**EXHIBIT 10.1**

**Dated        the 28**
**th**

**        day of December 2006**

**Dong        Shunsheng**

**Zhang        Xiaoxiao**

**Xia        Weilan**

**Cai        Daqin**

**Xia        Fengling**

**Zeng        Yunwo**

**WENZHOU        LIREN EDUCATION GROUP CO., LTD. **

**and**

**AI-ASIA        INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD. **

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**ON        TAISHUN YUCAI SENIOR SCHOOL **

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**Table        of Contents**

| 1                             | Definitions                                                                      | 4  |
|-------------------------------|----------------------------------------------------------------------------------|----|
| 2                             | Preconditions                                                                    | 8  |
| 3                             | Assets                  and Operation of Yucai                                   | 9  |
| 4                             | Sale                  and Purchase of the Sale Interests                         | 9  |
| 5                             | Management                  Contract A and Management Contract B                 | 10 |
| 6                             | Representations                  and Warranties                                  | 11 |
| 7                             | Fees                  and Taxes                                                  | 13 |
| 8                             | Registration                  of the New Company                                 | 13 |
| 9                             | Profit                  Allocation of the New Joint Venture Company              | 13 |
| 10                            | Management                  of the New Joint Venture Company                     | 14 |
| 11                            | Business                  Term of the New Joint Venture Company                  | 14 |
| 12                            | Confidentiality                                                                  | 14 |
| 13                            | Breach                  of the Agreement                                         | 14 |
| 14                            | Dispute                  Settlement                                              | 14 |
| 15                            | Governing                  Law and Jurisdiction                                  | 15 |
| 16                            | Effectiveness                                                                    | 15 |
| 17                            | Miscellaneous                                                                    | 15 |
| Schedule                  1:  | Amendments                  of the Article of Association of Yucai               | 17 |
| Schedule                  2:  | Primary                  Terms and Conditions of Letter of Warranty              | 18 |
| Schedule                  3:  | Acknowledged                  Due Diligence Results & Financial Projections  | 19 |
| Schedule                  4:  | Primary                  Terms and Conditions of Management Contract A           | 20 |
| Schedule                  5:  | Primary                  Terms and Conditions of Management Contract B           | 21 |
| Schedule                  6:  | Assets                  List and Property Right Certificate of Yucai             | 22 |
| Schedule                  7:  | Employee                  Payroll and Students Roster of Yucai                   | 23 |
| Schedule                  8:  | All                  Licenses & Permits for Running Yucai                    | 24 |
| Schedule                  9:  | Primary                  Terms and Conditions of the Sale and Purchase Agreement | 25 |
| Schedule                  10: | Primary                  Terms and Conditions of the Share Consideration         | 27 |

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**THIS        AGREEMENT**

**BETWEEN:**

| (1) | Dong                  Shunsheng, Zhang Xiaoxiao, Xia Weilan, Cai Daqin, Xia Fengling                  and Zeng                  Yunwo** **(described                  as following and collectively referred to “**Dong                  Shunsheng and His Fellows**”; |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Dong        Shunsheng**

**Zhang        Xiaoxiao**

**Xia        Weilan**

**Cai        Daqin**

**Xia        Fengling**

**Zeng        Yunwo**

| (2) | **Wenzhou                  Liren Education Group Co., Ltd.,**a                  limited liability company incorporated in Wenzhou with its registered                  office at No. 117, Taishou Road, City Town, Taishun, Wenzhou, Zhejiangl                  People’s Republic of China and legal representative of **Dong                  Shunsheng**                  (hereinafter “**Liren**”);                  and |
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| (3) | **Ai-Asia                  Information Technology (Shanghai) Co., Ltd**.,                  a wholly-owned foreign company with limited liability and registered                  office at Room 628-14, Building 2, Guo Shou Jing Road, Zhangjiang                  Hi-Tech                  Park, Shanghai, People’s Republic of China and legal representative of                  Zhou Bizheng. Currently it is in the process of changing its name                  to                  **Hartcourt                  Education Investment Management & Consulting (Shanghai) Co.,                  Ltd.**                  (hereinafter “**Hartcourt                  Education**”). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**WHEREAS**
**:**

| 1. | Taishun                  Yucai Senior School (“**Yucai**”)                  is a private school duly incorporated and validly existing and                  has legally                  obtained the “License for Sponsoring and Running Private School” (License                  No. Private Education 3303293200603) and “Registration Certificate of                  Private Non-Enterprise Unit” (Certificate TAI MIN ZHENG ZI No.                  2000ó004)                  in China; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Dong                  Shunsheng and His Fellows**,**all                  of whom are Chinese natural persons, co-founded Yucai as investors,                  while                  Liren acts as the sponsor of Yucai; |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Hartcourt                  Education is a wholly-owned foreign company duly incorporated and                  validly                  existing with limited liability in                  China; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 4. | Liren                  hereby agrees to sell its 51% sponsorship rights and interests                  in Yucai                  indirectly to Hartcourt Education, and Hartcourt Education agrees                  to                  purchase it;  |
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| 5. | Dong                  Shunsheng and His Fellows have agreed that Hartcourt Education                  is the sole                  and exclusive provider of education & consulting management services                  to Yucai except themselves. |
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| 6. | Yucai                  signed the Memorandum of Understanding with Hartcourt Companies,                  Inc, the                  parent company of Hartcourt Education, on the restructuring and                  co-sponsoring of Yucai on September 28,                  2006. |
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**THEREFORE,        IT IS HEREBY AGREED BY DONG SHENSHENG AND HIS FELLOWS, LIREN AND HARTCOURT        EDUCATION AS FOLLOWS:**

