference to Exhibit 10.13 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.13 Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Jianguang Li and Beijing Tarena(incorporated herein by reference to Exhibit 10.14 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.14 Spousal consent letter dated November 25, 2013 signed by Ying Sun in connection with Beijing Tarena (incorporated herein byreference to Exhibit 10.15 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC onFebruary 27, 2014) 4.15 Spousal consent letter dated November 25, 2013 signed by Nan Li in connection with Beijing Tarena (incorporated herein by referenceto Exhibit 10.16 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February27, 2014) 126  Exhibit Number Description of Document 4.16 Amended and Restated Exclusive Business Cooperation Agreement dated November 25, 2013 between Tarena Tech and ShanghaiTarena (incorporated herein by reference to Exhibit 10.17 to the registration statement on Form F-1 (File No. 333-194191), as amended,initially filed with the SEC on February 27, 2014) 4.17 Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Shanghai Tarena(incorporated herein by reference to Exhibit 10.18 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.18 Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Shanghai Tarena(incorporated herein by reference to Exhibit 10.19 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.19 Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Shaoyun Han andShanghai Tarena (incorporated herein by reference to Exhibit 10.20 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.20 Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Jianguang Li andShanghai Tarena (incorporated herein by reference to Exhibit 10.21 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.21 Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Shaoyun Han in connection withShanghai Tarena (incorporated herein by reference to Exhibit 10.22 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.22 Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Jianguang Li in connection withShanghai Tarena (incorporated herein by reference to Exhibit 10.23 to the registration statement on Form F-1 (File No. 333-194191), asamended, initially filed with the SEC on February 27, 2014) 4.23 Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Shaoyun Han and Shanghai Tarena(incorporated herein by reference to Exhibit 10.24 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.24 Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Jianguang Li and Shanghai Tarena(incorporated herein by reference to Exhibit 10.25 to the registration statement on Form F-1 (File No. 333-194191), as amended, initiallyfiled with the SEC on February 27, 2014) 4.25 Spousal consent letter dated November 25, 2013 signed by Ying Sun in connection with Shanghai Tarena (incorporated herein byreference to Exhibit 10.26 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC onFebruary 27, 2014) 4.26 Spousal consent letter dated November 25, 2013 signed by Nan Li in connection with Shanghai Tarena (incorporated herein by referenceto Exhibit 10.27 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February27, 2014) 127  Exhibit Number Description of Document 4.27* Power of Attorney dated July 5, 2016 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Beijing Tarena 4.28* Power of Attorney dated July 5, 2016 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Beijing Tarena 4.29* Second Amended and Restated Exclusive Option Agreement dated July 5, 2016 among Tarena, Tarena Tech, Mr. Shaoyun Han andBeijing Tarena 4.30* Second Amended and Restated Exclusive Option Agreement dated July 5, 2016 among Tarena, Tarena Tech, Mr. Jianguang Li andBeijing Tarena 4.31* Second Amended and Restated Loan Agreement dated July 5, 2016 between Tarena Tech and Mr. Shaoyun Han in connection withBeijing Tarena 4.32* Second Amended and Restated Loan Agreement dated July 5, 2016 between Tarena Tech and Mr. Jianguang Li in connection withBeijing Tarena 4.33* Second Amended and Restated Share Pledge Agreement dated July 5, 2016 among Tarena Tech, Mr. Shaoyun Han and Beijing Tarena 4.34* Second Amended and Restated Share Pledge Agreement dated July 5, 2016 among Tarena Tech, Mr. Jianguang Li and Shanghai Tarena 4.35* Commodity Housing Presale Contract dated May 5, 2016 between Beijing Jingkai-Gongda Investment Management Co., Ltd. andTarena Technologies Inc. 4.36* Commodity Housing Presale Contract dated November 5, 2016 between Beijing Jingkai-Gongda Investment Management Co., Ltd. andTarena Software Technology (Hangzhou) Co., Ltd. 8.1* List of Subsidiaries of the Registrant 11.1 Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registration statement onForm F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014) 12.1* CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 12.2* CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 13.1** CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 13.2** CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 15.1* Consent of Conyers Dill & Pearman 15.2* Consent of Han Kun Law Offices 15.3* Consent of KPMG Huazhen LLP 101.INS* XBRL Instance Document 128  Exhibit Number Description of Document 101.SCH* XBRL Taxonomy Extension Schema Document 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase Document 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document * Filed herewith.** Furnished herewith. 129  SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized theundersigned to sign this annual report on its behalf. Tarena International, Inc. By:/s/ Shaoyun Han Name:Shaoyun Han Title:Chairman and Chief Executive Officer Date: April 25, 2017 130  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageConsolidated Financial Statements Report of Independent Registered Public Accounting FirmF-2Consolidated Balance Sheets as of December 31, 2015 and 2016F-3Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2015 and 2016F-4Consolidated Statements of Changes in Equity (Deficit) for the years ended December 31, 2014, 2015 and 2016F-5Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2015 and 2016F-6Notes to the Consolidated Financial StatementsF-7 F-1  Report of Independent Registered Public Accounting Firm The Board of Directors and ShareholdersTarena International, Inc.: We have audited the accompanying consolidated balance sheets of Tarena International, Inc. and subsidiaries (the “Company”) as of December 31,2015 and 2016, and the related consolidated statements of comprehensive income, changes in equity (deficit) and cash flows for each of the years in thethree-year period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TarenaInternational, Inc. and subsidiaries as of December 31, 2015 and 2016, and the results of their operations and their cash flows for each of the years in thethree-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. As described in note 2(c) to the consolidated financial statements, the Company has elected to change its reporting currency from U.S. dollars toChinese Renminbi. /s/ KPMG Huazhen LLPBeijing, ChinaApril 25, 2017 F-2  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and US Dollar (“US$”),except for number of shares and per share data) December 31, Note 2015 2016 RMB RMB ASSETS Current assets: Cash (including cash of VIEs of RMB1,043 and RMB630 as of December 31, 2015 and 2016,respectively) 513,938 810,672 Time deposits 449,878 416,724 Restricted time deposits 2 150,000 — Accounts receivable, net of allowance for doubtful accounts 3 146,999 97,374 Prepaid expenses and other current assets 4 66,103 126,088 Total current assets 1,326,918 1,450,858 Time deposits 114,227 58,667 Accounts receivable, net of allowance for doubtful accounts 3 7,771 1,176 Property and equipment, net (including property and equipment, net of VIEs of RMB18 and RMB3as of December 31, 2015 and 2016, respectively) 5 127,864 437,337 Goodwill — 3,365 Long term investments, including investment measured at fair value of nil and RMB15,000 as ofDecember 31, 2015 and 2016 (including long term investments of VIEs of RMB18,000 andRMB35,000 as of December 31, 2015 and 2016, respectively) 6 24,000 41,760 Other non-current assets (including other non-current assets of VIEs of RMB266 and RMB716 asof December 31, 2015 and 2016, respectively) 53,111 91,849 Total assets 1,653,891 2,085,012 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 4,413 4,502 Amounts due to a related party 11 879 79 Income taxes payable (including income taxes payable of VIEs of RMB3,737 and RMB3,729 as ofDecember 31, 2015 and 2016, respectively) 10 56,293 91,240 Deferred revenue 164,524 266,061 Accrued expenses and other current liabilities (including accrued expenses and other currentliabilities of VIEs of RMB892 and RMB176 as of December 31, 2015 and 2016, respectively) 7 79,835 117,867 Total current liabilities 305,944 479,749 Other non-current liabilities (including other non-current liabilities of VIEs of RMB267 andRMB267 as of December 31, 2015 and 2016, respectively) 9,333 7,043 Total liabilities 315,277 486,792 Commitments and contingencies 16 — — Shareholders’ equity: Class A ordinary shares (US$0.001 par value, 860,000,000 shares authorized, 44,914,538 and48,735,228 shares issued, 43,988,425 and 47,160,248 shares outstanding as of December 31,2015 and 2016, respectively) 12 276 302 Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and8,895,249 shares issued and outstanding as of December 31, 2015 and 2016, respectively) 12 98 86 Treasury shares (926,113 and 1,574,980 Class A ordinary shares as of December 31, 2015 and2016, respectively, at cost) 12 (49,355) (93,761)Additional paid-in capital 907,018 995,216 Accumulated other comprehensive income 30,232 58,204 Retained earnings 450,345 638,173 Total shareholders’ equity 1,338,614 1,598,220 Total liabilities and shareholders’ equity 1,653,891 2,085,012 The accompanying notes are an integral part of these consolidated financial statements. F-3  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands of RMB and US$,except for number of shares and per share data) Year Ended December 31, Note 2014 2015 2016 RMB RMB RMB Net revenues 8 836,941 1,178,008 1,579,604 Cost of revenues(a) (240,084) (333,559) (449,104) Gross profit 596,857 844,449 1,130,500 Selling and marketing expenses(a) (261,489) (384,954) (527,553)General and administrative expenses(a) (183,998) (251,298) (307,519)Research and development expenses(a) (33,454) (50,515) (65,594) Operating income 117,916 157,682 229,834 Interest income 26,802 42,732 23,974 Other income 14,568 11,812 15,960 Loss on foreign currency forward contract 9 — — (12,898)Foreign currency exchange gains (losses) 7,359 (29,499) 3,760 Income before income taxes 166,645 182,727 260,630 Income tax expense 10 (14,795) (3,967) (18,776) Net income 151,850 178,760 241,854 Accretion of convertible redeemable preferred shares 13 (3,530) — — Net income attributable to Class A and Class B ordinary shareholders 148,320 178,760 241,854 Basic earnings per Class A and Class B ordinary share 15 3.11 3.32 4.35 Diluted earnings per Class A and Class B ordinary share 15 2.69 3.04 4.10 Net income 151,850 178,760 241,854 Other comprehensive income (loss) Foreign currency translation adjustment, net of nil income taxes (2,896) 34,748 22,972 Unrealized holding gains on available for sale securities, net of RMB42 incometaxes — — 5,235 Less: reclassification adjustment for gains on available for sale securitiesrealized in net income, net of RMB42 income taxes — — (235) Comprehensive income 148,954 213,508 269,826 (a) Includes share-based compensation expense as follows (note 14): Cost of revenues (349) (664) (4,124)Selling and marketing expenses (1,036) (1,959) (5,496)General and administrative expenses (22,302) (28,274) (51,154)Research and development expenses (1,289) (2,022) (7,050) The accompanying notes are an integral part of these consolidated financial statements. F-4  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Amounts in thousands of RMB and US$, except for number of shares and per share data) Ordinary Shares Number ofClass A Ordinary Shares Amount Number ofClass BOrdinary Shares Amount Treasury Shares AdditionalPaid-inCapital Accumulated OtherComprehensiveIncome (loss) Retained Earnings(AccumulatedDeficit) TotalShareholders’Equity (Deficit) RMB RMB RMB RMB RMB RMB RMB Balance as of December 31, 2013 — — 12,226,558 107 — — (1,620) (406,222) (407,735)Net income — — — — — — — 151,850 151,850 Foreign currency translationadjustment, net of nil incometaxes — — — — — — (2,896) — (2,896)Share-based compensation — — — — — 24,976 — — 24,976 Accretion of convertible redeemablepreferred shares — — — — — (3,030) — (500) (3,530)Issuance of Class A ordinary shares,upon initial public offering(“IPO”), net of issuance cost ofRMB24,801 11,500,000 71 — — — 567,289 — — 567,360 Issuance of Class A ordinary sharesin private placement concurrentwith the IPO 1,500,000 9 — — — 83,043 — — 83,052 Conversion of Series A convertibleredeemable preferred shares toClass B ordinary shares — — 7,196,159 44 — 3,604 — — 3,648 Conversion of Series B convertibleredeemable preferred shares toClass B ordinary shares — — 7,319,820 45 — 107,949 — — 107,994 Conversion of Series C convertibleredeemable preferred shares toClass B ordinary shares — — 10,914,852 68 — 592,781 — — 592,849 Issuance of Class A ordinary sharesupon exercise of share optionsand vesting of non-vested shares 1,788,393 11 — — — 1,507 — — 1,518 Conversion of Class B ordinaryshares to Class A ordinary shares 8,924,365 55 (8,924,365) (55) — — — — — Reclassification of APIC andretained earnings (note 12(d)) — — — — — (526,457) — 526,457 — Balance as of December 31, 2014 23,712,758 146 28,733,024 209 — 851,662 (4,516) 271,585 1,119,086 Net income — — — — — — — 178,760 178,760 Conversion of Class B ordinaryshares to Class A ordinary shares 18,158,128 111 (18,158,128) (111) — — — — — Issuance of Class A ordinary sharesupon exercise of share optionsand vesting of non-vested shares 3,043,652 19 — — — 22,437 — — 22,456 Foreign currency translationadjustment, net of nil incometaxes — — — — — — 34,748 — 34,748 Share-based compensation — — — — — 32,919 — — 32,919 Purchase of Class A ordinary shares — — — — (49,355) — — — (49,355)Balance as of December 31, 2015 44,914,538 276 10,574,896 98 (49,355) 907,018 30,232 450,345 1,338,614 Net income — — — — — — — 241,854 241,854 Conversion of Class B ordinaryshares to Class A ordinary shares 1,679,647 12 (1,679,647) (12) — — — — — Issuance of Class A ordinary sharesupon exercise of share optionsand vesting of non-vested shares 2,141,043 14 — — — 20,374 — — 20,388 Foreign currency translationadjustment, net of nil incometaxes — — — — — — 22,972 — 22,972 Share-based compensation — — — — — 67,824 — — 67,824 Unrealized holding gains onavailable-for-sale security, net ofRMB42 income taxes — — — — — — 5,235 — 5,235 Reclassification adjustment for gainson available for sale securitiesrealized in net income, net ofRMB42 income taxes — — — — — — (235) — (235)Dividends — — — — — — — (54,026) (54,026)Purchase of Class A ordinary shares — — — — (44,406) — — — (44,406)Balance as of December 31, 2016 48,735,228 302 8,895,249 86 (93,761) 995,216 58,204 638,173 1,598,220 The accompanying notes are an integral part of these consolidated financial statements. F-5  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands RMB and US$, except for number of shares and per share data) Year Ended December 31, 2014 2015 2016 RMB RMB RMB Operating activities: Net income 151,850 178,760 241,854 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 43,478 54,981 72,757 Bad debt expense 46,000 63,103 33,605 Loss on disposal of property and equipment 1,102 500 297 Deferred income tax benefit (4,190) (21,614) (18,895)Share based compensation expense 24,976 32,919 67,824 Other income — — 29 Foreign currency exchange losses (gains), net (6,605) 29,499 (3,760)Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou Accounts receivable (102,974) (66,901) 22,928 Prepaid expenses and other current assets (15,125) (16,713) (60,362)Accrued interest income on time deposits (17,587) (655) 5,264 Other non-current assets (4,042) (3,757) (7,071)Accounts payable (269) 533 (248)Amounts due to a related party — 879 (800)Income taxes payable 14,641 23,287 34,947 Deferred revenue 23,528 46,570 101,439 Accrued expenses and other current liabilities 11,992 27,362 36,781 Other non-current liabilities 8,568 (1,055) (2,559) Net cash provided by operating activities 175,343 347,698 524,030 Investing activities: Purchase of property and equipment (48,405) (99,961) (381,982)Proceeds from disposal of property and equipment 227 1,040 358 Purchase of short term investments (622,800) (945,000) (1,937,000)Proceeds from maturity of short term investments 622,800 945,000 1,937,000 Purchase of long-term investments — (24,000) (12,755)Payment for acquisition of Hanru Hangzhou — (1,000) (4,360)Cash acquired from acquisition of Hanru Hangzhou — — 148 Purchase of time deposits (708,124) (639,019) (421,170)Proceeds from maturity of time deposits 22,325 690,250 678,741 Issuance of loans to employees (3,030) (1,227) (18,525)Proceeds from repayment of loans from employees 2,468 1,608 3,096 Net cash used in investing activities (734,539) (72,309) (156,449) Financing activities: Amounts received on behalf of a related party — 1,432 — Repayment of amounts received on behalf of a related party — (1,432) — Issuance of Class A ordinary shares upon the IPO 592,161 — — Issuance of Class A ordinary shares in private placement concurrent with the IPO 83,052 — — Issuance of Class A ordinary shares in connection with exercise of share options 1,518 22,456 20,388 Payment of dividend — — (54,026)Repurchase of treasury shares — (49,355) (44,406)Payment of IPO costs (21,705) — — Net cash provided by (used in) financing activities 655,026 (26,899) (78,044) Effect of foreign currency exchange rate changes on cash and cash equivalents 5,837 4,413 7,197 Net increase in cash and cash equivalents 101,667 252,903 296,734 Cash and cash equivalents at beginning of year 159,368 261,035 513,938 Cash and cash equivalents at end of year 261,035 513,938 810,672 Supplemental disclosure of cash flow information: Income taxes paid 3,479 2,246 3,096 Non-cash investing and financing activities: Accrual for purchase of equipment 1,758 3,685 3,692 Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares 3,648 — — Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares 107,994 — — Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares 592,849 — —  The accompanying notes are an integral part of these consolidated financial statements. F-6  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (a)Description of business Tarena International, Inc. (“Tarena International”), through its wholly-owned subsidiaries and consolidated variable interest entities or VIEs(collectively referred to hereinafter as the “Company”), is principally engaged in providing professional education services including professionalinformation technology (“IT”) training courses and non-IT training courses across the People’s Republic of China (“PRC”). To a lesser extent, theCompany is also engaged in providing IT and non-IT training courses for children. All of the Company’s operations are located in the PRC withnearly all of its customers located in the PRC. (b)Organization Tarena International is a holding company that was incorporated in the Cayman Islands on October 8, 2003 by Mr. Han Shaoyun (“Mr. Han”), thefounder and chief executive officer of the Company, and five other individuals. Tarena International is the parent company of a number of wholly-owned subsidiaries that are engaged in professional education services. The Company’s education services in certain locations of the PRC werepreviously conducted through Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) and Shanghai Tarena Software Technology Co., Ltd.(“Shanghai Tarena”)(collectively, the “Tarena Entities”), and their subsidiaries, in order to comply with the PRC laws and regulations whichrestricted foreign investments in companies that were engaged in education services. Tarena Entities and their subsidiaries were principally engagedin providing professional education services including professional IT training courses in those locations and operated 23 learning centers as ofDecember 31, 2011. Pursuant to the VIE Agreements as described below, Tarena International has effective financial control over Tarena Entities andtheir initial capital funding was provided by Tarena Technologies Inc., (a wholly-owned subsidiary of Tarena International or the “WOFE”, formerlyknown as Beijing Tarena Technology Co., Ltd.). The recognized and unrecognized revenue-producing assets that were held by Tarena Entities andtheir subsidiaries primarily consisted of property and equipment, operating leases for the learning premises, ICP license, www.tmooc.cn website andassembled workforce in those learning centers. Because of change in PRC laws and regulations in 2012 which encourages foreign investments ineducation services, the Company began to transfer most of the operations, including related assets and liabilities of Tarena Entities and theirsubsidiaries to the wholly-owned subsidiaries of Tarena International. As of December 31, 2013, all of the learning center operations of TarenaEntities and their subsidiaries have been transferred to other subsidiaries of Tarena International. As of December 31, 2016 Beijing Tarena investedRMB35,000 in five PRC companies, which are mainly engaged in provision of educational products and services. Upon the establishment of Tarena Entities in 2005, the registered capital of Beijing Tarena and Shanghai Tarena were RMB2,000 and RMB1,000,respectively. In 2016, Beijing Tarena received additional capital injection of RMB3,000 through its nominee equity holders. All of the equityinterests of Tarena Entities are legally held by Mr. Han and Mr. Li Jianguang (“Mr. Li”), a director of Tarena International. Both individuals arenominee equity holders of Tarena Entities and holding their equity interests on behalf of Tarena International. Through a series of contractualagreements and arrangements as amended (the “VIE Agreements”), among Tarena International, WOFE, Tarena Entities and their nominee equityholders, the nominee equity holders of Tarena Entities have granted all their legal rights including voting rights and disposition rights of theirequity interests in Tarena Entities to Tarena International. The nominee equity holders of Tarena Entities do not participate significantly in incomeand loss and do not have the power to direct the activities of the Tarena Entities that most significantly impact their economic performance.Accordingly, the Tarena Entities are considered variable interest entities. F-7  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (b)Organization (continued) In accordance with Accounting Standards Codification (“ASC”) 810-10-25-38A, Tarena International has a controlling financial interest in TarenaEntities because Tarena International has (i) the power to direct activities of Tarena Entities that most significantly impact the economicperformance of Tarena Entities; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of TarenaEntities that could potentially be significant to Tarena Entities. Thus, Tarena International is the primary beneficiary of the Tarena Entities. Under the terms of the VIE Agreements, Tarena International has (i) the right to receive economic benefits that could potentially be significant toTarena Entities in the form of service fees under the exclusive business cooperation agreements; (ii) the right to receive all dividends declared byTarena Entities and the right to all undistributed earnings of Tarena Entities; (iii) the right to receive the residual benefits of Tarena Entities throughits exclusive option to acquire 100% of the equity interests in Tarena Entities, to the extent permitted under PRC law. Accordingly, the financialstatements of Tarena Entities are consolidated in Tarena International’s consolidated financial statements. Under the terms of the VIE Agreements, Tarena Entities’ nominee equity holders have no rights to the net assets nor have the obligations to fund thedeficit, and such rights and obligations have been vested to Tarena International. All of the equity (net assets) and net income of Tarena Entities areattributed to Tarena International. The key terms of the VIE Agreements are as follows: Loan Agreements: The WOFE provided RMB6,000 loans in aggregate to Tarena Entities’ nominee equity holders for the sole purpose of theircontribution of Tarena Entities’ registered capital. The nominee equity holders of Tarena Entities can only repay the loans by transferring all of theirlegal equity interest in Tarena Entities to the WOFE or its designated representatives pursuant to the exclusive option agreements. The loans shall beinterest-free, unless the transfer price exceeds the principal of the loans when each nominee equityholder of Tarena Entities transfers his equityinterests in Tarena Entities to Tarena International or its designated representatives. Such excess over the principal of the loan shall be deemed as theinterest of the loans to the extent permitted under the PRC law. The terms of the loans expire in 2026 as amended, which can be extended with thewritten notice of both the WOFE and Tarena Entities before expiration. In December 2016, the Company wound up Shanghai Tarena and receivedthe repayment of RMB1,000 from Shanghai Tarena’s nominee equity holders in March 2017. Exclusive Option Agreements: Each of the nominee equity holders irrevocably granted Tarena International, Inc. or its designated representativesan exclusive option to purchase, to the extent permitted under PRC law, all or part of his equity interests in Tarena Entities. In addition, TarenaInternational has the option to acquire the equity interests of Tarena Entities for a specified price equal to the loan provided by the WOFE to thenominee equity holders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shallapply. Without Tarena International’s prior written consent, the nominee equity holders shall not sell, transfer, mortgage, or otherwise dispose anyequity interests in Tarena Entities. These agreements will remain effective until all equity interests held in Tarena Entities by the nominee equityholders are transferred or assigned to Tarena International or its designated representatives. F-8  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (b)Organization (continued) Exclusive Business Cooperation Agreements: The WOFE has the exclusive right to provide, among other things, technical support, businesssupport and related consulting services to Tarena Entities and Tarena Entities agree to accept all the consultation and services provided by theWOFE. Without the WOFE’s prior written consent, Tarena Entities are prohibited from engaging any third party to provide any of the services underthis agreement. In addition, the WOFE exclusively owns all intellectual property rights arising out of or created during the performance of thisagreement. Tarena Entities agree to pay a monthly service fee to the WOFE at an amount determined solely by the WOFE after taking into accountfactors including the complexity and difficulty of the services provided, the time consumed, the seniority of the WOFE employees providingservices to Tarena Entities, the value of services provided, the market price of comparable services and the operating conditions of Tarena Entities.Furthermore, to the extent permitted under the PRC law, the WOFE agrees to provide financial support to Tarena Entities. The term of the agreementwill remain effective unless the WOFE terminates the agreement in writing or a competent governmental authority rejects the renewal applicationsby either Tarena Entities or the WOFE to renew its respective business license upon expiration. Tarena Entities are not permitted to terminate thisagreement in any event unless required by applicable laws. Power of Attorney: Each nominee equity holder of Tarena Entities appointed the WOFE as the attorney-in-fact to act on all matters pertaining toTarena Entities and to exercise all of their rights as an equity holder of Tarena Entities, including but not limited to attend shareholders’ meetings,vote on their behalf on all matters of Tarena Entities requiring shareholders’ approval under PRC laws and regulations and the articles of associationof Tarena Entities, designate and appoint directors and senior management members. The WOFE may authorize or assign its rights under thisappointment to any other person or entity at its sole discretion without prior notice to the nominee equity holders of Tarena Entities. Each power ofattorney will remain effective until the nominee equity holder ceases to hold any equity interest in Tarena Entities. Equity Interest Pledge Agreements: Pursuant to the equity interest pledge agreement, Tarena Entities’ nominee equity holders pledged all of theirequity interests in Tarena Entities to the WOFE to guarantee their performance of the obligations under the contractual arrangements including butnot limited to, the service fees due to the WOFE. If Tarena Entities or any of Tarena Entities’ nominee equity holders breaches its contractualobligations under the contractual arrangements, the WOFE, as the pledgee, will be entitled to certain rights and entitlements, including receivingproceeds from the auction or sale of whole or part of the pledged equity interests of Tarena Entities in accordance with legal procedures. The WOFEhas the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in thecontractual arrangements occurs, the WOFE, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC lawsand regulations. The equity interest pledge agreements became effective on the date when the agreements were duly executed. The pledge wasregistered with relevant local administration for industry and commerce in December 2013 and April 2017, respectively, and will remain bindinguntil Tarena Entities and their nominee equity holders discharge all their obligations under the contractual arrangements. The registration of theequity pledge enables the WOFE to enforce the equity pledge against third parties who acquire the equity interests of Tarena Entities in good faith. F-9  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (b)Organization (continued) Tarena International relies on the VIE Agreements to operate and control the Tarena Entities. However, these contractual arrangements may not be aseffective as direct equity ownership in providing Tarena International with control over Tarena Entities. Any failure by Tarena Entities or thenominee equity holders to perform their obligations under the VIE Agreements would have a material adverse effect on the consolidated financialposition and consolidated financial performance of the Company. All the VIE Agreements are governed by PRC law and provide for the resolutionof disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes wouldbe resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as some other jurisdictions, such as theUnited States. As a result, uncertainties in the PRC legal system could limit Tarena International’s ability to enforce these contractual arrangements.In addition, if the legal structure and the VIE Agreements were found to be in violation of any existing or future PRC laws and regulations, TarenaInternational may be subject to fines or other legal or administrative sanctions. In the opinion of management, based on the legal opinion obtained from the Company’s PRC legal counsel, the above contractual arrangements arelegally binding and enforceable and do not violate current PRC laws and regulations. However, there are uncertainties regarding the interpretationand application of existing and future PRC laws and regulations. Accordingly, Tarena International cannot be assured that PRC regulatoryauthorities will not ultimately take a contrary view to its opinion. If the current ownership structure of the Company and the VIE Arrangements arefound to be in violation of any existing or future PRC laws and regulations, the PRC government could: •revoke the business and operating licenses of the WOFE, its subsidiaries and Tarena Entities; •discontinue or restrict the conduct of any transactions between the WOFE, its subsidiaries and Tarena Entities; •impose fines, confiscate the income from Tarena Entities, or impose other requirements with which the Company may not be able tocomply; •require Tarena International to restructure its ownership structure or operations, including terminating the contractual arrangements withTarena Entities and deregistering the equity pledges of Tarena Entities; and •restrict or prohibit the use of the proceeds of future offering to finance the Company’s business and operations in the PRC. If the imposition of any of these government actions causes Tarena International to lose its right to direct the activities of Tarena Entities or its rightto receive substantially all the economic benefits and residual returns from Tarena Entities and Tarena International is not able to restructure itsownership structure and operations in a satisfactory manner, Tarena International would no longer be able to consolidate the financial results ofTarena Entities and their subsidiaries. In the opinion of management, the likelihood of deconsolidation of the Tarena Entities and their subsidiariesis remote based on current facts and circumstances. F-10  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (b)Organization (continued) The equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li as nominee equity holders on behalf of the Company. Mr. Han and Mr.Li are also directors of Tarena International. Mr. Han and Mr. Li each holds 58.8% and 12.2% of the total voting rights as of December 31, 2016,respectively, assuming the exercise of all outstanding options held by Mr. Han and Mr. Li as of such date. The Company cannot assure that whenconflicts of interest arise, either of the nominee equity holders will act in the best interests of the Company or such conflicts will be resolved in theCompany’s favor. Currently, the Company does not have any arrangements to address potential conflicts of interest between the nominee equityholders and the Company, except that Tarena International could exercise the purchase option under the exclusive option agreement with thenominee equity holders to request them to transfer all of their equity ownership in Tarena Entities to a PRC entity or individual designated byTarena International. The Company relies on the nominee equity holders, who are bothTarena International’s directors and who owe a fiduciary dutyto Tarena International, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act ingood faith and in the best interests of Tarena International and not to use their positions for personal gains. If the Company cannot resolve anyconflict of interest or dispute between the Company and the nominee equity holders of Tarena Entities, the Company would have to rely on legalproceedings, which could result in disruption of the Company’s business and subject the Company to substantial uncertainty as to the outcome ofany such legal proceedings. The Company’s involvement with Tarena Entities under the VIE Agreements affected the Company’s consolidated financial position, results ofoperations and cash flows as indicated below. The assets and liabilities of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements as ofDecember 31, 2015 and 2016 are as follows: December 31, 2015 2016 RMB RMB Cash 1,043 630 Amounts due from related parties 25,109 21,650 Total current assets 26,152 22,280 Property and equipment, net 18 3 Long term investments 18,000 35,000 Other non-current assets 266 716 Total assets 44,436 57,999 Income taxes payable 3,737 3,729 Accrued expenses and other current liabilities 892 176 Amounts due to related parties, including amounts due to WOFE for accruedservice fees 39,307 46,486 Total current liabilities 43,936 50,391 Other non-current liabilities 267 267 Total liabilities 44,203 50,658 Amounts due from/to related parties represents the amounts due from/to Tarena International and its wholly-owned subsidiaries, which areeliminated upon consolidation. F-11  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (b)Organization (continued) The financial performance and cash flows of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financialstatements for the years ended December 31, 2014, 2015 and 2016 are as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Net revenues 2,902 177 - Net loss (14,542) (2,415) (892)Net cash used in operating activities (4,252) (2,201) (2,166)Net cash provided by (used in) investing activities 478 (18,000) (11,886)Net cash provided by financing activities 4,124 19,755 13,639 All of the assets of Tarena Entities and their subsidiaries can be used only to settle obligations of Tarena Entities and their subsidiaries. None of theassets of Tarena Entities and their subsidiaries have been pledged or collateralized. The creditors of Tarena Entities and their subsidiaries do nothave recourse to the general credit of Tarena International and its wholly-owned subsidiaries. Assets of Tarena Entities and their subsidiaries that canbe used only to settle obligations of Tarena Entities and their subsidiaries and liabilities of Tarena Entities and their subsidiaries for which creditors(or beneficial interest holders) do not have recourse to the general credit of Tarena International and its wholly owned subsidiaries have beenpresented parenthetically alongside each balance sheet caption on the face of the consolidated balance sheets. During the periods presented, Tarena International and its wholly-owned subsidiaries provided financial support to Tarena Entities that they werenot previously contractually required to provide in the form of advances. To the extent Tarena Entities require financial support, pursuant to theexclusive business cooperation agreements, the WOFE may, at its option and to the extent permitted under the PRC law, provide such support toTarena Entities through loans to Tarena Entities’ nominee equity holders or entrustment loans to Tarena Entities. (c)Basis of presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S.GAAP”). F-12  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 1DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS(CONTINUED) (d)Significant concentrations and risks Revenue concentration A substantial portion of the Company’s total net revenues are generated from Java, Digital Arts and Web Front courses. The percentages of theCompany’s total net revenues from Java, Digital Arts and Web Front training courses are as follows: Year Ended December 31, 2014 2015 2016 Java 36.7% 28.8% 34.3%Digital Arts 29.1% 32.2% 28.0%Web Front 0.0% 4.2% 12.7%Total 65.8% 65.2% 75.0% The Company expects net revenues from these three training courses to continue to represent a substantial portion of its total net revenues in thefuture. Negative factors that adversely affect net revenues generated by these three training courses will have a material adverse effect on theCompany’s business, financial condition and results of operations. There were no other courses that represented revenues greater than 10% of totalrevenues. A substantial portion of the Company’s students financed their tuition fees through the loans offered to them by Baidu Small Loan Co., Ltd.,RenRenDai, Bank of China Consumer Finance Co., Ltd., CreditEase Business Consulting (Beijing) Co., Ltd., and Bank of Beijing ConsumerFinance Company during the three-years period ended December 31, 2016. The Company expects students financed by these companies to continueto represent a substantial portion of its total students in the future. The Company believes other companies could provide similar loans to itsstudents on comparable terms. However, negative factors that adversely affect these companies will have a material adverse effect on the Company’sbusiness, financial condition and results of operations. Geographic concentration A substantial portion of the Company’s total net revenues are derived from its business operations in Beijing and Hangzhou. The percentages of theCompany’s total net revenues generated from its business operations in Beijing and Hangzhou are as follows: Year Ended December 31, 2014 2015 2016 Hangzhou 25.5% 33.0% 31.9%Beijing 15.5% 12.3% 12.4%Total 41.0% 45.3% 44.3% The Company expects revenues derived from its business operations in Beijing and Hangzhou to continue to represent a significant portion of itstotal net revenues. Negative factors that adversely affect professional education services in Beijing or Hangzhou will have a material adverse effecton the Company’s business, financial condition and results of operations. There were no other cities that represented revenues greater than 10% oftotal revenues. F-13  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)Principles of consolidation The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which TarenaInternational is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have beeneliminated upon consolidation. (b)Use of estimates The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Significant items subject to such estimates and assumptions include the estimated selling price of deliverables in multiple element arrangements, thefair values of share-based compensation awards and available-for-sale investments, the collectability of accounts receivable, the realizability ofdeferred income tax assets, the accruals for tax uncertainties and other contingencies, the recoverability of the carrying amounts of property andequipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent inthose estimates and assumptions. (c)Foreign currency In 2016, the Company changed its reporting currency from United States Dollars (“USD”) to Chinese Renminbi (“RMB”). Prior years’ comparativefinancial information have been recasted as if the Company always used RMB as its reporting currency. The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of TarenaInternational’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other thanthe functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets andliabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date.The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensiveincome. Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheetdate. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currencytranslation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity (deficit). Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’sBank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchangetransactions are the rates of exchange quoted by the PBOC. F-14  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d)Cash, cash equivalents , time deposits and restricted time deposits Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates ofdeposit with initial term of no more than three months when purchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term ofgreater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets. Time deposits that were pledged as collateral for line of credit with a financial institution in the U.S. with an initial term of greater than three monthswhen purchased as of December 31, 2015 were reported as restricted time deposits. Cash, time deposits and restricted time deposits maintained at banks consist of the following: December 31, 2015 2016 RMB RMB RMB denominated bank deposits with financial institutions in the PRC 627,148 867,811 US dollar denominated bank deposits with a financial institutions in the PRC 52,680 152,792 US dollar denominated bank deposits with financial institutions in Hong Kong SpecialAdministrative Region (“HK SAR”) 645 3,535 HK dollar denominated bank deposits with a financial institution in HK SAR 99 1 RMB denominated bank deposits with a financial institution in HK SAR 3 3 RMB denominated bank deposits with financial institutions in the U.S. 547,388 - US dollar denominated bank deposits with financial institutions in the U.S. 55 261,913 To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in thePRC, HK SAR and the U.S. with acceptable credit rating. (e)Short-term investment During the years ended December 31, 2014, 2015 and 2016, the Company invested RMB622,800, RMB945,000 and RMB1,937,000, respectively,in financial products managed by three financial institutions in the PRC. The terms of the financial products range between 5 days and 91 days. Thefinancial products matured before December 31, 2014, 2015 and 2016, respectively. The Company earned investment income of RMB4,652,RMB5,961 and RMB12,676, respectively on the financial products, which was included in other income in the consolidated statements ofcomprehensive income for the years ended December 31, 2014, 2015 and 2016. F-15  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (f)Accounts receivable Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet dateare presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balancesheets as a direct deduction from the principal amount of accounts receivable. See note 2(j). The Company maintains an allowance for doubtfulaccounts for estimated losses resulting from the inability of its customers to make required payments. Accounts receivable is considered past duebased on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the amountof accounts receivables in dispute, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to beuncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consideredremote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write offof the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collectionon the outstanding balances have been exhausted. (g)Property and equipment Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Theestimated useful life of property and equipment is as follows: Office buildings 45 yearsFurniture 5 yearsOffice equipment 3 to 4 yearsLeasehold improvements Shorter of the lease term or the estimated useful life of the assets Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired orotherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may notbe recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of anasset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of anasset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying valueexceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cashflow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower ofcarrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the yearspresented. (h)Goodwill The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is notamortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired. F-16  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h)Goodwill (continued) ASC 350-20, Goodwill, permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value ofa reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using atwo-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reportingunit is greater than its carrying amount, the two-step goodwill impairment test is not required. If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, includinggoodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is notrequired. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of theimpairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds itsimplied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner thatgoodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of thatunit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill. (i)Long-term investments The Company’s long-term investments consist of cost method investments, equity method investment and available-for-sale investment. Cost method investments Investments in entities in which the Company does not have an ability to exercise significant influence over the operating and financial matters ofthe investees and which do not have readily determinable fair value are accounted for using the cost method, under which the Company carries theinvestments at cost and recognizes as income for any dividend received from distribution of the investees’ earnings. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significantadverse effect on the fair value of the investment. No events or circumstances indicating a potential impairment were identified as of or for the yearended December 31, 2015 and 2016. The Company determines that it is not practicable to estimate fair value of cost method investments as ofDecember 31, 2015 and 2016, because the sales prices or bid-and-asked quotations of the equity interests of these entities are not currently availableand the cost of obtaining an independent valuation appears excessive considering the materiality of the investments to the Company. Equity method investment Investment in entity in which the Company has the ability to exercise significant influence, but does not have a controlling interest throughinvestment in common shares or in-substance common shares, are accounted for using the equity method. Under the equity method, the Companyinitially records its investment at cost, its share of the post-acquisition profits or losses of the investee is recognized in the Company’s consolidatedstatements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the Company’sconsolidated balance sheets. Unrealized gains on transactions between the Company and an investee in which the Company has recorded an equityinvestment are eliminated to the extent of the Company’s interest in the investee. To the extent of the Company’s interest in the investment,unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. F-17  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i)Long-term investments (continued) Available-for-sale investment For investment in debt security, the Company accounts for it as available-for-sale investment when it is not classified as either trading or held-to-maturity investments. Available-for-sale security is reported at fair value, with unrealized holding gains or losses, net of the related tax effect,excluded from earnings and recorded as a separate component of accumulated other comprehensive income until realized. Realized gains or lossesfrom the sale of available-for-sale investment are determined on a specific identification basis. The Company’s consolidated statements of comprehensive income reflects the full impairment (that is, the difference between the security’samortized cost basis and fair value) on debt securities that the Company intends to sell or would more-likely than-not be required to sell before theexpected recovery of the amortized cost basis. For available-for-sale investment that management has no intent to sell and believes that it morelikely than-not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while therest of the fair value loss is recognized in accumulated other comprehensive income. A decline in the market value of any available-for-sale investments below cost that is deemed to be other-than-temporary results in an impairment toreduce the carrying amount to fair value. To determine whether an impairment is other-than-temporary, the Company considers all availableinformation relevant to the collectibility of the financial product, including past events, current conditions, and reasonable and supportable forecastswhen developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment,the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general marketcondition in the geographic area or industry the investee operates in. (j)Revenue recognition Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or serviceshave been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the followingmajor revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates rangingbetween 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in theconsolidated balance sheets until it is paid to the tax authorities. Tuition fees Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded asdeferred revenue. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuitionservices are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore therevenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principalvalue of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interestrate used to determine the present value of total amount receivable is the rate at which the students can obtain financing of a similar nature fromother sources at the date of the transaction. F-18  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (j)Revenue recognition (continued) The Company enters into arrangements with certain students that purchase multiple services, including classroom training and extended on-line casestudies (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accountingprovided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includesa general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and issubstantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor.The Company’s revenue arrangements do not include a general right of return relative to the delivered services. The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes andrecognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all thedeliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established byAccounting Standard Update No. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of sellingprice nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables. Certification service revenue The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible forthe certification service, including organization, proctoring and grading of exams. All certificates are issued by third parties to the students who passthe exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primaryobligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, isrecorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, whichoccurs when the certificates are provided to the students. Loan referral service revenue In 2016, pursuant to the agreements between the Company and a number of financial service providers, the Company promotes loan products ofthese financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at arate of between 5% to 8% of the principal amount of the loans. The Company does not provide guarantee for the loans, which are between thefinancial service providers and its students. Loan referral service revenue is recognized upon the initiation of the loans. (k)Cost of revenues Cost of revenues consists of payroll and employee benefits, rent expenses of learning centers, depreciation relating to property and equipment usedfor operating the learning centers, and other operating costs that are directly attributed to the provision of training services. (l)Advertising costs Advertising costs are expensed as incurred and included in selling and marketing expenses. Advertising costs were RMB102,820, RMB151,533 andRMB201,298 for the years ended December 31, 2014, 2015 and 2016, respectively. F-19  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m)Operating lease The Company leases premises for learning centers and offices under non-cancellable operating leases. Leases with escalated rent provisions arerecognized on a straight-line basis commencing with the beginning of the lease term. There are no capital improvement funding, other leaseconcessions or contingent rent in the lease agreements. The lease terms of the Company’s learning centers range between 1 and 10 years. TheCompany has no legal or contractual asset retirement obligations at the end of the lease term. Certain learning centers of the Company sublease a portion of the areas to certain students for their living accommodation. Income from subleases isrecognized on a straight-line basis over the term of the lease and recognized as reduction of costs of revenues. (n)Government grant Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant willbe received. Government grant for the purpose of giving immediate financial support to the Company with no future related costs or obligation isrecognized in the Company’s consolidated statements of comprehensive income when the grant becomes receivable. Government grants ofRMB9,916, RMB5,851 and RMB3,199 were recognized and included in other income for the years ended December 31, 2014, 2015 and 2016,respectively. (o)Research and development expense Research and development costs are expensed as incurred. (p)Employee benefits Pursuant to relevant PRC regulations, the Company is required to make contributions to various defined contribution plans organized by municipaland provincial PRC governments. The contributions are made for each PRC employee at rates ranging from 22.3% to 53.1% on a standard salarybase as determined by local social security bureau. Contributions to the defined contribution plans are charged to the consolidated statements ofcomprehensive income when the related service is provided. For the years ended December 31, 2014, 2015 and 2016, the costs of the Company’sobligations to the defined contribution plans amounted to RMB51,510, RMB69,370 and RMB85,325, respectively. The Company has no otherobligation for the payment of employee benefits associated with these plans beyond the contributions described above. (q)Income taxes Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective taxbases and tax loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply totaxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assetsand liabilities of a change in tax rates or tax laws is recognized in the consolidated statements of comprehensive income in the period the change intax rates or tax laws is enacted. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is consideredmore likely than not that some portion or all of the deferred income tax assets will not be realized. F-20  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q)Income taxes (continued) The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of beingsustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount thatis greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgmentoccurs. The Company has elected to classify interest and penalties related to an unrecognized tax benefits, if and when required, as part of incometax expense in the consolidated statements of comprehensive income. (r)Deferred offering costs Deferred offering costs consist principally of legal, printing and registration costs in connection with the IPO. Upon completion of the IPO on April3, 2014, the deferred offering costs of RMB3,788 were recognized as a reduction of the offering proceeds. (s)Share based compensation The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value ofthe award and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is thevesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on astraight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount ofcompensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture ratesare estimated based on historical and future expectations of employee turnover rates. (t)Commitments and contingencies In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, thatcover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual fora loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If apotential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of thecontingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. (u)Earnings per share Basic earnings per Class A and Class B ordinary share is computed by dividing net income attributable to Tarena International’s Class A and Class Bordinary shareholders by the weighted average number of Class A and Class B ordinary shares outstanding during the year using the two-classmethod. Under the two-class method, net income attributable to Tarena International’s Class A and Class B ordinary shareholders is allocatedbetween Class A and Class B ordinary shares and other participating securities, if any, based on participating rights in undistributed earnings. Tarena International’s Series A convertible redeemable preferred shares, Series B convertible redeemable preferred shares and Series C convertibleredeemable preferred shares were participating securities since the holders of these securities participated in dividends on the same basis as Class Aand Class B ordinary shareholders. F-21  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (u)Earnings per share (continued) Diluted earnings per share is calculated by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders asadjusted for the effect of dilutive Class A and Class B ordinary share equivalents, if any, by the weighted average number of Class A and Class Bordinary and dilutive Class A and Class B ordinary share equivalents outstanding during the year. Class A and Class B ordinary share equivalentsinclude the Class A and Class B ordinary shares issuable upon the exercise of the outstanding share options (using the treasury stock method) andconversion of convertible redeemable preferred shares (using the as-if-converted method). Potential dilutive securities are not included in thecalculation of diluted earnings per Class A and Class B ordinary share if the impact is anti-dilutive. (v)Segment reporting The Company uses the management approach in determining its operating segments. The management approach considers the internal reportingused by the Company’s chief operating decision maker for making decisions about the allocation of resources to and the assessment of theperformance of the segments of the Company. Management has determined that the Company has one operating segment, which is the trainingsegment. All of the Company’s operations and customers are located in the PRC. Consequently, no geographic information is presented. (w)Fair value measurements The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assetsand financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financialstatements on a recurring and nonrecurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid totransfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements forassets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which itwould transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820 also establishes aframework for measuring fair value and expands disclosures about fair value measurements. ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use ofunobservable inputs when measuring fair value. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value. Thehierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and thelowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are asfollows: •Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at themeasurement date. •Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly orindirectly. •Level 3 inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant tothe fair value measurement in its entirety. In situations where there is little, if any, market activity for the asset or liability at the measurement date,the fair value measurement reflects management’s own judgments about the assumptions that market participants would use in pricing the asset orliability. Those judgments are developed by management based on the best information available in the circumstances. F-22  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (w)Fair value measurements (continued) The carrying amounts of cash, current time deposits, restricted time deposits, accounts receivable, loans to employees, accounts payable, amountsdue to a related party, accrued expenses and other current liabilities as of December 31, 2015 and 2016 approximate their fair value because of shortmaturity of these instruments. The carrying amounts of non-current time deposits as of December 31, 2015 and 2016 approximates their fair value since the interest rates of thetime deposits did not differ significantly from the market interest rates for similar types of time deposits. The fair values of time deposits, restricted time deposits as of December 31, 2015 and 2016 are categorized as Level 2 measurement. Available-for-sale investment as of December 31, 2016 is valued based on the implied enterprise value indirectly observed in a recent transaction atthe reporting date and is categorized as Level 2 measurement. (x)Recently issued accounting standards The Financial Reporting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts withCustomers, in May 2014. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers inan amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should alsodisclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, anduncertainty of revenue and cash flows arising from contracts with customers. In December 2015, the FASB issued ASU No. 2015-14, Revenue fromcontracts with customers, which deferred the effective date of ASU 2014-09. The new standard is effective for annual reporting periods beginningafter December 15, 2017. The Company will apply the new revenue standard beginning January 1, 2018. The Company has set up animplementation team that is currently in the process of analyzing each of the Company’s revenue streams in accordance with the new revenuestandard to determine the impact on the Company’s consolidated financial statements. The Company plans to continue the evaluation, analysis, anddocumentation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify its provisions) in 2017 as the Companyworks towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements. On January 5, 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities,which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equityinvestments to be measured at fair value, with changes in the fair value recognized through net income (other than those accounted for under theequity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning afterDecember 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this standardon its consolidated financial statements. F-23  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (x)Recently issued accounting standards(continued) On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 specifies the accounting for leases. For operatingleases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the leasepayments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocatedover the lease term, on a generally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key informationabout lease transactions. ASU 2016-02 is effective for publicly-traded companies for annual reporting periods, and interim periods within thoseyears, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard onits consolidated financial statements. On March 30, 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to accounting for employee share-based payments. This standard addresses several aspects of theaccounting for share-based payment award transactions, including (a) income tax consequences; (b) classification of awards as either equity orliabilities; and (c) classification in the statement of cash flows; and (d) accounting for forfeitures of share-based payments. This standard will beeffective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company does not expect thisstandard to have a material impact on its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326), which requiresentities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, andreasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses onfinancial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and relateddisclosures. In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows — Classification of Certain CashReceipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cashflows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within thosefiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financialstatements and related disclosures. In November 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amountsgenerally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cashequivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown inthe statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years.Early adoption is permitted, including adoption in an interim period. The standard should be applied using a retrospective transition method to eachperiod presented. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements. F-24  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (x)Recently issued accounting standards(continued) In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying theDefinition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whethertransactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning afterDecember 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectivelyon or after the effective date. The Company will evaluate the impact of adopting this standard prospectively upon any transactions of acquisitions ordisposals of assets or businesses. In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment. The guidanceremoves Step 2 of a goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be theamount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should beadopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption ispermitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating theimpact of adopting this standard on its consolidated financial statements. F-25  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 3ACCOUNTS RECEIVABLE Accounts receivable consists of the following: December 31, 2015 2016 RMB RMB Accounts receivable: Gross 237,624 214,142 Unearned interest (15,997) (15,130)Total accounts receivable 221,627 199,012 Less: allowance for doubtful accounts (66,857) (100,462)Accounts receivable, net 154,770 98,550 The classification of accounts receivable is as follows: December 31, 2015 2016 RMB RMB Accounts receivable, net – current portion 146,999 97,374 Accounts receivable, net – non-current portion 7,771 1,176 Total accounts receivable, net 154,770 98,550 The movements of the allowance for doubtful accounts are as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Balance at the beginning of the year 14,041 35,347 66,857 Additions charged to bad debt expense 46,000 63,103 33,605 Write-off of bad debt allowance (24,694) (31,593) - Balance at the end of the year 35,347 66,857 100,462 The aging analysis of our accounts receivable based on due date is as follows: As of December 31, 2015 2016 RMB RMB Aging: – current 104,368 78,276 – 1-3 months past due 37,005 15,306 – 4-6 months past due 13,373 10,846 – 7-12 months past due 18,015 22,748 – greater than one year past due 48,866 71,836 Total accounts receivable 221,627 199,012 F-26  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 4PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: December 31, 2015 2016 RMB RMB Prepaid expenses and other current assets: Prepaid rental expenses 17,925 25,038 Interest receivable from time deposits 11,485 5,945 Prepaid advertising deposits 10,975 11,875 Prepaid advertising expenses 9,991 14,193 Prepaid value-added tax 7,176 50,587 Housing loans made to employees (a) 2,290 4,968 Staff advances (b) 423 1,404 Others (c) 5,838 12,078 Total prepaid expenses and other current assets 66,103 126,088 (a)Before 2016, the Company provided one-year housing loans to the employees to help them finance their purchase of apartments. In 2016, theCompany provided five-year loans to the employees, which amounted to RMB12,751 and were included in other non-current assets. (b)Staff advances are provided to staff for traveling and related expenses and are expensed when incurred. (c)Others mainly represent other deposits, professional fees and other miscellaneous prepaid expenses. 5PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following: December 31, 2015 2016 RMB RMB Office buildings - 281,541 Furniture 10,510 18,078 Office equipment 211,385 271,862 Leasehold improvements 53,126 64,383 Total property and equipment 275,021 635,864 Less: accumulated depreciation (147,157) (198,527)Property and equipment, net 127,864 437,337 Depreciation expense for property and equipment was allocated to the following: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Cost of revenues 38,088 48,553 61,967 Selling and marketing expenses 2,253 2,694 3,226 General and administrative expenses 2,649 3,031 6,455 Research and development expenses 488 703 1,109 Total 43,478 54,981 72,757 F-27  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 6LONG-TERM INVESTMENTS Long-term investments consisted of the following: December 31, 2015 2016 RMB RMB Cost method investments Sino-German Know-How Education Investment Co., Ltd. (a) 12,000 12,000 Juesheng.com (b) 5,000 5,000 Mxsoft.com (c) 4,000 4,000 Other cost method investments (d) 3,000 5,000 Total cost method investments 24,000 26,000 Equity method investment Hockey global resources investment limited (e) - 760 Available-for-sale investment (f) - 15,000 Total 24,000 41,760 (a)In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in Sino-German Know-How EducationInvestment Co., Ltd, which is engaged in provision of training for senior mechanic in vehicle maintenance and repair. (b)In November 2015, the Company paid RMB5,000 in cash to acquire 0.50% of the total equity interest of an online shopping platform providingeducation products. (c)In August 2015, the Company paid RMB4,000 in cash to acquire 5.71% of the total equity interest in Mxsoft.com, which provides ITenvironment management and monitoring solution to customers. (d)As of December 31, 2015, the Company paid RMB3,000 in cash to acquire 1.43% and 0.74% equity interest in two other entities which wereaccounted for under cost method. In June 2016, the Company paid RMB2,000 in cash to acquire 2.00% equity interest of an online platformproviding vehicle sales and related services. (e)In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company throughinvestment in its common shares and accounted for the investment using equity method. (f)In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in Beijing Crouching Tiger Hidden Dragon InternetTechnology Co., Ltd., which provides employment course trainings and recruitment services. Because the investment terms contain bothsubstantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, theinvestment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, theinvestment qualifies as a debt security. The Company recorded the investment as available-for-sale investment and recorded an increase ofRMB5,000 in fair value of the investment with nil income tax effect in 2016, as a component of other comprehensive income. F-28  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 7ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES December 31, 2015 2016 RMB RMB VAT and other tax payables 18,347 29,995 Accrued payroll and employee benefits 37,396 59,512 Others 24,092 28,360 Total 79,835 117,867 Others mainly represent current deferred income under American Depositary Receipt program, accrual for employee reimbursement, rental expenses andother miscellaneous expenses. 8NET REVENUES Net revenues consist of the following: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Tuition fee 835,275 1,174,596 1,545,680 Certification service fee 18,038 27,466 35,980 Loan referral service fee - - 8,750 Others 2,873 1,136 1,875 Business taxes and surcharges (19,245) (25,190) (12,681) Total net revenues 836,941 1,178,008 1,579,604 Others mainly represent miscellaneous fees, including franchise fee and guarantee fee (see note 11(a)). 