Exhibit
      10.1




May
      31,
      2006





Mr.
      Victor Zhou


Suite
      1903, No 7, Rongcheng Garden,


Rongcheng
      Road,


Shanghai,
      China 200120




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




Dear
      Mr.
      Zhou:




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




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




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




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




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




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




(a) Term. Your
      employment with the Company will be month to month, starting June 1, 2006.
      The
      Company will terminate this contract immediately who the permanent CEO is in
      place.




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




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




(a) Salary .
      You
      will receive for your services an monthly base salary of US$8,330 (the “Base
      Salary”), payable in accordance with the Company’s standard payroll practices
      and subject to standard withholdings for taxes and social security and the
      like.













Mr.
      Victor Zhou


__________,
      2006


Page
      2






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




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




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




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




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




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




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




(a) Initial
      Grant. The
      Company will immediately grant you an option to purchase common stock consisting
      of 10,000,000 shares of common stock at an exercise price per share equal to
      no
      more than $0.04 per share, equal to the fair market value of the shares as
      of
      May 29, 2006, (“Initial Grant”). The initial Vesting Date for these shares shall
      be August 30, 2006.




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




§
            20%
                of your Initial Grant upon each new business acquisition for a total
                of
                60% Initial Grant.





§
            20% of your Initial Grant upon each full profitable
              year.













Mr.
        Victor Zhou
 __________,
        2006
 Page
        3




****5.****Termination
        of Employment****.****
  (a) Termination
        Upon Death .
        If you
        die during your employment with the Company, the Company shall pay to your
        estate, or other designated beneficiary(s) as shown in the records of the
        Company, any Base Salary and/or bonuses earned but unpaid as of the termination
        date (which for purposes of this subsection (a) shall be the date of your
        death); accrued but unused vacation time as of the end of the month in which
        you
        die; and benefits that you are entitled to receive as of the date of your
        death
        under benefit plans of the Company ,
        less
        standard withholdings for tax and social security purposes. In the event
        of your
        death, the Company shall have no obligation to make any other payment, including
        severance or other compensation, of any kind. All other benefits provided
        by the
        Company to you under its existing benefit plans shall be
        determined under the provisions of those plans.
  (b) Termination
        Upon Disability . **** The
        Company may terminate your employment if you suffer a disability that renders
        you unable, as determined in good faith by the Board, to perform the essential
        functions of your position, even with reasonable accommodation, for three
        months
        within any twelve month period. If your employment is terminated pursuant
        to
        this Section 5(b), you shall receive payment for any earned and unpaid Base
        Salary and/or bonuses as of the termination date (which for purposes of this
        subsection (b) shall be the date specified by the Board); accrued but unused
        vacation time as of the end of the month in which the termination for disability
        occurs; and benefits that you are then entitled to receive under benefit
        plans
        of the Company, less standard withholdings for tax and social security
        purposes. If your
        employment is terminated as a result of a disability pursuant to this
        Section 5(b), the Company also shall provide to you as severance the
        payment of an amount equal to six months of your then Base Salary, less standard
        withholdings for tax and social security purposes, in a lump sum on the
        termination date .
  Except
        as
        set forth in the immediately preceding paragraph, a fter
        the
        termination date, no other compensation of any kind or severance or other
        payment of any kind or payment in lieu of notice shall be payable by the
        Company
        if your employment is terminated as a result of a disability. All benefits
        provided by the Company under Section 3(b) shall be extended, at your election
        and cost, to the extent permitted by the applicable insurance policies and
        benefit plans of the Company, for six months after your termination date,
        except
        as otherwise required by law ( *e.g.* ,
        COBRA
        health insurance continuation election). Except as set forth in the immediately
        preceding sentence, all benefits provided by the Company to you under this
        Employment Agreement or otherwise shall cease as of your termination
        date.
  (c) Voluntary
        Termination **.** You
        may
        voluntarily terminate your employment with the Company at any time. If you
        voluntarily terminate your employment, you will receive payment for any earned
        and unpaid Base Salary and/or bonuses as of the date of such termination;
        accrued but unused vacation time; and benefits you are entitled to receive
        under
        benefit plans of the Company, less standard withholdings for tax and social
        security purposes, through the termination date, which for purposes of this
        subsection (c) shall be the date upon which you voluntarily cease performing
        your duties under this Employment Agreement. The Company shall have no further
        obligation to pay any compensation (including severance) of any kind. All
        benefits provided by the Company to you under this Employment Agreement or
        otherwise shall cease as of the date of your voluntary termination.
   
