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EXHIBIT 2.02



                              DATE June 29th, 2004




              (1)    HARTCOURT CHINA INC AND MR. LEE LU PING


                     (as Vendors)

                                       AND

              (2)    FIRST INFORMATION TECHNOLOGY LIMITED

                     (as Purchaser)


               --------------------------------------------------

                                A G R E E M E N T

                       FOR SALE AND PURCHASE OF SHARES IN

                      HOPEFUL INTERNET TECHNOLOGIES LIMITED
               --------------------------------------------------



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This AGREEMENT is entered into on June 29th, 2004


AMONG:

(1)      HARTCOURT CHINA INC, a company incorporated in the British Virgin
         Islands and whose registered address is P O Box 957, Offshore
         Incorporations Centre, Road Town, Tortola, British Virgin Islands and
         whose business address is Suite B, 19/F., Ritz Plaza, 122 Austin Road,
         Tsimshatsui, Hong Kong ("HARTCOURT"); and

(2)      MR. LEE LU PING (PERSONAL IDENTITY CARD NO. __________) WHOSE
         RESIDENTIAL ADDRESS IS SITUATED AT

         ("Mr Lee", together with Hartcourt the "Vendors"); and

(3)      FIRST INFORMATION TECHNOLOGY LIMITED, a company incorporated in the
         British Virgin Islands and whose registered address is P O Box 957,
         Offshore Incorporations Centre, Road Town, Tortola, British Virgin
         Islands and business address is 19/F., Wing On House, No. 71 Des Voeux
         Road Central, Hong Kong (the "PURCHASER").


RECITALS:

A.       The Company is established under the laws of the British Virgin Islands
         whose particulars are set out in Schedule 1.

B.       The Vendors are the legal and beneficial owners of the Company.

C.       The Vendors are desirous to sell and the Purchaser is desirous to
         purchase the entire equity capital of the Company on the terms and
         conditions set out in this Agreement.


NOW IT IS AGREED as follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      Definitions

         In this Agreement, unless the context otherwise requires, the following
         words and expressions shall have the following meanings:

         "Accounting Date"          means 31st December, 2003;

         "Accounts"                 means the audited consolidated accounts of
                                    the Company comprising the balance sheet of
                                    the Company and the consolidated balance
                                    sheet of the Company as at the Accounting
                                    Date, the profit and loss account of the
                                    Company and the consolidated profit and loss
                                    account of the Company for the financial
                                    year ended on the Accounting Date, the notes
                                    thereto and the directors' and auditors'
                                    reports thereon;


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         "Business Day"             means a day on which banks in Hong Kong are
                                    open for business (except Saturdays,
                                    Sundays, public holidays in Hong Kong and a
                                    day when the typhoon signal number 8 is
                                    raised or black rain storm warning is issued
                                    and is not lowered before 2 p.m. of such
                                    alert);

         "BVI"                      means the British Virgin Islands;

         "Company"                  means Hopeful Internet Technologies Limited,
                                    a company established under the laws of the
                                    BVI;

         "Companies Ordinance"      means the Companies Ordinance (Cap. 32 of
                                    the Laws of Hong Kong);

         "Completion"               means the completion of the sale and
                                    purchase of the Sale Shares pursuant to
                                    Clause 6;

         "Completion Date"          means the seventh (7th) Business Day after
                                    the conditions set out in Clause 4.1 are
                                    fulfilled (or such other date as the Vendors
                                    and the Purchaser may agree in writing prior
                                    to Completion);

         "Consideration"            means HK$3,622,881, the consideration for
                                    the Sale Shares which is to be settled in
                                    the manner set out in Clause 5;

         "Consideration Shares"     means 2,179 ordinary shares of US$0.01 each
                                    in the share capital of the Purchaser to be
                                    issued to the Vendors on Completion,
                                    pursuant to Clause 5;

         "Director"                 means a director from time to time appointed
                                    by the Company;

         "Disclosure Letter"        means the letter of even date issued by the
                                    Vendors to the Purchaser in the agreed form;

         "Encumbrances"             means and includes any option, right to
                                    acquire, right of pre-emption, mortgage,
                                    charge, pledge, lien, hypothecation, title
                                    retention, right of set off, counterclaim,
                                    trust arrangement or other security or any
                                    equity or restriction;

         "HK$"                      means Hong Kong dollars, the lawful currency
                                    of Hong Kong;

         "Hong Kong"                means the Hong Kong Special Administrative
                                    Region of the PRC;


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         "Intellectual Property     means the rights in respect of any patents,
         Rights"                    trade marks, service marks, applications for
                                    any of the foregoing, copyright, design
                                    rights, know-how, confidential information,
                                    trade secrets, trade and business names and
                                    any other similar protected rights owned by
                                    or belonging to the Company and its
                                    subsidiaries from time to time in any
                                    country;

         "Listing Rules"            means the Rules Governing the Listing of
                                    Securities on the Stock Exchange;

         "PRC" or "China"           means the People's Republic of China, for
                                    the purpose of this Agreement, excluding
                                    Hong Kong, Macau and Taiwan;

         "US$"                      means United States dollars, the lawful
                                    currency of the United States of America;

         "Sale Shares"              means all the equity capital of the Company;

         "Stock Exchange"           means The Stock Exchange of Hong Kong
                                    Limited;

         "Taxation"                 means and includes all forms of tax, rate,
                                    levy, duty, charge, impost, fee, deduction
                                    or withholding of any nature now or
                                    hereafter imposed, levied, collected,
                                    withheld or assessed by any taxing or other
                                    authority in the PRC and includes any
                                    interest, additional tax, penalty or other
                                    charge payable or claimed in respect
                                    thereof;

         "Warranties"               means the warranties, representations and
                                    undertakings given by the Vendors pursuant
                                    to Clause 7 and set out in Schedule 2 and
                                    any other representations, warranties and
                                    indemnities made by or on behalf of the
                                    Vendors in this Agreement.


1.2      Interpretation

         In this Agreement unless the context otherwise requires:

         (a)      reference to any statute or statutory provision includes a
                  reference to that statute or statutory provision as from time
                  to time amended, extended or re-enacted;

         (b)      words and phrases the definitions of which are contained or
                  referred to in the Companies Ordinance shall be construed as
                  having the meaning thereby attributed to them but excluding
                  any statutory modification thereof not in force on the date of
                  this Agreement;

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         (c)      words importing the singular include the plural, words
                  importing any gender include every gender, and words importing
                  persons include bodies corporate and unincorporated; and (in
                  each case) vice versa;

         (d)      all warranties, representations, indemnities, covenants,
                  agreements and undertakings given or entered into by more than
                  one person are given or entered into jointly and severally,
                  unless otherwise specified;

         (e)      where any Warranty is qualified by being given or made to the
                  best of the knowledge, information or belief of any person
                  giving or making the same or so far as that person is aware or
                  is qualified in any similar way such qualification shall be
                  deemed to be followed by the words "having made due and
                  careful enquiry";

         (f)      references to the Parties, Recitals, Clauses and Schedules
                  refer to the parties, the recitals, clauses of and schedules
                  to this Agreement;

         (g)      references to a document being in the "agreed form" or "agreed
                  terms", means a document the terms of which have been approved
                  by or on behalf of the Vendors and the Purchaser and a copy of
                  which has been signed for the purpose of identification by or
                  on behalf of the Vendors and the Purchaser;

         (h)      headings used in this Agreement are for convenience only and
                  shall not affect its interpretation.

1.3      This Agreement include the Recitals, all Clauses and Schedules as may
         be amended, varied or revised from time to time.

1.4      Time shall be of the essence in this Agreement.


2.       SALE AND PURCHASE OF SALE SHARES

2.1      Subject to the terms of this Agreement, the Vendors as legal and
         beneficial owner shall sell and transfer or procure the transfer of the
         Sale Shares free from Encumbrances and the Purchaser shall purchase the
         Sale Shares upon Completion.

2.2      The Sale Shares are sold together with all rights attached or accruing
         thereto and together with all dividends declared and paid in respect of
         periods commencing on or after the Completion Date.

2.3      The Purchaser shall not be obliged to purchase any of the Sale Shares
         unless the sale of all the Sale Shares is completed simultaneously.

2.4      Subject to the terms of this Agreement, the Vendors covenant to do and
         execute all such acts and things as may be reasonably necessary to vest
         the Sale Shares in the Purchaser and to place the Purchaser in full
         control of the Sale Shares as from the Completion Date.


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3.       TRANSFER OF METASTOCK

3.1      Subject to the terms of this Agreement, upon Completion (or as soon as
         reasonably practicable thereafter), the Vendors shall make effective
         transfer to the Purchaser all its Intellectual Property Rights of the
         Chinese translation of the software "Metastock" and its distribution
         right in the PRC. Consideration for the Metastock Project has been
         included in the total number of Consideration Shares to be issued by
         the Purchaser to the Vendors on Completion.


4.       CONDITIONS PRECEDENT

4.1      Completion is conditional upon:

         (a)      the passing of a resolution by the board of directors of
                  Hartcourt China Inc approving the sale of the Sale Shares to
                  the Purchaser and all terms in this Agreement and the
                  implementation thereof;

         (b)      the passing of resolutions by the board of directors and
                  shareholders of the Purchaser approving the purchase of the
                  Sale Shares, the issue and allotment of the Consideration
                  Shares and all terms in this Agreement and the implementation
                  thereof;

         (c)      all necessary authorizations, orders, grants, consents,
                  permissions and approvals for all transactions contemplated by
                  this Agreement (including transfer of the Sale Shares to the
                  Purchaser) having been obtained from, and all filings and
                  registrations having been performed with, all applicable
                  authorities, departments and bodies in the PRC, including
                  without the limitation to the government approval, consent and
                  permissions required in the PRC in respect of the Company,
                  from appropriate governments, governmental, supranational or
                  trade agencies and regulatory bodies and all such
                  authorizations, and such authorizations, orders, grants,
                  consents, permissions and approvals remaining in full force
                  and effect.

4.2      The parties shall use their respective best endeavours to ensure that
         the conditions set out in CLAUSE 4.1 are fulfilled by 5:00 p.m. (Hong
         Kong time) on or before the date referred to in CLAUSE 4.3.

4.3      If the conditions set out in CLAUSE 4.1 have not been fulfilled by 5:00
         p.m. (Hong Kong time) on 15th July, 2004 or such later date as the
         parties may agree in writing, this Agreement and everything herein
         contained shall, subject to the liability of any party to the other in
         respect of any antecedent breaches of the terms hereof, be null and
         void and of no effect.


5.       CONSIDERATION

5.l      The Consideration shall be settled by the Purchaser by the issue of the
         Consideration Shares to the Vendors. The Consideration Shares shall be
         issued and allotted, credited as fully paid and free from Encumbrances
         to the Vendors in the following ratio: (Hartcourt 51%, Mr.Lee 49%.)
         Upon Completion, the Consideration Shares issued to the Vendors shall
         constitute 21.79% of the entire issued share capital of the Purchaser
         as enlarged by the issue of the Consideration Shares.

