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                                                                    Exhibit 2.05

                       Dated the 14th day of February 2003
                       -----------------------------------


                                 (Li Zhengzheng)
                                 (Zhu Jianping)
                                   (Zhang Hui)
                                    (Sang Yi)
                                  (Dai Peimin)
                                  (Luo Meifang)



                                       and



                             HARTCOURT CAPITAL, INC.
 -------------------------------------------------------------------------------
                       AGREEMENT FOR SALE AND PURCHASE OF
                  CERTAIN INTEREST IN THE REGISTRED CAPITAL OF

                    (HUAQING CORPORATION DEVELOPMENT CO LTD)
 -------------------------------------------------------------------------------
                              Preston|Gates|Ellis
                                   Solicitors


                           10th Floor, Hutchison House
                                10 Harcourt Road
                               Central, Hong Kong


                    Tel: (852) 2511 5100 Fax: (852) 2511 9515
                          Website: www.prestongates.com

                          Our ref: 47831-00002/KAL/VTSO














                                       1
<PAGE>
THIS AGREEMENT is dated the 14th of February, 2003.

BETWEEN:

(1)      310108511123403 571 2 202;

(2)      , holder of PRC Identity Card No.310110540905003, of  2767 8 2;

(3)      , holder of PRC Identity Card No.310110580501465, of 332;

(4)      , holder of PRC Identity Card No.310112591122001, of 248 63 202;

(5)      , holder of PRC Identity Card No.310110571117425, of 46 106; and

(6)      , holder of PRC Identity Card No.310110561205382, of 436;

         ( and ] are hereinafter  collectively  referred to as the "Vendors" and
           each individually referred to as the "Vendor"); and

(7)      HARTCOURT CAPITAL,  INC., a company  incorporated in the British Virgin
         Islands with its registered office situate at Akara Bldg., 24 De Castro
         Street, Wickhams Cay 1, Road Town, Tortola,  British Virgin Islands and
         its principal  office situate at Suite 1310, China  VentureTech  Plaza,
         819 Nan Jing Xi Road, Shanghai China (the "Purchaser").


WHEREAS:

(A)      (HuaQing Corporation  Development Co Ltd) (the "Company") is a domestic
         joint venture  company with limited  liability  incorporated in the PRC
         and has as at the date hereof a  registered  capital of  RMB20,000,000.
         Brief particulars of the Company are set out in Schedule 1.

(B)      As at the date of this  Agreement,  the  Vendors are  respectively  the
         beneficial owners of certain interests in the registered capital of the
         Company as set out in column 2 of Schedule 2.

(C)      As at the date of this  Agreement,  the  Purchaser  is a  wholly  owned
         subsidiary of Hartcourt  Companies,  Inc. (the "Holding Company"),  the
         shares of which are currently listed on the  Over-the-Counter  Bulletin
         Board ("OTCBB") of the United States (OTCBB Symbol: HRCT).

(D)      The  Vendors  have  agreed  to sell and the  Purchaser  has  agreed  to
         purchase certain interests in the registered  capital of the Company as
         set out in column 3 of Schedule 2, the  aggregate  of which  represents
         45% of the registered  capital of the Company (the "Sale Interests") in
         accordance with the terms and conditions of this Agreement.


NOW IT IS HEREBY AGREED AS FOLLOWS:

1.       INTERPRETATION
         --------------
1.1      In this Agreement  (including the Recitals and  Schedules),  unless the
         context otherwise  requires,  the following words and expressions shall
         have the following meanings ascribed to each of them below:

                                       2
<PAGE>
         "Agreement"             this agreement for the sale and purchase of the
                                 Sale Interest,  as amended or supplemented from
                                 time to time;

         "Board"                 the board of directors of the Company from time
                                 to time;

         "Business Day"          a day (other than Saturdays and days on which a
                                 tropic  cyclone  warning  No.  8 or  above or a
                                 rainstorm  warning  signal is  hoisted  in Hong
                                 Kong at any time  between  9:00  a.m.  and 5:00
                                 p.m.) on which banks in Hong Kong are generally
                                 open  for the  transaction  of  normal  banking
                                 business;

         "Company"               has the  meaning  ascribed  thereto  in Recital
                                 (A);

         "Companies Ordinance"   the Companies Ordinance (Chapter 32 of the Laws
                                 of Hong Kong);

         "Completion             Date" the date  falling on the 5th Business Day
                                 after the conditions set out in Clause 3.1 have
                                                                 ----------
                                 been fulfilled or waived by the Purchaser;

         "Completion"            completion of the sale and purchase of the Sale
                                 Interests  in  accordance  with the  terms  and
                                 conditions of this Agreement;

         "Consideration"         the  consideration  payable  by  the  Purchaser
                                 pursuant to Clause 4.1 hereof;
                                             ----------

         "Consideration          Shares"  14,126,482  ordinary  shares  with par
                                 value of  US$0.001  each in the  capital of the
                                 Holding  Company to be  allotted  and issued in
                                 the  name  of the  Vendors  or  their  nominees
                                 pursuant to Clause 4.1;
                                             ----------
         "Directors"             directors  of the Company from time to time and
                                 "Director"  shall  be  construed  as any one of
                                 them;

         "Encumbrance"           any mortgage,  charge,  pledge, lien (otherwise
                                 than  arising by statute or  operation of law),
                                 equities,  hypothecation or other  encumbrance,
                                 priority   or   security   interest,   deferred
                                 purchase,     title     retention,     leasing,
                                 sale-and-repurchase    or    sale-and-leaseback
                                 arrangement whatsoever over or in any property,
                                 assets  or  rights  of  whatsoever  nature  and
                                 includes any agreement for any of the same;




                                       3
<PAGE>
         "Group"                 the Company and its subsidiaries and "member of
                                 the  Group"  shall be  construed  as any one of
                                 them;

         "Guaranteed Net Profit" RMB4,500,000;

         "Guaranteed Turnover"   RMB400,000,000;

         "HK$"                   Hong Kong dollars;

         "Holding Company"       Hartcourt    Companies,    Inc.,    a   company
                                 incorporated  under  the  laws of the  State of
                                 Utah,  United  States  and the  registered  and
                                 beneficial  owner of the  entire  issued  share
                                 capital of the Purchaser;

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

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

         "Long Stop Date"        30 June 2003;

         "Net Profit"            in  relation  to the year ending on the date on
                                 which the  Restricted  Trading Period ends, the
                                 consolidated profits (less losses) of the Group
                                 as shown by the Special Audited Accounts :

                                 (a) after deducting all expenses of working and
                                     management  including,  without limitation,
                                     director's  remuneration (whether by way of
                                     fees,    salary    or    commission)    and
                                     depreciation;

                                 (b) without  taking  into  account  profits  or
                                     losses  of  a  capital  nature  arising  on
                                     disposal  of  fixed  assets,   investments,
                                     plant or any other assets of the Group; and

                                 (c) after making such other  adjustments as the
                                     auditors    of   the    Company    consider
                                     appropriate;

         "PRC"                   the People's  Republic of China,  which for the
                                 purpose of this  Agreement,  excludes Hong Kong
                                 and Macau;

         "Purchaser's Nominees"  persons to be  nominated  by the  Purchaser  to
                                 acquire the Sale  Interests in accordance  with
                                 the terms and conditions of this Agreement;






                                       4
<PAGE>
         "Relevant               Proportion"  the  respective  portion  of  Sale
                                 Interests   owned   by  each  of  the   Vendors
                                 expressed  as  a   percentage   of  the  entire
                                 interest  in  the  registered  capital  of  the
                                 Company as set out in column 4 of the  Schedule
                                 2;                                     --------
                                 -
         "RMB"                   Renminbi, the lawfully currency of PRC;

         "Restricted
          Trading Period"        a period of twelve (12) months from the date on
                                 which the  Consideration  Shares being allotted
                                 and issued to the Vendors or their nominees;

         "Sale Interests"        45% of the entire  interest  in the  registered
                                 capital  of  the  Company  to be  sold  by  the
                                 Vendors to the Purchaser's Nominees;

         "Special
         Audited Accounts"       the  audited   consolidated   profit  and  loss
                                 accounts of the Group for the year ended on the
                                 date on which  the  Restricted  Trading  Period
                                 ends;

         "Tax Indemnity"         the  deed of  indemnity  to be given by each of
                                 the Vendors in favour of the  Purchaser and the
                                 Group  in such  form  and  substance  as may be
                                 satisfactory and acceptable to the Purchaser;

         "Taxation"              all  forms  of  taxation  whenever  created  or
                                 imposed and whether in the PRC or elsewhere and
                                 without   limiting   the   generality   of  the
                                 foregoing,  includes  all forms of profits tax,
                                 interest  tax,   salaries  tax,  property  tax,
                                 estate  duty,   stamp  duty,   sales  tax,  any
                                 provisional  tax,  customs  and import duty and
                                 any  amount  equal  to any  deprivation  of any
                                 relief,   allowance,   set  off,  deduction  in
                                 computing  profits  or rights to  repayment  of
                                 taxation   granted  by  or   pursuant   to  any
                                 legislation concerning or otherwise relating to
                                 taxation  and also  includes  in  addition  and
                                 without prejudice to the foregoing,  all fines,
                                 penalties,   costs,   charges,   expenses   and
                                 interests relating thereto;

         "US"                    the United States of America;

         "US$"                   United   States   Dollars,   being  the  lawful
                                 currency of the United States of America;







                                       5
<PAGE>
         "Vendors' Solicitors"   Mr. Gu Daihua
                                 Shanghai Z&C Law Office
                                 D/13F, 1 Build Lane 628,
                                 Zhang Yang Road, Shanghai
                                 Tel:58358811,58358822-12
                                 Fax:58358737
                                 Mobile:13301683476

         "Warranties"            the  representations  and warranties set out in
                                 Schedule 3.
                                 ----------

1.2      The headings of this  Agreement are inserted for  convenience  only and
         shall be ignored  in  construing  this  Agreement.  Unless the  context
         otherwise requires,  references in this Agreement to the singular shall
         be  deemed  to  include  references  to  the  plural  and  vice  versa;
         references  to one gender shall  include all genders and  references to
         any person  shall  include  an  individual,  firm,  body  corporate  or
         unincorporated.

1.3      References  in this  Agreement to clauses,  schedules  and exhibits are
         references  to clauses,  schedules  and exhibits of this  Agreement and
         references to sub-clauses and paragraphs are unless  otherwise  stated,
         references to sub-clauses and paragraphs of the clause,  sub-clause or,
         as  appropriate,  the  schedule or the  exhibit in which the  reference
         appears.

1.4      Reference to a "subsidiary" or "holding  company" shall be construed in
         accordance with section 2 of the Companies Ordinance.

1.5      Reference to any Ordinance,  regulation or other statutory provision or
         rules  in  this  Agreement   includes   reference  to  such  Ordinance,
         regulation,  provision or rule as modified,  consolidated or re-enacted
         from time to time.


2.       SALE AND PURCHASE OF THE SALE INTERESTS
         ---------------------------------------
2.1      Subject  to the terms and  conditions  of this  Agreement,  each of the
         Vendors,  as  beneficial  owners  of the  respective  portion  of  Sale
         Interests  as set out in column 4 of  Schedule  2,  shall  sell and the
         Purchaser  shall,  relying on the  warranties  and  indemnities  herein
         contained,  purchase  or  procure  its  nominee  to  purchase  the Sale
         Interests,  with full title guarantee with effect from the date of this
         Agreement  free from all  Encumbrances  together with all rights now or
         hereafter  attaching thereto including but not limited to all dividends
         paid,  declared  and/or made in respect thereof on or after the date of
         this Agreement.

2.2      The parties  acknowledge  and agree that the Vendors  will enter into a
         share transfer  agreement with the Purchaser's  Nominees as referred to
         in Clause 3.1(b),  pursuant to which the  Purchaser's  Nominees will be
            -------------
         registered as the beneficiary owner of the Sale Interests in accordance
         with the instructions of the Purchaser.


                                       6
<PAGE>
2.3      The Purchaser  and/or the Purchaser's  Nominees shall not be obliged to
         purchase any portion of the Sale  Interests  unless the purchase of all
         the Sale Interests is completed simultaneously.


