Exhibit
      10.3




August
      30, 2006





Mr.
      Victor Zhou


Suite
      1903, No 7, Rongcheng Garden,


Rongcheng
      Road,


Shanghai,
      China 200120




**Re:** **CEO** **Employment
      Agreement**




Dear
      Mr.
      Zhou:




On
      behalf
      of the Board of Directors (“Board”), I am pleased to offer you the position of Chief
      Executive Officer with The
      Hartcourt Companies, Inc. (the “Company”). This Employment Agreement sets forth
      the terms of our offer of employment to you for your approval and
      agreement.




**1.** **Employment
      by the Company** **.**




(a) Duties .
      You are
      employed by the Company as its Chief Executive Officer, reporting to the Company
      Board. You have
      the
      standard duties and powers associated with the CEO of a company, and your duties
      may include other duties as reasonably assigned by the Board from time to
      time. Notwithstanding the foregoing, you shall not be entitled to approve or bind
      the
      Company to any action or obligation that requires approval by the Board under
      corporate law, the Articles of Incorporation, or bylaws of the Company, or
      the
      guidelines, policies, and procedures adopted and established from time to time
      by the Board without Board approval..




(b) Company
      Policies .
      The
      employment relationship between you and the Company is governed by the general
      employment policies and practices of the Company; provided, however, that when
      the terms of this Employment Agreement differ from or are in conflict with
      the
      Company’s general employment policies or practices, this Employment Agreement
      will control.




(c) Board
      Membership .
      You as
      an elected director of the Company shall serve in such capacity without
      additional compensation. As a member of the Company’s Board, you are subject to
      the provisions of the Company’s bylaws and all applicable general corporation
      laws relative to your position on the Board.




**2.** **Term
      of Employment** **.**




(a) Term. Your
      employment with the Company will be for 2 years, starting Sept 1 st ,
      2006.




(b) Survival .
      Upon
      the termination of your employment with the Company, for any reason, neither
      you
      nor the Company shall have any further obligation or liability under this
      Employment Agreement to the other, except as set forth in Sections 5, 6, 7,
      8,
      9, 10, and 11 below.




**3.** **Compensation
      and Benefits** **.**




(a) Salary .
      You
      will receive for your services an annual base salary of US$100,000 (the “Base
      Salary”), payable in accordance with the Company’s standard payroll practices
      and subject to standard withholdings for taxes and social security and the
      like.
      Your Base Salary will be reviewed at least annually.











Mr.
        Victor Zhou
 _______,
        2006
 Page
        2






(b) Benefits .
      During
      your employment with the Company, you will be entitled to participate in any
      group insurance, hospitalization, medical, dental, health and accident,
      disability or similar plan or program or equivalent benefits of the Company
      to
      the extent that you are eligible under the general provisions of these plans.
      The Company may, in its sole discretion and from time to time, establish
      additional senior management benefit programs as it deems appropriate. You
      understand that any benefit plans may be modified or eliminated in the sole
      discretion of the Company in accordance with applicable law.




(d) Vacation .
      You
      will be entitled to a period of annual paid vacation time equal to not less
      than
      four weeks per year. Your eligibility to carryover your accrued vacation shall
      be subject to the Company policy applicable to employees at a similar level
      in
      effect during the term of this Employment Agreement. You shall also be entitled
      to pay, at your Base Salary rate, for any or all vacation not taken in a
      calendar year, such payment to be made on the first regular payday following
      the
      end of the calendar year.




(e) Key
      Person Insurance .
      You
      agree to take such actions as may be reasonably necessary or appropriate to
      permit the Company to obtain a key person insurance policy insuring you and
      naming the Company as beneficiary, should the Company wish to obtain such
      insurance.




(f) Directors
      and Officers Liability Insurance. Company
      will provide you during the term of this Employment Agreement the same level
      of
      coverage of directors and officers liability insurance that Company extends
      to
      its other directors and officers.