9LOSS ON FOREIGN CURRENCY FORWARD CONTRACT The Company entered into a foreign currency forward contract on January 29, 2016 to sell its time deposits denominated in RMB for US dollars at afixed rate at 6.7070 on May 19, 2016 with the notional amount of RMB564,095. The Company settled the forward contract on May 19, 2016 andincurred a loss on foreign currency forward contract in the amount of RMB12,898 for the year ended December 31, 2016. F-29  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 10INCOME TAXES Under the current laws of the Cayman Islands, Tarena International is not subject to tax on its income or capital gains. For the period from its inceptionon October 22, 2012 to December 31, 2016, Tarena HK did not have any assessable profits arising in or derived from HK SAR. Tarena International’sPRC subsidiaries and consolidated VIEs and the subsidiaries of the VIEs file separate tax returns in the PRC. Effective from January 1, 2008, the PRCstatutory income tax rate is 25% according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress onMarch 16, 2007. Under the CIT Law, entities that qualify as “Advanced and New Technology Enterprise” (“ANTE”) are entitled to a preferential income tax rate of 15%.In 2009, the WOFE qualified as an ANTE, which entitled it to the preferential income tax rate of 15% from January 1, 2009 to December 31, 2011. In2012, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2012 to December 31,2014. In 2015, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2015 toDecember 31, 2017. Tarena Software Technology (Hangzhou) Co., Ltd. (“Tarena Hangzhou”) was established in 2013 and qualified as an eligible software enterprise. As aresult of this qualification, it is entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from theyear in which its taxable income is greater than zero. As a result, its income tax rates for the years ended December 31, 2014, 2015 and 2016 were nil,nil and 12.5%, respectively. In 2016, Tarena Hangzhou acquired Hanru Education& Technology Co., Ltd. (“Hanru Hangzhou”), which was qualified as an eligible softwareenterprise, and was entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in whichits taxable income is greater than zero. As a result, the income tax rate of Hanru Hangzhou for the year ended December 31, 2016 was nil. Certain Tarena International’s subsidiaries and branches qualified as “Small Profit Enterprises” in 2014, 2015 and 2016, and therefore are subject to thepreferential income tax rate of 20%. According to the approvals from the tax authorities in certain locations in the PRC, Tarena International’s subsidiaries and consolidated VIEs and thesubsidiaries of the VIEs that are based in these locations are required to use the deemed profit method to determine their income tax. Under the deemedprofit method, these subsidiaries are subject to income tax at 25% on its deemed profit which is calculated based on revenues less deemed expensesequal to 85% and 90% of revenues. F-30  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 10INCOME TAXES (CONTINUED) The components of income before income taxes are as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB PRC 146,570 200,789 272,745 Hong Kong (1,964) (1,908) (573)Cayman Islands 22,039 (16,154) (11,542)Total income before income taxes 166,645 182,727 260,630 Income tax expense consists of the following: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Current income tax expense 18,985 25,581 37,671 Deferred income tax benefit (4,190) (21,614) (18,895)Total 14,795 3,967 18,776 The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2014, 2015and 2016 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following: Year Ended December 31, 2014 2015 2016 PRC statutory income tax rate 25.0% 25.0% 25.0%Increase (decrease) in effective income tax rate resulting from: Cayman and HK entities not subject to income taxes (3.0)% 2.5% 1.2%Research and development bonus deduction (2.7)% (3.3)% (2.7)%Non-deductible selling, general and administrative expenses Share based compensation 3.8% 4.5% 6.5%Other non-deductible selling, general and administrativeexpenses 0.5% 0.6% 0.1%ANTE preferential tax rate (1.0)% 0.1% (0.7)%Tarena Hangzhou preferential tax rate (0.1)% 0.7% 0.5%Change in valuation allowance 6.4% 3.1% 2.5%Tarena Hangzhou and Hanru Hangzhou tax holiday (20.0)% (31.1)% (25.2)%Others 0.0% 0.1% 0.0%Actual income tax expense 8.9% 2.2% 7.2% Basic earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014, 2015and 2016 was RMB0.81, RMB1.06 and RMB1.18, respectively. Diluted earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014,2015 and 2016 was RMB0.70, RMB0.97 and RMB1.11, respectively. F-31  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 10INCOME TAXES (CONTINUED) The principal components of deferred income tax assets are as follows: December 31, 2015 2016 RMB RMB Deferred income tax assets: Accounts receivable 34,616 47,126 Tax loss carry forwards 7,065 9,984 Advertising expense 13,666 23,401 Accrued expenses and other current liabilities - 123 Total deferred income tax assets 55,347 80,634 Valuation allowance (20,115) (26,507)Deferred income tax assets, net 35,232 54,127 The movements of the valuation allowance are as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Balance at the beginning of the year 3,647 14,362 20,115 Additions of valuation allowance 11,198 9,069 13,076 Reduction of valuation allowance (483) (3,316) (6,684)Balance at the end of the year 14,362 20,115 26,507 The valuation allowance as of December 31, 2015 and 2016 was primarily provided for the deferred income tax assets of certain Tarena International’sPRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs, which were at cumulative loss positions. In assessing the realization of deferredincome tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not berealized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in whichthose temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies inmaking this assessment. As of December 31, 2016, the Company had tax losses carryforwards of RMB 39,936. Tax losses of RMB227, RMB11,053,RMB8,165 and RMB20,491 will expire, if unused, by 2018, 2019, 2020 and 2021, respectively. The CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount ofdividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulatedbeginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholdingincome tax. The Company has considered temporary differences on the book to tax differences pertaining to all investment in subsidiaries including thedetermination of the indefinite reinvestment assertion that would apply to each foreign subsidiary. The Company evaluated each entity’s historical,current business environment and plans to indefinitely reinvest all earnings accumulated in its respective jurisdiction for purpose of future businessexpansion. Due to the plan to indefinitely reinvest its earnings in the PRC, the Company has not provided for deferred income tax liabilities on undistributedearnings of RMB604,218 and RMB937,735 as of December 31, 2015 and 2016, respectively. It is not practicable to estimate the unrecognized deferredincome tax liabilities thereof. F-32  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 10INCOME TAXES (CONTINUED) A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2014, 2015 and 2016 is asfollows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Balance at beginning of year 18,764 36,921 53,404 Increase related to current year tax positions 35,436 51,050 66,122 Settlement (17,279) (34,567) (49,704)Balance at end of year 36,921 53,404 69,822 RMB49,198 and RMB69,263 of unrecognized tax benefits as of December 31, 2015 and 2016, if recognized, would affect the effective tax rate. Nointerest and penalty expenses were recorded for the years ended December 31, 2014, 2015 or 2016. RMB42,489 and RMB62,665 of unrecognized taxbenefits as of December 31, 2015 and 2016 were included in income taxes payable. RMB3,700 and RMB3,700 of unrecognized tax benefits as ofDecember 31, 2015 and 2016 were included in other non-current liabilities. The remaining RMB7,215 and RMB3,457 unrecognized tax benefit as ofDecember 31, 2015 and 2016, respectively were presented as a reduction of the deferred income tax assets for tax loss carry forwards since the uncertaintax position would reduce the tax loss carry forwards under the tax law. The unrecognized tax benefits represent the estimated income tax expenses theCompany would be required to pay should its revenue for tax purposes be recognized in accordance with current PRC tax laws and regulations.Management believes that it is reasonably possible that RMB66,122 unrecognized tax benefits as of December 31, 2016 will be recognized in the nexttwelve months as a result of such revenue being reported in the income tax filing during the next twelve months. According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due tocomputational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstanceswhere the underpayment of taxes is more than RMB100. In the case of transfer pricing issues, the statute of limitation is 10 years. There is no statute oflimitation in the case of tax evasion. The income tax returns of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of theVIEs for the years from 2012 to 2016 are open to examination by the PRC tax authorities. F-33  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 11RELATED PARTY TRANSACTIONS During the years ended December 31, 2014, 2015 and 2016, the Company entered into related party transactions with Mr. Han, Chuanbang BusinessConsulting (Beijing) Co., Ltd. (“Chuanbang”), which is wholly owned by Mr. Han, and Precise Advance Limited (“Precise”), which is owned by anexecutive of the Company’s shareholder. The significant related party transactions are summarized as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Transactions with Chuanbang Guarantee fee (a) 112 — — Cash collection service fee (b) 664 2,053 6,445 Transactions with others Advances from Precise (c) — (1,432) — Repayment of advances from Precise (c) — 1,432 — Notes: (a)Starting from the second half of 2011, the Company began to refer its students who need financial assistance for the payment of their tuition feesto Chuanbang. Chuanbang is a person-to-person or a “peer-to-peer” (P2P) lending intermediary that assists students in obtaining loans to pay fortheir tuition fees by identifying potential third-party individual lenders (the “Student Loan Program”). The Company has no direct involvementin or is a party to the P2P arrangement, other than serving as the guarantor of the student loans. Under the Student Loan Program, the Companyallocates the total consideration between the fair value of the tuition service and the loan guarantee. Subsequent to the initial recognition, theloan guarantee liability is recognized as guarantee fee revenue over the term of the guarantee on a straight-line basis. RMB112, nil and nil wasrecognized as guarantee fee revenue and included in other revenues for the years ended December 31, 2014, 2015 and 2016, respectively. (b)Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on theCompany’s accounts receivable. The fee for the service is calculated based on 2%~12% of the amount collected. Employees of Chuanbanginclude former employees of the Company who worked in the credit evaluation department. Chuanbang also provides similar cash collectionservice to financial institutions in the PRC. The cash collection service fee which is included in general and administrative expenses in theconsolidated statement of comprehensive income was RMB664, RMB2,053 and RMB6,445 for the years ended December 31, 2014, 2015 and2016, respectively. The amount due to Chuanbang as of December 31, 2015 was RMB879. The amount due to Chuanbang as of December 31,2016 was RMB79, which has been fully paid by March 31, 2017. (c)In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P (“KKR”), a shareholder of the Company,provided cash advances in the amount of RMB1,432 to the Company in order to fund its share repurchase plan. The Company has fully repaidthe advances in October 2015. F-34  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 12ORDINARY SHARES AND STATUTORY RESERVE (a)Ordinary shares On October 8, 2003, Tarena International was established with authorized share capital of US$150 or 90,000,000 ordinary shares with a par valueof US$0.001 (being retroactively adjusted to reflect the effect of the share split) and 60,000,000 preferred shares with a par value of US$0.001(being retroactively adjusted to reflect the effect of the share split). On December 16, 2008, the Board of Directors of Tarena International approved a 10:1 share split, which increased (i) the total number ofauthorized ordinary shares of 9,000,000, and issued and outstanding ordinary shares of 1,358,000 to 90,000,000 and 13,580,000 respectively;and (ii) the total number of authorized preferred shares of 6,000,000, and issued and outstanding preferred shares of 1,589,125 to 60,000,000 and15,891,250 respectively. All applicable share and per share amounts in the accompanying consolidated financial statements have beenretroactively adjusted to reflect the effect of the share split. On April 9, 2013, IDG Technology Venture Investments, LP (“IDG”), the Series A convertible redeemable preferred shareholder, entered into aseries of agreements with Mr. Han, Connion Capital Ltd. (“Connion”), a company incorporated in the Cayman Islands with limited liability andwholly owned by Mr. Han, Techedu Limited, a company incorporated in the British Virgin Islands (“BVI”) with limited liability and whollyowned by Mr. Han, and GF Tarena Limited, a third party company incorporated with limited liability under the law of the BVI, pursuant to whichIDG sold 1,146,059 and 229,212 of its Series A convertible redeemable preferred shares to Techedu Limited and GF Tarena Limited for aconsideration of RMB31,320 and RMB6,264, respectively, or RMB27.33 per share. At the same time, Connion sold 916,848 of its ordinaryshares to GF Tarena Limited for a consideration of RMB25,056 or RMB27.33 per share. The 1,146,059 Series A convertible redeemable preferredshares purchased by Techedu Limited and 229,212 Series A convertible redeemable preferred shares purchased by GF Tarena Limited wereconverted to ordinary shares on December 10, 2013. To facilitate the purchase of the Series A convertible redeemable preferred shares, TecheduLimited borrowed a loan in the amount of RMB31,320 from GF Tarena Limited on April 9, 2013, with an annual interest rate of 19% for a periodof 30 months. On February 27, 2014, the Board of Directors of Tarena International approved the fifth amendment of the Memorandum and Articles ofAssociation (the “Amended M&A”), pursuant to which the authorized share capital was amended to 1,000,000,000 ordinary shares at a par valueof US$0.001 per share, of which 860,000,000 shares were designated as Class A ordinary shares, 40,000,000 as Class B ordinary shares and100,000,000 shares were designated as Reserved Shares, each with such rights, preferences and privileges set forth in the Amended M&A. Therights of the holders of Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Each share of ClassA ordinary shares is entitled to one vote per share and is not convertible into Class B ordinary shares under any circumstances. Each share ofClass B ordinary shares is entitled to ten votes per share and is convertible into one Class A ordinary share at any time by the holder thereof. In the Amended M&A, the Board of Directors of Tarena International approved that the Company to adopt a dual class ordinary share structureimmediately upon the completion of the IPO. Upon the completion of the IPO, the Group’s ordinary shares were divided into Class A ordinaryshares and Class B ordinary shares. All of its issued and outstanding ordinary share prior to this offering were re-designated as Class B ordinaryshares, all of its issued and outstanding preferred shares were automatically re-designated or converted into Class B ordinary shares on a one-for-one basis immediately upon the completion of the IPO and all of the issued and outstanding options, non-vested shares and non-vested shareunits granted by the Company pursuant to the 2008 Share Plan and the 2014 Share Incentive Plan were re-designated as options in Class Ashares, non-vested Class A ordinary shares, non-vested Class A ordinary share units. F-35  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 12ORDINARY SHARES AND STATUTORY RESERVE(CONTINUED) (a)Ordinary shares(continued) In April 2014, in connection with its IPO, Tarena International issued 11,500,000 Class A ordinary shares with par value of US$0.001, at a priceof US$9.00 per share to investors. Net proceeds from the issuance of 11,500,000 Class A ordinary shares amounted to RMB567,360 (net ofissuance costs of RMB24,801), of which RMB71 and RMB 567,289 were recorded in the Class A ordinary shares and additional paid-in capital,respectively. Concurrently upon the completion of the Company’s IPO, the Company issued 1,500,000 Class A ordinary shares with par value of US$0.001 toNew Oriental Education & Technology Group Inc., in a private placement at a price of US$9.00 per share. Proceeds from the issuance of Class Aordinary shares were RMB83,052 of which RMB9 and RMB83,043 were recorded in the Class A ordinary shares and additional paid-in capital,respectively. As a result of automatic conversion of Series A, Series B, and Series C convertible redeemable preferred shares into Class B ordinary shares uponcompletion of the Company’s IPO on April 3, 2014, 25,430,831 Class B ordinary shares were issued. From January 1, 2014 to December 31,2014, a total of 8,924,365 Class B ordinary shares were converted to Class A ordinary shares. 1,788,393 Class A ordinary shares were issued uponexercise of share options and vesting of non-vested shares. From January 1, 2015 to December 31, 2015, a total of 18,158,128 Class B ordinaryshares were converted to Class A ordinary shares. 3,043,652 Class A ordinary shares were issued upon exercise of share options and vesting ofnon-vested shares. From January 1, 2016 to December 31, 2016, a total of 1,679,647 Class B ordinary shares were converted to Class A ordinaryshares. 2,141,043 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares. As of December 31, 2016, 860,000,000 Class A ordinary shares and 40,000,000 Class B ordinary shares have been authorized, 48,735,228 and47,160,248 Class A ordinary shares have been issued and outstanding, respectively, and 8,895,249 Class B ordinary shares have been issued andoutstanding. (b)Treasury shares On August 20, 2015, the board of directors of the Company authorized a share repurchase plan under which the Company may repurchase up toRMB133,556 of its ordinary shares over the next 12 months. The Company repurchased 926,113 ordinary shares on the open market withconsideration of approximately RMB49,355 for the year ended December 31, 2015. For the year ended December 31, 2016, 648,867 ordinaryshares were repurchased on the open market in the amount of RMB44,406. (c)Statutory reserves Under PRC rules and regulations, Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs (the “PRCEntities”) are required to appropriate 10% of their net profit, as determined in accordance with PRC accounting rules and regulations, to astatutory surplus reserve until the reserve balance reaches 50% of their registered capital. In addition, private schools (held by the PRC Entities)which require reasonable returns are required to appropriate 25% of their net profit, as determined in accordance with PRC accounting rules andregulations, to a statutory development fund, whereas in the case of private schools which do not require reasonable return, 25% of the annualincrease of their net assets. The appropriation to these statutory reserves must be made before distribution of dividends to Tarena Internationalcan be made. For the years ended December 31, 2014, 2015 and 2016, the PRC Entities made appropriations to the statutory reserves of RMB15,823,RMB36,524 and RMB40,491, respectively. As of December 31, 2014, 2015 and 2016, the accumulated balance of the statutory reserves wasRMB38,228, RMB74,752 and RMB115,243, respectively. F-36  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 12ORDINARY SHARES AND STATUTORY RESERVE(CONTINUED) (d)Reclassification between additional paid-in capital and retained earnings On August 19, 2014, the Board of Directors approved the Company to undertake a reclassification of the balances between additional paid-incapital and retained earnings of RMB526,457. The reclassification was due to the accretion of convertible redeemable preferred shares, of whichRMB526,457 were charged against the balance in accumulated deficit in the absence of additional paid-in capital. (e)Dividend On March 7, 2016, the Company’s board of directors approved to declare a cash dividend of US$0.15 per ordinary share to shareholders as of theclose of trading on April 6, 2016. The aggregate amount of cash dividends was approximately RMB54,026, which was paid in May 2016. 13PREFERRED SHARES Series A convertible redeemable preferred shares On January 16, 2004, pursuant to the Series A convertible redeemable preferred shares purchase agreements (“Series A Purchase Agreement”), TarenaInternational issued 8,571,430 Series A convertible redeemable preferred shares to a third party investor for a total consideration of RMB4,138 orRMB0.48 per share (“Series A Original Issuance Price”) (being retroactively adjusted to reflect the effect of the share split). The Company determined that there was no embedded beneficial conversion feature attributable to the Series A convertible redeemable preferred sharesat the commitment date since the initial conversion price of the Series A convertible redeemable preferred shares was greater than the estimated fairvalue of the Company’s ordinary shares as of January 16, 2004. The estimated fair value of the underlying ordinary shares on January 16, 2004 wasdetermined by management based on a retrospective valuation with the assistance of American Appraisal China Limited (“American Appraisal”), anindependent valuation firm, using an income approach which requires the estimation of future cash flows and the application of an appropriatediscount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value. The significant terms of Series A convertible redeemable preferred shares are as follows: (i)Conversion The holders of Series A convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary sharesat a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed tobe issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series A Original IssuancePrice. In addition, each Series A Preferred Share is automatically converted into ordinary shares upon the consummation of a Qualified PublicOffering, as defined in the Series A Purchase Agreement. The contingent conversion price adjustment may provide the holders of the Series A convertible redeemable preferred shares with a beneficialconversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when thecontingency is resolved. (ii)Voting The holders of Series A convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted”basis. (iii)Dividends Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series A convertible redeemable preferredshares as if all such Series A convertible redeemable preferred shares has been converted to ordinary shares. F-37  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series A convertible redeemable preferred shares (continued) (iv)Liquidation preference The liquidation preference of the holders of Series A convertible redeemable preferred shares as of December 31, 2013 is as follows: In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the followingsequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plusdeclared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertibleredeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series Bconvertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series AOriginal Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remainingassets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertibleredeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis. From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), theliquidation preference of the holders of Series A convertible redeemable preferred shares was as follows: In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the followingsequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plusdeclared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertibleredeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series Aconvertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series Bconvertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis. From the date of its issuance (January 16, 2004) to September 25, 2008 (the date of the issuance of Series B convertible redeemable preferredshares), the liquidation preference of the holders of Series A convertible redeemable preferred shares was as follows: In the event of any liquidation, dissolution, or winding up of the Company, the holders of the outstanding Series A convertible redeemablepreferred shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of Tarena International to the holders ofthe ordinary shares by reason of their ownership of such shares, an amount equal to the Series A Original Issuance Price plus dividends declaredbut unpaid on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributedpro rata to the holders of ordinary shares and Series A convertible redeemable preferred shares then outstanding, based on the number of ordinaryshares then held by each shareholder on an “if-converted” basis. F-38  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series A convertible redeemable preferred shares (continued) (v)Drag-along rights Holders of a majority of the Series A convertible redeemable preferred shares have a drag-along right whereby they can require the ordinaryshareholders to approve a third-party offer to directly or indirectly purchase all, or substantial all, of the equity interests or assets of the Company,provided that the transaction shall occur on or after the fifth anniversary of the closing of the issuance of the Series A convertible redeemablepreferred shares or the transaction shall be at a price per share of not less than US$0.58 per share (being retroactively adjusted to reflect the effectof the share split). Triggering of this drag-along right results in a deemed liquidation of the Company at the option of a majority of the holders ofSeries A convertible redeemable preferred shares with a required distribution of the transaction proceeds in accordance with the Company’sMemorandum and Articles of Association. Consequently, the Series A convertible redeemable preferred shares are classified outside of permanent equity. Series B convertible redeemable preferred shares On September 25, 2008, pursuant to Series B convertible redeemable preferred shares purchase agreement, Tarena International issued 5,630,630 SeriesB convertible redeemable preferred shares to a third party investor for a total consideration of RMB34,099 or RMB6.06 per share (“Series B OriginalIssuance Price”) (being retroactively adjusted to reflect the effect of the share split). On the same date, an outstanding short term borrowing in theamount of RMB10,230 was exchanged for 1,689,190 shares of Series B convertible redeemable preferred shares (being retroactively adjusted to reflectthe effect of the share split). The Company determined that there was no embedded beneficial conversion feature attributable to the Series B convertible redeemable preferred sharesat the commitment date since the initial conversion price of the Series B convertible redeemable preferred shares was greater than the estimated fairvalue of the Company’s ordinary shares as of September 25, 2008. The estimated fair value of the underlying ordinary shares on September 25, 2008was determined by management based on a retrospective valuation with the assistance of American Appraisal, using an income approach whichrequires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engagedin a similar industry to convert such future cash flows to a single present value. The significant terms of Series B convertible redeemable preferred shares are as follows: (i)Conversion The holders of Series B convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary sharesat a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed tobe issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series B Original IssuancePrice. In addition, each Series B convertible redeemable preferred share is automatically converted into ordinary shares upon the written consentof the holders of more than 45% of the then outstanding Series B convertible redeemable preferred shares and the holders of more than 45% of thethen outstanding Series A convertible redeemable preferred shares or the consummation of a Qualified Public Offering, as defined in the Series Bconvertible redeemable preferred shares purchase agreement. The contingent conversion price adjustment may provide the holders of the Series B convertible redeemable preferred shares with a beneficialconversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when thecontingency is resolved. F-39  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series B convertible redeemable preferred shares (continued) (ii)Voting The holders of Series B convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted”basis. (iii)Dividends Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series B convertible redeemable preferredshares as if all such Series B convertible redeemable preferred shares have been converted to ordinary shares. (iv)Liquidation preference The liquidation preference of the holders of Series B convertible redeemable preferred shares as of December 31, 2013 is as follows: In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the followingsequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plusdeclared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertibleredeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series Bconvertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series AOriginal Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remainingassets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertibleredeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis. From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), theliquidation preference of the holders of Series B convertible redeemable preferred shares was as follows: In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the followingsequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plusdeclared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertibleredeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series Aconvertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series Bconvertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis. F-40  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series B convertible redeemable preferred shares (continued) (v)Redemption If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series B convertible redeemable preferred shares purchase agreement, didnot occur by December 31, 2012 (the “Redemption Date”), the holders of Series B convertible redeemable preferred shares had the right to requestfor redemption any portion of the Series B convertible redeemable preferred shares they held at a price equal to the sum of: •an amount equal to 150% of Series B Original Issuance Price; plus, •an amount equal to all declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; plus, •10% compound interest per annum on 150% of Series B Original Issuance Price for each Series B convertible redeemable preferred sharefrom the date of issuance to the earliest redemption date of the security. On August 11, 2011, in connection with the issuance of Series C convertible redeemable preferred shares, the Company and holders of Series Bconvertible redeemable preferred shares agreed to defer the Redemption Date until June 30, 2014. F-41  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series C convertible redeemable preferred shares On August 11, 2011, pursuant to the Series C convertible redeemable preferred shares purchase agreement (“Series C Purchase Agreement”), TarenaInternational issued 10,914,852 Series C convertible redeemable preferred shares to a third party investor for a total consideration of RMB127,817 orRMB11.71 per share (“Series C Original Issuance Price”). Total issuance cost of Series C convertible redeemable preferred shares was RMB1,397. The Company determined that there was no embedded beneficial conversion feature attributable to the Series C convertible redeemable preferred sharesat the commitment date since the initial conversion price of the Series C convertible redeemable preferred shares was greater than the estimated fairvalue of the Company’s ordinary shares as of August 11, 2011. The estimated fair value of the underlying ordinary shares on August 11, 2011 wasdetermined by management based on a retrospective valuation with the assistance of American Appraisal, a third party valuation firm, using an incomeapproach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listedcompanies engaged in a similar industry to convert such future cash flows to a single present value. The significant terms of Series C convertible redeemable preferred shares are as follows: (i)Conversion The holders of Series C convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary sharesat a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed tobe issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series C Original IssuancePrice. In addition, each Series C Preferred Share is automatically converted into ordinary shares upon the closing of a Qualified Public Offering, asdefined in the Memorandum and Articles of Association or the written consent of 67% of the holders of the Series C convertible redeemablepreferred shares as well as the written consent of the holders of more than 45% of the then outstanding Series B convertible redeemable preferredshares and the written consent of the holders of more than 45% of the then outstanding Series A convertible redeemable preferred shares forconversion. The contingent conversion price adjustments may provide the holders of the Series C convertible redeemable preferred shares with a beneficialconversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, is recognized when thecontingency is resolved. (ii)Voting The holders of Series C convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted”basis. (iii)Dividends The board of directors of Tarena International may approve the payment of dividends at their discretion to the holders of Series C convertibleredeemable preferred shares. Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series Cconvertible redeemable preferred shares as if all such Series C convertible redeemable preferred shares have been converted to ordinary shares. F-42  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 13PREFERRED SHARES (CONTINUED) Series C convertible redeemable preferred shares (continued) (iv)Liquidation preference The liquidation preference of the holders of Series C convertible redeemable preferred shares is as follows: In the event of liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence:(i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared butunpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemablepreferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertibleredeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original IssuancePrice, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of theCompany, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemablepreferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis. (v)Redemption If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series C convertible redeemable preferred shares purchase agreement, doesnot occur by June 30, 2014 (the “Redemption Date”), the holders of the Series C convertible redeemable preferred shares have the right to requestfor redemption for all or a portion of the Series C convertible redeemable preferred shares they hold at a price equal to the greater of (i) an amountequal to 137.50% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemablepreferred shares; or (ii) the fair market value of the Series C convertible redeemable preferred shares as of the most recent year end, as determinedby an independent appraiser mutually agreeable to the Company and the holder of the Series C convertible redeemable preferred shares. As of December 31, 2013, the Company concluded that it was probable that the Series B and Series C convertible redeemable preferred shares willbecome redeemable. The Company has elected to accrete changes in the redemption value over the period from the date of issuance to the earliestredemption date using the interest method. The total accretion of Series B and Series C convertible redeemable preferred shares in the amount ofRMB3,530 and nil were recorded as a reduction to additional paid-in capital first and then charged against accumulated deficit in the absence ofadditional paid-in capital for the year ended December 31, 2014. All the Series A, Series B and Series C convertible redeemable preferred shares were automatically converted into Class B ordinary shares uponcompletion of the Company’s IPO on April 3, 2014. As a result, 25,430,831 Class B ordinary shares were issued upon the conversion of Series A,Series B and Series C convertible preferred shares. Upon the conversion, the carrying amounts of the Series A, Series B and Series C convertiblepreferred shares were recorded in additional paid-in capital of RMB704,334 and Class B ordinary shares of RMB157. F-43  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 14SHARE BASED COMPENSATION Share incentive plans On September 22, 2008, Tarena International adopted the 2008 Share Plan (the “2008 Plan”), pursuant to which Tarena International is authorized toissue share options and other share-based awards to key employees, directors and consultants of the Company to purchase up to 6,002,020 of its ClassA ordinary shares (being retroactively adjusted to reflect the effect of the share split) under the 2008 Plan. On November 28, 2012, the Companyincreased the number of Class A ordinary shares authorized for issuance under the 2008 Plan to 8,184,990 Class A ordinary shares. Share options issuedbefore September 22, 2008 are also administered under the 2008 Plan. On February 1, 2014, Tarena International adopted the 2014 Share Plan (the “2014 Plan”), pursuant to which Tarena International was authorized toissue options, non-vested shares and non-vested share units to qualified employees, directors and consultants of the Company. The maximum aggregatenumber of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved inthe Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the AwardPool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of theimmediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each suchincrease shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately precedingcalendar year. Share options On January 1, 2011 and September 26, 2011, the board of directors of Tarena International approved the grant of options to purchase 124,000 and1,533,020 ordinary shares of Tarena International to certain employees and directors. These options vest over a five-year period. The option holders canonly exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined inthe Company’s Memorandum and Articles of Association, or (iii) the five-year anniversary of the option grant date. The options have a contractual termof ten years. The fair value of Tarena International’s ordinary shares on January 1, 2011 and September 26, 2011 was determined to be US$0.63 andUS$0.83 per share, respectively. On January 1, 2013, the board of directors of Tarena International approved the grant of options to certain employees to purchase 2,029,386 ordinaryshares of Tarena International. These options vest over a four year period. The option holders can only exercise their vested options upon theoccurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined in the Company’s Memorandum and Articles ofAssociation, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. On September 16, 2013, the board of directors of Tarena International approved the grant of options to an employee to purchase 30,000 ordinary sharesof Tarena International. 25% of the options will be vested at the closing of the Company’s IPO while the remaining 75% will vest over a four-yearperiod, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary ofthe option grant date. The options have a contractual term of ten years. F-44  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 14SHARE BASED COMPENSATION (CONTINUED) Share options (continued) On September 16, 2013, the board of directors of Tarena International approved the grant of options to an officer to purchase 458,424 ordinary shares ofTarena International. If the Company undertakes any additional round of financing or any other activities to effect an increase of the total sharesoutstanding on a fully diluted basis before the IPO, the officer will be granted additional share options at the same exercise price. The total number ofshare options the officer will be granted will be equal to not less than 1% of the Company’s total shares outstanding on a fully diluted basis on the dateimmediately preceding the closing of the Company’s IPO. 25% of the options will be immediately and fully vested at the closing of the Company’s IPOwhile the remaining 75% will vest over a four-year period, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) aliquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of TarenaInternational’s ordinary shares on January 1, 2013 and September 16, 2013 was determined to be US$3.75 and US$5.69 per share, respectively. On February 20, 2014, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase1,805,784 ordinary shares of Tarena International. The options vest over a four year period. The option holders can only exercise their vested optionsupon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The optionshave a contractual term of ten years. The fair value of Tarena International’s ordinary shares on February 20, 2014 was determined to be US$8.60 pershare. During the year ended December 31, 2015, the board of the directors of Tarena International approved the grant of options to certain officers andemployees to purchase 615,624 ordinary shares of Tarena International at exercise prices ranging from US$0.89 to US$4.36 per share. These optionsvest over a period ranging between 1 year and 4 years. The options have a contractual term of ten years. During the year ended December 31, 2016, the board of the directors of Tarena International approved the grant of options to certain officers andemployees to purchase 1,115,807 ordinary shares of Tarena International at exercise prices ranging from US$0.058 to US$4.36 per share. These optionsvest over a period ranging between 0.5 year and 4 years. The options have a contractual term of ten years. F-45  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 14SHARE BASED COMPENSATION (CONTINUED) Share options (continued) A summary of share options activity for the years ended December 31, 2014, 2015 and 2016 is as follows: Number ofShareOptions WeightedAverageExercise PriceUS$ WeightedAverageRemainingContractualYears AggregateIntrinsicValue US$ Outstanding at December 31, 2013 8,134,830 0.82 Granted 1,805,784 3.05 Exercised (1,786,449) 0.14 Forfeited (115,215) 2.91 Expired — — Outstanding at December 31, 2014 8,038,950 1.44 6.19 77,658 Granted 615,624 3.38 Exercised (3,015,872) 1.20 Forfeited (56,926) 3.33 Expired — — Outstanding at December 31, 2015 5,581,776 1.77 5.68 48,412 Granted 1,115,807 1.90 Exercised (2,106,043) 1.46 Forfeited (263,671) 2.98 Expired — — Outstanding at December 31, 2016 4,327,869 1.88 5.84 56,743 Vested and expected to vest as of December 31, 2016 3,959,763 1.74 5.59 52,460 Exercisable as of December 31, 2016 2,536,418 1.17 4.09 35,045 The Company calculated the fair value of the share options on the grant date using the Binomial option-pricing valuation model. The assumptionsused in the valuation model are summarized in the following table. The total intrinsic value of options exercised during the years ended December 31, 2014, 2015 and 2016 were RMB153,860, RMB235,831 andRMB141,040, respectively. Year Ended December 31, 2014 2015 2016 US$ US$ US$ Expected volatility 51.7% 62.3%-70.9% 63.5%-68.8% Expected dividends yield 0% 0% 0%Exercise multiple 2.2 2.0 2.0 Risk-free interest rate per annum 3.81% 2.68%-2.99% 2.15%-3.18% Estimated fair value of underlying ordinary shares (per share) US$8.60 US$9.28-US$12.85 US$9.99-US$16.54 F-46  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 14SHARE BASED COMPENSATION (CONTINUED) Share options (continued) Because the Company’s ordinary shares had a short trading history at the time the options were issued, the expected volatility was based on thehistorical volatilities of comparable publicly traded companies engaged in the similar industry. The estimated fair value of the underlying ordinary shares on each date of grant prior to September 2013, was determined by management based on aretrospective valuation conducted by American Appraisal. The estimated fair values of the underlying ordinary shares on September 16, 2013 andFebruary 20, 2014 were determined by management based on a contemporaneous valuation conducted by American Appraisal. The Company firstdetermined its enterprise value by using income approach, which required the estimation of future cash flows, and the application of an appropriatediscount rate with reference to comparable listed companies engaged in the similar industry to convert such future cash flows to a single present value,and then allocated the enterprise value between the ordinary shares and preferred shares. The fair values of the underlying ordinary shares on each dateof grant after April 2014, were the closing prices of the Company’s Class A ordinary shares traded in the Stock Exchange. No income tax benefit was recognized in the consolidated statements of comprehensive income as the share-based compensation expense was not taxdeductible. The fair values of the options granted for the years ended December 31, 2014, 2015 and 2016 are as follows: Year Ended December 31, 2014 2015 2016 US$ US$ US$ Weighted average grant date fair value of option per share 6.35 9.16 10.17 Aggregate grant date fair value of options 11,468 5,641 11,352 As of December 31, 2016, there was approximately RMB71,282 of total unrecognized compensation cost related to unvested share options. Theunrecognized compensation costs are expected to be recognized over a weighted average period of approximately 2.18 years. Non-vested shares On April 3, 2014, the board of directors of Tarena International approved the grant of two batches of non-vested shares to three independent directors.The number of the first batch of non-vested shares is equal to 27,780 shares, which was calculated as US$250 divided by US$9 per share, i.e. the IPOprice of ordinary share of Tarena International. Conditioned on the Grantee’s continuous services as a director of the Company, a second batch of non-vested shares should be granted with the number equal to US$250 divided by the closing price of ordinary share of Tarena International on April 3,2015, which was calculated as US$250 divided by US$10 per share, with 25,000 non-vested shares were granted on April 3, 2015. The two batches ofnon-vested shares shall vest on the April 3, 2015 and 2016, respectively. On November 11, 2014, the board of directors of Tarena International approved the grant of 1,944 non-vested shares to 8 employees. One hundredpercent of the non-vested shares shall vest immediately on the grant date. On April 3, 2016, the board of directors of Tarena International approved the grant of 20,000 non-vested shares to three independent directors, 25% ofwhich vest at the end of every quarter within one year. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares thathave not been vested. F-47  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 14SHARE BASED COMPENSATION (CONTINUED) Non-vested shares (continued) A summary of the non-vested shares activity under the 2014 Share Plan is summarized as follows: Number of Non-vested Shares Weighted AverageGrant Date FairValue US$ Outstanding as of December 31, 2013 - - Granted 29,724 9.38 Vested (1,944) 13.95 Forfeited - - Outstanding as of December 31, 2014 27,780 9.06 Granted 25,000 9.63 Vested (27,780) 9.06 Forfeited - - Outstanding as of December 31, 2015 25,000 9.63 Granted 20,000 10.82 Vested (35,000) 9.97 Forfeited - - Outstanding as of December 31, 2016 10,000 10.82 As of December 31, 2016, there was approximately RMB244 of total unrecognized compensation cost related to non-vested shares, which is expectedto be recognized over a weighted average period of approximately 0.25 years. The total fair value of shares vested during the year ended December 31,2015 and 2016 was RMB1,567 and RMB2,316 respectively. F-48  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 15EARNINGS PER SHARE Basic and diluted earnings per share is calculated as follows: Year Ended December 31, 2014 2015 2016 RMB RMB RMB Numerator: Net income attributable to Class A and Class B ordinary shareholders 148,320 178,760 241,854 Less: Earnings allocated to participating Series A convertible redeemable preferred shares (5,648) — — Earnings allocated to participating Series B convertible redeemable preferred shares (5,745) — — Earnings allocated to participating Series C convertible redeemable preferred shares (8,566) — — Net income for basic and diluted earnings per share 128,361 178,760 241,854 Denominator: Denominator for basic earnings per share: Weighted average number of Class A and Class B ordinary shares outstanding 41,223,389 53,767,810 55,540,670 Dilutive effect of outstanding share options 6,546,743 4,983,046 3,464,591 Denominator for diluted earnings per share 47,770,132 58,750,856 59,005,261 Basic earnings per Class A and Class B ordinary share 3.11 3.32 4.35 Diluted earnings per Class A and Class B ordinary share 2.69 3.04 4.10 The Company uses the two-class method to calculate basic and diluted earnings per Class A and Class B ordinary share. Under the two-class method,when calculating the basic and dilutive earnings per Class A and Class B ordinary share, net income attributable to Class A and Class B ordinaryshareholders is adjusted to reflect the net income which is allocated to preferred shares. F-49  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 16COMMITMENTS AND CONTINGENCIES (a)Operating lease commitments Future minimum lease payments under non-cancelable operating lease agreements as of December 31, 2016 were as follows. The Company’sleases do not contain any contingent rent payment terms. RMB Year ending December 31, 2017 116,805 2018 100,736 2019 70,660 2020 47,230 2021 32,542 2022 and thereafter 53,924 Total 421,897 Gross rent expenses incurred under operating leases were RMB77,493, RMB108,992 and RMB136,076 for the years ended December 31, 2014,2015 and 2016, respectively. Sublease rental income of RMB1,416, RMB382 and RMB 460 for the years ended December 31, 2014, 2015 and2016, respectively, were recognized as reductions of gross rental expenses. F-50  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 17PARENT ONLY FINANCIAL INFORMATION The following presents condensed parent company financial information of Tarena International. Condensed Balance Sheets December 31, 2015 2016 RMB RMB ASSETS Current assets: Cash 6,275 43,770 Time deposits 397,388 242,795 Restricted time deposits 150,000 — Prepaid expenses and other current assets 10,843 1,855 Total current assets 564,506 288,420 Investments and loans to subsidiaries 786,264 1,316,552 Total assets 1,350,770 1,604,972 LIABILITIESAND SHAREHOLDERS’ EQUITY Current liabilities: Accrued expenses and other current liabilities 6,522 3,409 Total current liabilities 6,522 3,409 Other non-current liabilities 5,634 3,343 Total liabilities 12,156 6,752 Commitments and contingencies — — Shareholders’ equity: Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 44,914,538 and 48,735,228 sharesissued, 43,988,425 and 47,160,248 shares outstanding as of December 31, 2015 and 2016, respectively) 276 302 Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and 8,895,249shares issued and outstanding as of December 31, 2015 and 2016, respectively) 98 86 Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively,at cost) (49,355) (93,761)Additional paid-in capital 907,018 995,216 Accumulated other comprehensive income 30,232 58,204 Retained earnings 450,345 638,173 Total shareholders’ equity 1,338,614 1,598,220 Total liabilities and shareholders’ equity 1,350,770 1,604,972 F-51  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 17PARENT ONLY FINANCIAL INFORMATION (CONTINUED) Condensed Statements of Comprehensive Income Year Ended December 31, 2014 2015 2016 RMB RMB RMB General and administrative expenses (1,047) (4,241) (4,477)Operating loss (1,047) (4,241) (4,477)Equity in income of subsidiaries 129,811 194,914 253,396 Foreign currency exchange gains (loss) 7,251 (31,923) (4,753)Interest income 14,059 17,610 8,027 Loss on foreign currency forward contract — — (12,898)Other income 1,776 2,400 2,559 Income before income taxes 151,850 178,760 241,854 Income tax expense — — — Net income 151,850 178,760 241,854 Other comprehensive income Foreign currency translation adjustment, net of nil income tax (2,896) 34,748 22,972 Unrealized holding gains on available for sale securities, net of RMB42 income taxes — — 5,235 Less: reclassification adjustment for gains on available for sale securities realized innet income, net of RMB42 income taxes — — (235)Comprehensive income 148,954 213,508 269,826 F-52  TARENA INTERNATIONAL, INC. AND SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of RMB and US$,except for number of shares and per share data) 17PARENT ONLY FINANCIAL INFORMATION (CONTINUED) Condensed Statements of Cash Flows Year Ended December 31, 2014 2015 2016 RMB RMB RMB Operating activities: Net cash provided by (used in) operating activities 19,036 9,770 (10,272) Investing activities: Purchase of time deposits (569,312) (588,426) (298,688)Proceeds from maturity of time deposits 3,071 603,501 620,607 Investments made to subsidiaries (104,662) — (198,137) Net cash provided by (used in) investing activities (670,903) 15,075 123,782 Financing activities: Advances from a related party — 1,432 — Repayment of advances from a related party — (1,432) — Issuance of Class A ordinary shares upon the IPO 592,161 — — Issuance of Class A ordinary shares in private placement concurrent with the IPO 83,052 — — Issuance of Class A ordinary shares in connection with exercise of share options 1,518 22,456 20,388 Payment of dividends — — (54,026)Repurchase of treasury shares — (49,355) (44,406)Payment of IPO costs (17,228) — — Net cash provided by (used in) financing activities 659,503 (26,899) (78,044)Effect of foreign currency exchange rate changes on cash and cash equivalents (27) 398 2,029 Net increase (decrease) in cash and cash equivalents 7,609 (1,656) 37,495 Cash and cash equivalents at beginning of year 322 7,931 6,275 Cash and cash equivalents at end of year 7,931 6,275 43,770 Non-cash investing and financing activities: Conversion of Series A convertible redeemable preferred shares to Class B ordinaryshares 3,648 — — Conversion of Series B convertible redeemable preferred shares to Class B ordinaryshares 107,994 — — Conversion of Series C convertible redeemable preferred shares to Class B ordinaryshares 592,849 — — 18SUBSEQUENT EVENTS On February 28, 2017, The Board of Directors approved to declare a cash dividend of RMB1.10 (US$0.16) per ordinary share to shareholders as of theclose of trading on March 27, 2017. The cash dividend will be paid on or about May 30, 2017. The aggregate amount of cash dividends to be paid isapproximately RMB64,900 (US$9,500). F-53  Exhibit 4.27 Power of Attorney This Power of Attorney (this “Power of Attorney”) shall supersede and replace the power of attorney I executed as of November 25, 2013 (the “OriginalPower of Attorney”) upon the effective date stipulated in this Power of Attorney. I, Han Shaoyun, a Chinese citizen with Chinese Identification Card No.: , and a holder of 70% of the entire registered capital in Beijing TarenaJinqiao Technology Co., Ltd. (“Beijing Tarena”) as of the date when the Power of Attorney is executed, hereby irrevocably authorize Tarena TechnologiesGroup Inc. (the “Designee”) to exercise the following rights relating to all equity interests held by me now and in the future in Beijing Tarena (“MyShareholding”) during the term of this Power of Attorney: The Designee is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning MyShareholding, including without limitation to: 1) attending shareholders’ meetings of Beijing Tarena; 2) exercising all the shareholder’s rights andshareholder’s voting rights I am entitled to under the laws of China and Beijing Tarena’s Articles of Association, including but not limited to the sale ortransfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, thedirectors, supervisors, the chief executive officer and other senior management members of Beijing Tarena. Without limiting the generality of the powers granted hereunder, the Designee shall have the power and authority to, on behalf of myself, execute allthe documents I shall sign as stipulated in the Second Amended and Restated Exclusive Option Agreement entered into by and among me, the Designee andTarena International Inc. on July 5, 2016 and the Second Amended and Restated Equity Pledge Agreement entered into by and among me, Beijing Tarenaand the Designee on July 5, 2016 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and performthe terms of the Transaction Documents. All the actions associated with My Shareholding conducted by the Designee shall be deemed as my own actions, and all the documents related to MyShareholding executed by the Designee shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by theDesignee. The Designee is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and withoutgiving prior notice to me or obtaining my consent. If required by PRC laws, the Designee shall designate a PRC citizen to exercise the aforementioned rights. During the period that I am a shareholder of Beijing Tarena, this Power of Attorney shall be irrevocable and continuously effective and valid from thedate of execution of this Power of Attorney. During the term of this Power of Attorney, I hereby waive all the rights associated with My Shareholding, which have been authorized to the Designeethrough this Power of Attorney, and shall not exercise such rights by myself. This Power of Attorney is written in Chinese and English. The Chinese version and English version shall have equal legal validity. In case there is anyconflict between the Chinese version and the English version, the Chinese version shall prevail. 1  Han Shaoyun By:/s/ Han Shaoyun Date: July 5, 2016 Accepted by Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed) Name:Han Shaoyun Title: Legal Representative Date:July 5, 2016 Acknowledged by: Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Date:July 5, 2016  Exhibit 4.28 Power of Attorney This Power of Attorney (this “Power of Attorney”) shall supersede and replace the power of attorney I executed as of November 25, 2013 (the “OriginalPower of Attorney”) upon the effective date stipulated in this Power of Attorney. I, Li Jianguang, a Chinese citizen with Chinese Identification Card No.: , and a holder of 30% of the entire registered capital in Beijing TarenaJinqiao Technology Co., Ltd. (“Beijing Tarena”) as of the date when the Power of Attorney is executed, hereby irrevocably authorize Tarena TechnologiesGroup Inc. (the “Designee”) to exercise the following rights relating to all equity interests held by me now and in the future in Beijing Tarena (“MyShareholding”) during the term of this Power of Attorney: The Designee is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning MyShareholding, including without limitation to: 1) attending shareholders’ meetings of Beijing Tarena; 2) exercising all the shareholder’s rights andshareholder’s voting rights I am entitled to under the laws of China and Beijing Tarena’s Articles of Association, including but not limited to the sale ortransfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, thedirectors, supervisors, the chief executive officer and other senior management members of Beijing Tarena. Without limiting the generality of the powers granted hereunder, the Designee shall have the power and authority to, on behalf of myself, execute allthe documents I shall sign as stipulated in the Second Amended and Restated Exclusive Option Agreement entered into by and among me, the Designee andTarena International Inc. on July 5, 2016 and the Second Amended and Restated Equity Pledge Agreement entered into by and among me, Beijing Tarenaand the Designee on July 5, 2016 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and performthe terms of the Transaction Documents. All the actions associated with My Shareholding conducted by the Designee shall be deemed as my own actions, and all the documents related to MyShareholding executed by the Designee shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by theDesignee. The Designee is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and withoutgiving prior notice to me or obtaining my consent. If required by PRC laws, the Designee shall designate a PRC citizen to exercise the aforementioned rights. During the period that I am a shareholder of Beijing Tarena, this Power of Attorney shall be irrevocable and continuously effective and valid from thedate of execution of this Power of Attorney. During the term of this Power of Attorney, I hereby waive all the rights associated with My Shareholding, which have been authorized to the Designeethrough this Power of Attorney, and shall not exercise such rights by myself. This Power of Attorney is written in Chinese and English. The Chinese version and English version shall have equal legal validity. In case there is anyconflict between the Chinese version and the English version, the Chinese version shall prevail. 1  Li Jianguang By:/s/ Li Jianguang Accepted by Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Acknowledged by: Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative  Exhibit 4.29 Second Amended and Restated Exclusive Option Agreement This Second Amended and Restated Exclusive Option Agreement (this “Agreement”) is executed by and among the Parties below as of July 5, 2016 inBeijing, the People’s Republic of China (“China” or the “PRC”): Party A: Tarena International Inc.Address: Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands Party B: Tarena Technologies Group Inc.Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing Party C: Han ShaoyunID No.: Party D: Beijing Tarena Jinqiao Technology Co., Ltd.Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing In this Agreement, each of Party A, Party B, Party C and Party D shall be referred to as a “Party” respectively, and they shall be collectively referred to asthe “Parties”. Whereas: 1.Party A is a company established in Cayman Islands and holds 100% of the equity interests of Party B. 2.Party C is a shareholder of Party D and as of the date hereof holds 70% of the equity interests of Party D, representing RMB3,500,000 in theregistered capital of Party D. 3.Party B and Party C executed a Second Amended and Restated Loan Agreement on July 5, 2016 (the “Loan Agreement”). 4.Party B, Party C and Party D executed a Amended and Restated Exclusive Option Agreement (the “Original Exclusive Option Agreement”) onNovember 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Exclusive Option Agreement by executingthis Agreement. Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement: 1.Sale and Purchase of Equity Interest 1.1Option Granted 1  In consideration of the payment of RMB10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party C, Party C herebyirrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase, theequity interests in Party D then held by Party C once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretionto the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”).Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to theequity interests of Party C. Party D hereby agrees to the grant by Party C of the Equity Interest Purchase Option to Party A. The term “person” asused herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations. 1.2Steps for Exercise of Equity Interest Purchase Option Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a writtennotice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s decision to exercise the Equity Interest PurchaseOption; (b) the portion of equity interests to be purchased from Party B (the “Optioned Interests”); and (c) the date for purchasing the OptionedInterests. Party A and/or the Designee(s) shall obtain all necessary government licenses and permits and take all necessary actions to purchase theequity interests in Party D. 1.3Equity Interest Purchase Price The purchase price of all equity interests held by Party C in Party D purchased by Party A by exercising the Equity Interest Purchase Option shallbe RMB3,500,000; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party C in Party D, thepurchase price shall be calculated on a pro rata basis. If PRC law requires a minimum price higher than the aforementioned price when Party Aexercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “EquityInterest Purchase Price”). 1.4Transfer of Optioned Interests For each exercise of the Equity Interest Purchase Option by Party A: 1.4.1Party C shall cause Party D to promptly convene a shareholders meeting, at which a resolution shall be adopted approving Party C’stransfer of the Optioned Interests to Party A and/or the Designee(s); 1.4.2Party C shall obtain written statements from the other shareholders of Party D giving consent to the transfer of the equity interests toParty A and/or the Designee(s) and waiving any right of first refusal related thereto; 2  1.4.3Party C shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable),in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests; 1.4.4The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses andpermits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee(s),unencumbered by any security interests, and cause Party A and/or the Designee(s) to become the registered owner(s) of the OptionedInterests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party's rightsor interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements,but shall be deemed to exclude any security interest created by this Agreement, Party C’s Share Pledge Agreement and Party C’s Powerof Attorney. “Party C’s Share Pledge Agreement” as used in this Agreement shall refer to the Amended and Restated Share PledgeAgreement executed by and among Party B, Party C and Party D on the date hereof and any modifications, amendments, andrestatements thereto. “Party C’s Power of Attorney” as used in this Agreement shall refer to the Power of Attorney executed by Party C onthe date hereof and any modifications, amendments, and restatements thereto. 1.5Payment of the Equity Interest Purchase Price The Parties have agreed in the Loan Agreement that any proceeds obtained by Party C through the transfer of its equity interests in Party D shallbe used for repayment of the loan provided by Party B in accordance with the Loan Agreement. Accordingly, if Party A designates Party B as theDesignee, upon exercise of the Equity Interest Purchase Option, Party B may elect to make payment of the Equity Interest Purchase Price throughcancellation of the outstanding amount of the loan owed by Party C to Party B, in which case Party A shall not be required to pay any additionalpurchase price to Party C, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicablelaws and regulations. 2.Covenants 2.1Covenants regarding Party D 3  Party C (as a shareholder of Party D) and Party D hereby covenant as follows: 2.1.1Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association andbylaws of Party D, increase or decrease its registered capital, or change its structure of registered capital in other manners; 2.1.2They shall maintain Party D’s corporate existence in accordance with good financial and business standards and practices by prudentlyand effectively operating its business and handling its affairs; 2.1.3Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of inany manner any assets of Party D or legal or beneficial interest in the business or revenues of Party D, or allow the encumbrance thereonof any security interest; 2.1.4Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, exceptforpayables incurred in the ordinary course of business other than through loans; 2.1.5They shall always operate all of Party D’s businesses within the ordinary course of business to maintain the asset value of Party D andrefrain from any action/omission that may affect Party D’s operating status and asset value; 2.1.6Without the prior written consent of Party A, they shall not cause Party D to execute any major contract, except the contracts in theordinary course of business (for purpose of this subsection, a contract with a value exceeding RMB 500,000 shall be deemed a majorcontract); 2.1.7Without the prior written consent of Party A, they shall not cause Party D to provide any person with any loan or credit; 2.1.8They shall provide Party A with information on Party D's business operations and financial condition at Party A's request; 2.1.9If requested by Party A, they shall procure and maintain, at the cost of Party D, insurance in respect of Party D’s assets and business froman insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses; 2.1.10Without the prior written consent of Party A, they shall not cause or permit Party D to merge, consolidate with, acquire or invest in anyperson; 4  2.1.11They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrativeproceedings relating to Party D’s assets, business or revenue; 2.1.12To maintain the ownership by Party D of all of its assets, they shall execute all necessary or appropriate documents, take all necessary orappropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims; 2.1.13Without the prior written consent of Party A, they shall ensure that Party D shall not in any manner distribute dividends to itsshareholders, provided that upon Party A's written request, Party D shall immediately distribute all distributable profits to itsshareholders; 2.1.14At the request of Party A, they shall appoint any persons designated by Party A as directors of Party D; 2.1.15Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and 2.1.16Unless otherwise required by PRC law, Party D shall not be dissolved or liquated without prior written consent by Party A. 2.2Other Covenants Party C hereby covenants as follows: 2.2.1Without the prior written consent of Party A, Party C shall not sell, transfer, mortgage or dispose of in any other manner any legal orbeneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, except forthe pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement; 2.2.2Party C shall cause the shareholders’ meeting and/or the board of directors of Party D not to approve the sale, transfer, mortgage ordisposition in any other manner of any legal or beneficial interest in the equity interests in Party D held by Party C, or allow theencumbrance thereon of any security interest, without the prior written consent of Party A, except for the pledge placed on these equityinterests in accordance with Party C’s Share Pledge Agreement and Party C’s Power of Attorney; 2.2.3Party C shall cause the shareholders’ meeting or the board of directors of Party D not to approve the merger or consolidation with anyperson, or the acquisition of or investment in any person, without the prior written consent of Party A; 5  2.2.4Party C shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrativeproceedings relating to the equity interests in Party D held by Party C; 2.2.5Party C shall cause the shareholders’ meeting or the board of directors of Party D to vote their approval of the transfer of the OptionedInterests as set forth in this Agreement and to take any and all other actions that may be requested by Party A; 2.2.6To the extent necessary to maintain Party C’s ownership in Party D, Party C shall execute all necessary or appropriate documents, takeall necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses againstall claims; 2.2.7Party C shall appoint any designee of Party A as director of Party D, at the request of Party A; 2.2.8Party C hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party D to Party A (ifany), and gives consent to the execution by each other shareholder of Party D with Party A and Party D the exclusive option agreement,the share pledge agreement and the power of attorney similar to this Agreement, Party C’s Share Pledge Agreement, and Party C’s Powerof Attorney, and undertakes not to take any actions in conflict with such documents executed by the other shareholders; 2.2.9Party C shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated byParty A to the extent permitted under the applicable PRC laws; and 2.2.10Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party C,Party D and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect theeffectiveness and enforceability thereof. To the extent that Party C has any remaining rights with respect to the equity interests subjectto this Agreement hereunder or under Party C’sShare Pledge Agreement among the same parties hereto or under Party C’s Power ofAttorney, Party C shall not exercise such rights except in accordance with the written instructions of Party A. 3.Representations and Warranties Party C and Party D hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of theOptioned Interests, that: 3.1They have the authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the OptionedInterests to be transferred thereunder (each, a “Transfer Contract”), and to perform their obligations under this Agreement and any TransferContracts. Party C and Party D agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of theEquity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal,valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof; 6  3.2Party C and Party D have obtained any and all approvals and consents from the relevant government authorities and third parties (if required) forthe execution, delivery, and performance of this Agreement; 3.3The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shallnot: (i) cause any violation of any applicable PRC laws; (ii) be inconsistent with the articles of association, bylaws or other organizationaldocuments of Party D; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, orconstitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of anycondition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension orrevocation of or imposition of additional conditions to any licenses or permits issued to either of them; 3.4Party C has a good and merchantable title to the equity interests in Party D he holds. Except for Party C’s Share Pledge Agreement, Party C hasnot placed any security interest on such equity interests; 3.5Party D has a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets; 3.6Party D does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A forwhich Party A’s written consent has been obtained; 3.7Party D has complied with all laws and regulations of China applicable to asset acquisitions; and 3.8There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party D, assets of PartyD or Party D. 4.Effective Date and Term This Agreement shall become effective upon execution by the Parties, and remain in effect until all equity interests held by Party C in Party D have beentransferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement. Since the effective date of thisAgreement, the Original Exclusive Option Agreement shall be terminated and shall be replaced and superseded by this Agreement. 7  5.Governing Law and Resolution of Disputes 5.1Governing Law The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereundershall be governed by the laws of the PRC. 5.2Methods of Resolution of Disputes In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate ingood faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after anyParty’s request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economicand Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on all Parties. 6.Taxes and Fees Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws ofChina in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactionscontemplated under this Agreement and the Transfer Contracts. 7.Notices 7.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 7.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on thedate of delivery or refusal at the address specified for notices. 8  7.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission). 7.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena International Inc.Address:Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman IslandsAttn: Phone: Facsimile: Party B:Tarena Technologies Group Inc.Address:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingAttn:Han ShaoyunPhone:86-10 6213-6369Facsimile:86-10 6211-0873 Party C:Han ShaoyunAddress:Tel: Party D:Beijing Tarena Jinqiao Technology Co., Ltd.Address:Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, BeijingAttn:Han ShaoyunPhone:86-10 6213-5687Facsimile:86-10 6211-0873 7.3Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof. 8.Confidentiality The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties inconnection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain theconfidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevantconfidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through thereceiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stockexchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legalcounsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financialadvisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by thestaff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liablefor breach of this Agreement. This Section shall survive the termination of this Agreement for any reason. 9  9.Further Warranties The Parties agree to promptly execute the documents that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement and to take further actions that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement. 10.Breach of Agreement 10.1If Party C or Party D conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/orrequire Party C or Party D to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein; 10.2Party C or Party D shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws. 11.Miscellaneous 11.1Amendments, Changes and Supplements Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements thathave been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legalvalidity as this Agreement. 11.2Entire Agreement Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitutethe entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral andwritten consultations, representations and contracts reached with respect to the subject matter of this Agreement. This Agreement supersedes, inits entirety, the Original Exclusive Option Agreement relating to the matters set forth herein, which shall be terminated as of the date hereof. 10  11.3Headings The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of theprovisions of this Agreement. 11.4Language This Agreement is written in both Chinese and English language in four copies, each Party having one copy with equal legal validity; in casethere is any conflict between the Chinese version and the English version, the Chinese version shall prevail. 11.5Severability In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordancewith any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected orcompromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effectiveprovisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effectiveprovisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions. 11.6Successors This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of suchParties. 11.7Survival 11.7.1Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreementshall survive the expiration or early termination thereof. 11.7.2The provisions of Sections 5, 7, 8 and this Section 11.7 shall survive the termination of this Agreement. 11.8Waivers Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require thesignatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver bysuch a Party with respect to any similar breach in other circumstances. 11  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Exclusive OptionAgreement as of the date first above written. Party A:Tarena International Inc. By:/s/ Han Shaoyun Name:Han Shaoyun Title:Director Party B:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Party C:Han Shaoyun By:/s/ Han Shaoyun Party D:Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title:Legal Representative  Exhibit 4.30 Second Amended and Restated Exclusive Option Agreement This Second Amended and Restated Exclusive Option Agreement (this “Agreement”) is executed by and among the Parties below as of July 5, 2016 inBeijing, the People’s Republic of China (“China” or the “PRC”): Party A: Tarena International Inc.Address: Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands Party B: Tarena Technologies Group Inc.Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing Party C: Li JianguangID No.: Party D: Beijing Tarena Jinqiao Technology Co., Ltd.Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing In this Agreement, each of Party A, Party B, Party C and Party D shall be referred to as a “Party” respectively, and they shall be collectively referred to asthe “Parties”. Whereas: 1.Party A is a company established in Cayman Islands and holds 100% of the equity interests of Party B. 2.Party C is a shareholder of Party D and as of the date hereof holds 30% of the equity interests of Party D, representing RMB1,500,000 in theregistered capital of Party D. 3.Party B and Party C executed a Second Amended and Restated Loan Agreement on July 5, 2016 (the “Loan Agreement”). 4.Party B, Party C and Party D executed a Amended and Restated Exclusive Option Agreement (the “Original Exclusive Option Agreement”) onNovember 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Exclusive Option Agreement by executingthis Agreement. Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement: 1.Sale and Purchase of Equity Interest 1.1Option Granted 1  In consideration of the payment of RMB10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party C, Party C herebyirrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase, theequity interests in Party D then held by Party C once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretionto the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”).Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to theequity interests of Party C. Party D hereby agrees to the grant by Party C of the Equity Interest Purchase Option to Party A. The term “person” asused herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations. 1.2Steps for Exercise of Equity Interest Purchase Option Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a writtennotice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s decision to exercise the Equity Interest PurchaseOption; (b) the portion of equity interests to be purchased from Party B (the “Optioned Interests”); and (c) the date for purchasing the OptionedInterests. Party A and/or the Designee(s) shall obtain all necessary government licenses and permits and take all necessary actions to purchase theequity interests in Party D. 1.3Equity Interest Purchase Price The purchase price of all equity interests held by Party C in Party D purchased by Party A by exercising the Equity Interest Purchase Option shallbe RMB1,500,000; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party C in Party D, thepurchase price shall be calculated on a pro rata basis. If PRC law requires a minimum price higher than the aforementioned price when Party Aexercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “EquityInterest Purchase Price”). 1.4Transfer of Optioned Interests For each exercise of the Equity Interest Purchase Option by Party A: 1.4.1Party C shall cause Party D to promptly convene a shareholders meeting, at which a resolution shall be adopted approving Party C’stransfer of the Optioned Interests to Party A and/or the Designee(s); 1.4.2Party C shall obtain written statements from the other shareholders of Party D giving consent to the transfer of the equity interests toParty A and/or the Designee(s) and waiving any right of first refusal related thereto; 2  1.4.3Party C shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable),in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests; 1.4.4The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses andpermits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee(s),unencumbered by any security interests, and cause Party A and/or the Designee(s) to become the registered owner(s) of the OptionedInterests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party's rightsor interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements,but shall be deemed to exclude any security interest created by this Agreement, Party C’s Share Pledge Agreement and Party C’s Powerof Attorney. “Party C’s Share Pledge Agreement” as used in this Agreement shall refer to the Amended and Restated Share PledgeAgreement executed by and among Party B, Party C and Party D on the date hereof and any modifications, amendments, andrestatements thereto. “Party C’s Power of Attorney” as used in this Agreement shall refer to the Power of Attorney executed by Party C onthe date hereof and any modifications, amendments, and restatements thereto. 1.5Payment of the Equity Interest Purchase Price The Parties have agreed in the Loan Agreement that any proceeds obtained by Party C through the transfer of its equity interests in Party D shallbe used for repayment of the loan provided by Party B in accordance with the Loan Agreement. Accordingly, if Party A designates Party B as theDesignee, upon exercise of the Equity Interest Purchase Option, Party B may elect to make payment of the Equity Interest Purchase Price throughcancellation of the outstanding amount of the loan owed by Party C to Party B, in which case Party A shall not be required to pay any additionalpurchase price to Party C, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicablelaws and regulations. 2.Covenants 2.1Covenants regarding Party D 3  Party C (as a shareholder of Party D) and Party D hereby covenant as follows: 2.1.1Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association andbylaws of Party D, increase or decrease its registered capital, or change its structure of registered capital in other manners; 2.1.2They shall maintain Party D’s corporate existence in accordance with good financial and business standards and practices by prudentlyand effectively operating its business and handling its affairs; 2.1.3Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of inany manner any assets of Party D or legal or beneficial interest in the business or revenues of Party D, or allow the encumbrance thereonof any security interest; 2.1.4Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, exceptforpayables incurred in the ordinary course of business other than through loans; 2.1.5They shall always operate all of Party D’s businesses within the ordinary course of business to maintain the asset value of Party D andrefrain from any action/omission that may affect Party D’s operating status and asset value; 2.1.6Without the prior written consent of Party A, they shall not cause Party D to execute any major contract, except the contracts in theordinary course of business (for purpose of this subsection, a contract with a value exceeding RMB 500,000 shall be deemed a majorcontract); 2.1.7Without the prior written consent of Party A, they shall not cause Party D to provide any person with any loan or credit; 2.1.8They shall provide Party A with information on Party D's business operations and financial condition at Party A's request; 2.1.9If requested by Party A, they shall procure and maintain, at the cost of Party D, insurance in respect of Party D’s assets and business froman insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses; 2.1.10Without the prior written consent of Party A, they shall not cause or permit Party D to merge, consolidate with, acquire or invest in anyperson; 4  2.1.11They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrativeproceedings relating to Party D’s assets, business or revenue; 2.1.12To maintain the ownership by Party D of all of its assets, they shall execute all necessary or appropriate documents, take all necessary orappropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims; 2.1.13Without the prior written consent of Party A, they shall ensure that Party D shall not in any manner distribute dividends to itsshareholders, provided that upon Party A's written request, Party D shall immediately distribute all distributable profits to itsshareholders; 2.1.14At the request of Party A, they shall appoint any persons designated by Party A as directors of Party D; 2.1.15Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and 2.1.16Unless otherwise required by PRC law, Party D shall not be dissolved or liquated without prior written consent by Party A. 2.2Other Covenants Party C hereby covenants as follows: 2.2.1Without the prior written consent of Party A, Party C shall not sell, transfer, mortgage or dispose of in any other manner any legal orbeneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, except forthe pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement; 2.2.2Party C shall cause the shareholders’ meeting and/or the board of directors of Party D not to approve the sale, transfer, mortgage ordisposition in any other manner of any legal or beneficial interest in the equity interests in Party D held by Party C, or allow theencumbrance thereon of any security interest, without the prior written consent of Party A, except for the pledge placed on these equityinterests in accordance with Party C’s Share Pledge Agreement and Party C’s Power of Attorney; 2.2.3Party C shall cause the shareholders’ meeting or the board of directors of Party D not to approve the merger or consolidation with anyperson, or the acquisition of or investment in any person, without the prior written consent of Party A; 5  2.2.4Party C shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrativeproceedings relating to the equity interests in Party D held by Party C; 2.2.5Party C shall cause the shareholders’ meeting or the board of directors of Party D to vote their approval of the transfer of the OptionedInterests as set forth in this Agreement and to take any and all other actions that may be requested by Party A; 2.2.6To the extent necessary to maintain Party C’s ownership in Party D, Party C shall execute all necessary or appropriate documents, takeall necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses againstall claims; 2.2.7Party C shall appoint any designee of Party A as director of Party D, at the request of Party A; 2.2.8Party C hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party D to Party A (ifany), and gives consent to the execution by each other shareholder of Party D with Party A and Party D the exclusive option agreement,the share pledge agreement and the power of attorney similar to this Agreement, Party C’s Share Pledge Agreement, and Party C’s Powerof Attorney, and undertakes not to take any actions in conflict with such documents executed by the other shareholders; 2.2.9Party C shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated byParty A to the extent permitted under the applicable PRC laws; and 2.2.10Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party C,Party D and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect theeffectiveness and enforceability thereof. To the extent that Party C has any remaining rights with respect to the equity interests subjectto this Agreement hereunder or under Party C’sShare Pledge Agreement among the same parties hereto or under Party C’s Power ofAttorney, Party C shall not exercise such rights except in accordance with the written instructions of Party A. 3.Representations and Warranties Party C and Party D hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of theOptioned Interests, that: 3.1They have the authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the OptionedInterests to be transferred thereunder (each, a “Transfer Contract”), and to perform their obligations under this Agreement and any TransferContracts. Party C and Party D agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of theEquity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal,valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof; 6  3.2Party C and Party D have obtained any and all approvals and consents from the relevant government authorities and third parties (if required) forthe execution, delivery, and performance of this Agreement; 3.3The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shallnot: (i) cause any violation of any applicable PRC laws; (ii) be inconsistent with the articles of association, bylaws or other organizationaldocuments of Party D; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, orconstitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of anycondition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension orrevocation of or imposition of additional conditions to any licenses or permits issued to either of them; 3.4Party C has a good and merchantable title to the equity interests in Party D he holds. Except for Party C’s Share Pledge Agreement, Party C hasnot placed any security interest on such equity interests; 3.5Party D has a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets; 3.6Party D does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A forwhich Party A’s written consent has been obtained; 3.7Party D has complied with all laws and regulations of China applicable to asset acquisitions; and 3.8There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party D, assets of PartyD or Party D. 4.Effective Date and Term This Agreement shall become effective upon execution by the Parties, and remain in effect until all equity interests held by Party C in Party D have beentransferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement. Since the effective date of thisAgreement, the Original Exclusive Option Agreement shall be terminated and shall be replaced and superseded by this Agreement. 7  5.Governing Law and Resolution of Disputes 5.1Governing Law The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereundershall be governed by the laws of the PRC. 5.2Methods of Resolution of Disputes In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate ingood faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after anyParty’s request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economicand Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on all Parties. 6.Taxes and Fees Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws ofChina in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactionscontemplated under this Agreement and the Transfer Contracts. 7.Notices 7.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 7.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on thedate of delivery or refusal at the address specified for notices. 8  7.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission). 7.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena International Inc.Address:Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman IslandsAttn: Phone: Facsimile: Party B:Tarena Technologies Group Inc.Address:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingAttn:Han ShaoyunPhone:86-10 6213-6369Facsimile:86-10 6211-0873 Party C:Li JianguangAddress:5 Jianguomennei Avenue, Dongcheng District, BeijingTel:86-10 6526-2400 Party D:Beijing Tarena Jinqiao Technology Co., Ltd.Address:Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, BeijingAttn:Han ShaoyunPhone:86-10 6213-5687Facsimile:86-10 6211-0873 7.3Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof. 8.Confidentiality The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties inconnection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain theconfidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevantconfidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through thereceiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stockexchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legalcounsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financialadvisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by thestaff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liablefor breach of this Agreement. This Section shall survive the termination of this Agreement for any reason. 9  9.Further Warranties The Parties agree to promptly execute the documents that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement and to take further actions that are reasonably required for or are conducive to the implementation of the provisions andpurposes of this Agreement. 10.Breach of Agreement 10.1If Party C or Party D conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/orrequire Party C or Party D to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein; 10.2Party C or Party D shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws. 11.Miscellaneous 11.1Amendments, Changes and Supplements Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements thathave been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legalvalidity as this Agreement. 11.2Entire Agreement Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitutethe entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral andwritten consultations, representations and contracts reached with respect to the subject matter of this Agreement. This Agreement supersedes, inits entirety, the Original Exclusive Option Agreement relating to the matters set forth herein, which shall be terminated as of the date hereof. 10  11.3Headings The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of theprovisions of this Agreement. 11.4Language This Agreement is written in both Chinese and English language in four copies, each Party having one copy with equal legal validity; in casethere is any conflict between the Chinese version and the English version, the Chinese version shall prevail. 11.5Severability In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordancewith any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected orcompromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effectiveprovisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effectiveprovisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions. 11.6Successors This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of suchParties. 11.7Survival 11.7.1Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreementshall survive the expiration or early termination thereof. 11.7.2The provisions of Sections 5, 7, 8 and this Section 11.7 shall survive the termination of this Agreement. 11.8Waivers Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require thesignatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver bysuch a Party with respect to any similar breach in other circumstances. 11  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Exclusive OptionAgreement as of the date first above written. Party A:Tarena International Inc. By:/s/ Han Shaoyun Name:Han Shaoyun Title:Director Party B:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Party C:Li Jianguang By:/s/ Li Jianguang Party D:Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title:Legal Representative  Exhibit 4.31 Second Amended and Restated Loan Agreement This Second Amended and Restated Loan Agreement (this “Agreement”) is made and entered into by and between the Parties below as of the 5th day ofJuly, 2016 in Beijing, People's Republic of China (“PRC” or “China”): (1)Tarena Technologies Group Inc. (the “Lender”), a Wholly Foreign-Owned Enterprise, organized and existing under the laws of China, with itsaddress at Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing; (2)Han Shaoyun (the “Borrower”), a citizen of the China with Chinese Identification No.: . Each of the Lender and the Borrower shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively. Whereas: 1.The Borrower holds 70% of equity interests in Beijing Tarena Jinqiao Technology Co., Ltd. (the “Borrower Company”). All of the equityinterests now held and hereafter acquired by the Borrower in the Borrower Company shall be referred to as “the Borrower Equity Interest”. TheBorrower Company is a limited company duly registered in Beijing, China with its registered capital of RMB 5,000,000; 2.The Lender confirms that it agrees to provide the Borrower with and the Borrower confirms that he/she has received a loan to be used for thepurposes set forth under this agreement. 3.The Lender and the Borrower executed an Amended and Restated Loan Agreement (the “Original Loan Agreement”) on November 25, 2013. TheParties intend to enter this Agreement to replace and supersede the Original Loan Agreement by executing this Agreement. After friendly consultation, the Parties agree as follows: 1.Loan 1.1In accordance with the terms and conditions of this Agreement, the Lender agrees to provide an interest-free loan in the amount ofRMB3,500,000 (the “Loan”) to the Borrower. For the avoidance of doubt, the interest-free loan in the amount of RMB1,400,000 provided in theOriginal Loan Agreement shall be part of the Loan provided in this Agreement, and the Lender will provide another interest-free loan in theamount of RMB2,100,000 to the Borrower pursuant to this Agreement so that the total amount of Loan under this Agreement will beRMB3,500,000. The term of the Loan shall be 10 years from the date of this Agreement, which may be extended upon mutual written consent ofthe Parties. During the term of the Loan or the extended term of the Loan, the Borrower shall immediately repay the full amount of the Loan inthe event that any one or more of the following circumstances occur: 1  1.1.130 days elapse after the Borrower receives a written notice from the Lender requesting repayment of the Loan; 1.1.2The Borrower’s death, lack or limitation of civil capacity; 1.1.3The Borrower ceases (for any reason) to be an employee of the Lender, the Borrower Company or their affiliates; 1.1.4The Borrower engages in criminal act or is involved in criminal activities; 1.1.5According to the applicable laws of China, foreign investors are permitted to invest in the business that is currently conducted by theBorrower Company in China with a controlling stake and/or in the form of wholly-foreign-owned enterprises, the relevant competentauthorities of China begin to approve such investments, and Tarena International Inc., as the sole shareholder of Lender, exercises theexclusive option under the Exclusive Option Agreement described in this Agreement. 1.2The Loan provided by the Lender under this Agreement shall inure to the Borrower’s benefit only and not to the Borrower’s successor(s) orassign(s). 1.3The Borrower agrees to accept the aforementioned Loan provided by the Lender, and hereby agrees and warrants using the Loan to providecapital for the Borrower Company to develop the business of the Borrower Company. Without the Lender’s prior written consent, the Borrowershall not use the Loan for any purpose other than as set forth herein. 1.4The Lender and the Borrower hereby agree and acknowledge that the Borrower’s method of repayment of the Loan set forth in Section 1.1 shallbe at the sole discretion of the Lender, and may at the Lender’s option take the form of the Borrower’s transferring the Borrower Equity Interest inwhole to Tarena International Inc. or Tarena International Inc.’s designated persons (legal or natural persons) to the extent permitted under theapplicable PRC laws pursuant to the Tarena International Inc.’s exercise of its right to acquire the Borrower Equity Interest under the ExclusiveOption Agreement. 1.5The Borrower also undertakes to execute an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes a legal or natural persondesignated by Tarena International Inc. to exercise all of the Borrower’s rights as a shareholder of the Borrower Company. 2  1.6The Parties agree hereof that the Loan shall be interest-free unless otherwise agreed in this Agreement. When the Borrower transfers the BorrowerEquity Interest to the Tarena International Inc. or Tarena International Inc.’s designated person(s), in the event that the transfer price of suchequity interest exceeds the principal of the Loan under this Agreement, the excess over the principal shall be deemed the interest of the Loanunder this Agreement payable by the Borrower to the Lender. 2.Conditions Precedent The obligation of the Lender to provide the Loan to the Borrower contemplated in Section 1.1 shall be subject to the satisfaction of the followingconditions, unless waived in writing by the Lender. 2.1The Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have officially executed an Amendedand Restated Exclusive Business Cooperation Agreement (the “Exclusive Business Cooperation Agreement”), under which the Lender or otherperson designated by the Lender, as an exclusive service provider, will provide the Borrower Company with business support service andbusiness consulting service. 2.2The Borrower, the Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have executed anAmended and Restated Share Pledge Agreement (the “Share Pledge Agreement”), the contents of which have been confirmed, and according tothe Share Pledge Agreement, the Borrower agrees to pledge the Borrower Equity Interest to the Lender or other person designated by the Lender. 2.3The Borrower, the Lender, Tarena International Inc. and the Borrower Company have officially executed an Amended and Restated ExclusiveOption Agreement (the “Exclusive Option Agreement”), the contents of which have been confirmed, and under which the Borrower shallirrevocably grant Tarena International Inc. an exclusive option to purchase all of the Borrower Equity Interest. 2.4The Borrower has executed an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes Lender or other person (legal or naturalperson) designated by Lender to exercise all of the Borrower’s rights as a shareholder in the Borrower Company. 2.5The aforementioned Share Pledge Agreement, Power of Attorney, Exclusive Option Agreement and Exclusive Business Cooperation Agreementhave been entered into before or on the date of execution of this Agreement and shall have full legal validity without any default or encumbrancerelated to these agreements or contracts, and all the related filing procedures, approvals, authorization, registrations and government procedureshave been completed (as applicable). 3  2.6All the representations and warranties by the Borrower in Section 3.2 are true, complete, correct and not misleading. 2.7The Borrower has not violated the covenants in Section 4 of this Agreement, and no event which may affect the Borrower’s performance of itsobligations under this Agreement has occurred or is expected to occur. 3.Representations and Warranties 3.1Between the date of this Agreement and the date of termination of this Agreement, the Lender hereby makes the following representations andwarranties to the Borrower: 3.1.1The Lender is a corporation duly organized and legally existing in accordance with the laws of China; 3.1.2The Lender has the legal capacity to execute and perform this Agreement. The execution and performance by the Lender of thisAgreement is consistent with the Lender’s scope of business and the provisions of the Lender’s corporate bylaws and otherorganizational documents, and the Lender has obtained all necessary and proper approvals and authorizations for the execution andperformance of this Agreement; and 3.1.3This Agreement constitutes the Lender’s legal, valid and binding obligations enforceable in accordance with its terms. 3.2Between the date of this Agreement and the date of termination of this Agreement, the Borrower hereby makes the following representations andwarranties: 3.2.1The Borrower has the legal capacity to execute and perform this Agreement. The Borrower has obtained all necessary and properapprovals and authorizations for the execution and performance of this Agreement; 3.2.2The Borrower has caused his/her spouse to agree never to claim any ownership rights in the Borrower Equity Interest, including, withoutlimitation, claiming that the Borrower Equity Interest constitutes communal property of marriage; 3.2.3This Agreement constitutes the Borrower’s legal, valid and binding obligations enforceable in accordance with its terms; and 3.2.4There are no disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower, norare there any potential disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to theBorrower. 4  4.Borrower's Covenants 4.1As and when he/she becomes, as well as for so long as he/she remains a shareholder of the Borrower Company, the Borrower irrevocablycovenants that during the term of this Agreement, the Borrower shall cause the Borrower Company: 4.1.1to strictly abide by the provisions of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement, and torefrain from any action/omission that may affect the effectiveness and enforceability of the Exclusive Option Agreement and theExclusive Business Cooperation Agreement; 4.1.2at the request of the Lender (or a party designated by the Lender), to execute agreements/contracts on business cooperation with theLender (or a party designated by the Lender), and to strictly abide by such agreements/contracts; 4.1.3to provide the Lender with all of the information on the Borrower Company's business operations and financial situation at the Lender’srequest; 4.1.4to immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedingsrelating to the Borrower Company's assets, business or income; 4.1.5at the request of the Lender, to appoint any persons designated by Lender as directors of the Borrower Company. 4.2The Borrower covenants that during the term of this Agreement, he/she shall: 4.2.1endeavor to keep the Borrower Company to engage in its principal businesses specified in its business license; 4.2.2abide by the provisions of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement towhich the Borrower is a party, perform his/her obligations under this Agreement, the Power of Attorney, the Share Pledge Agreement andthe Exclusive Option Agreement, and refrain from any action/omission that may affect the effectiveness and enforceability of thisAgreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement; 4.2.3not sell, transfer, mortgage or dispose of in any other manner the legal or beneficial interest in the Borrower Equity Interest, or allow theencumbrance thereon of any security interest or the encumbrance, except in accordance with the Share Pledge Agreement; 5  4.2.4cause any shareholders’ meeting and/or the board of directors of the Borrower Company to not approve the sale, transfer, mortgage ordisposition in any other manner of any legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon ofany security interest, except to the Lender or the Lender’s designated person; 4.2.5cause any shareholders’ meeting and/or the board of directors of the Borrower Company not to approve the merger or consolidation ofthe Borrower Company with any person, or its acquisition of or investment in any person, without the prior written consent of theLender; 4.2.6immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedingsrelating to the Borrower Equity Interest; 4.2.7to the extent necessary to maintain his/her ownership of the Borrower Equity Interest, execute all necessary or appropriate documents,take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defensesagainst all claims; 4.2.8without the prior written consent of the Lender, refrain from any action/omission that may have a material impact on the assets, businessand liabilities of the Borrower Company; 4.2.9appoint any designee of the Lender as director of the Borrower Company, at the request of the Lender; 4.2.10to the extent permitted by the laws of China, at the request of the Lender at any time, promptly and unconditionally transfer all of theBorrower Equity Interest to the Lender or the Lender’s designated representative(s) at any time, and cause the other shareholders of theBorrower Company to waive their right of first refusal with respect to the share transfer described in this Section; 4.2.11to the extent permitted by the laws of China, at the request of the Lender at any time, cause the other shareholders of the BorrowerCompany to promptly and unconditionally transfer all of their equity interests to the Lender or the Lender’s designated representative(s)at any time, and the Borrower hereby waives his/her right of first refusal (if any) with respect to the share transfer described in thisSection; 4.2.12without the prior written consent of the Lender, not to cause the Borrower Company to supplement, change, or amend its articles ofassociation in any manner, increase or decrease its registered capital or change its share capital structure in any manner. 6  5.Liability for Default 5.1If the Borrower commits any material breach of any term of this Agreement, the Lender shall have the right to terminate this Agreement andrequire the Borrower to pay for all damages; this Section 5.1 shall be without prejudice to any other rights of the Lender herein. 5.2The Borrower shall have no right to terminate this Agreement in any event unless otherwise required by the applicable laws. 5.3In the event that the Borrower fails to perform the repayment obligations set forth in this Agreement, the Borrower shall pay an overdue interest of0.01% per day for the outstanding payment, until the day the Borrower repays the full principal of the Loan, overdue interests and other payableamounts. 6.Notices 6.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 6.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on thedate of delivery. 6.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of the transmission). 6.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena Technologies Group Inc.Attn: Han ShaoyunAddress:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingPhone:010 6213-6369Facsimile:010 6211-0873 Party B:Han ShaoyunAddress:Phone: 6.3Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof. 7  7.Confidentiality The Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information. TheParties shall maintain the confidentiality of all such information, and without the written consent of other Party, either Party shall not disclose anyrelevant information to any third party, except in the following circumstances: (a) such information is or will be in the public domain (provided that thisis not the result of a public disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of anystock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding the transaction contemplatedhereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in this section. Disclosure of anyconfidential information by the staff members or agency hired by any Party shall be deemed disclosure of such confidential information by such Party,which Party shall be held liable for breach of this Agreement. This section shall survive the termination of this Agreement for any reason. 8.Governing Law and Resolution of Disputes 8.1The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes shall begoverned by the laws of China. 8.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in goodfaith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party'srequest for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic andTrade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing,and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties. 8.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of anydispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreementand perform their respective obligations under this Agreement. 9.Miscellaneous 9.1This Agreement shall become effective on the date thereof, and shall expire upon the date of full performance by the Parties of their respectiveobligations under this Agreement. Since the effective date of this Agreement, the Original Loan Agreement shall be terminated and shall bereplaced and superseded by this Agreement. 8  9.2This Agreement is written in both Chinese and English language in two copies, with each Party having one copy with equal legal validity. In casethere is any conflict between the Chinese version and the English version, the Chinese version shall prevail. 9.3This Agreement may be amended or supplemented through written agreement by and between the Lender and the Borrower. Such writtenamendment agreement and/or supplementary agreement executed by and between the Lender and the Borrower are an integral part of thisAgreement, and shall have the same legal validity as this Agreement. 9.4In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordancewith any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected orcompromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effectiveprovisions that accomplish to the greatest extent permitted by the relevant laws the intentions of the Parties, and the economic effect of sucheffective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions. 9.5The attachments (if any) to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement. 9.6Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive theexpiration or early termination thereof. The provisions of Sections 5, 7, 8, and this Section 9.6 shall survive the termination of this Agreement. 9  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Amended and Restated Loan Agreement as of the datefirst above written. Lender:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Borrower:Han Shaoyun By:/s/ Han Shaoyun  Exhibit 4.32 Second Amended and Restated Loan Agreement This Second Amended and Restated Loan Agreement (this “Agreement”) is made and entered into by and between the Parties below as of the 5th day ofJuly, 2016 in Beijing, People's Republic of China (“PRC” or “China”): (1)Tarena Technologies Group Inc. (the “Lender”), a Wholly Foreign Owned Enterprise, organized and existing under the laws of China, with itsaddress at Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing; (2)Li Jianguang (the “Borrower”), a citizen of the China with Chinese Identification No.: . Each of the Lender and the Borrower shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively. Whereas: 1.The Borrower holds 30% of equity interests in Beijing Tarena Jinqiao Technology Co., Ltd. (the “Borrower Company”). All of the equityinterests now held and hereafter acquired by the Borrower in the Borrower Company shall be referred to as “the Borrower Equity Interest”. TheBorrower Company is a limited company duly registered in Beijing, China with its registered capital of RMB 5,000,000; 2.The Lender confirms that it agrees to provide the Borrower with and the Borrower confirms that he/she has received a loan to be used for thepurposes set forth under this agreement. 3.The Lender and the Borrower executed a Loan Agreement (the “Original Loan Agreement”) on November 25, 2013. The Parties intend to enterthis Agreement to replace and supersede the Original Loan Agreement by executing this Agreement. After friendly consultation, the Parties agree as follows: 1.Loan 1.1In accordance with the terms and conditions of this Agreement, the Lender agrees to provide an interest-free loan in the amount ofRMB1,500,000 (the “Loan”) to the Borrower. For the avoidance of doubt, the interest-free loan in the amount of RMB600,000 provided in theOriginal Loan Agreement shall be part of the Loan provided in this Agreement, and the Lender will provide another interest-free loan in theamount of RMB900,000 to the Borrower pursuant to this Agreement so that the total amount of Loan under this Agreement will beRMB1,500,000. The term of the Loan shall be 10 years from the date of this Agreement, which may be extended upon mutual written consent ofthe Parties. During the term of the Loan or the extended term of the Loan, the Borrower shall immediately repay the full amount of the Loan inthe event that any one or more of the following circumstances occur: 1  1.1.130 days elapse after the Borrower receives a written notice from the Lender requesting repayment of the Loan; 1.1.2The Borrower’s death, lack or limitation of civil capacity; 1.1.3The Borrower ceases (for any reason) to be an employee of the Lender, the Borrower Company or their affiliates; 1.1.4The Borrower engages in criminal act or is involved in criminal activities; 1.1.5According to the applicable laws of China, foreign investors are permitted to invest in the business that is currently conducted by theBorrower Company in China with a controlling stake and/or in the form of wholly-foreign-owned enterprises, the relevant competentauthorities of China begin to approve such investments, and Tarena International Inc., as the sole shareholder of Lender, exercises theexclusive option under the Exclusive Option Agreement described in this Agreement. 1.2The Loan provided by the Lender under this Agreement shall inure to the Borrower’s benefit only and not to the Borrower’s successor(s) orassign(s). 1.3The Borrower agrees to accept the aforementioned Loan provided by the Lender, and hereby agrees and warrants using the Loan to providecapital for the Borrower Company to develop the business of the Borrower Company. Without the Lender’s prior written consent, the Borrowershall not use the Loan for any purpose other than as set forth herein. 1.4The Lender and the Borrower hereby agree and acknowledge that the Borrower’s method of repayment of the Loan set forth in Section 1.1 shallbe at the sole discretion of the Lender, and may at the Lender’s option take the form of the Borrower’s transferring the Borrower Equity Interest inwhole to Tarena International Inc. or Tarena International Inc.’s designated persons (legal or natural persons) to the extent permitted under theapplicable PRC laws pursuant to the Tarena International Inc.’s exercise of its right to acquire the Borrower Equity Interest under the ExclusiveOption Agreement. 1.5The Borrower also undertakes to execute an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes a legal or natural persondesignated by Tarena International Inc. to exercise all of the Borrower’s rights as a shareholder of the Borrower Company. 2  1.6The Parties agree hereof that the Loan shall be interest-free unless otherwise agreed in this Agreement. When the Borrower transfers the BorrowerEquity Interest to the Tarena International Inc. or Tarena International Inc.’s designated person(s), in the event that the transfer price of suchequity interest exceeds the principal of the Loan under this Agreement, the excess over the principal shall be deemed the interest of the Loanunder this Agreement payable by the Borrower to the Lender. 2.Conditions Precedent The obligation of the Lender to provide the Loan to the Borrower contemplated in Section 1.1 shall be subject to the satisfaction of the followingconditions, unless waived in writing by the Lender. 2.1The Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have officially executed an Amendedand Restated Exclusive Business Cooperation Agreement (the “Exclusive Business Cooperation Agreement”), under which the Lender or otherperson designated by the Lender, as an exclusive service provider, will provide the Borrower Company with business support service andbusiness consulting service. 2.2The Borrower, the Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have executed anAmended and Restated Share Pledge Agreement (the “Share Pledge Agreement”), the contents of which have been confirmed, and according tothe Share Pledge Agreement, the Borrower agrees to pledge the Borrower Equity Interest to the Lender or other person designated by the Lender. 2.3The Borrower, the Lender, Tarena International Inc. and the Borrower Company have officially executed an Amended and Restated ExclusiveOption Agreement (the “Exclusive Option Agreement”), the contents of which have been confirmed, and under which the Borrower shallirrevocably grant Tarena International Inc. an exclusive option to purchase all of the Borrower Equity Interest. 2.4The Borrower has executed an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes Lender or other person (legal or naturalperson) designated by Lender to exercise all of the Borrower’s rights as a shareholder in the Borrower Company. 2.5The aforementioned Share Pledge Agreement, Power of Attorney, Exclusive Option Agreement and Exclusive Business Cooperation Agreementhave been entered into before or on the date of execution of this Agreement and shall have full legal validity without any default or encumbrancerelated to these agreements or contracts, and all the related filing procedures, approvals, authorization, registrations and government procedureshave been completed (as applicable). 3  2.6All the representations and warranties by the Borrower in Section 3.2 are true, complete, correct and not misleading. 2.7The Borrower has not violated the covenants in Section 4 of this Agreement, and no event which may affect the Borrower’s performance of itsobligations under this Agreement has occurred or is expected to occur. 3.Representations and Warranties 3.1Between the date of this Agreement and the date of termination of this Agreement, the Lender hereby makes the following representations andwarranties to the Borrower: 3.1.1The Lender is a corporation duly organized and legally existing in accordance with the laws of China; 3.1.2The Lender has the legal capacity to execute and perform this Agreement. The execution and performance by the Lender of thisAgreement is consistent with the Lender’s scope of business and the provisions of the Lender’s corporate bylaws and otherorganizational documents, and the Lender has obtained all necessary and proper approvals and authorizations for the execution andperformance of this Agreement; and 3.1.3This Agreement constitutes the Lender’s legal, valid and binding obligations enforceable in accordance with its terms. 3.2Between the date of this Agreement and the date of termination of this Agreement, the Borrower hereby makes the following representations andwarranties: 3.2.1The Borrower has the legal capacity to execute and perform this Agreement. The Borrower has obtained all necessary and properapprovals and authorizations for the execution and performance of this Agreement; 3.2.2The Borrower has caused his/her spouse to agree never to claim any ownership rights in the Borrower Equity Interest, including, withoutlimitation, claiming that the Borrower Equity Interest constitutes communal property of marriage; 3.2.3This Agreement constitutes the Borrower’s legal, valid and binding obligations enforceable in accordance with its terms; and 3.2.4There are no disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower, norare there any potential disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to theBorrower. 4  4.Borrower's Covenants 4.1As and when he/she becomes, as well as for so long as he/she remains a shareholder of the Borrower Company, the Borrower irrevocablycovenants that during the term of this Agreement, the Borrower shall cause the Borrower Company: 4.1.1to strictly abide by the provisions of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement, and torefrain from any action/omission that may affect the effectiveness and enforceability of the Exclusive Option Agreement and theExclusive Business Cooperation Agreement; 4.1.2at the request of the Lender (or a party designated by the Lender), to execute agreements/contracts on business cooperation with theLender (or a party designated by the Lender), and to strictly abide by such agreements/contracts; 4.1.3to provide the Lender with all of the information on the Borrower Company's business operations and financial situation at the Lender’srequest; 4.1.4to immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedingsrelating to the Borrower Company's assets, business or income; 4.1.5at the request of the Lender, to appoint any persons designated by Lender as directors of the Borrower Company. 4.2The Borrower covenants that during the term of this Agreement, he/she shall: 4.2.1endeavor to keep the Borrower Company to engage in its principal businesses specified in its business license; 4.2.2abide by the provisions of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement towhich the Borrower is a party, perform his/her obligations under this Agreement, the Power of Attorney, the Share Pledge Agreement andthe Exclusive Option Agreement, and refrain from any action/omission that may affect the effectiveness and enforceability of thisAgreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement; 4.2.3not sell, transfer, mortgage or dispose of in any other manner the legal or beneficial interest in the Borrower Equity Interest, or allow theencumbrance thereon of any security interest or the encumbrance, except in accordance with the Share Pledge Agreement; 5  4.2.4cause any shareholders’ meeting and/or the board of directors of the Borrower Company to not approve the sale, transfer, mortgage ordisposition in any other manner of any legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon ofany security interest, except to the Lender or the Lender’s designated person; 4.2.5cause any shareholders’ meeting and/or the board of directors of the Borrower Company not to approve the merger or consolidation ofthe Borrower Company with any person, or its acquisition of or investment in any person, without the prior written consent of theLender; 4.2.6immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedingsrelating to the Borrower Equity Interest; 4.2.7to the extent necessary to maintain his/her ownership of the Borrower Equity Interest, execute all necessary or appropriate documents,take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defensesagainst all claims; 4.2.8without the prior written consent of the Lender, refrain from any action/omission that may have a material impact on the assets, businessand liabilities of the Borrower Company; 4.2.9appoint any designee of the Lender as director of the Borrower Company, at the request of the Lender; 4.2.10to the extent permitted by the laws of China, at the request of the Lender at any time, promptly and unconditionally transfer all of theBorrower Equity Interest to the Lender or the Lender’s designated representative(s) at any time, and cause the other shareholders of theBorrower Company to waive their right of first refusal with respect to the share transfer described in this Section; 4.2.11to the extent permitted by the laws of China, at the request of the Lender at any time, cause the other shareholders of the BorrowerCompany to promptly and unconditionally transfer all of their equity interests to the Lender or the Lender’s designated representative(s)at any time, and the Borrower hereby waives his/her right of first refusal (if any) with respect to the share transfer described in thisSection; 4.2.12without the prior written consent of the Lender, not to cause the Borrower Company to supplement, change, or amend its articles ofassociation in any manner, increase or decrease its registered capital or change its share capital structure in any manner. 6  5.Liability for Default 5.1If the Borrower commits any material breach of any term of this Agreement, the Lender shall have the right to terminate this Agreement andrequire the Borrower to pay for all damages; this Section 5.1 shall be without prejudice to any other rights of the Lender herein. 5.2The Borrower shall have no right to terminate this Agreement in any event unless otherwise required by the applicable laws. 5.3In the event that the Borrower fails to perform the repayment obligations set forth in this Agreement, the Borrower shall pay an overdue interest of0.01% per day for the outstanding payment, until the day the Borrower repays the full principal of the Loan, overdue interests and other payableamounts. 6.Notices 6.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. Aconfirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 6.1.1Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on thedate of delivery. 6.1.2Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of the transmission). 6.2For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena Technologies Group Inc.Attn:Han ShaoyunAddress:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingPhone:010 6213-6369Facsimile:010 6211-0873 Party B:Li JianguangAddress:5 Jianguomennei Avenue, Dongcheng District, BeijingPhone:010 6526-2400 6.3Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof. 7  7.Confidentiality The Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information. TheParties shall maintain the confidentiality of all such information, and without the written consent of other Party, either Party shall not disclose anyrelevant information to any third party, except in the following circumstances: (a) such information is or will be in the public domain (provided that thisis not the result of a public disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of anystock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding the transaction contemplatedhereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in this section. Disclosure of anyconfidential information by the staff members or agency hired by any Party shall be deemed disclosure of such confidential information by such Party,which Party shall be held liable for breach of this Agreement. This section shall survive the termination of this Agreement for any reason. 8.Governing Law and Resolution of Disputes 8.1The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes shall begoverned by the laws of China. 8.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in goodfaith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party'srequest for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic andTrade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing,and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties. 8.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of anydispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreementand perform their respective obligations under this Agreement. 9.Miscellaneous 9.1This Agreement shall become effective on the date thereof, and shall expire upon the date of full performance by the Parties of their respectiveobligations under this Agreement. Since the effective date of this Agreement, the Original Loan Agreement shall be terminated and shall bereplaced and superseded by this Agreement. 8  9.2This Agreement is written in both Chinese and English language in two copies, with each Party having one copy with equal legal validity. In casethere is any conflict between the Chinese version and the English version, the Chinese version shall prevail. 9.3This Agreement may be amended or supplemented through written agreement by and between the Lender and the Borrower. Such writtenamendment agreement and/or supplementary agreement executed by and between the Lender and the Borrower are an integral part of thisAgreement, and shall have the same legal validity as this Agreement. 9.4In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordancewith any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected orcompromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effectiveprovisions that accomplish to the greatest extent permitted by the relevant laws the intentions of the Parties, and the economic effect of sucheffective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions. 9.5The attachments (if any) to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement. 9.6Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive theexpiration or early termination thereof. The provisions of Sections 5, 7, 8, and this Section 9.6 shall survive the termination of this Agreement. 9  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Loan Agreement as ofthe date first above written. Lender:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Borrower:Li Jianguang By:/s/ Li Jianguang  Exhibit 4.33 Second Amended and Restated Share Pledge Agreement This Second Amended and Restated Share Pledge Agreement (this “Agreement”) has been executed by and among the following parties on July 5,2016 in Beijing, the People’s Republic of China (“China” or the “PRC”): Party A: Tarena Technologies Group Inc. (hereinafter “Pledgee”);Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing Party B: Han Shaoyun (hereinafter “Pledgor”)ID No.: Party C: Beijing Tarena Jinqiao Technology Co., Ltd.Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the“Parties”. Whereas: 1.Pledgor is a Chinese citizen and holds 70% of the equity interest in Party C. Party C is a limited liability company registered in Beijing, China engagingin technology development, technology transfer, technology consulting, etc.. Party C acknowledges the respective rights and obligations of Pledgorand Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge; 2.Pledgee is a wholly foreign-owned enterprise registered in China. Pledgee and Party C which is partially owned by Pledgor have executed an ExclusiveBusiness Cooperation Agreements (as defined below) in Beijing; Party C, Pledgee, Pledgor and Tarena International Inc. have executed an ExclusiveOption Agreements (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Tarena International Inc.; and Pledgeeand Pledgor have executed a Loan Agreement (as defined below); 3.To ensure that Party C and Pledgor fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive OptionAgreement, the Loan Agreement and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in PartyC as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the LoanAgreement and the Power of Attorney. 4.Party A, Party B and Party C executed an Amended and Restated Share Pledge Agreement on November 25, 2013 (the “Original Share PledgeAgreement”). The Parties intend to enter this Agreement to replace and supersede the Original Share Pledge Agreement by executing this Agreement. 1  To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon thefollowing terms. 1.Definitions Unless otherwise provided herein, the terms below shall have the following meanings: 1.1Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to becompensated on a preferential basis with the conversion, auction or sales price of the Equity Interest. 1.2Equity Interest: shall refer to 70% equity interests in Party C currently held by Pledgor, representing RMB3,500,000 in the registered capital ofParty C, and all of the equity interest hereafter acquired by Pledgor in Party C. 1.3Term of Pledge: shall refer to the term set forth in Section 3.2 of this Agreement. 1.4Transaction Documents: shall refer to the Amended and Restated Exclusive Business Cooperation Agreement executed by and between Party Cand Pledgee on November 25, 2013 (the “Exclusive Option Agreements”; (ii) Second Amended and Restated Exclusive Option Agreementexecuted by and among Party C, Pledgee and Pledgor on July 5, 2016 (the “Exclusive Option Agreement”); (iii) Second Amended and RestatedLoan Agreement executed by and between Pledgee and Pledgor on July 5, 2016 (the “Loan Agreement”); (iv) Power of Attorney executed onJuly 5, 2016 by Pledgor (the “Power of Attorney”) and any modification, amendment and restatement to the aforementioned documents. 1.5Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the LoanAgreement and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive OptionAgreement and this Agreement. 1.6Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred asa result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecastof Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses occurred inconnection with enforcement by Pledgee of Pledgor’s and/or Party C’s Contract Obligations and etc. 1.7Event of Default: shall refer to any of the circumstances set forth in Article 7 of this Agreement. 2  1.8Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default. 2.The Pledge 2.1Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtednessunder this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement. 2.2During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividendsdistributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction ofindividual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee andused to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionallydonated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws. 2.3Pledgor may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as aresult of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest. 2.4In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution orliquidation shall, upon the request of the Pledgee, be (1) deposited into an account designate and supervised by Pledgee and used to secure theContract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgeeor any other person designated by Pledgee to the extent permitted under applicable PRC laws. 3.Term of Pledge 3.1The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein has been registered with relevantadministration for industry and commerce (the “AIC”). The Pledge shall be continuously valid until all payments due under the ExclusiveBusiness Cooperation Agreement have been fulfilled by Party C. The parties agree that within 3 business days following the execution of thisAgreement, Pledgor and Party C shall register the Pledge in the shareholders’ register of Party C, and within 10 business days after the competentAIC has formally begun accepting applications for the registration of equity interest pledge, Pledgor and Party C shall submit application to theAIC for the registration of the Pledge of the Equity Interest contemplated herein. Pledgor and Party C shall submit all necessary documents andcomplete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the EquityInterest shall be registered with the AIC within 20 business days after filing (or such other time period normally required by the relevant AIC). 3  3.2During the Term of Pledge, in the event Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have theright, but not the obligation, to dispose of the Pledge in accordance with the provisions of this Agreement. 4.Custody of Records for Equity Interest subject to Pledge During the Term of Pledge set forth in this Agreement, Pledgor shall deliver to Pledgee's custody the capital contribution certificate for theEquity Interest and the shareholders' register containing the Pledge within one week from the execution of this Agreement. Pledgee shall havecustody of such items during the entire Term of Pledge set forth in this Agreement. 5.Representations and Warranties of Pledgor and Party C As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that: 5.1Pledgor is the sole legal owner of the Equity Interest. 5.2Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement. 5.3Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest. 5.4Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) forexecution, delivery and performance of this Agreement. 5.5The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles ofassociation or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or instrument to which it isa party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or approvalgranted to any Party; or (v) cause any permit or approval granted to any Party to be suspended, cancelled or attached with additional conditions. 6.Covenants of Pledgor and Party C 6.1During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee: 6.1.1not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest,without the prior written consent of Pledgee, except for the performance of the Transaction Documents; 4  6.1.2Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within 5 days ofreceipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall presentthe aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order orrecommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable requestor upon consent of Pledgee; 6.1.3Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on Pledgee'srights to the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on anyguarantees and other obligations of Pledgor arising out of this Agreement. 6.1.4Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration ofsuch term to maintain the validity of this Agreement. 6.2Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted orharmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings. 6.3To protect or perfect the security interest granted by this Agreement for payment of the Service Fees under the Exclusive Business CooperationAgreement, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute allcertificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have aninterest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto bythis Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee(s) of Pledgee (naturalpersons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding thePledge that are required by Pledgee. 6.4Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under thisAgreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shallindemnify Pledgee for all losses resulting therefrom. 5  7.Event of Breach 7.1The following circumstances shall be deemed Event of Default: 7.1.1Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement; 7.1.2Party C’s any breach to any obligations under the Transaction Documents and/or this Agreement. 7.2Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described inSection 7.1, Pledgor shall immediately notify Pledgee in writing accordingly. 7.3Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after thePledgee and /or Party C delivers a notice to the Pledgor requesting rectification of such Event of Default, Pledgee may issue a Notice of Defaultto Pledgor in writing upon the occurrence of the Event of Default or at any time thereafter and demand that Pledgor immediately pay alloutstanding payments due under the Exclusive Business Cooperation Agreement and all other payments due to Pledgee, and/or dispose of thePledge in accordance with the provisions of Article 8 of this Agreement. 8.Exercise of Pledge 8.1Pledgee may issue a Notice of Default to Pledgor when exercising the Pledge. 8.2Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge concurrently with the issuance of the Notice ofDefault in accordance with Section 8.1 or at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge,Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest. 8.3After Pledgee issues a Notice of Default to Pledgor in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicablePRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based onthe monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgeeshall not be liable for any loss incurred by its duly exercise of such rights and powers. 8.4The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interestand to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After thepayment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balanceunder applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor.To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any otherperson designated by Pledgee. 6  8.5Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority withthe Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of theEquity Interest under this Agreement, without exercising any other remedy measure first. 8.6Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise anyobjection to such exercise. 8.7When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enablePledgee to enforce the Pledge in accordance with this Agreement. 9.Breach of Agreement 9.1If Pledgor or Party C conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/orrequire Pledgor or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein; 9.2Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws. 10.Assignment 10.1Without Pledgee's prior written consent, Pledgor and Party C shall not have the right to assign or delegate its rights and obligations under thisAgreement. 10.2This Agreement shall be binding on Pledgor and its successors and permitted assigns, and shall be valid with respect to Pledgee and each of itssuccessors and assigns. 10.3At any time, Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designee(s)(natural/legal persons), in which case the designee shall have the rights and obligations of Pledgee under the Transaction Documents and thisAgreement, as if it were the original party to the Transaction Documents and this Agreement. 10.4In the event of a change in Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreementwith the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC. 7  10.5Pledgor shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any ofthem, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that mayaffect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shallnot be exercised by Pledgor except in accordance with the written instructions of Pledgee. 11.Termination 11.1Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and Party C, Pledgee shall releasethe Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge fromthe shareholders’ register of Party C and with relevant PRC local administration for industry and commerce. 11.2The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement. 12.Handling Fees and Other Expenses All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any othertaxes and fees, shall be borne by Party C. 13.Confidentiality The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties inconnection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality ofall such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidentialinformation to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’sunauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, ororders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels orfinancial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisorsshall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staffmembers or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable forbreach of this Agreement. This Section shall survive the termination of this Agreement for any reason. 8  14.Governing Law and Resolution of Disputes 14.1The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereundershall be governed by the laws of the PRC. 14.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate ingood faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after anyParty's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economicand Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties. 14.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of anydispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreementand perform their respective obligations under this Agreement. 15.Notices 15.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. Aconfirmation copy of each notice shall also be sent by E-mail. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 15.2Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date ofdelivery or refusal at the address specified for notices. 15.3Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission). 9  15.4For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena Technologies Group Inc.Address:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingAttn:Han ShaoyunPhone:86-10 6213-6369Facsimile:86-10 6211-0873 Party B:Han ShaoyunAddress:Tel: Party C:Beijing Tarena Jinqiao Technology Co., Ltd.Address:Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, BeijingAttn:Han ShaoyunPhone:86-10 6213-5687Facsimile:86-10 6211-0873 15.5Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof. 16.Severability In the event that one or several of the provisions of this Contract are found to be invalid, illegal or unenforceable in any aspect in accordance with anylaws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in anyrespect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish tothe greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possibleto the economic effect of those invalid, illegal or unenforceable provisions. 17.Attachments The attachments set forth herein shall be an integral part of this Agreement. 18.Effectiveness 18.1This Agreement shall become effective upon execution by the Parties hereto. Since the effective date of this Agreement, the Original Share PledgeAgreement shall be terminated and shall be replaced and superseded by this Agreement. 18.2Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements thathave been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validityas this Agreement. 18.3This Agreement is written in Chinese and English in three copies. Pledgor, Pledgee and Party C shall hold one copy respectively. Each copy of thisAgreement shall have equal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shallprevail. 10  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Share PledgeAgreement as of the date first above written. Party A:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Party B:Han Shaoyun By:/s/ Han Shaoyun Party C:Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title:Legal Representative  Attachments: 1.Shareholders’ register of Party C; 2.The Capital Contribution Certificate for the Formation of Party C; 3.Exclusive Business Cooperation Agreement. 4.Exclusive Option Agreement 5.Loan Agreement 6.Power of Attorney  Exhibit 4.34 Second Amended and Restated Share Pledge Agreement This Second Amended and Restated Share Pledge Agreement (this “Agreement”) has been executed by and among the following parties on July 5,2016 in Beijing, the People’s Republic of China (“China” or the “PRC”): Party A: Tarena Technologies Group Inc. (hereinafter “Pledgee”);Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing Party B: Li Jianguang (hereinafter “Pledgor”)ID No.: Party C: Beijing Tarena Jinqiao Technology Co., Ltd.Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the“Parties”. Whereas: 1.Pledgor is a Chinese citizen and holds 30% of the equity interest in Party C. Party C is a limited liability company registered in Beijing, China engagingin technology development, technology transfer, technology consulting, etc.. Party C acknowledges the respective rights and obligations of Pledgorand Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge; 2.Pledgee is a wholly foreign-owned enterprise registered in China. Pledgee and Party C which is partially owned by Pledgor have executed an ExclusiveBusiness Cooperation Agreements (as defined below) in Beijing; Party C, Pledgee, Pledgor and Tarena International Inc. have executed an ExclusiveOption Agreements (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Tarena International Inc.; and Pledgeeand Pledgor have executed a Loan Agreement (as defined below); 3.To ensure that Party C and Pledgor fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive OptionAgreement, the Loan Agreement and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in PartyC as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the LoanAgreement and the Power of Attorney. 4.Party A, Party B and Party C executed an Amended and Restated Share Pledge Agreement on November 25, 2013 (the “Original Share PledgeAgreement”). The Parties intend to enter this Agreement to replace and supersede the Original Share Pledge Agreement by executing this Agreement. 1  To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon thefollowing terms. 1.Definitions Unless otherwise provided herein, the terms below shall have the following meanings: 1.1Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to becompensated on a preferential basis with the conversion, auction or sales price of the Equity Interest. 1.2Equity Interest: shall refer to 30% equity interests in Party C currently held by Pledgor, representing RMB600,000 in the registered capital ofParty C, and all of the equity interest hereafter acquired by Pledgor in Party C. 1.3Term of Pledge: shall refer to the term set forth in Section 3.2 of this Agreement. 1.4Transaction Documents: shall refer to the Amended and Restated Exclusive Business Cooperation Agreement executed by and between Party Cand Pledgee on November 25, 2013 (the “Exclusive Option Agreements”; (ii) Second Amended and Restated Exclusive Option Agreementexecuted by and among Party C, Pledgee and Pledgor on July 5, 2016 (the “Exclusive Option Agreement”); (iii) Second Amended and RestatedLoan Agreement executed by and between Pledgee and Pledgor on July 5, 2016 (the “Loan Agreement”); (iv) Power of Attorney executed onJuly 5, 2016 by Pledgor (the “Power of Attorney”) and any modification, amendment and restatement to the aforementioned documents. 1.5Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the LoanAgreement and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive OptionAgreement and this Agreement. 1.6Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred asa result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecastof Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses occurred inconnection with enforcement by Pledgee of Pledgor’s and/or Party C’s Contract Obligations and etc. 1.7Event of Default: shall refer to any of the circumstances set forth in Article 7 of this Agreement. 2  1.8Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default. 2.The Pledge 2.1Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtednessunder this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement. 2.2During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividendsdistributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction ofindividual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee andused to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionallydonated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws. 2.3Pledgor may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as aresult of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest. 2.4In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution orliquidation shall, upon the request of the Pledgee, be (1) deposited into an account designate and supervised by Pledgee and used to secure theContract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgeeor any other person designated by Pledgee to the extent permitted under applicable PRC laws. 3.Term of Pledge 3.1The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein has been registered with relevantadministration for industry and commerce (the “AIC”). The Pledge shall be continuously valid until all payments due under the ExclusiveBusiness Cooperation Agreement have been fulfilled by Party C. The parties agree that within 3 business days following the execution of thisAgreement, Pledgor and Party C shall register the Pledge in the shareholders’ register of Party C, and within 10 business days after the competentAIC has formally begun accepting applications for the registration of equity interest pledge, Pledgor and Party C shall submit application to theAIC for the registration of the Pledge of the Equity Interest contemplated herein. Pledgor and Party C shall submit all necessary documents andcomplete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the EquityInterest shall be registered with the AIC within 20 business days after filing (or such other time period normally required by the relevant AIC). 3  3.2During the Term of Pledge, in the event Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have theright, but not the obligation, to dispose of the Pledge in accordance with the provisions of this Agreement. 4.Custody of Records for Equity Interest subject to Pledge During the Term of Pledge set forth in this Agreement, Pledgor shall deliver to Pledgee's custody the capital contribution certificate for theEquity Interest and the shareholders' register containing the Pledge within one week from the execution of this Agreement. Pledgee shall havecustody of such items during the entire Term of Pledge set forth in this Agreement.5.Representations and Warranties of Pledgor and Party C As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that:5.1Pledgor is the sole legal owner of the Equity Interest.5.2Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement.5.3Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest. 5.4Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) forexecution, delivery and performance of this Agreement. 5.5The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles ofassociation or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or instrument to which it isa party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or approvalgranted to any Party; or (v) cause any permit or approval granted to any Party to be suspended, cancelled or attached with additional conditions. 6.Covenants of Pledgor and Party C 6.1During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee: 6.1.1not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest,without the prior written consent of Pledgee, except for the performance of the Transaction Documents; 4  6.1.2Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within 5 days ofreceipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall presentthe aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order orrecommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable requestor upon consent of Pledgee; 6.1.3Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on Pledgee'srights to the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on anyguarantees and other obligations of Pledgor arising out of this Agreement. 6.1.4Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration ofsuch term to maintain the validity of this Agreement. 6.2Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted orharmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings. 6.3To protect or perfect the security interest granted by this Agreement for payment of the Service Fees under the Exclusive Business CooperationAgreement, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute allcertificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have aninterest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto bythis Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee(s) of Pledgee (naturalpersons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding thePledge that are required by Pledgee. 