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5.2      The Consideration Shares issued to the Vendors shall rank pari passu in
         all respects with the all other existing issued and allotted shares of
         the Purchaser and the Vendors shall be entitled to all rights attached
         or accruing thereto including all dividends declared and paid on or
         after Completion.


6.       COMPLETION

6.1      Completion of the sale and purchase of the Sale Shares shall take place
         on the Completion Date at the offices of the Purchaser in accordance
         with Schedule 3.

6.2      No party shall be obliged to complete the sale and purchase of the Sale
         Shares unless the other party complies fully with the requirements set
         out in Schedule 3 applicable to them respectively.

6.3      Without prejudice to any other remedies available to any party, if in
         respect of the provisions of this Agreement and in particular Schedule
         3 are not complied with by either the Vendors on the one part or by the
         Purchaser on the other part on or before the Completion Date, the party
         not in default may:

         (a)      defer Completion to a date not more than 28 days following the
                  Completion Date (and so that the provisions of this Clause 6.3
                  (a) shall apply to Completion as so deferred);

         (b)      proceed to Completion so far as practicable (but without
                  prejudice to its rights hereunder); or

         (c)      rescind this Agreement without prejudice to any of its other
                  rights in respect of such default.


7.       WARRANTIES, REPRESENTATIONS,  AND UNDERTAKINGS

7.1      Save as disclosed in the Disclosure Letter, each of the Vendors hereby
         warrant, represent and undertake to the Purchaser the Warranties and
         acknowledges that the Purchaser is entering into this Agreement in
         reliance on the Warranties and that the Purchaser may treat them as
         conditions of this Agreement.

7.2      Save as except in this Agreement, the Vendors agree to indemnify and
         keep indemnified the Purchaser (for itself and as trustee for the
         Company) against all losses, damages, costs, actions, proceedings,
         claims, demands and expenses suffered by the Purchaser or the Company
         or its subsidiaries as a result of or in connection with any breach of
         any of the Warranties.

7.3      Each of the Warranties is without prejudice to each and every other
         Warranty.

7.4      The Vendors undertake to the Purchaser that it will forthwith notify
         the Purchaser in writing of any matter or thing which may arise or
         become known to them after the date of this Agreement and prior to
         Completion which is a breach of or inconsistent with any of the
         Warranties or other provisions contained in this Agreement.


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7.5      In the event of the aforesaid notice is given to the Purchaser or the
         Purchaser otherwise becoming aware or it becoming apparent on or before
         Completion that any of the Warranties or any other term of this
         Agreement is incorrect or breached in any material respect, the
         Purchaser may rescind this Agreement by notice in writing to the
         Vendors without prejudice to any rights it may have in respect of the
         alleged breach or rescission hereof.

7.6      The Warranties shall remain in full force and effect after and
         notwithstanding Completion.

7.7      The Warranties are given subject to the matters disclosed in the
         Disclosure Letter, no other information relating to the Company which
         the Purchaser has knowledge whether actual or constructive shall
         prejudice any claim made by the Purchaser under the Warranties or
         operate to reduce any amount recoverable.

7.8      It is agreed between the parties that (without limitation or prejudice
         to any rights accruing to the Purchaser pursuant to any of the
         provisions of this Agreement) in the event of there being discovered a
         breach of any Warranty which was not disclosed in the Disclosure
         Letter, any damages or compensation to which the Purchaser may be
         entitled may, if the Purchaser so elects, be calculated on the
         following basis, that is to say there shall be paid to the Purchaser
         such sum as shall represent the diminution in the value of the Sale
         Shares as a result of such breach, plus any and all expenses and costs,
         including without limitation attorney's fees and expenses, to enforce
         this provision and to collect such sum.

7.9      The Purchaser may take action for any breach or non-fulfillment of any
         of the same before or after Completion and in the event of action taken
         after Completion. Completion shall not in any way constitute a waiver
         of the Purchaser's rights notwithstanding that such rights may have
         been arisen or known to the Purchaser before Completion.

7.10     Notwithstanding anything contained in this CLAUSE 7 or any other
         provision of this Agreement:

         (a)      no liability shall in any event arise in respect of any claim
                  under the Warranties unless:

                  (i)      the amount of a single claim exceeds HK$100,000; or

                  (ii)     the amount of a single claim (when aggregated with
                           the amount of any other claim then or previously made
                           hereunder against the Vendors) exceed HKD$100,000 in
                           which event the whole of such claim and all previous
                           claims shall be recovered in full within one year.

         (b)      the aggregate liability of the Vendors in respect of all
                  breaches under the Warranties shall not exceed the amount of
                  the Consideration; and

         (c)      (i) the Vendors shall not be liable for any breaches of the
                  Warranties unless on or before 3 months from the date of this
                  Agreement, the Purchaser shall have given written notice to
                  that Vendors of any claim, such notice to comply with the
                  provisions of Clause 7.10 (c) (ii);

                  (ii)     Any notice of a claim for any breach of the
                           Warranties given by the Purchaser to the Vendors
                           shall specify (in reasonable detail) the matters
                           which give rise to the breach, the nature of the
                           breach and an estimate of the amount claimed in
                           respect thereof ;

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7.11     Purchaser's warranties

         The Purchaser represents and warrants to the Vendors that:

         (a)      it is a company duly incorporated and subsisting under the
                  laws of BVI and has the corporate power and, subject to the
                  fulfillment of the conditions in Clause 4.1, has obtained all
                  necessary approvals, authorizations and consents to enter into
                  and perform its obligations under this Agreement and has taken
                  all necessary corporate and other action to authorize the
                  entering into and performance of this Agreement;

         (b)      this Agreement constitutes the legal, valid and legally
                  binding obligations of the Purchaser and are and will be fully
                  enforceable against the Purchaser in accordance with their
                  respective terms;

         (c)      the execution and delivery of ,and the performance by the
                  Purchaser of its obligations under this Agreement will not:

                  (i)      result in a breach of any provision of the memorandum
                           and articles of association or bye-laws of the
                           Purchaser; or

                  (ii)     result in a breach of, or constitute a default under,
                           any instrument or agreement or contract or deed to
                           which the Purchaser is a party or by which the
                           Purchaser is bound (including any shareholder's
                           agreement between its members in respect of the
                           Purchaser);or

                  (iii)    result in a breach of any law, rule or regulation or
                           any order, judgment or decree of any court or
                           governmental, regulatory, judicial or administrative
                           body to which the Purchaser is a party or by which
                           the Purchaser is bound;

         (d)      the Purchaser through its wholly owned subsidiaries holds
                  219,999,999 shares (ie.78.57% equity interest) in GTI
                  Financial Information Limited ("GTI");

         (e)      subject to the fulfillment of the conditions in Clause 4.1,
                  the Consideration Shares to be issued pursuant to the terms of
                  the Agreement and have been duly authorized by the Purchaser
                  and will be validly issued, credited as fully-paid and
                  unencumbered and free and clear of any security interests,
                  claims (including pre-emptive rights and other restrictions on
                  disposals of the Consideration Shares), liens or encumbrances
                  and will be freely transferable and will rank PARI PASSU in
                  all respects with all other issued shares in the capital of
                  the Purchaser then in issue;

         (f)      save for the matters and transactions contemplated in this
                  Agreement, there are no ( and there will be none up to and on
                  the Completion Date) outstanding options, warrants, rights
                  (including conversion or preemptive rights) or agreements for
                  the purchase, subscription, issue and allotment or acquisition
                  from the Purchaser of any of its capital shares. Except for
                  the existing memorandum and articles of association of the
                  Purchaser as at the date hereof, the existing shareholder's
                  agreement dated 3rd January 2000 between Hu Qing Shan, Hu
                  Ying, Gong Hui and Huang Tong Feng as Party A, Illumination
                  International Limited as Party B, Twin Tiger Limited as Party
                  C, Shenzhen Genius Information Technologies Limited as Party
                  D, GTI as Party E and Shenzhen Ju Lie Information Consulting
                  Limited as Party F respectively and the matters and
                  transactions contemplated in this Agreement, the Purchaser
                  and/or any existing shareholder of the Purchaser is not a
                  party or subject to any agreement or understanding which
                  affects or relates to the voting or giving of written consents
                  with respect to any shares of the Purchaser or by a director
                  of the Purchaser (and will not be a party or subject to any of
                  the aforesaid up to and on the Completion Date). Except the
                  matters and transactions contemplated in this Agreement, there
                  is no other agreement or understanding (and there will be none
                  up to and on the Completion) between any persons and/or
                  entities, which affects or relates to the voting or giving of
                  written consents with respect to any shares of the Purchaser
                  or by a director of the Purchaser;

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         (g)      the particulars of the Purchaser contained in Schedule 5 are
                  true and accurate in all respects;

         (h)      all returns particulars resolutions and other documents
                  required to be filed with the relevant authorities in Hong
                  Kong by the Purchaser have been duly filed and the Purchaser
                  has complied with all legal requirements in connection with
                  its formation and with all issues of its shares;

         (i)

7.12     The Purchaser shall not do or allow and shall procure that no act or
         omission shall occur before Completion which would constitute a breach
         of any of the Warranties, representations and undertakings given by the
         Purchaser in this Agreement if they were given at Completion or which
         would make any of such warranties inaccurate or misleading if they were
         so given.

7.13     In the event of it being found prior to Completion that any of the
         warranties, representations and undertakings given by the Purchaser in
         this Agreement are untrue or incorrect, or in the event of any matter
         or thing arising or becoming known or being notified to the Vendors
         which is inconsistent with any of such warranties, representations and
         undertakings, the Vendors shall not be bound to complete the sale and
         purchase of the Sale Shares and may by written notice rescind this
         Agreement without liability on its part. The right conferred upon the
         Vendors by this Clause is in addition to and without prejudice to any
         other rights of the Vendors (including any rights to claim damages or
         compensation from the Purchaser by reason of any such breach or
         non-fulfilment) and failure to exercise it shall not constitute a
         waiver of any such rights.

7.14     The Purchaser hereby undertakes to indemnify and keep indemnified the
         Vendors against any loss or liability suffered by the Vendors as a
         result of or in connection with any breach of any of the warranties,
         representations and undertakings given by the Purchaser in this
         Agreement and against any costs and expenses incurred in connection
         therewith provided that the indemnity contained in this Clause shall be
         without prejudice to any other rights and remedies of the Vendors in
         relation to any such breach. The aggregate liability of the Purchaser
         in respect of all breaches under the Warranties shall not exceed the
         amount of the Consideration, and the Purchaser shall not be liable for
         any breach of the Warranties unless on or before 3 months from the date
         of this Agreement, the Vendors shall have given written notice to that
         Purchaser of any claim, such notice shall specify (in reasonable
         detail) the matters which give rise to the breach, the nature of the
         breach and an estimate of the amount claimed in respect thereof.