3.       CONDITIONS
         ----------
3.1      Completion is conditional upon:

         (a)  the  Purchaser  having  completed  its  due  diligence  (including
              without  limitation,  legal,  financial and commercial aspects) in
              respect  of the  Group  referred  to in  Clause  3.3 below and the
              results of which are, in the  absolute  opinion of the  Purchaser,
              satisfactory and acceptable to the Purchaser in all respects;

         (b)  the due execution of a share transfer agreement by the Vendors and
              the Purchaser's Nominees;

         (c)  if so required,  passing of necessary  resolutions by shareholders
              of the Purchaser at a general meeting approving (i) this Agreement
              and the  transactions  contemplated  herein and (ii) the allotment
              and issue of the  Consideration  Shares to the Vendors credited as
              fully paid;

         (d)  all necessary consents permits and approval (whether governmental,
              regulatory or  otherwise)  as may be required  under US securities
              laws or  other  relevant  laws,  regulations  and  rules  in US in
              respect  of  this  Agreement,  the  allotment  and  issue  of  the
              Consideration Shares and the transactions  contemplated  hereunder
              having been obtained by the Purchaser;

         (e)  all necessary consents permits and approval (whether governmental,
              regulatory or otherwise) as may be required in respect of the sale
              and purchase of the Sale Interests and/or the change of control of
              the  Company   having  been   obtained   from  the   relevant  PRC
              governmental  authorities,  including  but not  limited to the new
              business license for the Company;

         (f)  the Purchaser  having  obtained a legal opinion issued by a lawyer
              (acceptable to the Purchaser) qualified to practice PRC securities
              laws (which form and contents are  satisfactory  and acceptable to
              the Purchaser at its absolute discretion) in respect of:

              (i)   the  legality  and  validity  of  this   Agreement  and  the
                    transactions contemplated herein;

              (ii)  the completion of all necessary  procedures and obtaining of
                    all necessary  approvals  regarding the sale and purchase of
                    the Sale Interests;

              (iii) the  appointment of  Director(s)  nominated by the Purchaser
                    become effective;

              (iv)  no change in the  permitted  scope  business  of the Company
                    after the transfer of the Sale Interests;


                                       7
<PAGE>
              (v)   all other matters reasonably requested by the Purchaser;

         (g)  the Purchaser having obtained a legal opinion issued by a US legal
              counsel (which form and contents are  satisfactory  and acceptable
              to the Purchaser at its absolute discretion) in respect of:

              (i)   the legality and validity of this  Agreement,  allotment and
                    issue  of the  Consideration  Shares  and  the  transactions
                    contemplated herein;

              (ii)  the completion of all necessary  procedures and obtaining of
                    all necessary  approvals  regarding the  acquisition  of the
                    Sale Interests; and

              (iii) all other matters reasonably requested by the Purchaser;

         (h)  the Purchaser  having obtained a consent letter duly signed by all
              shareholders and person who has any direct or indirect interest in
              the  registered  capital of the Company  waiving their  respective
              rights of pre-emption or any other rights they may have in respect
              of the Sale Interests;

         (i)  the due execution of a share transfer and pledge  agreement by the
              Purchaser's Nominees and the Purchaser;

         (j)  the Warranties and undertakings  under this Agreement are true and
              accurate  and  are  not  misleading  in any  material  aspects  at
              Completion  as if repeated at  Completion  and at all time between
              the date of this Agreement and the Completion.

3.2      The Vendors shall jointly and severally  procure the fulfillment of the
         condition  precedents  mentioned in Clauses 3.1(e) above and shall keep
                                             --------------
         the  Purchaser  fully  informed  of all their  actions  and  efforts in
         connection  with their  obtaining the necessary  consents,  permits and
         approvals from the relevant regulatory  authorities,  including without
         limitation,  providing  the  Purchaser  immediately  with  all of their
         correspondence with these relevant regulatory authorities.

3.3      In relation to Clause 3.1(a),  the Vendors shall give and shall procure
                        -------------
         that the Purchaser and/or any persons  authorized by it in writing will
         be given such access to the  premises and all books,  documents,  title
         deeds, records, returns, approvals,  correspondence and accounts of the
         Company and all members of the Group and all such information  relating
         to the  Group as may be  reasonably  requested  by or on  behalf of the
         Purchaser to undertake and conduct a full due diligence  (including but
         without  limitation,  in all legal,  financial and commercial  aspects)
         against  the Group and be  permitted  to take copies of any such books,
         documents, title deeds, records and accounts and that the directors and
         employees  of all  members  of the Group  shall be  instructed  to give
         promptly all such  information and  explanations to any such persons as
         aforesaid  as may be  requested  by it or them.  For the  avoidance  of
         doubt,  such due diligence shall not limit or otherwise  qualify in any
         way the obligations and liabilities of the Vendors under Clause 10.
                                                                  ---------

                                       8
<PAGE>
3.4      The Purchaser may at any time by notice in writing to the Vendors waive
         any  of the  conditions  set  out  in  Clause  3.1.  If (a)  any of the
                                                -----------
         conditions set out in Clause 3.1 has not been satisfied (or as the case
                               ----------
         may be,  waived by the  Purchaser)  on or before  5:00 p.m. on the Long
         Stop Date or such later  date as the  Purchaser  may agree;  or (b) the
         Purchaser  is not  satisfied  with  the  results  of the due  diligence
         conducted according to Clause 3.3 and informs the Vendors in writing at
                                ----------
         any time,  this Agreement  shall cease and determine and the parties to
         this Agreement shall not have any obligations and liabilities hereunder
         save for any antecedent  breaches of the terms hereof and save that all
         such  reasonable   out-of-pocket  expenses  properly  incurred  by  the
         Purchaser  in  connection  with the  purchase of the Sale  Interests or
         otherwise in connection with the arrangements  contemplated  under this
         Agreement shall be borne and paid by the Vendors on demand.


4.       CONSIDERATION
         -------------
4.1      The consideration for the sale and purchase of the Sale Interests shall
         be the sum of RMB  16.083  million,  which  shall be  satisfied  by the
         Purchaser  procuring the Holding Company to allot, issue and credit the
         Consideration Shares to the Vendors in the Relevant Proportion as fully
         paid at an issue price of US$0.138 per share upon Completion.

4.2      The  Vendors  shall  notify the  Purchaser  in writing at least two (2)
         Business  Days  before the  Completion  Date of the  name(s)  and other
         particulars of the registered holder(s) of the Consideration Shares and
         the board lot  denomination of the share  certificate(s)  in respect of
         the  Consideration  Shares to be issued to them or their nominee(s) and
         all  necessary  information  and details as is  reasonably  required to
         enable  the  share  registrars  of the  Holding  Company  to issue  the
         definitive  share  certificates  for  such  Consideration  Shares  upon
         Completion.

4.3      The  Vendors  understand  that  the  Consideration  Shares  will not be
         registered  under the Securities  Act. The Vendors also understand that
         the  Consideration  Shares are being allotted and issued pursuant to an
         exemption  from  registration  contained in the Securities Act based in
         part upon the Vendors' representations contained in this Agreement. The
         Vendors hereby represent and warrant as follow:

         (a)  Vendors  bear  economic   risk:   the  Vendors  have   substantial
              experience  in  evaluating  and  investing  in  private  placement
              transactions  of securities in companies  similar to the Purchaser
              so that it is  capable of  evaluating  the merits and risks of its
              investments  in the Purchaser and have the capacity to protect its
              own  interests.  The Vendors are able to bear the economic risk of
              this investment;

         (b)  Acquisition  for  own  account:  the  Vendors  are  acquiring  the
              Consideration   Shares  for  their   respective  own  account  for
              investment only, and not with a view towards their distribution;


                                       9
<PAGE>
         (c)  Vendors can protect their interest:  the Vendors represent that by
              reason of their management,  business or financial experience, the
              Vendors  have the  capacity  to  protect  their own  interests  in
              connection with the  transactions  contemplated in this Agreement.
              Further,   the  Vendors  are  aware  of  no   publication  of  any
              advertisement in connection with the transactions  contemplated in
              this Agreement;

         (d)  Company  information:  the  Vendors  have  had an  opportunity  to
              discuss the Purchaser's business, management and financial affairs
              with directors,  officers and management of the Purchaser and have
              had the  opportunity  to review  the  Purchaser's  operations  and
              facilities.  The  Vendors  have  also had the  opportunity  to ask
              questions  of and  receive  answers  from  the  Purchaser  and its
              management regarding the terms and conditions of this investment;

         (e)  Rule 144: The Vendors acknowledge and agree that the Consideration
              Shares  must be held  indefinitely  unless  they are  subsequently
              registered  under the  Securities  Act or an  exemption  from such
              registration  is  available.  The Vendors have been advised or are
              aware  of  the  provisions  of  Rule  144  promulgated  under  the
              Securities Act, which permits  limited resale of shares  purchased
              in a private  placement  subject  to the  satisfaction  of certain
              conditions;

         (f)  Legends:  The Vendors understand and agree that the Purchaser will
              cause  the  legends  set  forth  below  or  legends  substantially
              equivalent   thereto,   to  be  placed  upon  any   certificate(s)
              evidencing  ownership of the Consideration  Shares,  together with
              any  other  legends  that may be  required  by  state  or  federal
              securities laws, or by the Articles of Association and Bye laws of
              the Company, or by any other agreement between the Vendors and the
              Purchaser or between the Vendors and any third party:

              THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER
              THE SECURITIES  ACT OF 1933, AS AMENDED (THE "ACT"),  OR UNDER THE
              SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
              RESTRICTIONS  ON  TRANSFERABILITY   AND  RESALE  AND  MAY  NOT  BE
              TRANSFERRED  OR RESOLD  EXCEPT AS PERMITTED  UNDER THE ACT AND THE
              APPLICABLE  STATE  SECURITIES  LAWS,  PURSUANT TO  REGISTRATION OR
              EXEMPTION  THEREFROM.  INVESTORS  SHOULD BE AWARE THAT THEY MAY BE
              REQUIRED TO BEAR THE  FINANCIAL  RISKS OF THIS  INVESTMENT  FOR AN
              INDEFINITE  PERIOD OF TIME.  THE  ISSUER OF THESE  SECURITIES  MAY
              REQUIRE AN OPINION OF COUNSEL IN FORM AND  SUBSTANCE  SATISFACTORY
              TO THE ISSUER TO THE EFFECT THAT ANY  PROPOSED  TRANSFER OR RESALE
              IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE  STATE SECURITIES
              LAWS.

         (g)  Refusal to  Transfer:  The  Purchaser  will not be required to (i)
              transfer on its books any Consideration Shares that have been sold
              or otherwise  transferred in violation of any of the provisions of
              this  Agreement;  or (ii)  treat as  owner  of such  Consideration
              Shares or to  accord  the  right to vote or pay  dividends  to any
              purchaser or other  transferee to whom such  Consideration  Shares
              have been so transferred.


                                       10
<PAGE>
4.4      The Purchaser agrees that upon expiry of the Restricted  Trading Period
         and  upon  presentation  of  the  Consideration  Shares  to  Purchaser,
         Purchaser  will attend to all necessary  formalities  and  registration
         procedures  as may  be  required  under  the  Securities  Act  and  the
         applicable  State  securities  law to enable the  Consideration  Shares
         becoming freely transferable and resalable.


5.       COMPLETION
         ----------
5.1      Completion  shall take place at the PRC office of the Vendors  situated
         at  301-305,  Jing  Chang  Building,  No.2,  Lane 556,  Chang  Ping Rd,
         Shanghai, China on the Completion Date at 2p.m. (or at such other place
         and time as the parties  may agree) when all the acts and  requirements
         set out in this Clause 5 shall be complied with.