   Mr.
          Victor Zhou
 __________,
          2006
 Page
          4
  (d) Termination
        for Cause .
  (1) Termination;
        Payment of Salary and Vacation .
        The
        Board may terminate your employment with the Company at any time for “cause” (as
        defined below). In the event that your employment is terminated under this
        subsection (d), you shall receive payment for all earned but unpaid Base
        Salary; accrued but unused vacation time; and benefits you are then entitled
        to
        receive under benefit plans of the Company, less standard withholdings for
        tax
        and social security purposes, through the date of your termination, which
        for
        purposes of this subsection (d) shall be the date upon which such notice of
        termination is given. The Company shall have no further obligation to pay
        you
        compensation of any kind nor to make any payment in lieu of notice. All benefits
        provided by the Company to you under this Employment Agreement or otherwise
        shall cease as of the termination date.
  (2) Definition
        of Cause .
        For
        purposes of this Employment Agreement, the Company shall have “cause” to
        terminate your employment upon any of the following: (a) a material breach
        by you of the terms of this Employment Agreement; (b) any breach of
        fiduciary duty or act of theft, misappropriation, embezzlement, intentional
        fraud, falsification of any employment or Company records, or other violation
        of
        applicable law or regulation or similar conduct by you involving the Company
        or
        any of its affiliates; (c) your conviction or plea of *nolo
        contendere* or the
        equivalent involving a felony or a crime involving fraud or dishonesty;
        (d) any damage of a material nature to the business or property of the
        Company or any of its affiliates caused by your willful or grossly negligent
        conduct; (e) the willful failure or refusal by you to perform reasonable
        duties, responsibilities, or instructions from the Board; (f) engaging in
        abuse
        of alcohol, illegal drugs, or controlled substances in a manner that materially
        interferes with your performance of your duties; or (g) improper disclosure
        of
        the Company’s confidential or proprietary information. No act, or failure to
        act, by you shall be considered “willful” unless committed without a reasonable
        belief that the act or omission was in the Company’s best interest.
  (e) Termination
        Without Cause .
        The
        Company, at any time without prior written notice, may terminate you without
        cause. If your employment is terminated without cause you shall receive payment
        for all earned but unpaid Base Salary and/or bonuses as of the termination
        date
        (which for purposes of this subsection (e), shall be the date of your
        termination); accrued but unused vacation time; and benefits you are then
        entitled to receive under benefit plans of the Company, less standard
        withholdings for tax and social security purposes, as of the termination
        date.
        Upon execution by you of an effective release of claims substantially in
        the
        form attached as Exhibit
        A ,
        the
        final wording of which shall be determined by the Company in conjunction
        with
        its legal counsel (the “Release”) the Company shall also pay to you as severance
        (1) an amount equal to two months of your then base salary, less standard
        withholdings for tax and social security purposes, in a lump sum on the
        termination date; (2) continuation of all benefits you are then entitled
        to
        receive under benefit plans of the Company for a period of six months; and
        (3)
        Acceleration of vesting of unvested stock options as described in Section
        5(h)
        below, effective upon such termination date (“Acceleration Date”). No other
        compensation of any kind or severance or other payment of any kind shall
        be
        payable by the Company after such termination date. All benefits provided
        by the
        Company to you under this Employment Agreement or otherwise shall cease as
        of
        the termination date.
  (f) Change
        of Control .
        If your
        employment is terminated without your written consent within twelve months
        after
        a Change of Control (as defined below), you shall receive payment for all
        earned
        but unpaid Base Salary and/or bonuses, as of the termination date (which
        for
        purposes of this subsection (f), shall be the date of your termination);
        accrued
        but unused vacation time; and benefits you are then entitled to receive under
        benefit plans of the Company, less standard withholdings for tax and social
        security purposes, as of the termination date. In such event, the Company
        shall
        also provide to you as severance (1) the payment of an amount equal to two
        months of your then base salary, less standard withholdings for tax and social
        security purposes, in a lump sum on the termination date; (2) **** continuation
        of all benefits you are then entitled to receive under benefit plans of the
        Company for a period of six months; and (3) Acceleration of vesting of unvested
        stock as described in Section 5(h) below, effective upon such termination
        date
        (“Acceleration Date”). **** No
        other
        compensation of any kind or severance or other payment of any kind shall
        be
        payable to you by the Company after such termination date. All benefits provided
        by the Company to you under this Employment Agreement or otherwise shall
        cease
        as of the termination date.
   
