CAPITAL COMMERCE LTD.
                               2B Mansion House, 143 Main Street, Gibraltar
                                        Telephone: 350.76173 Fax: 350.70135



        On 28 July 1997,  Capital  Commerce,  Ltd. (an Isle of Man Corporation),
does hereby enter into this agreement with The Harcourt Companies,  Inc. (a Utah
Corporation),  to provide  free  trading  securities  for the  purchase  of Pego
Industries and the creation of ECS (a Nevada  Corporation.  to be a wholly owned
subsidiary of Hartcourt).  The free trading securities to be provided by Capital
Commerce shall be from its trading  portfolio,  in the amount of no less than US
$6.000,000.00 as follows:

Capital Commerce Ltd. does hereby agree to provide the following, free trading
 securities from its portfolio, to be
used by HRCT as equity capital:
<TABLE>
<CAPTION>

      1.  Uniforms for America (NASDAQ BB: UNTIF) at the current price of
<S>              <C>                           <C>                                        <C>       
               US$ 6.00 per share              500,000 shares                          US $3,000,000

      2.  The Beverage Store (NASDAQ BB: BEVG) at the current price of
               US$ 5.75 per share              260,869 shares                          US $1,500,000

      3.  Phone Time Resources, Inc. (NASDAQ BB: PHTM) at the current price of
               US$ 1.10 per share              1,363,636 shares                        US $1,500.000
                                                                                     US$6,000,000
</TABLE>

In exchange  for the above  referenced  securities  Hartcourt  agrees to issue a
class 'A' convertible,  preferred stock, in the amount of $4,000,000.00  bearing
interest  at 9% per  annum,  interest  payable in equal  monthly  amounts of US$
30,000.00 per month, for a term of ten (10) years.

In exchange  for the  securities  in the amount of US  $2,000.000.00,  Hartcourt
agrees to a class 'B' convertible  preferred  stock,  bearing interest at 9% per
annum,  interest payable in equal monthly  installments of US $15,000 per month,
for a term of (10) years.

At any time during the 10 years term referenced herein. Hartcourt shall have the
right to call the  preferred  class  'A' or class  'B'  securities  provided  to
Capital  Commerce in exchange for  US$4.000.000 for the class 'A' securities and
US$2,000,000  for the class 'B' shares,  plus any interest accrued to that date.
Harcourt  shall have the right to exchange  all or any portion of the  portfolio
shares  herein,  for any other shares of equal or greater value owned by Capital
Commerce.

All  preferred  shares  issued  by  Hartcourt  shall  be  fully  assignable  and
transferable on the books of the Company, and shall further be non-assessable.

At the end of the 10 year term, Capital Commerce,  its assigns or nominees,  may
elect  to  renew  the  convertible  preferred  shares,  at the  same  terms  and
conditions as contained herein.






                                                             67

<PAGE>





Special Terms of the Preferred Stock:

1.        At the option of Capital  Commerce.  the Hartcourt class 'A' and class
          'B' preferred shares shall be convertible into Hartcourt Common stock,
          based  upon the  Hartcourt  closing  price  per  share,  on the day of
          conversion, on a dollar for dollar basis.

2.        In the alternative,  at the option of Capital Commerce.  the Hartcourt
          class 'A' preferred shares shall be convertible into a 30% non diluted
          interest  in ECS,  until  such time as ECS has gone  public,  at which
          time,  the dilution  clause  contained  herein,  shall have no further
          force or effect.

3.        At the further  option of Capital  Commerce,  the Hartcourt  class 'B'
          preferred  shares shall be convertible into a 30% non diluted interest
          in Pego Industries,  until such time as Pego has gone public, at which
          time the dilution clause  contained herein shall have no further force
          or effect.

4.        Regardless  of the status of the  preferred  shares and the payment of
          the interest thereon,  the anti-dilution  clause will remain in effect
          until  ECS and Pego  commence  to trade  publicly,  so that at no time
          prior to the  approval  of ECS or Pego to trade  publicly,  shall  the
          interest of Capital Commerce in Pego or of ECS fall below 30%.