6.4Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under thisAgreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shallindemnify Pledgee for all losses resulting therefrom. 5  7.Event of Breach 7.1The following circumstances shall be deemed Event of Default: 7.1.1Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement; 7.1.2Party C’s any breach to any obligations under the Transaction Documents and/or this Agreement. 7.2Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described inSection 7.1, Pledgor shall immediately notify Pledgee in writing accordingly. 7.3Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after thePledgee and /or Party C delivers a notice to the Pledgor requesting rectification of such Event of Default, Pledgee may issue a Notice of Defaultto Pledgor in writing upon the occurrence of the Event of Default or at any time thereafter and demand that Pledgor immediately pay alloutstanding payments due under the Exclusive Business Cooperation Agreement and all other payments due to Pledgee, and/or dispose of thePledge in accordance with the provisions of Article 8 of this Agreement. 8.Exercise of Pledge 8.1Pledgee may issue a Notice of Default to Pledgor when exercising the Pledge.8.2Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge concurrently with the issuance of the Notice ofDefault in accordance with Section 8.1 or at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge,Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.8.3After Pledgee issues a Notice of Default to Pledgor in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicablePRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based onthe monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgeeshall not be liable for any loss incurred by its duly exercise of such rights and powers. 8.4The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interestand to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After thepayment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balanceunder applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor.To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any otherperson designated by Pledgee. 6  8.5Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority withthe Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of theEquity Interest under this Agreement, without exercising any other remedy measure first. 8.6Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise anyobjection to such exercise. 8.7When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enablePledgee to enforce the Pledge in accordance with this Agreement. 9.Breach of Agreement 9.1If Pledgor or Party C conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/orrequire Pledgor or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein; 9.2Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws. 10.Assignment 10.1Without Pledgee's prior written consent, Pledgor and Party C shall not have the right to assign or delegate its rights and obligations under thisAgreement. 10.2This Agreement shall be binding on Pledgor and its successors and permitted assigns, and shall be valid with respect to Pledgee and each of itssuccessors and assigns. 10.3At any time, Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designee(s)(natural/legal persons), in which case the designee shall have the rights and obligations of Pledgee under the Transaction Documents and thisAgreement, as if it were the original party to the Transaction Documents and this Agreement. 10.4In the event of a change in Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreementwith the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC. 7  10.5Pledgor shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any ofthem, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that mayaffect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shallnot be exercised by Pledgor except in accordance with the written instructions of Pledgee. 11.Termination 11.1Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and Party C, Pledgee shall releasethe Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge fromthe shareholders’ register of Party C and with relevant PRC local administration for industry and commerce. 11.2The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement. 12.Handling Fees and Other Expenses All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any othertaxes and fees, shall be borne by Party C. 13.Confidentiality The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties inconnection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality ofall such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidentialinformation to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’sunauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, ororders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels orfinancial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisorsshall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staffmembers or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable forbreach of this Agreement. This Section shall survive the termination of this Agreement for any reason. 8  14.Governing Law and Resolution of Disputes 14.1The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereundershall be governed by the laws of the PRC.14.2In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate ingood faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after anyParty's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economicand Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted inBeijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties. 14.3Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of anydispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreementand perform their respective obligations under this Agreement. 15.Notices 15.1All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent byregistered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. Aconfirmation copy of each notice shall also be sent by E-mail. The dates on which notices shall be deemed to have been effectively given shall bedetermined as follows: 15.2Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date ofdelivery or refusal at the address specified for notices. 15.3Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by anautomatically generated confirmation of transmission). 9  15.4For the purpose of notices, the addresses of the Parties are as follows: Party A:Tarena Technologies Group Inc.Address:Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, BeijingAttn:Han ShaoyunPhone:86-10 6213-6369Facsimile:86-10 6211-0873 Party B:Li JianguangAddress:5 Jianguomennei Avenue, Dongcheng District, BeijingTel:86-10 6526-2400 Party C:Beijing Tarena Jinqiao Technology Co., Ltd.Address:Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, BeijingAttn:Han ShaoyunPhone:86-10 6213-5687Facsimile:86-10 6211-0873 15.5Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof. 16.Severability In the event that one or several of the provisions of this Contract are found to be invalid, illegal or unenforceable in any aspect in accordance with anylaws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in anyrespect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish tothe greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possibleto the economic effect of those invalid, illegal or unenforceable provisions. 17.Attachments The attachments set forth herein shall be an integral part of this Agreement. 18.Effectiveness 18.1This Agreement shall become effective upon execution by the Parties hereto. Since the effective date of this Agreement, the Original Share PledgeAgreement shall be terminated and shall be replaced and superseded by this Agreement. 18.2Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements thathave been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validityas this Agreement. 18.3This Agreement is written in Chinese and English in three copies. Pledgor, Pledgee and Party C shall hold one copy respectively. Each copy of thisAgreement shall have equal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shallprevail. 10  IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Share PledgeAgreement as of the date first above written. Party A:Tarena Technologies Group Inc. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title: Legal Representative Party B:Li Jianguang By:/s/ Li Jianguang Party C:Beijing Tarena Jinqiao Technology Co., Ltd. By:/s/ Han Shaoyun(Company seal affixed)Name:Han Shaoyun Title:Legal Representative Signature Page to Second Amended and Restated Share Pledge Agreement  Attachments: 1.Shareholders’ register of Party C; 2.The Capital Contribution Certificate for the Formation of Party C; 3.Exclusive Business Cooperation Agreement. 4.Exclusive Option Agreement 5.Loan Agreement 6.Power of Attorney  Exhibit 4.35 BF—2005—0117Contract No.:________________ Beijing Commodity Housing Presale Contract(Non-residential properties including commercial/office houses) Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.Buyer: Tarena Technologies Inc. Beijing Municipal Housing and Urban Construction CommitteeBeijing Municipal Industrial and Commercial Administration Bureau Revised in Oct. 2010 Printed on 5th Day of May, 2016 1  Instructions 1. This contract is a model contract formulated jointly by the Beijing Municipal Construction Committee and the Beijing Municipal Industrial andCommercial Administration Bureau. 2. Before signing of the presale contract, the Seller shall show the Buyer the presale license of commodity housing and other related certificates andcertifying documents. 3. The contracting parties shall conclude the contract on the basis of the principle of free will, fairness and good faith and honesty, and neither party mayimpose its will on the other party. The two parties may alter, supplement or delete contents of the articles of this contract text. After this contract comes intoforce, the printed contents of this text without alteration are to be deemed as stipulation made by the parties 4. Before execution of the commodity housing presale contract, the Buyer shall review the articles of the contract prudently, especially those alternative,supplementary contents and those filled or altered contents. 5. In order to present the principles of free will of contracting parties, there are blanks following some articles of this contract text, left for supplementarystipulation made by both parties separately. For any matters not covered or not stipulated sufficiently in this contract, the Seller and the Buyer may concludesupplementary agreements on a fair and reasonable basis and in light of the specific conditions of the sold housing, or make supplementary stipulations inthe blanks following relevant articles. 6. With respect to the alternative contents in [ ] and the contents to be filled in blanks in this contract text, and other contents to be deleted or supplemented,the contracting parties shall make determination through negotiation. To select the items in [ ], please make a √. If any content does not refer to the actualcase or the parties do not make stipulation, the parties shall delete such content by making a × in the blanks. 7. If any dispute arises between the two parties from the performance of this contract, they may either lodge a lawsuit to the people’s court of the place wherethe property is located, or apply to relevant arbitration commission for arbitration. If the parties select arbitration, they may apply to the Beijing ArbitrationCommission, the China International Economic and Trade Arbitration Commission, or those arbitration commissions of places beyond Beijing. 8. The contracting parties may determine the number of original copies of this contract in light of the actual conditions, and must check the copies prudentlyso as to ensure that the contents in every copy are identical. Under any circumstance, the buyer shall hold at least one original copy of this contract. 2  Beijing Commodity Housing Presale Contract(Non-residential properties including commercial/office houses) Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.Address: 4/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic & Technological Development Area, Beijing, ChinaPostal Code: 100176Registration number of Business License: 110302003481318Enterprise qualification certificate No.: JK-A-3352Legal Representative: Zhou Shiyi Tel.: 67862520Entrusted Agent: Tel.:Entrusted Sales Agency: Beijing Jingkai-Yicheng Investment Consultant Co., Ltd.Address: 1/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic & Technological Development Area, Beijing, ChinaPostal Code:Registration number of Business License: 110302012140425 Buyer: Tarena Technologies Inc.[Legal Representative] [Principal]: Han Shaoyun Nationality: ChinaRegistration number of Business License: 110000410175162Date of birth: , Gender:Address: Rm. 3709, No. 18A North Third Ring Rd. West, Haidian District, Beijing, ChinaPostal Code: 100089 Tel.:[Legal representative] [Authorized agent]Nationality:[ID Card No.] [Passport No.] [ ]:Date of birth: , Gender:Address:Postal Code: Tel.: 3  In accordance with the Contract Law of the People’s Republic of China, the Law of the People’s Republic of China on Administration of Urban Real Estate,the Measures on the Administration of Urban Real Estate Transfer in Beijing and other relevant laws and regulations, the Seller and the Buyer, on the basis ofequality, voluntariness and fairness and through negotiations, do hereby agree as follows with respect to the purchase and sale of commercial house: Article 1 Reference for Project Construction The Seller has obtained the state-owned land use right of the plot located at D1F1 of the Beijing Economic & Technological Development Area throughtransfer of land use right and acquired the Certificate of Real Estate Title through legal registration of the use right. The number of the certificate is: No.00008 (2015 Chu) and the land area is: 54,928.2 square meters, and the purpose of the land where the commodity house purchased by the Buyer (hereinafterrefers to as “the Commodity House”) is located is for _F2 public mixed-use residentials; the term for land use will start on Dec.12, 2011 and end on Dec.11,2061. The number of Contract for State-Owned Construction Land Use Right Assignment: No. 32 JJGTCR[H]Z(2011). The purpose of the land where theCommodity House is located is for composite, commercial, residential types, and the term for land use right assignment starts on Dec.12, 2011 and end onDec. 11, 2061. Upon approval, the Seller has invested to build the commodity housing on the said land lot mentioned above, with a temporary name of Beijing JiangkaiOne Center, the Construction Engineering Planning Permit number of No. 0032 [2014 G(K)JZ] , and the Construction Engineering Working License numberof No. 0050 [2014]S[J]JZ; the starting date of the construction stipulated in the Contract shall be Jul. 16, 2014 and the completion date will be Feb. 21, 2016. Article 2 Reference for Sales The commodity housing has been approved to be qualified for presale by the Economic and Technological Development Zone Branch of Beijing MunicipalBureau of Land and Resources, with the Presale License number of ____________. Article 3 Basic Information The architectural structure of main building where the Commodity Houses are located is: ; and the building consists of 10 storeys, including an over-ground part of 9_ floors and an underground of 1 floor. The commodity housing refers to No.____ Unit____ Floor____ Building [B5] mentioned in the item of Article 1. The room number as a [Approval Number][Temporary Number] now will be subject to the final number approved by the Administration Department of Public Security; References can be made toAnnex 1 for the housing plan and location plan in the whole building. 4  The purpose of this commodity housing is to be office house: the floor height of the Commodity House is meters, [net height of the slope roof] theminimum height: X meters, the maximum height: X meters. The orientation of the commodity housing is: X ; there are X balconies, of which X enclosedbalconies and X unclosed balconies. The Seller entrusts a mapping institution of_ Beijing Jingheng Real Surveying Technology Co., Ltd to predict that the building area of the CommodityHouse is 8,389.91square meters totally, which includes 5,633.45 square meters of interior building area and 2,756.46 square meters of public share buildingarea. References can be made to Annex 2 for the introduction of the public share building area. When both parties sign the Contract, the construction progress status of the commodity housing building is . The floor height mentioned in this article refers to the vertical distance between an upper floor and a lower floor or between the floor and the ground. The netheight refers to the vertical distance between a floor and the soffit of the upper floor or between the ground and the underside of the suspended ceiling. Article 4 Reference for Mortgage The mortgage condition of this House is: 2, 3. 1. The land use right shared by this House and the construction in progress are not set to mortgage. 2. The land use right shared by this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development ZoneBranch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of BeijingEconomic and Technological Development Zone on the date of Apr. 20, 2015. 3. The construction in progress of this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development ZoneBranch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of BeijingEconomic and Technological Development Zone on the date of Apr. 20, 2015. The presale certificate of this House and other covering mortgage approved by the mortgagee refers to Annex 3. Article 5 Pricing Mode and Purchase Price As for commodity houses except for single-family villas, entire buildings, garage (carport) , the Seller and the Buyer shall agree to calculate the price of theCommodity House according to the 1st method below. If the Commodity House type is [single-family villa], [entire building], [garage] or [carport], the Seller and the Buyer shall agree to calculate the price of theCommodity House according to the 1st method below. 5  1. According to the interior building area, the Commodity House can be priced to be ___X__ Yuan per square meter, with the total price of RMB ONEHUNDRED AND FOURTEEN MILLION SIX HUNDRED THOUSAND Yuan ONLY . 2. According to the building area, the Commodity House can be priced to be ___ ____ ______RMB Yuan per square meter, with the total price of RMB ___BILLION _____ HUNDRED ______ MILLION _______ HUNDRED AND __ ___ THOUSAND _____ HUNDRED ______ Yuan ONLY. 3. According to the suite (unit), the total price of the Commodity House can be priced to be _________X__ BILLION __X___ HUNDRED ___X____MILLION __X______ HUNDRED AND __X ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY. 4. According to ___X___, the total price of the Commodity House can be priced to be BILLION __X___ HUNDRED ___X____ MILLION __X______HUNDRED AND __X ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY. For the detailed agreement on terms of pricing and cost, see the Annex 4. The building area in this article refers to the horizontal projected area of each floor above the outside wall plinth of a permanent building with the floorheight of over 2.20 meters (including 2.20 meters), including balconies, overhanging corridors, basements, and exterior stairs and so on, which is also roofcovered and stably constructed. The interior building area refers to the usable area, wall covering and balcony areas in total inside each unit of the commodity house. Article 6 Payment Term and Deadline The Buyer shall pay for the Commodity House by the following 1st method 1. Lump-sum settlement. 2. Installment payment 3. Credit payment: [commercial loan] The Buyer can pay ______ % of the total price of the Commodity House as down payment, and then pay the balanceby credit from [ ]. 4. Other methods. References can be made to Annex 4 for the agreement on the detailed payment terms and deadline. Article 7 Supervision and Management on Presale Funds According to the provisions of the Interim Measures of Beijing on Supervision and Management of Pre-sale Funds for Commodity Houses, the pre-sale fundsof the Commodity House shall be supervised by the bank: Beijing Economic and Technological Development Zone Branch of ICBC, with the specialaccount name of Beijing Jingkai-Gongda Investment Management Co., Ltd (One Center) and the special account number: 0200059029200318384. Whenthe commodity house is pre-sold, the Buyer shall deposit the house purchase price directly into the special account. In case the Buyer applies for a mortgage,the Seller shall provide the special account for receiving the loan. 6  Article 8 The Seller shall guarantee that the Commodity House for sale is not involved in any dispute of ownership. In case of the inability to handleownership registration or occurrence of credit and debt disputes, the seller shall undertake all the responsibilities. Article 9 Agreements on Planning Alteration The Seller shall build the Commodity House according to the conditions stipulated in the Construction Planning Permit approved and issued by thePlanning Administration Department and cannot alter the planning without authorization. If the Seller wants to alter the conditions stipulated in the Construction Planning Permit, the Seller should obtain the agreement of the affected buyers inwriting, as well as the approval of the Planning Administration Department. For the losses of the buyer’s interests caused by the planning alteration, the Sellershould provide the corresponding compensation. Article 10 Agreements on Design Alteration I. With the approval of the design inspection unit entrusted by the Planning Administration Department, The following alterations on the construction designdocuments which will affect the quality and use functions of the Commodity House, the seller should inform the buyer by written notice within 10 days afterthe approval of the design inspection unit. 1. The construction, layout, space dimension and orientation of the Commodity House; 2. Heating methods. If the seller doesn’t inform the buyer within the stipulated time, the buyer has the right to cancel the order. II. The buyer should reply in written whether to cancel the order or not within 15 days after receiving the notice. If the buyer doesn’t give any reply within 15days after receiving the notice, it will be deemed that the purchaser accepts the alterations. III. If the Buyer wants to refund the house, the Buyer shall, within 30 days after effectively delivering the Refund Notice to the Seller, sign all documentsnecessary to cancel the pre-sale contract (including but not limited to the written agreement to cancel this contract, and the Power of Attorney necessary forundergoing formalities to cancel the registration of this pre-sale contract). The seller shall, within 30 days after the above documents necessary to cancel thepre-sale contract take effect, refund the paid house purchase price to the Buyer, and shall pay an interest at the demand deposit interest rate specified by thePeople's Bank of China for the same period. 7  If the Buyer does not refund the house, the Buyer shall separately enter into a supplementary agreement with the Seller within 30 days after receiving thewritten notice from the Seller. If the Buyer neither undergoes formalities to cancel the pre-sale contract nor enters into a supplementary agreement with theSeller within the above said time period, it shall be deemed that the Buyer accepts the changed plan and design, and agrees to carry out acceptanceexamination and take-over of the house as scheduled. Article 11 Purchaser’s Responsibility for Breach of Contract Due to Overdue Payment If the Buyer fails to make the payment in the stipulated time, the 1st method will be complied with: 1. Handle separately according to the overdue period, ((1) and (2) are not cumulative) (1) If the overdue period is less than 30 days, the Buyer shall pay 0.006 percent of the overdue payment per day within 7 days after the actual payment date tothe Seller as a penalty from the second day after the payment deadline stipulated in this contract to the actual payment date, and the contract continues to beeffective. (2) If the overdue period is over 30 days (this date shall be the same as the date mentioned in Item (1), the Seller has the right to terminate the contract. If theSeller terminates the contract, the Buyer shall pay 3 percent of the accumulative payables to the Seller as a penalty within_7_days after receiving thenotification of terminating the contract, and the Seller shall return the total effected payment to the Buyer. If the Buyer is willing to continue performing thecontract, the contract will continue to be effective with the approval of the Seller. From the second day after the payment deadline stipulated in this contractto the actual payment date, the purchaser shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the overdue paymentper day within 30 days after the actual payment date to the Seller as a penalty. The overdue payment in this article refers to the balance between the due payable stipulated in Article Six of this contract and the actual payment in thatterm. If installment payment is adopted, the overdue payment shall be decided by the balance between the due installment and the actual payment in thatterm. 2. X Article 12 Delivery Term I. The seller shall deliver the Commodity House before the date of Jul. 31, 2016. However, in case of force majeure or the influence of national policy orgovernment action, the above house delivery time shall postpone accordingly, provided that the seller shall promptly notify the special circumstances to theBuyer in writing after the occurrence of such circumstances. 8  II. When delivered, the Commodity House should meet the conditions of the following Items . 1. The Measured Area Report of the commodity House issued by a qualified real estate mapping organization; 2. The infrastructure conditions undertaken by the Seller in Article 13 should be met; 3. The Buyer shall have paid the full house purchase price agreed in this Contract to the Seller. Article 13 Promise of the Seller on the Infrastructure and Other Facilities The Seller promises that the infrastructure and other facilities directly related to the normal usage of this House should meet the following conditions by theappointed date: 1. Municipal infrastructure (1) Water supply lines and sewers: shall meet the use requirements by Mar. 30, 2016 (2) Municipal two circuit feeding: shall meet the use requirements by Mar. 30, 2016; (3) Heating: shall meet the use requirements by the date of Mar. 30, 2016; (4) Gas: shall be available for use by ×; (5) Telephone: the ports shall be reserved in place by the date of Mar. 30, 2016, and will be reported for installation by customers; (6) TV network: the ports shall be reserved in place by the date of Mar. 30, 2016 and will be reported for installation by customers; If the above conditions haven’t been realized by the stipulated date, both parties can handle according to the following methods: (1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery; (2) X 2. Other facilities (1) Public green spaces: shall be available for use by Jul. 30, 2016; (2) Public roads: shall be available for use by Jul. 30, 2016; (3) Public parking lots: shall be available for use by Jul. 30, 2016;. If the above conditions haven’t been realized by the stipulated date, both parties shall agree to handle according to the following methods: (1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery (2) X 3. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policyor government action, such delivery time shall postpone accordingly. 9  Article 14 Seller’s Responsibility for Breach of Contract Due to Overdue Delivery Except for the force majeure, if the Seller cannot deliver the Commodity House to the Buyer according to the deadline and conditions stipulated in Article 12of this contract, the following Method 1 can be complied with: 1. Handle separately according to the overdue period, ((1) and (2) are not cumulative) (1) If the overdue period is less than 30 days (the time should be no less than the time mentioned in Item (1) of Article 10), the Seller shall pay 0.006 percent(This rate should be no less than the rate stipulated in the item (1) of Article 10) of the effected payment per day within 7 days after the actual delivery date tothe Buyer as a penalty from the second day after the delivery deadline stipulated in this contract to the actual delivery date, and the contract continues to beeffective. (2) If the overdue period is over 30 days (this date should be the same as the date mentioned in Item (1), the Buyer has the right to terminate the contract. Ifthe Buyer cancels the order, the Seller shall return the total effected payment to the Buyer, as well as 3percent of the effected payment to the Buyer as apenalty, within_7_days after receiving the notification of cancelling the order. If the Buyer requires to continue performing the contract, the contract willcontinue to be effective. From the second day after the delivery deadline stipulated in this contract to the actual delivery date, the Seller shall pay 0.006percent (This rate should be no less than the rate stipulated in the item (1)) of the effected payment per day within 7 days after the actual delivery date to theBuyer as a penalty. 2. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policyor government action, such delivery time shall postpone accordingly. Article 15 Solutions on Area Discrepancy When delivering the Commodity House, the Seller shall demonstrate the Commodity Housing Area Mapping Report issued by the entrusted qualified RealEstate Mapping organization, and provide the actual measured area of the Commodity House to the Buyer (Hereinafter refers to as the Measure Area). If thereare any discrepancy between the Measure Area and the predicted area stated in Article 3, both parties will agree to handle in accordance with Method 1: 1. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with thefollowing principles: (1) If the absolute discrepancy rate of the interior building area is within 3% (including 3%), it can be settled the payment of the Commodity Houseaccording to the fact; (2) If the absolute discrepancy rate of the interior building area exceeds 3%, the Buyer has the right to cancel the order. 10  If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period. If the Buyer doesn’t cancel the order, when the Measured Area of the interior building area is larger than the predicted area with the discrepancy rate within3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller andthe ownership belongs to the Buyer. When the Measured Area of the interior building area is smaller than the predicted area with the discrepancy rate within3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice morethan the cost of the less area to the Buyer. The absolute discrepancy rate of the interior building area = The Measured Area – The Predicted Area The Predicted Area x100% 2. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with thefollowing principles: (1) If the absolute discrepancy rates of the building area and the interior building area both are within 3% (including 3%), it can be settled the payment of theCommodity House according to the fact; (2) If either of the absolute discrepancy rates of the building area and the interior building area exceeds 3%, the Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of current deposit interest rate of the People's Bank of China_. If the Buyer doesn’t cancel the order, when the Measured Area of the building area is larger than the predicted area with the discrepancy rate within 3%(including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and theownership belongs to the Buyer. When the Measured Area of the building area is smaller than the building area stipulated in the contract within 3%(including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more thanthe cost of the less area to the Buyer. The absolute discrepancy rate of the building area = The Measured Area – The Predicted Area The Predicted Area x100% 11  3. Both parties can achieve the agreements by themselves: X Article 16 Handling-over Procedure I. Delivery of the House means that the Seller sends the Move-in Notice for delivery of the Commodity House after its acceptance by the constructionsurveying, design and engineering supervision institutions etc. After the Commodity House meets the delivery conditions stipulated in Article 12, the Seller shall inform the Buyer in written within 7 days before thedelivery date of the handling-over time and place, as well as the required credentials. In the acceptance of the handling-over, the Seller shall demonstrate thecertifications stipulated in Article 12, as well as those certificating the Commodity House meet the other conditions stipulated in Article 12. If the Sellercannot demonstrate the certifications or the certifications are not complete, or the other conditions in Article 12 haven’t been met, the Seller has the right toaccept the Commodity House; and the Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according toArticle 14. If the Buyer finds any item needing repair during the process of receiving the house, the Buyer shall require the Seller to repair it according to the provisionsof this Contract .However, Such item shall not constitute a reason for the Buyer to refuse or delay the house take-over formalities, or to ask the Seller to bearthe liability for breach of contract for overdue delivery. II. If the take-over formalities cannot be undergone on time due to the Buyer’s reason, the Seller shall not bear the liability for breach of contract for overduedelivery, and both parties agree to settle this in the following way: If the Buyer fails to undergo the receiving formalities within the notified time period after the Buyer receives or shall receive the “Move-in Notice” from theSeller, or fails to complete the receiving formalities within 30 days after receiving the notice, it shall be deemed that the Buyer has received this commodityhouse at the time and in the place as stipulated in the “Move-in Notice” and according to the delivery conditions agreed in this Contract. Any damage, lossand other risks of the commodity house shall be transferred to the Buyer from the time of house receiving stipulated in the Move-in Notice. Relevant costs ofthis commodity house, including all taxes and fees, property management fees, heating costs and other incidental expenses occurring from the receiving timestipulated in the Move-in Notice shall all be borne by the Buyer. The Buyer shall bear the loss or additional costs sustained by the Seller due to the Buyerdelaying in undergoing the receiving formalities. If the Buyer fails to undergo or complete the receiving formalities more than one year overdue, the Sellershall have the right to cancel this Contract, take back the commodity house and dispose of it otherwise. The Buyer shall support the Seller in undergoingrelevant formalities to cancel the Contract. The Seller shall refund the remaining house purchase price paid by the Buyer after deducting all relevant costswhich shall be borne by the Buyer according to this Contract as well as liquidated damages equal to 3% of the total purchase price. In addition, the Buyershall also compensate the Seller for all losses arising herefrom. 12  III. Both parties shall agree to pay the taxes according to the following Methods 1 2: 1. The Buyer shall agree to entrust the Seller to pay the following taxes of (5), and entrust the property service enterprise to collect the 3rd of the followingfees on behalf of it, and pay the aforesaid taxes to the Seller and the property service enterprise while receiving the commodity house. (1) Special housing maintenance funds; (2) Contract tax; (3) Heating fees (4) Stamp tax of the Title Certificate; (5) Other relevant fees for handling house acceptance 2. The Buyer shall pay the following taxes of (2) and (4) to the related departments and show the vouchers to the Seller when accepting the CommodityHouse. (1) Special housing maintenance funds; (2) Contract tax; (3) Heating fees (4) Stamp tax of the Title Certificate; (5) Other relevant fees for handling house acceptance Article 17 Agreement on the Quality, Ornament and Facility Standard of the House I. The Seller shall promise that the building materials and the components of the House are qualified and the House quality meet the requirements of theconstruction quality specifications and standards issued by the state and Beijing Municipal Government and the Construction drawing documents. II. The Seller and the Buyer agree on the following items: 1. If the foundation basis and main structure quality of this House are detected to be unqualified, the Buyer has the right to cancel the order within 60 days. Ifthe Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period, and alsocompensate the Buyer for the corresponding losses if necessary. Hence, the detection charge will be at the Seller’s expenses. If the Buyer chooses not to refund the house, or if the commodity house has been delivered and used for more than 60 days, the Buyer shall sign asupplemental agreement with the Seller. 13  2. When delivering the House after the units of construction, investigation and design, as well as the builders and Engineering Project Supervisor, havepassed the acceptance inspection, the Seller shall check the House for acceptance together with the Buyer; if any other problems, both parties shall agree onthe Method (3): (1) The Seller shall deliver the repaired House within × days. The Seller shall take the responsibility for breach of contract due to overdue delivery, which willbe handled according to Article 14. (2) The Seller shall be responsible to repair the House within × days after the delivery date according to the national and municipal regulations and standardsrelated to the engineering quality, account for the repairing expense and compensate the Buyer for the corresponding losses. (3) After the Commodity House meets the delivery and use conditions specified in the pre-sale contract, the Buyer shall have the right to conduct on-siteinspection on this commodity house. If the Buyer finds any item needing repair in such inspection, the Seller shall repair it, until the commodity house meetsthe requirements of relevant regulations and standards of the country or the city on project quality, and shall bear the cost of repair. The Buyer shall notrefuse to receive this commodity house just because of this. 3. The ornaments and facilities of the delivered House shall meet the contracted standard. If fail to meet the standard, the Buyer has the right to request theSeller to manage it according to the following Methods (1) and (2): (1) If the decoration or equipment standard of the Commodity House delivered by the Seller is lower than the agreed one, the Seller shall compensate doublethe price differences of the ornaments and facilities; (2) If the decoration or equipment standard of the Commodity House delivered by the Seller is higher than the agreed one, the Seller may not notify theSeller, but the Seller shall not charge any additional fees for this, and the Buyer shall not refuse to receive this commodity house just because of this, andshall not require the Seller to bear the liability for breach of contract. References can be made to Annex 6 for the detailed agreements on the ornament and facility standard. III. When the Seller and the Buyer have any disputes on the construction quality, either party can entrust a qualified detection organization of constructionengineering quality for test; and both parties shall have the obligation to cooperate with each other to detect the House. If it is tested to be qualified, the test costs shall be borne by the Buyer. Otherwise, the test costs shall be borne by the Seller. Article 18 Responsibility for Housing Warranty I. Both Parties agree on the scope of warranty, warranty period and warranty liability in detail in Annex VII of this Contract. The scope of warranty andwarranty period must meet applicable laws and regulations of the country and Beijing City, as well as the requirements of relevant standards and codes. 14  II. When the House has any quality problem within the warranty scope in the warranty period, if both parties have contracted to cancel the order, it shall besubject to the contract; while if both parties haven’t contracted to cancel the order, the Seller shall perform the obligation of warranty and the Buyer shallcooperate. If the loss is not caused due to the Seller, the Seller will not be responsible for it. Article 19 Energy-efficiency Measures for the House The Commodity House shall meet the requirements of the Design Standard for Energy Efficiency of Public Buildings of the country and Beijing city.Otherwise, the Seller shall make up energy efficiency measures according to the requirements of relevant standards, and take charge of the total costs; if itcauses any losses to the Buyer, the Seller shall compensate for them. Article 20 Building Sound Insulation If the building sound insulation of the Commodity House fails to meet the standard, the Seller shall make up construction sound insulation measuresaccording to the requirements of the planning and design, and shall bear all costs. If any damage is caused to the Buyer, the Seller shall bear the liability forcompensating the Buyer. Article 21 Commitment on the Use 1. When using this House, the Buyer must not change the main building structure, bearing structure and usage without authorization. Except for theagreements in the contract, supplemental agreements and the annexes, the Buyer has the right to share the common parts and facilities related to the Housewith other obligees and undertake the obligations according to the appointed areas of the common parts and shared buildings. In case of any violation of the above provisions, the Buyer shall bear relevant economic and legal liability arising herefrom. In addition, the Buyer shall notchange the public parts and facilities associated with this Commodity House without authorization. If the Buyer has changed them without authorization,the Buyer shall restore them immediately or no later than within 15 days after receiving a written notice from the Seller, the property service enterprise or theparty actually suffering loss, and shall compensate the Seller, the property service enterprise or the party actually suffering loss for actual loss arisingherefrom. 2. The Seller shall not arbitrarily change the use nature of the public parts and facilities associated with the Commodity House. The Seller shall promise notto change the planned purpose of the Commodity House, not to sell the Commodity House by dividing it, not to sell the Commodity House by means of cost-returned sale or any such means in disguised forms, and not to sell the uncompleted Commodity House by the after-sale lease guarantee or by any such meansin disguised forms. 15  3. During the usage of the Commodity House, the Buyer shall not arbitrarily change or destroy the appearance and current situations of the exterior eaves,building structure and building roof. Otherwise, the Buyer shall unconditionally restore them to their original conditions according to the requirements of theSeller or the property service enterprise. If this causes any loss to the Seller or a third party, the Buyer shall bear all the compensation liability. Article 22 Ownership Registration I. Primary registration The Seller shall get the ownership certificate of the building of this House before Oct. 31, 2016. If the ownership certificate hasn’t been got within the timestipulated in this Article due to the Seller, both parties agree to manage it according to the following Method 1: 1. The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days afterreceiving the notification of canceling the order, and pay the interests at the rate of 3% of the total effected payment to the Buyer. If the Buyer doesn’t cancelthe order, the contract will continue to be effective; from the second day after the deadline to get the ownership certificate from the actual date of getting thecertificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty. 2 X II. Transfer registration 1. After the House has been delivered for use, both parties agree to manage it according to the following Method (2): (1) Both parties apply to the registration authority for the registration of ownership transfer. The fees for handling the registration of ownership shall be borneby the Buyer. (2) The Buyer agrees to entrust seller or the entrusted agency_ to apply to the registration authority for the registration of ownership transfer with the entrustfee of RMB _2,000_______ YUAN. 2. If the Buyer cannot get the ownership certificate of the House within360 days after the delivery date due to the Seller, both partied shall agree to manage itaccording to the following Methods: (1) The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days afterreceiving the notification of canceling the order, and pay the corresponding interest rates to the Buyer according to the interest rate of individual housingloan issued by the bank in the corresponding period. If the Buyer doesn’t cancel the order, from the second day after the deadline to get the ownershipcertificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penaltywithin7days after the actual date. 16  2. If the housing ownership certificate cannot be obtained as scheduled due to the Buyer's responsibility (including but not limited to the Buyer failing topay relevant taxes and fees according to the requirements of relevant government departments, failing to submit relevant materials, or failing to sign legaldocuments required for property rights, etc.), the Buyer shall be held responsible for it, and Seller shall assume no liability for breach of contract. 3. If the Buyer fails to obtain the housing ownership certificate after the expiry of the period specified by this Contract due to the fault of the Seller, the Buyershall have the right to notify the Seller whether to cancel this Contract or not within 60 days after the expiry of this period. If the Buyer does not do so withinthis time period, the Buyer shall not notify the Seller to cancel the contract any more. This contract shall be cancelled as of the date when the Buyer issues awritten cancellation notice to the Seller. 4. If the Buyer cannot obtain the housing ownership certificate within 360 days after this Commodity House has been delivered due to force majeure,national policy adjustment or government action, the Seller shall not bear the liability for breach of contract. Article 23 Agreement on Common Rights and Interests 1. The use right of the roof of the House building belongs to all the owners(the use right of the roof of each unit of a duplex building shall belong to theproperty owner of each unit); 2. The use right of the exterior wall of the House building belongs to all the owners; (the use right of the roof of each unit of a duplex building shall belong tothe property owner of each unit) 3. The naming right of the building where the house is located shall belong to all proprietors of this building (the naming right of each unit of a duplexbuilding shall belong to the property owner of each unit); 4. The naming right of the Housing District belongs to the Seller. Article 24 Agreement on Ancillary Buildings and Other Structures Both parties agree to manage the ancillary buildings and other structures of the House such as the underground garages and so on according to the followingMethod 2: 1. When the Seller presales the House, the ancillary buildings of _X__, _ X__, _ X__ shall be transferred together with the House. 2. The Seller shall disclose parking spaces on the ground and unshared public areas will not be transferred together with the House. Article 25 Prophase Property Management Service I. The property management company selected by the Seller according to law is: Beijing Jingkai Investment Advisor, Co., Ltd. with the qualification numberof No. 0075 JWQZS [2014]. 17  II. During the prophase of property management, the property service charge will be RMB 5.50 Yuan /month/m2 (building area), which will be charged by theproperty management company annually. The charge includes cleaning fee of the property region, public order maintenance fee, daily maintenance fee ofpublic areas and facilities, greening maintenance fees, comprehensive management fees. Therein to, the fees for parking on the ground is 150 Yuan/month while the fees for underground parking is 400 Yuan/month. The above charging standardwill be adjusted according to national policy adjustment. III. The property management company shall charge the property service charge according to the Method 1. 1. Charge by year: the Buyer shall pay for the charges before the date required by the service company. 2. Charge by half a year: the Buyer shall pay for the charges before the dates of __X__ and __X__ each year separately. 3. Charge by quarter: the Buyer shall pay for the charges before the dates of __X__, __X__, __X__ and __X__ each year separately. IV. References can be made to Annex 8 for the contents of property service and the owners’ temporary agreement. The Buyer should read all the content ofAnnex8 carefully and agree that the property management service selected by the Seller will provide the prophase property service and the Buyer will abideby the owners’ temporary agreement. The preliminary property management period mentioned in this Article shall refer to the period from the time when the first proprietor moves in to the timewhen all the proprietors and the Project Owner complete the take-over of the property shared areas. Article 26 Housing Maintenance Funds If the Buyer entrusts the Seller to pay the housing maintenance fund, the Seller shall give the Buyer the payment voucher within7days after the date ofentrustment. If the Buyer pays the housing maintenance fund in person, the Buyer shall show the payment voucher to the property management company [at the deliverydate of the house] [within __X__ days after the delivery date]. Article 27 Exceptions 1. If the contract cannot be performed according to the agreements due to force majeure, partial or total responsibility can be exempted according to the effectof the force majeure; however, either party who cannot perform the contract due to force majeure should inform the other party in time and provide proofs tothe other party within60days after the end date of the force majeure event. 18  2. If the Seller cannot perform part or all of the terms of the Contract due to the change of national policies or the behaviors of government, the Seller may beexempted from partial or all liabilities, and shall inform the Buyer in time after the occurrence of the exemptions. The Buyer shall have the right to choose tocontinue or terminate the performance of this Contract, but the Seller shall not bear the liability for breach of contract. Article 28 Dispute Settlement If there are any disputes during the performance of the contract, both parties shall settle it through negotiation or application for mediation; if fail throughnegotiation or mediation, should sue to the Beijing Daxing District People’s Court according to relevant laws. Article 29 This contract will come into effect upon both parties’ signature. As for the issues excluded or stipulated unclearly or inapplicably in this contract,both parties can sign written supplemental agreements for modification or supplementation according to the particular cases; but if the supplementalagreements include any unreasonable articles to lighten or exempt the responsibility stipulated in this contract of the Seller or to enhance the Buyer’sresponsibility and remove the Buyer’s main rights, this contract will prevail. The dissolution of this contract shall be made in written. The contract annexesand supplemental agreements bear the equivalent legal force as this contract. Article 30 The contract and its annexes are totally 93 pages, in quintuplicate, with the equivalent legal force, the contract holding situation include thefollowings: TWO copies for the Seller, TWO copies for the Buyer, _ONE_ copy for the Economic and Technological Development Zone Branch of Beijing MunicipalBureau of Land and Resources. Article 31 After the Seller and the Buyer sign and seal this Contract, the Seller shall perform online recording for this commodity house pre-sale contract inBeijing real estate transaction management system, and shall print and give one stamped copy of the online recording form to the Buyer. The formalities for the online recording for this Commodity House Pre-sale Contract shall be completed within 7 days. Seller (Signature): Buyer (Signature):/seal/ Beijing Jingkai-Gongda Investment /seal/ Tarena Technologies Inc.Management Co., Ltd. Group Co., Ltd. [Legal Representative]: [Legal Representative]:/s/Shiyi Zhou /s/ Shaoyun Han [Entrusted Agent] (Signature): [The Principal]:[Entrusted Sales Agency] [Entrusted Agent] (Signature): (Signature): Date: May 5, 2016 Date: May 5, 2016Place: Place: 19  Annex 1: Floor plan and location plan of the House in the entire building B1 office building B13 office building B11 office building B10 office building B9 office building B2 office building B14 office building B12 office building B3 office building B4 office building B5 office building B6 office building B7 office building B8 office building 20  Floor plan: B5 floor plan (1/F) 21  B5 floor plan (2/F) 22  B5 floor plan (3/F) 23  B5 floor plan (4/F) 24  B5 floor plan (5/F) 25  B5 floor plan (6/F) 26  B5 floor plan (7/F) 27  B5 floor plan (8/F) 28  B5 floor plan (9/F) 29  B5 floor plan (ancillary accommodation) 30  Floor plan of underground garage, equipment room and multi-functional hall at the office area 31  Annex 2: Description of apportioned building area composition of commonly shared sections and commonly shared house Description of B5 apportionment: Description of building area apportionment for commonly shared sections of B1 office building, other 15 items (Digital Technology Park) and B5 officebuilding I. Project description B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological DevelopmentArea, and B5 office building is composed of ground 9 floors and provided with the reinforced concrete structure. The distribution of functional zones in B5 office building is as follows: 1. B5 office building: 1/F-9/F; II. Details of commonly shared sections (1) Commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 officebuilding, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room,TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room,duty room of electric transformer and distribution room and tool room of electric transformer and distribution room. (2) Commonly shared sections of B5 office services; 1. B5 office building 1/F: staircase, elevator room, front room, aisle, hallway, toilet, air shaft, water well, plumbing well, power distribution room and half ofouter wall; 2. B5 office building 2/F-9/F: staircase, elevator room, front room, air shaft, water well, plumbing well, power distribution room and half of outer wall; 3. Ancillary accommodation floor of B5 office building: staircase, elevator machine room air shaft, plumbing well and door header; 4. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 5 and weak electricityengine room 5. Beijing Jingkai-Gongda Investment Management Co., Ltd.Date: Sep. 7, 2014 Apportionment description of underground garage, equipment room and multi-functional hall at the office area Description of building area apportionment for commonly shared sections of underground garage, equipment room and multi-functional hall at B1office building and other 15 items (digital technology park) at the office area I. Project description B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological DevelopmentArea, and underground garage, equipment room and multi-functional room at the office area are located at the ground floor and are provided with thereinforced concrete structure. 32  The distribution of functional zones for underground garage, equipment room and multi-functional room at the office area is as follows: 1.Parking stall of office building: ground floor; 2.Mechanical parking stall of office building: ground floor; 3.Multi-functional hall: ground floor; 4.Tool room: ground floor; II. Details of commonly shared sections (I) commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 officebuilding, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room,TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room,duty room of electric transformer and distribution room and tool room of electric transformer and distribution room; (II) The apportionable commonly shared sections of underground garage, equipment room and multi-functional room at the office area: 1. Commonly shared sections of parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room commonservices; (1) Ground floor of underground garage, equipment room and multi-functional room at the office area; lane, elevator room, staircase, air shaft, ventilationroom, front room plumbing room, toilet, aisle and half of outer wall; (III) Commonly shared sections of B1 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 1. (IV) Commonly shared sections of B2 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 2. (V) Commonly shared sections of B3 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 3. (VI) Commonly shared sections of B4 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 4. (VII) Commonly shared sections of B5 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 5. (VIII) Commonly shared sections of B6 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 6. (IX) Commonly shared sections of B7 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 7. (X) Commonly shared sections of B8 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 8. 33  (XI) Commonly shared sections of B9 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 9. (XII) Commonly shared sections of B10 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 10. (XIII) Commonly shared sections of B11 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 11. (XIV) Commonly shared sections of B12 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricityengine room 12. (XV) Commonly shared sections of B13 office services; 34  Annex 3: Certificate of commodity housing sale approval from pledgee and related provisions of pledge parties Statement of bank’s approval for handling of commodity housing advance sale license for pledged houses Housing and Land Administration of Beijing Economic Technological Development Area: Beijing Jingkai One Center project (corresponding construction project planning license no.: 2014 G(K)JZ No. 0032), located at D1F1 lot at LudongDistrict, Beijing Economic Technological Development Area, that is developed and constructed by Beijing Jingkai-Gongda Investment Management Co.,Ltd. has been pledged to our bank and our bank agrees the advance housing sale within the following pledge scope; National land use certificate number: JJGY (2015) No. 00008Building number: B1-B14 office buildings Notes: 1. The project name must be filled according to the name approved by the Place Name Administration Office; the building number must be filled accordingto the building number approved on the planning permit. 2. The pledge scope covers part of the houses inside the building and the pledged house number shall be filled according to the building number. Opening bank: Beijing Economic Technological Development Area Branch of Industrial and Commercial Bank of China Limited(Seal) YY MM DD 35  Annex 4: Pricing mode and other provisions of housing fund 1. Payment method: Lump sum payment. 2. Total commodity housing fund (in RMB) under the advance sale contract: one hundred and fourteen million six hundred thousand yuan (RMB114,600,000), will be paid by the Buyer once and for all to the Seller within 15 days after the signing of the advance sale contract and the down payment oftwo hundred million yuan (RMB 2,000,000) already paid by the Buyer will automatically be converted into the housing fund. 3. On the premise of receiving the full housing fund from the Buyer, the Seller shall be obliged to handle the commodity housing handover procedureswith the Buyer in accordance with the agreement in Paragraph 1, Article 16 of the advance sale contract. If the Buyer fails to pay the housing fund in duetime, the Seller shall be entitled to delay the handling of commodity housing handover procedures with the Buyer and shall not bear the defaultresponsibilities arising from this. 4. After the advance sale contract is signed, if the Buyer requests for changing to the bank mortgage loan, the Seller and the Buyer shall sign the changeagreement according to the related contents in Article 6 of the advance sale contract and Annex 4. The housing fund of the Buyer shall be determined by themortgage loan discount again and the total housing fund shall be calculated again. 36  Annex 5: Other provisions 1. Handling of property rights: If the Buyer entrusts the Seller or the agent company designated by the Seller (hereinafter referred to “assignee”) with the registration of property rightduring the occupancy settlement, the Buyer shall issue the letter of attorney to the assignee for handling of commodity housing property certificate, provideall the data related to this and offer the necessary assistance during the handling of property right by the Seller, including but not limited to, carry out therelevant procedures at the designated place jointly with the Seller, pay the related fees according to the national provisions, provide the related data and signthe related legal documents for handling of property right. The Buyer confirms that all fees required for handling of commodity housing property certificate(including but not limited to deed tax, agency fee, property registration fee, property certificate stamp tax etc.) shall be borne by the Buyer. 2. If either party proposes to terminate the contract, the non-defaulting party shall be entitled to request continuing to perform the contract, unlessotherwise agreed in the advance sale contract. If the defaulting party refuses to continue the performance, it shall pay the liquidated damages of three percentof the total house fund to the non-defaulting party according to the advance sale contract and shall also bear the corresponding liabilities for loss incurred tothe non-defaulting party. 3. The Buyer shall ensure that the production and operation activities within the area under the jurisdiction of Beijing Jingkai One Center projectcomply with the stipulations of laws, administrative regulations and rules of the related departments and won’t engage in any illegal acts, otherwise theBuyer shall bear all legal, economic and administrative consequences, and shall compensate for losses incurred to other proprietors or property managemententerprises. 37  Annex 6: Provisions of decoration and equipment standard 1. Heating system: (1) Central heating: fan coil; (2) Brand of heating equipment: ELCO. 2. Insulation materials: (1) Outer wall insulation: rock wool board. 3. Outer wall: mainly composed of glass curtain wall and aluminum plate curtain wall, locally made of stone curtain wall. 4 Inner wall: concrete wall surface extending to the structural layer, block wall surface extending to DP-HP bottoming mortar. 5. Ceiling: 1) B5/B7: 1/F-5/F, 7/F, 8/F: concrete structure, 6/F: concrete structure, locally coated steel sheet; 9/F: coated steel sheet; 2) B6/B10: 1/F-4/F, 6/F: concrete structure, 5/F: concrete structure, locally coated steel sheet; 7/F: coated steel sheet; 3) B11/B13: 1/F-5/F: concrete structure, 6/F: Al-Zn coated steel sheet; 4) B12/B14: 1/F-4/F: concrete structure, 5/F: Al-Zn coated steel sheet; 6. Indoor floor: concrete structural layer. 7. Door and window: (1) Opening mode: flat opening; (2) Profiles of door and window: aluminum alloy thermal-break profiles. 8. Elevator: (1) Elevator brand: Hitachi; (2) Elevator speed: 1.75m/s; (3) Elevator capacity: 1100kg; 9. Floor load: uniformly distributed live load of 1/F ground: 5KN/M2, live load of standard floor: 2KN/M2. 10. Others: (1) Insulation: central insulation; (2) Canopy: steel joist, aluminum plate; (3) Handrail: the steel tube of the staircase is painted and the glass breast board is provided on the external façade where the protection is necessary; (4) Entrance step and disabled ramp: granite face; (5) Cable TV system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft; (6) Telephone network system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft; (7) Power distribution: two independent 10KV high-voltage powers are introduced from the municipal electricity for the project; (8) Fire control: with automatic fire alarm and fire linkage control system; (9) Security system: with monitoring system and quarter parking lot management system indoors and outdoors. 11. Electric load of the building: 1000KVA. 38  Annex 7: Related provisions of warranty liability I. Scope and term of warranty For the installed and constructed items under normal service conditions when the Seller delivers the houses, their quality problems concerning civilengineering, water, heat, electricity and other facilities within the warranty period will be subject to warranty by the following scope and term. Warranty items Warranty period of the project Wall surface leakage 5 years Roofing waterproof 5 years Outer curtain wall, door and window 2 years Wall, ceiling 2 years Crack of door and window, damage of hardware 2 years Strong and weak electric wires, water inlet and outlet pipelines andcorresponding components 2 years Fire alarm system 2 years Foundation and primary bearing structure Designed endurance life: 50 years Other components According to the related provisions of related authorities in Beijing II. Start date of warranty The warranty period of the house purchased by the Buyer will start from the date of house completion acceptance. The warranty period of the elevatorwill start from the date that the governmental authorities issue the inspection conformance report and the related license. III. Problems outside warranty scope (1) The quality damages resulting from natural disaster and force majeure are not within the warranty scope; (2) The warranty items that have been installed, removed, modified or repaired by the proprietor and the house user at discretion after occupancy are notwithin the warranty scope; (3) The quality problems of the above-mentioned warranty items resulting from improper application by the proprietor or the house user after occupancyare not within the warranty scope, however, the Seller may assist in the maintenance and the related costs shall be borne by the Buyer. IV. Warranty liability (1) The paid maintenance services may be provided for the quality maintenance outside the warranty period or the warranty scope stipulated in theAnnex. (2) The Seller shall not be liable for the quality problems resulting from improper application of proprietor and house user, unauthorized modificationof house structure, adding equipment or changing position at discretion and inappropriate decoration. 39  (3) The Seller shall assume the corresponding warranty liabilities within the warranty period and the property service enterprise will provide the paidmaintenance after the warranty period expires. (4) If the Seller fails to repair the defected houses due to proprietor, house user and relevant party, the Seller shall not be entitled to bear anyresponsibility, which shall be assumed by the corresponding proprietor, house user and relevant party connecting to this. 40  Annex 8: Preliminary Property Management Preliminary Property Service Contract of Beijing Jingkai One Center Project The contract was entered into between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Beijing Jingkai Investment Development Co., Ltd. on__________in Beijing, China. Principal: Beijing Jingkai-Gongda Investment Management Co., Ltd. (hereinafter referred to as the “Party A”)Address: 4/F, Block 2, No. 1 North Disheng Street, Beijing Economic-Technological Development AreaLegal Representative: Zhou Shiyi Trustee: Beijing Jingkai Investment Development Co., Ltd. (hereinafter referred to as the “Party B”)Address: Block 1, No. 1 North Disheng Street, Beijing Economic-Technological Development AreaLegal representative: Guo GuangqingProperty Management Qualification: Level 3Certificate No.: D0075 JWQZS [2014] In accordance with the Regulations on Property Management and relevant laws and regulations, Party A entrusts Party B to implement property managementfor the Beijing Jingkai One Center project (hereinafter referred to as the “Project”), and the parties have entered into this Contract through equal consultation. Chapter I General Provisions Article 1 Party A entrusts Party B to provide property management and service for the project, and Party B is the sole property manager of the project; Article 2 Party B accepts the entrustment of Party A and agrees to provide property management and service for the project in accordance with this Contract,the Regulations on Property Management and the relevant laws and regulations. Article 3 In this Contract, references to any legislation shall be construed as laws and regulations promulgated by the state government or the government ofBeijing municipality. If significant changes occur in the economic interests of either party as a result of changes in laws and regulations, the parties shallconsult in a timely manner and make the necessary adjustments or modifications to the relevant provisions of this Contract in order to safeguard the interestsof both parties under this Contract. Chapter II Basic Conditions of the Property Project Article 4 Basic Conditions of the Property 1. Approved property name: Beijing Jingkai One Center 41  2. Property type: office building, commercial property, residential property 3. Property location: Lots D1C1 and D1F1, No. D1 Block of Eastern Zone, Beijing Economic-Technological Development Area 4. Scope: west to the 1st Jinghai Road, east to the 3rd Jinghai Road, south to the 13th Kechuang Street, north to the southern green belt of the 12th KechuangStreet. 5. Area: 92,392.1m3; construction area: a total construction area of 293,692 m3, area for which property management fee is collectable is 204,840 m3.Underground parking lot: 83,002 m3, among which the number of parking lots with the right to get parking fee is 1,834. The above data of area is based onestimates and the final measured area shall prevail. Chapter III Scope and Content of Property Management Services Article 6 The scope of the property management services provided by Party B shall be as follows: the buildings and the ancillary facilities and equipmentwithin the scope of the red line of the project, including all kinds of public roads and landscaping, and various types of public service facilities. Article 7 Party B shall provide the following property management services in two phases: 1. Preparatory period of property management: For the service in this period, please refer to Article 8 of this Contract. 2. Normal management period of property management: For the service in this period, please refer to Article 9 of this Contract. Article 8 Services provided in the preparatory period of property management: 1. To propose suggestions on the selection of type for facilities and equipment and the selection of construction materials. 2. To follow up on the progress of the project and make recommendations. 3. To propose suggestions on the vehicle moving line and parking spaces of the underground parking lot. 4. To assist Party A in the development of interim management provisions. 5. To establish the project property management agency. Party B will set up a project property management institution during the preparatory period, and put it into normal operation as soon as possible. The detailsof work are as follows: (1) To develop organizational structure, departmental set-up and staffing; (2) To work out the function distribution method among various departments and the duties of the various positions; (3) To develop internal management system, service standards and working procedures. 6. To complete staff recruitment and professional training. 7. To develop item procurement plans. 8. To prepare annual work plan for property management. During the preparatory period of project management, Party B will be responsible for the preparation of the annual work plan of the project management,including the following: (1) Work plan for daily operation, repair and regular maintenance of housing and its ancillary facilities, and equipment; (2) Work plan for security and fire management; (3) Work plan for daily cleaning and regular cleaning; 42  (4) Work plan for road traffic and parking management; (5) Work plan for customer service; (6) Work plan for financial management and development of human resources; (7) Emergency response procedures and proposals; (8) Establishing a coordinated relationship with the local government authorities. 9. To prepare the customer manual. 10. To prepare decoration guide. 11. To establish special service items and collection and payment items. 12. To assist Party A in completing the project acceptance. 13. To take over and accept the project. 14. To take charge of the cleanup land reclamation of the public areas of the project. 15. To prepare for moving-in of the owners of the project. Article 9 Services provided during the normal property management period include: 1. To develop a work plan of property management services, and organize the implementation of the plan; manage property-related engineering drawings,customer files, as well as completion and acceptance materials; establish property management system. 2. To carry out the daily maintenance, operation and management of shared facilities and equipment. Shared facilities and equipment include: shared waterpipes, pressurized pumps, water pipes, shared lighting, transformation and distribution systems, security systems, fire systems, transportation facilities, rainsewage lift pump. 3. To carry out the daily maintenance and management of public facilities, ancillary buildings and structures, including roads, fences, septic tanks, pumpingstations, green water systems, outdoor ground parking, garbage transfer stations, and litter bins in public areas. 4. To carry out conservation and management of public green spaces, flowers and trees, and small architectural works 5. To be responsible for the public environmental sanitation, including the daily cleaning in public areas and peripheral areas, collection, sorting andremoval of daily garbage and refuse, and regular cleaning of septic tanks, as well as regular pest control services. 6. To maintain public order, including safety monitoring, public area inspections, gate service and so on. 7. To maintain the order of vehicles in the facility, and manage and offer service to the vehicles parked on the parking spaces in the public areas and thevehicles parked in the underground parking lot. 12. To provide fire management services, including fire safety monitoring and inspection, fire safety warning and publicity, and maintenance and repair offirefighting facilities in public areas. 13. To provide house decoration management services. 14. When property owners and users entrust Party B to carry out repair and maintenance of their own premises, self-use facilities and equipment, Party Bshould accept the commission and charge a reasonable fee. 15. To provide special services, including collection and payment services, according to the actual needs of Party A and property users. 16. To set up service supervision telephone, and publicize the phone number in the bulletin board and other prominent position of the managed propertyarea. 43  17. To organize cultural and recreational activities and festive decorations. Chapter IV Service Standards Article 10 The service standards for the management of the project are as follows: 1. The 3rd level standards for property service shall be refereed to during provision of services. 2. The management procedures, quality standards and assessment of the project are carried out according to the requirements of the ISO 9001: 2008 qualitymanagement system. Chapter V Service Term of Entrusted Management Article 11 The term of property service is 3 years from the day after the completion of the check-in procedure for the first property user of the property, whichshall end at the day when the first property owner of the property has moved in for 3 years. If the property delivery is made in advance or delayed, the startingday of property service term under the contract shall be correspondingly brought forward or delayed, under which case the property service term remains 3years, and the final property delivery date shall be confirmed by Party A and Party B in writing. Chapter VI Property Management and Related Matters Article 12 Property management fee 1.Remuneration shall be paid for the project’s property management. 2.The property management fee shall be paid by the property owners in advance according to the building area owned by the owners based on thefollowing criteria: Office Building: 5.50 yuan / month / m3 Commercial Property: 5.50 yuan / month / m3 Residential Property: 3.00 yuan / month /m3 The property service funds are jointly owned by the property owners who have contributed to the funds and the funds are managed by Party B on behalf ofthe property owners. The funds include property service expenses and the remuneration made to the property service enterprise. 1. The property management fee consists of the following: (1) The wages, social insurance, dismissal compensation and the welfare fees legally set aside for Party B’s employees; (2) The daily operation and maintenance costs of the shared locations and the commonly shared facilities and equipment of the property; (3) The cleanup costs of the managed area of the property; (4) The landscaping and maintenance costs of the managed area of the property; (1) The order maintenance costs of the managed area of the property; (2) Party B’s overhead expenses; (3) Depreciation of fixed assets of Party B; (4) The premium of property insurance, machine damage insurance and public liability insurance for the property’s shared locations, commonly sharedfacilities and equipment. (5) Financial audit fees; (6) Corporate tax and corporate income tax; (7) Refunding of advance payment made by Party A for preliminary operation; (8) Management remuneration. a) The property management fee shall be calculated based on the total construction area, the construction area of each functional area, the condition ofequipment system and the energy consumption data provided by Party A, taking into account the personnel and the relevant expenses and other managementexpenses required by Party B in providing services for the project. If the data and the conditions of facilities and equipment provided by Party A are not inaccordance with the actual situation, the above fees shall be adjusted accordingly. 