(g) Expenses .
      Subject
      to compliance with the Company’s normal and customary policies regarding
      substantiation and verification of business expenses, you are authorized to
      incur on behalf of the Company, and the Company will directly pay or shall
      fully
      reimburse you for, all customary and reasonable expenses incurred for promoting,
      pursuing, or otherwise furthering the business of the Company and its
      affiliates.




(h) Indemnification
      Agreement .
      As an
      officer, director and employee, the Company will enter into a standard
      indemnification agreement that will indemnify you to the maximum extent
      permitted by law.




**4.** **Stock** **.**




(a) The
      Company will grant you an option to purchase common stock at an exercise price
      per share equal to no more than $0.05 per share, equal to the fair market value
      of the shares as of August 29, 2006, according to the following vesting schedule
      and subject to number of shares available for option approved by shareholders.
      The option will be exercisable within 5 years after vesting. In the event of
      termination of your employment with the company, you will have 90 days to
      exercise all the vested stock options, unvested stock options will automatically
      be terminated.




(b) Vesting .
      Your
      Grant will vest on the following schedule:




§
            7,500,000
                share pro rata over 2 years of employment contract
                period;




§
            2,000,000
                shares upon each successful acquisition;   
   Mr.
          Victor Zhou
 _______,
          2006
 Page
          3
 §
              1,500,000
                  shares will be granted upon each full profitable
                  year  **5.** **Termination
          of Employment** **.**
  (a) Termination
          Upon Death .
          If you
          die during your employment with the Company, the Company shall pay to your
          estate, or other designated beneficiary(s) as shown in the records of the
          Company, any Base Salary and/or bonuses earned but unpaid as of the termination
          date (which for purposes of this subsection (a) shall be the date of your
          death); accrued but unused vacation time as of the end of the month in
          which you
          die; and benefits that you are entitled to receive as of the date of your
          death
          under benefit plans of the Company ,
          less
          standard withholdings for tax and social security purposes. In the event
          of your
          death, the Company shall have no obligation to make any other payment,
          including
          severance or other compensation, of any kind. All other benefits provided
          by the
          Company to you under its existing benefit plans shall be
          determined under the provisions of those plans.
  (b) Termination
          Upon Disability . **** The
          Company may terminate your employment if you suffer a disability that renders
          you unable, as determined in good faith by the Board, to perform the essential
          functions of your position, even with reasonable accommodation, for three
          months
          within any twelve month period. If your employment is terminated pursuant
          to
          this Section 5(b), you shall receive payment for any earned and unpaid Base
          Salary and/or bonuses as of the termination date (which for purposes of
          this
          subsection (b) shall be the date specified by the Board); accrued but unused
          vacation time as of the end of the month in which the termination for disability
          occurs; and benefits that you are then entitled to receive under benefit
          plans
          of the Company, less standard withholdings for tax and social security
          purposes. If your
          employment is terminated as a result of a disability pursuant to this
          Section 5(b), the Company also shall provide to you as severance the
          payment of an amount equal to six months of your then Base Salary, less
          standard
          withholdings for tax and social security purposes, in a lump sum on the
          termination date .
  Except
          as
          set forth in the immediately preceding paragraph, a fter
          the
          termination date, no other compensation of any kind or severance or other
          payment of any kind or payment in lieu of notice shall be payable by the
          Company
          if your employment is terminated as a result of a disability. All benefits
          provided by the Company under Section 3(b) shall be extended, at your election
          and cost, to the extent permitted by the applicable insurance policies
          and
          benefit plans of the Company, for six months after your termination date,
          except
          as otherwise required by law ( *e.g.* ,
          COBRA
          health insurance continuation election). Except as set forth in the immediately
          preceding sentence, all benefits provided by the Company to you under this
          Employment Agreement or otherwise shall cease as of your termination
          date.
  (c) Voluntary
          Termination **.** You
          may
          voluntarily terminate your employment with the Company at any time. If
          you
          voluntarily terminate your employment, you will receive payment for any
          earned
          and unpaid Base Salary and/or bonuses as of the date of such termination;
          accrued but unused vacation time; and benefits you are entitled to receive
          under
          benefit plans of the Company, less standard withholdings for tax and social
          security purposes, through the termination date, which for purposes of
          this
          subsection (c) shall be the date upon which you voluntarily cease performing
          your duties under this Employment Agreement. The Company shall have no
          further
          obligation to pay any compensation (including severance) of any kind. All
          benefits provided by the Company to you under this Employment Agreement
          or
          otherwise shall cease as of the date of your voluntary termination.
   