5.2      On Completion,  each of the Vendors shall jointly and/or  severally (as
         the case may be) deliver or procure the  delivery to the  Purchaser  of
         all the following:

         (a)  copies,  certified  as true  and  complete  by a  director/  legal
              representative  of the Company and its relevant  subsidiaries,  of
              resolutions  of  the  shareholders  /board  of  directors  meeting
              approving  the matters as  stipulated  in Clauses 5.3,  5.4(c) and
              5.4(d);                                   ------------------------
              ------
         (b   in respect of every member of the Group:

              (i)   all constitutional  documents,  statutory records and minute
                    books (which shall be written up to date as at Completion);

              (ii)  all common seals and all rubber stamps, cheque books, cheque
                    stubs  and  bank  statements,  receipt  books,  all  current
                    insurance  policies  (if any),  books and accounts and title
                    deeds and  evidence  of  ownerships  to all  assets  and all
                    current contracts and all other accounting records;

              (iii) copies of all tax returns and assessments  (receipted  where
                    the due dates for payment  fell on or before the  Completion
                    Date); and

              (iv)  all other papers,  correspondence  and documents relating to
                    the  Group  which  are in the  possession  of or  under  the
                    control of any of the Vendor;

                     provided that, if the Purchaser so agrees,  delivery of all
                     documents  and records as referred to in this Clause 5.2(b)
                                                                          ------
                     shall  be  deemed  to have  been  effected  where  they are
                     situated in premises  and shall  continue to be in the sole
                     occupation  of the relevant  member of the Group  following
                     Completion or otherwise in the custody of persons who shall
                     remain  officers  and/or  employees  of such  member of the
                     Group following Completion;



                                       11
<PAGE>
         (c)  the Tax Indemnity duly executed by each of the Vendors.

5.3      On Completion,  the Vendors shall procure a meeting of the shareholders
         of the Company at which such  matters  shall be dealt with and resolved
         upon as the  Purchaser  shall require for the purposes of giving effect
         to the provisions of this Agreement including:

         (a)  approving the sale and purchase of the Sale Interests;

         (b)  appointing  nominee(s) of the Purchaser to be  Director(s)  and of
              the Company;

         (c)  amending the memorandum and articles of association of the Company
              as may be required  by the  Purchaser  to effect the  transactions
              contemplated hereunder; and

         (d)  procure  the  resignation  of  such  existing  Director(s)  of the
              Company as the Purchaser  shall specify and that each person shall
              confirm under seal that they have no claim against the Company for
              compensation for loss of office or any other claim.

5.4      On Completion, each of the Vendors shall jointly procure that:

         (a)  all  registration  procedures as may be required under the PRC law
              in respect of the transfer of the Sale Interests by the Vendors to
              the  Purchaser's  Nominees  shall be completed  within  reasonable
              time;

         (b)  a new articles of  association  of the Company  shall be signed by
              the  Purchaser's  Nominees  and  filed  with  the  relevant  local
              Administration of Industry and Commerce which shall state that the
              Purchaser's  Nominees hold 45% interest in the registered  capital
              of the Company;

         (c)  a board meeting of each subsidiary of the Company shall be held at
              which such matters  shall be dealt with and  resolved  upon as the
              Purchaser  shall  require for the purposes of giving effect to the
              provisions of this Agreement, including appointing such persons as
              the board of directors may determine to be new director(s); and

         (d)  such existing  directors,  supervisor(s) and the secretary of each
              subsidiary  of the Company as the  Purchaser  shall  specify shall
              resign  as  directors,  supervisor(s)  and the  secretary  of such
              relevant subsidiary of the Company and that each such person shall
              confirm  under seal that they have no claim  against the  relevant
              subsidiary for  compensation for loss of office or any other claim
              whatsoever.

5.5      Against  performance  of the  obligations  by the Vendors under Clauses
                                                                         -------
         5.2, 5.3 and 5.4 above, the Purchaser shall:
         ----------------------





                                       12
<PAGE>
         (a)  procure the  allotment  and issue to each of the Vendors (or their
              respective  nominees)  the  Consideration  Shares in the  Relevant
              Proportion  and  immediately  thereafter  to register  each of the
              Vendors  (or  their  respective  nominees)  as  a  member  of  the
              Purchaser;

         (b)  cause to be  delivered  to each of the Vendors  certified  copy of
              instructions to the share registrar of the Holding Company for the
              issue of definitive share  certificates of title in respect of the
              Consideration  Shares in the Relevant Proportion in the respective
              names of the Vendors or their respective nominee(s); and

         (c)  deliver to each of the Vendors a certified  copy of the directors'
              resolutions of the Purchaser approving:

              (i)   the  acquisition  of the Sale  Interests  and the  terms and
                    conditions of this Agreement; and

              (ii)  the issue and allotment of the Consideration Shares.

5.6      If the Vendors  shall fail to do  anything  required to be done by them
         under Clauses 5.2, 5.3 and 5.4, without prejudice to any other right or
               ------------------------
         remedy available to the Purchaser, the Purchaser may:

         (a)  defer  Completion  to a day not later  than 14 days after the date
              fixed for Completion (and so that the provisions of this paragraph
              (a) shall apply to Completion as so deferred); or

         (b)  proceed to Completion so far as practicable but without  prejudice
              to the Purchaser's rights to the extent that the Vendors shall not
              have complied with their obligations hereunder; or

         (c)  rescind this Agreement without liability on its part.

5.7      Clauses 6 to Clause 17 shall survive the Completion.
         ---------    ---------

6.       MANAGEMENT OF THE COMPANY
         -------------------------
6.1      Upon  Completion,  the  business and  operations  of the Group shall be
         managed by the Board.

6.2      The chairman of the Board and the legal  representative  of the Company
         shall be  nominated  and  appointed  by the Board.  The chairman of the
         Board and the legal  representative  of the Company shall  initially be
         [ss.o+/-W+/-W].

6.3      The Board shall comprise of five Directors.  The  Purchaser's  Nominees
         shall be entitled to nominate and appoint two  Directors at any time by
         written notice addressed to the Company.

6.4      The quorum for meetings of the Board shall be two, of whom one shall be
         a Director nominated by the Purchaser's Nominees.



                                       13
<PAGE>
6.5      Unless otherwise  unanimously agreed by all Directors,  meetings of the
         Board shall be held at least once in each quarter.

6.6      At least 7 days'  written  notice of each meeting of the Board shall be
         given to each Director and alternate director specifying the date, time
         and place of the meeting and the business to be transacted thereat with
         all documents and papers to be  distributed  in such meeting  attached,
         provided that if Directors  and their  nominated  alternates  who would
         constitute a quorum at any meeting agree to a shorter period of notice,
         then such meeting shall be deemed to be properly called.

6.7      The  financial  controller  and/or the chief  financial  officer of the
         Company shall be nominated and appointed by the Purchaser's Nominees.

6.8      Save with the consent of the  Purchaser,  the Vendors shall not sell or
         otherwise dispose of any of their remaining interests in the Company.

6.8      So far as the Vendors remain as  shareholders  of the Company,  each of
         the  Vendors  undertakes  that  he/she/it  shall  procure  and take all
         actions  to  ensure  that all  obligations  under  Clauses  6.8 be duly
         executed, done and/or performed.


7.       DISPOSAL OF CONSIDERATION SHARES
         --------------------------------
         Each of the  Vendors  agrees and  acknowledges  that the  Consideration
         Shares  are  subject  to the  United  States  Securities  and  Exchange
         Commission  ("SEC")  Rule 144 and in  particular,  hereby  jointly  and
         severally  undertakes  to and  covenants  with  the  Purchaser  and the
         Holding Company that it will not, during the Restricted Trading Period,
         dispose of (including without limitation by the creation of any option,
         charge or other Encumbrance or rights over or in respect of) any of the
         Consideration Shares or any interests therein owned by it/him/her or in
         which  it/he/she is,  directly or  indirectly,  interested  immediately
         after  Completion  or dispose of (including  without  limitation by the
         creation of any option,  charge or other  encumbrance or rights over or
         in respect of) any shares in any company  controlled by it/he/she which
         is the beneficial owner of the Consideration Shares.


8.       FURTHER UNDERTAKING OF THE VENDORS
         ----------------------------------
8.1      (HuaQing  Economics  Development  Company  Limited) is a domestic joint
         venture company  established in the PRC and is beneficially owned as to
         50% by  (HuaQing  Economics  Development  Company),  16.67% by (HuaChen
         Computer  Company  Limited)] and the remaining  33.33% by . Each of the
         Vendors is a beneficial  owner of certain  interests in the  registered
         capital of (HuaQing Economics Development Company).

8.2      The Vendors hereby jointly and severally undertake to procure that:

         (a)  a new domestic  joint venture  company  ("New JV Company")  with a
              registered  share  capital of not less than RMB 6 million  will be
              established within three 3 months after the date of this Agreement
              and the Purchaser's  Nominees will become the beneficial  owner of


                                       14
<PAGE>
              45% interest in the  registered  capital of the New JV Company and
              the remaining 55% interest in the registered capital of the New JV
              Company will be owned by the existing shareholders of the Company;
              for the  avoidance of doubt,  the Vendors will, at their costs and
              expenses,   be  responsible  for  all  the   contribution  to  the
              registered  capital  of the New JV  Company  and  the  Purchaser's
              Nominees  will  not be  required  to make any  contribution  or be
              responsible for any other expenses;

         (b)  [all tangible and intangible  assets and business  currently owned
              by u0(2)M  gAUuo(R)i|(3)--*1/2(Y)q(HuaQing  Economics  Development
              Company Limited) will be transferred to the New JV Company and all
              existing  shareholders  (and  each of  their  respective  ultimate
              beneficial   owners)  of  u0(2)M   gAUuo(R)i|(3)--*1/2(Y)q(HuaQing
              Economics  Development  Company  Limited)  will  consent  to  such
              transfer and attend to all necessary formalities and procedures to
              effect such transfer;]

         (c)  the registered capital of the New JV Company will be fully paid-up
              and  that  the  New JV  Company  shall  have  incurred  no debt or
              liabilities without the written consent of the Purchaser; and

         (d)  all necessary  formalities  and  registration  procedures  for the
              formation  of the New JV Company as may be required  under the PRC
              law will be duly complied with and all necessary  documentation in
              relation  thereto will be executed  and  performed by the relevant
              parties to the satisfaction of the Purchaser.

8.3      The  Purchaser  agrees that,  within five (5)  Business  Days after the
         fulfillment  of  the   undertakings  as  set  out  Clause  8.2  to  its
                                                            -----------
         satisfaction,  it will  procure the Holding  Company to allot and issue
         1,833,992  ordinary  shares in the share capital of the Holding Company
         to the  Vendors or their  nominees  in  addition  to the  Consideration
         Shares.

8.4      For the avoidance of doubt, this Clause 8 shall survive the Completion.


9.       REPURCHASE OPTION
         -----------------
9.1      If, according to the Special Audited Accounts, the Company either:

         (a)  fails to attain a Net Profit  exceeding the  Guaranteed Net Profit
              or fails to achieve the Guaranteed  Turnover during the Restricted
              Trading Period; or

         (b)  making  loss  in any  single  quarter  in the  Restricted  Trading
              Period,

         then the  Purchaser  may at its sole and  absolute  discretion,  within
         three (3) months from the issue of the  Special  Audited  Accounts,  by
         notice in writing  ("Purchaser's  Repurchase  Notice") to the  Vendors,
         request the Vendors to  repurchase  the Sale  Interests and the Vendors
         shall transfer to the Purchaser or its nominee all of the Consideration
         Shares  which have been  issued  pursuant  to Clause 4.1 and Clause 8.3
                                                       ----------     ----------
                                       15
<PAGE>
         free from Encumbrances in consideration of all beneficial and equitable
         interest  in the  registered  capital of the  Company  then held by the
         Purchaser  and/or the  Purchaser's  Nominees  being  transferred to the
         Vendors.

9.2      If, upon expiry of the Restricted Trading Period, the return accrued or
         derived from the  Consideration  Shares is less than the return accrued
         or derived  from the Sale  Interests,  then the Vendors may at its sole
         and absolute discretion,  within three (3) months from the issue of the
         Special Audited Accounts,  by notice in writing  ("Vendors'  Repurchase
         Notice") to the  Purchaser,  request the  Purchaser to  repurchase  the
         Consideration  Shares and  transfer to the Vendors all  beneficial  and
         equitable  interest in the registered  capital of the Company then held
         by the Purchaser  and/or the Purchaser's  Nominees in  consideration of
         all of the  Consideration  Shares  which have been  issued  pursuant to
         Clause 4.1 and Clause 8.3 free from  Encumbrances  being transferred to
         ----------     ----------
         the Purchaser.