| **1.** | **DEFINITIONS** |
|--------|-----------------|

| **“Dong                  Shunsheng and His Fellows”** | The                  six Chinese natural persons of Dong Shensheng, Zhang Xiaoxiao,                  Xia Weilan,                  Cai Daqin, Xia Fengling and Zeng Yunwo. Dong Shunsheng and His                  Fellows                  were the investors of Yucai prior to the execution of the Agreement.                                                                                                                                |
|-------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **“Liren”**                                           | Wenzhou                  Liren Education Group Co., Ltd. Liren was the sponsor of Yucai                  prior to                  the execution of the Agreement.                                                                                                                                                                                                                                                                             |
| **“Hartcourt                  Education”**            | Ai-Asia                  Information Technology (Shanghai) Co., Ltd. It is now in the process                  of                  changing its name to Hartcourt Education Investment Management                  and                  Consulting (Shanghai) Co., Ltd. Hartcourt Education is the wholly                  owned                  subsidiary of Hartcourt.                                                                     |
| **“Hartcourt”**                                       | The                  Hartcourt Companies, Inc. is incorporated in State of Utah, United                  States,                  the shares of which are currently listed on the Over-the-Counter                  Bulletin                  Board (“**OTCBB**”)                  of the United States. Hartcourt conducts and focuses its business                  on the                  education investment and management. |
| **“Yucai”**                                           | Taishun                  Yucai Senior School. Prior to the execution of the Agreement, Dong                  Shunsheng and His Fellows are the investors of Yucai, while Liren                  is the                  sponsor of Yucai.                                                                                                                                                                                                      |

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| **“Investors                  and Sponsors”**                | The                  entity or individual which invested and/or sponsored Yucai pursuant                  the                  regulations of PRC law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **“New                  Company”**                           | A                  limited liability company that Liren will newly establish. Dong                  Shunsheng                  and His Fellows will make the New Company become the sponsor of                  Yucai.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **“Board”**                                                  | The                  board of directors of Taishun Yucai School.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **“Related                  natural persons”**               | Natural                  persons that signed “Letter of Funding” and “Investment Agreement” with                  the Board of Yucai. The following are generally agreed in such                  documents:                  Related Natural Persons would invest in Taishun Yucai Schools (Taishun                  Yucai Senior School, Taishun Yucai Junior High School, Taishun                  Yucai                  Primary School, Taishun Yucai Kindergarten), and become the “Investors” of                  the schools in respect hereof. Such Related Natural Persons can                  draw down                  at not less than 15% dividend at the end of each anniversary year                  for the                  three years following the investing date. |
| **“Teaching                  Facility and Assets of Yucai”** | Buildings,                  equipments and lands, etc. that Yucai applies for its teaching                  activities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **“Financial                  Due Diligence”**               | The                  Financial Due Diligence conducted by KRC Business & Financial Advisors                  as entrusted by Hartcourt Education prior to December 20, 2006                  on Yucai’s                  financial standing as of October 22, 2006, and the results of which                  were                  taken as the financial document for Yucai to change its existing                  sponsor                  to the New Company. Detailed Financial Due Diligence results are                  set out                  in the Schedule 3.                                                                                                                                                                                                                                         |
| **“Financial                  Projections”**                 | In                  relation to the year ending on December 31, 2007, 2008 and 2009,                  the                  Financial Projection on Yucai conducted by KRC Business & Financial                  Advisors as entrusted by Hartcourt Education prior to December                  20, 2006.                  Detailed Financial Projections is set out in the Schedule 3.                                                                                                                                                                                                                                                                                                                                                                                                                                    |

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| **“Letter                  of Warranty”**    | The                  Letter of Warranty made by Dong Shunsheng and His fellows to Hartcourt                  Education and the New Company, to covenant the commitment to Hartcourt                  Education and the New Company in respect of the Teaching Facility                  and                  Assets of Yucai. The primary terms and conditions of the Letter                  of                  Warranty are set out in Schedule 2.                                                                            |
|----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **“Management                  Contract A”** | The                  management contract executed by Hartcourt Education, Dong Shunsheng                  and                  His Fellows and Yucai to agree that Hartcourt Education’s responsibility                  on education management of Yucai and providing consulting service                  as such.                  In exchange for that, Yucai shall pay management fee to Hartcourt                  Education, with Dong Shunsheng and His Fellows assuming the guarantee                  liability. |
| **“Management                  Fee A”**      | The                  management fee defined in aforesaid Management Contract A includes                  the                  base management fee and performance management fee, the amount                  and                  calculation of which as set out in Clause 5.2.                                                                                                                                                                                                                                                |
| **“Management                  Contract B”** | The                  management contract executed by Dong Shunsheng and His Fellows                  and Yucai                  to agree on the offering of education management and consulting                  service by                  Dong Shunsheng and His Fellows to Yucai. In exchange of that, Yucai                  shall                  pay management fee to Dong Shunsheng and His Fellows.                                                                                                                   |
| **“Management                  Fee B”**      | The                  management fee defined in aforesaid Management Contract B, the                  amount and                  calculation of which as set out in Clause 5.5.                                                                                                                                                                                                                                                                                                                                                  |
| **“Original                  Contracts”**    | Any                  contract entered into by Dong Shunsheng and His Fellows and Yucai                  before                  the execution of this Agreement.                                                                                                                                                                                                                                                                                                                                                                 |
| **“Sale                  Interests”**        | 51%                  of the entire interest in the registered capital of the New Company                  to be                  sold by Liren to Hartcourt Education.                                                                                                                                                                                                                                                                                                                                                           |