   Mr.
            Victor Zhou
 _______,
            2006
 Page
            4
 (d) Termination
          for Cause .
  (1) Termination;
          Payment of Salary and Vacation .
          The
          Board may terminate your employment with the Company at any time for “cause” (as
          defined below). In the event that your employment is terminated under this
          subsection (d), you shall receive payment for all earned but unpaid Base
          Salary; accrued but unused vacation time; and benefits you are then entitled
          to
          receive under benefit plans of the Company, less standard withholdings
          for tax
          and social security purposes, through the date of your termination, which
          for
          purposes of this subsection (d) shall be the date upon which such notice of
          termination is given. The Company shall have no further obligation to pay
          you
          compensation of any kind nor to make any payment in lieu of notice. All
          benefits
          provided by the Company to you under this Employment Agreement or otherwise
          shall cease as of the termination date.
  (2) Definition
          of Cause .
          For
          purposes of this Employment Agreement, the Company shall have “cause” to
          terminate your employment upon any of the following: (a) a material breach
          by you of the terms of this Employment Agreement; (b) any breach of
          fiduciary duty or act of theft, misappropriation, embezzlement, intentional
          fraud, falsification of any employment or Company records, or other violation
          of
          applicable law or regulation or similar conduct by you involving the Company
          or
          any of its affiliates; (c) your conviction or plea of *nolo
          contendere* or the
          equivalent involving a felony or a crime involving fraud or dishonesty;
          (d) any damage of a material nature to the business or property of the
          Company or any of its affiliates caused by your willful or grossly negligent
          conduct; (e) the willful failure or refusal by you to perform reasonable
          duties, responsibilities, or instructions from the Board; (f) engaging
          in abuse
          of alcohol, illegal drugs, or controlled substances in a manner that materially
          interferes with your performance of your duties; or (g) improper disclosure
          of
          the Company’s confidential or proprietary information. No act, or failure to
          act, by you shall be considered “willful” unless committed without a reasonable
          belief that the act or omission was in the Company’s best interest.




(e) Termination
      Without Cause .
      The
      Company, at any time without prior written notice, may terminate you without
      cause. If your employment is terminated without cause you shall receive payment
      for all earned but unpaid Base Salary and/or bonuses as of the termination
      date
      (which for purposes of this subsection (e), shall be the date of your
      termination); accrued but unused vacation time; and benefits you are then
      entitled to receive under benefit plans of the Company, less standard
      withholdings for tax and social security purposes, as of the termination date.
      Upon execution by you of an effective release of claims substantially in the
      form attached as Exhibit
      A ,
      the
      final wording of which shall be determined by the Company in conjunction with
      its legal counsel (the “Release”) the Company shall also pay to you as severance
      (1) an amount equal to two months of your then base salary, less standard
      withholdings for tax and social security purposes, in a lump sum on the
      termination date; (2) continuation of all benefits you are then entitled to
      receive under benefit plans of the Company for a period of six months; and
      (3)
      Acceleration of vesting of unvested stock options as described in Section 5(h)
      below, effective upon such termination date (“Acceleration Date”). No other
      compensation of any kind or severance or other payment of any kind shall be
      payable by the Company after such termination date. All benefits provided by
      the
      Company to you under this Employment Agreement or otherwise shall cease as
      of
      the termination date.