7.15     The rights conferred upon the Purchaser by this Clause 7 are in
         addition to and without prejudice to any other rights of the Purchaser
         and failure to exercise it shall not constitute a waiver of any such
         rights notwithstanding that such breach or non-fulfillment may have
         been known to or discoverable by the Purchaser before Completion.

7.16     The Vendors hereby waive any and all claims against the Company and all
         its subsidiaries and their respective officers, employees, servants,
         agents and representatives in respect of any information supplied by
         any of them to the Vendors on or before the date hereof in connection
         with any of the Warranties or any matters which have been disclosed to
         the Purchaser or otherwise howsoever in relation to the business or
         affairs of the Company or any of its subsidiaries.

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8.       CONFIDENTIALITY

8.1      Subject to the fulfilment of Clause 4.1, the Vendors undertake at all
         reasonable times, notwithstanding Completion, it will at the request of
         the Purchaser promptly give to the Purchaser such Information (defined
         in Clause 8.3) in its possession.

8.2      Subject to the fulfilment of Clause 4.1, the Vendors further undertake
         to the Purchaser that they will not and will procure all their
         respective officers, employees, servants, agents and representatives
         will not at any time after Completion for their own benefit or on
         behalf of any other person take away, make use of or disclose to any
         person (except as may be necessary to comply with any statutory
         obligation or order of any court or statutory tribunal of competent
         jurisdiction) any Information are confidential in any way relating to
         the business or affairs of the or to any customer, client, agent,
         supplier or any other person who has or has had any dealings with the
         Company.

8.3      In this Clause 8, "Information" refers to all information in the
         possession of or within the control of the Vendors or their respect
         officers, employees, servants, agents and representatives concerning
         the business, dealings, transactions or affairs of the Company and all
         claims made or threatened against the Company.

8.4      The Purchaser hereby undertakes with the Vendors that it will not,
         prior to Completion and save as required by law, make use of or
         disclose or divulge any confidential information relating to the
         Company obtained by it or its representatives pursuant to this
         Agreement and the transactions contemplated thereby to any person other
         than its own officers, employees or professional advisors.

9.       NON-COMPETITION AND NON-SOLICITATION

9.1      Subject to the fulfilment of Clause 4.1, the Vendors undertake from the
         Completion Date to the expiry of 12 months after the Completion Date,
         it will not and will procure all its respective officers, employees,
         servants, agents, associates and representatives will not for their own
         benefit or on behalf of any other person without the prior written
         consent of the Purchaser:

         (a)      carry on (whether alone or in partnership or joint venture
                  with anyone else) or be concerned with or interested any
                  business carried by the Company in the PRC at any time within
                  12 months prior to the Completion Date or directly or
                  indirectly competitive with such business of the Company in
                  the PRC save and except as a shareholder (for investment
                  purposes only) holding not more than 5% directly or indirectly
                  of the securities of a company listed on a recognized stock
                  exchange;

         (b)      whether as principal, agent or servant canvass or solicit
                  business from any person who was a customer, client, agent or
                  supplier of the Company in the PRC during the period of 12
                  months immediately prior to Completion;


                                       11
<PAGE>

         (c)      offer employment to any person who at the date of this
                  Agreement or within 12 months prior to the Completion Date, is
                  or had been an employee of the Company in the PRC and for so
                  long thereafter as such employee shall remain in the
                  employment of the Company in the PRC or for a period of 6
                  months after leaving such employment; or

         (d)      offer any inducement or encouragement to any such employee to
                  cease to be so employed or to seek employment with any other
                  employer or to become self-employed or to go into any
                  partnership or business on his own account in the PRC.

9.2      Each of the restrictions contained in Clause 9.l is separate and
         distinct and is to be construed separately from the other restrictions.
         The Vendors hereby acknowledge that he/it considers such restrictions
         to be reasonable both individually and in aggregate and that the
         duration, extent and application of each of such restrictions are no
         greater than is necessary for the protection of the legitimate
         interests of the Purchaser and that the Consideration paid by the
         Purchaser under the terms of this Agreement takes into account and
         adequately compensates them for any restriction or restraint imposed
         hereby. However, in the event that any such restriction shall be found
         to be void or unenforceable but would be valid or enforceable if some
         part or parts thereof were deleted or the period or area of application
         reduced, the Vendors hereby agree that such restriction shall apply
         with such modification as may be necessary to make it valid.


10.      CONDUCT OF THE COMPANY UP TO COMPLETION

10.1     Pending Completion, the Vendors undertake with the Purchaser to procure
         that the Company and its subsidiaries will NOT:

         (a)      enter into any commitment, contract or arrangement other than
                  in the ordinary and proper course of its business;

         (b)      dispose of or create or permit any Encumbrances over any of
                  its assets or agree so to do, other than a disposal of its
                  stock in trade in the ordinary and proper course of its
                  business;

         (c)      incur any material liabilities other than in the ordinary and
                  proper course of its business;

         (d)      hire any new employee other than those general staff, alter
                  the remuneration or conditions of employment or superannuation
                  of any employee (except under the requirements of any award,
                  industrial agreement, service contract or law) or terminate
                  the employment of any employee (except for fraud or
                  misconduct);

         (e)      allot or issue or agree to allot or issue any shares or any
                  loan capital or any security convertible into share capital;

         (f)      declare or pay any dividend or make any other distribution of
                  its profits;

         (g)      alter its memorandum or articles of association other than for
                  the purpose of transferring the Sale Shares to the Purchaser
                  and in the agreed terms; or

         (h)      change its name.


                                       12
<PAGE>

10.2     Up to Completion the Vendors shall cause the Company, at all reasonable
         times, to make all premises, plant, stock, Accounts and records
         available for the Purchaser's inspection for the purposes of this
         Agreement and allow copies of such records to be taken.


11.      INDEMNITY

11.1     The Vendors shall indemnify and hold harmless the Purchaser against
         each proceeding, judgment, loss, damage, cost, expense or liability
         suffered, incurred by or brought or made or recorded against the
         Purchaser, as a direct or indirect consequence of:

         (a)      any breach by the Vendors or any other person of any of the
                  Warranties;

         (b)      any Warranty not being true and correct or being misleading as
                  at the Completion Date; or

         (c)      any failure by the Vendors to duly perform any of the
                  obligations imposed upon them by this Agreement.

11.2     The Vendors further acknowledge that the aforesaid indemnity:

         (a)      extends to all costs, expenses and other amounts incurred or
                  paid by the Purchaser in the enforcement or purported or
                  attempted enforcement of such indemnity or for the
                  preservation of or in any manner in reference to the rights
                  conferred upon the Purchaser by this Agreement, including
                  legal costs as between solicitor and client;

         (b)      will not be abrogated, modified, prejudiced, affected or
                  considered as wholly or partially discharged by any one or
                  more of:

                  (i)      any time, credit, indulgence or concession extended
                           by the Purchaser or the Company to the Vendors or any
                           other person;

                  (ii)     any compounding, compromise, release, abandonment,
                           waiver, variation, relinquishment or renewal of any
                           rights of the Purchaser or the Company against the
                           Vendors or any other person;

                  (iii)    the neglect or omission of the Purchaser or the
                           Company to enforce any of those rights or any delay
                           in the enforcement of any of those rights; and

                  (iv)     the winding up, bankruptcy or death of any of the
                           Vendors.

         (c)      is continuing and irrevocable and the obligations of the
                  Vendors will be absolute and unconditional in all
                  circumstances; and

         (d)      will be in addition to and not in substitution for any other
                  indemnity provided under this Agreement or any other rights
                  which the Purchaser or the Company may have against the
                  Vendors from time to time and will not merge on Completion.


                                       13
<PAGE>

11.3     The Purchaser shall indemnify and hold harmless at all times the
         Vendors against each proceeding, judgment, loss, damage, cost, expense
         or liability suffered, incurred by or brought or made or recorded
         against the Vendors, whether before or after Completion or in respect
         of any period before or after Completion, as a direct or indirect
         consequence of:

         (a)      any breach by the Purchaser of any of the Warranties;

         (b)      any Warranty given by the Purchaser not being true and correct
                  or being misleading as at the Completion Date; or

         (c)      any failure by the Purchaser to duly perform any of the
                  obligations imposed upon them by this Agreement.

11.4     The Purchaser further acknowledges that the aforesaid indemnity:

         (a)      extends to all costs, expenses and other amounts incurred or
                  paid by the Vendors in the enforcement or purported or
                  attempted enforcement of such indemnity or for the
                  preservation of or in any manner in reference to the rights
                  conferred upon the Vendors by this Agreement, including legal
                  costs as between solicitor and client;

         (b)      will not be abrogated, modified, prejudiced, affected or
                  considered as wholly or partially discharged by any one or
                  more of:

                  (i)      any time, credit, indulgence or concession extended
                           by the Vendors or the Company to the Purchaser or any
                           other person;

                  (ii)     any compounding, compromise, release, abandonment,
                           waiver, variation, relinquishment or renewal of any
                           rights of the Vendors or the Company against the
                           Purchaser or any other person;

                  (iii)    the neglect or omission of the Vendors or the Company
                           to enforce any of those rights or any delay in the
                           enforcement of any of those rights; and

                  (iv)     the winding up, bankruptcy or death of any of the
                           Purchaser.

         (c)      is continuing and irrevocable and the obligations of the
                  Purchaser will be absolute and unconditional in all
                  circumstances; and

         (d)      will be in addition to and not in substitution for any other
                  indemnity provided under this Agreement or any other rights
                  which the Vendors or the Company may have against the
                  Purchaser from time to time and will not merge on Completion.


12.      CONTINUING OBLIGATIONS

12.1     The Vendors must do nothing to discourage the Company's or its
         subsidiaries' current clients and new clients to utilize the goods and
         service of the Company's or its subsidiaries' business.


                                       14
<PAGE>

12.2     The Vendors must provide all reasonable assistance including access to
         any documents in their possession or under their power or control in
         relation to any dispute between the Company or its subsidiaries and any
         person.

12.3     Each obligation and warranty of a party to this Agreement (except an
         obligation fully performed at Completion) continues in force despite
         Completion.

12.4     Default

         (a)      No party to this Agreement shall be entitled to enforce any
                  rights or remedies under this Agreement or at common law
                  arising out of the default of any other party in performing or
                  observing any of the terms and conditions of this Agreement
                  (other than the right of any party to sue for any moneys
                  already due) UNLESS the non defaulting party has given to the
                  party in default ("DEFAULTING PARTY") a written notice
                  specifying the default and stating his intention to enforce
                  his rights and remedies unless the default is made good within
                  14 days and the Defaulting Party fails within that period to
                  remedy the default. If the default is not so rectified then
                  the non-defaulting party may:

                  (i)      demand immediate payment to it of all moneys to be
                           paid to it by the defaulting Party pursuant to this
                           Agreement;

                  (ii)     suspend compliance with its obligations under this
                           Agreement until the default is so rectified; and

                  (iii)    sue for damages or seek specific performance of this
                           Agreement or any other remedy to which it might be
                           entitled.