44  b) Where government-approved adjustment of energy unit price and changes in national laws and regulations lead to mandatory changes in labor costs,property management fees shall be adjusted accordingly. c) The property owners shall pay the Property Management Fee on a yearly basis as of the date of move-in as specified in the notice. For the propertymanagement fees that shall be borne by Party A according to the Property Management Measures of Beijing Municipality and its implementation rules, aswell as the preliminary property service contract and commercial housing sales contract signed between Party A and the buyer, Party A shall pay propertymanagement fees to Party B within the agreed period as agreed by Party A and the buyer in the property service contract. d) Expenditure on property services should be restricted to expenses agreed upon in the Contract, and the balance of the expenditure on property serviceswill be calculated once a year. The balance can be used to improve the quality of the scene, including but not limited to the increase in equipment andfacilities. However, any transformation shall be subject to the approval of Party A before implementation. After the establishment of the owners 'committee,the approval authority shall be conferred to the owners' committee. Party B shall return the balance to the owner every two years in accordance with theproportion of property costs paid by the owners. e) Where Party A undertakes to reduce or exempt the property management fee of the property buyer, Party B shall pay Party B the property management feeafter reduction or exemption on the basis of Party A's written confirmation. f) If the owners refuse to pay full or part of the property management fees due to the nonperformance of commitment made in the sales contract, changes inplanning, construction quality issues and other reasons of Party A, Party A shall make up the balance to Party B. g) For the facilities in the scope of property management that have been completed but have not yet been sold, or the properties that have been sold but notyet been delivered to the Buyers for the reasons of Party A or the facilities in Party A’s property management space, the property management fees and thewater, heat, electricity and gas expenses shall be borne by Party A. h) It is the responsibility of Party A to provide Party B with true and complete information on the owners to whom the properties have been sold but thecheck-in have not been completed. To ensure the quality of service, after the property is completed and delivered, the property management fees forproperties sold but having not completed the check-in shall be collected against the owners by Party B. Chapter VII Parking Management Article 13 Parking management fee The parking management fee shall be collected by Party B against the users of parking lots according to the following standards: Ground parking fees and temporary parking fees shall be collected in accordance with the provisions of the competent government departments; Underground parking management fee: RMB 400 Yuan/month/m3 Article 14 Party B shall sign a written management service agreement with the users of the parking lot to clarify the rights and obligations of both parties inrespect of parking spaces and parking management services. 45  Chapter VIII Special Maintenance Fees Article 15 The daily minor maintenance expenses of the shared areas, commonly shared facilities, equipment and public spots after the expiration of thehouse warranty shall be included as costs and expenses of property management. The overhaul and renovation costs shall be paid from the specialmaintenance expenses. When the special maintenance fees need to be used, a report shall be sent to Party A for approval, and a general meeting of the ownersshall be convened in accordance with the provisions of the Measures on the Management of Special Maintenance Fees to decide the cost expenditure issues. Chapter IX Property Management Areas Article 16 Party A shall, at the commencement day of the preparatory period of property management, provide the property management areas needed for theproperty management activities to Party B without charging fees and according to the actual needs, and Party A shall be responsible for the renovation of theproperty management areas, which include the following parts: 1.Customer reception room 2.Property office and conference room 3.Staff dining lounge 4.Storehouse 5.Other areas (depending on the specific circumstances of the project) Chapter X Remuneration and Payment of Property Management Services Article 17 The remuneration of property management services charged by Beijing Development Area Co., Ltd shall be as follows: 1. In case the D1F1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 /month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case theoccupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month. 2. In case the D1C1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 /month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case theoccupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month. Article 18 During the preparatory period of property management, the remuneration for Party B’s property management services shall be disbursed from theproperty management start-up capital and shall be paid at the same time as the property management start-up capital. Article 19 After business opening (move-in) of this project, Party B shall withdraw the remuneration of current month from the property management fees onthe 25th of each month. Chapter XI Business Opening (Move-in) Conditions Article 20 Party A shall obtain all necessary permits, licenses, etc. from the government as soon as possible after the signing of this Contract, and make themcontinuously valid, so that Party B can carry out its work in accordance with the terms of this Contract. Article 21 Party A shall be responsible for opening the supply channels for water, electricity, heating, gas, communications, post and telecommunications,and cable television for this project, and shall handle relevant business licenses. 46  Article 22 Party A shall inform Party B in writing of the proprietors' information known by Party A and relevant undertakings made by Party A to proprietorsin the second month after the commencement of the preparatory period, and thereafter shall inform Party B in writing of the proprietors’ information knownby Party A and relevant undertakings made by Party A to proprietors from time to time in writing during Party A’s sales process. Party B shall carry outconfidential management for customers’ information. Article 23 After the project has been completed and passed completion examination and acceptance according to relevant provisions of the country, PartyA and Party B shall jointly organize the take-over acceptance of public parts, public facilities and equipment. Party B shall, within 15 days after receivingParty A’s application for take-over acceptance, perform take-over acceptance according to the National Housing Take-over Acceptance Standard. If they areexamined to meet applicable requirements, the acceptance qualification certificate shall be signed within 7 days, and relevant take-over documents shall beissued timely. Article 24 Party A shall transfer the following information to Party B when undergoing formalities for take-over acceptance of the property: 1.Site plan of the completion, drawings of the completed individual buildings, architectural structures, equipment, supporting facilities and undergroundpipelines; 2.Technical information on the installation, use and maintenance of the facilities and equipment; 3.Property quality warranty documents and property use instructions; 4.Counterparts or copies of inspection and acceptance reports, government approval documents, lists of items of civil works, ownership list of propertyrights of the house and supporting facilities; and 5.Other information necessary for property management Article 25 After the completion of take-over acceptance of the project, Party A shall send a Move-in Notice to proprietors and shall notify Party B in writingtwo weeks in advance of move-in time. Article 26 The facilities and equipment of the project which are entrusted to Party B for property management shall meet national acceptance standards.Imported equipment shall be equipped with enough spare parts and the corresponding supply channels shall be made available. In case any quality problemoccurs to the project, facilities or equipment, Party A shall urge suppliers to rework until it is qualified within an agreed period. At the same time, since thedate of take-over acceptance, Party A shall be responsible for warranty according to national regulations on warranty of construction projects. Chapter XII Other Management Article 27 The premiums of all insurances necessary for the property management of the project, including but not limited to all-risk insurance, machinerybreakdown insurance and public liability insurance, shall all be disbursed from the costs and expenses of property management operation. Above insurancesneed not be bought repeatedly if they have been bought by Party A. Article 28 All insurance policies of this project shall be insured by an local insurance company recognized and designated by Party A, and registered in thePeople’s Republic of China. The types of insurances and insured amounts shall be handled according to relevant provisions of insurance companies in Chinaand the actual situation of the project. The insured amounts shall be jointly determined by Party A and Party B. The insurance period shall be the same as theperiod during which Party B provides property management services. Article 29 Party B shall provide Party A with all original documents of relevant insurances, so that Party A can review, photocopy and record them. Party Bshall keep the aforesaid insurances valid during the entrustment period. Without Party A's prior written consent, Party B and / or its insurance company shallnot cancel relevant insurance policies under this Contract or amend information under any insurance policy. 47  Chapter XIII Human Resource Management Article 30 Party B shall, before the commencement of the preparatory period of this project, recommend a project manager and candidates to Party A. Theproject manager (project leader) shall have more than 1 year experience in managing similar projects, and shall have experience in equipment and propertymanagement. Party A may also recommend a project manager and other property personnel as alternatives. If the project manager is to be replaced within theperiod of the Contract, Party B shall provide an alternative to the project manager confirmed by Party A. Other personnel shall be assigned to variousmanagement and service levels according to the preparatory work plan. Article 31 Party B shall carry out training for the personnel before they assume their posts, and the expenses incurred for this purpose shall be disbursedfrom the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operationcosts and expenses after the business opening of this project. Article 32 Party B shall be responsible for formulating the organizational structure and remuneration standard of the property management organization ofthis project and shall prepare the annual staff structure and remuneration system of the project department according to the needs of each work by the end ofeach year. The staff structure shall include Party B's own employees and all the outsourcing business staff, as well as the duty description of each post, andshall be used as the reference for the recruitment of personnel after it has been approved by Party A. Article 33 The personnel sent by Party B for this project shall provide full-time services to the project, and shall not concurrently hold any office in Party B's functional departments or in other projects. Article 34 The labor costs incurred by all levels of management and service personnel sent or recruited by Party B shall be disbursed from the propertymanagement start-up capital before the business opening of this project, and shall be disbursed from the property management operation expenses after thebusiness opening of this project. Chapter XIV Rights and Obligations of Both Parties Article 35 Party A’s rights and obligations 1.Party A shall review the property management work plan prepared by Party B, inspect and supervise the implementation of Party B’s propertymanagement, and have the right to require Party B to rectify those failing to meet the plan indicators within a specified period; 2.Party A shall provide a property management room to Party B according to relevant provisions of this Contract; 3.Party A shall conduct property take-over acceptance with Party B according to relevant provisions of this Contract, and transfer relevant materials toParty B; 4.Party A shall be responsible for formulating the Temporary Management Convention, specify according to law the issues such as the use, maintenanceand management of the property; proprietors’ common interests; obligations proprietors shall perform; responsibilities which shall be borne in violationof the Convention, and shall require proprietors and property users to comply with them; 5.Party A shall show and explain the Temporary Management Convention to the property buyer prior to the sale of the property; and shall require theproperty buyer to comply with the Temporary Management Convention and make written commitment in signing the property sale contract with theproperty buyer; 48  6.The sale contract signed with the property buyer shall include relevant contents agreed in this Contract; 7.Party A shall pay to Party B the property management service remuneration, property management start-up capital, property management fees and otherrelated costs which shall be borne by Party A according to relevant provisions of this Contract; 8.Party A shall assist Party B in coordinating the relationship with local government administrative departments; 9.Party A shall assist Party B in property management, publicity and education and cultural activities; 10.Before the establishment of the proprietors committee, Party A shall not arbitrarily occupy or change the use function of shared facilities of this project.If it is necessary to reconstruct, expand or improve supporting items within the project, it shall be negotiated with all proprietors of the project and PartyB, and shall be reported to competent departments for approval before it can be implemented; 11.Party A shall ensure that the property delivered for use meets the provisions of national acceptance standards, and shall bear the warranty responsibilityfor the project according to the warranty period and warranty coverage stipulated by the country; 12.If the property fails to meet the use function and causes a major accident due to the house construction quality, the quality of equipment and facilities orinstallation technology or other reasons, and it is identified by relevant government departments to be the responsibility of Party A, Party A shall bearthe responsibility and deal with the aftermath. 13.If Party B violates relevant provisions of this Contract, and fails to complete the agreed management services, Party A shall have the right to requireParty B to rectify it within a specified time limit. Party A shall have the right to send a notice to Party B. If it causes economic loss to Party A, Party Bshall give Party A corresponding economic compensation. (1) Notice: Party B shall, within 5 working days after receiving the Notice, make a reply and propose a rectification plan. (2) Re-notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Notice, or Party B’s rectification fails tomeet Party A’s requirements, Party A may issue a "Re-notice " to deduct 5% of Party B's management remuneration of that month as liquidated damages, butnot more than 25% of the management remuneration of that month. (3) Final notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Re-notice, or Party B’s rectificationfails to meet Party A’s requirements, Party A may issue a "Final Notice". If Party B still fails to rectify it for no reason or Party B’s rectification fails to meetParty A’s requirements within 5 working days after receiving the Final Notice, Party A shall have the right to terminate the contract in advance, withoutbearing any liability, provided that Party A shall notify Party B in writing at least one month in advance and complete the formalities for replacing theproperty management enterprise. Costs and expenses of Party B sustained for such early termination of the Contract, such as staff dismissal fees, shall bedisbursed from the property management fees. 14.Party A shall have the right to provide value-added services to proprietors or property users according to the needs of the property and for the purpose ofimproving the quality of the property, provided that such value-added services do not affect the normal property management services. Party A shallensure that the value-added services provided comply with the provisions of national laws and regulations, as well as the Temporary ManagementConvention for the proprietors of the property. 15.If this Contract is terminated for any reason, Party A shall have the right to take over this project by itself or re-entrust a new property managementservice enterprise to take over this project. 49  Article 36 Party B 's rights and obligations 1.Party B shall provide property management services within this property area according to relevant laws and regulations and this Contract; 2.Party B shall charge property management fees, decoration management fees, decoration waste clearance fees, parking management fees, speciallyengaged paid service fees and other related fees from proprietors and property users according to relevant provisions of this Contract; 3.If proprietors or property users violate the Temporary Management Convention, laws or regulations, Party B shall take measures to discourage or stop itor file a lawsuit according to the seriousness of the case; 4.With the prior consent of Party A, Party B shall have the right to hire a professional service enterprise to undertake the project's special service business,but Party B shall not entrust all property management to a third party; 5.Party B shall accept the supervision and guidance from Party A, competent property management departments and relevant government departments; 6.Party B shall ensure and continuously improve the quality of services, control costs and reduce energy consumption; 7.Party B shall be responsible for preparing annual minor repair and maintenance plans for the house, ancillary buildings, public parts, shared facilitiesand equipment and greening, and shall organize their implementation; 8.Party B shall be responsible for preparing annual medium and major repair and renovation and maintenance plans for the house, ancillary buildings,public parts, shared facilities and equipment and greening, and shall organize their implementation after they are voted by the proprietors meeting. 9.Party B shall inform relevant provisions on the use of the property to proprietors and property users. When proprietors and property users decorate, PartyB shall inform relevant provisions, enter into a written agreement with them, and be responsible for supervision; 10.Party B shall be responsible for preparing the annual property management plan, fund use plan and final accounting report; 11.Party B shall publish the income and expenditure account of property management fees to all proprietors and property users every six months; 12.Party B shall conduct a property service satisfaction survey to all proprietors and property users every six months; 13.Party B shall not arbitrarily occupy or change the use function of the public facilities of the property. If it is necessary to reconstruct, expand or improvesupporting items within the property, it shall be approved by relevant proprietors and shall be reported to relevant approving parties for approval beforeit can be implemented; 14.If the property management fees are undercollected not due to Party B’s reason, resulting in that it is difficult to carry out property management work,Party B shall have the right to terminate this Contract and withdraw from the property management of the project, provided that Party B shall notifyParty A in writing three months in advance and assist Party A in aftermath and take-over work; 15.The quality of the building and its ancillary equipment and facilities of this project shall meet the quality standards set by the country. For any accidentor loss caused by its quality or defects which cannot be improved, Party B shall bear no responsibility. However, Party B shall be obliged to take timelyand effective measures to prevent expansion of the loss, and promptly notify Party A; 16.During the management period of Party B, if any damage to the equipment and facilities or accident occurs due to Party B’s poor management, and thuscauses property damage or personal injury to a third party, and it is identified by relevant government departments to be the responsibility of Party B,Party B shall bear corresponding responsibility; 50  17.Upon the termination of this Contract, Party B shall hand over various archival data kept during its management period to Party A or the proprietorscommittee; 18.If Party A violates relevant provisions of this Contract, and causes Party B not to complete management services, Party B shall have the right to requireParty A to resolve it within a certain period of time. If this causes economic loss to Party B, Party A shall give Party B corresponding economiccompensation; 19.Party B shall fully cooperate with Party A to provide value-added services to proprietors and property users, and provide all the convenience for this; 20.If this Contract is terminated for any reason, Party B shall unconditionally undergo formalities to hand over property management to Party A or aproperty management unit designed by Party A, and shall in no case delay the hand-over or create any take-over obstacle. The period for such take-overshall be 30 days; 21.If the property management services provided by Party B cause any liability accident, unexpected accident or litigation due to Party B’s reason, Party Bshall be solely responsible for this. If relevant events cause economic loss to Party A due to Party B’s reason, Party B shall compensate Party A for this; 22.All acts relating to the provision of property management services by Party B shall comply with Chinese laws and regulations and orders issued bygovernment departments. If Party A’s aspects, such as reputation, are affected by Party B’s unlawful act, Party A shall have the right to reserve the rightsof recourse for any loss sustained, such as in reputation, from Party B; 23.If Party B, after the termination of this Contract, does not transfer the property management right to Party A or a property management enterprisedesignated by Party A, or withdraw from the property under this Contract, or hand over the management room or relevant archival data, Party B shall payRMB 2,500 as liquidated damages to Party A for each overdue day. If Party B still fails to transfer the property management right and withdraw from theproperty within 30 days after the termination of this Contract, Party A shall have the right to take all measures according to relevant laws andregulations, and all legal liabilities and economic consequences arising herefrom shall be borne by Party B. 24. Chapter XV Handling of Unforeseeable Events Article 37 In order to safeguard the vital interests of the public, proprietors and property users, if Party B sustains necessary economic loss due to takingemergency measures in case of unforeseeable events, such as gas leakage, electric leakage, fire, water pipe burst, rescue of life, assisting the public securityorgans in carrying out tasks, both parties shall handle such events according to relevant laws and regulations. Chapter XVI Termination of Contract Article 38 Party A and Party B agree that this Contract can be terminated if any of the following cases occurs, provided that the terminating party shallnotify the other party in writing in advance: 1.This Contract shall be automatically terminated upon the expiry of the validity term agreed in this Contract; 2.This Contract shall be terminated after the property service contract signed between the proprietors committee of this project on behalf of all proprietorsand the property management enterprise takes effect; 3.This Contract shall be terminated if Party A and Party B mutually agree and reach a written agreement; 51  4.This Contract cannot be fulfilled due to force majeure; 5.Either party is subject to legal sanction, and suffers bankruptcy liquidation; and 6.Other provisions specified by laws and regulations. Article 39 After the termination of this contract, Party A and Party B shall well handle their creditor’s rights and debts, including the liquidation of propertymanagement fees and various agreements signed with an external party. Party B shall assist Party A in handover and aftermath work of property services. Article 40 In 3 months prior to the expiration of this Contract, Party B may apply to Party A for the renewal of this Contract. After Party A reviews andapproves it, both parties may agree to renew this Contract in the form of a supplementary agreement. Chapter XVII Liability for Breach of Contract and Dispute Resolution Article 41 If Party B violates relevant provisions of this Contract and fails to complete the agreed management services, Party A shall have the right torequire Party B to rectify it within a specified time limit. If the rectification still fails to meet the requirements within this time lime, Party A shall have theright to terminate this Contract. If this causes economic loss to Party A, Party B shall give Party A corresponding economic compensation. Article 42 If Party A violates relevant provisions of this Contract, causing Party B not to complete management services, Party B shall have the right torequest Party A to settle it within a certain period of time. If Party A fails to settle it within this time period, Party B shall have the right to terminate thisContract. It this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation. Article 43 Party B shall bear no responsibility in the following cases: 1.If the property management services are interrupted due to force majeure (including natural disasters, war, etc.), Party B shall inform Party A aboutrelevant information within 48 hours after the end of the force majeure event, and at the same time provide effective evidence for the occurrence of thisforce majeure event; 2.Party B has fulfilled the obligations of this Contract, but the inherent defect of the property itself causes loss, Party B shall be obliged to take timely andeffective measures to prevent the expansion of this loss, and shall promptly notify Party A; 3.If loss is caused due to maintenance of the shared areas, public facilities and equipment of the property, which has been informed to proprietors andproperty users in advance, or loss is caused by temporary interruption of water supply, power supply and public facilities and equipment; or 4.If loss is caused by the interruption of water supply, power supply heating, communications, cable television and other public facilities and equipmentnot due to Party B responsibility. Article 44 For any dispute arising from or in connection with the performance of this Contract, both parties shall settle it through friendly negotiation. If nosettlement can be reached through negotiation, either party may bring a lawsuit to the people's court of the place where this Contract is performed. In thecourse of the proceedings, the contract shall continue to be fulfilled except where the parties are in dispute. Chapter XVIII Supplementary Provisions Article 45 Both parties agree that Party B shall, according to Party A’s commission, undergo take-over acceptance formalities 30 days prior to the move-inof the first proprietor. Article 46 Both parties shall cooperate with law enforcement activities, rescue and other public affairs to be carried out within the property area, and shallnot obstruct such affairs. 52  Article 47 Neither party shall transfer or sell or assign its rights, responsibilities and obligations under this Contract in any manner without the writtenconsent of the other party. Meanwhile, neither party shall disclose any trade secrets obtained from the other party to a third party. Otherwise, the default partyshall compensate for the loss caused to the other party. Article 48 This Contract shall only take Party A and Party B as beneficiaries. Except for both parties to this Contract, this Contract cannot be implementedby any other person. Article 49 During the execution period of this Contract, both parties agree that each party may refer to the name and service identification of the other partyin the following way in its business promotion and producing relevant publicity materials, and each party shall not charge any fees from the other party forthis .The reference shall be as follows: Party B referred by Party A: Entrusted property services: Beijing Development Area Co., Ltd Party A referred by Party B: Entrusted service project: Beijing Jingkai One Center Article 50 After the termination of this Contract, neither party shall continue to refer to the name and service identification of the other party in its businesspromotion or on its relevant publicity materials. Article 51 The annexes to this Contract are an integral part of this Contract, and shall have the same legal effect as this Contract. Article 52 As for issues not mentioned in this Contract, or if any objection arises in interpreting this Contract, both parties shall settle or sign asupplementary agreement on the basis of friendly negotiation. Article 53 Any amendment or supplement to this Contract shall be confirmed in writing by both parties, and shall have the same legal effect as thisContract. The contents of such amendment or supplement shall not be inconsistent with the contents of this Contract and the Temporary ManagementConvention. Article 54 This Contract shall be made in sextuplicate, with Party A and Party B each holding three copies. Each of these 6 copies shall be original, andshall have the same legal effect. Article 55 The counterpart copies (stamped) of Party A and Party B’s business licenses within the validity period shall be attached as annexes. This Contract shall take effect as of the date when the representatives of both parties sign and seal this Contract on the date specified on the first page of thisContract, and shall be valid as an annex to the "Commodity Housing Presale Contract" or the "Contract for Sale of Finished Commodity Housing", and shallbe binding on all proprietors of this property. Party A: Beijing Jingkai-Gongda Investment Management Co., Ltd /sBeijing Jingkai-Gongda Investment Management Co., LtdParty B: Beijing Development Area Co.,Ltd /s/Beijing Development Area Co.,LtdSignature and seal: /s/ Shiyi ZhouSignature and seal: /s/ Guangqing GuoDate:Date: 53  Annexes: 1. Layout Plan 2. Details of Property Constitution 3. Details of Commonly Shared Sections of the Property 4. Details of Commonly Shared Facilities and Equipment of the Property 5. Details of Property Service 6. List of Hand-over Materials 54  Annex 1: Layout Plan 55  Annex 2: Details of Property Constitution Boundaries of Property Corresponding Planned Building Number Planned Construction Area (m3) Floor Area (m3) Remarks B1 office building 6674.59 B2 office building 5999.00 B3 office building 5013.55 B4 office building 4605.2 B5 office building 6262.02 B6 office building 4893.38 B7 office building 6262.02 B8 office building 3419.06 B9 office building 3433.89 B10 office building 4914.03 B11 office building 2895.65 Stage 1 D1F1 B12 office building 2715.48 Parcel (east to B13 office building 2895.65 54928.2 Jinghai 3rd Road; B14 office building 2715.48 west to Jinghai Subtotal 83832.86 1st Road; south toKechuang 13th A1 Residential Building and Supporting Commercial Properties 9398.70 Street; north to D1Block Road) A2 Residential Building and SupportingCommercial Properties 11102.12 A3 residential building 5107.47 A4 residential building 8122.87 A5 residential building 5107.47 A6 residential building 8191.73 Subtotal 47030.36 Total 130863.22 Stage 2 D1C1 C1 office building 33639.54 Parcel (east to C2 office building 24753.57 Jinghai 3rd Road; C3 office building 15049.66 west to Jinghai C4 office building 19990.67 1st Road; south toD1 Block Road; north to Kechuang 12th Street;) DX1 underground garage, commercialproperties, ancillary facilities, and air raidshelters 37924.56 37994.9 Total 131358 The final area shall be determined by the actually measured area in the report. 56  Annex 3: Details of Commonly Shared Sections of the Property 1. Load-carrying structure of the building 2. Main structure of the building 3. Public hallways 4. Public corridors 5. Public staircases 6. Inner courtyard 7. Outdoor wall surfaces 8. Roofs 9. Fire control and security surveillance rooms 10. Machine rooms 11. Public restrooms 12. Public greens 13. Rooms used by property service company 57  Annex 4: Details of Commonly Shared Facilities and Equipment of the Property 1. Elevators: 36 units 2. Septic tanks and rainwater retention tanks 3. Power distribution room 4. Power distribution room 5. Main boxes 6. Property service rooms 7. Rooms for commonly-shared facilities and equipment 8. Underground motor vehicle parking garages 9. Roads 10. Inter-building and central greens 11. Sewer manholes 12. Catch basins 13. Power transformation and distribution system 14. Public lighting facilities 15. High pressure water pumps 16. Fire facilities 17. Lightning protection facilities... 58  Annex 5 Standard for Beijing Residential Property Management (Class III)DB11/T 751-2010 Class III Standard of for Beijing Residential Property Service 1. Basic requirements 1.1 Customer service premises 1) A customer service center with office furniture, telephones, and other office equipment shall be set up. 2) An original copy or photocopy of the qualification certificate of the property service company, photos of persons in charge of the project, property serviceitems, service standards, chargeable items, charge rates, and all other relevant information shall be made public. 3) The customer service center shall be open for business for at least 8 hours during work days and shall have watch-keepers on duty beyond the work hours. 4) 24-hour service hotlines shall be set up and made public. 1.2 Staffing 1) All staff shall obtain vocational qualification certificates as required. 2) The staff shall wear uniforms and badges according to their respective job posts. 3) A project leader in charge of the property service project, as well as building safety administrators, shall be appointed. 4) The project leader shall have more than 2 years of work experience on an equivalent job post with a property service company and shall be currentlyregistered in the municipal credit information database of project leaders. 1.3 Rules 1) Management rules shall be established for the maintenance and repair of commonly-shared sections and facilities, fire safety and prevention, greening andlandscape maintenance, environmental sanitation, and maintenance of public order. 2) An emergency plan shall be established for unexpected public events. 3) A training system shall be established to organic training and examination on a regular basis. 4) A property service log shall be created. 1.4 Archives 1) A property management file shall be created 2) Personnel shall be appointed for file management 3) Basic information, basic records, repair and maintenance records, and charging records shall be managed with computers. 1.5 Signs Property service signs, such as safety warnings, operation and construction warnings, and kindly reminders shall be set up. 1.6 Customer service 1) The performance of the property service contract and the income and expenditures in the previous year, as well as the budget for the current year, shall bemade public in the first quarter of every year. 59  2) For important matters of property service which are related to the normal life of proprietors or house users, notices shall be posted at main entrances andexits as well as the entrance to each apartment unit. 3) Conducts in violation of laws and regulations on public security, planning, and environmental protection shall be discouraged and reported to competentauthorities. 4) For urgent repairs of water and power facilities, repair workers shall reach the site within 20 minutes. For other repairs, repair workers shall reach the sitewithin the time limit agreed upon by both Parties. Notices shall be given within 30 minutes of repairs of facilities and equipment for which specializedservice enterprises are responsible, and return visits shall be paid for such repairs. 5) Responses shall be made within 2 work days to the opinions, suggestions, and complaints made by the proprietors or house users. Return visits shall bepaid for complaints. 6) Opinions on property service shall be publicly solicited once every year; subsequent rectifications shall be made public. 7) Service quality of the project shall be examined once every month. Safety inspections shall be conducted before important holidays and festivals. 8) Proprietors shall be invited to visit the machine rooms for commonly-shared facilities and equipment every year. 9) At least one community culture event shall be organized every year. 10) Bulletin boards shall be set up, in order to assist relevant authorities in public welfare publicity programs. 11) Insurances for shared sections, shared facilities and equipment, and public liability shall be bought as required. 12) If conditions permit, specially engaged services, such as indoor cleaning, laundry, cooking, car wash, property custody, and ticketing shall be provided. 1.7 Commissioning of the management specialized services 1) Commissioning contracts for specialized services shall be signed to define the rights and obligations of each party. 2) Specialized service enterprises shall meet the qualification requirements set out by competent authorities; operating personnel shall have correspondingvocational qualification certificates. 3) The staff of specialized service enterprises shall wear uniforms and badges. 4) Specialized services shall be supervised, managed, and assessed. 2. Operation, repair, and maintenance of commonly-shared sections, facilities, and equipment 2.1 Integrated management 1) Basic files of housing and commonly-shared facilities and equipment shall be created. 2) Operation, inspection, and maintenance records shall be archived on a monthly basis. 3) Inspections shall be conducted to assess the safety of the use of houses. 4) For problems identified during the inspection of commonly-shared sections, repair plans shall be developed according to the scopes of responsibility andthe problems shall be repaired in accordance with their respective repair plans; failures in the operation of commonly-shared facilities and equipment, as wellas problems identified during inspections, shall be repaired promptly. 5) The repair and maintenance plan for the next year shall be determined in the fourth quarter of every year. 60  6) Special-purpose equipment shall be operated, repaired, maintained, and regularly tested in accordance with relevant regulations. 7) Inspections shall be conducted and preventive measures shall be implemented before and after extreme weather conditions, such as thundering, heavyrainfall, strong winds, and sandstorms. 8) Machine rooms (1) Machine rooms shall be cleaned once per month and shall be clear of sundries (2) Mouse baffles, raticide boxes, or mouse glue traps shall be set up. (3) Fire equipment shall be provided in easily visible and accessible positions. Fire equipment shall be checked once per month to make sure it is intact andeffective. (4) Facilities and equipment shall have all necessary signs and nameplates. (5) Relevant rules and certificates shall be posted or hung in easily visible positions (6) Shift handover records and work logs shall be full and complete. 2.2 Commonly-shared sections 1) Building structure Structural members, such as beams, plates, and columns shall be checked once per quarter. If any deformation or crack is detected during visual inspection, arequest for building safety assessment shall be filed, necessary protection measures shall be taken, and repairs shall be carried out according to the assessmentresults. 2) Building components A) Wall finish, plastering, eaves, balconies, rainshades, and supporting members for outdoor units of air conditioners shall be checked once per quarter B) Patrol inspection shall be conducted once per month for doors, windows, and glass of commonly-shared sections. C) Indoor flooring, wall surfaces, ceilings, outdoor roofs, and water aprons of commonly-shared sections shall be checked once per quarter. D) Waterproofing and rainwater down pipes shall be checked before the flood season every year and after heavy rainfall 3. Ancillary structures 1) Patrol inspection shall be conducted once per month for roads, yards, stairs and handrails, curb stones, tube wells, ditches, and channels. 2) Rainwater and sewage wells shall be checked once per quarter. 3) Patrol inspection shall be conducted once per month for gates, enclosing walls, and fences. 4) Patrol inspection shall be conducted once per month for leisure chairs, pavilions, sculptures, and featured landscapes. 5) Lightening protection devices shall be tested once per year. 2.3 Air conditioning system 1) Before operation, a systematic inspection shall be conducted for the water chilling unit, circulating water pumps, cooling tower, fans, fan coils, and watertreatment facilities and equipment. 2) During operation, patrol inspection shall be conducted once per day for the air conditioning system in order to ensure that the indoor temperature meetsrelevant requirements. 61  3) Energy saving measures shall be developed and energy consumption shall be counted and analyzed on a monthly basis. 4) Pipes and valves shall be checked and derusted once per year. 5) Pressure vessels, meters, and noise of the cooling tower shall be checked once per year. 6) The fresh air ventilator, air processor filter screen, surface air cooler, box body, and fan coil filter screen shall be cleaned and sterilized once per year. 7) An overhaul shall be conducted on the air conditioning system every year. 2.4 Secondary water supply facilities 1) Sterilizing equipment shall be used in accordance with requirements by health and disease prevention authorities. Cleaning and sterilizing shall beconducted according to relevant requirements. Water quality measured in water quality tests shall meet national hygienic standards on domestic and drinkingwater. 2) Patrol inspection shall be conducted twice per day on the water tank room and water pump room in order to check the operating status of equipment. 3) The standby water pump shall be switched online once per quarter. 4) Lubrication of water pumps shall be checked once per year; the lubricant shall be replenished or replaced as necessary. Water pumps shall be maintainedonce per year. 5) Water supply pipes and valves shall be derusted and painted every year. All exposed pipes shall be freeze-proofed before the beginning of each winter. 6) Cover plates of the water tank and the impounding reservoir shall be kept intact and locked; the key shall be kept by specially assigned persons. Theoverflow pipe orifice and the ventilation pipe orifice shall be covered with metal protection screens and shall be kept intact. 2.5 Drainage system 1) Drainage facilities Before each flood season, the rainwater and sewage wells and roof rainwater inlets shall be inspected, cleaned, and dredged. After every rainfall, the maindrainage outlets and tubular wells shall be inspected. 2) Sewage pumps Patrol inspection shall be conducted twice per day during the flood season and once per week beyond the flood season in order to check the operating statusof the equipment; a manual startup test shall be conducted once every two weeks; maintenance shall be done once per quarter. 3) Septic tanks Septic tanks shall be checked once every six months and shall be dredged if necessary. 2.6 Lighting and electrical equipment 1) In-building lighting Patrol inspection shall be conducted three times per week. General failures shall be fixed within one day; complicated failures shall be fixed within 5 days. 2) Outside-building lighting Patrol inspection shall be conducted once per week. General failures shall be fixed within one day and complicated failures shall be fixed within one week.The time controller shall be adjusted once per month. 3) Emergency lighting Patrol inspection shall be conducted once per day. Any failures identified shall be instantly fixed. 62  4) LV cabinets Patrol inspection shall be conducted twice per day on the operating status of equipment. Maintenance shall be done once per year, including fastening,testing, and cleaning; electrical safety shall be checked once per year. 5) LV power distribution cabinets and LV lines Patrol inspection shall be conducted once per month on the operating status of equipment; Maintenance shall be done once per year, including fastening,testing, and cleaning. 6) Control cabinets Patrol inspection shall be conducted once every two weeks on the operating status of equipment; Maintenance shall be done once per year, includingfastening, testing, commissioning, and cleaning. 7) Power generators Commissioning shall be done once per month to ensure normal operation. Storage batteries shall be activated once per year. Patrol inspection shall beconducted once per week for battery chargers and storage batteries. 8) Testing The in-house power meter shall be tested once every five years. 9) Power distribution rooms and power distribution compartments on every floor Proper measures shall be taken to keep out small animals. Perimeters of wiring ducts passing through walls shall be tightly sealed. Locks shall be intact.Incoming and outgoing lines of cables and switches shall have proper signs. 2.7 Security system 1) Alarm control host Patrol inspection shall be conducted once per day to check the operating status of equipment. Surfaces shall be cleaned once every two weeks and interiorsshall be cleared of dust once every six months. 2) Door machine of intercom Buttons and display shall be checked once per month. Surfaces shall be cleaned once per month; Interiors shall be cleared of dust once every six months. 3) Network control cabinet Appearance shall be checked once every six months. For connecting wires, surface cleaning shall be done once per quarter and internal dedusting shall bedone once per six months. 4) Infrared emission detectors Wiring, detecting range, and waterproofing shall be checked once per quarter. Surfaces shall be cleaned once per quarter and interiors shall be cleared of dustonce every six months. 5) Video acquisition devices Surveillance images and video recording functions shall be checked once per week. Surfaces shall be cleaned once every two weeks and interiors shall becleared of dust once every six months. 6) Cameras A) Focusing, infrared night vision, wiring, and waterproofing shall be checked once per quarter and adjustments and tests shall be performed as appropriate.Surface cleaning shall be done for lenses once per quarter. Internal dedusting shall be done for the protective housing once every six months. 63  B) During operation, patrol inspection shall be conducted on the spray pond, water pumps, and ancillary facilities twice per week and the anti-creepingfacilities shall be checked once per month. C) Safety warning signs shall be set up as necessary. D) Water quality shall meet hygienic requirements. 3. Fire safety and prevention 3.1 Integrated management 1) A fire safety responsibility system shall be established and implemented. Persons responsible for fire safety shall be appointed. Fire safety responsibilitiesshall be clearly defined for every level and every job post. 2) A voluntary firefighting team armed with necessary firefighting equipment shall be set up. Relevant personnel shall master the basic firefightingknowledge and skills. A fire drill involving employees and proprietors or house users shall be organized annually. 3) Fire safety bulletins shall be set up and regular fire safety education shall be carried out. Two fire safety trainings shall be provided for employees everyyear. 4) Patrol inspection shall be conducted on fire protection once per day. Fire protection inspection shall be conducted once per month. Firefighting equipmentshall be tested once per year according to relevant regulations in order to ensure that the evacuation paths, safety exits, fire lanes, and firefighting facilitiesand equipment meet relevant safety requirements. 5) An conduct in violation of fire safety rules, as well as fire hazards, must be immediately corrected or eliminated once discovered. Any conduct or hazardthat cannot be corrected or eliminated must be reported to the fire department of the local police. 6) The fire control room shall be manned by watch-keepers around the clock. Each shift, which consists of two persons, shall promptly process all kinds ofalarms and failure information. 7) In the event of a fire, the police must be immediately notified. Attempts shall be made to put out fire in its initial stage, personnel in danger shall beevacuated, and assistance shall be offered to the fire department. 3.2 Repair and maintenance of firefighting facilities and equipment 1) Automatic fire alarm system (1) Patrol inspection shall be conducted once per day on fire alarm controllers interlock control equipment to check the functioning of equipment and toensure uninterrupted around-clock normal operation. The alarm function of alarm controllers and interlock control equipment, as well as the interlockcontrol, display, and printing functions, shall be checked and tested once per month. Interiors of machine cabinets shall be dedusted once per year. (2) Fire alarm controllers, manual alarm buttons, and alarm devices shall be randomly selected for testing once per month. After having been in use for 2years, the alarm and warning functions of manual alarm buttons and alarm devices shall be cleaned by specialized cleaning companies once every three years. (3) Standby power supply The master power supply and standby power supply shall be tested and switched between each other once per month. The standby power supply and storagebatteries shall be put to one charge-discharge test every quarter. 64  2) Fire control broadcast system The interlock and forced switchover functions of fire emergency telephones, intercom phones in important locations, intercom telephone hosts, broadcastequipment, megaphones, and loudspeakers shall be checked and tested once per month, and their volume shall be tested as well; the interiors of machinesshall be removed of dust once per year and the equipment inside cabinets shall be removed of dust once per year. 3) Smoke control and exhaust system Irrigation shall be well planned. The irrigating water shall completely and evenly permeate the soil to prevent conspicuous drought and flood; Generally,plants must be watered 4 months before germination, 5 months before germination, in autumn, and before winter, respectively. For cool-season lawns, ahigher frequency of irrigation may be adopted according to the growth and soil conditions. 2) Fertilization Fertilizers shall be administered according to plant growth. Arboreal trees shall be fertilized once or twice every two years; shrubs shall be fertilized once ortwice per year; Ground cover and lawn plants shall be fertilized twice or thrice per year. Additional fertilization may be used for bedding plants according totheir growth. Dependence on chemical fertilizers shall be minimized. 3) Pest and plant disease control Based on the pattern of plant pests and diseases, plants shall be inspected at least three times per month during the growing season and pests and diseasesshall be controlled in accordance with the inspection results, so that leaves do not fall prematurely and plants do not die because of pest or disease. 4) Trimming Arboreal trees shall be trimmed once every winter. Shrubs shall be trimmed once during the growing season and in the winter, respectively. The green hedgesand color lumps shall be trimmed once before the Labor Day, before the National Day, and in the winter, respectively. Cool-season lawns shall be trimmed atleast once or twice per month, depending on the growth, during the growing season and at least 12 times per year. 5) Weeding Full weeding shall be carried out three times per year. The weeding frequency shall be elevated for important green belts. Green belts with weeds shall notexceed 10% of the total green belt area. Seasonal weeds shall be effectively controlled. 6) Garbage disposal Waste created during greening work and garbage in the green belts shall be cleared three times per week. 4.3 Inspection of work 1) Greening work shall be checked three times per month during the growing season. 2) Landscape maintenance measures and work plans shall be developed for each quarter. 3) Greening files shall be present. 5. Environmental hygiene 5.1 Collection and removal of household garbage 1) Sorted collection shall be implemented for household garbage. 2) Hermetic garbage collection vessels with sort signs shall be provided. 65  3) Garbage collection vessels shall be cleaned at least once every two weeks. Pesticides shall be sprayed daily during the breeding season of flies andmosquitos. 4) Garbage shall be moved to designated garbage disposal sites once per day and shall not be dumped randomly. 5) Garbage trucks shall be clean and tidy in appearance. 5.2 Cleaning of commonly-shared sections of property 1) Inside buildings (1) Lobby and elevator hall on 1st floor The ground of the lobby and the elevator hall on the 1st floor shall be swept and mopped once per day. The mailboxes and glass surfaces in the lobby shall bewiped once per week. The wall surfaces in the lobby and in the elevator hall shall be wiped once per month. Patrol inspection and cleaning shall be done forthe lobby and the elevator hall on the 1st floor once per day. (2) Corridors and stairs Grounds of corridors and stairs shall be swept once per week and mopped once every two weeks. Shared facilities, such as handrails, windowsills, fire doors,fire hydrants, and signs of the stairs, shall be wiped once every two weeks. Light fixtures in the building shall be dedusted once per quarter. Patrol inspectionand cleaning shall be done for the corridors and stairs on a daily basis. 2) Elevator compartment The doors and panels of the elevator compartment shall be wiped once per day. The ground of the elevator compartment shall be mopped once per day.Elevator compartments decorated with stainless steel or other materials shall be maintained once per month. Elevator compartments decorated with stonematerials shall be maintained once per quarter. Patrol inspection and cleaning shall be done twice per day for the elevator compartment. 3) Terrace and roof: The terrace and roof shall be swept once per quarter; during the rain season, the terrace and the roof shall be swept once every 2 months.Patrol inspection shall be conducted once per month on the terrace and internal courtyard and any sundries shall be promptly removed. 4) Outdoor roads and facilities Sweeping shall be done once per day and patrol inspection and cleaning shall be done twice per day for the outdoor roads. The outdoor public lighting andshared facilities shall be cleaned once per month. Rain hoods and door awnings shall be cleaned once per quarter. 5) Waterscape Sterilization and purification shall be carried out according to the water quality. During operation, the water surface shall be cleaned twice per week and thebottom of the pond shall be cleaned twice per year. 6) Pest control and prevention Assistance shall be offered to competent authorities in pest control and prevention. Prior notices shall be given of pesticides to be administered. Easilyvisible signs shall be set up where pesticides have been administered. 7) Cleaning in rainy and snowy weathers After a rain, water in the main roads and trunk roads of the community shall be swept away. In snowy weathers, ground snow shall be promptly swept awayand ground ice shoveled. If it snows at night, the ice and snow on main roads shall be removed before 10:00 AM next morning. 66  5.3 Inspection and logging of work 1) Quality of cleaning shall be checked once per day and proper records shall be kept. 2) Quality of cleaning shall be fully checked once per quarter and proper records shall be kept. 3) Complete cleaning files shall be kept 6. Maintenance of public order 6.1 Main entrances and exits shall be guarded by specially assigned watch-keepers around the clock. 6.2 Patrol inspection routes shall be set. Patrol inspection shall be properly carried out and recorded, twice between 6:00 and 22:00 and once between 22:306:00. 6.3 Patrol inspection shall be conducted on parking lots and order shall be properly maintained for the use of roads and sites. 6.4 Motor vehicles must have proper permits when entering or exiting the property. 6.5 Security control rooms shall be manned by specially assigned watch-keepers around the clock; Surveillance videos and alarm records shall be retained for30 days in case of the need to investigate. Management rules and emergency plans shall be posted in conspicuous positions. 6.6 Illegal conducts shall be immediately reported to the police and assistance shall be offered to competent authorities in processing illegal conducts. 6.7 Two special emergency plan drills shall be conducted every year and proper records shall be kept. 6.8 Duty personnel shall stand by around the clock. 6.9 Records and files 1) Complete and valid records shall be kept of all items of work. 2) Complete files shall be kept. 7. Decoration and fitting management 7.1 Decoration and fitting management service rules shall be established. 7.2 Decoration and fitting management files shall be created. 7.3 Declaration and registration of proprietors or house users for decoration and fitting shall be proper handled. Interior decoration and fitting managementservice agreements shall be signed with proprietors or house users, who shall be informed of the forbidden behavior and precautions in the decoration andfitting work. 7.4 During decoration and fitting, patrol inspection shall be conducted for the site once per day. If it is discovered that the proprietor or the house user fails todeclare and register the decoration and fitting project or violate the law or any relevant regulation, such behavior shall be immediately dissuaded. If theproprietor or the house user refuses to correct such behavior, the violation shall be reported to competent authorities, the proprietor, and the proprietorscommittee and shall be made public within the range of the property management. 7.5 Inspection shall be carried out after decoration and fitting is completed. Any interested party that violates the interior decoration and fitting managementservice agreement shall be treated as agreed. 67  7.6 If the removal of decoration waste is commissioned to a third party, the waste shall be temporarily piled in designated locations and retention andcovering measures shall be taken. Such waste shall be removed within 2 days. If the decoration waste is to be removed by the constructor, the waste shall betransported out of the property in bags or in hermetic vessels within 2 days. 68  Property Service Contract of Beijing Jingkai One Center Project Annex 6: List of Hand-over Materials 1. Site plan of the completion; as-built drawings of individual buildings, structures, and equipment; as-built drawings of supporting facilities andunderground pipes; and layout drawings of pipelines for buildings. 2. Technical data on the installation, use, and maintenance of facilities and equipment 3. Quality warranty documents and user's instruction documents of the property (Building Quality Warranty and Building User's Manual) 4. Materials of acceptance inspection by related professional agencies 5. List of property rights of the house and supporting facilities (including proprietor's name, construction area, and contact information) 6. Pressure test reports for water supply and heat supply systems 7. Report on measured area 8. Other materials required for property service 69  Beijing Jingkai·One Center Project Temporary Management Convention Project Owner: Beijing Jingkai-Gongda Investment Management Co., Ltd. (MM)/(DD)/(YY) 70  Table of contents Part 1General provisions72Part 2Overview of property72Part 3Use, maintenance and management of exclusive areas of property73Part 4Use, maintenance and management of shared areas of property76Part 5Decoration and furnishing78Part 6Preliminary property service79Part 7Inspection and handover of project items80Part 8Property service fee81Part 9Other matters83Part 10Supplementary provisions83Letter of Commitment for Temporary Management Convention85 71  Part 1 General provisions To carry out the after-sales property management of Beijing Jingkai · One Center Project (this “Property”), safeguard legitimate rights and interests of allproprietors and house users, and to preserve public environment and order in the shared areas of the property, the project owner, prior to sales of the property,develops this temporary management convention (this “Convention”) with respect to use, maintenance and management of the property, common interestsand obligations of proprietors, and liability for violation of this convention in accordance with the Regulations of Beijing Municipality for RealtyManagement (Decree of the People’s Government of Beijing Municipality No. 219) and the relevant laws, regulations and policies. The Owner shall present and explain this convention to the Buyer prior to sales of the property. This convention shall be attached to the Beijing CommodityHousing Presale Contract or the Contract for Sale of Finished Commodity Housing in Beijing to be made by and between the first Buyer of the property andthe Owner (the “Housing Purchase Contract”) as an annex thereto. By written undertaking in connection with this convention, the first Buyer acknowledgesthis convention, and effects of this convention shall be extended to subsequent Buyers of the property. This convention shall be binding upon the Owner, proprietors and the house users. The proprietor shall warrant that the co-occupier and the relevant personto use this property in compliance with this convention and the relevant regulations. Agreements involving common interests of proprietors contained in the Preliminary Property Service Contract by and between the project owner and theproperty service enterprise shall be consistent with those of this convention. Part 2 Overview of property I. Overview of properties within the property area: Name of property: Beijing Jingkai · One Center Location: Lot D1F1, Eastern Zone, Beijing Economic-Technological Development Area Road Type of property: office and commercial properties Floor area: 83,832.86m2 (measured area prevails) Scope of the property East to: 3rd Jinghai Road South to: 13th Kechuang Street West to: 1st Jinghai Road North to: Qujian Road D1# Details concerning properties situated within area of this property are found in the Preliminary Property Service Contract. II. Rooms for property service within area of this property are located on the aboveground 1F and underground 1F of A2, with floor area: aboveground100m2, and underground 50m2. 72  III. Overview of property service enterprise: Name of enterprise: Beijing Jingkai Investment Development Co., Ltd. Legal representative: Guo Guangqing Business license number: 110000001699163 Qualification class and qualification certificate number: No.0075 JWQZS [2014] Registered office: Building 1, Zone A, Beijing Gongda Software Park, No. 1 Disheng North Street, Beijing Economic-Technological Development Area,Beijing, 100176, China Contact phone: 010-67873388 Part 3 Use, maintenance and management of exclusive areas of property IV. A proprietor is entitled to occupation, use, income and disposal of the exclusive area of the property, and shall also comply with the relevant laws andregulations of the country and Beijing municipality without endangering safety of the building or infringing upon legitimate rights and interests of any otherperson. The proprietor and the house user shall comply with regulations on supply of power, water, heating, and of gas, drainage, accessibility, ventilation,lighting, decoration & outfitting, surrounding sanitation and environmental protection, and properly deal with his or her relationship with proprietors ofneighboring houses in the principles of facilitation of use, safety and neatness of the property, fairness and rationality without jeopardizing public interestsand interests of any other person. V. A proprietor shall, upon expiration of the warranty period of the property, solely take charge of maintenance and repair of the exclusive area of his or herproperty. Such proprietor shall be liable for any loss of any other proprietor incurred due to delay in repair or maintenance or failure to take actions toeliminate potential safety risk. VI. A proprietor and a house user shall use the property for the planned purpose set forth in the house purchase contract, and annex and supplementaryagreement thereto, and where the planned purpose of the property has to be changed, such proprietor and house user shall complete the relevant procedures inaccordance with the laws subject to approval by the relevant competent governmental authority with written consent of the interested proprietor, projectowner and the property service enterprise, and shall notify the property service enterprise, property right holder and proprietors committee of such change.Nature of use of the shared sections and facilities that are developed within the property management area according to the planning shall not be changed. VII. A proprietor and a house user shall promptly deal with any potential safety risk that is revealed during use of water, electricity, gas, heating, cooling andventilation facilities and equipment in accordance with the relevant regulations and report such risk to the property service enterprise and authorityconcerned; coordinate with the relevant authority to take actions to avoid danger when emergency event occurs; comply with and ensure their employees,visitors, customers, agents and contractors to comply with regulations concerning fire protection safety and safety rules developed by property the propertyservice enterprise, and shall make sufficient fire extinguishers available within his or her unit. 73  VIII. For outdoor and indoor equipment, facilities, and garden greening and sites of a proprietor,, which are either situated within the exclusive area or areused by such proprietor independently, such proprietor shall entrust the qualified professional enterprise with regular inspection, repair and maintenance ofitems including (but not limited to) lifting equipment, pressure vessel equipment, pressure gauge, fire-fighting facility and equipment, greening supportfacility and equipment, and central air-conditioning equipment, obtain the permit for safe operation from the competent governmental authority, and shall beliable for any and all expenses incurred in connection therewith pursuant to the relevant regulations of the country and Beijing municipality. VX. Neither a proprietor nor a house user shall modify structure, appearance and use of the house without authorization; engage in catering and other tradesresulting in excessive noises to residents and environmental pollution in the ground floor store of the residential property; open or block exterior door andwindow or change their sizes and styles without authorization; change material and color of finish of outer wall; erect or develop any building and structureon the roof, building body, and accessory platform and within any other commonly shared sections; and change the pipe without authorization. X. In the event that the property service enterprise has to access the exclusive area for repair, maintenance, renewal and renovation of the shared areas of theproperty, it shall give a prior notice to the relevant proprietor and house user, and proprietor and house user of the relevant exclusive area shall coordinatewith such enterprise. If a proprietor or house user hinders or provide negative coordination in connection with such repair, maintenance, renewal andrenovation, resulting in damage to or any other loss of the property, such proprietor or house user shall be liable for aggravation of the loss incurred from suchhindering or negative coordination. If the proprietor refuses or fails to repair after receipt of notice, the property service enterprise is entitled either to perform on its own or to cause any thirdparty to perform such repair , in which case the proprietor shall be liable for any and all consequential losses and expenses, and it shall also pay the propertyservice enterprise the fines equal to 2‱ of total property purchase price on daily basis for the period commencing from the date on which the propertyservice enterprise gives oral or written warning and ending on the date on which such repair is completed. Such fines shall be fully paid one time on the dateof remedy of the breach, and shall be allocated to the public fund of the community. If the proprietor refuses to accept liability for repair or loss, or fails to pay the fines on due date, hindering normal operation of the property or resulting indamage to the property or loss of any other proprietor, such other proprietor and the property service enterprise have the right to entrust professional lawyerwith safeguarding their rights, and such proprietor shall bear any and all consequential costs and expenses (including but not limited to attorney's fee). In the event that the property service enterprise, as a result of an emergency that endangers public interests and legitimate rights or interests of any otherproprietor, has to access the exclusive area of a property for maintenance or repair, the property service enterprise shall notify the relevant proprietor or houseuser of such property in advance, and if it is indeed impossible to notify such proprietor or house user, the property service enterprise is allowed to performsuch repair or maintenance under supervision of the public security authority, government of the relevant jurisdiction, and other non-interested proprietor,provided that the enterprise shall notify the relevant proprietor or house user thereafter and shall well settle the problems arising thereafter. 74  XI. In the event that a proprietor or house user has to temporarily occupy or dig road or site due to repair or maintenance of property or due to public interest,such proprietor or house user shall complete the relevant formalities in accordance with the relevant laws and regulations, issue public announcement inadvance, obtain written consent from the property service enterprise hired by the project owner, and shall reinstate such road or site within the agreed period.Such proprietor or house user shall be liable for any consequential loss of the property service enterprise, any other proprietor or house user, and any thirdparty. XII. If a property poses safety threat or endangers public interests or legitimate rights or interests of any other proprietor, the relevant responsible person suchas proprietor or house user of such property shall immediately take actions to eliminate such threat. 1. Neither a proprietor nor a house user shall raise any animal and pet within the area of property in the office park. 2. Where a proprietor or house user engages in such activities as production, processing, office and R&D in buildings in the park, such proprietor or houseuser shall execute the relevant national standards, develop the relevant management, production and safety measures, as well as prevention measures, andshall arrange and use park facilities and energy facilities in a reasonable manner. 3. To transport goods into or out of the park, the organization shall comply with the relevant property management rules, and the proprietor or house usershall go through the relevant formalities with the property service enterprise. Any large transportation vehicle with capacity more than 30t (including 30t) isprohibited from accessing into the park, and in case of transportation in such large vehicle, the proprietor or the house user shall arrange lighter on its own. XIII. Where a proprietor leases out, transfers or otherwise dispose of his or her exclusive area, such proprietor shall notify the project owner and the propertyservice enterprise in writing in advance, notify the tenant and the buyer of this convention in compliance with the regulations for leasing and transfer ofhouse, and shall notify the project owner and property service enterprise of the lease and transfer (i.e., attach this convention to the relevant contract ordocument as annex thereto, notify the project owner and the property service enterprise of disposal of the realty in writing within three days as of the date ofexecution of such relevant contract and document, and submit the letter of commitment for the right successor signing this convention to the property serviceenterprise), otherwise the proprietor shall be severally and jointly liable for loss and overdue fee incurred due to violation of the property management systemand this convention on part of the tenant and the transferee. 75  Part 4 Use, maintenance and management of shared areas of property XIV. A proprietor shall be entitled to rights and assume obligations in connection with shared area of the property, and shall not refuse to fulfill obligationsby reason of waiver of any right. When using shared area of the property, a proprietor or house user shall comply with regulations and rules developed by theproject owner for use of shared area of property, and maintenance of public order, environment and sanitation in accordance with the Preliminary PropertyService Contract. In case of damage to the shared area of property as a result of improper use on part of the user, the responsible person shall assume the legalliabilities such as reinstatement and compensation for loss. XV. A proprietor or house user shall reasonably use the shared facility and equipment, consciously maintain the property neat and good-looking, and complywith regulations of the governmental for appearance and environment of the municipality. A proprietor or house user shall not erect any facility, building orstructure, permanent or temporary, within the public area; not damage pipe well or cable above or ground the greening area, not shade or enclose the well lid,and not disturb necessary infrastructure within the greening area, installation and normal operation of the equipment. XVI. When driving and parking a vehicle within the property management area (including motor vehicle and non-motor vehicle), a proprietor or house usershall comply with the rules for driving and parking within the property management area without parking the vehicle on the shared road, public greeningarea and other public sites and without occupying fire-fighting passageway or outdoor hydrant and equipment pipe well. A property service staff has the right to instruct any person who violates the parking management rules to rectify such violation immediately, and such personshall be liable for any and all consequential losses. Any person shall otherwise sign the agreement for use and management of parking space with the propertyservice enterprise and pay the relevant parking space management fee no matter how such person obtains the right of use of the parking space. XVII. A proprietor or house user shall operate and use the lift in compliance with the relevant regulations of competent governmental authority. XVIII. To erect company nameplates and sign boards (including but not limited to emblem) that are erected within public area, the proprietors or house usersshall not install any such nameplate or sign board on their own but shall contact the property service enterprise for centralized fabrication and installation atthe relevant expenses of such proprietors or house users. The project owner will provide spaces for hanging corporate guidance emblem at the entrance lobbyon the ground floor, provided that the proprietor or house user shall notify the property service enterprise of the emblem details 7 days ahead of mobilization. XIX. A proprietor or house user shall reasonably use water, electricity, gas, heating, cooling, ventilation, fire protection and security facilities and equipmentwithout any unauthorized removal or modification in accordance with the relevant regulations, and shall be liable for any and all consequences and losses ofpublic area, shared equipment, and neighboring proprietor or house user as a result of unauthorized removal or modification. The property service enterprisehas the right to claim repair, recovery or compensation against a proprietor or house user in connection with any loss caused by such proprietor or house user,and to report such loss to the competent governmental authority and the competent industry authority. If any equipment or facility that is so removed ormodified remains within its warranty period, then warranty obligation of the relevant warranty provide shall be terminated. 76  XX. Garbage of each building shall be classified according to the Regulations of Beijing Municipality for Administration of Domestic Garbage (Bulletin No.20 issued by the Standing Committee of the 3rd Municipal People's Congress of Beijing), and shall be stored in area specified by the property serviceenterprise, which in turn shall arrange to clear such garbage. XXI. The following acts shall be prohibited within the property management area: 1. unauthorized removal or modification of load bearing structure and main structure of the house, unauthorized change of appearance of the house,unauthorized occupation of or damage to shared area of property, shared facility and equipment and the relevant site, and unauthorized relocation of sharedfacility and equipment of property; 2. damage to or scratch of any public items of the property such as glass curtain wall, wall of passageway/corridor and glass/column, in which case therelevant responsible person shall be liable for costs in connection with repair. 3. drilling on the glass curtain wall or sticking any type of facility, object or advertisement board on the indoor or outdoor surfaces of the curtain wall. Anydevice shall not touch any structural member of the curtain wall, Correctly use and specially protect external door and window, and do not support theexternal window with a hard object. Promptly close and lock external door and window when all persons leave the property. 