(f) Change
      of Control .
      If your
      employment is terminated without your written consent within twelve months
      after
      a Change of Control (as defined below), you shall receive payment for all earned
      but unpaid Base Salary and/or bonuses, as of the termination date (which for
      purposes of this subsection (f), shall be the date of your termination); accrued
      but unused vacation time; and benefits you are then entitled to receive under
      benefit plans of the Company, less standard withholdings for tax and social
      security purposes, as of the termination date. In such event, the Company shall
      also provide to you as severance (1) the payment of an amount equal to two
      months of your then base salary, less standard withholdings for tax and social
      security purposes, in a lump sum on the termination date; (2) **** continuation
      of all benefits you are then entitled to receive under benefit plans of the
      Company for a period of six months; and (3) Acceleration of vesting of unvested
      stock as described in Section 5(h) below, effective upon such termination date
      (“Acceleration Date”). **** No
      other
      compensation of any kind or severance or other payment of any kind shall be
      payable to you by the Company after such termination date. All benefits provided
      by the Company to you under this Employment Agreement or otherwise shall cease
      as of the termination date.






Mr.
        Victor Zhou
 _______,
        2006
 Page
        5






(1) For
      purposes of this Section 5(f), a Change of Control shall be deemed to occur
      upon
      the consummation of any one of the following events: (i) a sale of all or
      substantially all of the assets of the Company; (ii) a merger or consolidation
      in which the Company is not the surviving corporation (other than a transaction
      the principal purpose of which is to change the state of the Company’s
      incorporation or a transaction in which the voting securities of the Company
      are
      exchanged for beneficial ownership of at least a majority of the voting
      securities of the acquiring corporation); (iii) a merger or consolidation in
      which the Company is the surviving corporation and less than 50% of the voting
      securities of the Company that are outstanding immediately after the
      consummation of such transaction are beneficially owned, directly or indirectly,
      by the persons who owned such voting securities immediately prior to such
      transaction; (iv) any transaction or series of related transactions after which
      any person (as such term is used in Section 13(d)(3) of the Securities Exchange
      Act of 1934), other than any employee benefit plan (or related trust) sponsored
      or maintained by the Company, becomes the beneficial owner of voting securities
      of the Company representing a majority of the combined voting power of all
      of
      the voting securities of the Company; or (v) the liquidation or dissolution
      of
      the Company.




(2) For
      purposes of Section 5(f)(1), any person who acquired securities of the
      Company prior to the occurrence of the specified transaction in contemplation
      of
      such transaction and who immediately after such transaction possesses direct
      or
      indirect beneficial ownership of at least 10% of the securities of the Company
      or the surviving corporation, as appropriate (or if the Company or the surviving
      corporation is a controlled affiliate, then of the appropriate entity as
      determined above), shall not be included in the calculation of the group of
      persons who owned such voting securities immediately prior to such
      transaction.




(g) Termination
      for Good Reason .
      Notwithstanding anything in this Section 5 to the contrary, you may voluntarily
      end your employment with the Company and receive the benefits detailed in
      Section 5(e) upon or within 90 days following the occurrence of an event
      constituting “Good Reason,” which for purposes of this Section 5(g) shall mean
      any of the following conditions, provided that the underlying condition persists
      more than 15 business days after written notification to the Board: (1) a
      material adverse change in your position causing it to be of materially less
      responsibility or authority without your written consent, and such a materially
      adverse change shall in all events be deemed to occur if you no longer serve
      as Chief
      Executive Officer ,
      unless
      you consent in writing to such change; (2) a reduction, without your written
      consent, in your level of Base Salary; (3) the Company fails to obtain the
      assumption of this Employment Agreement by any successor or assign of the
      Company; (4) the Company without your consent requires your permanent relocation
      from the Shanghai Area; or (5) any material breach by the Company of any
      material provision of this Agreement.