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| **“Agreement                  for Sale and Purchase of****Certain                  Interest in the Registered****Capital                  of the New Company”** | The                  agreement executed by Liren and Hartcourt Education on the sale                  and                  purchase of 51% of the entire interest in the registered capital                  of the                  New Company.                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **“Consideration”**                                                                                                                                             | The                  total consideration payable by Hartcourt Education of which includes                  US$2,000,000 cash and 5,500,000 new Hartcourt Restricted Shares                  of Common                  Stock.                                                                                                                                                                                                                                                                                                                                      |
| **“Restricted                  Shares of Hartcourt Common Stock”**                                                                                              | The                  ordinary restricted shares of common stock with par value of US$0.001                  each                  in the capital of Hartcourt to be allotted and issued in the name                  of                  Liren’s nominees. Trading symbol: U.S. HRCT.OB, Frankfurt                  900009.                                                                                                                                                                                                                                  |
| **“Delivery                  Date of the Sale Interests in the****New                  Company”**                                                               | The                  delivery date of the 51% sale interests in the New Company, on                  which,                  pursuant to the PRC law, 51% control of the New Company has changed                  from                  Liren to Hartcourt Education. Delivery Date of Sale Interests in                  the New                  Company shall be within 30 business days upon obtaining all necessary                  consents permits and approval from relevant Governmental Agency                  on Foreign                  Investment. |
| **“Consideration                  Shares Trading Date”**                                                                                                        | The                  date on which the restricted shares of Hartcourt common stock as                  share                  consideration are permitted to be freely traded at the stock exchange.                  The                  date shall be the first trading date after one anniversary of the                  date                  when Hartcourt issues the consideration shares to the nominees                  of Liren.                                                                                                                      |
| **“Governmental                  Education Approval Authority”**                                                                                                | The                  original education approval authority of Yucai.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **“Governmental                  Agency on Foreign Investment”**                                                                                                | Relevant                  PRC Administrative authority on Foreign Economic &                  Trade.                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **“Consideration                  Payment Dates”**                                                                                                              | The                  dates on which Hartcourt Education pays cash consideration and                  issues                  Restricted Shares of Hartcourt Common Stock to Liren.                                                                                                                                                                                                                                                                                                                                                                                 |
| **“Net                  Profit”**                                                                                                                               | Net                  Profit = total audited revenue - total audited expenses (all based on U.S.                  GAAP and audited by independent auditor)                                                                                                                                                                                                                                                                                                                                                                                                          |

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| **2.** | **PRECONDITIONS** |
|--------|-------------------|

| 2.1 | Liren                  shall establish the New Company before January 31, 2007 and change                  the                  sponsor of Yucai to the New Company through amending the Article                  of                  Association of Yucai etc, pursuant to the regulations of PRC law.                  The                  amendment of the Article of Association of Yucai is set out in                  Schedule 1. |
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| 2.2 | Dong                  Shunsheng and His Fellows shall present a Letter of Warranty to                  Hartcourt                  Education and the New Company, agrees that within twenty years                  upon which,                  provided that the Teaching Facility and Assets that are currently                  being                  used by Yucai ceases to be so, including but not limit to the changes                  of                  the purpose of land usage and obligee of the land and real properties,                  and                  which causes that Yucai cannot pay the Management Fee A to Hartcourt                  Education pursuant to Management Contract A, in this regards, Dong                  Shunsheng and His Fellows shall indemnify Hartcourt Education against                  all                  the losses incurred, including but not limit to the Management                  Fee A.                  Moreover, Dong Shunsheng and His Fellows shall provide Teaching                  Facility                  and Assets comparable to current property area in use to Yucai                  free of any                  charges and obligations. In the event of any loss to the New Company                  or                  Yucai, caused by the Letter of Funding and Investment Agreement                  duly                  signed by the Board of Yucai and Related Natural Persons, Dong                  Shunsheng                  and His Fellows shall fully indemnify against all the losses and                  liabilities; Whenever Dong Shunsheng and His Fellows obtain reasonable                  profit/returns from Yucai, they shall assign the profit/returns                  to the New                  Company in full amount; Dong Shunsheng and His Fellows agree that                  Hartcourt Education and the New Company will audit the accounts                  of Yucai                  periodically, including without limitation, account vouchers, account                  books and audit report, etc. The aforesaid warranties made by Dong                  Shunsheng and His Fellows shall be secured by all their equity                  interests                  in Liren in pledge. The primary terms and conditions of the Letter                  of                  Commitment are set out in Schedule 2. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | Hartcourt                  Education has entrusted independent professionals to perform financial                  due                  diligence and financial projection on Yucai. Hartcourt Education,                  Liren as                  well as Dong Shunsheng and His Fellows hereby acknowledge the results                  of                  the due diligence in writing. Acknowledged results of financial                  due                  diligence and financial projection are set out in Schedule 3. |
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| 2.4 | Yucai,                  Dong Shunsheng and His Fellows and Hartcourt Education shall duly                  execute                  the Management Contract A, covenanting that Hartcourt Education                  shall                  provide education management and consulting services to Yucai,                  while Yucai                  shall pay Management Fee A to Hartcourt Education each year. In                  this                  regards, Dong Shunsheng shall assume the liability of guarantee.                  The                  primary terms and conditions of Management Contract A are set out                  in                  Schedule 4. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.5 | As                  at the date of this Agreement, Dong Shunsheng and His Fellows have                  presented all the Original Contracts duly signed with Yucai to                  Hartcourt                  Education, and a Termination Contract has been entered into between                  Dong                  Shunsheng and His Fellows and Yucai to terminate all previously                  executed                  Original Contracts by all parties. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.6 | Yucai                  and Dong Shunsheng and His Fellows shall enter into Management                  Contract B                  in respect thereof to covenant education management and consulting                  services that Dong Shunsheng and His Fellows shall provide to Yucai                  and                  Yucai shall pay Management Fee B to Dong Shunsheng and His Fellows                  each                  year for the services rendered. The primary terms and conditions                  of                  Management Contract B are set out in Schedule 5. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| **3.** | **ASSETS                  AND OPERATIONS OF YUCAI** |
|--------|-----------------------------------------------------|