9.3      The  Vendors  shall,  within 7 days  from  the date of the  Purchaser's
         Repurchase  Notice or the Vendors'  Repurchase  Notice (as the case may
         be), deliver to or cause to be delivered to the Purchaser the following
         in respect of the relevant Consideration Shares:

         (a)  duly executed transfer instruments and contract notes in favour of
              the  Purchaser or its nominees  together  with the relevant  share
              certificates; and

         (b)  such other  documents as may be  reasonably  required to give good
              title to the Consideration Shares free from Encumbrances to enable
              the  Purchaser or its  nominees (or as it may  nominate) to become
              the registered holder thereof,

              against which the Purchaser  shall  transfer and assign or procure
              the  transfer  and  assign to the  Vendors  of all  equitable  and
              beneficial  interest and all shareholding in the Company then held
              by it and/or the Purchaser's Nominees.

9.4      For the  purposes of this Clause 9, return  accrued or derived from the
                                   --------
         Consideration  Shares  or the  Sale  Interests  respectively  shall  be
         calculated by reference to:

         (a)  the  multiple of the average  closing  price of the  Consideration
              Shares for the last thirty (30) trading days including the date on
              which the  Restricted  Trading  Period  ends and the number of the
              Consideration Shares; and

         (b)  45% of the net assets value of the Company as at the date on which
              the  Restricted  Trading  Period  ends  according  to the  Special
              Audited Accounts.






                                       16
<PAGE>
10.      WARRANTIES
         ----------
10.1     Each  of the  Vendors  hereby  jointly  and  severally  represents  and
         warrants to the Purchaser  that the Warranties are true and accurate in
         all respects as at the date of this  Agreement  and will continue to be
         so up  to  and  including  Completion  and  agree  to  use  their  best
         endeavours  (including taking such remedial action as may be necessary)
         to ensure that the  Warranties  have  remained and will remain true and
         accurate in all respects  from date of signing of this  Agreement up to
         the time of Completion and acknowledges that the Purchaser, in entering
         into this Agreement,  is relying on, inter alia, such  Warranties.  For
         the avoidance of doubt,  the liabilities and obligations of each of the
         Vendors under the  Warranties  shall in no  circumstances  be lessened,
         modified,   relieved  or  otherwise   reduced  due  to  any  actual  or
         constructive knowledge of the Purchaser of any facts or events relating
         to the  business,  operations  or otherwise of the Group,  whether such
         knowledge is gained in the course of the due diligence  conducted under
         Clause 3.3 or otherwise.
         ----------
10.2     Each of the Vendors  agrees that the Purchaser  shall treat each of the
         Warranties as a condition of this Agreement.  In addition,  each of the
         Warranties is without prejudice to any other Warranty and, except where
         expressly  otherwise  stated, no provision in any Warranty shall govern
         or limit  the  extent or  application  of any  other  provision  in any
         Warranty.

10.3     Each of the Vendors  agrees to fully  indemnify  and keep the Purchaser
         and its  assignee  fully  indemnified  on demand  from and  against all
         losses,  liabilities,  damages,  costs and  expenses  (including  legal
         expenses)  which the  Purchaser  and its  assignee may incur or sustain
         from or in  consequence  of any of the  Warranties not being correct or
         fully complied with. This indemnity  shall be without  prejudice to any
         other rights and remedies of the Purchaser and its assignee in relation
         to any such breach of  Warranties  and all such rights and remedies are
         hereby reserved.

10.4     The Warranties shall survive  Completion and the rights and remedies of
         the Purchaser in respect of any breach of the  Warranties  shall not be
         affected by Completion or by any investigation  made by or on behalf of
         the  Purchaser  into  the  affairs  of the  Group  or by the  Purchaser
         rescinding,  or  failing  to  rescind  this  Agreement,  or  failing to
         exercise or  delaying  the  exercise of any right or remedy,  or by any
         other event or matter whatsoever, except a specific and duly authorised
         written  waiver or  release  and no single or partial  exercise  of any
         right or remedy shall preclude any further or other exercise.

10.5     The  Purchaser  shall be  entitled to take action both before and after
         Completion  in respect of any breach or  non-fulfillment  of any of the
         Warranties and  Completion  shall not in any way constitute a waiver of
         any right of the Purchaser.

10.6     Each of the Vendors undertakes in relation to any Warranty which refers
         to the knowledge,  information or belief of each of the Vendors that it
         has made full enquiry into the subject matter of that Warranty and that



                                       17
<PAGE>
         they do not have  actual  or  constructive  knowledge,  information  or
         belief that the  subject  matter of that  Warranty  may not be correct,
         complete or accurate.

10.7     If at any time  before  Completion  the  Vendors or any of them come to
         know of any fact or event which:

         (a)  is in any way inconsistent  with any of the undertakings  given by
              the Vendors, and/or

         (b)  suggests that any fact warranted may not be as warranted or may be
              misleading; and/or

         (c)  might affect the  willingness of a prudent  purchaser for value of
              the Sale  Interests  to complete its purchase or the amount of the
              consideration  which such  purchaser  would be prepared to pay for
              the Sale Interests;

              the Vendors shall give  immediate  written  notice  thereof to the
              Purchaser  in which  event  the  Purchaser  may  within 14 days of
              receiving  such notice rescind this Agreement by written notice to
              each of the Vendors.

10.8     If at any time before  Completion,  the Purchaser finds that any of the
         Warranties  is  incorrect  or has not  been  or is (in  the  reasonable
         opinion of the  Purchaser)  incapable of being  rectified the Purchaser
         may rescind this Agreement by written notice to each of the Vendors.

10.9     The  Purchaser's  rights under the above clauses are in addition to and
         without prejudice to all other rights and remedies  available to it and
         its  exercise of or its failure to exercise its rights under any of the
         above clauses shall not  constitute a waiver of or prejudice any of its
         other rights under this Agreement.


11.      VENDORS' UNDERTAKINGS
         ---------------------
11.1     Each of the Vendors  jointly and severally  undertakes that the Vendors
         will not  directly or  indirectly  either  alone or jointly  with or as
         manager or agent of any person and  whether or not for gain,  carry on,
         engage or in any way be  interested  in any business that is similar to
         and/or in  competition  with the business of the Company  and/or any of
         its  subsidiaries  for a period of three (3) years  commencing from the
         date on which the Restricted Trading Period ends.

11.2     The Vendors covenant and undertake that prior to Completion and without
         the prior written  consent of the Purchaser,  the Vendors shall procure
         that the Company and each member of the Group shall not:

         a.   incur any  expenditure on capital account or enter into any option
              in respect of any part of its assets;

         b.   dispose  of or agree to  dispose of or grant any option in respect
              of any part of its assets;



                                       18
<PAGE>
         c.   borrow any money or make any  payments  out of or  drawings on its
              bank account(s) other than routine payments;

         d.   enter into any unusual or abnormal contract or commitment;

         e.   make any loan;

         f.   enter into any  leasing,  hire,  purchase  or other  agreement  or
              arrangements for payment on deferred terms;

         g.   declare,  make or pay any dividend or other  distribution or do or
              suffer  anything  which may render  its  financial  position  less
              favourable than as at the date of this Agreement;

         h.   grant or issue or agree to grant or issue any mortgages,  charges,
              debentures  or  other  securities  or give or  agree  to give  any
              guarantees or indemnities;

         i.   make any  change in the  terms and  conditions  of  employment  or
              pension benefits of any of its directors or employees or employ or
              terminate  (other  than  for good  cause)  the  employment  of any
              person;

         j.   create, issue or grant any option in respect of any class of share
              or loan capital or agree so to do;

         k.   in any other way depart from the ordinary course of its respective
              day-to-day  business  either as regards the nature scope or manner
              of conducting the same;

         l.   voluntarily  contravene  or  fail  to  comply  with  any  material
              obligation, statutory or otherwise; and

         m.   do anything  whereby its financial  position will be rendered less
              favourable than at the date hereof.

11.3     Each of the Vendors  agrees to fully  indemnify and keep each member of
         the Group and/or the Purchaser and its assignee  fully  indemnified  on
         demand from and against all  losses,  liabilities,  damages,  costs and
         expenses  (including  legal  expenses)  which  any  member of the Group
         and/or the  Purchaser  and its assignee may incur or sustain from or in
         consequence  of  any  liabilities  of  the  Group,  whether  actual  or
         contingent  including without  limitation,  the diminution of the value
         (including  without  limitation,  the  net  assets  value  or  expected
         profits) of the Group,  arising  from any act or omission or  otherwise
         incurred on or before the Completion Date.


12.      ACCESS TO INFORMATION
         ---------------------
         Each  of  the  Vendors   shall  assist  the   Purchaser,   its  agents,
         representatives  and  professional  advisers in  obtaining  promptly on
         request full access to all such  facilities and  information  regarding
         the business, assets,  liabilities,  contracts and affairs of the Group



                                       19
<PAGE>
         and other evidence of ownership of the assets owned by the Group as the
         Purchaser may require.

13.      FURTHER ASSURANCE
         -----------------
         Each of the  Vendors  shall  execute,  do and  perform or procure to be
         executed,  done and  performed  by  other  necessary  persons  all such
         further acts, agreements, assignments,  assurances, deeds and documents
         as the Purchaser may require  effectively  to vest the  registered  and
         beneficial  ownership of the Sale  Interests in the Purchaser free from
         all  Encumbrances  and  with all  rights  now and  hereafter  attaching
         thereto.

14.      CONFIDENTIALITY AND ANNOUNCEMENTS
         ---------------------------------
14.1     Each of the parties  undertakes  to the others that it will not, at any
         time after the date of this  Agreement,  divulge or  communicate to any
         person other than to its professional advisers, or when required by law
         or  any  rule  of  any  relevant  stock  exchange  body  or  regulatory
         authorities,  or to its respective officers or employees whose province
         is to  know  the  same  any  confidential  information  concerning  the
         business,  accounts,  finance  or  contractual  arrangements  or  other
         dealings,  transactions  or affairs  of any of the others  which may be
         within  or may  come  to  its  knowledge  and it  shall  use  its  best
         endeavours  to  prevent  the  publication  or  disclosure  of any  such
         confidential information concerning such matters.

14.2     No public  announcement or  communication  of any kind shall be made in
         respect of the subject  matter of this  Agreement  unless  specifically
         agreed  between  the  parties  or unless an  announcement  is  required
         pursuant to the applicable laws and the regulations or the requirements
         of  any  relevant  stock  exchange  or any  other  regulatory  body  or
         authority.  Any  announcement by any party required to be made pursuant
         to any relevant laws or regulation or the  requirements of the relevant
         stock  exchange  or any other  regulatory  body or  authority  shall be
         issued  only after such prior  consultation  with the other party as is
         reasonably practicable in the circumstances.

15.      GENERAL
         -------
15.1     This Agreement  constitutes  the entire  agreement  between the parties
         hereto with respect to the matters dealt with herein and supersedes all
         previous  agreements,  arrangements,   statements,   understandings  or
         transactions  between  the  parties  hereto in  relation to the matters
         hereof and the parties acknowledge that no claim shall arise in respect
         of any agreement so superseded.

15.2     Any variation to this Agreement  shall be binding only if recorded in a
         document signed by all the parties hereto.

15.3     Time shall be of the  essence of this  Agreement  but no failure by any
         party to  exercise,  and no delay on its part in  exercising  any right
         hereunder  will  operate as a waiver  thereof,  nor shall any single or
         partial  exercise  of any  right  under  this  Agreement  (including  a
         settlement with the Vendor)  preclude any other or further  exercise of


                                       20
<PAGE>
         it or the  exercise  of any  right or  prejudice  or  affect  any right
         against any person under the same liability  whether joint,  several or
         otherwise.  The rights and  remedies  provided  in this  Agreement  are
         cumulative and not exclusive of any rights or remedies provided by law.

15.4     The obligations,  liabilities (including without limitation,  breach of
         Warranties) and undertakings of the Vendors shall be joint and several.