13. COSTS

13.1     Each party shall bear its own legal and other costs and expenses
         arising directly or indirectly with respect to the preparation,
         execution, completion and performance of this Agreement or any other
         related documentation.

13.2     Notwithstanding the foregoing, the Vendors and the Purchaser shall bear
         any stamp duty payable in respect of the transfer of the Sale Shares in
         equal shares.

14.      NOTICE

14.1     Delivery

         All notices, demands or other communications which are required to be
         given under this Agreement shall be in writing in English and sent to:


                                       15
<PAGE>

         (a) in the case of the Vendors:

                  Vendors' Address  :       Suite 1310 China VentureTech Plaza,
                                            819 Nan Jing Xi Road, Shanghai,
                                            PRC, 200041
                  Facsimile number  :       in PRC :- 86 21 5213 0664
                  Attention         :       Mr David Chen

         (b) in the case of the Purchaser:

                  Address           :       19/F., Wing On House, 71 Des Voeux
                                            Road Central, Hong Kong
                  Facsimile number  :       852-28106070
                  Attention         :       Mr Rankine Yeung

         or to such other address or facsimile number or marked for the
         attention of such other person as the recipient may designate by notice
         given in accordance with the provisions of this Clause 14.

14.2     Receipt

         Any such notice may be delivered personally or by prepaid post or sent
         by facsimile transmission and shall be deemed to have been effectively
         served:

         (a)      on the day of receipt, where any personally delivered letter
                  or facsimile message is received on any Business Day before or
                  during normal working hours;

         (b)      on the following Business Day, where any personally delivered
                  letter or facsimile message is received either on any Business
                  Day after normal working hours or on any day which is not a
                  Business Day;

         (c)      on the third Business Day following the day of posting, upon
                  despatch from within Hong Kong of any posted letter to the
                  address of a recipient in Hong Kong, unless actually received
                  sooner; or

         (d)      on the seventh Business Day following the day of posting, upon
                  despatch from within Hong Kong of any posted letter to the
                  address of an overseas recipient (and vice-versa), unless
                  actually received sooner.

15.      GENERAL

15.1.    Assignment

         The Parties shall not be permitted to assign or transfer or purport to
         assign or transfer any of their rights or obligations under this
         Agreement without the prior written consent of the other party.

15.2.    Waiver

         (a)      A failure or delay in exercising or the partial exercise of
                  any provision of, or right, election or discretion under, this
                  Agreement is not a waiver of that provision, right, election
                  or discretion.


                                       16
<PAGE>

         (b)      A waiver of any such provision, right, election or discretion
                  or of any breach or default under this Agreement must be in
                  writing and signed by the party granting the waiver.

15.3     Variation

         A variation of any term of this Agreement must be in writing and signed
         by all Parties.

15.4     Cumulative rights

         The rights or remedies conferred on any party by this Agreement are in
         addition to all rights and remedies of that party at law or in equity.

15.5     Further assurance

         Each party will sign execute and complete all further documents
         necessary to effect, perfect or complete the provisions of and the
         transactions contemplated by this Agreement.

15.6     Severability

         If any part of this Agreement is or becomes illegal, invalid or
         unenforceable in a jurisdiction, the legality, validity or
         enforceability of the remainder of this Agreement will not be affected
         and this Agreement will be read as if that part had been deleted.

15.7     Entire understanding

         This Agreement contains the entire understanding and agreement between
         the Parties as to the subject matter of this Agreement.

15.8     Survival

         All agreements, obligations covenants and representations contained in
         this Agreement which have not been fulfilled shall unless otherwise
         expressly stated survive the execution and consummation of this
         Agreement and the transactions in relation thereto.

16.      GOVERNING LAW AND JURISDICTION

         This Agreement shall be governed by and construed in accordance with
         the laws of Hong Kong and each party shall submit to the non-exclusive
         jurisdiction of the courts of Hong Kong.


                                       17
<PAGE>


IN WITNESS whereof this Agreement has been duly executed the day and year first
before written.


The Vendors

SIGNED by                                   )
for and on behalf of Hartcourt China Inc.   )
                                            )
in the presence of :                        )

SIGNED by                                   )
Mr. Lee Luping                              )
                                            )
in the presence of :                        )



The Purchaser

SIGNED by                                   )
for and on behalf of                        )
First Information Technology Limited        )
in the presence of:                         )




                                       18
<PAGE>


                                   SCHEDULE 1

                           PARTICULARS OF THE COMPANY


A.      THE COMPANY

1.  Name                      :    Hopeful Internet Technologies Limited

2.  Registered Office         :    P.O. Box 957, Offshore Incorporations Center,
                                   Road Town, Tortola, BVI

3.  Date of Incorporation     :    January 11, 2000

4.  Place of Incorporation    :    BVI

5.  Directors                 :    Stephen Tang

6.  Authorised Capital        :    US$50,000
    Issued Capital                 US$

7.  Shareholders              :    Hartcourt China Inc  51%
                                   Lee Lu Ping          49%


8.  Nature of business        :    The holding of 100% equity interest in
                                   Shanghai Sinobull Information Corporation
                                   Limited which is a wholly foreign owned
                                   enterprises incorporated in Shanghai, PRC and
                                   its business is economic information and data
                                   distribution, computer information and data
                                   collection, network technical services,
                                   transfer of technology, technical supports,
                                   software development and consultation, sales
                                   of self developed products.



                                       19
<PAGE>


                                   SCHEDULE 2

                  WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS


The Vendors hereby represent, warrant and undertake to and with the Purchaser in
title in the following terms:-

l.       CAPACITY
         --------

1.1      The Vendors have full power and capacity to enter into and perform this
         Agreement and this Agreement will, when executed, constitute binding
         obligations on each Vendor in accordance with their terms.

1.2      All necessary authorization for the Vendors to enter into this
         Agreement has been duly obtained.

2.       ACCOUNTS AND RECORDS
         --------------------

2.l      Books and Records
         -----------------

2.l.l    The Company and its subsidiaries have at all times fully, properly and
         accurately maintained all books, accounts and records required by law
         to be maintained all of which books, accounts and records are in its
         possession.

2.l.2    The books, accounts and records of the Company and its subsidiaries
         duly and accurately record all matters required by law to be entered
         therein and accurately present and reflect in accordance with generally
         accepted accounting principles and standards the assets and liabilities
         (actual and contingent) of the Company and its subsidiaries and all
         transactions to which it is or has been a party.

2.2      Accounting Matters
         ------------------

2.2.l    The Accounts were prepared in accordance with the historical cost
         convention and the bases and policies of accounting adopted for the
         purpose of preparing the Accounts are the same as those adopted in
         preparing the audited accounts of the Company and its subsidiaries in
         respect of the last three preceding accounting periods of the Company
         and its subsidiaries.

2.2.2    The Accounts:-

         2.2.2.l  give a true and fair view of the assets and liabilities of the
                  Company and its subsidiaries at the Accounting Date and its
                  profits for the twelve months period ended on that date;

         2.2.2.2  comply with the requirements of the relevant regulations and
                  legislation;

         2.2.2.3  have been prepared in accordance with good accounting practice
                  in the PRC and comply with all current standard accounting
                  practices applicable to a PRC company;

                                       20
<PAGE>

         2.2.2.4  are not affected by any extraordinary, exceptional or
                  non-recurring item;

         2.2.2.5  properly reflect the financial position of the Company and its
                  subsidiaries as at their date;

         2.2.2.6  fully disclose all the assets and liabilities of the Company
                  and its subsidiaries as at their date;

         2.2.2.7  make full provision or reserve in accordance with good
                  accounting practice in PRC for all liabilities and capital
                  commitments of the Company and its subsidiaries outstanding at
                  the Accounting Date including contingent, unquantified or
                  disputed liabilities;

         2.2.2.8  make full and proper provision or reserve in accordance with
                  the principles set out in the notes included in the Accounts
                  for all Taxation liability to be assessed on the Company and
                  its subsidiaries or for which it may be accountable in respect
                  of the twelve months period ended on the Accounting Date and
                  such provision shall be sufficient to cover all Taxation
                  assessed or liable to be assessed on the Company and its
                  subsidiaries or for which the Company is or may become
                  accountable in respect of profits, income, earnings, receipts,
                  transfers, events and transactions up to and including the
                  Accounting Date.

2.2.3    No amount included in the Accounts in respect of any fixed or current
         asset exceeds its purchase price or production cost at the Accounting
         Date.

2.2.4    No amount included in the Accounts in respect of any current assets
         exceeds its net realisable value at the Accounting Date.

2.3      Stock-in-trade and work in progress
         -----------------------------------

2.3.l    In the Accounts the stock-in-trade and work in progress of the Company
         and its subsidiaries have been treated strictly in accordance with
         standard accounting practices applicable to a PRC company.

2.3.2    In the Accounts all redundant, obsolete and slow moving stock-in-trade
         has been written off or written down as appropriate.

2.4      Depreciation
         ------------

         In the Accounts the fixed assets of the Company and its subsidiaries
         have been depreciated in accordance with standard accounting practices
         applicable to a PRC company.

2.5      Deferred taxation
         -----------------

         Where provision for deferred Taxation is not made in the Accounts full
         details of the amounts of such deferred Taxation must be disclosed in
         the Disclosure Letter.


                                       21
<PAGE>

2.6      Book debts
         ----------

2.6.l    No part of the amounts included in the Accounts or subsequently
         recorded in the books of the Company as owing by any debtor is or shall
         at the Completion Date be overdue by more than 12 weeks or has been
         released on terms that any debtor pays less than the full book value of
         his debt or has been written off or has proved to any extent to be
         irrecoverable or is now regarded by the Company and its subsidiaries as
         irrecoverable in whole or in part.

2.6.2    All amounts due to the Company and its subsidiaries from debtors as at
         the Completion Date (less the amount of any provision or reserve
         determined on the same basis as that applied in the Accounts and
         disclosed in writing to the Purchasers) shall be recoverable in full in
         the ordinary course of business (and in any event not later than 12
         weeks after the Completion Date) and none of such debts is or shall at
         the Completion Date be subject to any counter-claim or set off except
         to the extent of any such provision or reserve.

2.7      Treatment in the Accounts
         -------------------------

         There are no material differences between the accounting and taxation
         treatment of any item in the Accounts.