   Mr.
          Victor Zhou
 __________,
          2006
 Page
          5
 (1) For
        purposes of this Section 5(f), a Change of Control shall be deemed to occur
        upon
        the consummation of any one of the following events: (i) a sale of all or
        substantially all of the assets of the Company; (ii) a merger or consolidation
        in which the Company is not the surviving corporation (other than a transaction
        the principal purpose of which is to change the state of the Company’s
        incorporation or a transaction in which the voting securities of the Company
        are
        exchanged for beneficial ownership of at least a majority of the voting
        securities of the acquiring corporation); (iii) a merger or consolidation
        in
        which the Company is the surviving corporation and less than 50% of the voting
        securities of the Company that are outstanding immediately after the
        consummation of such transaction are beneficially owned, directly or indirectly,
        by the persons who owned such voting securities immediately prior to such
        transaction; (iv) any transaction or series of related transactions after
        which
        any person (as such term is used in Section 13(d)(3) of the Securities Exchange
        Act of 1934), other than any employee benefit plan (or related trust) sponsored
        or maintained by the Company, becomes the beneficial owner of voting securities
        of the Company representing a majority of the combined voting power of all
        of
        the voting securities of the Company; or (v) the liquidation or dissolution
        of
        the Company.
  (2) For
        purposes of Section 5(f)(1), any person who acquired securities of the
        Company prior to the occurrence of the specified transaction in contemplation
        of
        such transaction and who immediately after such transaction possesses direct
        or
        indirect beneficial ownership of at least 10% of the securities of the Company
        or the surviving corporation, as appropriate (or if the Company or the surviving
        corporation is a controlled affiliate, then of the appropriate entity as
        determined above), shall not be included in the calculation of the group
        of
        persons who owned such voting securities immediately prior to such
        transaction.
  (g) Termination
        for Good Reason .
        Notwithstanding anything in this Section 5 to the contrary, you may voluntarily
        end your employment with the Company and receive the benefits detailed in
        Section 5(e) upon or within 90 days following the occurrence of an event
        constituting “Good Reason,” which for purposes of this Section 5(g) shall mean
        any of the following conditions, provided that the underlying condition persists
        more than 15 business days after written notification to the Board: (1) a
        material adverse change in your position causing it to be of materially less
        responsibility or authority without your written consent, and such a materially
        adverse change shall in all events be deemed to occur if you no longer serve
        as
        Acting Chief
        Executive Officer ,
        unless
        you consent in writing to such change; (2) a reduction, without your written
        consent, in your level of Base Salary; (3) the Company fails to obtain the
        assumption of this Employment Agreement by any successor or assign of the
        Company; (4) the Company without your consent requires your permanent relocation
        from the Shanghai Area; or (5) any material breach by the Company of any
        material provision of this Agreement.
   
