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                                                                    Exhibit 2.12

                       Dated the 9th day of December 2003



                                   (Song Ming)
                                  (Wang Mujie)
                                   (Yang Qing)
                                  (Zhang Jian)



                                       and



                             HARTCOURT CAPITAL, INC.
 ------------------------------------------------------------------------------
                       AGREEMENT FOR SALE AND PURCHASE OF
                  CERTAIN INTEREST IN THE REGISTRED CAPITAL OF
                 Beijing Challenger Wanzhong Info Tech Co., LTD
 ------------------------------------------------------------------------------

                                   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 9th of December, 2003.

BETWEEN:

(1)   Song Ming, ID No.  120104196404056832,  Address: No.7, Gate 1, Building 6,
      District 4, Gaojia Yuan, Chaoyang District, Beijing

(2)   Wang Mujie, ID No. 110102571102005,  Address: No. 203, Gate 1, Building 7,
      Yard 5, Ni Wa Road, Fengtai District, Beijing

(3)   Yang Qing, ID No.  110108197208152243,  Address: No. 501, Gate 4, Building
      15, No. 14, Xue Yuan Road,  Haidian  District,  Beijing

(4)   Zhang Jian, ID No. 110108630329607,  Address: No. 141, Building 8, No. 22,
      Da Liu Shu Village, Haidian District, Beijing

      (Song  Ming,   Wang  Mujie,   Yang  Qing,   Zhang  Jian)  are  hereinafter
      collectively  referred to as the "Vendors" and each individually  referred
      to as the "Vendor"); and

(5)   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
      Nanjing Xi Road, Shanghai, China (the "Purchaser").


WHEREAS:

(A)   Beijing  Challenger  Wanzhong  Info Tech  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 RMB 10,000,000.
      Brief particulars of the Company are set out in Schedule 1. 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.

(B)   As at the  date  of  this  Agreement,  the  Purchaser  is a  wholly  owned
      subsidiary of The 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).

(C)   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  51% 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


                                       2

<PAGE>

           context otherwise requires, the following words and expressions shall
           have the following meanings ascribed to each of them below:

          "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"            From  Monday to Friday  except  Hong  Kong's
                                    public holidays;

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

          "Consideration Shares"    5,797,980ordinary  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 Profit"       RMB10,770,000;

          "Guaranteed Turnover"     RMB600,000,000;

          "HK$"                     Hong Kong dollars;

          "Holding Company"         The  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"          March 31, 2004;

          "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 3 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"          51% 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 favor 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. Chen Guoli
                                    Beijing University Tonghe Law Firm
                                    Beijing University Campus
                                    Tel: 13701294871
                                    Fax: (010)82642002

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

          "Sihai Lanxiang"          Beijing Sihai Lanxiang Tech Development Co.,
                                    Ltd.( ), a domestic  joint  venture  company
                                    established in and under the laws of the PRC
                                    and whose  entire  registered  capital as at
                                    the  date  hereof  is  10,000,000   RMB  and
                                    registered  in the name of (i) Song  Ming as
                                    to 50%  of the  entire  equity  interest  in
                                    Sihai  Lanxiang;  and (ii) Wang Yu as to 35%
                                    of  the  entire  equity  interest  in  Sihai
                                    Lanxiang;  (iii)  Sun  Lei  as to 15% of the
                                    entire equity interest in Sihai Lanxiang.

          "Challenger Ruihua"       Beijing  Challenger  Ruihua  Electronic Tech
                                    Co.,  Ltd  (),  a  domestic   joint  venture
                                    company established in and under the laws of
                                    the PRC and whose entire registered  capital
                                    as at the date hereof is 15,000,000  RMB and
                                    registered  in the name of (i) Zhang Qing as
                                    to 20%  of the  entire  equity  interest  in
                                    Challenger  Ruihua;  and (ii) Liu Shiying as
                                    to 50%  of the  entire  equity  interest  in
                                    Challenger  Ruihua; and (iii) Zhao Wei as to
                                    30%  of  the  entire   equity   interest  in
                                    Challenger Ruihua.

          "Shanghai Helian"         Shanghai Helian Electronic Tech Co., Ltd (),
                                    a domestic joint venture company established
                                    in and  under  the laws of the PRC and whose
                                    entire  registered  capital  as at the  date
                                    hereof is 5,000,000  and  registered  in the
                                    name  of  (i)  Song  Ming  as to  60% of the
                                    entire equity  interest in Shanghai  Helian;
                                    and  (ii)Meng  Song as to 40% of the  entire
                                    equity interest in Shanghai Helian.