4. non-compliance of building load capacity of the property by installing (placing) any furniture, equipment, mechanical device and other articles exceedingthe roof load capacity onto any part of the roof. 5. unauthorized placement of articles, unauthorized erection of any building, structure, bracket, canopy, advertisement board, signboard, umbrella and anyother article not approved by all other proprietors or house users onto the common terrace or roof platform. 6. stacking of flammable, explosive, hypertoxic, or radioactive substance, and emission of harmful substances such as air pollutant, water pollutant, noise,light, and electromagnetic wave. 7. blockage or obstacle of any public item or public site, or placement or disposal of any garbage or article in public item or public site or out of the window. 8. unauthorized hanging, posting, alteration, scratching, erection of flag, distribution of brochure, or installation of neon light in public item or the relevantsite. 9. encroachment of or damage to public greening area (including but not limited to cutting and digging), road, flowers, trees, artistic landscape, and facilitiesand equipment for culture, recreation, sports and leisure. 10. parking on public road, or washing or repair of vehicles on public road. 11. installation of satellite receiver or any other high-power receiving device that shall be subject to approval by the governmental approval, withoutapproval by the governmental approval. 12. engaging in activities endangering public interests and infringing legitimate rights and interests of any other person using the property. 13. demanding the property service enterprise for services irrelevant to the property management. 77  14. any other act prohibited by laws, regulations and this convention. XXII. Any proprietor shall pay the specific repair fund as prescribed, and shall pay the property service fee in accordance with the Preliminary PropertyService Contract. If a proprietor sells, transfers, mortgages or contributes his or her property, the repair fund he or she pays for the public item and sharedfacility and equipment shall remain the funds for repair and renewal of the public item and shared facility and equipment of the property. XXIII. The order preservation staff has the right to inquire about a strange visitor and register such visit in order to preserve safety and order within theproperty management area, and a proprietor or house user shall cause the visitor to coordinate with such staff. In case of fire, theft, personal injury or death and any other safety accident, the proprietor, house user, property service enterprise, and the project owner shallreport to the public security authority. The property service enterprise and the project owner shall coordinate with such authority to conduct investigationsand evidence gathering. The supervision video shall be kept in compliance with the relevant regulations. XXIV. Where a proprietor or house user violates this convention, the property service enterprise has the right to urge such proprietor or house user to rectifysuch violation by advice, warning, prevention or any other measure permitted by laws, and such proprietor shall remedy such violation until he or shebecomes compliant with this convention as required by the property service enterprise within the prescribed time limit at his or her remedy costs. If theproprietor fails to remedy his or her violation of this convention even through coordination, the property service enterprise is entitled to directly initiate civillitigation to the people's court, and if the proprietor violates the relevant regulations and policies, the property service enterprise is entitled to complainabout and report such violation to the competent authority concerned. Part 5 Decoration and furnishing XXV. In order to maintain quality of the property, the proprietor and house user undertake that the decoration recipient and decoration & furnishingenterprise engaged by such recipient, as well as the project owner shall comply with the Guidance for Decoration for the property area to perform decoration.The proprietor or house user and the decoration recipient shall declare the decoration to and register the decoration with the property service enterprise priorto decoration, and sign the Housing Decoration Management Service Agreement with the property service enterprise, defining the relevant rights andobligations, components of service and liability for breach of agreement. The proprietor or house user shall conduct decoration & furnishing in accordancewith the housing decoration management service agreement, and observe the precautions for decoration & furnishing, and shall not perform any decorationprohibition. The proprietor shall place the decoration & furnishing materials and waste resulted from decoration in the designated area without unauthorizedoccupation of the public items and public site of the property. The proprietor or house user shall pay fees in connection with decoration management(including but not limited to decoration management fee, decoration garbage disposal fee and decoration deposit). 78  During decoration & furnishing construction within the property management area, decoration work generating noises is prohibited in the building from 8:30a.m. to 18:00 p.m. in working days, and actions shall be taken for decoration work to be performed in other times in order to mitigate interference withsurroundings. The proprietor or house user shall post an announcement in the building, indicating the date and time of decoration & furnishing to beperformed. XXVI. Where decoration & furnishing of house influences normal operation of public item and shared facilities and equipment, and infringes upon legitimaterights and interests of neighboring proprietor or house user, the proprietor or house user of the property under decoration shall promptly reinstate normaloperation and legitimate rights and interests, and shall assume the relevant compensation liability. The proprietor or house user shall coordinate with theproperty service enterprise to bind and manage the decoration & furnishing enterprise. The proprietor or house user shall promptly reinstate normal operationof the public items and shared facilities and equipment that is influenced by decoration of the house, and shall repair the public area if consequentiallydamaged and shall be liable for any consequential loss of any other proprietor or house user. XXVII. During decoration of house, the proprietor and house user shall take finished product protection measures for the relevant public area, and shallneither remove or modify the load-bearing wall and pipes nor damage waterproofing course. The property service enterprise has the right to supervise andinspect decoration activities of the proprietor and the house user. If any decoration work shall be subject to approval and acceptance by the governmental authority concerned pursuant to the relevant regulations, theproprietor and house user shall complete such approval and acceptance in accordance with such regulations, and shall file such decoration work with theproperty service enterprise. If modification of fire-fighting system is involved in the decoration, the proprietor or house user shall submit such modification tothe fire protection authority for approval and acceptance and file such modification with the property service enterprise. Any proprietor or house user shallnot move, relocate, close, replace, cancel or remove any fire-fighting equipment and facility without prior written consent of the property service enterprise,and shall not damage the fire-fighting facilities or result in wrong alarm of or damage to fire alarm system for human-made reason, otherwise such proprietoror house user shall be liable for any and all consequences incurred due to any act under the laws and regulations such as fire control law and the relevant firecontrol regulations, and shall also bear all repair costs, losses, and penalties imposed by the government. Part 6 Preliminary property service XXVIII. The project owner and property service enterprise shall take charge of preliminary property service for the property management area. Regardingexact property services, service standard and property service fee, the Preliminary Property Service Contract shall apply. Any proprietor shall fully pay thepayable fees under the property purchase contract or the Preliminary Property Service Contract . 79  XXIX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the project owner with respect to propertymanagement activities: 1. to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greeningarea and environmental sanitation, and for other property service aspects. 2. to prevent the proprietor or house user from violating this convention and the regulations and rules by warning, advice, publicity and other necessaryactions. 3. to withhold property service fee payable by the proprietor and any other fee collected and handed over on behalf of the proprietor under the laws,regulations and the Preliminary Property Service Contract. 4. to pay property service fee for unsold houses commencing from the due date of the property service fee. Where the property service fee for any unsoldhouse paid by the project owner includes the property service fee that become payable after such house is sold, the project owner has the right to, followingsuch sales, withdraw the balance of the said property service fee it pays without written confirmation by the proprietor. 5. to fully withdraw the balance of the preliminary property service fee the project owner pays as the preliminary property service provider without writtenconfirmation by the proprietor, provided that the audited preliminary property service fee assumed by the project owner exceeds the actual fee incurred forthe preliminary property service period, in which case the excess property service fee shall be the property of the project owner. XXX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the property service enterprise with respect to propertymanagement activities: 1. to cooperate with the project owner to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservationof public order, public greening area and environmental sanitation, and for other property service aspects, in accordance with this convention. 2. it is lawful for property service staff to damage exclusive area of any proprietor without any liability, provided that such damage is indeed necessary forurgent danger prevention. 3. property service staff can open channel or door to any part of the property from time to time for any national administrative authority, law enforcementauthority, or judicial authority if any such authority has to access the park in order to perform its duties, in which case the proprietor shall understand andcooperate with such authority. 4. there is no any personal, property custody or insurance relationship within this property with the proprietor and house user. 5. the property service enterprise may be relieved from liability for inconvenience brought to the proprietor or house user as a result of necessary maintenanceor repair of the public item or shared facilities and equipment. Part 7 Inspection and handover of project items XXXI. In the event that all proprietors decide to terminate the preliminary property service contract and that they determine the property management mode,the project owner shall verify the shared areas of the property with the proprietors and handover the shared areas to the proprietors in the manner as prescribedin the regulations of Beijing for handover of property items. 80  XXXII. Where inspections demonstrate that the shared areas of the property comply with the relevant standards, or after inspection and handover arecompleted under the property purchase contract (including deemed completion of inspection and handover), the project owner shall fully fulfill obligationsand responsibilities in connection with the shared areas in addition to the warranty liability, which shall be performed on the basis of the warranty period andwarranty scope as provided in the national regulations and the property purchase contract. XXXIII. The proprietors meeting shall, within 30 days after it is established and after the property management mode is determined, carry out post-inspectionand handover of shared areas of the property with the project owner. The preliminary property service contract shall be terminated on the date on which theinspection and handover of shared areas of property are accomplished. In the event that the handover is not accomplished within the said 30 days for anyreason not attributable to the project owner, the date on which the said 30-day period expires shall be deemed as the completion date of property handover. XXXIV. If the proprietors meeting continues choosing the property service enterprise appointed by the project owner (including deemed de factomanagement), the project owner is not required to complete such formalities as handover and inspection with the property service enterprise given that theproject owner has inspected the property and shared areas with and handed over the relevant documentations to the property service enterprise in accordancewith the Measures for Property Undertaking and Inspection (J. F. [2010] No. 165), and Measures of Beijing Municipality for Realty Management (Decree ofthe People's Government of Beijing No. 219) when the project owner appointed the property service enterprise, and that the property service enterprise hasbeen managing and maintaining the shared areas, and the date on which the proprietors meeting makes decision shall be deemed as the completion date ofhandover and inspection, commencing from which the Buyer shall pay the property service fee. XXXV. If any dispute arises out of inspection of the shared areas between the proprietor and the property service enterprise, and if authoritative organizationdetermines that the shared areas satisfy the relevant criteria, the handover shall be deemed to be completed at time of inspection, and the proprietor shall paythe due but not paid property service fee if any. XXXVI. The shared areas of property shall be inspected and handed over as long as they materially comply with the handover conditions, and any repairabledefect in the shared area shall not influence receipt of the property, provided that the project owner shall be responsible for repair of such defect. Part 8 Property service fee XXXVII. Any proprietor or house user shall pay the project owner or property service enterprise the property service fee promptly in accordance with thePreliminary Property Service Contract, and if a proprietor entrusts the property service enterprise with providing specially engaged service other than thoseset forth therein, such proprietor and the property service enterprise shall otherwise agree upon fees for such specially engaged service. 81  1. Property service rate: Office Building (sold as a whole): 5.50yuan/month• m' Office Building (partially sold ): 6.50yuan/month• m' Commercial property: 5.50yuan/month• m' 2. Payment period of property service fee: the project owner or the property service enterprise shall pre-collect the property service fee on annual basis. Aproprietor shall pay the property service fee for the first year when he or she moves in the property. 3. Subsequent payment of property service fee: the property service enterprise will remind the proprietor of paying the property service fee for the next yearthirty days prior to expiration of the period related to the property service fee that has been paid by the proprietor. The proprietor shall, prior to expiration ofthe period related to the paid property service fee, pay the next tranche of property service fee to the project owner or the property service enterprise in cash orby cheque or T/T, and accordingly the payee shall issue the formal invoice. 4. Commencement date of property service fee: the commencement date of property service fee shall be the date from which the formal move-in procedurescan be performed as indicated on the move-in notice or similar instrument issued by the developer. In the event that a proprietor fails to complete the move-inprocedures promptly for his or her own reason, such proprietor shall still pay the property service fee accrued from the said date. 5. If a proprietor fails to pay the due and payable property service fee, such proprietor shall pay the project owner or the property service enterprise theliquidated damages equal to 3% of the payable property service fee per day. Where a proprietor fails to pay the property service fee for more than 6 monthsafter the due date, the project owner or the property service enterprise has the right to publish the overdue payment at obvious positions in the propertymanagement area, and where a proprietor owes the due property service fee for more than 12 months, the project owner or the property service enterprise hasthe right to initiate an action against such proprietor. 6. In case of forced change in labor cost as a result of adjustment in unit price of energy fee which is approved by the government or change in the nationallaws, regulations and policies, the property service rate shall be adjusted following the relevant procedures stipulated by the government. XXXVIII. Where the proprietor and the house user agree that the property service fee shall be paid by the house user, such agreement shall prevail, in whichcase the proprietor shall be severally and jointly liable for payment of the property service fee. The proprietor shall immediately notify the property serviceenterprise in writing of any payment agreement reached by and between the proprietor and the house user. XXXIX. All proprietors within the property area shall pay, use and manage the specific repair fund as prescribed, and if balance of the fund is less than 30% ofthe initial collection amount, the proprietors shall contribute to the specific repair fund as prescribed. XXXX. Where the project owner or the property service enterprise undertakes entrustment with collection and handover for competent governmental orindustry authorities, the proprietor shall pay the project owner or property service enterprise the payable fees such as those for water, electricity and gas thatare covered by such collection and handover. 82  Part 9 Other matters XXXXI. When completing the move-in formalities, a proprietor or house user shall fully complete various forms, and shall provide the property serviceenterprise with the minimum 2 lawful and valid contact phone numbers so that the property service enterprise could contact the proprietor or house user incase of emergency. The proprietor or house user shall promptly notify the property service enterprise in writing of any change in such phone numbers,otherwise the proprietor or house user shall solely assume any liability and loss incurred in connection with consequential failure of the property serviceenterprise to contact the proprietor or house user. XXXXII. A proprietor shall be liable for losses of any other person due to negligence and improper conduct of employee, temporary visitor, contractor, tenant,and agent of such proprietor and any other house user. XXXXIII. A bulletin board shall be erected within the property area, and the relevant management information the project owner and the property serviceenterprise announce on such board, and notice or announcement the project owner and the property service enterprise issue to the proprietor shall be deemedto be delivered to all proprietors on the third day as of the date of publicity. Part 10 Supplementary provisions XXXIV. In the event that a proprietor, house user, project owner or property service enterprise violates the laws, regulations and this convention, disturbingnormal operation of the property or resulting in personal injury or loss of property of the right holder, the infringed party is entitled to initiate a legal actionto local people's court with jurisdiction. XXXXV. For the purpose of this convention, the public item and shared facilities and equipment of the property shall mean house, space, site and the relevantfacilities and equipment owned or used by several or all proprietors other than the exclusive area of individual proprietor. XXXXVI. For the purpose of this convention, the house user shall mean family and employee of a proprietor, tenant and its employee, co-user, temporaryuser, borrower, visitor, and authorized caretaker of the house, and any other person whom is authorized by the proprietor to use such house. XXXXVII. This convention shall be binding upon proprietors and house users within the property management area only. In case of transfer of this property,effects of this convention shall be extended to the property transferee. Where the house user violates this convention, the proprietor shall be jointly andseverally liable for such violation. XXXXVIII. The project owner shall be entitled to proprietor's rights of and undertake proprietor's obligations in connection with unsold portions and sold butnot delivered portions within the property management area. 83  XXXXIX. The proprietor, project owner and property service enterprise shall hold each copy of this convention. XXXXX. This convention shall be attached to the Beijing Commodity Housing Presale Contract as an annex thereto, and shall come into force as of the dateon which the first Buyer of this property signs the commitment (letter of commitment provided in the annex) and expire on the effective date of themanagement convention developed by the proprietors meeting. XXXXXI. If there is any conflict between provisions hereof and the relevant laws and regulations, such provisions shall be null and void without influencingeffects of the remaining provisions hereof. XXXXXII. The person developing this convention shall be bound to interpret this convention. This convention shall not be amended in any way unless theproprietors meeting is established, and the proprietors meeting shall re-consider and re-develop the proprietor management convention after the meeting isestablished. 84  Annex: Letter of Commitment Beijing Jingkai·One Center Project Letter of Commitment for Management Convention I / our company is the Buyer of Unit No. of Building B5 of Beijing Jingkai • One Center Project (hereinafter refers to as “this Property”). In order tosafeguard the common interests of all the proprietors in this property management area, I / our company agrees and represents as below: I.Acknowledges that “the Temporary Management Convention for Beijing Jingkai • One Center Project” (hereinafter refers to as “this Convention”)as stipulated by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been read thoroughly. II.Agrees to fulfill, comply with and cause the persons related to this Property fulfill and comply with the all the liabilities and obligations for theproprietors as well as the property users as specified in the Management Convention. III.I / our company agrees to assume the corresponding liabilities resulted from breach of this Convention and furthers agrees to assume any jointliability from any action of any user of this Property in breaching of this Convention. IV.I / our company agrees to acquire the Letter of Commitment for this Convention executed by successor of this Property at the time of assignment ofthis Property, and deliver the same to the Project Owner or the property service enterprise, and this Letter of Commitment shall remain in full forceand effect until receipt of the successor’s Letter of Commitment by the Project Owner or the property service enterprise. Promisee (Seal): /seal/ Tarena Technologies Inc. Date of Signature: May 5, 2016 85  Annex IX: Other Provisions Supplementary Agreement to Beijing Commodity Housing Presale Contract on Beijing Jingkai • One Center Project The Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd. The Buyer: Tarena Technologies Inc. Both the Seller and the Buyer agree to enter into and comply with this Supplementary Agreement (hereinafter referred to as “the SupplementaryAgreement”) so as to supplement the Beijing Commodity Housing Presale Contract (Contract No.: , hereinafter referred to as “the Presale Contract”)executed between both parties through friendly negotiation and based on voluntariness with respect to the outstanding issues related to the Presale Contract. Article 1 Definitions and Interpretations in the Presale Contract 1. “Delivery” as mentioned in the annexes to the Contract shall mean “delivery for use”, and only refer to transfer for occupation and risk transfer of thisCommodity Housing, excluding the contents of title transfer and registration of this Commodity Housing to be dealt with by the Buyer. 2. “The Seller shall ‘show’ the relevant documents to the Buyer” as mentioned in the Presale Contract shall mean “that the Seller shall keep the relevantdocuments at the marketing place or the handover & takeover place of this Commodity Housing and make the same available to the Buyer for consultationother than providing duplicates to the Buyer”; “the Buyer shall ‘show’ the relevant documents to the Seller” shall mean “the Buyer shall show expressly theduplicates of the relevant documents and the Seller shall have the right to consult the same”; “the Seller shall ‘provide’ the relevant documents to the Buyer”shall mean “the Seller shall deliver the data or documents to the Buyer in person or with the mode of service as agreed in this Supplementary Agreement”. 3. “The project quality codes, standards and working drawing design documents issued by the State and Beijing Municipality” as mentioned in thePresale Contract refers to “the mandatory project quality codes, standards and working drawing design documents of the State and Beijing Municipality ineffect at the time of design and construction”. “The orientation of this Commodity Housing” as given in Article 3 of the Presale Contract shall refer to “the orientations of some of the rooms of thisCommodity Housing”. 4. “Day” as mentioned in the Presale Contract shall refer to “calendar day”. 5. “The date of duly receipt” as mentioned in the Presale Contract shall refer to: (1) In case of delivery by mail, the 5th day after the date of delivery by mail shall be deemed as the date of duly receipt. (2) In case of delivery by courier, in person or taking delivery by the assigned person, the date of receipt as indicated on the receipt form shall bedeemed as the date of duly receipt; when no receipt form is made, the date given on the letter shall be deemed as the date of duly receipt. (3) In case of transmission by fax or email, the second day after the date indicated on the notice shall be deemed as the date of duly receipt. 86  Article 2 Supplementary Provisions for House Delivery 1. In case the Buyer asserts its right for sales return of the commodity housing to the Seller for reason that the commodity housing has serious qualitydefect(s) in accordance with the relevant provisions as given in the Presale Contract, the Buyer shall show the valid testing report as issued by a statutoryappraisal agency within 60 days (including the 60th day) after the date of handover of the commodity housing by the Seller. Any failure to show or beingunable to show within the said deadline shall be deemed as the commodity housing is acceptable in quality, and the Buyer has waived its right for assertingsales return, in this case, the Presale Contract shall continue to be fulfilled and Buyer shall not assert its right for sales return to the Seller according to theseprovisions. The Buyer shall assume the responsibility for not taking delivery of the commodity housing in time if it has rejected to take over this CommodityHousing. In case the Buyer asserts its right for sales return of the commodity housing to the Seller according to the provisions as given under Article 17 (2) of thePresale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60th day) after the dateof handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodityhousing is acceptable in indoor air quality. In this case, the Buyer shall assume the responsibility for not taking delivery of the commodity housing in time. Air quality measure shall be based on the initial state of the Commodity Housing at the time of delivery. The Seller shall assume no responsibility forany non-conformity with the standards of the state with respect to indoor air quality after the Buyer has made any decoration or transformation to theCommodity Housing. 2. Unless otherwise agreed between both parties, the Seller shall deliver this Commodity Housing to the Buyer at the time as specified in the PresaleContract. In case the delivery conditions for this Commodity Housing as specified in the Presale Contract have been satisfied ahead of the time as specified,the Seller can make delivery ahead of the time as specified, and the date of taking delivery shall be the date as indicated on the written document “Notice onTaking Delivery” issued by the Seller to notify the Buyer to handle the relevant formalities and take over the Commodity Housing. 3. For any Commodity Housing of which the acceptance and registration formalities upon project completion have been satisfied, if the CommodityHousing is defective identified at the time of taking delivery, the Buyer shall reject this Commodity Housing by virtue of the said defect. The Seller shallassume its obligations for warranty and maintenance, but not bear any liability for breach of contract due to late delivery. 4. After actual delivery of this Commodity Housing by the Buyer, any occupation and damage to this Commodity Housing by any other person, anddamage to the devices and equipment of the property shall be under the responsibility of the Buyer. 5. The Buyer shall pay up the taxes as specified in Article 16(5) of the Presale Contract before the formalities of taking over the keys. The Seller mayhave the right to refuse to handle the formalities of handing over the keys to the Buyer if the Buyer has not paid of the above taxes. 87  Article 3 Property Management Service Related to this Commodity Housing 1. The Buyer agrees that the Seller will select or replace a property management company to exercise property management by law before formalestablishment of the Proprietors Committees. After formal establishment of the Proprietors Committees, the Proprietors Committees shall have the right tofurther employ the existing property service enterprise or select another property management entity by law. 2. If the Buyer carries out decoration on this Commodity Housing by itself after the occupancy formalities, it shall comply with “the TemporaryManagement Convention for Beijing Jingkai • One Center Project”, and shall not make any damage to this Commodity Housing and bring any nuisance tothe proprietors in the vicinity. 3. The Buyer shall not use this property for other purposes other than those specified in the Presale Contract. Article 4 Special Provisions for Cancellation of the Presale Contract l. In case of occurrence of any circumstance in which the Buyer shall be entitled to terminate the contract due to the Seller’s default as specified in thePresale Contract, the Buyer shall issue a written notice for cancellation of the Presale Contract to the Seller within 60 days (including the 60th day) afteroccurrence of the said circumstance. The Buyer’s failure’s to do so shall be deemed as the Buyer has waived its right for cancellation of the contract andagreement to further fulfillment of the Presale Contract. 2. In case of occurrence of any circumstance which may lead to cancellation of the contract by either party as referred in the Presale Contract as well asthis Supplementary Agreement, the Buyer shall issue its written application for cancellation of the contract to the Seller, then, execute the Agreement onCancellation of the Commodity Housing Presale Contract within 5 days after delivery of the said application, and assist the Seller to complete all theformalities for cancellation of the presale contract for this Commodity Housing at the competent government authorities, otherwise, the Buyer shall payliquidated damages to the Seller at 2/10000 of the total price of this Commodity Housing to the Seller per each day’s delay in payment (excluding the delaycaused by the Seller). Article 5 Notification l. The Buyer shall provide its correct contact information in detail (including the address, telephone, fax and contact person, etc.) to the Buyer at thetime of concluding the Presale Contract, and issue its written notice to the Seller within 7 days after any change to the said address or any other contactinformation, otherwise, the original contact information provided by the Buyer shall further remain in effect, and the Seller shall assume no legal liability forthe Buyer’s not receiving any relevant notice from the Seller due to change to the Buyer’s contact information. 2. According to the Presale Contract and this Agreement, important documents such as any notice from one party to the other party shall be delivered tothe address as specified in the Presale Contract as well as this Agreement or otherwise given by the written notice from the other party. Article 6 Other Provisions l. The Seller’s sales advertisement and publicity presentation materials (including but not limited to postings, brochures, sand table, models andadvertisements, etc.) for this Commodity Housing shall not be deemed as a contractual offer, and the rights and obligations of both parties shall be based onthe provisions as specified in the Presale Contract as well as the corresponding supplementary agreements. The Seller shall not assume any liability for anymatter which has not been agreed between both parties in the Presale Contract (including but not limited to any oral promise, recommendation and publicitymade by the Seller as well as its staff). 88  2. If a fire sprinkler system is provided in the commodity housing purchased by the Buyer, when performing fine decoration on the commodity housingafter purchase, the Buyer shall comply with the requirements as specified in the relevant laws, regulations and codes of the state. 3. The Seller shall be responsible for warranty of this Commodity Housing according to Article 18 of the Presale Contract, Nevertheless, the Seller shallnot be responsible for any damage due to any force majeure event or modification out of artificial reasons or any defect upon expiry of the warranty periodwhich shall be under the Buyer’s responsibility. In addition, the Seller shall not take any warranty obligation for any change to the original state of thisCommodity Housing caused by decoration by the Buyer. 4. The Presale Contract (including the annexes as well as this Supplementary Agreement) shall constitute all the contents with respect to selling andpurchase of this Commodity Housing between the Buyer and the Seller and supersede all the previous agreements made between both parties and all theliteral and picture materials provided by the Seller immediately upon execution. This Supplementary Agreement and the Presale Contract shall have equallegal effect. This Supplementary Agreement shall prevail in case of any conflict between the provisions in this Supplementary Agreement and the PresaleContract. Article 7 Special Provisions 1. After purchase of this Commodity Housing, this Commodity Housing can be only used by the legal entity which has been registered at BeijingEconomic-Technological Development Area. 2. When handling the title transfer and registration processes related to this Commodity Housing by the Buyer and the Seller, both parties shall executethe relevant legal documents as required by the title registration authority, and shall comply with the relevant conditions and requirements as imposed by thecompetent government authority. In case that the title certificate of this Commodity Housing has not been obtained on time at the Buyer’s fault (includingbut not limited to that the Buyer has not satisfied the relevant requirements for admission to the development area, the Buyer has failed to pay the relevanttaxes, provide the relevant information and execute the legal documents necessary for handling the property right according to the Seller’s requirements,etc.), the Buyer shall assume the liability and Seller shall not assume any liability for breach of the contract. 3. Agreement on “Specialized Housing Maintenance Funds” The Buyer agrees that the Buyer shall be liable to pay the public maintenance cost in full and in time at the amount and due time as given in the writtennotice from the property service enterprise when the public locations and public facilities and devices in the area where this Commodity Housing is locatedrequire maintenance, renewal or reconstruction upon expiry of the warranty period. 4. The Seller shall issue the VAT invoice in full to the Buyer within 60 days after the Buyer has completed registration of the new company (i.e. theproperty owner of this house) and the Seller has received the purchase price in full. 89  5. “The Buyer” in the Beijing Commodity Housing Presale Contract as well as its annexes and this Supplementary Agreement shall refer to the Buyer orany subsidiary of which the Buyer holds shares. Seller (Seal)Buyer (Seal)/seal/ Beijing Jingkai-Gongda Investment/seal/ Tarena Technologies Inc.Management Co., Ltd. Date: May 5, 2016Date: May 5, 2016 90  Exhibit 4.36 BF—2005—0117Contract No.: Beijing Commodity Housing PresaleContract (Non-residential properties includingcommercial/office houses) Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd. Buyer: Tarena Software Technology (Hangzhou) Co., Ltd. Beijing Municipal Housing and Urban Construction Committee Beijing Municipal Industrial and Commercial Administration Bureau Revised in Oct. 2010 Printed on Day Month Year 1  Instructions 1. This contract is a model contract formulated jointly by the Beijing Municipal Construction Committee and the Beijing Municipal Industrial andCommercial Administration Bureau. 2. Before signing of the presale contract, the Seller shall show the Buyer the presale license of commodity housing and other related certificates andcertifying documents. 3. The contracting parties shall conclude the contract on the basis of the principle of free will, fairness and good faith and honesty, and neither party mayimpose its will on the other party. The two parties may alter, supplement or delete contents of the articles of this contract text. After this contract comes intoforce, the printed contents of this text without alteration are to be deemed as stipulation made by the parties 4. Before execution of the commodity housing presale contract, the Buyer shall review the articles of the contract prudently, especially those alternative,supplementary contents and those filled or altered contents. 5. In order to present the principles of free will of contracting parties, there are blanks following some articles of this contract text, left for supplementarystipulation made by both parties separately. For any matters not covered or not stipulated sufficiently in this contract, the Seller and the Buyer may concludesupplementary agreements on a fair and reasonable basis and in light of the specific conditions of the sold housing, or make supplementary stipulations inthe blanks following relevant articles. 6. With respect to the alternative contents in [ ] and the contents to be filled in blanks in this contract text, and other contents to be deleted or supplemented,the contracting parties shall make determination through negotiation. To select the items in [ ], please make a √. If any content does not refer to the actualcase or the parties do not make stipulation, the parties shall delete such content by making a × in the blanks. 7. If any dispute arises between the two parties from the performance of this contract, they may either lodge a lawsuit to the people’s court of the place wherethe property is located, or apply to relevant arbitration commission for arbitration. If the parties select arbitration, they may apply to the Beijing ArbitrationCommission, the China International Economic and Trade Arbitration Commission, or those arbitration commissions of places beyond Beijing. 8. The contracting parties may determine the number of original copies of this contract in light of the actual conditions, and must check the copies prudentlyso as to ensure that the contents in every copy are identical. Under any circumstance, the buyer shall hold at least one original copy of this contract. 2  Beijing Commodity Housing PresaleContract (Non-residential properties including commercial/office houses) Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.Address: 4/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic-Technological Development Area, Beijing, ChinaPostal Code: 100176Registration number of Business License: 110302003481318Enterprise qualification certificate No.: JK-A-3352Legal Representative: Zhou Shiyi Tel.: 67862520Entrusted Agent: Tel.: Entrusted Sales Agency: Beijing Jingkai-Yicheng Investment Consultant Co., Ltd.Address: 1/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic-Technological Development Area, Beijing, ChinaPostal Code: Registration number of Business License: 110302012140425 Buyer: Tarena Software Technology (Hangzhou) Co., Ltd.[Legal Representative] [Principal]: Han Shaoyun Nationality: China Registration number of Business License: 330100400045853Date of birth: , Gender: Address: 1/F Unit A of Shixun Building, No. 65 Kejiyuan Rd., Baiyang Subdistrict, Hangzhou Economic & Technological Development Area, Hangzhou,ChinaPostal Code: Tel.: [Legal representative] [Authorized agent]Nationality:[ID Card No.] [Passport No.] [ ]:Date of birth: , Gender: Address:Postal Code: Tel.: 3  In accordance with the Contract Law of the People’s Republic of China, the Law of the People’s Republic of China on Administration of Urban Real Estate,the Measures on the Administration of Urban Real Estate Transfer in Beijing and other relevant laws and regulations, the Seller and the Buyer, on the basis ofequality, voluntariness and fairness and through negotiations, do hereby agree as follows with respect to the purchase and sale of commercial house: Article 1 Reference for Project Construction The Seller has obtained the state-owned land use right of the plot located at D1F1 of the Beijing Economic-Technological Development Area throughtransfer of land use right and acquired the Certificate of Real Estate Title through legal registration of the use right. The number of the certificate is: No.00008 (2015 Chu) and the land area is: 54,928.2 square meters, and the purpose of the land where the commodity house purchased by the Buyer (hereinafterrefers to as “the Commodity House”) is located is for _F2 public mixed-use residentials; the term for land use will start on Dec.12, 2011 and end on Dec.11,2061. The number of Contract for State-Owned Construction Land Use Right Assignment: No. 32 JJGTCR[H]Z(2011). The purpose of the land where theCommodity House is located is for composite, commercial, residential types, and the term for land use right assignment starts on Dec.12, 2011 and end onDec. 11, 2061. Upon approval, the Seller has invested to build the commodity housing on the said land lot mentioned above, with a temporary name of Beijing JiangkaiOne Center, the Construction Engineering Planning Permit number of No. 0032 [2014 G(K)JZ] , and the Construction Engineering Working License numberof No. 0050 [2014]S[J]JZ; the starting date of the construction stipulated in the Contract shall be Jul. 16, 2014 and the completion date will be Feb. 21, 2016. Article 2 Reference for Sales The commodity housing has been approved to be qualified for presale by the Economic and Technological Development Zone Branch of Beijing MunicipalBureau of Land and Resources, with the Presale License number of No. 4 JFSZZ (2016)K. Article 3 Basic Information The architectural structure of main building where the Commodity Houses are located is: reinforced concrete structure; and the building consists of 10storeys, including an over-ground part of 9_ floors and an underground of 1 floor. The commodity housing refers to No.____ Unit____ Floor____ Building [B7] mentioned in the item of Article 1. The room number as a [Approval Number][Temporary Number] now will be subject to the final number approved by the Administration Department of Public Security; References can be made toAnnex 1 for the housing plan and location plan in the whole building. The purpose of this commodity housing is to be office house: the floor height of the Commodity House is meters, [net height of the slope roof] theminimum height: X meters, the maximum height: X meters. The orientation of the commodity housing is: X ; there are X balconies, of which X enclosedbalconies and X unclosed balconies. 4  The Seller entrusts a mapping institution of Beijing Jingheng Real Surveying Technology Co., Ltd to predict that the building area of the Commodity Houseis 8,169.39 square meters totally, which includes 6884.32 square meters of interior building area and 1285.07 square meters of public share building area.References can be made to Annex 2 for the introduction of the public share building area. When both parties sign the Contract, the construction progress status of the commodity housing building is . The floor height mentioned in this article refers to the vertical distance between an upper floor and a lower floor or between the floor and the ground. The netheight refers to the vertical distance between a floor and the soffit of the upper floor or between the ground and the underside of the suspended ceiling. Article 4 Reference for Mortgage The mortgage condition of this House is: 2, 3. 1. The land use right shared by this House and the construction in progress are not set to mortgage. 2. The land use right shared by this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development ZoneBranch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of BeijingEconomic and Technological Development Zone on the date of Apr. 20, 2015. 3. The construction in progress of this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development ZoneBranch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of BeijingEconomic and Technological Development Zone on the date of Apr. 20, 2015. The presale certificate of this House and other covering mortgage approved by the mortgagee refers to Annex 3. Article 5 Pricing Mode and Purchase Price As for commodity houses except for single-family villas, entire buildings, garage (carport) , the Seller and the Buyer shall agree to calculate the price of theCommodity House according to the 1st method below. If the Commodity House type is [single-family villa], [entire building], [garage] or [carport], the Seller and the Buyer shall agree to calculate the price of theCommodity House according to the 1st method below. 1. According to the interior building area, the Commodity House can be priced to be ___X__ Yuan per square meter, with the total price of RMB ONEHUNDRED AND EIGHTEEN MILLION THREE HUNDRED THOUSAND Yuan ONLY . 2. According to the building area, the Commodity House can be priced to be ___ ____ ____ __RMB Yuan per square meter, with the total price of RMB ___BILLION _____ HUNDRED ______ MILLION __ _____ HUNDRED AND __ ___ THOUSAND _____ HUNDRED ______ Yuan ONLY. 3. According to the suite (unit), the total price of the Commodity House can be priced to be _________X__ BILLION __X___ HUNDRED ___X____MILLION __ X______ HUNDRED AND __ X ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY. 4. According to ___ X___, the total price of the Commodity House can be priced to be BILLION __X___ HUNDRED ___X____ MILLION __ X______HUNDRED AND __ X ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY. 5  For the detailed agreement on terms of pricing and cost, see the Annex 4. The building area in this article refers to the horizontal projected area of each floor above the outside wall plinth of a permanent building with the floorheight of over 2.20 meters (including 2.20 meters), including balconies, overhanging corridors, basements, and exterior stairs and so on, which is also roofcovered and stably constructed. The interior building area refers to the usable area, wall covering and balcony areas in total inside each unit of the commodity house. Article 6 Payment Term and Deadline The Buyer shall pay for the Commodity House by the following 1st method 1. Lump-sum settlement.2. Installment payment3. Credit payment: [commercial loan] The Buyer can pay ___/___ % of the total price of the Commodity House as down payment, and then pay the balanceby credit from [ / ].4. Other methods. References can be made to Annex 4 for the agreement on the detailed payment terms and deadline. Article 7 Supervision and Management on Presale Funds According to the provisions of the Interim Measures of Beijing on Supervision and Management of Pre-sale Funds for Commodity Houses, the pre-sale fundsof the Commodity House shall be supervised by the bank: Beijing Economic and Technological Development Zone Branch of ICBC, with the specialaccount name of Beijing Jingkai-Gongda Investment Management Co., Ltd (One Center) and the special account number: 0200059029200318384. Whenthe commodity house is pre-sold, the Buyer shall deposit the house purchase price directly into the special account. In case the Buyer applies for a mortgage,the Seller shall provide the special account for receiving the loan. Article 8 The Seller shall guarantee that the Commodity House for sale is not involved in any dispute of ownership. In case of the inability to handleownership registration or occurrence of credit and debt disputes, the seller shall undertake all the responsibilities. Article 9 Agreements on Planning Alteration The Seller shall build the Commodity House according to the conditions stipulated in the Construction Planning Permit approved and issued by thePlanning Administration Department and cannot alter the planning without authorization. If the Seller wants to alter the conditions stipulated in the Construction Planning Permit, the Seller should obtain the agreement of the affected buyers inwriting, as well as the approval of the Planning Administration Department. For the losses of the buyer’s interests caused by the planning alteration, the Sellershould provide the corresponding compensation. Article 10 Agreements on Design Alteration I. With the approval of the design inspection unit entrusted by the Planning Administration Department, The following alterations on the construction designdocuments which will affect the quality and use functions of the Commodity House, the seller should inform the buyer by written notice within 10 days afterthe approval of the design inspection unit. 1. The construction, layout, space dimension and orientation of the Commodity House; 6  2. Heating methods. If the seller doesn’t inform the buyer within the stipulated time, the buyer has the right to cancel the order. II. The buyer should reply in written whether to cancel the order or not within 15 days after receiving the notice. If the buyer doesn’t give any reply within 15days after receiving the notice, it will be deemed that the purchaser accepts the alterations. III. If the Buyer wants to refund the house, the Buyer shall, within 30 days after effectively delivering the Refund Notice to the Seller, sign all documentsnecessary to cancel the pre-sale contract (including but not limited to the written agreement to cancel this contract, and the Power of Attorney necessary forundergoing formalities to cancel the registration of this pre-sale contract). The seller shall, within 30 days after the above documents necessary to cancel thepre-sale contract take effect, refund the paid house purchase price to the Buyer, and shall pay an interest at the demand deposit interest rate specified by thePeople's Bank of China for the same period. If the Buyer does not refund the house, the Buyer shall separately enter into a supplementary agreement with the Seller within 30 days after receiving thewritten notice from the Seller. If the Buyer neither undergoes formalities to cancel the pre-sale contract nor enters into a supplementary agreement with theSeller within the above said time period, it shall be deemed that the Buyer accepts the changed plan and design, and agrees to carry out acceptanceexamination and take-over of the house as scheduled. Article 11 Purchaser’s Responsibility for Breach of Contract Due to Overdue Payment If the Buyer fails to make the payment in the stipulated time, the 1st method will be complied with: 1. Handle separately according to the overdue period, ((1) and (2) are not cumulative) (1) If the overdue period is less than 30 days, the Buyer shall pay 0.006 percent of the overdue payment per day within 7 days after the actual payment date tothe Seller as a penalty from the second day after the payment deadline stipulated in this contract to the actual payment date, and the contract continues to beeffective. (2) If the overdue period is over 30 days (this date shall be the same as the date mentioned in Item (1), the Seller has the right to terminate the contract. If theSeller terminates the contract, the Buyer shall pay 3 percent of the accumulative payables to the Seller as a penalty within_7_days after receiving thenotification of terminating the contract, and the Seller shall return the total effected payment to the Buyer. If the Buyer is willing to continue performing thecontract, the contract will continue to be effective with the approval of the Seller. From the second day after the payment deadline stipulated in this contractto the actual payment date, the purchaser shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the overdue paymentper day within 30 days after the actual payment date to the Seller as a penalty. The overdue payment in this article refers to the balance between the due payable stipulated in Article Six of this contract and the actual payment in thatterm. If installment payment is adopted, the overdue payment shall be decided by the balance between the due installment and the actual payment in thatterm. 2._______________________________X____________________________ 7  Article 12 Delivery Term I. The seller shall deliver the Commodity House before the date of Jul. 31, 2016. However, in case of force majeure or the influence of national policy orgovernment action, the above house delivery time shall postpone accordingly, provided that the seller shall promptly notify the special circumstances to theBuyer in writing after the occurrence of such circumstances. II. When delivered, the Commodity House should meet the conditions of the following Items . 1. The Measured Area Report of the commodity House issued by a qualified real estate mapping organization; 2. The infrastructure conditions undertaken by the Seller in Article 13 should be met; 3. The Buyer shall have paid the full house purchase price agreed in this Contract to the Seller. Article 13 Promise of the Seller on the Infrastructure and Other Facilities The Seller promises that the infrastructure and other facilities directly related to the normal usage of this House should meet the following conditions by theappointed date: 1. Municipal infrastructure (1) Water supply lines and sewers: shall meet the use requirements by Mar. 30, 2016(2) Municipal two circuit feeding: shall meet the use requirements by Mar. 30, 2016;(3) Heating: shall meet the use requirements by the date of Mar. 30, 2016;(4) Gas: shall be available for use by ×;(5) Telephone: the ports shall be reserved in place by the date of Mar. 30, 2016, and will be reported for installation by customers;(6) TV network: the ports shall be reserved in place by the date of Mar. 30, 2016 and will be reported for installation by customers;If the above conditions haven’t been realized by the stipulated date, both parties can handle according to the following methods:(1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery;(2) __________________________________X_______________________. 2. Other facilities (1) Public green spaces: shall be available for use by Jul. 30, 2016;(2) Public roads: shall be available for use by Jul. 30, 2016;(3) Public parking lots: shall be available for use by Jul. 30, 2016;. If the above conditions haven’t been realized by the stipulated date, both parties shall agree to handle according to the following methods: (1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery (2) __________________________________X_______________________. 3. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policyor government action, such delivery time shall postpone accordingly. 8  Article 14 Seller’s Responsibility for Breach of Contract Due to Overdue Delivery Except for the force majeure, if the Seller cannot deliver the Commodity House to the Buyer according to the deadline and conditions stipulated in Article 12of this contract, the following Method 1 can be complied with: 1. Handle separately according to the overdue period, ((1) and (2) are not cumulative) (1) If the overdue period is less than 30 days (the time should be no less than the time mentioned in Item (1) of Article 10), the Seller shall pay 0.006 percent(This rate should be no less than the rate stipulated in the item (1) of Article 10) of the effected payment per day within 7 days after the actual delivery date tothe Buyer as a penalty from the second day after the delivery deadline stipulated in this contract to the actual delivery date, and the contract continues to beeffective. (2) If the overdue period is over 30 days (this date should be the same as the date mentioned in Item (1), the Buyer has the right to terminate the contract. Ifthe Buyer cancels the order, the Seller shall return the total effected payment to the Buyer, as well as 3percent of the effected payment to the Buyer as apenalty, within_7_days after receiving the notification of cancelling the order. If the Buyer requires to continue performing the contract, the contract willcontinue to be effective. From the second day after the delivery deadline stipulated in this contract to the actual delivery date, the Seller shall pay 0.006percent (This rate should be no less than the rate stipulated in the item (1)) of the effected payment per day within 7 days after the actual delivery date to theBuyer as a penalty. 2. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policyor government action, such delivery time shall postpone accordingly. Article 15 Solutions on Area Discrepancy When delivering the Commodity House, the Seller shall demonstrate the Commodity Housing Area Mapping Report issued by the entrusted qualified RealEstate Mapping organization, and provide the actual measured area of the Commodity House to the Buyer (Hereinafter refers to as the Measure Area). If thereare any discrepancy between the Measure Area and the predicted area stated in Article 3, both parties will agree to handle in accordance with Method 1: 1. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with thefollowing principles: (1) If the absolute discrepancy rate of the interior building area is within 3% (including 3%), it can be settled the payment of the Commodity Houseaccording to the fact; (2) If the absolute discrepancy rate of the interior building area exceeds 3%, the Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the People Bank of China in the correspondingperiod. If the Buyer doesn’t cancel the order, when the Measured Area of the interior building area is larger than the predicted area with the discrepancy rate within3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller andthe ownership belongs to the Buyer. When the Measured Area of the interior building area is smaller than the predicted area with the discrepancy rate within3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice morethan the cost of the less area to the Buyer. 9  The absolute discrepancy rate of the interior building area =The Measured Area – The Predicted Area The Predicted Areax100% 2. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with thefollowing principles: (1) If the absolute discrepancy rates of the building area and the interior building area both are within 3% (including 3%), it can be settled the payment of theCommodity House according to the fact; (2) If either of the absolute discrepancy rates of the building area and the interior building area exceeds 3%, the Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of current deposit interest rate of the People's Bank of China_. If the Buyer doesn’t cancel the order, when the Measured Area of the building area is larger than the predicted area with the discrepancy rate within 3%(including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and theownership belongs to the Buyer. When the Measured Area of the building area is smaller than the building area stipulated in the contract within 3%(including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more thanthe cost of the less area to the Buyer. The absolute discrepancy rate of the building area =The Measured Area – The Predicted Area The Predicted Areax100% 3. Both parties can achieve the agreements by themselves: _______________________________X_____________________________ . Article 16 Handling-over Procedure I. Delivery of the House means that the Seller sends the Move-in Notice for delivery of the Commodity House after its acceptance by the constructionsurveying, design and engineering supervision institutions etc. After the Commodity House meets the delivery conditions stipulated in Article 12, the Seller shall inform the Buyer in written within 7 days before thedelivery date of the handling-over time and place, as well as the required credentials. In the acceptance of the handling-over, the Seller shall demonstrate thecertifications stipulated in Article 12, as well as those certificating the Commodity House meet the other conditions stipulated in Article 12. If the Sellercannot demonstrate the certifications or the certifications are not complete, or the other conditions in Article 12 haven’t been met, the Seller has the right toaccept the Commodity House; and the Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according toArticle 14. 10  If the Buyer finds any item needing repair during the process of receiving the house, the Buyer shall require the Seller to repair it according to the provisionsof this Contract .However, Such item shall not constitute a reason for the Buyer to refuse or delay the house take-over formalities, or to ask the Seller to bearthe liability for breach of contract for overdue delivery. II. If the take-over formalities cannot be undergone on time due to the Buyer’s reason, the Seller shall not bear the liability for breach of contract for overduedelivery, and both parties agree to settle this in the following way: If the Buyer fails to undergo the receiving formalities within the notified time period after the Buyer receives or shall receive the “Move-in Notice” from theSeller, or fails to complete the receiving formalities within 30 days after receiving the notice, it shall be deemed that the Buyer has received this commodityhouse at the time and in the place as stipulated in the “Move-in Notice” and according to the delivery conditions agreed in this Contract. Any damage, lossand other risks of the commodity house shall be transferred to the Buyer from the time of house receiving stipulated in the Move-in Notice. Relevant costs ofthis commodity house, including all taxes and fees, property management fees, heating costs and other incidental expenses occurring from the receiving timestipulated in the Move-in Notice shall all be borne by the Buyer. The Buyer shall bear the loss or additional costs sustained by the Seller due to the Buyerdelaying in undergoing the receiving formalities. If the Buyer fails to undergo or complete the receiving formalities more than one year overdue, the Sellershall have the right to cancel this Contract, take back the commodity house and dispose of it otherwise. The Buyer shall support the Seller in undergoingrelevant formalities to cancel the Contract. The Seller shall refund the remaining house purchase price paid by the Buyer after deducting all relevant costswhich shall be borne by the Buyer according to this Contract as well as liquidated damages equal to 3% of the total purchase price. In addition, the Buyershall also compensate the Seller for all losses arising herefrom. III. Both parties shall agree to pay the taxes according to the following Methods 1, 2: 1. The Buyer shall agree to entrust the Seller to pay the following taxes of (5), and entrust the property service enterprise to collect the 3rd of the followingfees on behalf of it, and pay the aforesaid taxes to the Seller and the property service enterprise while receiving the commodity house. (1) Special housing maintenance funds;(2) Contract tax;(3) Heating fees(4) Stamp tax of the Title Certificate;(5) Other relevant fees for handling house acceptance 2. The Buyer shall pay the following taxes of (2) and (4) to the related departments and show the vouchers to the Seller when accepting the CommodityHouse. (1) Special housing maintenance funds;(2) Contract tax;(3) Heating fees(4) Stamp tax of the Title Certificate;(5) Other relevant fees for handling house acceptance 11  Article 17 Agreement on the Quality, Ornament and Facility Standard of the House I. The Seller shall promise that the building materials and the components of the House are qualified and the House quality meet the requirements of theconstruction quality specifications and standards issued by the state and Beijing Municipal Government and the Construction drawing documents. II. The Seller and the Buyer agree on the following items: 1. If the foundation basis and main structure quality of this House are detected to be unqualified, the Buyer has the right to cancel the order within 60 days. Ifthe Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order,and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period, and alsocompensate the Buyer for the corresponding losses if necessary. Hence, the detection charge will be at the Seller’s expenses. If the Buyer chooses not to refund the house, or if the commodity house has been delivered and used for more than 60 days, the Buyer shall sign asupplemental agreement with the Seller. 2. When delivering the House after the units of construction, investigation and design, as well as the builders and Engineering Project Supervisor, havepassed the acceptance inspection, the Seller shall check the House for acceptance together with the Buyer; if any other problems, both parties shall agree onthe Method (3): (1) The Seller shall deliver the repaired House within × days. The Seller shall take the responsibility for breach of contract due to overdue delivery, which willbe handled according to Article 14. (2) The Seller shall be responsible to repair the House within × days after the delivery date according to the national and municipal regulations and standardsrelated to the engineering quality, account for the repairing expense and compensate the Buyer for the corresponding losses. (3) After the Commodity House meets the delivery and use conditions specified in the pre-sale contract, the Buyer shall have the right to conduct on-siteinspection on this commodity house. If the Buyer finds any item needing repair in such inspection, the Seller shall repair it, until the commodity house meetsthe requirements of relevant regulations and standards of the country or the city on project quality, and shall bear the cost of repair. The Buyer shall notrefuse to receive this commodity house just because of this. 3. The ornaments and facilities of the delivered House shall meet the contracted standard. If fail to meet the standard, the Buyer has the right to request theSeller to manage it according to the following Methods (1) and (2): (1) If the decoration or equipment standard of the Commodity House delivered by the Seller is lower than the agreed one, the Seller shall compensate doublethe price differences of the ornaments and facilities; (2) If the decoration or equipment standard of the Commodity House delivered by the Seller is higher than the agreed one, the Seller may not notify theSeller, but the Seller shall not charge any additional fees for this, and the Buyer shall not refuse to receive this commodity house just because of this, andshall not require the Seller to bear the liability for breach of contract. References can be made to Annex 6 for the detailed agreements on the ornament and facility standard. III. When the Seller and the Buyer have any disputes on the construction quality, either party can entrust a qualified detection organization of constructionengineering quality for test; and both parties shall have the obligation to cooperate with each other to detect the House. 12  If it is tested to be qualified, the test costs shall be borne by the Buyer. Otherwise, the test costs shall be borne by the Seller. Article 18 Responsibility for Housing Warranty I. Both Parties agree on the scope of warranty, warranty period and warranty liability in detail in Annex VII of this Contract. The scope of warranty andwarranty period must meet applicable laws and regulations of the country and Beijing City, as well as the requirements of relevant standards and codes. II. When the House has any quality problem within the warranty scope in the warranty period, if both parties have contracted to cancel the order, it shall besubject to the contract; while if both parties haven’t contracted to cancel the order, the Seller shall perform the obligation of warranty and the Buyer shallcooperate. If the loss is not caused due to the Seller, the Seller will not be responsible for it. Article 19 Energy-efficiency Measures for the House The Commodity House shall meet the requirements of the Design Standard for Energy Efficiency of Public Buildings of the country and Beijing city.Otherwise, the Seller shall make up energy efficiency measures according to the requirements of relevant standards, and take charge of the total costs; if itcauses any losses to the Buyer, the Seller shall compensate for them. Article 20 Building Sound Insulation If the building sound insulation of the Commodity House fails to meet the standard, the Seller shall make up construction sound insulation measuresaccording to the requirements of the planning and design, and shall bear all costs. If any damage is caused to the Buyer, the Seller shall bear the liability forcompensating the Buyer. Article 21 Commitment on the Use 1. When using this House, the Buyer must not change the main building structure, bearing structure and usage without authorization. Except for theagreements in the contract, supplemental agreements and the annexes, the Buyer has the right to share the common parts and facilities related to the Housewith other obligees and undertake the obligations according to the appointed areas of the common parts and shared buildings. In case of any violation of the above provisions, the Buyer shall bear relevant economic and legal liability arising herefrom. In addition, the Buyer shall notchange the public parts and facilities associated with this Commodity House without authorization. If the Buyer has changed them without authorization,the Buyer shall restore them immediately or no later than within 15 days after receiving a written notice from the Seller, the property service enterprise or theparty actually suffering loss, and shall compensate the Seller, the property service enterprise or the party actually suffering loss for actual loss arisingherefrom. 2. The Seller shall not arbitrarily change the use nature of the public parts and facilities associated with the Commodity House. The Seller shall promise notto change the planned purpose of the Commodity House, not to sell the Commodity House by dividing it, not to sell the Commodity House by means of cost-returned sale or any such means in disguised forms, and not to sell the uncompleted Commodity House by the after-sale lease guarantee or by any such meansin disguised forms. 13  3. During the usage of the Commodity House, the Buyer shall not arbitrarily change or destroy the appearance and current situations of the exterior eaves,building structure and building roof. Otherwise, the Buyer shall unconditionally restore them to their original conditions according to the requirements of theSeller or the property service enterprise. If this causes any loss to the Seller or a third party, the Buyer shall bear all the compensation liability. Article 22 Ownership Registration I. Primary registration The Seller shall get the ownership certificate of the building of this House before Oct. 31, 2016. If the ownership certificate hasn’t been got within the timestipulated in this Article due to the Seller, both parties agree to manage it according to the following Method 1: 1. The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days afterreceiving the notification of canceling the order, and pay the interests at the rate of 3% of the total effected payment to the Buyer. If the Buyer doesn’t cancelthe order, the contract will continue to be effective; from the second day after the deadline to get the ownership certificate from the actual date of getting thecertificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty. 2.________________________________X__________________________ . II. Transfer registration 1. After the House has been delivered for use, both parties agree to manage it according to the following Method (2): (1) Both parties apply to the registration authority for the registration of ownership transfer. The fees for handling the registration of ownership shall be borneby the Buyer. (2) The Buyer agrees to entrust seller or the entrusted agency_ to apply to the registration authority for the registration of ownership transfer with the entrustfee of RMB _2,000_______ YUAN. 2. If the Buyer cannot get the ownership certificate of the House within360 days after the delivery date due to the Seller, both partied shall agree to manage itaccording to the following Methods: (1) The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days afterreceiving the notification of canceling the order, and pay the corresponding interest rates to the Buyer according to the interest rate of individual housingloan issued by the bank in the corresponding period. If the Buyer doesn’t cancel the order, from the second day after the deadline to get the ownershipcertificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penaltywithin7days after the actual date. 2. If the housing ownership certificate cannot be obtained as scheduled due to the Buyer's responsibility (including but not limited to the Buyer failing topay relevant taxes and fees according to the requirements of relevant government departments, failing to submit relevant materials, or failing to sign legaldocuments required for property rights, etc.), the Buyer shall be held responsible for it, and Seller shall assume no liability for breach of contract. 14  3. If the Buyer fails to obtain the housing ownership certificate after the expiry of the period specified by this Contract due to the fault of the Seller, the Buyershall have the right to notify the Seller whether to cancel this Contract or not within 60 days after the expiry of this period. If the Buyer does not do so withinthis time period, the Buyer shall not notify the Seller to cancel the contract any more. This contract shall be cancelled as of the date when the Buyer issues awritten cancellation notice to the Seller. 4. If the Buyer cannot obtain the housing ownership certificate within 360 days after this Commodity House has been delivered due to force majeure,national policy adjustment or government action, the Seller shall not bear the liability for breach of contract. Article 23 Agreement on Common Rights and Interests 1. The use right of the roof of the House building belongs to all the owners(the use right of the roof of each unit of a duplex building shall belong to theproperty owner of each unit);2. The use right of the exterior wall of the House building belongs to all the owners; (the use right of the roof of each unit of a duplex building shall belong tothe property owner of each unit)3. The naming right of the building where the house is located shall belong to all proprietors of this building (the naming right of each unit of a duplexbuilding shall belong to the property owner of each unit);4. The naming right of the Housing District belongs to the Seller. Article 24 Agreement on Ancillary Buildings and Other Structures Both parties agree to manage the ancillary buildings and other structures of the House such as the underground garages and so on according to the followingMethod 2:1. When the Seller presales the House, the ancillary buildings of _X__, _ X__, _ X__ shall be transferred together with the House.2. The Seller shall disclose parking spaces on the ground and unshared public areas will not be transferred together with the House. Article 25 Prophase Property Management Service I. The property management company selected by the Seller according to law is: Beijing Jingkai Investment Advisor, Co., Ltd. with the qualification numberof No. 0075 JWQZS [2014]. II. During the prophase of property management, the property service charge will be RMB 5.50 Yuan /month/m2 (building area), which will be charged by theproperty management company annually. The charge includes cleaning fee of the property region, public order maintenance fee, daily maintenance fee ofpublic areas and facilities, greening maintenance fees, comprehensive management fees. Therein to, the fees for parking on the ground is 150 Yuan/month while the fees for underground parking is 400 Yuan/month. The above charging standardwill be adjusted according to national policy adjustment. III. The property management company shall charge the property service charge according to the Method 1. 1. Charge by year: the Buyer shall pay for the charges before the date required by the service company. 2. Charge by half a year: the Buyer shall pay for the charges before the dates of __X__ and __X__ each year separately. 15  3. Charge by quarter: the Buyer shall pay for the charges before the dates of __X__, __X__, __X__ and __X__ each year separately. IV. References can be made to Annex 8 for the contents of property service and the owners’ temporary agreement. The Buyer should read all the content ofAnnex8 carefully and agree that the property management service selected by the Seller will provide the prophase property service and the Buyer will abideby the owners’ temporary agreement. The preliminary property management period mentioned in this Article shall refer to the period from the time when the first proprietor moves in to the timewhen all the proprietors and the Project Owner complete the take-over of the property shared areas. Article 26 Housing Maintenance Funds If the Buyer entrusts the Seller to pay the housing maintenance fund, the Seller shall give the Buyer the payment voucher within7days after the date ofentrustment. If the Buyer pays the housing maintenance fund in person, the Buyer shall show the payment voucher to the property management company [at the deliverydate of the house] [within __X__ days after the delivery date]. Article 27 Exceptions 1. If the contract cannot be performed according to the agreements due to force majeure, partial or total responsibility can be exempted according to the effectof the force majeure; however, either party who cannot perform the contract due to force majeure should inform the other party in time and provide proofs tothe other party within60days after the end date of the force majeure event. 