  Mr.
          Victor Zhou
 __________,
          2006
 Page
          6
  (h) Acceleration
        of Vesting .
        “Acceleration” means that all additional unvested shares from all outstanding
        option grants to you will vest immediately upon the Acceleration
        Date.
  (i) At-Will
        Employment .
        You
        understand and agree that your employment with the Company is at-will, which
        means that either you or the Company may, subject to the terms of this
        Employment Agreement, terminate this Employment Agreement at any time, with
        or
        without cause, as set forth in this Employment Agreement. Any modification
        of
        the at-will nature of this Employment Agreement must be in writing and executed
        by you and the Company.
  **6.** **Proprietary
        Information Obligations** .
        You
        agree to sign and abide by the terms of the Company’s standard form of
        intellectual property assignment and employee confidentiality agreement,
        if
        any.
  **7.** **Noninterference** .
        While
        employed by the Company pursuant to this Employment Agreement and for a period
        of six months after the date of your termination, you agree not to solicit
        or
        hire or attempt to solicit or hire, directly or indirectly, any employee
        of the
        Company or any affiliate.
  **8.** **Injunctive
        Relief** .
        The
        parties agree that damages would be an inadequate remedy for the Company
        in the
        event of a breach or threatened breach of Section 6, 7 or 8 of this
        Employment Agreement by you, and in the event or any such breach or threatened
        breach, the Company may, either with or without pursuing any potential damage
        remedies, obtain and enforce an injunction prohibiting you from violating
        such
        section of this Employment Agreement and requiring you to comply with its
        terms.
  **9.** **Warranties
        and Representations** .
        You
        hereby represent and warrant to the Company that you:
  (a) are
        not
        now under any obligation of a contractual or quasi-contractual nature known
        to
        you that is inconsistent or in conflict with this Employment Agreement or
        that
        would prevent, limit, or impair the performance by you of any of your
        obligations under this Employment Agreement; and
  (b) have
        been
        or have had the opportunity to be represented by legal counsel in the
        preparation, negotiation, execution, and delivery of this Employment Agreement
        and understand fully its terms and provision.
  **10.** **Dispute
        Resolution and Binding Arbitration** .
        You and
        the Company agree that if a dispute arises concerning or relating to your
        employment with the Company, such dispute shall be submitted to binding
        arbitration in accordance with the employment rules of the American Arbitration
        Association then in effect. The arbitration shall take place in Los Angeles,
        California, and both you and the Company agree to submit to the jurisdiction
        of
        the arbitrator selected in accordance with American Arbitration Association
        rules and procedures. You and the Company agree that the arbitration procedure
        provided for in this section will be the exclusive avenue of redress for
        any
        disputes relating to or arising from your employment with the Company, and
        that
        the award of the arbitrator shall be final and binding on both parties, and
        nonappealable. The arbitrator shall have discretion to award monetary and
        other
        damages, or no damages, and to fashion such other relief as the arbitrator
        deems
        appropriate. The arbitrator shall also have discretion to award the prevailing
        party reasonable costs and attorneys’ fees incurred in bringing or defending an
        action under this provision. The costs and expenses relating to the arbitration
        proceeding itself, including the fees of the arbitrator, shall be borne by
        the
        Company.












Mr.
        Victor Zhou
 __________,
        2006
 Page
        7


**11.****Miscellaneous**.
  (a) Notices .
        Any
        notice or other communication required or permitted under this Employment
        Agreement shall be in writing and shall be deemed to have been duly given
        (a) on
        the day of delivery if delivered in person; (b) on the second business day
        following the date of dispatch if (i) delivered by an internationally-recognized
        express courier service, (ii) delivered by facsimile upon confirmation of
        receipt, or (iii) sent by e-mail, if confirmed by first-class mail or
        acknowledged by the recipient or recipient’s e-mail system; (c) on the fourth
        business day following the date of mailing if delivered by registered or
        certified mail, return receipt requested, postage prepaid. All notices shall
        be
        sent to the addresses specified below, unless such other address may be
        designated by notice given in accordance with this Section.
  To
        the
        Company:
  The
        Hartcourt Companies, Inc.
 Room
        306,
        Yong Teng Plaza, No. 1065 WuZhong Road, Shanghai, China, 201103
  Attention:
        Chairman of the Board
  To
        you:
 Mr.
        Victor Zhou
 Suite
        1903, No. 7, Rongcheng Garden, Rongcheng Road,
 Shanghai,
        PRC. 200120