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.



                                       6

<PAGE>

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 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.  That share transfer  agreement
         is the appendix to this agreement.

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;




                                       7

<PAGE>

         (c)   if so required,  passing of necessary resolutions by directors of
               the Purchaser at a board 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 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;

               (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



                                       8

<PAGE>

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


         (h)   the Vendors  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.

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.


4.       CONSIDERATION



                                       9

<PAGE>

4.1      The Consideration for the sale and purchase of the Sale Interests (i.e.
         51% of the entire  equity  interest  in the  registered  capital of the
         Company on a fully diluted basis from time to time) shall be the sum of
         RMB33,700,000  which  shall  be  satisfied  by  the  Purchaser  in  the
         following manner:

               i.    RMB28,700,000,  being payment and  consideration for 41% of
                     the entire equity interest in the registered capital of the
                     Company (on a fully diluted basis including after issue and
                     allotment  of  shares  in  the  Company  to  the  Purchaser
                     pursuant to sub-clause  (ii) below),  shall be satisfied by
                     the Purchaser procuring the Holding Company to allot, issue
                     and credit the  Consideration  Shares to the Vendors in the
                     Relevant  Proportions  as fully  paid at an issue  price of
                     US$0.60 per Consideration Share upon Completion;

               ii.   RMB5,000,000,  representing  the  remaining  balance of the
                     Consideration  and being payment and  consideration for 10%
                     of the entire equity interest in the registered  capital of
                     the  Company  (on a fully  diluted  basis  including  after
                     transfer shares in the Company to the Purchaser pursuant to
                     sub-clause (i) above),  shall be satisfied by the Purchaser
                     procuring  the payment of  RMB5,000,000  to Sihai  Lanxiang
                     upon Completion. The Vendors shall be jointly and severally
                     responsible  to do and  execute  or  procure to be done and
                     executed all necessary  acts,  deeds,  documents and things
                     within  their  power  to  ensure  that  Sihai  Lanxiang  is
                     converted  from a domestic  PRC  company to a  sino-foreign
                     join  venture  company  under the laws of the PRC (with the
                     Purchaser's cooperation).

             The Purchaser shall not be obliged to complete the purchase of any
             of the Sale Interests unless the purchase of all the Sale Interests
             is completed simultaneously.

         For the purpose of above clause:

         Consideration  Shares shall be defined as an aggregate of 5,797,980 new
         shares of US$ 0.60 per share in the capital of the  Holding  Company to
         be  allotted  and issued,  credited  as fully  paid,  to the Vendors in
         accordance with the terms and conditions of this Agreement;

         US$1.00 is equal to RMB8.25 (1USD=(cent)D8.25)

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.



                                       10

<PAGE>

4.3      The  Vendors  understand  that  the  Consideration  Shares  will not be
         registered  under the U.S.  Securities Act. The Vendors also understand
         that the Consideration Shares are being allotted and issued pursuant to
         an exemption  from  registration  contained in the U.S.  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;

         (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;
               Purchaser  will  provide  balance  sheet and income  statement to
               Vendors.

         (e)   Rule  144:  The  Vendors  have been  advised  or are aware of the
               provisions of Rule 144 promulgated under the U.S. 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


                                       11

<PAGE>

               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.  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.

4.4      The Purchaser agrees that upon expiry of the Restricted Trading Period,
         and upon  expiry of the  Repurchase  Options  under  Clause 8, and upon
         presentation of the Consideration  Shares to Purchaser,  Purchaser will
         commerce   within  7  business  days  all  necessary   formalities  and
         registration  procedures as may be required  under the U.S.  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 third floor, Kaiyuan Building,  No.28 Zhi Chun Li, Haidian District,
         Beijing 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;

                                       12

<PAGE>

               (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;

         (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 51%  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


                                       13

<PAGE>

               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:                    -------
         ----------------

         (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      If the Purchaser shall fail to do anything  required to be done by them
         under  Clauses  5.5,  without  prejudice  to any other  right or remedy
         available to the Vendors, the Vendors may:

                                       14

<PAGE>

         (d)   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

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

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

5.8      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
         Song Ming.

6.3      The Board shall comprise of 5 Directors. The Purchaser's Nominees shall
         be entitled to nominate  and appoint 3 Directors at any time by written
         notice  addressed  to the  Company  according  to the new  articles  of
         association of the Company under Clause 5.3.

6.4      The quorum  for  meetings  of the Board  shall be 3, of whom 2 shall be
         Directors nominated by the Purchaser's Nominees.

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 Board.