| 3.1 | Prior                  to the Sale and Purchase of the Sale Interests, total amount of                  operating                  assets of Yucai, including but not limit to land use right, real                  property,                  automobiles, computers, teaching appliances, desks and chairs,                  lab                  equipment and facilities and property lease agreements, shall be                  not less                  than RMB40,000,000, and net assets of not less than RMB20,000,000.                  Assets                  list and Property Right Certificate of Yucai are set out in Schedule                  6. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Prior                  to the Sale and Purchase of the Sale Interests, total number of                  faculty of                  Yucai shall be not less than 150 persons, among which full-time                  teachers                  of not less than 90 persons, and teachers with senior high school                  qualifications of not less than 90 persons; and total number of                  students                  on campus of not less than 1,700 persons. Employee Payroll and                  Students                  Roster of Yucai are set out in Schedule 7. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | All                  licenses and permits for running Yucai are set out in Schedule                  8. |
|-----|---------------------------------------------------------------------------------------------------------|

| **4** | **SALE                  AND PURCHASE OF THE SALE                  INTERESTS** |
|-------|-------------------------------------------------------------------------------|

| 4.1 | Within                  30 business days upon the Preconditions are satisfied and the                  prerequisites are met in respect of the Assets and Operations of                  Yucai                  referred to in Clause 3, Liren and Hartcourt Education shall sign                  and                  execute an Agreement for Sale and Purchase of Certain Interest                  in the                  Registered Capital of the New Company. Subject to the terms and                  conditions                  of the agreement, Liren shall sell its 51% equity interest in the                  New                  Company to Hartcourt Education. The primary terms and conditions                  of the                  Agreement for Sale and Purchase of Certain Interest in the Registered                  Capital of the New Company are set out in Schedule 9. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | The                  Consideration for the sale and purchase of the Sale Interests shall                  be an                  aggregate of US$2,000,000 cash and 5,500,000 Restricted Shares                  of                  Hartcourt Common Stock, based on the assets of Yucai, the capital                  injected                  to the New Company from Liren and the financial projections each                  year in                  the future years. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Hartcourt                  Education shall credit the Consideration to the accounts designated                  by                  Liren. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4. | Since                  the Delivery Date of the Sale Interests in the New Company, Hartcourt                  Education shall take over the 51% control of the New Company from                  Liren as                  shareholder pursuant to the                  Agreement. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5. | Hartcourt                  Education shall credit the Consideration to the nominees designated                  by                  Liren, satisfied as details                  hereunder:- |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    | (1) | Within                  30 business days upon the Delivery Date of the Sale Interest in                  the New                  Company, Hartcourt Education shall issue and allot the Consideration                  of                  total 5,500,000 Restricted Shares of Hartcourt Common Stock to                  the                  nominees designated by Liren. Hartcourt and Hartcourt Education                  shall                  jointly guarantee the average closing price of the 3 days immediately                  prior to the Consideration Shares Trading Date at not less than                  US$0.50                  per share, otherwise, Hartcourt shall, within 10 business days                  from the                  Consideration Shares Trading Date, credit additional cash or issue                  and                  allot to the nominees additional new Restricted Shares of Hartcourt                  Common                  Stock to make it up. The primary terms and conditions of issuance                  of                  Restricted Shares of Hartcourt Common Stock and Consideration Shares                  Trading Date are set out in Schedule 10. |
|--------------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (2) | Within                  30 business days upon the Delivery Date of the Sale Interests in                  the New                  Company, Hartcourt Education shall credit US$1,000,000 cash Consideration                  to the accounts designated by                  Liren; |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | Before                  July 31, 2007, Hartcourt Education shall credit US$500,000 cash                  Consideration to the accounts designated by                  Liren; |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Before                  January 31, 2008, Hartcourt Education shall credit US$500,000 cash                  Consideration to the accounts designated by Liren. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **5.** | **MANAGEMENT                  CONTRACT A AND B** |
|--------|--------------------------------------------------|

| 5.1 | Hartcourt                  Education shall provide education management and consulting services                  to                  Yucai, detailed as follows:- |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Assisting                  to prepare and amend the corporate governance system, financial                  management                  policy of Yucai, etc.; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Assisting                  to introduce the overseas advanced teaching model and                  methodology; |
|--------|-----|----------------------------------------------------------------------------------------------------------------|

|   | (3) | Assisting                  Yucai to upgrade its financial management, and assign financial                  expert to                  instruct and manage the financial department of                  Yucai; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Assist                  to set up the employment guide and coordination committee for graduates,                  and assign experts to instruct and coordinate the graduates employment; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | To                  offer the overseas exchange opportunity for students of Yucai as                  it may                  practically need; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | To                  offer the overseas training opportunity for faculty of Yucai as                  it may                  practically need; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Assisting Yucai                  to make material strategic decisions and the implementation procedures                  in                  detail; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | Assisting                  to manage Yucai and the New Company in fully compliance with the                  regulations and rules of the United States Securities Exchange                  Commission,                  and offer the consulting service in the aspect of corporate governance,                  legal, financial management, audit,                  etc.; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | To                  provide other related consulting services as it may be required                  by Yucai. |
|--------|-----|----------------------------------------------------------------------------------------------------------------|