2. If the Seller cannot perform part or all of the terms of the Contract due to the change of national policies or the behaviors of government, the Seller may beexempted from partial or all liabilities, and shall inform the Buyer in time after the occurrence of the exemptions. The Buyer shall have the right to choose tocontinue or terminate the performance of this Contract, but the Seller shall not bear the liability for breach of contract. Article 28 Dispute Settlement If there are any disputes during the performance of the contract, both parties shall settle it through negotiation or application for mediation; if fail throughnegotiation or mediation, should sue to the Beijing Daxing District People’s Court according to relevant laws. Article 29 This contract will come into effect upon both parties’ signature. As for the issues excluded or stipulated unclearly or inapplicably in this contract,both parties can sign written supplemental agreements for modification or supplementation according to the particular cases; but if the supplementalagreements include any unreasonable articles to lighten or exempt the responsibility stipulated in this contract of the Seller or to enhance the Buyer’sresponsibility and remove the Buyer’s main rights, this contract will prevail. The dissolution of this contract shall be made in written. The contract annexesand supplemental agreements bear the equivalent legal force as this contract. Article 30 The contract and its annexes are totally ____ pages, in quintuplicate, with the equivalent legal force, the contract holding situation include thefollowings: TWO copies for the Seller, TWO copies for the Buyer, _ONE_ copy for the Economic and Technological Development Zone Branch of Beijing MunicipalBureau of Land and Resources. 16  Article 31 After the Seller and the Buyer sign and seal this Contract, the Seller shall perform online recording for this commodity house pre-sale contract inBeijing real estate transaction management system, and shall print and give one stamped copy of the online recording form to the Buyer. The formalities for the online recording for this Commodity House Pre-sale Contract shall be completed within 7 days. Seller (signature and seal):Buyer (signature and seal):/seal/ Beijing Jingkai-Gongda Investment/seal/ Tarena Software Technology (Hangzhou) Co., Ltd.Management Co., Ltd. [Legal Representative]: /s/ Shiyi Zhou[Legal Representative]: [Entrusted Agent] (Signature):[The Principal]: [Entrusted Sales Agency][Entrusted Agent](Signature and seal):(Signature and seal): Date:Date: November 5, 2016 Place:Place: 17  Annex 1: Floor plan and location plan of the House in the entire building B1 office buildingB13 office buildingB11 office buildingB10 office buildingB9 office building B2 office buildingB14 office buildingB12 office building B3 office building B4 office buildingB5 office buildingB6 office buildingB7 office building B8 office building 18  Floor plan: B7 floor plan (1/F) 19  B7 floor plan (2/F) 20  B7 floor plan (3/F) 21  B7 floor plan (4/F) 22  B7 floor plan (5/F) 23  B7 floor plan (6/F) 24  B7 floor plan (7/F) 25  B7 floor plan (8/F) 26  B7 floor plan (9/F) 27  B7 floor plan (ancillary accommodation) 28  Floor plan of underground garage, equipment room and multi-functional hall at the office area 29  Annex 2: Description of apportioned building area composition of commonly shared sections and commonly shared house Description of B7 apportionment: Description of building area apportionment for commonly shared sections of B1 office building, other 15 items (Digital Technology Park) and B7 officebuilding I. Project description B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological DevelopmentArea, and B7 office building is composed of ground 9 floors and provided with the reinforced concrete structure. The distribution of functional zones in B7 office building is as follows: 1. B7 office building: 1/F-9/F; II. Details of commonly shared sections (1) Commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 officebuilding, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room,TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room,duty room of electric transformer and distribution room and tool room of electric transformer and distribution room. (2) Commonly shared sections of B7 office services; 1. B7 office building 1/F: staircase, elevator room, front room, aisle, hallway, toilet, air shaft, water well, plumbing well, power distribution room and half ofouter wall; 2. B7 office building 2/F-9/F: staircase, elevator room, front room, air shaft, water well, plumbing well, power distribution room and half of outer wall; 3. Ancillary accommodation floor of B7 office building: staircase, elevator machine room air shaft, plumbing well and door header; 4. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 7 and weak electricityengine room 7. Beijing Jingkai-Gongda Investment Management Co., Ltd. /s/ Beijing Jingkai-Gongda Investment Management Co., Ltd. Date: Sep. 7, 2014 Apportionment description of underground garage, equipment room and multi-functional hall at the office area Description of building area apportionment for commonly shared sections of underground garage, equipment room and multi-functional hall at B1office building and other 15 items (digital technology park) at the office area 30  I. Project description B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological DevelopmentArea, and underground garage, equipment room and multi-functional room at the office area are located at the ground floor and are provided with thereinforced concrete structure. The distribution of functional zones for underground garage, equipment room and multi-functional room at the office area is as follows: 1.Parking stall of office building: ground floor;2.Mechanical parking stall of office building: ground floor;3.Multi-functional hall: ground floor;4.Tool room: ground floor; II. Details of commonly shared sections (I) commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 officebuilding, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room,TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room,duty room of electric transformer and distribution room and tool room of electric transformer and distribution room; (II) The apportionable commonly shared sections of underground garage, equipment room and multi-functional room at the office area: 1. Commonly shared sections of parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room commonservices; (1) Ground floor of underground garage, equipment room and multi-functional room at the office area; lane, elevator room, staircase, air shaft, ventilationroom, front room plumbing room, toilet, aisle and half of outer wall; (III) Commonly shared sections of B1 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 1. (IV) Commonly shared sections of B2 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 2. (V) Commonly shared sections of B3 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 3. (VI) Commonly shared sections of B4 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 4. (VII) Commonly shared sections of B5 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 5. 31  (VIII) Commonly shared sections of B6 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 6. (IX) Commonly shared sections of B7 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 7. (X) Commonly shared sections of B8 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 8. (XI) Commonly shared sections of B9 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 9. (XII) Commonly shared sections of B10 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 10. (XIII) Commonly shared sections of B11 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 11. (XIV) Commonly shared sections of B12 office services; 1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak currentmachine room 12. (XV) Commonly shared sections of B13 office services; 32  Annex 3: Certificate of commodity housing sale approval from pledgee and related provisions of pledge parties Statement of bank’s approval for handling of commodity housing advance sale license for pledged houses Housing and Land Administration of Beijing Economic Technological Development Area: Beijing Jingkai One Center project (corresponding construction project planning license no.: 2014 G(K)JZ No. 0032), located at D1F1 lot at LudongDistrict, Beijing Economic Technological Development Area, that is developed and constructed by Beijing Jingkai-Gongda Investment Management Co.,Ltd. has been pledged to our bank and our bank agrees the advance housing sale within the following pledge scope; National land use certificate number: JJGY (2015) No. 00008Building number: B1-B14 office buildings Notes: 1. The project name must be filled according to the name approved by the Place Name Administration Office; the building number must be filled accordingto the building number approved on the planning permit. 2. The pledge scope covers part of the houses inside the building and the pledged house number shall be filled according to the building number. Opening bank: Beijing Economic Technological Development Area Branch ofIndustrial and Commercial Bank of China Limited (Seal) /s/ Beijing Economic Technological Development Area Branch of Industrial andCommercial Bank of China LimitedYY MM DD 33  Annex 4: Pricing mode and other provisions of housing fund 1. Payment method: Lump sum payment. 2. Total commodity housing fund (in RMB) under the advance sale contract: one hundred and fourteen million six hundred thousand yuan (RMB118,300,000), will be paid by the Buyer once and for all to the Seller within 15 days after the signing of the advance sale contract and the down payment oftwo hundred million yuan (RMB 2,000,000) already paid by the Buyer will automatically be converted into the housing fund. 3. On the premise of receiving the full housing fund from the Buyer, the Seller shall be obliged to handle the commodity housing handover procedureswith the Buyer in accordance with the agreement in Paragraph 1, Article 16 of the advance sale contract. If the Buyer fails to pay the housing fund in duetime, the Seller shall be entitled to delay the handling of commodity housing handover procedures with the Buyer and shall not bear the defaultresponsibilities arising from this. 4. After the advance sale contract is signed, if the Buyer requests for changing to the bank mortgage loan, the Seller and the Buyer shall sign the changeagreement according to the related contents in Article 6 of the advance sale contract and Annex 4. The housing fund of the Buyer shall be determined by themortgage loan discount again and the total housing fund shall be calculated again. 34  Annex 5: Other provisions 1. Handling of property rights: If the Buyer entrusts the Seller or the agent company designated by the Seller (hereinafter referred to “assignee”) with the registration of property rightduring the occupancy settlement, the Buyer shall issue the letter of attorney to the assignee for handling of commodity housing property certificate, provideall the data related to this and offer the necessary assistance during the handling of property right by the Seller, including but not limited to, carry out therelevant procedures at the designated place jointly with the Seller, pay the related fees according to the national provisions, provide the related data and signthe related legal documents for handling of property right. The Buyer confirms that all fees required for handling of commodity housing property certificate(including but not limited to deed tax, agency fee, property registration fee, property certificate stamp tax etc.) shall be borne by the Buyer. 2. If either party proposes to terminate the contract, the non-defaulting party shall be entitled to request continuing to perform the contract, unlessotherwise agreed in the advance sale contract. If the defaulting party refuses to continue the performance, it shall pay the liquidated damages of three percentof the total house fund to the non-defaulting party according to the advance sale contract and shall also bear the corresponding liabilities for loss incurred tothe non-defaulting party. 3. The Buyer shall ensure that the production and operation activities within the area under the jurisdiction of Beijing Jingkai One Center projectcomply with the stipulations of laws, administrative regulations and rules of the related departments and won’t engage in any illegal acts, otherwise theBuyer shall bear all legal, economic and administrative consequences, and shall compensate for losses incurred to other proprietors or property managemententerprises. 35  Annex 6: Provisions of decoration and equipment standard 1. Heating system: (1) Central heating: fan coil; (2) Brand of heating equipment: ELCO. 2. Insulation materials: (1) Outer wall insulation: rock wool board. 3. Outer wall: mainly composed of glass curtain wall and aluminum plate curtain wall, locally made of stone curtain wall. 4 Inner wall: concrete wall surface extending to the structural layer, block wall surface extending to DP-HP bottoming mortar. 5. Ceiling: 1) B5/B7: 1/F-5/F, 7/F, 8/F: concrete structure, 6/F: concrete structure, locally coated steel sheet; 9/F: coated steel sheet; 2) B6/B10: 1/F-4/F, 6/F: concrete structure, 5/F: concrete structure, locally coated steel sheet; 7/F: coated steel sheet; 3) B11/B13: 1/F-5/F: concrete structure, 6/F: Al-Zn coated steel sheet; 4) B12/B14: 1/F-4/F: concrete structure, 5/F: Al-Zn coated steel sheet; 6. Indoor floor: concrete structural layer. 7. Door and window: (1) Opening mode: flat opening; (2) Profiles of door and window: aluminum alloy thermal-break profiles. 8. Elevator: (1) Elevator brand: Hitachi; (2) Elevator speed: 1.75m/s; (3) Elevator capacity: 1100kg; 9. Floor load: uniformly distributed live load of 1/F ground: 5KN/M2, live load of standard floor: 2KN/M2. 10. Others: (1) Insulation: central insulation; (2) Canopy: steel joist, aluminum plate; (3) Handrail: the steel tube of the staircase is painted and the glass breast board is provided on the external façade where the protection is necessary; (4) Entrance step and disabled ramp: granite face; (5) Cable TV system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft; (6) Telephone network system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft; (7) Power distribution: two independent 10KV high-voltage powers are introduced from the municipal electricity for the project; (8) Fire control: with automatic fire alarm and fire linkage control system; (9) Security system: with monitoring system and quarter parking lot management system indoors and outdoors. 11. Electric load of the building: 1200KVA. 36  Annex 7: Related provisions of warranty liability I. Scope and term of warranty For the installed and constructed items under normal service conditions when the Seller delivers the houses, their quality problems concerning civilengineering, water, heat, electricity and other facilities within the warranty period will be subject to warranty by the following scope and term. Warranty items Warranty period of the projectWall surface leakage 5 yearsRoofing waterproof 5 yearsOuter curtain wall, door and window 2 yearsWall, ceiling 2 yearsCrack of door and window, damage of hardware 2 yearsStrong and weak electric wires, water inlet and outlet pipelines andcorresponding components 2 yearsFire alarm system 2 yearsFoundation and primary bearing structure Designed endurance life: 50 yearsOther components According to the related provisions of related authorities in Beijing II. Start date of warranty The warranty period of the house purchased by the Buyer will start from the date of house completion acceptance. The warranty period of the elevatorwill start from the date that the governmental authorities issue the inspection conformance report and the related license. III. Problems outside warranty scope (1) The quality damages resulting from natural disaster and force majeure are not within the warranty scope; (2) The warranty items that have been installed, removed, modified or repaired by the proprietor and the house user at discretion after occupancy are notwithin the warranty scope; (3) The quality problems of the above-mentioned warranty items resulting from improper application by the proprietor or the house user after occupancyare not within the warranty scope, however, the Seller may assist in the maintenance and the related costs shall be borne by the Buyer. IV. Warranty liability (1) The paid maintenance services may be provided for the quality maintenance outside the warranty period or the warranty scope stipulated in theAnnex. (2) The Seller shall not be liable for the quality problems resulting from improper application of proprietor and house user, unauthorized modificationof house structure, adding equipment or changing position at discretion and inappropriate decoration. (3) The Seller shall assume the corresponding warranty liabilities within the warranty period and the property service enterprise will provide the paidmaintenance after the warranty period expires. (4) If the Seller fails to repair the defected houses due to proprietor, house user and relevant party, the Seller shall not be entitled to bear anyresponsibility, which shall be assumed by the corresponding proprietor, house user and relevant party connecting to this. 37  Annex 8: Preliminary Property Management Preliminary Property Service Contract of BeijingJingkai One Center Project The contract was entered into between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Beijing Jingkai Investment Development Co., Ltd. on__________in Beijing, China. Principal: Beijing Jingkai-Gongda Investment Management Co., Ltd. (hereinafter referred to as the “Party A”)Address: 4/F, Block 2, No. 1 North Disheng Street, Beijing Economic-Technological Development AreaLegal Representative: Zhou Shiyi Trustee: Beijing Jingkai Investment Development Co., Ltd. (hereinafter referred to as the “Party B”)Address: Block 1, No. 1 North Disheng Street, Beijing Economic-Technological Development AreaLegal representative: Guo GuangqingProperty Management Qualification: Level 3Certificate No.: D0075 JWQZS [2014] In accordance with the Regulations on Property Management and relevant laws and regulations, Party A entrusts Party B to implement property managementfor the Beijing Jingkai One Center project (hereinafter referred to as the “Project”), and the parties have entered into this Contract through equal consultation. Chapter I General Provisions Article 1 Party A entrusts Party B to provide property management and service for the project, and Party B is the sole property manager of the project; Article 2 Party B accepts the entrustment of Party A and agrees to provide property management and service for the project in accordance with this Contract,the Regulations on Property Management and the relevant laws and regulations. Article 3 In this Contract, references to any legislation shall be construed as laws and regulations promulgated by the state government or the government ofBeijing municipality. If significant changes occur in the economic interests of either party as a result of changes in laws and regulations, the parties shallconsult in a timely manner and make the necessary adjustments or modifications to the relevant provisions of this Contract in order to safeguard the interestsof both parties under this Contract. Chapter II Basic Conditions of the Property Project Article 4 Basic Conditions of the Property 1. Approved property name: Beijing Jingkai One Center 38  2. Property type: office building, commercial property, residential property 3. Property location: Lots D1C1 and D1F1, No. D1 Block of Eastern Zone, Beijing Economic-Technological Development Area 4. Scope: west to the 1st Jinghai Road, east to the 3rd Jinghai Road, south to the 13th Kechuang Street, north to the southern green belt of the 12th KechuangStreet. 5. Area: 92,392.1m3; construction area: a total construction area of 293,692 m3, area for which property management fee is collectable is 204,840 m3.Underground parking lot: 83,002 m3, among which the number of parking lots with the right to get parking fee is 1,834. The above data of area is based onestimates and the final measured area shall prevail. Chapter III Scope and Content of Property Management Services Article 6 The scope of the property management services provided by Party B shall be as follows: the buildings and the ancillary facilities and equipmentwithin the scope of the red line of the project, including all kinds of public roads and landscaping, and various types of public service facilities. Article 7 Party B shall provide the following property management services in two phases: 1. Preparatory period of property management: For the service in this period, please refer to Article 8 of this Contract. 2. Normal management period of property management: For the service in this period, please refer to Article 9 of this Contract. Article 8 Services provided in the preparatory period of property management: 1. To propose suggestions on the selection of type for facilities and equipment and the selection of construction materials. 2. To follow up on the progress of the project and make recommendations. 3. To propose suggestions on the vehicle moving line and parking spaces of the underground parking lot. 4. To assist Party A in the development of interim management provisions. 5. To establish the project property management agency. Party B will set up a project property management institution during the preparatory period, and put it into normal operation as soon as possible. The detailsof work are as follows: (1) To develop organizational structure, departmental set-up and staffing; (2) To work out the function distribution method among various departments and the duties of the various positions; (3) To develop internal management system, service standards and working procedures. 6. To complete staff recruitment and professional training. 7. To develop item procurement plans. 8. To prepare annual work plan for property management. During the preparatory period of project management, Party B will be responsible for the preparation of the annual work plan of the project management,including the following: (1) Work plan for daily operation, repair and regular maintenance of housing and its ancillary facilities, and equipment; (2) Work plan for security and fire management; 39  (3) Work plan for daily cleaning and regular cleaning; (4) Work plan for road traffic and parking management; (5) Work plan for customer service; (6) Work plan for financial management and development of human resources; (7) Emergency response procedures and proposals; (8) Establishing a coordinated relationship with the local government authorities. 9. To prepare the customer manual. 10. To prepare decoration guide. 11. To establish special service items and collection and payment items. 12. To assist Party A in completing the project acceptance. 13. To take over and accept the project. 14. To take charge of the cleanup land reclamation of the public areas of the project. 15. To prepare for moving-in of the owners of the project. Article 9 Services provided during the normal property management period include: 1. To develop a work plan of property management services, and organize the implementation of the plan; manage property-related engineering drawings,customer files, as well as completion and acceptance materials; establish property management system. 2. To carry out the daily maintenance, operation and management of shared facilities and equipment. Shared facilities and equipment include: shared waterpipes, pressurized pumps, water pipes, shared lighting, transformation and distribution systems, security systems, fire systems, transportation facilities, rainsewage lift pump. 3. To carry out the daily maintenance and management of public facilities, ancillary buildings and structures, including roads, fences, septic tanks, pumpingstations, green water systems, outdoor ground parking, garbage transfer stations, and litter bins in public areas. 4. To carry out conservation and management of public green spaces, flowers and trees, and small architectural works 5. To be responsible for the public environmental sanitation, including the daily cleaning in public areas and peripheral areas, collection, sorting andremoval of daily garbage and refuse, and regular cleaning of septic tanks, as well as regular pest control services. 6. To maintain public order, including safety monitoring, public area inspections, gate service and so on. 7. To maintain the order of vehicles in the facility, and manage and offer service to the vehicles parked on the parking spaces in the public areas and thevehicles parked in the underground parking lot. 12. To provide fire management services, including fire safety monitoring and inspection, fire safety warning and publicity, and maintenance and repair offirefighting facilities in public areas. 13. To provide house decoration management services. 14. When property owners and users entrust Party B to carry out repair and maintenance of their own premises, self-use facilities and equipment, Party Bshould accept the commission and charge a reasonable fee. 40  15. To provide special services, including collection and payment services, according to the actual needs of Party A and property users. 16. To set up service supervision telephone, and publicize the phone number in the bulletin board and other prominent position of the managed propertyarea. 17. To organize cultural and recreational activities and festive decorations. Chapter IV Service Standards Article 10 The service standards for the management of the project are as follows: 1. The 3rd level standards for property service shall be refereed to during provision of services. 2. The management procedures, quality standards and assessment of the project are carried out according to the requirements of the ISO 9001: 2008 qualitymanagement system. Chapter V Service Term of Entrusted Management Article 11 The term of property service is 3 years from the day after the completion of the check-in procedure for the first property user of the property, whichshall end at the day when the first property owner of the property has moved in for 3 years. If the property delivery is made in advance or delayed, the startingday of property service term under the contract shall be correspondingly brought forward or delayed, under which case the property service term remains 3years, and the final property delivery date shall be confirmed by Party A and Party B in writing. Chapter VI Property Management and Related Matters Article 12 Property management fee 1.Remuneration shall be paid for the project’s property management. 2.The property management fee shall be paid by the property owners in advance according to the building area owned by the owners based on thefollowing criteria: Office Building: 5.50 yuan / month / m3 Commercial Property: 5.50 yuan / month / m3 Residential Property: 3.00 yuan / month /m3 The property service funds are jointly owned by the property owners who have contributed to the funds and the funds are managed by Party B on behalf ofthe property owners. The funds include property service expenses and the remuneration made to the property service enterprise. 1. The property management fee consists of the following: (1) The wages, social insurance, dismissal compensation and the welfare fees legally set aside for Party B’s employees; (2) The daily operation and maintenance costs of the shared locations and the commonly shared facilities and equipment’s of the property; (3) The cleanup costs of the managed area of the property; (4) The landscaping and maintenance costs of the managed area of the property; (1) The order maintenance costs of the managed area of the property; (2) Party B’s overhead expenses; (3) Depreciation of fixed assets of Party B; 41  (4) The premium of property insurance, machine damage insurance and public liability insurance for the property’s shared locations, commonly sharedfacilities and equipment’s. (5) Financial audit fees; (6) Corporate tax and corporate income tax; (7) Refunding of advance payment made by Party A for preliminary operation; (8) Management remuneration. a)The property management fee shall be calculated based on the total construction area, the construction area of each functional area, the condition ofequipment system and the energy consumption data provided by Party A, taking into account the personnel and the relevant expenses and othermanagement expenses required by Party B in providing services for the project. If the data and the conditions of facilities and equipment provided byParty A are not in accordance with the actual situation, the above fees shall be adjusted accordingly. b)Where government-approved adjustment of energy unit price and changes in national laws and regulations lead to mandatory changes in labor costs,property management fees shall be adjusted accordingly. c)The property owners shall pay the Property Management Fee on a yearly basis as of the date of move-in as specified in the notice. For the propertymanagement fees that shall be borne by Party A according to the Property Management Measures of Beijing Municipality and its implementation rules,as well as the preliminary property service contract and commercial housing sales contract signed between Party A and the buyer, Party A shall payproperty management fees to Party B within the agreed period as agreed by Party A and the buyer in the property service contract. d)Expenditure on property services should be restricted to expenses agreed upon in the Contract, and the balance of the expenditure on property serviceswill be calculated once a year. The balance can be used to improve the quality of the scene, including but not limited to the increase in equipment andfacilities. However, any transformation shall be subject to the approval of Party A before implementation. After the establishment of the owners'committee, the approval authority shall be conferred to the owners' committee. Party B shall return the balance to the owner every two years inaccordance with the proportion of property costs paid by the owners. e)Where Party A undertakes to reduce or exempt the property management fee of the property buyer, Party B shall pay Party B the property managementfee after reduction or exemption on the basis of Party A's written confirmation. f)If the owners refuse to pay full or part of the property management fees due to the nonperformance of commitment made in the sales contract, changes inplanning, construction quality issues and other reasons of Party A, Party A shall make up the balance to Party B. g)For the facilities in the scope of property management that have been completed but have not yet been sold, or the properties that have been sold but notyet been delivered to the Buyers for the reasons of Party A or the facilities in Party A’s property management space, the property management fees andthe water, heat, electricity and gas expenses shall be borne by Party A. 42  h)It is the responsibility of Party A to provide Party B with true and complete information on the owners to whom the properties have been sold but thecheck-in have not been completed. To ensure the quality of service, after the property is completed and delivered, the property management fees forproperties sold but having not completed the check-in shall be collected against the owners by Party B. Chapter VII Parking Management Article 13 Parking management fee The parking management fee shall be collected by Party B against the users of parking lots according to the following standards: Ground parking fees and temporary parking fees shall be collected in accordance with the provisions of the competent government departments; Underground parking management fee: RMB 400 Yuan/month/m3 Article 14 Party B shall sign a written management service agreement with the users of the parking lot to clarify the rights and obligations of both parties inrespect of parking spaces and parking management services. Chapter VIII Special Maintenance Fees Article 15 The daily minor maintenance expenses of the shared areas, commonly shared facilities, equipment’s and public spots after the expiration of thehouse warranty shall be included as costs and expenses of property management. The overhaul and renovation costs shall be paid from the specialmaintenance expenses. When the special maintenance fees need to be used, a report shall be sent to Party A for approval, and a general meeting of the ownersshall be convened in accordance with the provisions of the Measures on the Management of Special Maintenance Fees to decide the cost expenditure issues. Chapter IX Property Management Areas Article 16 Party A shall, at the commencement day of the preparatory period of property management, provide the property management areas needed for theproperty management activities to Party B without charging fees and according to the actual needs, and Party A shall be responsible for the renovation of theproperty management areas, which include the following parts: 1.Customer reception room2.Property office and conference room3.Staff dining lounge4.Storehouse5.Other areas (depending on the specific circumstances of the project) Chapter X Remuneration and Payment of Property Management Services Article 17 The remuneration of property management services charged by Beijing Development Area Co., Ltd shall be as follows: 1. In case the D1F1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 /month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case theoccupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month. 43  2. In case the D1C1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 /month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case theoccupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month. Article 18 During the preparatory period of property management, the remuneration for Party B’s property management services shall be disbursed from theproperty management start-up capital and shall be paid at the same time as the property management start-up capital. Article 19 After business opening (move-in) of this project, Party B shall withdraw the remuneration of current month from the property management fees onthe 25th of each month. Chapter XI Business Opening (Move-in) Conditions Article 20 Party A shall obtain all necessary permits, licenses, etc. from the government as soon as possible after the signing of this Contract, and make themcontinuously valid, so that Party B can carry out its work in accordance with the terms of this Contract. Article 21 Party A shall be responsible for opening the supply channels for water, electricity, heating, gas, communications, post and telecommunications,and cable television for this project, and shall handle relevant business licenses. Article 22 Party A shall inform Party B in writing of the proprietors' information known by Party A and relevant undertakings made by Party A to proprietorsin the second month after the commencement of the preparatory period, and thereafter shall inform Party B in writing of the proprietors’ information knownby Party A and relevant undertakings made by Party A to proprietors from time to time in writing during Party A’s sales process. Party B shall carry outconfidential management for customers’ information. Article 23 After the project has been completed and passed completion examination and acceptance according to relevant provisions of the country, PartyA and Party B shall jointly organize the take-over acceptance of public parts, public facilities and equipment. Party B shall, within 15 days after receivingParty A’s application for take-over acceptance, perform take-over acceptance according to the National Housing Take-over Acceptance Standard. If they areexamined to meet applicable requirements, the acceptance qualification certificate shall be signed within 7 days, and relevant take-over documents shall beissued timely. Article 24 Party A shall transfer the following information to Party B when undergoing formalities for take-over acceptance of the property: 1.Site plan of the completion, drawings of the completed individual buildings, architectural structures, equipment, supporting facilities and undergroundpipelines; 2.Technical information on the installation, use and maintenance of the facilities and equipment; 3.Property quality warranty documents and property use instructions; 4.Counterparts or copies of inspection and acceptance reports, government approval documents, lists of items of civil works, ownership list of propertyrights of the house and supporting facilities; and 44  5.Other information necessary for property management Article 25 After the completion of take-over acceptance of the project, Party A shall send a Move-in Notice to proprietors and shall notify Party B in writingtwo weeks in advance of move-in time. Article 26 The facilities and equipment of the project which are entrusted to Party B for property management shall meet national acceptance standards.Imported equipment shall be equipped with enough spare parts and the corresponding supply channels shall be made available. In case any quality problemoccurs to the project, facilities or equipment, Party A shall urge suppliers to rework until it is qualified within an agreed period. At the same time, since thedate of take-over acceptance, Party A shall be responsible for warranty according to national regulations on warranty of construction projects. Chapter XII Other Management Article 27 The premiums of all insurances necessary for the property management of the project, including but not limited to all-risk insurance, machinerybreakdown insurance and public liability insurance, shall all be disbursed from the costs and expenses of property management operation. Above insurancesneed not be bought repeatedly if they have been bought by Party A. Article 28 All insurance policies of this project shall be insured by an local insurance company recognized and designated by Party A, and registered in thePeople’s Republic of China. The types of insurances and insured amounts shall be handled according to relevant provisions of insurance companies in Chinaand the actual situation of the project. The insured amounts shall be jointly determined by Party A and Party B. The insurance period shall be the same as theperiod during which Party B provides property management services. Article 29 Party B shall provide Party A with all original documents of relevant insurances, so that Party A can review, photocopy and record them. Party Bshall keep the aforesaid insurances valid during the entrustment period. Without Party A's prior written consent, Party B and / or its insurance company shallnot cancel relevant insurance policies under this Contract or amend information under any insurance policy. Chapter XIII Human Resource Management Article 30 Party B shall, before the commencement of the preparatory period of this project, recommend a project manager and candidates to Party A. Theproject manager (project leader) shall have more than 1 year experience in managing similar projects, and shall have experience in equipment and propertymanagement. Party A may also recommend a project manager and other property personnel as alternatives. If the project manager is to be replaced within theperiod of the Contract, Party B shall provide an alternative to the project manager confirmed by Party A. Other personnel shall be assigned to variousmanagement and service levels according to the preparatory work plan. 45  Article 31 Party B shall carry out training for the personnel before they assume their posts, and the expenses incurred for this purpose shall be disbursedfrom the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operationcosts and expenses after the business opening of this project. Article 32 Party B shall be responsible for formulating the organizational structure and remuneration standard of the property management organization ofthis project and shall prepare the annual staff structure and remuneration system of the project department according to the needs of each work by the end ofeach year. The staff structure shall include Party B's own employees and all the outsourcing business staff, as well as the duty description of each post, andshall be used as the reference for the recruitment of personnel after it has been approved by Party A. Article 33 The personnel sent by Party B for this project shall provide full-time services to the project, and shall not concurrently hold any office in Party B's functional departments or in other projects. Article 34 The labor costs incurred by all levels of management and service personnel sent or recruited by Party B shall be disbursed from the propertymanagement start-up capital before the business opening of this project, and shall be disbursed from the property management operation expenses after thebusiness opening of this project. Chapter XIV Rights and Obligations of Both Parties Article 35 Party A’s rights and obligations 1.Party A shall review the property management work plan prepared by Party B, inspect and supervise the implementation of Party B’s propertymanagement, and have the right to require Party B to rectify those failing to meet the plan indicators within a specified period; 2.Party A shall provide a property management room to Party B according to relevant provisions of this Contract; 3.Party A shall conduct property take-over acceptance with Party B according to relevant provisions of this Contract, and transfer relevant materials toParty B; 4.Party A shall be responsible for formulating the Temporary Management Convention, specify according to law the issues such as the use, maintenanceand management of the property; proprietors’ common interests; obligations proprietors shall perform; responsibilities which shall be borne in violationof the Convention, and shall require proprietors and property users to comply with them; 5.Party A shall show and explain the Temporary Management Convention to the property buyer prior to the sale of the property; and shall require theproperty buyer to comply with the Temporary Management Convention and make written commitment in signing the property sale contract with theproperty buyer; 6.The sale contract signed with the property buyer shall include relevant contents agreed in this Contract; 7.Party A shall pay to Party B the property management service remuneration, property management start-up capital, property management fees and otherrelated costs which shall be borne by Party A according to relevant provisions of this Contract; 8.Party A shall assist Party B in coordinating the relationship with local government administrative departments; 46  9.Party A shall assist Party B in property management, publicity and education and cultural activities; 10.Before the establishment of the proprietors committee, Party A shall not arbitrarily occupy or change the use function of shared facilities of this project.If it is necessary to reconstruct, expand or improve supporting items within the project, it shall be negotiated with all proprietors of the project and PartyB, and shall be reported to competent departments for approval before it can be implemented; 11.Party A shall ensure that the property delivered for use meets the provisions of national acceptance standards, and shall bear the warranty responsibilityfor the project according to the warranty period and warranty coverage stipulated by the country; 12.If the property fails to meet the use function and causes a major accident due to the house construction quality, the quality of equipment and facilities orinstallation technology or other reasons, and it is identified by relevant government departments to be the responsibility of Party A, Party A shall bearthe responsibility and deal with the aftermath. 13.If Party B violates relevant provisions of this Contract, and fails to complete the agreed management services, Party A shall have the right to requireParty B to rectify it within a specified time limit. Party A shall have the right to send a notice to Party B. If it causes economic loss to Party A, Party Bshall give Party A corresponding economic compensation. (1) Notice: Party B shall, within 5 working days after receiving the Notice, make a reply and propose a rectification plan. (2) Re-notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Notice, or Party B’s rectification fails tomeet Party A’s requirements, Party A may issue a "Re-notice " to deduct 5% of Party B's management remuneration of that month as liquidated damages, butnot more than 25% of the management remuneration of that month. (3) Final notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Re-notice, or Party B’s rectificationfails to meet Party A’s requirements, Party A may issue a "Final Notice". If Party B still fails to rectify it for no reason or Party B’s rectification fails to meetParty A’s requirements within 5 working days after receiving the Final Notice, Party A shall have the right to terminate the contract in advance, withoutbearing any liability, provided that Party A shall notify Party B in writing at least one month in advance and complete the formalities for replacing theproperty management enterprise. Costs and expenses of Party B sustained for such early termination of the Contract, such as staff dismissal fees, shall bedisbursed from the property management fees. 14.Party A shall have the right to provide value-added services to proprietors or property users according to the needs of the property and for the purpose ofimproving the quality of the property, provided that such value-added services do not affect the normal property management services. Party A shallensure that the value-added services provided comply with the provisions of national laws and regulations, as well as the Temporary ManagementConvention for the proprietors of the property. 15.If this Contract is terminated for any reason, Party A shall have the right to take over this project by itself or re-entrust a new property managementservice enterprise to take over this project. 47  Article 36 Party B 's rights and obligations 1.Party B shall provide property management services within this property area according to relevant laws and regulations and this Contract; 2.Party B shall charge property management fees, decoration management fees, decoration waste clearance fees, parking management fees, speciallyengaged paid service fees and other related fees from proprietors and property users according to relevant provisions of this Contract; 3.If proprietors or property users violate the Temporary Management Convention, laws or regulations, Party B shall take measures to discourage or stop itor file a lawsuit according to the seriousness of the case; 4.With the prior consent of Party A, Party B shall have the right to hire a professional service enterprise to undertake the project's special service business,but Party B shall not entrust all property management to a third party; 5.Party B shall accept the supervision and guidance from Party A, competent property management departments and relevant government departments; 6.Party B shall ensure and continuously improve the quality of services, control costs and reduce energy consumption; 7.Party B shall be responsible for preparing annual minor repair and maintenance plans for the house, ancillary buildings, public parts, shared facilitiesand equipment and greening, and shall organize their implementation; 8.Party B shall be responsible for preparing annual medium and major repair and renovation and maintenance plans for the house, ancillary buildings,public parts, shared facilities and equipment and greening, and shall organize their implementation after they are voted by the proprietors meeting. 9.Party B shall inform relevant provisions on the use of the property to proprietors and property users. When proprietors and property users decorate, PartyB shall inform relevant provisions, enter into a written agreement with them, and be responsible for supervision; 10.Party B shall be responsible for preparing the annual property management plan, fund use plan and final accounting report; 11.Party B shall publish the income and expenditure account of property management fees to all proprietors and property users every six months; 12.Party B shall conduct a property service satisfaction survey to all proprietors and property users every six months; 13.Party B shall not arbitrarily occupy or change the use function of the public facilities of the property. If it is necessary to reconstruct, expand or improvesupporting items within the property, it shall be approved by relevant proprietors and shall be reported to relevant approving parties for approval beforeit can be implemented; 14.If the property management fees are undercollected not due to Party B’s reason, resulting in that it is difficult to carry out property management work,Party B shall have the right to terminate this Contract and withdraw from the property management of the project, provided that Party B shall notifyParty A in writing three months in advance and assist Party A in aftermath and take-over work; 48  15.The quality of the building and its ancillary equipment and facilities of this project shall meet the quality standards set by the country. For any accidentor loss caused by its quality or defects which cannot be improved, Party B shall bear no responsibility. However, Party B shall be obliged to take timelyand effective measures to prevent expansion of the loss, and promptly notify Party A; 16.During the management period of Party B, if any damage to the equipment and facilities or accident occurs due to Party B’s poor management, and thuscauses property damage or personal injury to a third party, and it is identified by relevant government departments to be the responsibility of Party B,Party B shall bear corresponding responsibility; 17.Upon the termination of this Contract, Party B shall hand over various archival data kept during its management period to Party A or the proprietorscommittee; 18.If Party A violates relevant provisions of this Contract, and causes Party B not to complete management services, Party B shall have the right to requireParty A to resolve it within a certain period of time. If this causes economic loss to Party B, Party A shall give Party B corresponding economiccompensation; 19.Party B shall fully cooperate with Party A to provide value-added services to proprietors and property users, and provide all the convenience for this; 20.If this Contract is terminated for any reason, Party B shall unconditionally undergo formalities to hand over property management to Party A or aproperty management unit designed by Party A, and shall in no case delay the hand-over or create any take-over obstacle. The period for such take-overshall be 30 days; 21.If the property management services provided by Party B cause any liability accident, unexpected accident or litigation due to Party B’s reason, Party Bshall be solely responsible for this. If relevant events cause economic loss to Party A due to Party B’s reason, Party B shall compensate Party A for this; 22.All acts relating to the provision of property management services by Party B shall comply with Chinese laws and regulations and orders issued bygovernment departments. If Party A’s aspects, such as reputation, are affected by Party B’s unlawful act, Party A shall have the right to reserve the rightsof recourse for any loss sustained, such as in reputation, from Party B; 23.If Party B, after the termination of this Contract, does not transfer the property management right to Party A or a property management enterprisedesignated by Party A, or withdraw from the property under this Contract, or hand over the management room or relevant archival data, Party B shall payRMB 2,500 as liquidated damages to Party A for each overdue day. If Party B still fails to transfer the property management right and withdraw from theproperty within 30 days after the termination of this Contract, Party A shall have the right to take all measures according to relevant laws andregulations, and all legal liabilities and economic consequences arising herefrom shall be borne by Party B. 24. 49  Chapter XV Handling of Unforeseeable Events Article 37 In order to safeguard the vital interests of the public, proprietors and property users, if Party B sustains necessary economic loss due to takingemergency measures in case of unforeseeable events, such as gas leakage, electric leakage, fire, water pipe burst, rescue of life, assisting the public securityorgans in carrying out tasks, both parties shall handle such events according to relevant laws and regulations. Chapter XVI Termination of Contract Article 38 Party A and Party B agree that this Contract can be terminated if any of the following cases occurs, provided that the terminating party shallnotify the other party in writing in advance: 1.This Contract shall be automatically terminated upon the expiry of the validity term agreed in this Contract; 2.This Contract shall be terminated after the property service contract signed between the proprietors committee of this project on behalf of all proprietorsand the property management enterprise takes effect; 3.This Contract shall be terminated if Party A and Party B mutually agree and reach a written agreement; 4.This Contract cannot be fulfilled due to force majeure; 5.Either party is subject to legal sanction, and suffers bankruptcy liquidation; and 6.Other provisions specified by laws and regulations. Article 39 After the termination of this contract, Party A and Party B shall well handle their creditor’s rights and debts, including the liquidation of propertymanagement fees and various agreements signed with an external party. Party B shall assist Party A in handover and aftermath work of property services. Article 40 In 3 months prior to the expiration of this Contract, Party B may apply to Party A for the renewal of this Contract. After Party A reviews andapproves it, both parties may agree to renew this Contract in the form of a supplementary agreement. Chapter XVII Liability for Breach of Contract and Dispute Resolution Article 41 If Party B violates relevant provisions of this Contract and fails to complete the agreed management services, Party A shall have the right torequire Party B to rectify it within a specified time limit. If the rectification still fails to meet the requirements within this time lime, Party A shall have theright to terminate this Contract. If this causes economic loss to Party A, Party B shall give Party A corresponding economic compensation. Article 42 If Party A violates relevant provisions of this Contract, causing Party B not to complete management services, Party B shall have the right torequest Party A to settle it within a certain period of time. If Party A fails to settle it within this time period, Party B shall have the right to terminate thisContract. It this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation. Article 43 Party B shall bear no responsibility in the following cases: 1.If the property management services are interrupted due to force majeure (including natural disasters, war, etc.), Party B shall inform Party A aboutrelevant information within 48 hours after the end of the force majeure event, and at the same time provide effective evidence for the occurrence of thisforce majeure event; 50  2.Party B has fulfilled the obligations of this Contract, but the inherent defect of the property itself causes loss, Party B shall be obliged to take timely andeffective measures to prevent the expansion of this loss, and shall promptly notify Party A; 3.If loss is caused due to maintenance of the shared areas, public facilities and equipment of the property, which has been informed to proprietors andproperty users in advance, or loss is caused by temporary interruption of water supply, power supply and public facilities and equipment; or 4.If loss is caused by the interruption of water supply, power supply heating, communications, cable television and other public facilities and equipmentnot due to Party B responsibility. Article 44 For any dispute arising from or in connection with the performance of this Contract, both parties shall settle it through friendly negotiation. If nosettlement can be reached through negotiation, either party may bring a lawsuit to the people's court of the place where this Contract is performed. In thecourse of the proceedings, the contract shall continue to be fulfilled except where the parties are in dispute. Chapter XVIII Supplementary Provisions Article 45 Both parties agree that Party B shall, according to Party A’s commission, undergo take-over acceptance formalities 30 days prior to the move-inof the first proprietor. Article 46 Both parties shall cooperate with law enforcement activities, rescue and other public affairs to be carried out within the property area, and shallnot obstruct such affairs. Article 47 Neither party shall transfer or sell or assign its rights, responsibilities and obligations under this Contract in any manner without the writtenconsent of the other party. Meanwhile, neither party shall disclose any trade secrets obtained from the other party to a third party. Otherwise, the default partyshall compensate for the loss caused to the other party. Article 48 This Contract shall only take Party A and Party B as beneficiaries. Except for both parties to this Contract, this Contract cannot be implementedby any other person. Article 49 During the execution period of this Contract, both parties agree that each party may refer to the name and service identification of the other partyin the following way in its business promotion and producing relevant publicity materials, and each party shall not charge any fees from the other party forthis .The reference shall be as follows: Party B referred by Party A: Entrusted property services: Beijing Development Area Co., Ltd Party A referred by Party B: Entrusted service project: Beijing Jingkai One Center Article 50 After the termination of this Contract, neither party shall continue to refer to the name and service identification of the other party in its businesspromotion or on its relevant publicity materials. Article 51 The annexes to this Contract are an integral part of this Contract, and shall have the same legal effect as this Contract. Article 52 As for issues not mentioned in this Contract, or if any objection arises in interpreting this Contract, both parties shall settle or sign asupplementary agreement on the basis of friendly negotiation. 51  Article 53 Any amendment or supplement to this Contract shall be confirmed in writing by both parties, and shall have the same legal effect as thisContract. The contents of such amendment or supplement shall not be inconsistent with the contents of this Contract and the Temporary ManagementConvention. Article 54 This Contract shall be made in sextuplicate, with Party A and Party B each holding three copies. Each of these 6 copies shall be original, andshall have the same legal effect. Article 55 The counterpart copies (stamped) of Party A and Party B’s business licenses within the validity period shall be attached as annexes. This Contract shall take effect as of the date when the representatives of both parties sign and seal this Contract on the date specified on the first page of thisContract, and shall be valid as an annex to the "Commodity Housing Presale Contract" or the "Contract for Sale of Finished Commodity Housing", and shallbe binding on all proprietors of this property. Party A: Beijing Jingkai-Gongda Investment Management Co., Ltd /s/Beijing Jingkai-Gongda Investment Management Co., LtdParty B: Beijing Development Area Co.,Ltd /s/Beijing Development Area Co.,LtdSignature and seal: /s/Shiyi ZhouSignature and seal: /s/Guangqing GuoDate:Date: 52  Annexes: 1. Layout Plan 2. Details of Property Constitution 3. Details of Commonly Shared Sections of the Property 4. Details of Commonly Shared Facilities and Equipment of the Property 5. Details of Property Service 6. List of Hand-over Materials 53  Annex 1: Layout Plan 54  55  Annex 2: Details of Property Constitution Boundaries of Property Corresponding Planned Building Number Planned Construction Area (m3) Floor Area (m3) Remarks B1 office building 6674.59 B2 office building 5999.00 B3 office building 5013.55 B4 office building 4605.2 B5 office building 6262.02 B6 office building 4893.38 B7 office building 6262.02 B8 office building 3419.06 B9 office building 3433.89 B10 office building 4914.03 B11 office building 2895.65 Stage 1 D1F1 B12 office building 2715.48 Parcel (east to B13 office building 2895.65 54928.2 Jinghai 3rd Road; B14 office building 2715.48 west to Jinghai Subtotal 83832.86 1st Road; south toKechuang 13th A1 Residential Building and Supporting CommercialProperties 9398.70 Street; north to D1Block Road) A2 Residential Building and Supporting CommercialProperties 11102.12 A3 residential building 5107.47 A4 residential building 8122.87 A5 residential building 5107.47 A6 residential building 8191.73 Subtotal 47030.36 Total 130863.22 Stage 2 D1C1 C1 office building 33639.54 Parcel (east to C2 office building 24753.57 Jinghai 3rd Road; C3 office building 15049.66 west to Jinghai C4 office building 19990.67 1st Road; south toD1 Block Road; north to Kechuang12th Street;) DX1 underground garage, commercialproperties, ancillary facilities, and air raidshelters 37924.56 37994.9 Total 131358 The final area shall be determined by the actually measured area in the report. 56  Annex 3: Details of Commonly Shared Sections of the Property 1. Load-carrying structure of the building 2. Main structure of the building 3. Public hallways 4. Public corridors 5. Public staircases 6. Inner courtyard 7. Outdoor wall surfaces 8. Roofs 9. Fire control and security surveillance rooms 10. Machine rooms 11. Public restrooms 12. Public greens 13. Rooms used by property service company 57  Annex 4: Details of Commonly Shared Facilities and Equipment of the Property 1. Elevators: 36 units 2. Septic tanks and rainwater retention tanks 3. Power distribution room 4. Power distribution room 5. Main boxes 6. Property service rooms 7. Rooms for commonly-shared facilities and equipment 8. Underground motor vehicle parking garages 9. Roads 10. Inter-building and central greens 11. Sewer manholes 12. Catch basins 13. Power transformation and distribution system 14. Public lighting facilities 15. High pressure water pumps 16. Fire facilities 17. Lightning protection facilities... 58  Annex 5 Standard for Beijing Residential Property Management (Class III)DB11/T 751-2010 Class III Standard for Beijing Residential Property Service 1. Basic requirements 1.1 Customer service premises 1) A customer service center with office furniture, telephones, and other office equipment shall be set up. 2) An original copy or photocopy of the qualification certificate of the property service company, photos of persons in charge of the project, property serviceitems, service standards, chargeable items, charge rates, and all other relevant information shall be made public. 3) The customer service center shall be open for business for at least 8 hours during work days and shall have watch-keepers on duty beyond the work hours. 4) 24-hour service hotlines shall be set up and made public. 1.2 Staffing 1) All staff shall obtain vocational qualification certificates as required. 2) The staff shall wear uniforms and badges according to their respective job posts. 3) A project leader in charge of the property service project, as well as building safety administrators, shall be appointed. 4) The project leader shall have more than 2 years of work experience on an equivalent job post with a property service company and shall be currentlyregistered in the municipal credit information database of project leaders. 1.3 Rules 1) Management rules shall be established for the maintenance and repair of commonly-shared sections and facilities, fire safety and prevention, greening andlandscape maintenance, environmental sanitation, and maintenance of public order. 2) An emergency plan shall be established for unexpected public events. 3) A training system shall be established to organic training and examination on a regular basis. 4) A property service log shall be created. 1.4 Archives 1) A property management file shall be created 2) Personnel shall be appointed for file management 3) Basic information, basic records, repair and maintenance records, and charging records shall be managed with computers. 1.5 Signs Property service signs, such as safety warnings, operation and construction warnings, and kindly reminders shall be set up. 1.6 Customer service 1) The performance of the property service contract and the income and expenditures in the previous year, as well as the budget for the current year, shall bemade public in the first quarter of every year. 2) For important matters of property service which are related to the normal life of proprietors or house users, notices shall be posted at main entrances andexits as well as the entrance to each apartment unit. 59  3) Conducts in violation of laws and regulations on public security, planning, and environmental protection shall be discouraged and reported to competentauthorities. 4) For urgent repairs of water and power facilities, repair workers shall reach the site within 20 minutes. For other repairs, repair workers shall reach the sitewithin the time limit agreed upon by both Parties. Notices shall be given within 30 minutes of repairs of facilities and equipment for which specializedservice enterprises are responsible, and return visits shall be paid for such repairs. 5) Responses shall be made within 2 work days to the opinions, suggestions, and complaints made by the proprietors or house users. Return visits shall bepaid for complaints. 6) Opinions on property service shall be publicly solicited once every year; subsequent rectifications shall be made public. 7) Service quality of the project shall be examined once every month. Safety inspections shall be conducted before important holidays and festivals. 8) Proprietors shall be invited to visit the machine rooms for commonly-shared facilities and equipment every year. 9) At least one community culture event shall be organized every year. 10) Bulletin boards shall be set up, in order to assist relevant authorities in public welfare publicity programs. 11) Insurances for shared sections, shared facilities and equipment, and public liability shall be bought as required. 12) If conditions permit, specially engaged services, such as indoor cleaning, laundry, cooking, car wash, property custody, and ticketing shall be provided. 1.7 Commissioning of the management specialized services 1) Commissioning contracts for specialized services shall be signed to define the rights and obligations of each party. 2) Specialized service enterprises shall meet the qualification requirements set out by competent authorities; operating personnel shall have correspondingvocational qualification certificates. 3) The staff of specialized service enterprises shall wear uniforms and badges. 4) Specialized services shall be supervised, managed, and assessed. 2. Operation, repair, and maintenance of commonly-shared sections, facilities, and equipment 2.1 Integrated management 1) Basic files of housing and commonly-shared facilities and equipment shall be created. 2) Operation, inspection, and maintenance records shall be archived on a monthly basis. 3) Inspections shall be conducted to assess the safety of the use of houses. 4) For problems identified during the inspection of commonly-shared sections, repair plans shall be developed according to the scopes of responsibility andthe problems shall be repaired in accordance with their respective repair plans; failures in the operation of commonly-shared facilities and equipment, as wellas problems identified during inspections, shall be repaired promptly. 5) The repair and maintenance plan for the next year shall be determined in the fourth quarter of every year. 6) Special-purpose equipment shall be operated, repaired, maintained, and regularly tested in accordance with relevant regulations. 60  7) Inspections shall be conducted and preventive measures shall be implemented before and after extreme weather conditions, such as thundering, heavyrainfall, strong winds, and sandstorms. 8) Machine rooms (1) Machine rooms shall be cleaned once per month and shall be clear of sundries (2) Mouse baffles, raticide boxes, or mouse glue traps shall be set up. (3) Fire equipment shall be provided in easily visible and accessible positions. Fire equipment shall be checked once per month to make sure it is intact andeffective. (4) Facilities and equipment shall have all necessary signs and nameplates. (5) Relevant rules and certificates shall be posted or hung in easily visible positions (6) Shift handover records and work logs shall be full and complete. 2.2 Commonly-shared sections 1) Building structure Structural members, such as beams, plates, and columns shall be checked once per quarter. If any deformation or crack is detected during visual inspection, arequest for building safety assessment shall be filed, necessary protection measures shall be taken, and repairs shall be carried out according to the assessmentresults. 2) Building components A) Wall finish, plastering, eaves, balconies, rainshades, and supporting members for outdoor units of air conditioners shall be checked once per quarter B) Patrol inspection shall be conducted once per month for doors, windows, and glass of commonly-shared sections. C) Indoor flooring, wall surfaces, ceilings, outdoor roofs, and water aprons of commonly-shared sections shall be checked once per quarter. D) Waterproofing and rainwater down pipes shall be checked before the flood season every year and after heavy rainfall 3. Ancillary structures 1) Patrol inspection shall be conducted once per month for roads, yards, stairs and handrails, curb stones, tube wells, ditches, and channels. 2) Rainwater and sewage wells shall be checked once per quarter. 3) Patrol inspection shall be conducted once per month for gates, enclosing walls, and fences. 4) Patrol inspection shall be conducted once per month for leisure chairs, pavilions, sculptures, and featured landscapes. 5) Lightening protection devices shall be tested once per year. 2.3 Air conditioning system 1) Before operation, a systematic inspection shall be conducted for the water chilling unit, circulating water pumps, cooling tower, fans, fan coils, and watertreatment facilities and equipment. 2) During operation, patrol inspection shall be conducted once per day for the air conditioning system in order to ensure that the indoor temperature meetsrelevant requirements. 3) Energy saving measures shall be developed and energy consumption shall be counted and analyzed on a monthly basis. 61  4) Pipes and valves shall be checked and derusted once per year. 5) Pressure vessels, meters, and noise of the cooling tower shall be checked once per year. 6) The fresh air ventilator, air processor filter screen, surface air cooler, box body, and fan coil filter screen shall be cleaned and sterilized once per year. 7) An overhaul shall be conducted on the air conditioning system every year. 2.4 Secondary water supply facilities 1) Sterilizing equipment shall be used in accordance with requirements by health and disease prevention authorities. Cleaning and sterilizing shall beconducted according to relevant requirements. Water quality measured in water quality tests shall meet national hygienic standards on domestic and drinkingwater. 2) Patrol inspection shall be conducted twice per day on the water tank room and water pump room in order to check the operating status of equipment. 3) The standby water pump shall be switched online once per quarter. 4) Lubrication of water pumps shall be checked once per year; the lubricant shall be replenished or replaced as necessary. Water pumps shall be maintainedonce per year. 5) Water supply pipes and valves shall be derusted and painted every year. All exposed pipes shall be freeze-proofed before the beginning of each winter. 6) Cover plates of the water tank and the impounding reservoir shall be kept intact and locked; the key shall be kept by specially assigned persons. Theoverflow pipe orifice and the ventilation pipe orifice shall be covered with metal protection screens and shall be kept intact. 2.5 Drainage system 1) Drainage facilities Before each flood season, the rainwater and sewage wells and roof rainwater inlets shall be inspected, cleaned, and dredged. After every rainfall, the maindrainage outlets and tubular wells shall be inspected. 2) Sewage pumps Patrol inspection shall be conducted twice per day during the flood season and once per week beyond the flood season in order to check the operating statusof the equipment; a manual startup test shall be conducted once every two weeks; maintenance shall be done once per quarter. 3) Septic tanks Septic tanks shall be checked once every six months and shall be dredged if necessary. 2.6 Lighting and electrical equipment 1) In-building lighting Patrol inspection shall be conducted three times per week. General failures shall be fixed within one day; complicated failures shall be fixed within 5 days. 2) Outside-building lighting Patrol inspection shall be conducted once per week. General failures shall be fixed within one day and complicated failures shall be fixed within one week.The time controller shall be adjusted once per month. 3) Emergency lighting Patrol inspection shall be conducted once per day. Any failures identified shall be instantly fixed. 4) LV cabinets 62  Patrol inspection shall be conducted twice per day on the operating status of equipment. Maintenance shall be done once per year, including fastening,testing, and cleaning; electrical safety shall be checked once per year. 5) LV power distribution cabinets and LV lines Patrol inspection shall be conducted once per month on the operating status of equipment; Maintenance shall be done once per year, including fastening,testing, and cleaning. 6) Control cabinets Patrol inspection shall be conducted once every two weeks on the operating status of equipment; Maintenance shall be done once per year, includingfastening, testing, commissioning, and cleaning. 7) Power generators Commissioning shall be done once per month to ensure normal operation. Storage batteries shall be activated once per year. Patrol inspection shall beconducted once per week for battery chargers and storage batteries. 8) Testing The in-house power meter shall be tested once every five years. 9) Power distribution rooms and power distribution compartments on every floor Proper measures shall be taken to keep out small animals. Perimeters of wiring ducts passing through walls shall be tightly sealed. Locks shall be intact.Incoming and outgoing lines of cables and switches shall have proper signs. 2.7 Security system 1) Alarm control host Patrol inspection shall be conducted once per day to check the operating status of equipment. Surfaces shall be cleaned once every two weeks and interiorsshall be cleared of dust once every six months. 2) Door machine of intercom Buttons and display shall be checked once per month. Surfaces shall be cleaned once per month; Interiors shall be cleared of dust once every six months. 3) Network control cabinet Appearance shall be checked once every six months. For connecting wires, surface cleaning shall be done once per quarter and internal dedusting shall bedone once per six months. 4) Infrared emission detectors Wiring, detecting range, and waterproofing shall be checked once per quarter. Surfaces shall be cleaned once per quarter and interiors shall be cleared of dustonce every six months. 5) Video acquisition devices Surveillance images and video recording functions shall be checked once per week. Surfaces shall be cleaned once every two weeks and interiors shall becleared of dust once every six months. 6) Cameras A) Focusing, infrared night vision, wiring, and waterproofing shall be checked once per quarter and adjustments and tests shall be performed as appropriate.Surface cleaning shall be done for lenses once per quarter. Internal dedusting shall be done for the protective housing once every six months. B) During operation, patrol inspection shall be conducted on the spray pond, water pumps, and ancillary facilities twice per week and the anti-creepingfacilities shall be checked once per month. 63  C) Safety warning signs shall be set up as necessary. D) Water quality shall meet hygienic requirements. 3. Fire safety and prevention 3.1 Integrated management 1) A fire safety responsibility system shall be established and implemented. Persons responsible for fire safety shall be appointed. Fire safety responsibilitiesshall be clearly defined for every level and every job post. 2) A voluntary firefighting team armed with necessary firefighting equipment shall be set up. Relevant personnel shall master the basic firefightingknowledge and skills. A fire drill involving employees and proprietors or house users shall be organized annually. 3) Fire safety bulletins shall be set up and regular fire safety education shall be carried out. Two fire safety trainings shall be provided for employees everyyear. 4) Patrol inspection shall be conducted on fire protection once per day. Fire protection inspection shall be conducted once per month. Firefighting equipmentshall be tested once per year according to relevant regulations in order to ensure that the evacuation paths, safety exits, fire lanes, and firefighting facilitiesand equipment meet relevant safety requirements. 5) An conduct in violation of fire safety rules, as well as fire hazards, must be immediately corrected or eliminated once discovered. Any conduct or hazardthat cannot be corrected or eliminated must be reported to the fire department of the local police. 6) The fire control room shall be manned by watch-keepers around the clock. Each shift, which consists of two persons, shall promptly process all kinds ofalarms and failure information. 7) In the event of a fire, the police must be immediately notified. Attempts shall be made to put out fire in its initial stage, personnel in danger shall beevacuated, and assistance shall be offered to the fire department. 3.2 Repair and maintenance of firefighting facilities and equipment 1) Automatic fire alarm system (1) Patrol inspection shall be conducted once per day on fire alarm controllers interlock control equipment to check the functioning of equipment and toensure uninterrupted around-clock normal operation. The alarm function of alarm controllers and interlock control equipment, as well as the interlockcontrol, display, and printing functions, shall be checked and tested once per month. Interiors of machine cabinets shall be dedusted once per year. (2) Fire alarm controllers, manual alarm buttons, and alarm devices shall be randomly selected for testing once per month. After having been in use for 2years, the alarm and warning functions of manual alarm buttons and alarm devices shall be cleaned by specialized cleaning companies once every three years. (3) Standby power supply The master power supply and standby power supply shall be tested and switched between each other once per month. The standby power supply and storagebatteries shall be put to one charge-discharge test every quarter. 