2.8      Memorandum and articles of association and statutory books
         ----------------------------------------------------------

2.8.1    The copy of the memorandum and articles of association of the Company
         provided by the Vendors to the Purchaser is accurate and complete in
         all respects

2.9      Documents filed
         ---------------

2.9.l    All returns, particulars, resolutions and documents required by the
         relevant legislation to be filed with the relevant government authority
         in respect of the Company and its subsidiaries have been duly filed and
         were correct and due compliance has been made with all the provisions
         of the relevant regulations and legislation and other legal
         requirements in connection with the formation of the Company and its
         subsidiaries.

2.9.2    All charges created by the Company and its subsidiaries have (if
         appropriate) been registered in accordance with the provisions of the
         relevant legislation

3.       MATTERS SINCE THE ACCOUNTING DATE
         ---------------------------------

3.l      Since the Accounting Date:-

         3.l.l    no distribution of capital or income has been declared, made
                  or paid or agreed or resolved to be declared, made or paid;

         3.l.2    no loans have been made by the Company and its subsidiaries
                  and no loan capital or loan has been or become liable to be
                  repaid by the Company and its subsidiaries in whole or in
                  part;

         3.l.3    the Company and its subsidiaries have not borrowed, raised or
                  taken any money or any financial facility;


                                       22
<PAGE>

         3.l.4    the business of the Company and its subsidiaries have been
                  carried on in the ordinary and usual course both as regards
                  the nature, scope and manner of conducting the same and so as
                  to maintain the same as a going concern;

         3.l.5    the Company and its subsidiaries have not entered into any
                  capital commitments or any transaction or agreement for the
                  disposal of any asset (including all forms of intellectual and
                  industrial property rights) or under which it has incurred or
                  shall incur (otherwise than in the ordinary and usual course
                  of carrying on its business) any liabilities (including
                  contingent liabilities) nor has it disposed of or realised any
                  material assets or any interest therein;

         3.l.6    no resolutions have been (whether in general meeting or
                  otherwise) passed by the Company and its subsidiaries or any
                  class of their respective members;

         3.l.7    nothing has been done in the conduct or management of the
                  affairs of the Company and its subsidiaries which would be
                  likely to prejudice the interests of the Purchaser as a
                  prospective purchaser of the Shares; and

         3.l.8    no sum has been paid or voted to any director or employee (or
                  ex-director or ex-employee) of the Company and its
                  subsidiaries by way of remuneration or otherwise in excess of
                  the rates paid to him by the Company and its subsidiaries at
                  the Accounting Date and no new services agreements have been
                  made by the Company and its subsidiaries.

3.2      Since the Accounting Date the business of the Company and its
         subsidiaries has not been adversely affected by the loss of or material
         reduction in orders from any important customer or the loss of or
         material reduction in any source of supply or by any abnormal factor
         affecting similar businesses to a like extent and after making due and
         careful enquiries none of the Vendors is aware of any facts which are
         likely to give rise to any such adverse effect.

3.3      Since the Accounting Date there has been no material adverse change in
         the financial position or trading prospects of the Company and its
         subsidiaries nor is any such material change expected.

4.       FINANCE
         -------

4.l      Bank and other borrowings
         -------------------------

4.l.l    Full details of all limits on the Company's and its subsidiaries' bank
         overdraft facilities have been accurately disclosed in the Disclosure
         Letter to the Purchaser.

4.l.2    The total amount borrowed by the Company and its subsidiaries from its
         bankers does not exceed its overdraft facilities.

4.l.3    The total amount borrowed by the Company and its subsidiaries (as
         determined in accordance with the provisions of the relevant
         instrument) does not exceed any limitation on its borrowing power
         contained in its articles of association or in any debenture or other
         deed or document binding upon it.


                                       23
<PAGE>

4.l.4    The Company and its subsidiaries have no outstanding loan capital, nor
         has it agreed to create or issue any, or factored any of its debts nor
         borrowed any money which it has not repaid save for borrowings not
         exceeding the amounts shown in the Accounts.

4.l.5    The Company and its subsidiaries have not since the Accounting Date
         repaid or become liable to repay any loan or indebtedness in advance of
         its stated maturity.

4.2      Loans by and debts due to the Company and its subsidiaries
         ----------------------------------------------------------

         The Company and its subsidiaries have not lent any money (including
         shareholders' loan) which has not been repaid to it, nor owns the
         benefit of any debt (whether or not due for payment) other than debts
         owing to it in the ordinary course of its business, and the Company and
         its subsidiaries have not made any loan or quasi-loan contrary to the
         relevant legislation.

4.3      Liabilities
         -----------

         There are no liabilities (including contingent liabilities) which are
         outstanding on the part of the Company and its subsidiaries other than
         those liabilities disclosed in the Accounts or incurred in the ordinary
         and proper course of business since the Accounting Date.

4.4      Bank accounts
         -------------

4.4.l    A statement of the bank accounts of the Company and its subsidiaries
         and of the credit or debit balances thereon as at a date not more than
         seven days before the date of Completion has been supplied to the
         Purchaser.

4.4.2    Since such statement there have been no payments out of any such
         accounts except of payments in the ordinary course of business and the
         balance on current accounts at the Completion Date shall not be
         substantially different from the balances shown on such statement.

4.5      Working capital
         ---------------

         Having regard to existing bank and other facilities the Company and its
         subsidiaries have sufficient working capital for the purposes of
         continuing to carry on its business in its present form and at the
         increased levels of turnover contemplated herein following the
         Completion Date and for the purposes of executing, carrying out and
         fulfilling in accordance with their terms all orders, projects and
         contractual obligations which are binding upon the Company and its
         subsidiaries and remain outstanding.

4.6      Continuance of facilities
         -------------------------

4.6.l    In relation to debentures, acceptances, credits, overdrafts, loans or
         other financial facilities outstanding or available to the Company and
         its subsidiaries:-

         4.6.l.l  full details thereof and true and accurate copies of all
                  documents relating to such facilities have been disclosed in
                  the Disclosure Letter and the enclosures thereof; and


                                       24
<PAGE>

         4.6.l.2  there has been no contravention of or non-compliance with any
                  provision of any such document.

4.7      Grants
         ------

4.7.l    Full particulars have been disclosed of all grants, allowances, loans
         or financial aids of any kind applied for or received or receivable by
         the Company and its subsidiaries from any governmental department,
         board, body or agency or any other supranational or national or local
         authority body or agency.

4.7.2    No act or transaction has been effected or omitted in consequence of
         which:-

         4.7.2.l  the Company or its subsidiaries is or may become liable to
                  refund wholly or partly any of the grants, allowances, loans
                  or aids referred to in CLAUSE 4.7.l; or

         4.7.2.2  any application made by the Company and its subsidiaries for
                  the aforesaid grants, allowance, loans or aids shall be
                  rejected, deferred or not accepted in full.

5.       TAXATION
         --------

5.l      Provision for Taxation
         ----------------------

         The provision for Taxation in the Accounts shall be sufficient (on the
         basis of the law as presently existing) to cover all Taxation assessed
         or liable to be assessed on the Company and its subsidiaries or for
         which the Company is, may be or may become accountable in respect of
         profits, income, earnings, receipts, transfers, events and transactions
         up to the Accounting Date.

5.2      Obligation to account
         ---------------------

         The Company and its subsidiaries has duly complied with its obligations
         to account to the Commissioner of Inland Revenue and all other
         authorities for all amounts for which it is or may become accountable
         in respect of Taxation.

5.3      Returns and clearances
         ----------------------

         All returns in connection with Taxation that should have been made by
         the Company and its subsidiaries have been made and have been made
         correctly and on a proper basis making full disclosure of all matters
         relevant to the assessment of the Company's and its subsidiaries'
         liability to Taxation. No such return is likely to be disputed and
         there are no facts known or which would on reasonable enquiry be known
         to the Company and its subsidiaries, its Directors or the Vendors which
         may give rise to any dispute or to any claim for any Taxation or the
         deprivation of any relief or advantage that might have been available
         to the Company and its subsidiaries under any relevant legislation.


                                       25
<PAGE>

5.4      Disclosure
         ----------

         There are no assessments or charges to Taxation against the Company and
         its subsidiaries which are the subject of any present dispute with the
         relevant government tax authority or any relevant statutory authority
         whether such amounts of Taxation have been paid or not and regardless
         of which form such dispute is being or is to be heard.

6.       ASSETS
         ------

6.l      Ownership of Assets
         -------------------

6.l.l    The Company and its subsidiaries were at the Accounting Date the owner
         with good and marketable title of all the assets included in the
         Accounts and now so owns and has in its possession and under its
         control all such assets (save for current assets subsequently disposed
         of in the ordinary course of its business). Save as disclosed in the
         Disclosure Letter, all the existing assets and assets acquired by the
         Company and its subsidiaries after the Accounting Date are free from
         any charge, lien, encumbrance or equity and no other person has or
         claims any rights in relation to any of such assets.

6.l.2    The fixed and loose plant, machinery, furniture, fixtures, fittings and
         equipment, vehicles and other movable assets used in connection with
         the business of the Company and its subsidiaries are in the possession
         and control and are the sole and absolute property of the Company and
         its subsidiaries free from any charge, lien, encumbrance, hire
         purchase, leasing or rental agreement or agreement for payment on
         deferred terms or bill of sale and are in good repair and condition and
         satisfactory working order and comprise all assets necessary for the
         continuation of the business of the Company and its subsidiaries as
         carried on at the Completion Date.

6.2      Stocks
         ------

6.2.l    The stocks of raw materials, packaging materials and finished goods now
         held are not excessive and are adequate in relation to the current
         business requirements of the business of the Company and its
         subsidiaries and none of such stock is obsolete, unusable, unmarketable
         or inappropriate or of limited value in relation to the current
         business of the Company and its subsidiaries and no contracts are
         outstanding which are likely to result in the foregoing not being true.

6.2.2    The stock-in-trade of the Company and its subsidiaries are in good
         condition and is capable of being sold by the Company and its
         subsidiaries in the ordinary course of its business in accordance with
         the current price list without rebate or allowance to a purchaser.

6.3      Retention of title
         ------------------

         The Company and its subsidiaries have not purchased or agreed to
         purchase any stock, goods, materials or assets on terms that property
         therein does not pass until full payment is made or all indebtedness
         discharged.


                                       26
<PAGE>

6.5      Insurance
         ---------

6.5.1    The Company and its subsidiaries is fully covered by valid insurances
         against all risks normally insured against by persons carrying on the
         same business as that carried on by the Company and its subsidiaries
         and in particular all assets are and have at all material times been
         insured to the full replacement or reinstatement value thereof against
         fire and such other risks as aforesaid and the Company is and has at
         all material times been adequately covered against accident, damage,
         injury, third party loss (including product liability), loss of profits
         and other risks normally insured against by persons carrying on the
         same business as that carried on by the Company and its subsidiaries.