Mr.
        Victor Zhou
 _______,
        2006
 Page
        6




(h) Acceleration
      of Vesting .
      “Acceleration” means that all additional unvested shares from all outstanding
      option grants to you will vest immediately upon the Acceleration
      Date.




(i) At-Will
      Employment .
      You
      understand and agree that your employment with the Company is at-will, which
      means that either you or the Company may, subject to the terms of this
      Employment Agreement, terminate this Employment Agreement at any time, with
      or
      without cause, as set forth in this Employment Agreement. Any modification
      of
      the at-will nature of this Employment Agreement must be in writing and executed
      by you and the Company.




**6.** **Proprietary
      Information Obligations** .
      You
      agree to sign and abide by the terms of the Company’s standard form of
      intellectual property assignment and employee confidentiality agreement, if
      any.




**7.** **Noninterference** .
      While
      employed by the Company pursuant to this Employment Agreement and for a period
      of six months after the date of your termination, you agree not to solicit
      or
      hire or attempt to solicit or hire, directly or indirectly, any employee of
      the
      Company or any affiliate.




**8.** **Injunctive
      Relief** .
      The
      parties agree that damages would be an inadequate remedy for the Company in
      the
      event of a breach or threatened breach of Section 6, 7 or 8 of this
      Employment Agreement by you, and in the event or any such breach or threatened
      breach, the Company may, either with or without pursuing any potential damage
      remedies, obtain and enforce an injunction prohibiting you from violating such
      section of this Employment Agreement and requiring you to comply with its
      terms.




**9.** **Warranties
      and Representations** .
      You
      hereby represent and warrant to the Company that you:




(a) are
      not
      now under any obligation of a contractual or quasi-contractual nature known
      to
      you that is inconsistent or in conflict with this Employment Agreement or that
      would prevent, limit, or impair the performance by you of any of your
      obligations under this Employment Agreement; and




(b) have
      been
      or have had the opportunity to be represented by legal counsel in the
      preparation, negotiation, execution, and delivery of this Employment Agreement
      and understand fully its terms and provision.




**10.** **Dispute
      Resolution and Binding Arbitration** .
      You and
      the Company agree that if a dispute arises concerning or relating to your
      employment with the Company, such dispute shall be submitted to binding
      arbitration in accordance with the employment rules of the American Arbitration
      Association then in effect. The arbitration shall take place in Los Angeles,
      California, and both you and the Company agree to submit to the jurisdiction
      of
      the arbitrator selected in accordance with American Arbitration Association
      rules and procedures. You and the Company agree that the arbitration procedure
      provided for in this section will be the exclusive avenue of redress for any
      disputes relating to or arising from your employment with the Company, and
      that
      the award of the arbitrator shall be final and binding on both parties, and
      nonappealable. The arbitrator shall have discretion to award monetary and other
      damages, or no damages, and to fashion such other relief as the arbitrator
      deems
      appropriate. The arbitrator shall also have discretion to award the prevailing
      party reasonable costs and attorneys’ fees incurred in bringing or defending an
      action under this provision. The costs and expenses relating to the arbitration
      proceeding itself, including the fees of the arbitrator, shall be borne by
      the
      Company.











Mr.
        Victor Zhou
 _______,
        2006
 Page
        7







**11.** **Miscellaneous** .




(a) Notices .
      Any
      notice or other communication required or permitted under this Employment
      Agreement shall be in writing and shall be deemed to have been duly given (a)
      on
      the day of delivery if delivered in person; (b) on the second business day
      following the date of dispatch if (i) delivered by an internationally-recognized
      express courier service, (ii) delivered by facsimile upon confirmation of
      receipt, or (iii) sent by e-mail, if confirmed by first-class mail or
      acknowledged by the recipient or recipient’s e-mail system; (c) on the fourth
      business day following the date of mailing if delivered by registered or
      certified mail, return receipt requested, postage prepaid. All notices shall
      be
      sent to the addresses specified below, unless such other address may be
      designated by notice given in accordance with this Section.