| 5.2 | Yucai                  will pay the Management Fee A to Hartcourt Education, detailed                  as                  follows:- |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Yucai                  shall pay the annual Base Management Fee of RMB500,000 cash to                  Hartcourt                  Education prior to February 1 of that year; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Yucai                  shall pay the annual Performance Management Fee of RMB3,825,000                  cash to                  Hartcourt Education prior to December 31 of that year, depending                  on its                  operating results; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | (3) | Dong                  Shunsheng and His Fellows shall jointly guarantee that the Net                  Profit of                  Yucai can meet at least the payment of the Management Fee A specified                  in                  Clause 5.2.(1) and 5.2.(2) in the year of 2007, 2008 and 2009,                  and in the                  event of the Net Profit less than the Management Fee A, Dong Shunsheng                  and                  His Fellows shall make up the discrepancy to Hartcourt Education                  before                  December 31 of each year in respect thereof. The Management Fee                  A shall be                  paid fully depending on Yucai’s actual performance afterwards. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.3 | The                  Management Contract A shall have 20 years term, and effective from                  the                  date when Hartcourt Education legally obtains the 51% equity interest                  in                  the New Company. Yucai and Hartcourt Education may otherwise discuss                  the                  renewal as such term expires. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.4 | Dong                  Shunsheng shall provide the education management and consulting                  services                  to Yucai, detailed as follows:- |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | In                  charge of making and implementing the general management and financial                  management policy, etc. of Yucai and providing consulting services                  in                  practice; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | In                  charge of making and implementing the routine teaching management                  of                  Yucai, and assigning expert (the Principal) to instruct and lead                  the                  management work of Yucai; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | In                  charge of making and implementing teaching model and methodology                  of Yucai                  and providing consulting services in                  practice; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | To                  provide consulting services in respect of the financial                  management; |
|--------|-----|----------------------------------------------------------------------------------------------------------|

|   | (5) | Assisting                  Hartcourt Education to make material strategic decision of Yucai                  and the                  implementation procedure, as well as the consulting services as                  it may                  require. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.5 | Yucai                  shall pay Management Fee B to Dong Shunsheng and His Fellows, detailed                  as                  follows:- |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Yucai                  shall pay the Management Fee B to Dong Shunsheng and His Fellows                  each year                  of (i) RMB3,675,000 cash, or (ii) Net Profit minus Management Fee                  A,                  whichever is lower, before December 31 of that year for 2007, 2008                  and                  2009; The Management Fee B shall be paid fully depending on Yucai’s actual                  performance afterwards. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5.6 | The                  Management Contract B shall have 20 years term, effective from                  the date                  when Hartcourt Education legally obtains the 51% equity interest                  in the                  New Company. Yucai and Dong Shunsheng and His Fellows may otherwise                  discuss the renewal as such term expires. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **6** | **REPRESENTATIONS                  AND WARRANTS** |
|-------|---------------------------------------------------|

| 6.1 | Dong                  Shunsheng and His Fellows herby jointly represents and warrants                  as                  follows:- |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Liren                  shall be the actual beneficial owner of the 51% Sale Interests                  in the                  registered capital of the New Company and have full rights, interests,                  and                  control in this 51% interest. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | (2) | Dong                  Shunsheng and His Fellows jointly assure that no third-party interest                  has                  been put against the Sale Interests such as pledge, lien, etc.                  from the                  incorporation of the New Company till the Delivery Date of the                  Sale                  Interests in the New Company, and no conflicts or disputes in respect                  of                  any interest stand thereon. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Dong                  Shunsheng and His Fellows jointly assure that under no circumstances,                  without the written consent from Hartcourt Education, they shall                  not sign                  and execute any documents on behalf of the New Company from its                  incorporation date till Delivery Date of the Sale Interests in                  the New                  Company. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Dong                  Shunsheng and His Fellows guarantee that Yucai shall pay the Management                  Fee A referred to in Clause 5 of this Agreement to Hartcourt Education                  in                  full amount with priority. Should Yucai fail to pay the aforesaid                  management fee in full amount, Dong Shunsheng and His Fellows shall                  make                  up the discrepancy to Hartcourt Education before December 31 of                  that year                  in respect thereof. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | No                  false investment or capital withdrawal happens to Yucai, otherwise,                  Dong                  Shunsheng and His Fellows shall take full responsibility and liabilities                  and indemnify Yucai and Hartcourt Education for all the loss incurred;                  all                  the risks and losses before Hartcourt Education obtaining the 51%                  equity                  interests in the New Company, except otherwise expressly acceptable                  by                  Hartcourt Education, shall be borne by Dong Shunsheng and His Fellows,                  and                  provided any losses caused herewith to Yucai or Hartcourt Education,                  Dong                  Shunsheng and His Fellows shall assume the liabilities to indemnify. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Dong                  Shunsheng and His Fellows guarantee that the “Letter of Funding” and                  “Investment Agreement” duly signed by the Board and Related Natural                  Persons and presented to Hartcourt Education are all complete and                  no                  omittance or alike, provided any losses caused due to the abovementioned                  documents or similar herewith to Yucai, Dong Shunsheng and His                  Fellows                  shall assume all the liabilities and indemnify Yucai and Hartcourt                  Education for all the losses incurred. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | As                  of the date of the Agreement, Dong Shunsheng and His Fellows shall                  not,                  directly or indirectly, sponsor or participate in sponsoring any                  education                  institutions that might potentially be competitive to Yucai in                  Zhejiang                  province. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6.2 | Liren                  hereby represents and warrants as                  follows:- |
|-----|-------------------------------------------------------------------------------------|