6.5.2    Full particulars have been disclosed of all such insurances and there
         are no outstanding claims or circumstances likely to give rise to a
         claim thereunder and nothing has been done or omitted to be done which
         has made or could make any policy of insurance void or voidable or
         whereby the premium is likely to be increased.

6.5.3    None of the policies are subject to any special or unusual terms or
         restrictions or to the payment of any premium in excess of the normal
         rate.


7.       INTELLECTUAL PROPERTY
         ---------------------

7.1      The Company and its subsidiaries are entitled to carry on its present
         business in the manner in which it is presently carried on and such
         business does not and is not likely to infringe or conflict with any
         right (and in particular any industrial or intellectual property right)
         of any other person.

7.2      All trademarks, patents, designs, business names, trade names,
         copyright, know-how and other similar industrial, commercial or
         intellectual rights used by the Company and its subsidiaries in
         connection with its business have been disclosed in the Disclosure
         Letter and are in the sole beneficial ownership of the Company and its
         subsidiaries and to the extent to which the same are capable of
         registration are registered in the name of the Company and its
         subsidiaries as sole proprietor and are valid and enforceable and none
         of them is being used, claimed, opposed or attacked by any other person
         nor has anything been done or omitted whereby they or any of them might
         cease to be valid and enforceable or used, claimed, opposed or attacked
         as aforesaid.

7.3      No licence or other authority has been granted or agreed to be granted
         by the Company and its subsidiaries to any person to use in any manner
         or to do anything which would or might otherwise infringe any of the
         rights referred to (specifically or in general terms) in clause 7.2 and
         the Company and its subsidiaries have not permitted to be disclosed or
         agreed to disclose to any person other the Purchaser any of its
         know-how, trade secrets, confidential information, technical processes
         or lists of customers or suppliers.

7.4      All licences and authorities from any other person under which any of
         the rights referred to (specifically or in general terms) in clause 7.2
         are used by the Company and its subsidiaries and are in full force and
         effect and the Vendors are not aware of any breach by the Company and
         its subsidiaries of the terms and conditions of any such licence or
         authority or of any circumstances whereby the same may be prematurely
         terminated or rescinded.


                                       27
<PAGE>

7.5      There is no infringement of any Intellectual Property Rights in the
         operation of any business of the Company and its subsidiaries and all
         products and properties of the Company and its subsidiaries are not
         subject to any third party's Intellectual Properties Rights.

8.       COMMITMENTS AND CONTRACTS
         -------------------------

8.1      The Company and its subsidiaries are not a party to or subject to any
         liability (existing or contingent) under any contract or arrangement
         not entered into in the ordinary and usual course of business or any
         contract or arrangement of an unusual, onerous or long term nature or
         which is not of an arms' length nature.

8.2      All contracts for the purchase by the Company and its subsidiaries of
         raw materials, goods or services or for the supply of goods or services
         by the Company and its subsidiaries are on a formal arms' length basis.

8.3      All obligations of the Company and its subsidiaries to buy foreign
         exchange are against known commitments to pay for stock to be imported
         and paid for in foreign currency and any forward sales of foreign
         currency by the Company are against known receipts of the currency to
         be sold and the Company has no commitments in foreign exchange which
         are not covered by a forward purchase or sale as appropriate of the
         relevant currency.

8.4      The Company and its subsidiaries are not and have not agreed to become
         bound by any debenture, guarantee or contract of indemnity or
         suretyship and there is not now outstanding any guarantee or contract
         for indemnity or suretyship given for the accommodation of or in
         respect of any obligation on the part of the Company and its
         subsidiaries.

8.5      The Company and its subsidiaries have not given any power of attorney
         which remains in force.

8.6      The Company and its subsidiaries have not entered into or agreed to
         enter not any selling, purchasing, manufacturing or licensing agreement
         or arrangement or any agreement or arrangement which in any way
         restricts the freedom of the Company and its subsidiaries to carry on
         its business or any part thereof in any part of the world in such
         manner as it thinks fit.

8.7      The Company and its subsidiaries do not owe any debts or other monies
         to the Vendors or any of the Directors or any person connected with the
         Vendors or the Directors or any of them respectively.


9.       EMPLOYMENT
         ----------

9.1      Employment and terms of employment
         ----------------------------------

9.1.1    Full particulars of the identities, dates of commencement of employment
         or appointments to office and terms and conditions of employment of all
         the employees and officers of the Company and its subsidiaries
         including without limitation profit sharing schemes or commission or
         discretionary bonus arrangements have been fully and accurately
         disclosed in the Disclosure Letter to the Purchaser.


                                       28
<PAGE>

9.1.2    There are no agreements or other arrangements whether or not legally
         binding between the Company and its subsidiaries and any trade union or
         other body representing its employees.

9.2      Bonus schemes
         -------------

         Save as disclose in the Disclosure Letter, there are no schemes in
         operation by or in relation to the Company and its subsidiaries
         whereunder any employee of the Company and its subsidiaries is entitled
         to a commission or remuneration of any sort calculated by reference to
         the whole or part of the turnover profits or sales of the Company and
         its subsidiaries.

9.3      Changes in remuneration
         -----------------------

9.3.1    Since the date of the Disclosure Letter:-

         9.3.1.1  no change has been made in the rate of remuneration or the
                  emoluments or pension benefits of any officer, ex-officer or
                  senior executive of the Company and its subsidiaries (a senior
                  executive being a person in receipt of remuneration in excess
                  of HK$5,000.00 per annum);

         9.3.1.2  no change has been made in the terms of employment of any such
                  officer or senior executive; and

         9.3.1.3  no additional officers or senior executives have been
                  appointed.

9.3.2    The Company and its subsidiaries are not bound or accustomed to pay any
         monies other than in respect of remuneration or emoluments of
         employment or pension benefits to or for the benefit of any officer or
         employee of the Company and its subsidiaries.

9.4      Termination of contracts of employment
         --------------------------------------

9.4.1    All subsisting contracts of service to which the Company or its
         subsidiaries is a party are determinable on 12 months' notice or less
         without compensation.

9.4.2    No senior executive of the Company and its subsidiaries and no officer
         of the Company and its subsidiaries has given or received notice
         terminating his employment except as expressly contemplated in this
         Agreement and no such executive or officer will be entitled to give
         such notice as a result of the provisions of this Agreement.

9.5      Industrial disputes and employee claims
         ---------------------------------------

9.5.1    Neither the Company and its subsidiaries nor its employees are involved
         in any industrial dispute and there are no facts known or which should
         on reasonable enquiry be known to the Company, its Directors or the
         Vendors which might suggest that there may be any such industrial
         dispute or that any of the provisions of this Agreement may lead to any
         such industrial dispute.

9.5.2    There is no outstanding claim against the Company and its subsidiaries
         by any person who is now or has been an officer or employee of the
         Company and its subsidiaries or any dispute between the Company and its
         subsidiaries and a material number or class of its employees.


                                       29
<PAGE>

9.6      Redundancies
         ------------

         No employee of the Company and its subsidiaries shall become redundant
         and be entitled to a redundancy payment as a result of any provision of
         this Agreement.

9.7      Pensions
         --------

9.7.1    Other than required by the relevant legislations the Company and its
         subsidiaries are not under any legal or moral liability or obligation
         or a party to any ex-gratia arrangement or promise to pay pensions,
         gratuities, superannuation allowances or the like to any of its past or
         present officers or employees or their dependents.

9.7.2    Full particulars of the Company's and its subsidiaries' retirement
         benefits scheme ("Scheme") have been disclosed in the Disclosure Letter
         including without limitation true copies of the trust deeds and the
         latest actuarial report and full and accurate particulars of the assets
         funding arrangements, rules and current membership.

9.7.3    The assets, investments or policies held by the trustees of the Scheme
         are sufficient to satisfy the liabilities and obligations (both current
         and contingent) which the Scheme owes to its members at the date
         hereof.

10.      LITIGATION, DISPUTES AND WINDING-UP
         -----------------------------------

10.1     Claims
         ------

         There are no outstanding claims against the Company and its
         subsidiaries in respect of defects in quality or delays in delivery or
         completion of contracts or deficiencies design or performance of
         equipment or otherwise relating to liability for goods or services
         supplied or to be supplied by the Company and its subsidiaries and no
         such claims are threatened or anticipated and the Company and its
         subsidiaries have not given otherwise than in the ordinary course of
         business any guarantee or warranty in relation to any goods or services
         supplied or to be supplied by the Company and its subsidiaries.

10.2     Litigation
         ----------

10.2.1   The Company and its subsidiaries are not engaged in any litigation or
         arbitration proceedings as plaintiff or defendant; there are no
         proceedings pending or threatened either by or against the Company and
         its subsidiaries and there are no circumstances which are or may be
         likely to give rise to any litigation or arbitration.

10.2.2   There is no dispute with any revenue or other official department in
         Shanghai or elsewhere in relation to the affairs of the Company and its
         subsidiaries and there are no facts which may give rise to any dispute.

10.2.3   No order has been made or petition presented or resolution passed for
         the winding up of the Company and its subsidiaries nor has any
         distress, execution or other process been levied in respect of the
         Company and its subsidiaries which remains undischarged nor is there
         any unfulfilled or unsatisfied judgement or court order outstanding
         against the Company and its subsidiaries.


                                       30
<PAGE>

10.3     Compliance with legislation
         ---------------------------

10.3.1   Neither the Company nor its subsidiaries nor its officers, agents or
         employees (during the course of their duties to the Company and its
         subsidiaries) has committed or omitted to do any act or thing the
         commission or omission of which is or could be in contravention of any
         applicable laws and regulations (whether of Shanghai or elsewhere)
         giving rise to any fine, penalty, default proceedings or other
         liability on its part.

10.3.2   The Company and its subsidiaries has conducted and is conducting its
         business in all respects in accordance with all applicable laws and
         regulations whether of Shanghai or elsewhere.

10.4     Documents stamped
         -----------------

         All documents which in any way affect the right, title or interest of
         the Company and its subsidiaries in or to any of its property,
         undertaking or assets or to which the Company or its subsidiaries is a
         party and which attract stamp duty have been duly stamped within the
         requisite period for stamping.

10.5     Business names
         --------------

         The Company and its subsidiaries do not use a name for any purpose
         other than its full corporate name.

10.8     Powers of attorney and authorities
         ----------------------------------

10.8.1   There are not in force any powers of attorney given by the Company and
         its subsidiaries.

10.8.2   There are not outstanding any authorities whether express or implied by
         which any person may enter into any contract (other than the Agreement)
         or commitment to do anything on behalf of the Company and its
         subsidiaries.

10.9     Licences and consents
         ---------------------

10.9.1   The Company and its subsidiaries have obtained all necessary licences
         and consents from any person, authority or body for the proper
         operation of its business.