15.5     This Agreement  shall be binding upon and ensure for the benefit of the
         successors of the parties but shall not be assignable.

15.6     All provisions of this Agreement,  in so far as the same shall not have
         been  performed  at  Completion,  shall remain in full force and effect
         notwithstanding Completion.

15.7     If any  provision  of this  Agreement  shall be held to be  illegal  or
         unenforceable,  the  enforceability  of the remainder of this Agreement
         shall not be affected.

15.8     Time shall be of the essence as regards any date or period mentioned in
         this  Agreement  and any  date or  period  substituted  for the same by
         agreement of the parties hereto or otherwise.

16.      NOTICES
         -------
16.1     Any  notice,   claim,   demand,   court  process,   document  or  other
         communication   to  be  given   under  this   Agreement   (collectively
         "communication"  in this  Clause 16) shall be in writing in the English
                                   ---------
         language and may be served or given  personally  or sent to the address
         or facsimile numbers (if any) stated after the relevant party's name in
         Schedule 4 or to such other  address as may have been last  notified in
         ----------
         writing  by  such  party  to  the  party   serving  the   communication
         specifically  referring to this Agreement.  All communications shall be
         served by the  following  means and the  addressee  of a  communication
         shall be  deemed  to have  received  the same  within  the time  stated
         adjacent to the relevant means of dispatch:

         Means of dispatch               Time of deemed receipt
         -----------------               ----------------------
         Local mail or courier           24 hours
         Facsimile                       on receipt of a satisfactory  report of
                                         transmission printed out by the sending
                                         machine
         Air courier/Speedpost           3 days
         Airmail                         5 days

         Provided  that in the case of delivery  by hand or by fax which  occurs
         after 6:00 p.m. on a Business Day or a day which is not a Business Day,
         service  thereof  shall be  deemed  to occur at 9:30  a.m.  on the next
         following Business Day.

16.2     A  communication  served in accordance with Clause 16.1 shall be deemed
                                                     -----------


                                       21
<PAGE>
         sufficiently  served  and  in  proving  service  and/or  receipt  of  a
         communication  it shall be sufficient to prove that such  communication
         was left at the  addressee's  address or that the  envelope  containing
         such  communication was properly  addressed and posted or dispatched to
         the  addressee's   address  or  that  the  communication  was  properly
         transmitted by facsimile to the addressee.

16.3     Nothing in this Clause 16 shall  preclude the service of  communication
                         ---------
         or the proof of such service by any mode permitted by law.

17.      COSTS AND STAMP DUTY
         --------------------
17.1     Each party shall bear its own costs and expenses (including legal fees)
         incurred in connection with the preparation, negotiation, execution and
         performance of this Agreement and all documents  incidental or relating
         to Completion.

17.2     All  stamp  duty  (if  any)  payable  in  connection  with the sale and
         purchase  of the Sale  Interests  shall be borne by the Vendors and the
         Purchaser in equal shares.

18.      GOVERNING LAW AND JURISDICTION
         ------------------------------
18.1     This  Agreement  shall be governed by and construed in accordance  with
         the laws of Hong Kong.

18.2     In  relation  to any  legal  action  or  proceedings  to  enforce  this
         Agreement  or  arising  out of or in  connection  with  this  Agreement
         ("proceedings")  each of the parties submits to the jurisdiction of the
         High Court of Hong Kong and waives any objection to proceedings in that
         court on the  grounds of venue or on the grounds  that the  proceedings
         have been brought in any inconvenient forum.

18.3     These  submissions  shall  not  affect  the  right of any party to take
         proceedings  in  any  other   jurisdiction  nor  shall  the  taking  of
         proceedings  in  any  jurisdiction   preclude  any  party  from  taking
         proceedings in any other jurisdiction.

18.4     Each of the Vendors hereby  irrevocably  appoints Mr.Chaong Kai of Flat
         H, 27th Floor,  Tang Kung Mansion,  31 Taikoo Shing Road,  Hong Kong as
         its  process  agent to  receive  on its  behalf  service  of any  writ,
         summons, order, judgment or other notice of legal process in Hong Kong.
         Such  service  shall be deemed  completed  on delivery to such  process
         agent  (whether or not it is forwarded to and received by the Vendors).
         If for  any  reason  such  process  agent  ceases  to be able to act as
         process  agent,  or no longer has an address in Hong Kong,  each of the
         Vendors  irrevocably  agrees to appoint a substitute process agent with
         an address in Hong Kong and to deliver to the  Purchaser  a copy of the
         new process  agent's  acceptance  of that  appointment  within 30 days.
         Nothing herein contained shall affect the right to serve process in any
         other manner permitted by law.





                                       22
<PAGE>
19.      LEGAL REPRESENTATION
         --------------------
         Each party  confirms and  acknowledges  to the other that he/she/it has
         sought  separate  legal  representation  and  is  fully  aware  of  the
         provisions of this Agreement and the transactions  contemplated  herein
         before entering into this Agreement.


20.      COUNTERPARTS
         ------------
         This  Agreement  may be executed in one or more  counter  parts each of
         which  shall be binding on each party by whom or on whose  behalf it is
         so executed,  but which together shall substitute a single  instrument.
         For the avoidance of doubt,  this Agreement shall not be binding on any
         party  hereto  unless  and until it shall have been  executed  by or on
         behalf of all persons expressed to be a party hereto.









































                                       23
<PAGE>
                                   SCHEDULE 1
                                   ----------
                           Particulars of the Company
                           --------------------------

1.  Date of incorporation          :    10 July 2000

2.  Place of incorporation         :    PRC

3.  Registration No.               :    3101062011473

4.  Registered capital             :    RMB20,000,000

5.  Registered Address             :    1486  2 211

5.  Nature                         :    domestic joint venture company with
                                        limited liability

6.  Legal Representative           :

7.  Directors                      :








8.  Financial year end             :    31 December

9.  Auditors                       :

10. Scope of Business              :    Computer hardware, software, components
                                        and services; electronic products,
                                        biotech and health products; foods.





















                                       24
<PAGE>
                                   SCHEDULE 2
                                   ----------

                                   The Vendors
                                   -----------

Name                 Amount of         Amount Sale        Percentage
----                ----------         -----------        ----------
                    registered          Interests      of Sale Interests
                    ----------          ---------      -----------------
                   capital paid       beneficially     to the entire issued
                   ------------       ------------     --------------------
                   up by each of      owned by each    share capital of the
                   -------------      -------------    --------------------
                 the Vendors (RMB)    of the Vendors         Company
                 -----------------    --------------         -------

                    3,070,000           1,600,000              8.0%
                    3,070,000           1,600,000              8.0%
                    3,070,000           1,600,000              8.0%
                    3,070,000           1,600,000              8.0%
                    2,500,000           1,300,000              6.5%
                    2,500,000           1,300,000              6.5%
Other shareholder   2,720,000              N/A                 N/A
of the Company   ------------------------------------------------------------


Total:             20,000,000           9,000,000               45%





























                                       25
<PAGE>
                                   SCHEDULE 3
                                   ----------
                                   Warranties
                                   ----------
1.       INTERPRETATION
         --------------
(A)      In this schedule where the context admits:

         "Accounts" means the consolidated balance sheet of the Group made up as
         at the Balance Sheet Date and the consolidated profit and loss accounts
         of the Company and its  subsidiaries  for the year ended on the Balance
         Sheet Date, true copies of which are attached hereto marked "Appendix";

         "Balance Sheet Date" means 31 December 2002;

         "Connected  Persons"  shall have the  meaning  ascribed  thereto in the
         Listing Rules;

         "Intellectual Property" means patents, trademarks, service marks, trade
         names,  registered  designs,  designs,  copyrights  and other  forms of
         intellectual  or  industrial  property (in each case in any part of the
         world and whether or not  registered  or  registrable  and for the full
         period thereof and all extensions and renewals thereof and applications
         for  registration  of or otherwise in connection  with the  foregoing),
         know-how,  inventions,  formulae,  confidential or secret processes and
         information,  computer  programs and software,  and any other protected
         rights and assets,  and any  licences  and  permissions  in  connection
         therewith;


(B)      All  references in this Schedule 3 to the Company,  other than those in
                                 ----------
         paragraphs  3(B),  4(A) and  4(C)  shall  be read  and  construed  as a
         reference to the Company and each of its subsidiaries.


2.       INFORMATION
         -----------
(A)      Disclosures
         -----------
         The facts and  information  set out in the recitals  and, the Schedules
         and all documents  attached are true and all information which has been
         provided in writing to the Purchaser or its representatives or advisers
         by the  Vendors or by any  Director,  officer or other  official of the
         Company by its professional advisers or other agents was when given and
         is now true and accurate in all material respects.  There is no fact or
         matter which has not been disclosed which renders any such  information
         untrue,  inaccurate  or  misleading  or the  disclosure  of which might
         reasonably  affect the  willingness of a willing  purchaser to purchase
         the Sale Interests in accordance with the provisions of this Agreement.

(B)      Assessment of prospects
         -----------------------
         The information  disclosed to the Purchaser or its  representatives  or
         professional  advisers,  by the Vendors and the directors,  officers or


                                       26
<PAGE>
         other  officials  of  the  Company  regarding  its  current  status  or
         prospects   comprises  all  information   which  is  material  for  the
         reasonable  assessment of the  financial  and trading  prospects of the
         Company or the Group as a whole.

3.       COMPLIANCE AND ABILITY TO SELL
         ------------------------------
(A)      Constitution of each member of the Group
         ----------------------------------------
         The copy of the  memorandum  and articles of association of the Company
         which have been  provided to the Purchaser are true and complete in all
         respects  and have  embodied in them or annexed to them a copy of every
         such resolution and agreement required by law to be annexed thereto and
         the Company has at all times carried on its business and affairs in all
         respects in accordance  with its respective  memorandum and articles of
         association and all such resolutions and agreements.

(B)      Statutory compliance
         --------------------
         The Company is a domestic joint venture company with limited  liability
         duly established and validly existing under the laws of the PRC and has
         the corporate powers and authorises to carry on the business  presently
         carried on by it and to own and hold the assets used therewith.

         Each  member of the Group are duly  established  and  validly  existing
         under the laws of the place of its  incorporation and has the corporate
         powers and authorises to carry on the business  presently carried on by
         it and to own and hold the assets used therewith.

         Each  member of the  Group  has  complied  with the  provisions  of all
         applicable  laws,  regulations  (and all orders  notices and directions
         made  thereunder) and all applicable  codes or practices.  All returns,
         particulars,  resolutions and other documents required to be filed with
         or  delivered to the  registrar of companies or to any other  authority
         whatsoever by the relevant  member of the Group have been correctly and
         properly prepared and so filed or delivered.

(C)      Power to sell
         -------------
         Each of the  Vendors  has full  power to enter  into and  perform  this
         Agreement and the Tax Indemnity respectively and this Agreement and the
         Tax Indemnity will constitute  binding  obligations on each such party,
         enforceable in accordance with their terms.

4.       CAPITAL STRUCTURE
         -----------------
(A)      Capital of the Company
         ----------------------
         The Sale Interests together constitute 45% of the registered capital of
         the  Company  as at the date of this  Agreement  and are fully paid up.
         There  is  no  Encumbrance  or  other  form  of  agreement   (including
         conversion  rights and rights of pre-emption) on, over or affecting the
         Sale  Interests  and there is no  agreement  or  commitment  to give or
         create any of the  foregoing,  and no claim has been made by any person



                                       27
<PAGE>
         to be  entitled  to any of the  foregoing,  and no person has the right
         (whether  exercisable  now or in the future and whether  contingent  or
         not) to call for any portion of the capital of the Company under any of
         the foregoing.

(B)      Ownership
         ---------
         All the Sale Interests are solely legally and beneficially owned by and
         registered  in the names of the Vendors in the  proportions  set out in
         column 3 of Schedule 2 and are free from any  Encumbrance and there are
                     ----------
         no  arrangements in force or claimed  entitling or allegedly  entitling
         any person to any Encumbrance.