To
      the Company:




The
      Hartcourt Companies, Inc.


Room
      306,
      Yong Teng Plaza, No. 1065 WuZhong Road, Shanghai, China, 201103




Attention:
      Chairman of the Board




To
      you:


Mr.
      Victor Zhou


Suite
      1903, No. 7, Rongcheng Garden, Rongcheng Road,


Shanghai,
      PRC. 200120




or
      to
      such other address or to the attention of such other person as the recipient
      party will have specified by prior written notice to the sending
      party.




(b) Severability .
      If any
      term or provision (or any portion) of this Employment Agreement is determined
      by
      a court to be invalid, illegal or incapable of being enforced by any rule of
      law
      or public policy, all other terms and provisions (or other portions) of this
      Employment Agreement shall nevertheless remain in full force and effect. Upon
      such determination that any term or provision (or any portion) is invalid,
      illegal or incapable of being enforced, this Employment Agreement shall be
      deemed to be modified so as to effect the original intent of the parties as
      closely as possible to the end that the transactions contemplated hereby and
      the
      terms and provisions are fulfilled to the greatest extent possible.




(c) Entire
      Agreement .
      This
      document constitutes the final, complete, and exclusive embodiment of the entire
      agreement and understanding between the parties related to the subject matter
      hereof and supersedes and preempts any prior or contemporaneous understandings,
      agreements, or representations by or between the parties, written or oral.
      Without limiting the generality of the foregoing, except as provided in this
      Employment Agreement, all understandings and agreements, written or oral,
      relating to the employment of you by the Company, or the payment of any
      compensation, or the provision of any benefit in connection therewith or
      otherwise, are hereby terminated and shall be of no future force and
      effect.











Mr.
        Victor Zhou
 _______,
        2006
 Page
        8






(d) Counterparts .
      This
      Employment Agreement may be executed on separate counterparts, any one of which
      need not contain signatures of more than one party, but all of which taken
      together will constitute one and the same agreement. Signatures may be exchanged
      by electronic facsimile with machine evidence of transmission.




(e) Successors
      and Assigns .
      This
      Employment Agreement is intended to bind and inure to the benefit of and be
      enforceable by you and the Company, and their respective successors and assigns,
      except that you may not delegate any of your duties hereunder and you may not
      assign any of your rights hereunder without the prior written consent of the
      Company. If you should die while any amounts would still be payable to you
      hereunder if you had continued to live, all amounts payable hereunder shall
      be
      paid in accordance with the terms of this Employment Agreement to your estate,
      unless you have provided written notice to the Company specifying a different
      beneficiary or beneficiaries (which notice(s) may be changed from time to time
      at the sole discretion of you).




(f) Attorneys’
      Fees .
      If any
      legal proceeding is necessary to enforce or interpret the terms of this
      Employment Agreement, or to recover damages for breach, the prevailing party
      shall be entitled to reasonable attorneys’ fees, as well as reasonable costs and
      disbursements, whether taxable or not, in addition to any other relief to which
      you or the Company may be entitled.




(g) Amendments .
      No
      amendment or other modification to this Employment Agreement may be made except
      by a writing signed by both parties. Except for your estate pursuant to Section
      5(a) hereof, nothing in this Employment Agreement, express or implied, is
      intended to confer upon any third person any rights or remedies under or by
      reason of this Employment Agreement.




(h) Choice
      of Law and Venue .
      All
      questions concerning the construction, validity and interpretation of this
      Employment Agreement will be governed by the internal law, and not the law
      of
      conflicts, of the State of California. The exclusive venue for any such action
      shall be in the U.S. federal or state courts having within their venue Los
      Angeles, California.