10.9.2   The Company and its subsidiaries are not in breach of any of the terms
         or conditions of any such licences or consents which are all valid and
         subsisting and there are no factors that might in any way prejudice the
         continuation or renewal of any of them.

11.      CAPITAL OF THE COMPANY
         ----------------------

11.1     The authorised and issued share capital of the Company is as set out in
         Schedule 1.

11.2     The issued capital has been fully paid.

11.3     There is not now any loan capital of the Company nor any agreement,
         arrangement or option under which any person may now or at any time
         hereafter call for the creation, allotment, issue, sale or transfer of
         any loan or share capital of the Company or require to be put under
         option any loan or share capital of the Company.


                                       31
<PAGE>

11.4     The Company:-

         11.4.1   is not the holder or beneficial owner of and has not agreed to
                  acquire any share or loan capital of any other company or
                  corporation (whether incorporated in Shanghai or elsewhere);
                  and

         11.4.2   has neither a branch outside Shanghai nor any permanent
                  establishment outside Shanghai.

12.      OTHER OPERATIONS
         ----------------

12.1     The Company and its subsidiaries do not have and has never had any
         interest in or agreed to enter into any partnership, consortium, joint
         venture or similar arrangement with any other entity save as disclosed
         in this Agreement.

13.      RECITALS, SCHEDULES AND DISCLOSURES
         -----------------------------------

         The information and circumstances relating to the Company and its
         subsidiaries which are known or ought on reasonable enquiry to be known
         to the Vendors and which are material to be known by the Purchaser have
         been accurately and completely disclosed in [the Disclosure Letter and]
         the recitals to the Agreement the contents of all the schedules and all
         matters disclosed in the Disclosure Letter and other information
         relating to the Company given by the Vendors or their accountants to
         the Purchaser are accurate and complete in every respect and there is
         no fact or matter undisclosed which renders any such matters or
         information untrue, incomplete or misleading.

14.      EFFECT OF AGREEMENT
         -------------------

14.1     No person is entitled to receive from the Company and its subsidiaries
         any finder's fee, brokerage or commission in connection with the sale
         of the Shares to the Purchaser.

14.2     There are no contracts or arrangements (whether written or oral) to
         which the Company and its subsidiaries are a party which shall by their
         terms be determinable as a result of the provisions of this Agreement
         or which shall or may be determined by performance or Completion of
         this Agreement.

14.3     The execution and delivery of this Agreement and the fulfilment and
         performance of the compliance with the terms thereof by the Vendors do
         not and shall not:-

         14.3.1   conflict with, violate or result in a breach by the Company
                  and its subsidiaries or the Vendorss of the terms, provisions
                  or conditions of:-

                  14.3.1.1 any agreement,

                  14.3.1.2 any law, undertaking to or judgement order,
                           injunction or decree of any court, or


                                       32
<PAGE>

                  14.3.1.3 the memorandum and articles of association of the
                           Company and its subsidiaries;

         14.3.2   relieve any person of any contractual or other obligation to
                  the Company and its subsidiaries or entitle any person to
                  terminate any such obligation;

         14.3.3   terminate or make subject to termination or adversely affect
                  from the Company's and its subsidiaries' point of view the
                  enjoyment of any present or future benefit or privilege;

         14.3.4   result in any customer or supplier of the Company and its
                  subsidiaries ceasing to deal or substantially reducing the
                  level of his dealings with the Company and its subsidiaries;

         14.3.5   result in any indebtedness present or future of the Company
                  and its subsidiaries becoming due or capable of being declared
                  due and payable prior to the stated maturity date; or

         14.3.6   give rise to any contractual or other obligation of the
                  Company and its subsidiaries to any person or entitle any
                  person to require the performance of or compliance with any
                  existing contractual or other obligation of the Company and
                  its subsidiaries.




                                       33
<PAGE>


                                   SCHEDULE 3

                             COMPLETION REQUIREMENTS

On the Completion Date, the Vendors and the Purchaser shall have the following
obligations:


1.       Tax Deed of Indemnity
         ---------------------

         Each party to this Agreement shall cause to be executed the Tax
         Indemnity Deed in substantially the form specified in Schedule 4.

2.       Obligations of the Vendors
         --------------------------

2.1      The Vendors shall hand to or to the order of the Purchaser the
         following:

         (a)      the statutory books and record duly made up to the Completion
                  Date and common seal(s) and chops of the Company and all its
                  subsidiaries;

         (b)      the written resignations of all the directors of the Company
                  in which the relevant director shall acknowledge that he/she
                  has no claim or right of action against the Company or any of
                  it subsidiaries for compensation for loss of office,
                  termination of employment or otherwise;

         (c)      the share certificates in respect of the Sales Shares and
                  documents to the reasonable satisfaction of the Purchaser
                  evidencing that the Company has been duly established under
                  the BVI law and is wholly owned by the Vendors;

         (d)      an assignment or other document in the agreed form duly signed
                  by the Vendors transferring the Intellectual Property Rights
                  of the Metastock Project to the Purchaser;

2.2      The Vendors shall procure that a board meeting of the Company be held
         at which:

         (a)      it shall be resolved that the transfer of Sale Shares be
                  approved as the Purchaser may direct;

         (b)      nominees of the Purchaser be appointed as directors of the
                  Company.


3.       Obligations of the Purchaser
         ----------------------------

3.1      The Purchaser shall procure that a board meeting of the Purchaser be
         held at which a resolution approving the allotment of the Consideration
         Shares to the Vendors pursuant to the terms of this Agreement be
         passed.

3.2      The Purchaser shall deliver or cause to be delivered to the Vendors:

         (a)      the share certificates in respect of the Consideration Shares,
                  issued in the name of the Vendors or as it may direct in
                  writing prior to Completion and a certified true copy of the
                  register of members of the Purchaser showing the Vendors'
                  ownership of the Consideration Shares; and


                                       34
<PAGE>

         (b)      certified true copy of the written resolutions of the board of
                  directors and shareholders of the Purchaser (i) approving the
                  purchase of the Sale Shares, (ii) the issue and allotment of
                  the Consideration Shares and all terms in this Agreement and
                  the implementation thereof; and (iii) the appointment of one
                  director nominated by the Vendors to the board of directors of
                  the Purchaser.




                                       35
<PAGE>


                                   SCHEDULE 4

                               TAX INDEMNITY DEED



THIS DEED is made the 30th day of June, 2004.


BETWEEN

(l)      HARTCOURT CHINA INC AND MR LEE LU PING (the "VENDORS"); and

(2)      FIRST INFORMATION TECHNOLOGY LIMITED, a company incorporated in the
         British Virgin Islands and whose registered office is P O Box 957,
         Offshore Incorporations Centre, Road Town, Tortola, British Virgin
         Islands and business address is 19/F., Wing On House, No. 71 Des Voeux
         Road Central, Hong Kong (the "PURCHASER"); and

(3)      Hopeful Internet Technologies Limited, a company incorporated in the
         British Virgin Islands whose registered office is P O Box 957, Offshore
         Incorporations Centre, Road Town, Tortola, British Virgin Islands and
         business address is Suite B, 19/F., Ritz Plaza, 122 Austin Road,
         Tsimshatsui, Hong Kong (the "COMPANY").


WHEREAS pursuant to an agreement for the sale and purchase of shares in the
         Company dated June 29th, 2004, the Vendors and the Purchaser have today
         completed the sale and purchase of all the issued shares of the Company
         in reliance (inter alia) upon the undertaking of the Vendors to enter
         into this deed and upon the indemnities by the Vendors hereinafter
         contained.


NOW THIS DEED made in pursuance of the aforesaid undertaking and in
         consideration of the aforesaid purchase of shares WITNESSETH as
         follows:-


1.       DEFINITIONS AND INTERPRETATION

1.1      Definitions

         "Accounts"                 means the audited management accounts of the
                                    Company and its subsidiaries comprising the
                                    balance sheet as at the Management
                                    Accounting Date, the profit and loss account
                                    for the twelve-month period ended on the
                                    Management Accounting Date and the notes
                                    thereto;

         "Agreement"                means the agreement for the sale and
                                    purchase of the Sale Shares dated June 29th,
                                    2004 under which the Vendors agreed to sell
                                    and the Purchaser agreed to purchase the
                                    entire share capital of the Company;


                                       36
<PAGE>

         "Claim for Taxation"       includes:-

                                    (1)      any notice, demand, assessment
                                             letter or other document issued or
                                             action taken by or on behalf of the
                                             relevant tax authorities in the PRC
                                             or any other statutory or
                                             governmental authority or body
                                             whatsoever in any part of the world
                                             whereby it appears that the Company
                                             or its subsidiaries is or may be
                                             liable to make any payment of any
                                             Taxation whether or not the same is
                                             primarily payable by the Company or
                                             its subsidiaries and whether or not
                                             the Company or its subsidiaries has
                                             or may have any right of
                                             reimbursement;

                                    (2)      the loss or counteracting or
                                             clawing back of any Relief which
                                             would otherwise have been available
                                             to the Company or its subsidiaries;
                                             and

                                    (3)      the nullifying or cancellation or
                                             set-off of a right to repayment of
                                             Taxation which would have been
                                             available to the Company or its
                                             subsidiaries;

         "Completion"               means the completion of the sale and
                                    purchase of the Sale Shares pursuant to the
                                    Agreement;

         "Final Determination"      in relation to a Claim for Taxation where
                                    there is an appeal against that assessment,
                                    means:-

                                    (1)      an agreement under section 64(3) of
                                             the Inland Revenue Ordinance (Cap.
                                             112 of the Laws of Hong Kong) or
                                             any legislative provision
                                             corresponding to that section; or

                                    (2)      a decision of a court or tribunal
                                             from which either no appeal lies or
                                             in respect of which no appeal is
                                             made within the prescribed time
                                             limit;

         "Indemnified Person"       means the Purchaser and the Company, and
                                    their respective successors and assigns;

         "Liability to Taxation"    means any liability to make a payment in
                                    respect of Taxation;

         "Management Accounting     Means 31st December 2003;
         Date"


                                       37
<PAGE>

         "Relief"                   includes any relief, allowance, exemption,
                                    set-off or deduction in computing or against
                                    profits, income or gains of any description
                                    or from any source or credit against
                                    Taxation;

         "Sale Shares"              means 2,179 shares of the Company registered
                                    in the name of and legal and beneficially
                                    owned by the Vendors which have been or are
                                    to be sold to the Purchaser pursuant to the
                                    Agreement; and

         "Taxation"                 means and includes all forms of tax, rate,
                                    levy, duty, charge, impost, fee, deduction
                                    or withholding of any nature now or
                                    hereafter imposed, levied, collected,
                                    withheld or assessed by any taxing or other
                                    authority in any part of the world / the PRC
                                    and includes any interest, additional tax,
                                    penalty or other charge payable or claimed
                                    in respect thereof.