(C)      Connected business
         ------------------
         Save as disclosed, the Company:

         (i)  does not have any subsidiary and there is no company,  partnership
              or  unincorporated  business or  association  in which the Company
              owns or controls (whether  directly or indirectly  through another
              company) any interests therein;

         (ii) has not been and has not  agreed  to  become a  subsidiary  of any
              other  company or under the control of any group of  companies  or
              consortium;

         (iii)has not at any time been and has not  agreed to become a member of
              any partnership, joint venture, consortium or other unincorporated
              business or association; and

         (iv) has no  branch,  place of  business,  permanent  establishment  or
              substantial assets outside the PRC.

5.       ACCOUNTS
         --------
(A)      General
         -------
         The Accounts:

         (i)  were prepared in accordance with the  requirements of all relevant
              laws,  statutes,  with good  accounting  principles  and practices
              generally  accepted  at the date  hereof in the PRC for  companies
              carrying on a similar  business to that of the Group,  comply with
              all  relevant  statements  of  standard  accounting  practice  and
              accounting  guidelines  issued by the  relevant  authorities,  are
              prepared on a basis consistent with preceding  accounting  periods
              of the Group and with the  books of  account  of the Group and are
              true and accurate in all material respects;

         (ii) disclose a true and fair view of the assets and liabilities of the
              Group  at the  Balance  Sheet  Date  and of its  profits  for  the
              financial year ended on such date;




                                       28
<PAGE>
         (iii)contain  full  provision  or reserve for bad and  doubtful  debts,
              burdensome  contracts or other  obligations,  obsolescent  or slow
              moving  stocks  and  for  depreciation  on  fixed  assets,   which
              provision or reserve was when made and is now adequate;

         (iv) contain a note of all capital  commitments (if any) of the Company
              and its  subsidiaries  at the Balance  Sheet Date,  which note was
              when made and is now adequate, fair and not misleading; and

         (v)  contain  full  provision  or  reserves  (as  appropriate)  for all
              Taxation.

(B)      Liabilities
         -----------
         At the Balance Sheet Date, the Group had no liabilities  known,  actual
         or  contingent  (including  contingent  liabilities  to  customers  and
         contingent liabilities for Taxation) which were not disclosed, noted or
         provided for in the Accounts.

(C)      Stock valuation
         ---------------
         The  stock-in-trade  shown in the Accounts has been valued at the lower
         of cost and net realisable value and includes no redundant, obsolete or
         unsaleable  items and no items  which are the  subject  of any  dispute
         (other than minor  disputes in the ordinary  course of business) with a
         supplier or customer.  The basis of valuation of the stock-in-trade has
         remained in all material respects  consistent with that adopted for the
         purpose of the Group's  consolidated  accounts at the beginning and end
         of each of the accounting periods of the Group since its incorporation.

(D)      Plant and machinery etc.
         ------------------------
         All the fixed and loose  plant  and  machinery,  equipment,  furniture,
         fittings and vehicles  used by the Group at the Balance  Sheet Date are
         reflected in the  Accounts,  were at the Balance Sheet Date and (except
         for such items as have been disposed of or realised by the Group in the
         ordinary  course  of  business)  remain  in  the  absolute   beneficial
         ownership of the Group and are free from any Encumbrance,  hire or hire
         purchase  agreement or leasing  agreement  or agreement  for payment on
         deferred terms and (apart from  depreciation  in the ordinary course of
         business)  their value is not less than at the  Balance  Sheet Date and
         none has been  acquired  for any  consideration  in  excess  of its net
         realisable  value at the date of such  acquisition or otherwise than by
         way of a bargain at arm's length.

(E)      Profits
         -------
         The profits of the Group for the two years  ended on the Balance  Sheet
         Date as shown by the Accounts and by the audited  accounts of the Group
         for  previous  periods  delivered  to the  Purchaser  and the  trend of
         profits  shown by them have not  (except  as  disclosed  in them)  been
         affected  to  a  material  extent  by   inconsistencies  of  accounting
         practices,  by the  inclusion  of  non-recurring  items  of  income  or
         expenditure,  by  transactions  entered into  otherwise  than on normal
         commercial terms or by any other factors rendering such profits for all
         or any of such periods exceptionally high or low.

                                       29
<PAGE>
(F)      Depreciation
         ------------
         Depreciation  of the fixed  assets of the Group has been made at a rate
         sufficient to write down the value of such assets to nil not later than
         the end of their useful working lives and no fixed asset has attributed
         to it a value exceeding the current market value thereof at the Balance
         Sheet Date.

(G)      Books of account
         ----------------
         All accounts, books, ledgers,  financial and other necessary records of
         whatsoever kind of the Group  (including all invoices and other records
         required for tax):

         (i)  have been fully,  properly and accurately  maintained,  are in the
              possession  of the relevant  company and contain true and accurate
              records of all matters  including  those required to be entered in
              them by applicable  laws and no notice or  allegation  that any of
              the same is incorrect or should be rectified has been received;

         (ii) do  not  contain  or  reflect   any   material   inaccuracies   or
              discrepancies;

         (iii)give and reflect a true and fair view of the  matters  which ought
              to appear in them and in particular of the financial,  contractual
              and trading  position of the relevant company and of its plant and
              machinery,  fixed and current assets and  liabilities  (actual and
              contingent), debtors and creditors and stock-in trade; and

         (iv) contain accurate information in accordance with generally accepted
              accounting  principles in the PRC relating to all  transactions to
              which any member of the Group has been a party and the Accounts do
              not overstate  the value of any asset or understate  any liability
              of the Group at the Balance Sheet Date.

6.       POST BALANCE SHEET DATE EVENTS
         ------------------------------
         Since the Balance Sheet Date, each member of the Group:

(A)      Business
         --------
         has  carried  on its  business  in the  ordinary  and usual  course and
         without entering into any transaction, assuming any liability or making
         any  payment  not  provided  for in the  Accounts  which  is not in the
         ordinary course of business and without any  interruption or alteration
         in the  nature,  scope or manner of its  business  and nothing has been
         done which would be likely to prejudice  the interests of the Purchaser
         as a prospective purchaser of the Sale Interests;

(B)      Financial position and prospects
         --------------------------------
         has not  experienced  any  deterioration  in its  financial  or trading
         position or  prospects or turnover or suffered  any  diminution  of its
         assets  by the  wrongful  act of any  person  and the  value of its net



                                       30
<PAGE>
         assets is not less than the value of its net  assets as at the  Balance
         Sheet Date as shown by the  Accounts  and each  member of the Group has
         not had its business,  profitability or prospects adversely affected by
         the loss of any  important  customer  or  source  of  supply  or by any
         abnormal factor not affecting  similar  businesses to a like extent and
         there are no facts which are likely to give rise to any such effects;

(C)      Assets and liabilities
         ----------------------
         has not  acquired or disposed of or agreed to acquire or dispose of any
         assets  or  assumed  or  incurred  or  agreed  to  assume  or incur any
         liabilities  (actual  or  contingent)  otherwise  than in the  ordinary
         course of business;

(D)      Distributions and loan repayments
         ---------------------------------
         has  not  declared,   made  or  paid  any  dividend,   bonus  or  other
         distribution of capital or income (whether a qualifying distribution or
         otherwise) and (excluding  fluctuations in overdrawn  current  accounts
         with  bankers)  no loan or loan  capital of any member of the Group has
         been  repaid in whole or in part or has  become  due or is liable to be
         declared  due by reason of either  service of a notice or lapse of time
         or otherwise howsoever;

(E)      Liability to tax
         ----------------
         has not carried out or entered into any  transaction and no other event
         has occurred in  consequence  of which  (whether alone or together with
         any one or more  transactions or events occurring  before,  on or after
         the date of this  Agreement) any liability of the Group to Taxation has
         arisen or will arise (or would have  arisen or would or might arise but
         for the  availability  of any relief,  allowance,  deduction or credit)
         other than profits tax on the actual  income (not  chargeable  gains or
         deemed  income)  of the  relevant  member  of the  Group  arising  from
         transactions entered into in the ordinary course of business;

(F)      Employees
         ---------
         has not made  any  change  to the  remuneration,  terms of  employment,
         emoluments  or pension  benefits  of any  present  or former  director,
         officer  or  employee  of the Group who on the  Balance  Sheet Date was
         entitled to  remuneration  in excess of US$10,000 (or its equivalent in
         any other  currency)  per annum and has not  appointed  or employed any
         additional director, officer or employee entitled as aforesaid;

(G)      Debts
         -----
         has not  waived or  released  any debts in whole or in part and has not
         written off debts in an amount  exceeding  US$10,000 (or its equivalent
         in any other currency) in the aggregate;

(H)      Contracts
         ---------
         has not entered into  contracts  involving  capital  expenditure  in an
         amount exceeding in the  aggregate  US$10,000 (or its equivalent in any
         other currency);

                                       31
<PAGE>
(I)      Resolutions
         -----------
         has not passed any resolution whether in general meeting or otherwise;

(J)      Third party rights
         ------------------
         has not become  aware that any event has occurred  which would  entitle
         any third party to terminate any contract or any benefit  enjoyed by it
         or call in any money before the normal due date therefor;

(K)      Stock-in-trade
         --------------
         has not purchased stocks in  quantities or at prices materially greater
         than was its practice prior to the Balance Sheet Date;

(L)      Creditors
         ---------
         has paid its creditors  within the times agreed with such creditors and
         does not have any debts  outstanding  which are  overdue for payment by
         more than four weeks;

(M)      Borrowings
         ----------
         has not  borrowed or raised any money or taken any  financial  facility
         (except  such  short  term  borrowings  from  bankers as are within the
         amount of any  overdraft  facility  which was available to the relevant
         member of the Group at the  Balance  Sheet  Date) or since the  Balance
         Sheet Date  renegotiated  or  received  any notice from any banker that
         such banker wishes to renegotiate any overdraft  facility  available to
         the Group at the Balance Sheet Date;

7.       TRANSACTIONS WITH VENDORS, DIRECTORS AND CONNECTED PERSONS
         ----------------------------------------------------------
(A)      Loans and debts
         ---------------
         There is not outstanding:

         (i)  any indebtedness or other liability  (actual or contingent)  owing
              by the Company to any of the Vendors or any director or supervisor
              of the  Company  or any of its  Connected  Persons or owing to the
              Company by any of the Vendors or any director or supervisor of the
              Company or any of its respective Connected Persons; or

         (ii) any guarantee or security for any such  indebtedness  or liability
              as aforesaid.

(B)      Contracts and arrangements
         --------------------------
         (i)  There  is not  now  outstanding,  any  agreement,  arrangement  or
              understanding  (whether  legally  enforceable or not) to which the
              Company  is a party or has an  interest  and in  which  any of the
              Vendors,  or any director or  supervisor  of the Company or any of
              its   Connected   Persons  is  interested   whether   directly  or
              indirectly.



                                       32
<PAGE>
         (ii) The  Company is not a party to nor has its  profits  or  financial
              position during the last 3 years been affected by any agreement or
              arrangement which is not entirely of an arm's length nature.

(C)      Competitive interests
         ---------------------
         None of the Vendors nor any director or  supervisor  of the Company nor
         any of its Connected Persons intends to acquire, either individually or
         collectively,  or with any other  person or  persons,  has any  estate,
         right or interest,  directly or indirectly,  in any business other than
         that now  carried on by the Group which is or is likely to be or become
         competitive with the business of any member of the Group.

(D)      Intellectual Property
         ---------------------
         None of the Vendors nor any director or  supervisor  of the Company nor
         any of its Connected Persons either individually,  collectively or with
         any other person or persons are interested in any way whatsoever in any
         Intellectual Property used and/or not wholly owned by the Group.

(E)      Benefits
         --------
         None of the Vendors nor any director or  supervisor  of the Company nor
         any of its Connected Persons, is entitled to or has claimed entitlement
         to any remuneration, compensation or other benefit from the Group.

8.       FINANCE
         -------
(A)      Borrowings
         ----------
         (i)  The amount  borrowed  by the  Company  from its  bankers  does not
              exceed the overdraft facility agreed with such banker.

         (ii) The total amount  borrowed by the Company from any source does not
              exceed any  limitation on its borrowing  contained in its articles
              of  association  or in any  debenture  or loan stock trust deed or
              instrument or any other document executed by it.

         (iii)No member of the Group has any  outstanding  loan  capital or loan
              stock.