(i) Fees
      and Expenses .
      Each of
      the parties shall bear its own fees and expenses incurred in connection with
      the
      preparation of this Employment Agreement and related transactions.













Mr.
        Victor Zhou
 _______,
        2006
 Page
        9
   We
        are
        eager to have you join us as a key member of the Hartcourt Companies team.
        Please indicate your acceptance of the terms of this Employment Agreement
        by
        signing below.


Acknowledged
                  and agreed:
                
                
                _____________________
                  Mr.
                    Victor Zhou
            Sincerely,
              The Hartcourt Companies, Inc.
              
              
              
              Billy Wang
              Chairman of the Board of Directors









Mr.
        Victor Zhou
 _______,
        2006
 Page
        10


**EXHIBIT
      A**





**RELEASE
      AGREEMENT**


**OF
      THE HARTCOURT COMPANIES, INC.**




**Mr.
      Victor Zhou** (“Releasor”) agrees that the payments and benefits he has received from The
      Hartcourt Companies, Inc. (the “Company”) are in full satisfaction of all
      obligations of the Company to the Releasor arising out of or in connection
      with
      the Releasor’s employment including, without limitation, all salary, bonuses,
      sick pay, reimbursement of expenses, and that the payment and benefits that
      will
      be provided to Releasor in accordance with Section 4 of Releasor’s Employment
      Agreement entered into as of August 30, 2006 (the “Employment Agreement”), as
      applicable, constitute consideration for the covenants and releases of the
      Releasor as set forth in this Release Agreement (“Severance
      Benefits”).




1. Releasor
      acknowledges that the Severance Benefits represent a substantial benefit to
      Releasor to which Releasor would not have been entitled had he not entered
      into
      this Release Agreement. Releasor further agrees that The Company has fully
      compensated Releasor for all salary, bonuses, commissions and benefits that
      he
      earned through the date of termination, or pursuant to any employment or other
      agreements.




2. In
      consideration of the Company’ promise to give Releasor the Severance
      Benefits:




a. Releasor,
      on behalf of himself and on behalf of all persons acting on Releasor’s behalf
      (including but not limited to Releasor’s estate, heirs, administrators,
      executors, successors, and assigns) hereby releases, indemnifies and hold
      harmless the Company, and all its subsidiaries, affiliated companies, business
      and operating units and each such entities’ officers, agents, representatives,
      shareholders, employees, successors, predecessors, and assigns (hereinafter,
      collectively, “Releasees”) from any and all claims, actions, charges, causes of
      action, rights, demands, damages of whatever nature, known or unknown, existing
      as of the date Releasor signed this Release Agreement arising out of or relating
      to Releasor’s employment or the termination of Releasor’s employment with the
      Company, including but not limited to, any claims that arise under the common
      law of contracts, implied or express contract or covenant, tort, public policy,
      wrongful termination, defamation or any claim, under either state or federal
      law, or agency charge of discrimination based on race, age, marital status,
      military status, gender, religion, national origin, handicap, disability, sexual
      orientation, retaliation and specifically including, but not limited to, any
      and
      all claims arising under Title VII, the California Fair Employment and Housing
      Act, the Age Discrimination in Employment Act of 1967, the Americans with
      Disabilities Act, the Family and Medical Leave Act, the California Family Rights
      Act (all of the foregoing as amended), and
      any
      other statutory or common law claims.




b. Releasor
      also understands that, in addition to known claims, unknown claims may exist,
      and that a portion of the consideration paid by The Company is paid to obtain
      Releasor’s release of both known and unknown claims. By signing this Release
      Agreement, Releasor also expressly waives the provisions of California Civil
      Code section 1542, which provide as follows:













Mr.
        Victor Zhou
 _______,
        2006
 Page
        11


“A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his favor at the time of executing the release, which if
      known by him must have materially affected his settlement with the
      debtor.”




c. Releasor
      agrees that for a period of six months following the date this Release Agreement
      becomes effective Releasor will not solicit or hire or attempt to solicit or
      hire,
      directly or indirectly, any employee of the Company or any affiliate.