|   | (1) | Liren                  shall be the actual beneficial owner of the 51% Sale Interests                  in the                  registered capital of the New Company and have full rights, interests,                  and                  control in this 51% interest. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Liren                  assure that no third-party interest has been put against the Sale                  Interests such as pledge, lien, etc. from the incorporation of                  the New                  Company till the Delivery Date of the Sale Interests in the New                  Company,                  and no conflict and dispute in respect of any interest stands                  thereon. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Liren                  assure that under no circumstances, without the written consent                  from                  Hartcourt Education, it shall not sign and execute any documents                  on behalf                  of the New Company from its incorporation date till Delivery Date                  of the                  Sale Interests in the New Company. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | As                  of the date of the Agreement, Liren shall not, directly or indirectly,                  sponsor or participate in sponsoring any education institution                  that might                  potentially be competitive to Yucai in Zhejiang province. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 6.3 | Hartcourt                  Education hereby represents and warrants as                  follows:- |
|-----|---------------------------------------------------------------------------------------------------|

|   | (1) | Hartcourt                  Education is a duly incorporated and validly existing                  company. |
|--------|-----|------------------------------------------------------------------------------------------------------------|

|   | (2) | Hartcourt                  Education has the corporate powers and authority to sign and execute                  this                  Agreement. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Hartcourt                  Education agrees to completely fulfill the obligations as specified                  in                  Management Contract A, and any losses resulted from the non-fulfillment                  of                  such obligations by Hartcourt Education shall be borne by itself,                  and it                  shall indemnify Yucai and Dong Shunsheng and His Fellows for all                  the                  losses incurred hereof. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Hartcourt                  Education guarantees to pay the Consideration of the Sale Interests                  in                  full when due. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Hartcourt                  Education guarantees that all the documents presented to Dong Shunsheng                  and His Fellows are true, and in the event of any losses caused                  by the                  untrue documents, Hartcourt Education shall assume the liabilities                  and                  indemnify Yucai and Dong Shunsheng and His Fellows for the losses                  incurred                  hereof. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7** | **FEES                  AND TAXES** |
|-------|-------------------------------------|

|   | (1) | Liren                  shall bear all the expenses or fees involved in the incorporation                  of the                  New Company and undertake all the possible taxes. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Liren                  and Yucai shall assume the respective share of the expenses incurred                  for                  the Sale Interests in the New Company and be obliged to pay taxes                  due and                  payable. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **8** | **THE                  REGISTRATION OF THE OWNERSHIP CHANGE OF THE NEW                  COMPANAY** |
|-------|----------------------------------------------------------------------------------------------------|

|   | (1) | Liren                  shall complete all the formalities and procedures with Commercial&                  Industrial Bureau on the incorporation of the New Company within                  15                  business days of the date of the                  Agreement; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Dong                  Shunsheng and His Fellows, Liren are liable for changing the sponsor                  of                  Yucai to the New Company before the Delivery Date of the Sale Interests                  in                  the New Company, including but not limit to, obtain the permits                  from the                  Governmental Education Approval                  Authority; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | In                  respect of registration of the ownership change with Commercial&                  Industrial Bureau related to the Sale Interests, Dong Shunsheng                  and His                  Fellows and Liren shall cooperate with the New Company to complete                  it                  before the Delivery Date of the Sale Interests in the New Company,                  Hartcourt Education shall provide necessary assistance                  thereto. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **9** | **PROFIT                  ALLOCATION OF THE NEW JOINT VENTURE                  COMPANY** |
|-------|------------------------------------------------------------------------------------------|

| 9.1 | After                  Hartcourt Education controls the 51% equity interests in the New                  Company,                  the net profit, after deducting all the expenses as per the accounting                  standards, shall be allocated to Liren and Hartcourt Education                  based on                  their respective equity percentage in the New Company. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **10** | **MANAGEMENT                  OF THE NEW JOINT VENTURE                  COMPANY** |
|--------|-----------------------------------------------------------------------------------|

| 10.1 | After                  Hartcourt Education controls the 51% equity interest in the New                  Company,                  the New Company will become a sino-foreign joint venture; the Chairman                  of                  the Board and finance controller of the New Company will be appointed                  by                  Hartcourt Education, while the general manager of which will be                  appointed                  by Liren. The Board of the New Joint Venture Company shall comprise                  of 5                  directors, among which Hartcourt Education is entitled to nominate                  and                  appoint 3 directors, and Liren is entitled to nominate and appoint                  2                  directors. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | After                  Hartcourt Education controls the 51% equity interest in the New                  Company,                  the Chairman of the Board and the Principal of Yucai will still                  be                  appointed by Liren, while the finance controller of which will                  be                  appointed by Hartcourt Education. The Board of Yucai shall comprise                  of 5                  directors, among which Hartcourt Education is entitled to nominate                  and                  appoint 3 directors, and Liren is entitled to nominate and appoint                  2                  directors. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **11** | **BUSINESS                  TERM OF THE NEW JOINT VENTURE COMPANY**  |
|--------|---------------------------------------------------------------------------|

| 11.1 | After                  Hartcourt Education controls the 51% equity interest in the New                  Company,                  the business term of the new joint venture company shall be 50                  years. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **12** | **CONFIDENTIALITY** |
|--------|---------------------|

| 12.1 | Dong                  Shunsheng and His Fellows, Liren and Hartcourt Education undertakes                  the                  responsibilities to keep all the known information and documents                  in                  connection with this Agreement strictly                  confidential; |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.2 | Except                  legally required by relevant governmental authority or securities                  supervisory administration in respect hereof, without the consent                  of all                  its counterparties, no party shall divulge anything to any third                  party                  other than the parties in this Agreement. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13** | **BREACH                  OF THE AGREEMENT** |
|--------|----------------------------------------------|