6.8      According to PRC  corporate  law,  the Vendors  shall sell or otherwise
         dispose of any of their remaining interests in the Company.

6.9      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 be  duly
         executed, done and/or performed.



                                       15

<PAGE>

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.       REPURCHASE OPTION

8.1      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 to the Vendors ("the Purchaser's  Repurchase Notice")
         request the Vendors to either,  (i)  repurchase  the Sale Interests and
         the Vendors  shall  transfer to the Purchaser or its nominee all of the
         Consideration  which have been paid  pursuant  to Clause 4.1 and Clause
         8.3 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,  or (ii)  transfer  or procure to be  transferred  to the
         Purchaser such percentage  number of additional equity interests in the
         entire  capital  of the  Company  (i.e.  additional  percentage  equity
         interest  in  addition  to  the  Sale  Interests)   ("Additional   Sale
         Interests") calculated as follows :

         A (%)=  ( ((28,700,000 / 6.5) / Net Profit)  x 100 ) - (41)

         whereby

         A is the percentage additional number of equity interest in the entire
         capital of the Company to be transferred to the Purchaser in  addition
         to the Sales Interest; and

         In the  event  that  the  Purchaser  exercises  its  rights  to  obtain
         Additional  Sale  Interests  as  set  out  above,   (a)  no  additional
         consideration for the same shall be paid or be payable by the Purchaser


                                       16

<PAGE>

         to any of the  Vendors  and for the  purpose  of  this  Agreement,  the
         consideration for the Additional Sale Interests shall be deemed to have
         been  included  and paid for under  Clause  4.1(i)  above;  and (b) the
         Vendors shall transfer and assign to the Purchaser the Additional  Sale
         Interests pro-rata and according to their Relevant Proportion.

8.2      If, upon expiry of the Restricted Trading Period, the return accrued or
         derived from the Consideration Shares is less than 41% of the Company's
         Net Profit, then all of the Vendors may (but not individually) at their
         collective  and absolute  discretion,  within three (3) months from the
         issue of the  Special  Audited  Accounts,  by notice in  writing to the
         Purchaser ("the Vendors' Repurchase Notice"),  request the Purchaser to
         either,  (i)  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  which have been
         paid pursuant to Clause 4.1 and Clause 8.3 free from Encumbrances being
         transferred  to the  Purchase,  or (ii) issue and allot to the  Vendors
         such total number of  additional  shares of and in the Holding  Company
         ("Additional Hartcourt Shares") calculated as follows:

         X = ((41% x Net  Profit) - (Number of  Consideration  Shares x (average
         closing price per Consideration  Share for the last thirty (30) trading
         days, including the date on which the Restricted Trading Period ends) -
         RMB28,700,000)))  / (average closing price per Consideration  Share for
         the last  thirty (30)  trading  days,  including  the date on which the
         Restricted Trading Period ends )

          whereby

         X is the aggregate  total number of shares in the Holding Company to be
         issued and allotted to the Vendors.

         In  the  event  that  the  Vendors  exercise  their  rights  to  obtain
         Additional  Hartcourt  Shares  as set out  above,  (a) such  Additional
         Hartcourt  Shares  shall  be  credited  and  deemed  fully  paid by the
         Vendors;  and (b) the  Purchaser  shall issue and allot the  Additional
         Hartcourt  Shares to the  Vendors pro rata and in  accordance  to their
         Relevant Proportion.

8.3      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 favor 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,



                                       17

<PAGE>

         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.

8.4      For the  purposes of this Clause 8, return  accrued or derived from the
         Consideration  Shares shall be calculated by reference to: 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,  then
         less RMB28,700,000.

8.5      The Special Audited Accounts shall be issued by the accounting firms in
         P.R.C. which are jointly entrusted by the Vendors and the Purchaser.


9.       WARRANTIES

9.1      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.

9.2      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.

9.3      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.

9.4      The Warranties shall survive  Completion and the rights and remedies of
         the Purchaser in respect of any breach of the  Warranties  shall not be


                                       18

<PAGE>

         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.

9.5      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.

9.6      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
         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.

9.7      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.

9.8      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.

9.9      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.


10.      VENDORS' UNDERTAKINGS

10.1     Each of the Vendors  jointly and severally  undertakes that the Vendors
         will not  directly or  indirectly  either  alone or jointly  with or as

                                       19

<PAGE>

         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.

10.2     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;

         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.

10.3     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

                                       20

<PAGE>

         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, i.e. 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.


11.      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
         and other evidence of ownership of the assets owned by the Group as the
         Purchaser may require.