         (iv) Particulars of all money borrowed by each member of the Group have
              been disclosed.

(B)      Debts owed to each member of the Group
         --------------------------------------
         (i)      No member of the Group owns the  benefit of any debt  (whether
                  present or future)  other than debts which have  accrued to it
                  in the ordinary course of business.

         (ii)     All debts owed to the Company are  collectable in the ordinary
                  course of business and each such debt will realise in full its
                  face value within three months of its due date for payment.




                                       33
<PAGE>
         (iii)    The debts owing to the Company shown in the Accounts  (subject
                  to any  provision  for  bad  and  doubtful  debts  made in the
                  Accounts) were paid in full on their due dates or, if any such
                  debts are not yet due,  each such debt is not now  regarded by
                  the Company or by the Vendors as  irrecoverable in whole or in
                  part.

(C)      Bank accounts
         -------------
         Particulars of the balances on all bank accounts of the Company as at a
         date not more than seven days  before the date of this  Agreement  have
         been  disclosed and the Company has no other bank  accounts;  since the
         date of such  particulars  there have been no payments  out of any such
         bank accounts except for routine payments and the aggregate  balance on
         all  such  bank  accounts  is  not  substantially  different  from  the
         aggregate balance shown in such particulars.

(D)      Working capital requirements
         ----------------------------
         Having regard to the existing banking and other facilities, the Company
         has sufficient  working  capital for the purpose of continuing to carry
         on its  business  in its  present  form  and at its  present  level  of
         turnover for the foreseeable  future and for the purposes of executing,
         carrying out and fulfilling in accordance  with their terms all orders,
         projects  and  contractual  obligations  which have been placed with or
         undertaken by the Company.

(E)      Financial facilities
         --------------------
         In  relation  to any  Encumbrance  to which  any  asset of the Group is
         subject and in relation to debentures,  acceptance  lines,  overdrafts,
         loans or other  financial  facilities  outstanding  or available to the
         Group:

         (i)  the  Vendors  have  disclosed  full  details  of them and true and
              correct copies of all documents relating to them; and

         (ii) none of the Vendors nor any member of the Group has done  anything
              whereby the  continuance  of any such  encumbrance  or facility in
              full force and effect might be affected or prejudiced.

(F)      Options, guarantees etc.
         -----------------------
         The  Company  is not  responsible  for the  indebtedness  of any  other
         person,  and in particular  but without  prejudice to the generality of
         the  foregoing is not a party to any option or  pre-emption  right or a
         party to any guarantee or suretyship or any other obligation  (whatever
         called) to pay,  purchase or provide  funds  (whether by the advance of
         money,  the purchase of or subscription  for shares or other securities
         or the purchase of assets or services or otherwise) for the payment of,
         or as an indemnity  against the  consequence  of default in the payment
         of, any indebtedness of any other person.





                                       34
<PAGE>
9.       TAXATION
         --------
(A)      General
         -------
         (i)  Notices and returns
              -------------------
              All  notices,  returns  and  computations  of the  Company for the
              purposes of Taxation  have been made  punctually on a proper basis
              and are  correct  and none of them is,  or is  likely  to be,  the
              subject of any dispute with any fiscal authority.

         (ii) Payment of tax due
              ------------------
              All Taxation that the Company is liable to pay prior to Completion
              has been or will be so paid prior to Completion.

         (iii)Penalties or interest on tax
              ----------------------------
              No  member  of the  Group  has paid or  become  liable  to pay any
              penalty,  fine or interest  charged by virtue of the provisions of
              any Taxation statute, law, rule or regulation.

         (iv) Compliance with tax collection obligations
              ------------------------------------------
              (a)   All tax deductible  and payable under any Taxation  statute,
                    law,  rule or  regulation  has,  so far as is required to be
                    deducted, been deducted from all payments made or treated as
                    made by the  Company  and all  amounts due to be paid to all
                    relevant  Taxation  authorities  prior  to the  date of this
                    Agreement have been so paid.

              (b)   All  payments  by the  Company to any person  which ought to
                    have been made under  deduction of tax have been so made and
                    the  relevant  company  (if  required  by law to do so)  has
                    accounted to the relevant  fiscal  authority  for the tax so
                    deducted.

              (c)   Proper  records have been  maintained in respect of all such
                    deductions and payments and all applicable  regulations have
                    been complied with.

         (v)  No back duty investigation
              --------------------------
              The  Company  has not in the last 3 years  been the  subject  of a
              discovery,  audit or investigation  by any Taxation  authority and
              there are no facts which are likely to cause a discovery, audit or
              investigation to be made.

         (vi) Tax provision
              -------------
              Full  provision  or reserve has been made in the  Accounts for all
              Taxation  assessed  or liable to be assessed on the Company or for
              which it is  accountable  in respect  of income,  profits or gains
              earned,  accrued or received on or before the Balance  Sheet Date,



                                       35
<PAGE>
              including  distributions made down to such date or provided for in
              the Accounts,  and proper  provision has been made in the Accounts
              for deferred taxation in accordance with internationally  accepted
              accounting standards.

         (vii)Anti-avoidance provisions
              -------------------------
              The Company has not entered  into or been a party to any scheme or
              arrangement  of  which  the  main  purpose,  or one  of  the  main
              purposes,  was the  avoidance of or the  reduction in liability to
              taxation.

         (viii)Calculation of tax liability
               ----------------------------
              The Company has sufficient records to permit accurate  calculation
              of the tax  liability  or relief which would arise upon a disposal
              or realisation on completion of each asset owned by the Company at
              the  Balance  Sheet  Date  or  acquired  by  the  Company   before
              Completion.

         (ix) Claims and disclaimers
              ----------------------
              The  Company has duly  submitted  all claims and  disclaimers  the
              making of which has been assumed for the purposes of the Accounts.

         (x)  Sales at under-value or over-value
              ----------------------------------
              The Company has not been a party to any sale or other  disposal of
              an asset either at an under-value or an over-value.

10.      THE PROPERTIES
         --------------
         No member of the Group has owned any real properties.

11.      OTHER ASSETS
         ------------
(A)      Assets and charges
         ------------------
         (i)  All assets of the Company  which are  included in the  Accounts or
              have  otherwise  been  represented  as being the  property  of the
              Company or which were at the  Balance  Sheet Date used or held for
              the purposes of its business were at the Balance Sheet Date in the
              absolute  beneficial  ownership  of the  Company  and  (except for
              assets  disposed of or  realised  by the  Company in the  ordinary
              course of business) the Company is the absolute  beneficial  owner
              of and has good,  marketable title to all such assets and all such
              assets are in the  possession  and  control of the Company and are
              sited within the PRC.

         (ii) All  assets  which have been  acquired  by the  Company  since the
              Balance Sheet Date are (except as  aforesaid)  now in the absolute
              beneficial  ownership  of the  Company and in the  possession  and
              control of the Company and none is the subject of any  Encumbrance
              (excepting only liens arising in the normal course of trading) nor
              has the  Company  created or agreed to create any  encumbrance  or


                                       36
<PAGE>
              entered into any factoring arrangement, hire-purchase, conditional
              sale or credit sale agreement  which has not been disclosed and in
              respect  of any such  encumbrance,  arrangement  or  agreement  so
              disclosed  there  has  been  no  default  by  the  Company  in the
              performance or observance of any of the provisions thereof.

(B)      Condition of assets
         -------------------
         The plant and machinery  (including  fixed plant and machinery) and all
         vehicles  and  office  and  other  equipment  and  assets  shown in the
         Accounts or acquired  since the Balance Sheet Date or otherwise used in
         connection  with  the  business  of the  Company  which  have  not been
         disposed of in the ordinary course of business:

         (i)  do not contravene any requirement or restriction  having the force
              of law;

         (ii) performs in accordance with its manufacturers  specifications  and
              are in good repair and  condition  and are  regularly  maintained,
              fully serviceable and in good working order;

         (iii)are each  capable of doing the work for which  they were  designed
              and/or purchased and will each be so capable (subject to fair wear
              and tear)  during  the period of time over which the value of such
              assets will be written down to nil in the accounts of the Company;

         (iv) are not surplus to the Company's requirements; and

         (v)  are not dangerous, inefficient, out-of-date, unsuitable or in need
              of renewal or  replacement  and the vehicles  owned by the Company
              are  road-worthy and duly licensed for the purposes for which they
              are used.

         (vi) Maintenance  contracts  are in full force and effect in respect of
              the  computer  and all other  assets  owned or used by the Company
              which it is normal or  prudent  to have  maintained  by outside or
              specialist contractors.

(C)      Condition of stock-in-trade
         ---------------------------
         The  Company's  stock-in-trade  is  of  merchantable  quality  and  not
         obsolete,  defective  or out of fashion and is capable of being sold by
         the Company in the ordinary  course of business in accordance  with its
         current price list without rebate or allowance to retail purchasers.

(D)      Insurance
         ---------
         (i)  All the assets of the  Company  which are of an  insurable  nature
              have at all  material  times been and are at the date hereof fully
              insured to their full  replacement  value  against  fire and other
              risks normally  insured  against by companies  carrying on similar
              businesses or owning  property of a similar nature to those of the
              Company and the Company has at all  material  times been and is at
              the date of this Agreement  adequately  covered  against all legal
              liability and risks  normally  insured  against by such  companies


                                       37
<PAGE>
              (including  liability to  employees or third  parties for personal
              injury or loss or damage to property,  product  liability and loss
              of profit).

         (ii) Particulars  of all  policies of  insurance  of the Company now in
              force  have  been  disclosed  and  such  particulars  are true and
              correct and all premiums due on such  policies have been duly paid
              and all such  policies  are  valid and in force and (so far as the
              Company  and the  Vendors  are aware)  there are no  circumstances
              which  might  lead to any  liability  under such  insurance  being
              avoided by the insurers or the premiums being  increased and there
              is no claim  outstanding under such policy nor are the Company and
              the Vendors  aware of any  circumstances  likely to give rise to a
              claim or cause an  application  for  renewal of such  policy to be
              refused.

         (iii)No insurance  company has refused to insure the assets or risks of
              the  Company  or has  imposed  conditions  (by  way  of  increased
              premiums or otherwise) for such insurance.

(E)      Retention of title
         ------------------
         The Company has not acquired or agreed to acquire any material asset on
         terms that title to such asset does not pass to the Company  until full
         payment is made.

(F)      Equipment leases etc
         --------------------
         Rentals  payable by the Company  under any  leasing,  hire-purchase  or
         other  similar  agreement  to which it is a party have not been and are
         not likely to be increased and all such rentals are fully deductible by
         the Company for tax purposes.

12.      OPERATION
         ---------
(A)      Licences, permits, consents and authorities
         -------------------------------------------
         The Company has all necessary licences (including  statutory licences),
         permits,  consents and authorities  (public and private) for the proper
         and  effective  carrying on of its  business and in the manner in which
         such  business  is now  carried  on and  all  such  licences,  permits,
         consents  and  authorities  are  valid and  subsisting  and none of the
         Vendors  knows  of any  reason  why any of them  should  be  suspended,
         cancelled or revoked  whether in connection with the acquisition of the
         Sale  Interests by the Purchaser or otherwise and so far as the Vendors
         are aware  there are no  factors  that might in any way  prejudice  the
         continuance or renewal of any of those licences,  permits,  consents or
         authorities and the Company is not restricted by contract from carrying
         on any activity in any part of the world.

(B)      Litigation and arbitration
         --------------------------
         The Company is not engaged in (nor are any of its  director in relation
         to the  affairs  of the  Company  engaged  in)  any  legal  proceedings
         (including litigation, administrative, arbitration and prosecution) and


                                       38
<PAGE>
         no such proceedings are pending or threatened,  nor are there any facts
         likely  to give  rise to such  proceedings  known  or  which  would  on
         reasonable enquiry be known to the Company or its directors.

(C)      Delegation of powers
         --------------------
         There are in force no powers of  attorney  given by the Company nor any
         other authority  (express,  implied or ostensible) given by the Company
         to any person to enter into any contract or  commitment  or do anything
         on its  behalf  other than any  authority  of  employees  to enter into
         routine trading contracts in the normal course of their duties.