| 13.1 | Any                  party of Dong Shunsheng and His Fellows, Liren and Hartcourt Education,                  when fails to fulfill its obligations specified in this Agreement                  without                  legal reasons, shall assume the liabilities of breach to non-breaching                  party. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **14** | **DISPUTE                  SETTLEMENT** |
|--------|-----------------------------------------|

| 14.1 | Any                  dispute, controversy or claim arising out of or relating to this                  Agreement, shall be settled by negotiation and discussion between                  Dong                  Shunsheng and His Fellows, Liren and Hartcourt Education in good                  faith.                  This negotiation and discussion shall start immediately after one                  party                  sending out the written notice to the other parties in this                  regards. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14.2 | In                  the event that the dispute, controversy or claim cannot be solved                  within                  90 days of the aforesaid written notice, this dispute, controversy                  or                  claim, as any parties requires, and after informing the other parties,                  shall be submitted and settled by China International Economic                  and Trade                  Arbitration Commission, Shanghai Branch. Arbitration Rules will                  be final,                  and will be binding on Dong Shunsheng, Liren and Hartcourt Education. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **15** | **GOVERNING                  LAW AND JURISDICATION** |
|--------|------------------------------------------------------|

| 15.1 | This                  Agreement shall be governed, construed and interpreted in accordance                  with                  the laws of the People’s Republic of                  China. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **16** | **EFFECTIVENESS** |
|--------|-------------------|

| 16.1 | This                  Agreement will be effective immediately upon duly signed by Dong                  Shunsheng                  and His Fellows, Liren and Hartcourt Education or their authorized                  representative. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **17** | **MICELLANEOUS**  |
|--------|------------------------|

| 17.1 | The                  headings of the Clause in this Agreement are for reference only                  and shall                  not be construed as the interpretation of this Agreement. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.2 | This                  Agreement will be in eight original copies, one copy with each                  party, and                  each copy shall be deemed as equally authentic. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17.3 | This                  Agreement will supersede all previous agreements, arrangements,                  memorandum                  of understandings between the parties hereto upon signed and executed                  by                  all parties. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**IN          WITNESS**

**SIGNED        **

**SIGNED        **

**SIGNED        **

**SIGNED        **

**SIGNED        **

**SIGNED        **

**SIGNED        **

**WENZHOU          LIREN EDUCATION GROUP CO., LTD**

**WENZHOU        LIREN EDUCATION GROUP CO., LTD**

**SIGNED        **

**AI-ASIA          INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD**

**AI-ASIA        INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD**

----

**Schedule        1:**
**Amendments        of the Article of Associations of Yucai**

----

**Schedule        2: **
**Primary        Terms and Conditions of Letter of Warranty**

| 1 | Within                  twenty years upon the Letter of Warranty, provided that the Teaching                  Facility and Assets that are currently being used by Yucai ceases                  to be                  so, including but not limit to the changes of the purpose of land                  usage                  and obligee of the land and real properties, and which causes that                  Yucai                  cannot pay the Management Fee A to Hartcourt Education pursuant                  to                  Management Contract A, in this regards, Dong Shunsheng and His                  Fellows                  shall indemnify Hartcourt Education against all the losses incurred,                  including but not limit to the Management Fee A. Moreover, Dong                  Shunsheng                  and His Fellows shall provide Teaching Facility and Assets comparable                  to                  current property area in use to Yucai free of any charges and                  obligations; |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | In                  the event of any loss to the New Company or Yucai, caused by the                  Letter of                  Funding and Investment Agreement duly signed by the Board of Yucai                  and                  Related Natural Persons, Dong Shunsheng and His Fellows shall fully                  indemnify against all the losses and                  liabilities; |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Whenever                  Dong Shunsheng and His Fellows obtain reasonable profit/returns                  from                  Yucai, they shall assign the profit/returns to the New Company                  in full                  amount; |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Dong                  Shunsheng and His Fellows agree that Hartcourt Education and the                  New                  Company will audit the accounts of Yucai periodically, including                  without                  limitation, account vouchers, account books and audit report, etc. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | The                  aforesaid warranties made by Dong Shunsheng and His Fellows shall                  be                  secured by all their equity interests in Liren in pledge. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Schedule        3: **
**Acknowledged        Due Diligence Results & Financial Projections**

----

**Schedule        4:**
**Primary        Terms and Conditions of Management Contract A**

| 1 | Hartcourt                  Education shall provide education management and consulting service                  to                  Yucai, detailed as follows:- |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | Assisting                  to prepare and amend the corporate governance system, financial                  management                  policy of Yucai, etc.; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Assisting                  to introduce the overseas advanced teaching model and                  methodology; |
|--------|-----|----------------------------------------------------------------------------------------------------------------|

|   | (3) | Assisting                  Yucai to upgrade its financial management, and assign financial                  expert to                  instruct and manage the financial department of                  Yucai; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Assist                  to set up the employment guide and coordination committee for graduates,                  and assign the expert to instruct and coordinate the graduates                  employment; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | To                  offer the overseas exchange opportunity for students of Yucai as                  it may                  practically need; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | To                  offer the overseas training opportunity for faculty of Yucai as                  it may                  practically need; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Assisting Yucai                  to make material strategic decisions and the implementation procedures                  in                  detail; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | Assisting                  to manage Yucai and the New Company in fully compliance with the                  regulations and rules of the United States Securities Exchange                  Commission,                  and offer the consulting service in the aspect of corporate governance,                  legal, financial management, audit,                  etc.; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Providing                  other related consulting service as it may be required by Yucai. |
|--------|-----|---------------------------------------------------------------------------------------------|