64  2) Fire control broadcast system The interlock and forced switchover functions of fire emergency telephones, intercom phones in important locations, intercom telephone hosts, broadcastequipment, megaphones, and loudspeakers shall be checked and tested once per month, and their volume shall be tested as well; the interiors of machinesshall be removed of dust once per year and the equipment inside cabinets shall be removed of dust once per year. 3) Smoke control and exhaust system Irrigation shall be well planned. The irrigating water shall completely and evenly permeate the soil to prevent conspicuous drought and flood; Generally,plants must be watered 4 months before germination, 5 months before germination, in autumn, and before winter, respectively. For cool-season lawns, ahigher frequency of irrigation may be adopted according to the growth and soil conditions. 2) Fertilization Fertilizers shall be administered according to plant growth. Arboreal trees shall be fertilized once or twice every two years; shrubs shall be fertilized once ortwice per year; Ground cover and lawn plants shall be fertilized twice or thrice per year. Additional fertilization may be used for bedding plants according totheir growth. Dependence on chemical fertilizers shall be minimized. 3) Pest and plant disease control Based on the pattern of plant pests and diseases, plants shall be inspected at least three times per month during the growing season and pests and diseasesshall be controlled in accordance with the inspection results, so that leaves do not fall prematurely and plants do not die because of pest or disease. 4) Trimming Arboreal trees shall be trimmed once every winter. Shrubs shall be trimmed once during the growing season and in the winter, respectively. The green hedgesand color lumps shall be trimmed once before the Labor Day, before the National Day, and in the winter, respectively. Cool-season lawns shall be trimmed atleast once or twice per month, depending on the growth, during the growing season and at least 12 times per year. 5) Weeding Full weeding shall be carried out three times per year. The weeding frequency shall be elevated for important green belts. Green belts with weeds shall notexceed 10% of the total green belt area. Seasonal weeds shall be effectively controlled. 6) Garbage disposal Waste created during greening work and garbage in the green belts shall be cleared three times per week. 4.3 Inspection of work 1) Greening work shall be checked three times per month during the growing season. 2) Landscape maintenance measures and work plans shall be developed for each quarter. 3) Greening files shall be present. 5. Environmental hygiene 5.1 Collection and removal of household garbage 1) Sorted collection shall be implemented for household garbage. 2) Hermetic garbage collection vessels with sort signs shall be provided. 65  3) Garbage collection vessels shall be cleaned at least once every two weeks. Pesticides shall be sprayed daily during the breeding season of flies andmosquitos. 4) Garbage shall be moved to designated garbage disposal sites once per day and shall not be dumped randomly. 5) Garbage trucks shall be clean and tidy in appearance. 5.2 Cleaning of commonly-shared sections of property 1) Inside buildings (1) Lobby and elevator hall on 1st floor The ground of the lobby and the elevator hall on the 1st floor shall be swept and mopped once per day. The mailboxes and glass surfaces in the lobby shall bewiped once per week. The wall surfaces in the lobby and in the elevator hall shall be wiped once per month. Patrol inspection and cleaning shall be done forthe lobby and the elevator hall on the 1st floor once per day. (2) Corridors and stairs Grounds of corridors and stairs shall be swept once per week and mopped once every two weeks. Shared facilities, such as handrails, windowsills, fire doors,fire hydrants, and signs of the stairs, shall be wiped once every two weeks. Light fixtures in the building shall be dedusted once per quarter. Patrol inspectionand cleaning shall be done for the corridors and stairs on a daily basis. 2) Elevator compartment The doors and panels of the elevator compartment shall be wiped once per day. The ground of the elevator compartment shall be mopped once per day.Elevator compartments decorated with stainless steel or other materials shall be maintained once per month. Elevator compartments decorated with stonematerials shall be maintained once per quarter. Patrol inspection and cleaning shall be done twice per day for the elevator compartment. 3) Terrace and roof: The terrace and roof shall be swept once per quarter; during the rain season, the terrace and the roof shall be swept once every 2 months.Patrol inspection shall be conducted once per month on the terrace and internal courtyard and any sundries shall be promptly removed. 4) Outdoor roads and facilities Sweeping shall be done once per day and patrol inspection and cleaning shall be done twice per day for the outdoor roads. The outdoor public lighting andshared facilities shall be cleaned once per month. Rain hoods and door awnings shall be cleaned once per quarter. 5) Waterscape Sterilization and purification shall be carried out according to the water quality. During operation, the water surface shall be cleaned twice per week and thebottom of the pond shall be cleaned twice per year. 6) Pest control and prevention Assistance shall be offered to competent authorities in pest control and prevention. Prior notices shall be given of pesticides to be administered. Easilyvisible signs shall be set up where pesticides have been administered. 7) Cleaning in rainy and snowy weathers After a rain, water in the main roads and trunk roads of the community shall be swept away. In snowy weathers, ground snow shall be promptly swept awayand ground ice shoveled. If it snows at night, the ice and snow on main roads shall be removed before 10:00 AM next morning. 66  5.3 Inspection and logging of work 1) Quality of cleaning shall be checked once per day and proper records shall be kept. 2) Quality of cleaning shall be fully checked once per quarter and proper records shall be kept. 3) Complete cleaning files shall be kept 6. Maintenance of public order 6.1 Main entrances and exits shall be guarded by specially assigned watch-keepers around the clock. 6.2 Patrol inspection routes shall be set. Patrol inspection shall be properly carried out and recorded, twice between 6:00 and 22:00 and once between 22:306:00. 6.3 Patrol inspection shall be conducted on parking lots and order shall be properly maintained for the use of roads and sites. 6.4 Motor vehicles must have proper permits when entering or exiting the property. 6.5 Security control rooms shall be manned by specially assigned watch-keepers around the clock; Surveillance videos and alarm records shall be retained for30 days in case of the need to investigate. Management rules and emergency plans shall be posted in conspicuous positions. 6.6 Illegal conducts shall be immediately reported to the police and assistance shall be offered to competent authorities in processing illegal conducts. 6.7 Two special emergency plan drills shall be conducted every year and proper records shall be kept. 6.8 Duty personnel shall stand by around the clock. 6.9 Records and files 1) Complete and valid records shall be kept of all items of work. 2) Complete files shall be kept. 7. Decoration and fitting management 7.1 Decoration and fitting management service rules shall be established. 7.2 Decoration and fitting management files shall be created. 7.3 Declaration and registration of proprietors or house users for decoration and fitting shall be proper handled. Interior decoration and fitting managementservice agreements shall be signed with proprietors or house users, who shall be informed of the forbidden behavior and precautions in the decoration andfitting work. 7.4 During decoration and fitting, patrol inspection shall be conducted for the site once per day. If it is discovered that the proprietor or the house user fails todeclare and register the decoration and fitting project or violate the law or any relevant regulation, such behavior shall be immediately dissuaded. If theproprietor or the house user refuses to correct such behavior, the violation shall be reported to competent authorities, the proprietor, and the proprietorscommittee and shall be made public within the range of the property management. 7.5 Inspection shall be carried out after decoration and fitting is completed. Any interested party that violates the interior decoration and fitting managementservice agreement shall be treated as agreed. 7.6 If the removal of decoration waste is commissioned to a third party, the waste shall be temporarily piled in designated locations and retention andcovering measures shall be taken. Such waste shall be removed within 2 days. If the decoration waste is to be removed by the constructor, the waste shall betransported out of the property in bags or in hermetic vessels within 2 days. 67  Property Service Contract of Beijing Jingkai One Center Project Annex 6: List of Hand-over Materials 1. Site plan of the completion; as-built drawings of individual buildings, structures, and equipment; as-built drawings of supporting facilities andunderground pipes; and layout drawings of pipelines for buildings. 2. Technical data on the installation, use, and maintenance of facilities and equipment 3. Quality warranty documents and user's instruction documents of the property (Building Quality Warranty and Building User's Manual) 4. Materials of acceptance inspection by related professional agencies 5. List of property rights of the house and supporting facilities (including proprietor's name, construction area, and contact information) 6. Pressure test reports for water supply and heat supply systems 7. Report on measured area 8. Other materials required for property service 68  Beijing Jingkai·One Center Project Temporary Management Convention Project Owner: Beijing Jingkai-Gongda Investment Management Co., Ltd. (MM)/(DD)/(YY) 69  Table of contents Part 1General provisions71Part 2Overview of property71Part 3Use, maintenance and management of exclusive areas of property72Part 4Use, maintenance and management of shared areas of property75Part 5Decoration and furnishing78Part 6Preliminary property service79Part 7Inspection and handover of project items80Part 8Property service fee81Part 9Other matters82Part 10Supplementary provisions82Letter of Commitment for Temporary Management Convention84 70  Part 1 General provisions To carry out the after-sales property management of Beijing Jingkai · One Center Project (this “Property”), safeguard legitimate rights and interests of allproprietors and house users, and to preserve public environment and order in the shared areas of the property, the project owner, prior to sales of the property,develops this temporary management convention (this “Convention”) with respect to use, maintenance and management of the property, common interestsand obligations of proprietors, and liability for violation of this convention in accordance with the Regulations of Beijing Municipality for RealtyManagement (Decree of the People’s Government of Beijing Municipality No. 219) and the relevant laws, regulations and policies. The Owner shall present and explain this convention to the Buyer prior to sales of the property. This convention shall be attached to the Beijing CommodityHousing Presale Contract or the Contract for Sale of Finished Commodity Housing in Beijing to be made by and between the first Buyer of the property andthe Owner (the “Housing Purchase Contract”) as an annex thereto. By written undertaking in connection with this convention, the first Buyer acknowledgesthis convention, and effects of this convention shall be extended to subsequent Buyers of the property. This convention shall be binding upon the Owner, proprietors and the house users. The proprietor shall warrant that the co-occupier and the relevant personto use this property in compliance with this convention and the relevant regulations. Agreements involving common interests of proprietors contained in the Preliminary Property Service Contract by and between the project owner and theproperty service enterprise shall be consistent with those of this convention. Part 2 Overview of property I. Overview of properties within the property area: Name of property: Beijing Jingkai · One CenterLocation: Lot D1F1, Eastern Zone, Beijing Economic-Technological Development Area RoadType of property: office and commercial propertiesFloor area: 83,832.86m2 (measured area prevails) Scope of the propertyEast to: 3rd Jinghai RoadSouth to: 13th Kechuang StreetWest to: 1st Jinghai RoadNorth to: Qujian Road D1# Details concerning properties situated within area of this property are found in the Preliminary Property Service Contract. II. Rooms for property service within area of this property are located on the aboveground 1F and underground 1F of A2, with floor area: aboveground100m2, and underground 50m2. 71  III. Overview of property service enterprise: Name of enterprise: Beijing Jingkai Investment Development Co., Ltd. Legal representative: Guo Guangqing Business license number: 110000001699163 Qualification class and qualification certificate number: No.0075 JWQZS [2014] Registered office: Building 1, Zone A, Beijing Gongda Software Park, No. 1 Disheng North Street, Beijing Economic-Technological Development Area,Beijing, 100176, China Contact phone: 010-67873388 Part 3 Use, maintenance and management of exclusive areas of property IV. A proprietor is entitled to occupation, use, income and disposal of the exclusive area of the property, and shall also comply with the relevant laws andregulations of the country and Beijing municipality without endangering safety of the building or infringing upon legitimate rights and interests of any otherperson. The proprietor and the house user shall comply with regulations on supply of power, water, heating, and of gas, drainage, accessibility, ventilation,lighting, decoration & outfitting, surrounding sanitation and environmental protection, and properly deal with his or her relationship with proprietors ofneighboring houses in the principles of facilitation of use, safety and neatness of the property, fairness and rationality without jeopardizing public interestsand interests of any other person. V. A proprietor shall, upon expiration of the warranty period of the property, solely take charge of maintenance and repair of the exclusive area of his or herproperty. Such proprietor shall be liable for any loss of any other proprietor incurred due to delay in repair or maintenance or failure to take actions toeliminate potential safety risk. VI. A proprietor and a house user shall use the property for the planned purpose set forth in the house purchase contract, and annex and supplementaryagreement thereto, and where the planned purpose of the property has to be changed, such proprietor and house user shall complete the relevant procedures inaccordance with the laws subject to approval by the relevant competent governmental authority with written consent of the interested proprietor, projectowner and the property service enterprise, and shall notify the property service enterprise, property right holder and proprietors committee of such change.Nature of use of the shared sections and facilities that are developed within the property management area according to the planning shall not be changed. VII. A proprietor and a house user shall promptly deal with any potential safety risk that is revealed during use of water, electricity, gas, heating, cooling andventilation facilities and equipment in accordance with the relevant regulations and report such risk to the property service enterprise and authorityconcerned; coordinate with the relevant authority to take actions to avoid danger when emergency event occurs; comply with and ensure their employees,visitors, customers, agents and contractors to comply with regulations concerning fire protection safety and safety rules developed by property the propertyservice enterprise, and shall make sufficient fire extinguishers available within his or her unit. 72  VIII. For outdoor and indoor equipment, facilities, and garden greening and sites of a proprietor,, which are either situated within the exclusive area or areused by such proprietor independently, such proprietor shall entrust the qualified professional enterprise with regular inspection, repair and maintenance ofitems including (but not limited to) lifting equipment, pressure vessel equipment, pressure gauge, fire-fighting facility and equipment, greening supportfacility and equipment, and central air-conditioning equipment, obtain the permit for safe operation from the competent governmental authority, and shall beliable for any and all expenses incurred in connection therewith pursuant to the relevant regulations of the country and Beijing municipality. VX. Neither a proprietor nor a house user shall modify structure, appearance and use of the house without authorization; engage in catering and other tradesresulting in excessive noises to residents and environmental pollution in the ground floor store of the residential property; open or block exterior door andwindow or change their sizes and styles without authorization; change material and color of finish of outer wall; erect or develop any building and structureon the roof, building body, and accessory platform and within any other commonly shared sections; and change the pipe without authorization. X. In the event that the property service enterprise has to access the exclusive area for repair, maintenance, renewal and renovation of the shared areas of theproperty, it shall give a prior notice to the relevant proprietor and house user, and proprietor and house user of the relevant exclusive area shall coordinatewith such enterprise. If a proprietor or house user hinders or provide negative coordination in connection with such repair, maintenance, renewal andrenovation, resulting in damage to or any other loss of the property, such proprietor or house user shall be liable for aggravation of the loss incurred from suchhindering or negative coordination. If the proprietor refuses or fails to repair after receipt of notice, the property service enterprise is entitled either to perform on its own or to cause any thirdparty to perform such repair , in which case the proprietor shall be liable for any and all consequential losses and expenses, and it shall also pay the propertyservice enterprise the fines equal to 2‱ of total property purchase price on daily basis for the period commencing from the date on which the propertyservice enterprise gives oral or written warning and ending on the date on which such repair is completed. Such fines shall be fully paid one time on the dateof remedy of the breach, and shall be allocated to the public fund of the community. If the proprietor refuses to accept liability for repair or loss, or fails to pay the fines on due date, hindering normal operation of the property or resulting indamage to the property or loss of any other proprietor, such other proprietor and the property service enterprise have the right to entrust professional lawyerwith safeguarding their rights, and such proprietor shall bear any and all consequential costs and expenses (including but not limited to attorney's fee). 73  In the event that the property service enterprise, as a result of an emergency that endangers public interests and legitimate rights or interests of any otherproprietor, has to access the exclusive area of a property for maintenance or repair, the property service enterprise shall notify the relevant proprietor or houseuser of such property in advance, and if it is indeed impossible to notify such proprietor or house user, the property service enterprise is allowed to performsuch repair or maintenance under supervision of the public security authority, government of the relevant jurisdiction, and other non-interested proprietor,provided that the enterprise shall notify the relevant proprietor or house user thereafter and shall well settle the problems arising thereafter. XI. In the event that a proprietor or house user has to temporarily occupy or dig road or site due to repair or maintenance of property or due to public interest,such proprietor or house user shall complete the relevant formalities in accordance with the relevant laws and regulations, issue public announcement inadvance, obtain written consent from the property service enterprise hired by the project owner, and shall reinstate such road or site within the agreed period.Such proprietor or house user shall be liable for any consequential loss of the property service enterprise, any other proprietor or house user, and any thirdparty. XII. If a property poses safety threat or endangers public interests or legitimate rights or interests of any other proprietor, the relevant responsible person suchas proprietor or house user of such property shall immediately take actions to eliminate such threat. 1. Neither a proprietor nor a house user shall raise any animal and pet within the area of property in the office park. 2. Where a proprietor or house user engages in such activities as production, processing, office and R&D in buildings in the park, such proprietor or houseuser shall execute the relevant national standards, develop the relevant management, production and safety measures, as well as prevention measures, andshall arrange and use park facilities and energy facilities in a reasonable manner. 3. To transport goods into or out of the park, the organization shall comply with the relevant property management rules, and the proprietor or house usershall go through the relevant formalities with the property service enterprise. Any large transportation vehicle with capacity more than 30t (including 30t) isprohibited from accessing into the park, and in case of transportation in such large vehicle, the proprietor or the house user shall arrange lighter on its own. XIII. Where a proprietor leases out, transfers or otherwise dispose of his or her exclusive area, such proprietor shall notify the project owner and the propertyservice enterprise in writing in advance, notify the tenant and the buyer of this convention in compliance with the regulations for leasing and transfer ofhouse, and shall notify the project owner and property service enterprise of the lease and transfer (i.e., attach this convention to the relevant contract ordocument as annex thereto, notify the project owner and the property service enterprise of disposal of the realty in writing within three days as of the date ofexecution of such relevant contract and document, and submit the letter of commitment for the right successor signing this convention to the property serviceenterprise), otherwise the proprietor shall be severally and jointly liable for loss and overdue fee incurred due to violation of the property management systemand this convention on part of the tenant and the transferee. 74  Part 4 Use, maintenance and management of shared areas of property XIV. A proprietor shall be entitled to rights and assume obligations in connection with shared area of the property, and shall not refuse to fulfill obligationsby reason of waiver of any right. When using shared area of the property, a proprietor or house user shall comply with regulations and rules developed by theproject owner for use of shared area of property, and maintenance of public order, environment and sanitation in accordance with the Preliminary PropertyService Contract. In case of damage to the shared area of property as a result of improper use on part of the user, the responsible person shall assume the legalliabilities such as reinstatement and compensation for loss. XV. A proprietor or house user shall reasonably use the shared facility and equipment, consciously maintain the property neat and good-looking, and complywith regulations of the governmental for appearance and environment of the municipality. A proprietor or house user shall not erect any facility, building orstructure, permanent or temporary, within the public area; not damage pipe well or cable above or ground the greening area, not shade or enclose the well lid,and not disturb necessary infrastructure within the greening area, installation and normal operation of the equipment. XVI. When driving and parking a vehicle within the property management area (including motor vehicle and non-motor vehicle), a proprietor or house usershall comply with the rules for driving and parking within the property management area without parking the vehicle on the shared road, public greeningarea and other public sites and without occupying fire-fighting passageway or outdoor hydrant and equipment pipe well. A property service staff has the right to instruct any person who violates the parking management rules to rectify such violation immediately, and such personshall be liable for any and all consequential losses. Any person shall otherwise sign the agreement for use and management of parking space with the propertyservice enterprise and pay the relevant parking space management fee no matter how such person obtains the right of use of the parking space. XVII. A proprietor or house user shall operate and use the lift in compliance with the relevant regulations of competent governmental authority. XVIII. To erect company nameplates and sign boards (including but not limited to emblem) that are erected within public area, the proprietors or house usersshall not install any such nameplate or sign board on their own but shall contact the property service enterprise for centralized fabrication and installation atthe relevant expenses of such proprietors or house users. The project owner will provide spaces for hanging corporate guidance emblem at the entrance lobbyon the ground floor, provided that the proprietor or house user shall notify the property service enterprise of the emblem details 7 days ahead of mobilization. 75  XIX. A proprietor or house user shall reasonably use water, electricity, gas, heating, cooling, ventilation, fire protection and security facilities and equipmentwithout any unauthorized removal or modification in accordance with the relevant regulations, and shall be liable for any and all consequences and losses ofpublic area, shared equipment, and neighboring proprietor or house user as a result of unauthorized removal or modification. The property service enterprisehas the right to claim repair, recovery or compensation against a proprietor or house user in connection with any loss caused by such proprietor or house user,and to report such loss to the competent governmental authority and the competent industry authority. If any equipment or facility that is so removed ormodified remains within its warranty period, then warranty obligation of the relevant warranty provide shall be terminated. XX. Garbage of each building shall be classified according to the Regulations of Beijing Municipality for Administration of Domestic Garbage (Bulletin No.20 issued by the Standing Committee of the 3rd Municipal People's Congress of Beijing), and shall be stored in area specified by the property serviceenterprise, which in turn shall arrange to clear such garbage. XXI. The following acts shall be prohibited within the property management area: 1. unauthorized removal or modification of load bearing structure and main structure of the house, unauthorized change of appearance of the house,unauthorized occupation of or damage to shared area of property, shared facility and equipment and the relevant site, and unauthorized relocation of sharedfacility and equipment of property; 2. damage to or scratch of any public items of the property such as glass curtain wall, wall of passageway/corridor and glass/column, in which case therelevant responsible person shall be liable for costs in connection with repair. 3. drilling on the glass curtain wall or sticking any type of facility, object or advertisement board on the indoor or outdoor surfaces of the curtain wall. Anydevice shall not touch any structural member of the curtain wall, Correctly use and specially protect external door and window, and do not support theexternal window with a hard object. Promptly close and lock external door and window when all persons leave the property. 4. non-compliance of building load capacity of the property by installing (placing) any furniture, equipment, mechanical device and other articles exceedingthe roof load capacity onto any part of the roof. 5. unauthorized placement of articles, unauthorized erection of any building, structure, bracket, canopy, advertisement board, signboard, umbrella and anyother article not approved by all other proprietors or house users onto the common terrace or roof platform. 6. stacking of flammable, explosive, hypertoxic, or radioactive substance, and emission of harmful substances such as air pollutant, water pollutant, noise,light, and electromagnetic wave. 7. blockage or obstacle of any public item or public site, or placement or disposal of any garbage or article in public item or public site or out of the window. 8. unauthorized hanging, posting, alteration, scratching, erection of flag, distribution of brochure, or installation of neon light in public item or the relevantsite. 76  9. encroachment of or damage to public greening area (including but not limited to cutting and digging), road, flowers, trees, artistic landscape, and facilitiesand equipment for culture, recreation, sports and leisure. 10. parking on public road, or washing or repair of vehicles on public road. 11. installation of satellite receiver or any other high-power receiving device that shall be subject to approval by the governmental approval, withoutapproval by the governmental approval. 12. engaging in activities endangering public interests and infringing legitimate rights and interests of any other person using the property. 13. demanding the property service enterprise for services irrelevant to the property management. 14. any other act prohibited by laws, regulations and this convention. XXII. Any proprietor shall pay the specific repair fund as prescribed, and shall pay the property service fee in accordance with the Preliminary PropertyService Contract. If a proprietor sells, transfers, mortgages or contributes his or her property, the repair fund he or she pays for the public item and sharedfacility and equipment shall remain the funds for repair and renewal of the public item and shared facility and equipment of the property. XXIII. The order preservation staff has the right to inquire about a strange visitor and register such visit in order to preserve safety and order within theproperty management area, and a proprietor or house user shall cause the visitor to coordinate with such staff. In case of fire, theft, personal injury or death and any other safety accident, the proprietor, house user, property service enterprise, and the project owner shallreport to the public security authority. The property service enterprise and the project owner shall coordinate with such authority to conduct investigationsand evidence gathering. The supervision video shall be kept in compliance with the relevant regulations. XXIV. Where a proprietor or house user violates this convention, the property service enterprise has the right to urge such proprietor or house user to rectifysuch violation by advice, warning, prevention or any other measure permitted by laws, and such proprietor shall remedy such violation until he or shebecomes compliant with this convention as required by the property service enterprise within the prescribed time limit at his or her remedy costs. If theproprietor fails to remedy his or her violation of this convention even through coordination, the property service enterprise is entitled to directly initiate civillitigation to the people's court, and if the proprietor violates the relevant regulations and policies, the property service enterprise is entitled to complainabout and report such violation to the competent authority concerned. 77  Part 5 Decoration and furnishing XXV. In order to maintain quality of the property, the proprietor and house user undertake that the decoration recipient and decoration & furnishingenterprise engaged by such recipient, as well as the project owner shall comply with the Guidance for Decoration for the property area to perform decoration.The proprietor or house user and the decoration recipient shall declare the decoration to and register the decoration with the property service enterprise priorto decoration, and sign the Housing Decoration Management Service Agreement with the property service enterprise, defining the relevant rights andobligations, components of service and liability for breach of agreement. The proprietor or house user shall conduct decoration & furnishing in accordancewith the housing decoration management service agreement, and observe the precautions for decoration & furnishing, and shall not perform any decorationprohibition. The proprietor shall place the decoration & furnishing materials and waste resulted from decoration in the designated area without unauthorizedoccupation of the public items and public site of the property. The proprietor or house user shall pay fees in connection with decoration management(including but not limited to decoration management fee, decoration garbage disposal fee and decoration deposit). During decoration & furnishing construction within the property management area, decoration work generating noises is prohibited in the building from 8:30a.m. to 18:00 p.m. in working days, and actions shall be taken for decoration work to be performed in other times in order to mitigate interference withsurroundings. The proprietor or house user shall post an announcement in the building, indicating the date and time of decoration & furnishing to beperformed. XXVI. Where decoration & furnishing of house influences normal operation of public item and shared facilities and equipment, and infringes upon legitimaterights and interests of neighboring proprietor or house user, the proprietor or house user of the property under decoration shall promptly reinstate normaloperation and legitimate rights and interests, and shall assume the relevant compensation liability. The proprietor or house user shall coordinate with theproperty service enterprise to bind and manage the decoration & furnishing enterprise. The proprietor or house user shall promptly reinstate normal operationof the public items and shared facilities and equipment that is influenced by decoration of the house, and shall repair the public area if consequentiallydamaged and shall be liable for any consequential loss of any other proprietor or house user. XXVII. During decoration of house, the proprietor and house user shall take finished product protection measures for the relevant public area, and shallneither remove or modify the load-bearing wall and pipes nor damage waterproofing course. The property service enterprise has the right to supervise andinspect decoration activities of the proprietor and the house user. If any decoration work shall be subject to approval and acceptance by the governmental authority concerned pursuant to the relevant regulations, theproprietor and house user shall complete such approval and acceptance in accordance with such regulations, and shall file such decoration work with theproperty service enterprise. If modification of fire-fighting system is involved in the decoration, the proprietor or house user shall submit such modification tothe fire protection authority for approval and acceptance and file such modification with the property service enterprise. Any proprietor or house user shallnot move, relocate, close, replace, cancel or remove any fire-fighting equipment and facility without prior written consent of the property service enterprise,and shall not damage the fire-fighting facilities or result in wrong alarm of or damage to fire alarm system for human-made reason, otherwise such proprietoror house user shall be liable for any and all consequences incurred due to any act under the laws and regulations such as fire control law and the relevant firecontrol regulations, and shall also bear all repair costs, losses, and penalties imposed by the government. 78  Part 6 Preliminary property service XXVIII. The project owner and property service enterprise shall take charge of preliminary property service for the property management area. Regardingexact property services, service standard and property service fee, the Preliminary Property Service Contract shall apply. Any proprietor shall fully pay thepayable fees under the property purchase contract or the Preliminary Property Service Contract . XXIX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the project owner with respect to propertymanagement activities: 1. to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greeningarea and environmental sanitation, and for other property service aspects. 2. to prevent the proprietor or house user from violating this convention and the regulations and rules by warning, advice, publicity and other necessaryactions. 3. to withhold property service fee payable by the proprietor and any other fee collected and handed over on behalf of the proprietor under the laws,regulations and the Preliminary Property Service Contract. 4. to pay property service fee for unsold houses commencing from the due date of the property service fee. Where the property service fee for any unsoldhouse paid by the project owner includes the property service fee that become payable after such house is sold, the project owner has the right to, followingsuch sales, withdraw the balance of the said property service fee it pays without written confirmation by the proprietor. 5. to fully withdraw the balance of the preliminary property service fee the project owner pays as the preliminary property service provider without writtenconfirmation by the proprietor, provided that the audited preliminary property service fee assumed by the project owner exceeds the actual fee incurred forthe preliminary property service period, in which case the excess property service fee shall be the property of the project owner. XXX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the property service enterprise with respect to propertymanagement activities: 1. to cooperate with the project owner to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservationof public order, public greening area and environmental sanitation, and for other property service aspects, in accordance with this convention. 2. it is lawful for property service staff to damage exclusive area of any proprietor without any liability, provided that such damage is indeed necessary forurgent danger prevention. 79  3. property service staff can open channel or door to any part of the property from time to time for any national administrative authority, law enforcementauthority, or judicial authority if any such authority has to access the park in order to perform its duties, in which case the proprietor shall understand andcooperate with such authority. 4. there is no any personal, property custody or insurance relationship within this property with the proprietor and house user. 5. the property service enterprise may be relieved from liability for inconvenience brought to the proprietor or house user as a result of necessary maintenanceor repair of the public item or shared facilities and equipment. Part 7 Inspection and handover of project items XXXI. In the event that all proprietors decide to terminate the preliminary property service contract and that they determine the property management mode,the project owner shall verify the shared areas of the property with the proprietors and handover the shared areas to the proprietors in the manner as prescribedin the regulations of Beijing for handover of property items. XXXII. Where inspections demonstrate that the shared areas of the property comply with the relevant standards, or after inspection and handover arecompleted under the property purchase contract (including deemed completion of inspection and handover), the project owner shall fully fulfill obligationsand responsibilities in connection with the shared areas in addition to the warranty liability, which shall be performed on the basis of the warranty period andwarranty scope as provided in the national regulations and the property purchase contract. XXXIII. The proprietors meeting shall, within 30 days after it is established and after the property management mode is determined, carry out post-inspectionand handover of shared areas of the property with the project owner. The preliminary property service contract shall be terminated on the date on which theinspection and handover of shared areas of property are accomplished. In the event that the handover is not accomplished within the said 30 days for anyreason not attributable to the project owner, the date on which the said 30-day period expires shall be deemed as the completion date of property handover. XXXIV. If the proprietors meeting continues choosing the property service enterprise appointed by the project owner (including deemed de factomanagement), the project owner is not required to complete such formalities as handover and inspection with the property service enterprise given that theproject owner has inspected the property and shared areas with and handed over the relevant documentations to the property service enterprise in accordancewith the Measures for Property Undertaking and Inspection (J. F. [2010] No. 165), and Measures of Beijing Municipality for Realty Management (Decree ofthe People's Government of Beijing No. 219) when the project owner appointed the property service enterprise, and that the property service enterprise hasbeen managing and maintaining the shared areas, and the date on which the proprietors meeting makes decision shall be deemed as the completion date ofhandover and inspection, commencing from which the Buyer shall pay the property service fee. 80  XXXV. If any dispute arises out of inspection of the shared areas between the proprietor and the property service enterprise, and if authoritative organizationdetermines that the shared areas satisfy the relevant criteria, the handover shall be deemed to be completed at time of inspection, and the proprietor shall paythe due but not paid property service fee if any. XXXVI. The shared areas of property shall be inspected and handed over as long as they materially comply with the handover conditions, and any repairabledefect in the shared area shall not influence receipt of the property, provided that the project owner shall be responsible for repair of such defect. Part 8 Property service fee XXXVII. Any proprietor or house user shall pay the project owner or property service enterprise the property service fee promptly in accordance with thePreliminary Property Service Contract, and if a proprietor entrusts the property service enterprise with providing specially engaged service other than thoseset forth therein, such proprietor and the property service enterprise shall otherwise agree upon fees for such specially engaged service. 1. Property service rate: Office Building (sold as a whole): 5.50yuan/month• m' Office Building (partially sold ): 6.50yuan/month• m' Commercial property: 5.50yuan/month• m' 2. Payment period of property service fee: the project owner or the property service enterprise shall pre-collect the property service fee on annual basis. Aproprietor shall pay the property service fee for the first year when he or she moves in the property. 3. Subsequent payment of property service fee: the property service enterprise will remind the proprietor of paying the property service fee for the next yearthirty days prior to expiration of the period related to the property service fee that has been paid by the proprietor. The proprietor shall, prior to expiration ofthe period related to the paid property service fee, pay the next tranche of property service fee to the project owner or the property service enterprise in cash orby cheque or T/T, and accordingly the payee shall issue the formal invoice. 4. Commencement date of property service fee: the commencement date of property service fee shall be the date from which the formal move-in procedurescan be performed as indicated on the move-in notice or similar instrument issued by the developer. In the event that a proprietor fails to complete the move-inprocedures promptly for his or her own reason, such proprietor shall still pay the property service fee accrued from the said date. 5. If a proprietor fails to pay the due and payable property service fee, such proprietor shall pay the project owner or the property service enterprise theliquidated damages equal to 3% of the payable property service fee per day. Where a proprietor fails to pay the property service fee for more than 6 monthsafter the due date, the project owner or the property service enterprise has the right to publish the overdue payment at obvious positions in the propertymanagement area, and where a proprietor owes the due property service fee for more than 12 months, the project owner or the property service enterprise hasthe right to initiate an action against such proprietor. 81  6. In case of forced change in labor cost as a result of adjustment in unit price of energy fee which is approved by the government or change in the nationallaws, regulations and policies, the property service rate shall be adjusted following the relevant procedures stipulated by the government. XXXVIII. Where the proprietor and the house user agree that the property service fee shall be paid by the house user, such agreement shall prevail, in whichcase the proprietor shall be severally and jointly liable for payment of the property service fee. The proprietor shall immediately notify the property serviceenterprise in writing of any payment agreement reached by and between the proprietor and the house user. XXXIX. All proprietors within the property area shall pay, use and manage the specific repair fund as prescribed, and if balance of the fund is less than 30% ofthe initial collection amount, the proprietors shall contribute to the specific repair fund as prescribed. XXXX. Where the project owner or the property service enterprise undertakes entrustment with collection and handover for competent governmental orindustry authorities, the proprietor shall pay the project owner or property service enterprise the payable fees such as those for water, electricity and gas thatare covered by such collection and handover. Part 9 Other matters XXXXI. When completing the move-in formalities, a proprietor or house user shall fully complete various forms, and shall provide the property serviceenterprise with the minimum 2 lawful and valid contact phone numbers so that the property service enterprise could contact the proprietor or house user incase of emergency. The proprietor or house user shall promptly notify the property service enterprise in writing of any change in such phone numbers,otherwise the proprietor or house user shall solely assume any liability and loss incurred in connection with consequential failure of the property serviceenterprise to contact the proprietor or house user. XXXXII. A proprietor shall be liable for losses of any other person due to negligence and improper conduct of employee, temporary visitor, contractor, tenant,and agent of such proprietor and any other house user. XXXXIII. A bulletin board shall be erected within the property area, and the relevant management information the project owner and the property serviceenterprise announce on such board, and notice or announcement the project owner and the property service enterprise issue to the proprietor shall be deemedto be delivered to all proprietors on the third day as of the date of publicity. Part 10 Supplementary provisions XXXIV. In the event that a proprietor, house user, project owner or property service enterprise violates the laws, regulations and this convention, disturbingnormal operation of the property or resulting in personal injury or loss of property of the right holder, the infringed party is entitled to initiate a legal actionto local people's court with jurisdiction. 82  XXXXV. For the purpose of this convention, the public item and shared facilities and equipment of the property shall mean house, space, site and the relevantfacilities and equipment owned or used by several or all proprietors other than the exclusive area of individual proprietor. XXXXVI. For the purpose of this convention, the house user shall mean family and employee of a proprietor, tenant and its employee, co-user, temporaryuser, borrower, visitor, and authorized caretaker of the house, and any other person whom is authorized by the proprietor to use such house. XXXXVII. This convention shall be binding upon proprietors and house users within the property management area only. In case of transfer of this property,effects of this convention shall be extended to the property transferee. Where the house user violates this convention, the proprietor shall be jointly andseverally liable for such violation. XXXXVIII. The project owner shall be entitled to proprietor's rights of and undertake proprietor's obligations in connection with unsold portions and sold butnot delivered portions within the property management area. XXXXIX. The proprietor, project owner and property service enterprise shall hold each copy of this convention. XXXXX. This convention shall be attached to the Beijing Commodity Housing Presale Contract as an annex thereto, and shall come into force as of the dateon which the first Buyer of this property signs the commitment (letter of commitment provided in the annex) and expire on the effective date of themanagement convention developed by the proprietors meeting. XXXXXI. If there is any conflict between provisions hereof and the relevant laws and regulations, such provisions shall be null and void without influencingeffects of the remaining provisions hereof. XXXXXII. The person developing this convention shall be bound to interpret this convention. This convention shall not be amended in any way unless theproprietors meeting is established, and the proprietors meeting shall re-consider and re-develop the proprietor management convention after the meeting isestablished. 83  Annex: Letter of Commitment Beijing Jingkai·One Center Project Letter of Commitment for Management Convention I / our company is the Buyer of Unit No. of Building B7 of Beijing Jingkai • One Center Project (hereinafter refers to as “this Property”). In order tosafeguard the common interests of all the proprietors in this property management area, I / our company agrees and represents as below: I.Acknowledges that “the Temporary Management Convention for Beijing Jingkai • One Center Project” (hereinafter refers to as “this Convention”)as stipulated by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been read thoroughly. II.Agrees to fulfill, comply with and cause the persons related to this Property fulfill and comply with the all the liabilities and obligations for theproprietors as well as the property users as specified in the Management Convention. III.I / our company agrees to assume the corresponding liabilities resulted from breach of this Convention and furthers agrees to assume any jointliability from any action of any user of this Property in breaching of this Convention. IV.I / our company agrees to acquire the Letter of Commitment for this Convention executed by successor of this Property at the time of assignment ofthis Property, and deliver the same to the Project Owner or the property service enterprise, and this Letter of Commitment shall remain in full forceand effect until receipt of the successor’s Letter of Commitment by the Project Owner or the property service enterprise. Promisee (Seal): /seal/ Tarena Software Technology (Hangzhou) Co., Ltd. Date of Signature: __________ 84  Annex IX: Other Provisions Supplementary Agreement to Beijing Commodity Housing Presale Contract on Beijing Jingkai • One Center Project The Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd. The Buyer: Tarena Software Technology (Hangzhou) Co., Ltd. Both the Seller and the Buyer agree to enter into and comply with this Supplementary Agreement (hereinafter referred to as “the SupplementaryAgreement”) so as to supplement the Beijing Commodity Housing Presale Contract (Contract No.: , hereinafter referred to as “the Presale Contract”)executed between both parties through friendly negotiation and based on voluntariness with respect to the outstanding issues related to the Presale Contract. Article 1 Definitions and Interpretations in the Presale Contract 1. “Delivery” as mentioned in the annexes to the Contract shall mean “delivery for use”, and only refer to transfer for occupation and risk transfer of thisCommodity Housing, excluding the contents of title transfer and registration of this Commodity Housing to be dealt with by the Buyer. 2. “The Seller shall ‘show’ the relevant documents to the Buyer” as mentioned in the Presale Contract shall mean “that the Seller shall keep the relevantdocuments at the marketing place or the handover & takeover place of this Commodity Housing and make the same available to the Buyer for consultationother than providing duplicates to the Buyer”; “the Buyer shall ‘show’ the relevant documents to the Seller” shall mean “the Buyer shall show expressly theduplicates of the relevant documents and the Seller shall have the right to consult the same”; “the Seller shall ‘provide’ the relevant documents to the Buyer”shall mean “the Seller shall deliver the data or documents to the Buyer in person or with the mode of service as agreed in this Supplementary Agreement”. 3. “The project quality codes, standards and working drawing design documents issued by the State and Beijing Municipality” as mentioned in thePresale Contract refers to “the mandatory project quality codes, standards and working drawing design documents of the State and Beijing Municipality ineffect at the time of design and construction”. “The orientation of this Commodity Housing” as given in Article 3 of the Presale Contract shall refer to “the orientations of some of the rooms of thisCommodity Housing”. 4. “Day” as mentioned in the Presale Contract shall refer to “calendar day”. 5. “The date of duly receipt” as mentioned in the Presale Contract shall refer to: (1) In case of delivery by mail, the 5th day after the date of delivery by mail shall be deemed as the date of duly receipt. (2) In case of delivery by courier, in person or taking delivery by the assigned person, the date of receipt as indicated on the receipt form shall bedeemed as the date of duly receipt; when no receipt form is made, the date given on the letter shall be deemed as the date of duly receipt. (3) In case of transmission by fax or email, the second day after the date indicated on the notice shall be deemed as the date of duly receipt. 85  Article 2 Supplementary Provisions for House Delivery 1. In case the Buyer asserts its right for sales return of the commodity housing to the Seller for reason that the commodity housing has serious qualitydefect(s) in accordance with the relevant provisions as given in the Presale Contract, the Buyer shall show the valid testing report as issued by a statutoryappraisal agency within 60 days (including the 60th day) after the date of handover of the commodity housing by the Seller. Any failure to show or beingunable to show within the said deadline shall be deemed as the commodity housing is acceptable in quality, and the Buyer has waived its right for assertingsales return, in this case, the Presale Contract shall continue to be fulfilled and Buyer shall not assert its right for sales return to the Seller according to theseprovisions. The Buyer shall assume the responsibility for not taking delivery of the commodity housing in time if it has rejected to take over this CommodityHousing. In case the Buyer asserts its right for sales return of the commodity housing to the Seller according to the provisions as given under Article 17 (2) of thePresale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60th day) after the dateof handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodityhousing is acceptable in indoor air quality. In this case, the Buyer shall assume the responsibility for not taking delivery of the commodity housing in time. Air quality measure shall be based on the initial state of the Commodity Housing at the time of delivery. The Seller shall assume no responsibility forany non-conformity with the standards of the state with respect to indoor air quality after the Buyer has made any decoration or transformation to theCommodity Housing. 2. Unless otherwise agreed between both parties, the Seller shall deliver this Commodity Housing to the Buyer at the time as specified in the PresaleContract. In case the delivery conditions for this Commodity Housing as specified in the Presale Contract have been satisfied ahead of the time as specified,the Seller can make delivery ahead of the time as specified, and the date of taking delivery shall be the date as indicated on the written document “Notice onTaking Delivery” issued by the Seller to notify the Buyer to handle the relevant formalities and take over the Commodity Housing. 3. For any Commodity Housing of which the acceptance and registration formalities upon project completion have been satisfied, if the CommodityHousing is defective identified at the time of taking delivery, the Buyer shall reject this Commodity Housing by virtue of the said defect. The Seller shallassume its obligations for warranty and maintenance, but not bear any liability for breach of contract due to late delivery. 4. After actual delivery of this Commodity Housing by the Buyer, any occupation and damage to this Commodity Housing by any other person, anddamage to the devices and equipment of the property shall be under the responsibility of the Buyer. 5. The Buyer shall pay up the taxes as specified in Article 16(5) of the Presale Contract before the formalities of taking over the keys. The Seller mayhave the right to refuse to handle the formalities of handing over the keys to the Buyer if the Buyer has not paid of the above taxes. 86  Article 3 Property Management Service Related to this Commodity Housing 1. The Buyer agrees that the Seller will select or replace a property management company to exercise property management by law before formalestablishment of the Proprietors Committees. After formal establishment of the Proprietors Committees, the Proprietors Committees shall have the right tofurther employ the existing property service enterprise or select another property management entity by law. 2. If the Buyer carries out decoration on this Commodity Housing by itself after the occupancy formalities, it shall comply with “the TemporaryManagement Convention for Beijing Jingkai • One Center Project”, and shall not make any damage to this Commodity Housing and bring any nuisance tothe proprietors in the vicinity. 3. The Buyer shall not use this property for other purposes other than those specified in the Presale Contract. Article 4 Special Provisions for Cancellation of the Presale Contract l. In case of occurrence of any circumstance in which the Buyer shall be entitled to terminate the contract due to the Seller’s default as specified in thePresale Contract, the Buyer shall issue a written notice for cancellation of the Presale Contract to the Seller within 60 days (including the 60th day) afteroccurrence of the said circumstance. The Buyer’s failure’s to do so shall be deemed as the Buyer has waived its right for cancellation of the contract andagreement to further fulfillment of the Presale Contract. 2. In case of occurrence of any circumstance which may lead to cancellation of the contract by either party as referred in the Presale Contract as well asthis Supplementary Agreement, the Buyer shall issue its written application for cancellation of the contract to the Seller, then, execute the Agreement onCancellation of the Commodity Housing Presale Contract within 5 days after delivery of the said application, and assist the Seller to complete all theformalities for cancellation of the presale contract for this Commodity Housing at the competent government authorities, otherwise, the Buyer shall payliquidated damages to the Seller at 2/10000 of the total price of this Commodity Housing to the Seller per each day’s delay in payment (excluding the delaycaused by the Seller). Article 5 Notification l. The Buyer shall provide its correct contact information in detail (including the address, telephone, fax and contact person, etc.) to the Buyer at thetime of concluding the Presale Contract, and issue its written notice to the Seller within 7 days after any change to the said address or any other contactinformation, otherwise, the original contact information provided by the Buyer shall further remain in effect, and the Seller shall assume no legal liability forthe Buyer’s not receiving any relevant notice from the Seller due to change to the Buyer’s contact information. 2. According to the Presale Contract and this Agreement, important documents such as any notice from one party to the other party shall be delivered tothe address as specified in the Presale Contract as well as this Agreement or otherwise given by the written notice from the other party. 87  Article 6 Other Provisions l. The Seller’s sales advertisement and publicity presentation materials (including but not limited to postings, brochures, sand table, models andadvertisements, etc.) for this Commodity Housing shall not be deemed as a contractual offer, and the rights and obligations of both parties shall be based onthe provisions as specified in the Presale Contract as well as the corresponding supplementary agreements. The Seller shall not assume any liability for anymatter which has not been agreed between both parties in the Presale Contract (including but not limited to any oral promise, recommendation and publicitymade by the Seller as well as its staff). 2. If a fire sprinkler system is provided in the commodity housing purchased by the Buyer, when performing fine decoration on the commodity housingafter purchase, the Buyer shall comply with the requirements as specified in the relevant laws, regulations and codes of the state. 3. The Seller shall be responsible for warranty of this Commodity Housing according to Article 18 of the Presale Contract, Nevertheless, the Seller shallnot be responsible for any damage due to any force majeure event or modification out of artificial reasons or any defect upon expiry of the warranty periodwhich shall be under the Buyer’s responsibility. In addition, the Seller shall not take any warranty obligation for any change to the original state of thisCommodity Housing caused by decoration by the Buyer. 4. The Presale Contract (including the annexes as well as this Supplementary Agreement) shall constitute all the contents with respect to selling andpurchase of this Commodity Housing between the Buyer and the Seller and supersede all the previous agreements made between both parties and all theliteral and picture materials provided by the Seller immediately upon execution. This Supplementary Agreement and the Presale Contract shall have equallegal effect. This Supplementary Agreement shall prevail in case of any conflict between the provisions in this Supplementary Agreement and the PresaleContract. Article 7 Special Provisions 1. After purchase of this Commodity Housing, this Commodity Housing can be only used by the legal entity which has been registered at BeijingEconomic-Technological Development Area. 2. When handling the title transfer and registration processes related to this Commodity Housing by the Buyer and the Seller, both parties shall executethe relevant legal documents as required by the title registration authority, and shall comply with the relevant conditions and requirements as imposed by thecompetent government authority. In case that the title certificate of this Commodity Housing has not been obtained on time at the Buyer’s fault (includingbut not limited to that the Buyer has not satisfied the relevant requirements for admission to the development area, the Buyer has failed to pay the relevanttaxes, provide the relevant information and execute the legal documents necessary for handling the property right according to the Seller’s requirements,etc.), the Buyer shall assume the liability and Seller shall not assume any liability for breach of the contract. 3. Agreement on “Specialized Housing Maintenance Funds” 88  The Buyer agrees that the Buyer shall be liable to pay the public maintenance cost in full and in time at the amount and due time as given in the writtennotice from the property service enterprise when the public locations and public facilities and devices in the area where this Commodity Housing is locatedrequire maintenance, renewal or reconstruction upon expiry of the warranty period. 4. The Seller shall issue the VAT invoice in full to the Buyer within 60 days after the Buyer has completed registration of the new company (i.e. theproperty owner of this house) and the Seller has received the purchase price in full. 5. “The Buyer” in the Beijing Commodity Housing Presale Contract as well as its annexes and this Supplementary Agreement shall refer to the Buyer orany company under the same control. Seller (Seal)Buyer (Seal)/seal/ Beijing Jingkai-Gongda Investment/seal/ Tarena Software Technology (Hangzhou) Co., Ltd.Management Co., Ltd. Date: Date: November 5, 2016 89  Exhibit 8.1 List of Major Subsidiaries and Variable interest entity Name JurisdictionofIncorporation Affiliate Relationship with The Registrant Tarena Hong Kong Limited Hong Kong Wholly-owned subsidiary Tarena Software Technology (Hangzhou) Co., Ltd. PRC Wholly-owned subsidiary Tarena Technologies Inc. PRC Wholly-owned subsidiary Shenyang Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Jinan Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Qingdao Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Tarena (Wuhan) Technology Co., Ltd. PRC Wholly-owned subsidiary Chongqing Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Kunming Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Nanjing Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Zhuhai Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Guangzhou Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary Shenzhen Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Beijing Yingcai Tianyi Technology Co., Ltd. PRC Wholly-owned subsidiary Heilongjiang Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Harbin Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Shijiazhuang Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Changchun Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Tianjin Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Yantai Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Xi’an Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Suzhou Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary Wuxi Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Ningbo Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary Nanchang Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Fuzhou Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary  Name JurisdictionofIncorporation Affiliate Relationship with The Registrant Nanjing Tarena Weishang Information Technology Co., Ltd. PRC Wholly-owned subsidiary Guangxi Nanning Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Zhengzhou Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Changsha Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Chengdu Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Hefei Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Xiamen Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary Dalian Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Wuhan Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weishang Software Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weiguan Software Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weicheng Software Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weixin Software Technology Co., Ltd. PRC Wholly-owned subsidiary Changchun Yingcai Tianyi Technology Co. Ltd. PRC Wholly-owned subsidiary Beijing Pairuite Internet Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weiying Software Technology Co., Ltd. PRC Wholly-owned subsidiary Chengdu Tarena Weishang Technology Co., Ltd. PRC Wholly-owned subsidiary Taiyuan Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Hangzhou Tarena Weishang Technology Co., Ltd. PRC Wholly-owned subsidiary Dongguan Tarena Software Co., Ltd. PRC Wholly-owned subsidiary Weifang Tarena Times Software Co., Ltd. PRC Wholly-owned subsidiary Luoyang Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Tianjin Tarena Software Development Co. Ltd. PRC Wholly-owned subsidiary Tianjin Weishang Technology Co., Ltd. PRC Wholly-owned subsidiary Gansu Tarena Information Technology Co., Ltd. PRC Wholly-owned subsidiary Beijing Caixiu Renren Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Software Technology Co., Ltd. PRC Wholly-owned subsidiary Shanghai Tarena Weijia Software Co., Ltd. PRC Wholly-owned subsidiary  Name JurisdictionofIncorporation Affiliate Relationship with The Registrant Guizhou Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Hainan Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Haikou Tarena Technology Co., Ltd. PRC Wholly-owned subsidiary Linyi Tarena Technology Software Co., Ltd. PRC Wholly-owned subsidiary Shenzhen Tarena Weishang Software Co., Ltd. PRC Wholly-owned subsidiary Shenyang Tarena Professional Education School PRC School sponsored by Shenyang Tarena TechnologyCo., Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Jinan Tarena Professional Education School PRC School sponsored by Jinan Tarena Software Co.,Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Qingdao Tarena Professional Education School PRC School sponsored by Qingdao Tarena SoftwareTechnology Co., Ltd., a wholly-owned subsidiaryof Tarena International, Inc. Wuhan Tarena Professional Education School PRC School sponsored by Wuhan Tarena Software Co.,Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Chongqing Jiulongpo Tarena Professional Education School PRC School sponsored by Chongqing Tarena SoftwareCo., Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Kunming Guandu Tarena Professional Education School PRC School sponsored by Kunming Tarena TechnologyCo., Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Nanjing Tarena Professional Education School PRC School sponsored by Nanjing Tarena Software Co.,Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Zhuhai Tarena Professional Education School PRC School sponsored by Zhuhai Tarena Software Co.,Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Guangzhou Tarena Software Professional Education School PRC School sponsored by Guangzhou TarenaInformation Technology Co., Ltd., a wholly-ownedsubsidiary of Tarena International, Inc.  Name JurisdictionofIncorporation Affiliate Relationship with The Registrant Shenzhen Bao’an Tarena Professional Education School PRC School sponsored by Shenzhen Tarena SoftwareCo., Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Harbin Tarena Professional Education School PRC School sponsored by Harbin Tarena TechnologyCo., Ltd., a wholly-owned subsidiary of TarenaInternational, Inc. Dalian High-Tech Zone Tarena Professional Education School PRC School sponsored by Dalian Tarena Software Co.,Ltd. Nanjing Tarena Weishang Education School PRC School sponsored by Nanjing Tarena WeishangInformation Technology Co., Ltd. Shenyang Tarena Times Professional Education School PRC School sponsored by Shenyang Tarena TechnologyCo., Ltd. Zhengzhou Tarena Professional Education School PRC School sponsored by Zhengzhou TarenaTechnology Co., Ltd. Dalian Shahekou Tarena Accounting Professional Education School PRC School sponsored by Dalian Tarena SoftwareTechnology Co., Ltd. Chengdu High-tech Zone Tarena Professional Education School PRC School sponsored by Chengdu Tarena TechnologyCo., Ltd. Chengdu Tarena Professional Education School PRC School sponsored by Chengdu Tarena TechnologyCo., Ltd. Chongqing Nanan Tarena Professional Education School PRC School sponsored by Chongqing Tarena SoftwareCo., Ltd. Wuhan Technology Tarena Professional Education School PRC School sponsored by Wuhan Tarena Software Co.,Ltd. Weifang Tarena Professional Education School PRC School sponsored by Tarena Technology Co., Ltd. Shenzhen Longhua Xinqu Tarena Professional Skills Education School PRC School sponsored by Shenzhen Tarena SoftwareTechnology Co., Ltd. Beijing Tarena Jinqiao Technology Co., Ltd. PRC Variable interest entity Guangzhou Huicai Software Co., Ltd. PRC Subsidiary of Variable interest entity Hangzhou Tarena Technology Co., Ltd. PRC Subsidiary of Variable interest entity Hangzhou Tarena Computer Co., Ltd. PRC Subsidiary of Variable interest entity  Exhibit 12.1 Certification by the Principal Executive Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002 I, Shaoyun Han, certify that: 1.I have reviewed this Annual Report on Form 20-F of Tarena International, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this report; 4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) for the Company and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control overfinancial reporting; and 5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalentfunctions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting.  Date: April 25, 2017 /s/ Shaoyun Han Name:Shaoyun Han Title:Chief Executive Officer  Exhibit 12.2 Certification by the Principal Financial Officer Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002 I, Yuduo Yang, certify that: 1.I have reviewed this Annual Report on Form 20-F of Tarena International, Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this report; 4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the Company and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the periodcovered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control overfinancial reporting; and 5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalentfunctions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’sinternal control over financial reporting.  Date: April 25, 2017 /s/ Yuduo Yang Name:Yuduo Yang Title:Chief Financial Officer  EXHIBIT 13.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Tarena International, Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2016 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shaoyun Han, Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. April 25, 2017 /s/ Shaoyun Han Name:Shaoyun Han Title:Chief Executive Officer  EXHIBIT 13.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Tarena International, Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2016 asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), I, Yuduo Yang, Chief Financial Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. April 25, 2017 /s/ Yuduo Yang Name:Yuduo Yang Title:Chief Financial Officer  EXHIBIT 15.1 25 April, 2017Matter No.: 824093Doc Ref: 103291636852 2842 9556Christopher.bickleyl@conyersdill.comTarena International, Inc.Suite 10017, Building E, Zhongkun PlazaA18 Bei San Huan West RoadHaidian DistrictBeijing 100098The People’s Republic of China Dear Sirs, Re: Tarena International, Inc. We consent to the reference to our firm under the heading “Item 10. Additional Information — E. Taxation — Cayman Islands Taxation” in TarenaInternational, Inc.’s Annual Report on Form 20-F for the year ended 31 December 2016 (the “Annual Report”), which will be filed with the Securities andExchange Commission (the “SEC”) in the month of April 2017, and further consent to the incorporation by reference into the Registration Statements onForm S-8 (File No.: 333-197226) filed on July 3, 2014 and on Form S-8 (File No.: 333-204494) filed on May 28, 2015, in each case pertaining to TarenaInternational, Inc.’s 2008 share plan and 2014 share incentive plan of the summary of our opinion under the heading “Item 10. Additional Information — E.Taxation — Cayman Islands Taxation” in the Annual Report. We also consent to the filing with the SEC of this consent letter as an exhibit to the AnnualReport. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder. Yours faithfully, /s/ Conyers Dill & Pearman Conyers Dill & Pearman  EXHIBIT 15.2 [Han Kun Law Offices Letterhead] April 25, 2017 Tarena International, Inc.Suite 10017, Building E, Zhongkun PlazaA18 Bei San Huan West Road, Haidian DistrictBeijing 100098 The People’s Republic of China Dear Sir/Madam: We hereby consent to the reference of our name under the heading “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure,”“Item 4. Information on the Company—C. Organizational Structure” and “Item 10. Additional Information—E. Taxation—People’s Republic of ChinaTaxation” in Tarena International, Inc.’s Annual Report on Form 20-F for the year ended December 31, 2016 (the “Annual Report”), which will be filed withthe Securities and Exchange Commission (the “SEC”) in the month of April 2017, and further consent to the incorporation by reference into the RegistrationStatements on Form S-8 (File No.: 333-197226) filed on July 3, 2014 and on Form S-8 (File No.: 333-204494) filed on May 28, 2015, in each case pertainingto Tarena International, Inc.’s 2008 share plan and 2014 share incentive plan of the summary of our opinion under the heading “Item 3. Key Information—D.Risk Factors—Risks Relating to Our Corporate Structure,” “Item 4. Information on the Company—C. Organizational Structure” and “Item 10. AdditionalInformation—E. Taxation—People’s Republic of China Taxation” in the Annual Report. We also consent to the filing of this consent letter with the SEC asan exhibit to the Annual Report. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Actof 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder. Very truly yours, /s/ Han Kun Law Offices Han Kun Law Offices  EXHIBIT 15.3 Consent of Independent Registered Public Accounting Firm Board of Directors Tarena International, Inc. We consent to the incorporation by reference in the registration statements (No. 333-204494 and No. 333-197226) on Form S-8 of Tarena International, Inc.of our report dated April 25, 2017, with respect to the consolidated balance sheets of Tarena International, Inc. as of December 31, 2015 and 2016, and therelated consolidated statements of comprehensive income, changes in equity (deficit) and cash flows for each of the years in the three-year period endedDecember 31, 2016, which report appears in the December 31, 2016 annual report on Form 20-F of Tarena International, Inc. Our report dated April 25, 2017 contains an explanatory paragraph that states that the Company has elected to change its reporting currency from U.S. dollarsto Chinese Renminbi. /s/ KPMG Huazhen LLP Beijing, ChinaApril 25, 2017 

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