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




(b)Severability.
        If any
        term or provision (or any portion) of this Employment Agreement is determined
        by
        a court to be invalid, illegal or incapable of being enforced by any rule
        of law
        or public policy, all other terms and provisions (or other portions) of this
        Employment Agreement shall nevertheless remain in full force and effect.
        Upon
        such determination that any term or provision (or any portion) is invalid,
        illegal or incapable of being enforced, this Employment Agreement shall be
        deemed to be modified so as to effect the original intent of the parties
        as
        closely as possible to the end that the transactions contemplated hereby
        and the
        terms and provisions are fulfilled to the greatest extent
        possible.
  (c) Entire
        Agreement .
        This
        document constitutes the final, complete, and exclusive embodiment of the
        entire
        agreement and understanding between the parties related to the subject matter
        hereof and supersedes and preempts any prior or contemporaneous understandings,
        agreements, or representations by or between the parties, written or oral.
        Without limiting the generality of the foregoing, except as provided in this
        Employment Agreement, all understandings and agreements, written or oral,
        relating to the employment of you by the Company, or the payment of any
        compensation, or the provision of any benefit in connection therewith or
        otherwise, are hereby terminated and shall be of no future force and
        effect.
   
   Mr.
          Victor Zhou
 __________,
          2006
 Page
          8
 (d) Counterparts .
        This
        Employment Agreement may be executed on separate counterparts, any one of
        which
        need not contain signatures of more than one party, but all of which taken
        together will constitute one and the same agreement. Signatures may be exchanged
        by electronic facsimile with machine evidence of transmission.
  (e) Successors
        and Assigns .
        This
        Employment Agreement is intended to bind and inure to the benefit of and
        be
        enforceable by you and the Company, and their respective successors and assigns,
        except that you may not delegate any of your duties hereunder and you may
        not
        assign any of your rights hereunder without the prior written consent of
        the
        Company. If you should die while any amounts would still be payable to you
        hereunder if you had continued to live, all amounts payable hereunder shall
        be
        paid in accordance with the terms of this Employment Agreement to your estate,
        unless you have provided written notice to the Company specifying a different
        beneficiary or beneficiaries (which notice(s) may be changed from time to
        time
        at the sole discretion of you).
  (f) Attorneys’
        Fees .
        If any
        legal proceeding is necessary to enforce or interpret the terms of this
        Employment Agreement, or to recover damages for breach, the prevailing party
        shall be entitled to reasonable attorneys’ fees, as well as reasonable costs and
        disbursements, whether taxable or not, in addition to any other relief to
        which
        you or the Company may be entitled.
  (g) Amendments .
        No
        amendment or other modification to this Employment Agreement may be made
        except
        by a writing signed by both parties. Except for your estate pursuant to Section
        5(a) hereof, nothing in this Employment Agreement, express or implied, is
        intended to confer upon any third person any rights or remedies under or
        by
        reason of this Employment Agreement.
  (h) Choice
        of Law and Venue .
        All
        questions concerning the construction, validity and interpretation of this
        Employment Agreement will be governed by the internal law, and not the law
        of
        conflicts, of the State of California. The exclusive venue for any such action
        shall be in the U.S. federal or state courts having within their venue Los
        Angeles, California.
  (i) Fees
        and Expenses .
        Each of
        the parties shall bear its own fees and expenses incurred in connection with
        the
        preparation of this Employment Agreement and related
        transactions.













Mr.
        Victor Zhou
 __________,
        2006
 Page
        9


We
        are
        eager to have you join us as a key member of the Hartcourt Companies team.
        Please indicate your acceptance of the terms of this Employment Agreement
        by
        signing below.


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










Mr.
        Victor Zhou
 __________,
        2006
 Page
        10







**EXHIBIT
      A**





**RELEASE
      AGREEMENT**


**OF
      THE HARTCOURT COMPANIES, INC.**




**Mr.
      Victor Zhou** (“Releasor”) agrees that the payments and benefits he has received from The
      Hartcourt Companies, Inc. (the “Company”) are in full satisfaction of all
      obligations of the Company to the Releasor arising out of or in connection
      with
      the Releasor’s employment including, without limitation, all salary, bonuses,
      sick pay, reimbursement of expenses, and that the payment and benefits that
      will
      be provided to Releasor in accordance with Section 4 of Releasor’s Employment
      Agreement entered into as of May 31, 2006 (the “Employment Agreement”), as
      applicable, constitute consideration for the covenants and releases of the
      Releasor as set forth in this Release Agreement (“Severance
      Benefits”).




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




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




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




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













Mr.
        Victor Zhou
 __________,
        2006
 Page
        11






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




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




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




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




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




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




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




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




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




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













Mr.
        Victor Zhou
 __________,
        2006
 Page
        12






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




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




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





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