1.2      Interpretation

         In this Deed unless the context otherwise requires all expressions used
         in the Agreement shall have the same meanings in this Deed and the
         definitions and interpretation contained in the Agreement shall be
         deemed to be incorporated herein.

1.3      Headings

         The headings contained in this Deed are for convenience only and shall
         have no legal effect nor shall they affect the construction and
         interpretation of this Deed.


2.       INDEMNITY

2.1      Subject as hereinafter provided the Vendors hereby jointly and
         severally covenant with the Purchaser (for itself and for its
         successors and assigns) and the Company (for itself and for its
         successors and assignors) and as a separate covenant with the each of
         them that the Vendors and their respective representatives will
         indemnify the Purchaser and the Company and keep the Purchaser and the
         Company indemnified against any loss arising from time to time from a
         Claim for Taxation which imposes or seeks to impose on the Company or
         its subsidiaries and/or the Purchaser a Liability to Taxation as a
         consequence of any one or more events occurring on or before Completion
         and (without prejudice to the generality of the foregoing) against:-

(a)      the amount of any settlement of a Claim for Taxation;

(b)      any depletion of or diminution in the net tangible assets or any
         increase in the amount of the net liabilities of the Company or its
         subsidiaries or any loss by the Company or its subsidiaries of any
         benefit or advantage subsisting or which might reasonably have been
         supposed to subsist at Completion and arising by reason of or in
         consequence of or in connection with any Liability to Taxation;

                                       38
<PAGE>

(c)      the costs and expenses from time to time reasonably and properly
         incurred by the Company or its subsidiaries in relation to any demands,
         actions, proceedings and claims in respect of Liability to Taxation or
         Claim for Taxation; and

(d)      estate duty in respect of the death (whether before or after) of any
         person whereby a liability in respect of estate duty may fall on the
         Company or its subsidiaries by reason of any transfer of property or
         other circumstances occurring prior to or at Completion.

2.2      No delay or omission on the part of an Indemnified Person in the
         exercise of any right, power or privilege hereunder shall impair such
         right, power or privilege or be construed as a waiver thereof and any
         single or partial exercise of any such right, power or privilege shall
         not preclude the further exercise of that or any other right, power or
         privilege.

2.3      All sums payable by the Vendors to the Purchaser and/or the Company or
         its subsidiaries and/or any of their respective successors or assigns
         hereunder shall be paid insofar as is lawful free and clear of all
         deductions and withholdings whatsoever and in the event that a
         deduction or withholding is lawfully made the Vendors shall pay such
         greater sum which after any lawful deduction or withholding therefrom
         results in a net payment equal to the amount due under the indemnity
         provided for in Clause 2.1.

2.4      If a sum payable by the Vendors hereunder attracts a Liability to
         Taxation (or would have done so but for the availability of some
         Relief) then the Vendors shall pay such further amount so that the net
         receipts of the Company or its subsidiaries after Taxation in respect
         of the payment shall be as if the payment were not subject to Taxation
         in the hands of the Company or its subsidiaries.

2.5      The Vendors shall be liable under the indemnity in Clause 2.1
         notwithstanding any Reliefs, rights or repayment or other rights or
         claims of a similar nature which may be available to any person
         entitled to the benefit of such indemnity to set against or otherwise
         mitigate any liability arising from any Claim for Taxation so that the
         indemnity in Clause 2.1 shall take effect as though no such Reliefs,
         rights or repayment or other rights or claims were available.


3.       LIMITATION OF LIABILITY

3.1      The Vendors shall not incur liability under the indemnities
         hereinbefore contained by reason of a Liability to Taxation or Claim
         for Taxation imposed on the Company or its subsidiaries and/or the
         Purchaser:-

(a)      to the extent that full provision or reserve in respect thereof was
         specifically made in the Accounts;

(b)      to the extent that the Liability to Taxation or Claim for Taxation
         arises or is increased as a result only of any increase in rates of
         Taxation made after Completion with retrospective effect;

(c)      to the extent that the liability to make such payment would not have
         arisen but for a voluntary act, transaction or omission carried out
         (other than pursuant to a legally binding commitment created on or
         before Completion) by the Company or its subsidiaries after Completion
         and otherwise than in the ordinary course of business; and

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<PAGE>

  (d)     to the extent that the liability to make such payment is in respect of
          Taxation for which the Company or its subsidiaries is primarily liable
          arising as a result of transactions carried out by them in the
          ordinary course of business after Completion.


4.       NOTICE OF CLAIMS

         If the Purchaser and/or the Company or its subsidiaries shall become
         aware of any Claim for Taxation relevant for the purposes of this Deed
         it shall as soon as reasonable and practicable give written notice
         thereof to the Vendors and shall (if the Vendors shall indemnify and
         secure the Purchaser and/or the Company or its subsidiaries as the case
         may be to their reasonable satisfaction against all losses, costs,
         damages, charges and expenses including interest, fines, penalties and
         interest on overdue tax which may be incurred hereby) take such action
         and give such information and assistance in connection with the affairs
         of the Company or its subsidiaries as the Vendors may reasonably and
         promptly by written notice request to avoid, resist, appeal or
         compromise such Claim for Taxation PROVIDED THAT the Purchaser and the
         Company or its subsidiaries shall not be obliged to appeal against any
         Claim for Taxation made on them if after the Vendors have been given
         written notice of such claim pursuant hereto they have not within 15
         days thereafter received from the Vendors instructions in writing to do
         so and PROVIDED FURTHER THAT in the final event any action taken shall
         be at the discretion of the Purchaser or the Company or its
         subsidiaries (as the case may be) and shall not interfere with the
         ordinary course of their businesses and/or which in their opinions is
         likely to prejudice their businesses and/or their relationships with
         the relevant taxing, fiscal or other appropriate authority.


5.       ASSIGNMENT

         The whole of or any part of the benefit of this Deed may be assigned by
         the Purchaser or the Company to the extent that the indemnities given
         by this Deed shall ensure to the benefit of such party's successors and
         assigns.


6.       NOTICES

6.1      Delivery

         All notices, demands or other communications which are required to be
         given under this Deed shall be in writing in English and sent to:

         (a) in the case of the Vendors:

                   Address          :       Suite B, 19/F, Ritz Plaza,122 Austin
                                            Road Tsimshatsui, Hong Kong
                  Facsimile number  :       8621-52138870
                  Attention         :       Mr. David Chen


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<PAGE>

         (b) in the case of the Purchaser:

                  First Information Technology Limited
                  Address           :       19/F., Wing On House, 71 Des Voeux
                                            Road Central Hong Kong
                  Facsimile number  :       (852) 2810-6070
                  Attention         :       Mr. Rankine Yeung

         (c) in the case of the Company:

                  Address           :       19/F., Wing On House, 71 Des Voeux
                                            Road Central Hong Kong
                  Facsimile number  :       (852) 2810-6070
                  Attention         :       Mr. Rankine Yeung

         or to such other address or facsimile number or marked for the
         attention of such other person as the recipient may designate by notice
         given in accordance with the provisions of this Clause 6.

6.2      Receipt

         Any such notice may be delivered personally or by prepaid post or sent
         by facsimile transmission and shall be deemed to have been effectively
         served:

         (a)      on the day of receipt, where any personally delivered letter
                  or facsimile message is received on any Business Day before or
                  during normal working hours;

         (b)      on the following Business Day, where any personally delivered
                  letter or facsimile message is received either on any Business
                  Day after normal working hours or on any day which is not a
                  Business Day;

         (c)      on the third Business Day following the day of posting, upon
                  despatch from within Hong Kong of any posted letter to the
                  address of a recipient in Hong Kong, unless actually received
                  sooner; or

         (d)      on the seventh Business Day following the day of posting, upon
                  despatch from within Hong Kong of any posted letter to the
                  address of an overseas recipient (and vice-versa), unless
                  actually received sooner.

6.4      Nothing in this Clause 6 shall preclude the service of communication or
         the proof of such service by any other mode permitted by law.


7.       GOVERNING LAW

7.1      This Deed shall be governed by and construed in accordance with the
         laws of Hong Kong.

7.2      Each party irrevocably and unconditionally submits to the non-exclusive
         jurisdiction of the courts of Hong Kong and courts of appeal from them.
         Each party waives any right it has to object to an action being brought
         in those courts, to claim that the action has been brought in an
         inconvenient forum, or to claim that those courts do not have
         jurisdiction.


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<PAGE>

8.       PROCESS AGENT

8.1      The Vendors hereby irrevocably appoint First Shanghai Management
         Services Limited of 19/F, Wing On House, 71 Des Voeux Road Central,
         Hong Kong as its/his process agent to receive on its/his behalf service
         of process in any proceedings in Hong Kong with respect to this
         Agreement. Service shall be deemed completed on delivery to such
         process agent for Vendors (whether or not such service is forwarded to
         or received by the Vendors).

8.2      The Company hereby irrevocably appoints First Shanghai Management
         Services Limited of 19/F, Wing On House, 71 Des Voeux Road Central,
         Hong Kong as its process agent to receive on its behalf service of
         process in any proceedings in Hong Kong with respect to this Agreement.
         Service shall be deemed completed on delivery to such process agent for
         the Company (whether or not such service is forwarded to or received by
         the Company).

8.3      If for any reason the process agent for Vendors or the process agent
         for the Company ceases or fails to act as process agent, the Vendors or
         the Company (as the case may be) agree to appoint their respective
         substitute process agent acceptable to other parties and to deliver to
         other parties proof of the newly appointed process agent's acceptance
         of such appointment within 7 calendar days.

IN WITNESS whereof this Deed has been duly executed the day and year first
before written.



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<PAGE>


The Vendors

SIGNED under seal by                        )
                                            )
and SIGNED by                               )
for and on behalf of                        )
HARTCOURT CHINA INC                         )
in the presence of:                         )

Mr Lee Lu Ping                              )
Passport No:                                )
SIGNED by                                   )
in the presence of :                        )



The Purchaser

SIGNED by                                   )
for and on behalf of                        )
FIRST INFORMATION TECHNOLOGY LIMITED        )
in the presence of:                         )




The Company

SIGNED by                                   )
for and on behalf of                        )
HOPEFUL INTERNET TECHNOLOGIES LIMITED       )
in the presence of:                         )



                                       43
<PAGE>


SCHEDULE 5

                         (PARTICULARS OF THE PURCHASER)


1.   Name                     :         First Information Technology Limited

2.  Place of Incorporation    :         British Virgin Islands

3.  Company Incorporation No  :         324414

4.  Date of Incorporation     :         12th May 1999

5.  Authorised Share Capital  :         US$50,000.00 divided into 5,000,000
                                        ordinary shares of US$0.01 each

6.  Number of Issued Shares   :         7,821 ordinary shares of US$0.01 each

7. Shareholder and number of
   Shares held                :         First Shanghai Investments Limited held
                                        7,821 ordinary shares of US$0.01 each



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