12.      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.


13.      CONFIDENTIALITY AND ANNOUNCEMENTS

13.1     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.

13.2     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.



                                       21

<PAGE>

14.      GENERAL

14.1     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.

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

14.3     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
         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.

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

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

14.6     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.

14.7     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.

14.8     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.


15.      NOTICES

15.1     Any  notice,   claim,   demand,   legal  process,   document  or  other
         communication   to  be  given   under  this   Agreement   (collectively
         "communication"  in this  Clause 15) 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:


                                       22

<PAGE>

         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.

15.2     A  communication  served in accordance with Clause 15.1 shall be deemed
         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.

15.3     Nothing in this Clause 15 shall  preclude the service of  communication
                         ---------
         or the proof of such service by any mode  permitted by Hong Kong law.


16.      COSTS AND STAMP DUTY

16.1     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.

16.2     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.


17.      GOVERNING LAW AND JURISDICTION

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

17.2     Any dispute,  controversy  or claim  arising out of or relating to this
         Agreement,  or the breach termination or invalidity  thereof,  shall be
         settled by  arbitration  in  accordance  with the UNCITRAL  Arbitration
         Rules as at  present in force and as may be amended by the rest of this
         clause.  The  appointing  authority  shall be Hong  Kong  International
         Arbitration Centre.

17.3     The  place  of  arbitration  shall  be in Hong  Kong  and at Hong  Kong
         International  Arbitration  Centre  (HKIAC).  There shall be only [one]
         arbitrator.  Any such  arbitration  shall be  administered  by HKIAC in


                                       23

<PAGE>

         accordance  with HKIAC  Procedures for Arbitration in force at the date
         of this Agreement including such additions to the UNCITRAL  Arbitration
         Rules as are therein contained.

17.4     The language to be used in the arbitral proceedings shall be English.

17.5     Each of the Vendors hereby  irrevocably  appoints  Mr.Kang Qing of Room
         1603, 16/F, Kinox Center, No. 9 Hung To Road, Kwun Tong, Kowloon,  Hong
         Kong (TEL:  (852)  21913919 FAX: (852)  25421789) and Purchaser  hereby
         irrevocably appoints Keith Lee of 35th Floor, Two International Finance
         Centre, 8 Finance Street, Central, Hong Kong (TEL: (852) 25115100, FAX:
         (852)25119515) 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 both
         parties). 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, any party
         irrevocably  agrees  to  appoint a  substitute  process  agent  with an
         address in Hong Kong and to  deliver  to the other  party 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.


18.      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.


19.      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.


20.      Further Undertaking

20.1     Each of the Vendors hereby  jointly and severally  undertake to procure
         the following :

         (a)   the Company is restructured such that the entire equity interests
               of  Sihai  Lanxiang,   Challenger  Ruihua,  and  Shanghai  Helian
               respectively  are  beneficially  owned (whether  directly  and/or
               indirectly) by the Company,  including attending to all necessary
               matters to complete restructuring, within 2 months of the signing
               date of the Agreement.



                                       24

<PAGE>

         (b)   The Company,  following  completion of the  restructuring,  shall
               meet the following requirements:

               I.    its  entire  registered  capital  shall  be  no  less  than
                     RMB30,000,000;

               II.   the Purchaser  shall at all times remain as the  beneficial
                     owner of the 51% equity  interest in the entire  registered
                     capital of and in the Company;

               III.  the Company shall be as the actual  beneficial owner of the
                     100% equity  interest in the entire  registered  capital of
                     and in Sihai Lanxiang,  Challenger Ruihua,  Shanghai Helian
                     ("100%   Interest")  and  have  full  rights   ,benefits  ,
                     interests and control in the 100% Interest;

               IV.   the  representatives of Sihai Lanxiang,  Challenger Ruihua,
                     Shanghai Helian are  respectively Sun Lei, Zhang Qing, Meng
                     Song at the signing date of the  Agreement and the said Sun
                     Lei, Zhang Qing,  Meng Song as the registered  owner of the
                     10% equity interest in the entire registered capital of and
                     in  Sihai  Lanxiang,  Challenger  Ruihua,  Shanghai  Helian
                     respectively  ("10 % Interest")  shall at all times (unless
                     otherwise   agreed  in  writing  by  the  Company  and  the
                     Purchaser) hold on trust such 10% Interest on behalf of the
                     Company  such that the Company  shall have the full rights,
                     benefits,  interests and control in the 10% Interest and as
                     beneficial owner;

               V.    Sun Lei,  Zhang  Qing,  Meng Song  shall duly  execute  and
                     deliver the Pledge  Agreement , the Power of Attorney,  the
                     Statement   for   Waiving   the   Priority   Rights,    the
                     Shareholders'  Undertaking  and such  other  documents  and
                     deeds as maybe  reasonably  requested  by the  Company  (in
                     respect of the 10%  Interest  and such that the Company may
                     at all times exercise  control and have absolute benefit in
                     the 10% Interest) to and in favor of the Company;

               VI.   the Company shall be the registered owner of the 90% equity
                     interest in the entire  registered  capital of and in Sihai
                     Lanxiang, Challenger Ruihua, Shanghai Helian.