The parties hereto  recognize and acknowledge  that Mercantile  Investment Trust
Ltd. has acted as the intermediary,  broker, and finder, in this transaction and
that it shall be entitled to receive compensation related thereto, in the amount
of 10% of the amount of the  transaction,  specifically US $600,000,  payable in
the form of Hartcourt Regulation 'S' stock. The exact number of Hartcourt shares
payable to Mercantile  shall be based upon the closing Bid price,  upon the date
of execution.  Both parties hereby  acknowledge the  participation of Mercantile
Investment Trust Ltd., and concur that any and all finders fees due and owing to
Mercantile shall be the sole responsibility of Hartcourt.

In the  event  that it  becomes  necessary  to  enforce  all or any part of this
transaction  through the courts, it is agreed and understood that the prevailing
party will be entitled to recover reasonable attorney fees and costs.

Executed this 28th day of July, 1997

THE HARTCOURT COMPANIES                                 CAPITAL COMMERCE, LTD.


/s/Alan Phan                                            /s/Theresa Poole
By:    Alan Phan                                  By:  Theresa Poole




                                                             68

<PAGE>



                               
                                                                             




March 23, 1998


Dr. Alan V. Phan
President/CEO
Harcourt Investment (USA) Corporation
19104 South Norwalk Boulevard
Artesia, California 90701

Dear Dr. Phan:

I am attaching an  installment  note which sets forth the  agreement you reached
with our Operating Director, Mr. Fred Ashley, on Thursday, March 19, 1998.

Harcourt  Investment  (USA)  Corporation  now  owes  Scripto-Tokai   Corporation
$686,850.56  for various  transactions  with our wholly owned  subsidiary,  Anja
Engineering Corporation.

As a result  of  meeting  held  over the last few  months,  we have  agreed to a
negotiated settlement of $200,000 to be paid as shown on the enclosed note.

As long as all  payments  are  made in  accordance  with the  enclosed  note the
$200,000 plus interest  shall  represent the full and complete  balance due from
your company.  If payments are not made as agreed,  Harcourt will be responsible
for all attorney's fee and collection costs in addition to the balance due.

I am sure both our companies are glad to be putting this matter behind us.


/s/ Michael G. Forys
Michael G. Forys
Senior Vice President

Accept/s/ Alan V. Phan Date     March 24, 1998
               Alan V. Phan,
               President/CEO
               Harcourt Investment (USA) Corporation

                                                             69

<PAGE>






                                                      INSTALLMENT NOTE


$200,000.00                                 Fontana, California, March 23, 1998

At the times and in the  installments  hereinafter  stated,  for value received,
Harcourt  Investment  (USA)  Corporation   promises  to  pay  to  the  order  of
Scripto-Tokai Corporation, 11591 Etiwanda Avenue, Fontana, California 92337, the
negotiated  principal sum of two hundred thousand dollars and no cents,  payable
as follows, to-wit:

The  sum of  $100,000  Dollars  on the  15th  day of May,  1998,  and the sum of
$6,414.72  Dollars  on the  10th  day  of  each  and  every  succeeding  quarter
thereafter  including  interest  from the date until the  principal sum shall be
fully  paid,  at the rate of 10%  percent  per  annum,  payable  quarterly.  The
quarterly  payments (see attached  schedule)  herein  provided shall include the
interest,  and all sums  over and  above  the  accumulated  interest  at time of
payment shall be applied to the discharge of the principal sum of this note.

Should the interest not be so paid, it shall become a part of the principal, and
thereafter  bear like interest as the  principal.  Should default be made in the
payment of any installment of principal or interest when due, then the whole sum
of the remaining balance of principal and interest shall become  immediately due
and  payable at the option of the holder of this note.  Principal  and  interest
payable in lawful money of the United States.


/s/ Alan V. Phan, CEO
Alan V. Phan, President, CEO
Harcourt Investment (USA) Corporation

Date:_____________________________________

                                                             70

<PAGE>