| 2 | Yucai                  will pay the Management Fee A to Hartcourt Education, detailed                  as                  follows:- |
|---|--------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Other                  expenses that Yucai shall bear, detailed as                  follows:- |
|---|-----------------------------------------------------------------------------------------------|

| 4 | The                  Management Contract A shall have 20 years term, and effective from                  the                  date when Hartcourt Education legally obtains the 51% equity interest                  in                  the New Company. Yucai and Hartcourt Education may otherwise discuss                  the                  renewal as such term expires. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Schedule        5:**
**Primary        Terms and Conditions of Management Contract B**

| 1 | Dong                  Shunsheng shall provide the education management and consulting                  service to                  Yucai, detailed as follows:- |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (1) | In                  charge of making and implementing the general management and financial                  management policy, etc. of Yucai and providing consulting service                  in                  practice; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | In                  charge of making and implementing the routine teaching management                  of                  Yucai, and assigning expert (the Principal) to instruct and lead                  the                  management work of Yucai; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | In                  charge of making and implementing teaching model and methodology                  of Yucai                  and providing consulting service in                  practice; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | To                  provide consulting service in respect of the financial                  management; |
|--------|-----|---------------------------------------------------------------------------------------------------------|

|   | (5) | Assist                  Hartcourt Education to make material strategic decision of Yucai                  and the                  implementation procedure, as well as the consulting service as                  it may                  require. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2 | Yucai                  shall pay Management Fee B to Dong Shunsheng and His Fellows, detailed                  as                  follows:- |
|---|----------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | The                  Management Contract B shall have 20 years term, effective from                  the date                  when Hartcourt Education legally obtains the 51% equity interest                  in the                  New Company. Yucai and Dong Shunsheng and His Fellows may otherwise                  discuss the renewal as such term expires. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Schedule        6: **
**Assets        List and Property Right Certificates of Yucai**

----

**Schedule        7:              **
**Employee        Payroll and Students Roster of Yucai**

----

**Schedule        8:**
**All        Licenses & Permits for Sponsoring and Running Yucai**

----

**Schedule        9:             Primary Terms and Conditions of the Sale and Purchase        Agreement**

| 1      | Liren                    will sell its 51% equity interest in the New Company to Hartcourt                    Education.                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 2      | The                    Consideration for the sale and purchase of the Sale Interests                    Shall be an                    aggregate of US$2,000,000 cash and 5,500,000 Restricted Shares                    of                    Hartcourt Common Stock, based on the assets of Yucai, the capital                    injected                    to the New Company from Liren and the financial projections each                    year in                    the future.                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 3      | Hartcourt                    Education shall credit the Consideration to the accounts designated                    by                    Liren.                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 4      | The                    Delivery Date of the Sale Interests in the New Company shall                    be within 30                    business days upon obtaining the offcial approval from Governmental                    Agency                    on Foreign Investment; and Since the Delivery Date of the Sale                    Interests                    in the New Company, Hartcourt Education shalll take over the                    51% control                    of the New Company from Liren as shareholder pursuant to the                    Agreement. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 5      | Hartcourt                    Education shall credit the Consideration to the nominees designated                    by                    Liren in four installments, satisfied as details                    hereunder:-                                                                                                                                                                                                                                                                                                                                                        |

|   | (1) | Within                  30 business days upon the Delivery Date of the Sale Interest in                  the New                  Company, Hartcourt Education shall issue and allot the Consideration                  of                  total 5,500,000 Restricted Shares of Hartcourt Common Stock to                  the                  nominees designated by Liren. Hartcourt and Hartcourt Education                  shall                  jointly guarantee the average closing price of the 3 days immediately                  prior to the Consideration Shares Trading Date at not less than                  US$0.50                  per share, otherwise, Hartcourt shall, within 10 business days                  from the                  Consideration shares Trading Date, credit additional cash or issue                  and                  allot to the nominees additional new Restricted Shares of Hartcourt                  Common                  Stock to make it up. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Within                  30 business days upon the Delivery Date of the Sale Interests in                  the New                  Company, Hartcourt Education shall credit US$1,000,000 cash Consideration                  to the accounts designated by                  Liren; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Before                  July 31, 2007, Hartcourt Education shall credit US$500,000 cash                  Consideration to the accounts designated by                  Liren; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Before                  January 31, 2008, Hartcourt Education shall credit US$500,000 cash                  Consideration to the accounts designated by Liren. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | After                  Hartcourt Education controls the 51% equity interest in the New                  Company,                  the New Company will become a sino-foreign joint venture; the Chairman                  of                  the Board and finance controller of the New Company will be appointed                  by                  Hartcourt Education; The Board of the New Joint Venture Company                  shall                  comprise of 5 directors, among which Hartcourt Education is entitled                  to                  nominate and appoint 3 directors, and Liren is entitled to nominate                  and                  appoint 2 directors. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 7 | After                  Hartcourt Education controls the 51% equity interest in the New                  Company,                  the Chairman of the Board and the Principal of Yucai will still                  be                  appointed by Liren, while the finance controller of which will                  be                  appointed by Hartcourt Education. The board of Yucai shall comprise                  of 5                  directors, among which Hartcourt Education is entitled to nominate                  and                  appoint 3 directors, and Liren is entitled to nominate and appoint                  2                  directors. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | After                  Hartcourt Edcuation controls the 51% equity interest in the New                  Company,                  the Net Profit shall be allocated to Liren and Hartcourt Education                  based                  on their respective equity percentage in the New Company. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | The                        business term of the New Joint Venture Company shall be 50                  years. |
|---|---------------------------------------------------------------------------------------------------------------|

----

**Schedule        10: **
**Primary        Terms and Conditions of the Share Consideration**