20.2     Each of the Vendors hereby  jointly and severally  undertake to procure
         that the Company  will  acquire  Beijing  Xingrun  Jiayuan Tech Co., ("
         Jiayuan  Tech").  The  relevant  agreements  will  be  executed  by the
         Vendors, the Purchaser and Jiayuan Tech.






                                   SCHEDULE 1
                                   ----------


                                       25

<PAGE>



                           Particulars of the Company
                           --------------------------

Beijing Challenger Wanzhong Info Tech Co., LTD
1.       Date of incorporation                     :       June 07, 1999

2.       Place of incorporation                    :       Beijing ,PRC

3.       Registration No.                          :       1101071138267 (1-1)

4.       Registered capital                        :       RMB 10,000,000

5.       Registered Address                        :       Rm. 5584, Haite
                                                           hotel, Hi-Tech
                                                           Garden, Shi Jing Shan
                                                           District 8th Place ,
                                                           Beijing
5.       Nature                                    :       domestic joint
                                                           venture group with
                                                           limited liability

6.       Legal Representative                      :       Yang Qing

7.       Directors                                 :       Song Ming




8.       Financial year end                        :       31 December

9.       Auditors                                  :       Beijing
                                                           Tianzhenghua
                                                           accountants firm

10.      Scope of Business                         :       Selling electronic
                                                           computer and exterior
                                                           instrument, making
                                                           new products,
                                                           developing
                                                           information
                                                           technology,
                                                           technology transfer
                                                           and consultant and
                                                           training and service
                                                           etc





                                   SCHEDULE 2
                                   ----------


                                       26

<PAGE>

                                   The Vendors

Beijing Challenger Wanzhong Info Tech Co., LTD
Name                      Amount of registered capital  Percentage of Sale
                          of Sale Interests paid up by  Interests to the entire
                       each of the Vendors(RMB)    issued share capital of the
                                                        Company
Song Ming                 255Io                                    25.5%
Wang Mujie                102Io                                    10.2%
Yang Qing                 102Io                                 10.2%
Zhang Jian                51Io                                   5.1%
                     -----------------------------------------------------------

Total                     510Io                                     51%






































                                   SCHEDULE 3
                                   ----------


                                       27

<PAGE>


                                   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 November 31, 2003;

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
         other officials of the Company regarding its current status or
         prospects comprises all information which is material for the


                                       28

<PAGE>

         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 this Agreement 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 51% 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
         to be entitled to any of the foregoing, and no person has the right


                                       29

<PAGE>

         (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;



                                       30

<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


                                       31

<PAGE>

         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.

(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;

                                       32
<PAGE>

(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
         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;

                                       33

<PAGE>

(H)      Contracts

tal  expenditure  in an amount  exceeding in the  aggregate  US$10,000 (or its
         equivalent in any other currency);

(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

(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.





                                       34

<PAGE>

(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.

         (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.


                                       35

<PAGE>

(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.

         (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.





                                       36

<PAGE>

(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.


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.


                                       37

<PAGE>

         (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, 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) 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


                                       38

<PAGE>

                  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 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.





                                       39

<PAGE>

(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 (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.







                                       40

<PAGE>

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
         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

                                       41

<PAGE>

                  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.

         (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.








                                       42

<PAGE>

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;

         (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
                  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.





                                       43

<PAGE>

(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.

(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.

                                       44

<PAGE>

(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,
                  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


                                       45

<PAGE>

                  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.











                                       46

<PAGE>



                                   SCHEDULE 4

                         Addresses and facsimile numbers
                                for communication















                                       47

<PAGE>


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


SIGNED by                                   )
Song Ming                                   )
in the presence of:                         )


SIGNED by                                   )
Wang Mujie                                  )
in the presence of:                         )


SIGNED by                                   )
Yang Qing                                   )
in the presence of:                         )


SIGNED by                                   )
Zhang Jian                                  )
in the presence of:                         )


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














                                       48