(D)      Confidentiality
         ---------------
         No  disclosure  has been made of any of the  confidential  information,
         including  financial or trade secrets,  of any member of the Group save
         in the ordinary  course of business and the Company has taken  adequate
         steps to preserve the confidential nature of all such information.

(E)      Business names
         --------------
         The  Company  does  not use on its  letterhead,  books or  vehicles  or
         otherwise carry on its business under any name other than its corporate
         name.

(F)      Records of the Group
         --------------------
         (i)  All the accounting records,  statutory and other books and records
              (including  the  register of members),  and other deeds  documents
              records,  data and  information of the Company and its pension and
              benefit  schemes  (if any) are,  and have since its  incorporation
              been,  kept up to  date,  properly,  accurately  and  consistently
              completed  and are a complete and accurate  record of all acts and
              transactions of the Company and of all matters  required by law or
              best business practice to be recorded or registered  therein;  the
              Company  has  not   received  any   application   or  request  for
              rectification  of any such  registers are in the possession of the
              Company.

         (ii) The Company has no records, systems, controls, data or information
              recorded,  stored,  maintained,  operated or  otherwise  wholly or
              partly   dependent  on  or  held  by  any  means   (including  any
              electronic,    mechanical   or   photographic    process   whether
              computerised or not) which  (including all means of access thereto
              and  therefrom)  are not under its exclusive  ownership and direct
              control.

(G)      Winding up, insolvency and receivership
         ---------------------- ----------------
         (i)  No order has been made or petition  presented or resolution passed
              for the winding up of the Company and no  distress,  execution  or
              other process has been levied on any of its assets.

         (ii) The Company is not  insolvent  nor unable to pay its debts as they
              fall due.


                                       39
<PAGE>
         (iii)No  administrative  or other  receiver  has been  appointed by any
              person  of the  business  or  assets  of the  Company  or any part
              thereof, nor has any order been made or petition presented for the
              appointment of an administrator in respect thereof.

(iv)     There has been  no delay by the Company in the  payment of any material
         obligation due for payment.

(H)      Guarantees, warranties and sureties
         -----------------------------------
         (i)  The  Company has not given any  guarantee  or warranty or made any
              representation  in respect of  articles  or trading  stock sold or
              contracted  to be sold or service  provided  or  contracted  to be
              provided by it save for any warranty or  guarantee  implied by law
              and  (save  as  aforesaid)  has  not  accepted  any  liability  or
              obligation to service, maintain, repair, take back or otherwise do
              or not do  anything in respect of any  articles,  stock or service
              that  would  apply  after  any  such  article  or  stock  has been
              delivered by it or service performed by it, as the case may be.

         (ii) No person  other than the  Company has given any  guarantee  of or
              security for any overdraft,  loan or loan facility  granted to the
              Company.

13.      CONTRACTS
         ---------
(A)      Onerous contracts
         -----------------
         There are no long term contracts (i.e.  contracts not terminable by the
         Company  without  penalty on six months'  notice or less) or onerous or
         unusual or abnormal contracts (i.e.  contracts for capital  commitments
         or contracts  differing from those  necessitated by the ordinary course
         of business)  binding  upon the Company,  nor is the Company a party to
         any contract which contains any onerous or other provision material for
         disclosure  to an  intending  purchaser  of the Sale  Interests  and no
         expenses or liabilities of a material  amount have been incurred before
         the  date of this  Agreement  by the  Company  otherwise  than  for the
         purpose of the Company's business.

(B)      Material contracts
         ------------------
         Copies of all  material  contracts to which the Company is a party have
         been  disclosed or will be disclosed  to the  Purchaser  during the due
         diligence to be conducted  by the  Purchaser  pursuant to Clause 3.3 of
                                                                   ----------
         the Agreement and, save as those disclosed,  the Company is not a party
         to or subject to any agreement,  transaction,  obligation,  commitment,
         understanding, arrangement or liability which:

         (i)  is incapable of complete  performance in accordance with its terms
              within six months  after the date on which it was entered  into or
              undertaken;

         (ii) is known by any of the Vendors to be likely to be  unprofitable or
              result in a loss to the Company on completion of performance;


                                       40
<PAGE>
         (iii)cannot readily be fulfilled or performed by the relevant member of
              the Group on time and  without  undue or  unusual  expenditure  of
              money and effort;

         (iv) involves  or  is  likely  to  involve  obligations,  restrictions,
              expenditure  or  receipts of an  unusual,  onerous or  exceptional
              nature and not in the ordinary course of business;

         (v)  requires  an  aggregate  consideration  payable by the  Company in
              excess of US$10,000 (or its equivalent in any other currency);

         (vi) is a contract for services (other than contracts for the supply of
              electricity or normal office services);

         (viii)requires  any  member  of  the  Company  to  pay  any commission,
              finder's fee, royalty or the like; or

         (ix) is in any way otherwise  than in the ordinary and proper course of
              the Company's business.

(C)      Performance of contracts
         ------------------------
         (i)  The terms of all  contracts of the Company have been complied with
              by the Company and by the other  parties to the  contracts  in all
              respects and there are no  circumstances  likely to give rise to a
              default  by the  Company  or by the other  parties  under any such
              contract.

         (ii) All the contracts of the Company  except those between the Company
              and its  employees  are  assignable  by the  Company  without  the
              consent of any other party.

         (iii)There are no outstanding claims, separately or in the aggregate of
              material amounts,  against the Company on the part of customers or
              other  parties  in  respect  of  defects  in  quality or delays in
              delivery or completion of contracts or  deficiencies  of design or
              performance  or  otherwise  relating  to  liability  for  goods or
              services  sold or  supplied  by the Company and no such claims are
              threatened  or  anticipated  and  there  is no  matter  or fact in
              existence  in  relation  to goods or  services  currently  sold or
              supplied by the Company which might give rise to the same.

         (iv) The Company has no knowledge of the  invalidity  of or grounds for
              rescission,  avoidance or  repudiation  of any  agreement or other
              transaction  to which it is a party and has  received no notice of
              any  intention  to  terminate,  repudiate  or  disclaim  any  such
              agreement or other transaction.

(D)      Restrictive contracts
         ---------------------
         There are no agreements in force restricting the freedom of the Company
         to provide  and take goods and  services  by such means and from and to
         such persons as it may from time to time think fit.




                                       41
<PAGE>
(E)      Agency and distributorship agreements
         -------------------------------------
         Save as disclosed,  the Company is not a party to any subsisting agency
         or distributorship agreement.

14.      EMPLOYEES
         ---------
(A)      There is no current  contract of service between the Company and any of
         its  directors,  officers or employees  which is not  terminable by the
         Company  without  compensation  by three months notice or less given at
         any time or payment of salary for such period in lieu of notice.

(B)      Save as regards any scheme  which the Company is or may become  obliged
         to join or subscribe under any applicable law or regulations,  there is
         no scheme or fund in respect of retirement,  pension, health insurance,
         housing, bonus, incentive, share option or other benefits to directors,
         officers, staff, employees or any other party to which the Company is a
         party or in respect of which there is any  obligations or  liabilities,
         present or future, actual or contingent.

(C)      The Company is not subject to or involved in any industrial  dispute or
         action whether official or unofficial.

15.      INTELLECTUAL PROPERTY
         ---------------------
(A)      Ownership and rights
         --------------------
         (i)  General
              -------
              Full particulars of all  Intellectual  Property owned or otherwise
              exploited  or used by the Company in any part of the world will be
              disclosed  to  the  Purchaser  during  the  due  diligence  to  be
              conducted by the Purchaser. All Intellectual Property exploited or
              used by the Company is in the absolute beneficial ownership of the
              Company or any  member of the Group is a 1icensee  of the same and
              the Company does not own, use,  exploit or have any other interest
              in any  Intellectual  Property  which has not been  disclosed.  In
              particular  but  without   prejudice  to  the  generality  of  the
              foregoing,  none of the Intellectual Property disclosed is jointly
              owned by the Company and a third party.

         (ii) Enforcement
              -----------
              All  applications  for any  Intellectual  Property owned,  used or
              otherwise   exploited   by  the  Company   are  being   diligently
              prosecuted;  patents, registered trademarks and registered designs
              and other  similar  registered or recorded  Intellectual  Property
              rights owned, used or otherwise exploited by the Company have been
              maintained;  nothing has been done to diminish or otherwise affect
              the  reputation of  unregistered  trademarks,  trade names,  brand
              names or get up owned, used or otherwise exploited by the Company;
              no copying or reproduction of the copyright  material owned,  used
              or  otherwise   exploited  by  the  Company  has  been   permitted
              (expressly or by implication); the technical information and other
              knowhow owned, used or otherwise exploited by the Company has been
              kept   confidential;   and  (where  applicable)  all  application,
              registration  and renewal  fees  necessary  to procure,  register,
                                       42
<PAGE>
              record or maintain the Intellectual Property have been paid.

         (iii)Intellectual Property Agreements
              --------------------------------
              All  agreements in relation to any  Intellectual  Property used or
              owned  by the  Company  have  been  disclosed  and are  valid  and
              binding; none has been the subject of any breach or default by any
              party  thereto or of any event  which with notice or lapse of time
              or both would  constitute a default;  nor are there any  disputes,
              claims  or  proceedings   arising  out  of  or  relating  to  such
              agreements.  No member of the Group has  authorised  or  otherwise
              permitted,  expressly or by implication, any use whatsoever of the
              Intellectual  Property owned,  used or otherwise  exploited by the
              Group  save  insofar as any such  authority  is  contained  in the
              appropriate  agreements.  The  Company  does not use or  otherwise
              exploit any Intellectual  Property belonging to a third party save
              insofar as it is licensed to do so in the appropriate  agreements.
              All such agreements have been duly recorded or registered with the
              proper authorities whenever a requirement to do so exists.

16.      CONSEQUENCE OF THE PURCHASE OF THE SALE INTERESTS
         -------------------------------------------------
         The purchase of the Sale Interests by the Purchaser or compliance  with
         the terms of this Agreement and any change in the current management of
         the Company:

         (i)  will not cause the  Company  to lose the  benefit  of any right or
              privilege  it  presently  enjoys or cause any person who  normally
              does  business  with the  Company  not to continue to do so on the
              same basis as previously;

         (ii) will not  relieve  any  person of any  obligation  to the  Company
              (whether  contractual  or  otherwise)  or  enable  any  person  to
              determine any such  obligation or any right or benefit  enjoyed by
              the Company or to exercise  any right  whether  under an agreement
              with or otherwise in respect of the Company;

         (iii)will not conflict  with or result in the breach of or constitute a
              default  under any of the terms,  conditions  or provisions of any
              agreement or instrument to which the Company is now a party or any
              loan to or mortgage created by the Company or of its memorandum or
              articles of association;

         (iv) will not  result  in any  present  or future  indebtedness  of the
              Company  becoming due and payable or capable of being declared due
              and payable prior to its stated maturity;

         (v)  will not cause any director,  supervisor or senior employee of the
              Company to leave employment;

         (vi) will not conflict with,  violate or result in a breach of any law,
              regulation, order, decree or writ applicable to the Company; and

         so far as the Company and the Vendors are aware the attitude or actions
         of clients, customers and suppliers with regard to the Company will not
         be prejudicially affected thereby.

                                       43
<PAGE>
                                   SCHEDULE 4
                                   ----------
                         Addresses and facsimile numbers
                                for communication
                                -----------------

Name                    Address                               Facsimile
----                    -------                               ---------
                        571 202   [o]                         62588795

                        2767 8 2                              62588795

                        332                                   62588795

                        248 63 202                            62588795

                        46 106                                62588795

                        436                                   62588795


Hartcourt Capital, Inc. Suite 1310, China VentureTech Plaza   52130664
                        819 Nan Jing Xi Road,
                        Shanghai,China,200041

































                                       44
<PAGE>
IN WITNESS  whereof this  Agreement has been duly executed by all parties hereto
the day and year first above written.


SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )




SIGNED by                                   )
for and on behalf of                        )
HARTCOURT CAPITAL, INC.                     )
in the presence of:                         )












                                       45
<PAGE>
                                    APPENDIX
                                    --------
                                    Accounts
                                    --------
















































                                       46