3. By
      entering into this Release Agreement, neither Releasor nor the Company admits
      liability, wrongdoing or violation of any law. The parties agree that nothing
      in
      this Agreement, nor any of the discussions connected with those documents,
      will
      be construed to constitute, or will be offered or received as, evidence of
      an
      admission of liability or wrongdoing by any or all of the Releasees. Releasor
      represents and warrants that neither Releasor nor anyone on his behalf has
      filed
      or otherwise made any claim, charge, or complaint with, or commenced any action
      or proceeding in, any federal, state or local court or administrative agency
      or
      governmental entity against any or all of the Releasees.




4. Nothing
      in this Release Agreement will waive or otherwise release Releasor from any
      obligation Releasor may have to the Company, including without limitation,
      any
      proprietary information, invention assignment, confidentiality, or similar
      agreement between Releasor and the Company.




5. Releasor
      may not execute this Release Agreement prior to Releasor’s last day of
      employment with Releasor.




6. This
      Release Agreement shall be governed by, and construed and enforced in accordance
      with, the laws of the State of California, without regard to its choice of
      law
      provisions.




7. Releasor
      and The Company agree that the provisions of section 1654 of the California
      Civil Code shall not apply to the interpretation of this Release
      Agreement.




8. Releasor
      acknowledges his understanding that he may take 21 days to consider this Release
      Agreement and that he has been advised that he should consult with an attorney,
      if he decides to do so, prior to executing this Release Agreement. Executive
      further acknowledges that he understands that he may revoke this Release
      Agreement within seven days of his execution of this document and that the
      consideration to be paid to his pursuant to this Release Agreement will be
      paid
      only after that seven day revocation period and will be in accordance with
      Section 4 of the Employment Agreement.




9. This
      Release Agreement shall not cover obligations of the Company to defend and/or
      indemnify Releasor in his capacity as an officer or director of the Company
      in
      accordance with the provision of the Company’s Articles of Incorporation,
      Bylaws, and applicable law. In addition, it is understood that this Release
      Agreement shall not preclude Releasor from bringing an action to enforce the
      terms of this Release Agreement or any indemnification obligations on the part
      of the Company.




10. This
      Release Agreement sets forth the entire agreement between Releasor and the
      Company, and Releasor acknowledges by signing below that Releasor has not relied
      upon any representations, written or oral, not set forth in this Release
      Agreement. Releasor further acknowledges that this Agreement may not be changed
      or modified except by a subsequent written agreement signed by both Releasor
      and
      the Company.











Mr.
        Victor Zhou
 _______,
        2006
 Page
        12






11. Should
      any provision of this Agreement be held invalid or illegal, such invalidity
      or
      illegality shall not invalidate the whole of this Agreement. Upon such
      determination that any term or provision (or any portion) is invalid, illegal
      or
      incapable of being enforced, this Release Agreement shall be deemed to be
      modified so as to effect the original intent of the parties as closely as
      possible to the end that the transactions contemplated hereby and the terms
      and
      provisions are fulfilled to the greatest extent possible.




12. This
      Release Agreement contains all of the terms, promises, representations, and
      understandings made between the parties and supersedes any other representation,
      understandings or agreements by or between the parties, whether oral or written.
      Any waiver by the Company of a breach of any provision of this Release Agreement
      shall not operate or be construed as a waiver of any subsequent breach of such
      provision or any other provision of this Agreement.




13. Releasor
      represents that Releasor has read this Agreement and understands its provisions,
      and that Releasor has had the opportunity (whether or not such opportunity
      was
      taken) to consult with legal counsel of his own choosing.





THE
                HARTCOURT COMPANIES, INC.
              
              By____________________________Name:
                Billy Wang
              Title:
                Chairman of the Board
              
              
              By_____________________________
              Mr.
                Victor Zhou