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                                                                    Exhibit 2.10


                        Dated the thirty day of June 2003




                                  (Dai Peimin)
                                  (Luo Meifang)




                                       and



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

                (SHANGHAI HUAQING CORPORATION DEVELOPMENT 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 thirty of June, 2003.

BETWEEN:

(1)      310110571117425(pound)>>46106
(2)      310110561205382(pound)>>436


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

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


WHEREAS:

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

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

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

(D)       The  Vendors  have  agreed  to sell and the  Purchaser  has  agreed to
          purchase certain interests in the registered capital of the Company as
          set out in column 3 of Schedule 2, the  aggregate of which  represents
          6% of the registered  capital of the Company (the "Sale Interests") in
          accordance with the terms and conditions of this Agreement.

NOW IT IS HEREBY AGREED AS FOLLOWS:


1.        INTERPRETATION

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

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


                                       2
<PAGE>

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

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

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

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

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

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

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

          "Consideration      Shares"  1,340,455  ordinary shares with par value
                              of  US$0.001  each in the  capital of the  Holding
                              Company to be  allotted  and issued in the name of
                              the Vendors or their  nominees  pursuant to Clause
                              4.1;

          "Directors"         directors  of the  Company  from  time to time and
                              "Director" shall be construed as any one of them;

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

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

          "Guaranteed
          Net Profit"         RMB4,500,000;

          "Guaranteed
          Turnover"           RMB400,000,000;


                                       3
<PAGE>


          "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"    31 December 2003;

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

                              (a)   after  deducting all expenses of working and
                                    management  including,  without  limitation,
                                    director's  remuneration  (whether by way of
                                    fees,     salary    or    commission)    and
                                    depreciation;
                              (b)   without  taking  into  account   profits  or
                                    losses  of  a  capital   nature  arising  on
                                    disposal of fixed assets, investments, plant
                                    or any other assets of the Group; and

                              (c)   after making such other  adjustments  as the
                                    auditors    of    the    Company    consider
                                    appropriate;
          "PRC"
                              the  People's  Republic  of  China,  which for the
                              purpose of this Agreement,  excludes Hong Kong and
                              Macau;

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

          "Relevant           Proportion"   the   respective   portion  of  Sale
                              Interests  owned by each of the Vendors  expressed
                              as a  percentage  of the  entire  interest  in the
                              registered  capital  of the  Company as set out in
                              column 4 of the Schedule 2;

          "RMB"               Renminbi, the lawfully currency of PRC;



                                       4
<PAGE>

          "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"  6%  of  the  entire  interest  in  the
                              registered  capital  of the  Company to be sold by
                              the Vendors to the Purchaser's Nominees;

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

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

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

          "US"                the United States of America;

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

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

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






                                       5

<PAGE>

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

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

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

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

2.         SALE AND PURCHASE OF THE SALE INTERESTS

2.1        Subject to the terms and  conditions of this  Agreement,  each of the
           Vendors,  as  beneficial  owners of the  respective  portion  of Sale
           Interests  as set out in  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


                                       6
<PAGE>

                     aspects) in respect of the Group  referred to in Clause 3.3
                     below and the results of which are, in the absolute opinion
                     of  the  Purchaser,  satisfactory  and  acceptable  to  the
                     Purchaser in all respects;
           (b)       the due  execution  of a share  transfer  agreement  by the
                     Vendors and the Purchaser's Nominees;

           (c)       if  so  required,   passing  of  necessary  resolutions  by
                     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   securities   laws  (which  form  and   contents   are
                     satisfactory   and  acceptable  to  the  Purchaser  at  its
                     absolute discretion) in respect of:

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

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

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

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

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



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

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

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

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

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

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

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

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

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

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

4.1       The  consideration  for the sale and  purchase  of the Sale  Interests
          shall           be          the           sum          of          USD
          0.858 million USD=(pound)*8.25(pound)(C),  which  shall  be
          satisfied by the  Purchaser  procuring  the Holding  Company to allot,
          issue  and  credit  the  Consideration  Shares to the  Vendors  in the
          Relevant  Proportion  as fully paid at an issue  price of US$0.64  per
          share upon Completion.

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

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

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

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

          (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  Securities
                     Act, which permits limited resale of shares  purchased in a
                     private  placement  subject to the  satisfaction of certain
                     conditions;

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

                     THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                     UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED (THE "ACT"),
                     OR UNDER  THE  SECURITIES  LAWS OF  CERTAIN  STATES.  THESE
                     SECURITIES ARE SUBJECT TO RESTRICTIONS  ON  TRANSFERABILITY
                     AND RESALE AND MAY NOT BE  TRANSFERRED  OR RESOLD EXCEPT AS
                     PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
                     LAWS,  PURSUANT TO  REGISTRATION  OR  EXEMPTION  THEREFROM.
                     INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
                     THE FINANCIAL RISKS OF THIS INVESTMENT. 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  presentation  of  the   Consideration   Shares  to
           Purchaser,  Purchaser  will attend to all necessary  formalities  and
           registration  procedures as may be required  under the Securities Act
           and the applicable State  securities law to enable the  Consideration
           Shares becoming freely transferable and resalable.


5.         COMPLETION

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

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

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

           (b)       in respect of every member of the Group:

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

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

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

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

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

           (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 6%
                     interest in the registered capital of the Company;

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

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

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

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

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

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

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

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

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

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

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

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

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


6.         MANAGEMENT OF THE COMPANY

6.1        Upon  Completion,  the business and  operations of the Group shall be
           managed by the Board.

6.2        The chairman of the Board and the legal representative of the Company
           shall be nominated  and  appointed by the Board.  The chairman of the
           Board and the legal  representative of the Company shall initially be
           Li Zhengzheng.

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

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

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

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


7.         DISPOSAL OF CONSIDERATION SHARES

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



8.         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  ("Purchaser's  Repurchase Notice") to the Vendors,
           request the Vendors to repurchase  the Sale Interests and the Vendors
           shall   transfer  to  the   Purchaser  or  its  nominee  all  of  the
           Consideration  Shares  which have been issued  pursuant to Clause 4.1
           and  Clause  8.3  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.

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

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
                     favour of the  Purchaser or its nominees  together with the
                     relevant share certificates; and

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

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

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

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

           (b)       6% of the net assets value of the Company as at the date on
                     which the  Restricted  Trading Period ends according to the
                     Special Audited Accounts.


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  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
           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
           expenses  (including  legal  expenses)  which any member of the Group
           and/or the Purchaser and its assignee may incur or sustain from or in
           consequence  of any  liabilities  of the  Group,  whether  actual  or
           contingent including without limitation,  the diminution of the value
           (including  without  limitation,  the net  assets  value or  expected
           profits) of the Group,  arising from any act or omission or otherwise
           incurred on or before the Completion Date.


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.


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,  court  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:

           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 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
           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.Chaong Kai of Flat
           H, 27th Floor, Tang Kung Mansion, 31 Taikoo Shing Road, Hong Kong and
           Purchaser  hereby  irrevocably  appoints  Tso  Vincent  of 10th floor
           Hutchison  House, 10 Hartcourt  road,  Central  Hongkong (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 OF THE VENDORS

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

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

           (a)       a new domestic  joint  venture  company  ("New JV Company")
                     with a  registered  share  capital  of not less  than RMB 6
                     million will be established within three 3 months after the
                     date of this  Agreement and the  Purchaser's  Nominees will
                     become  the  beneficial   owner  of  45%  interest  in  the
                     registered  capital of the New JV Company and the remaining
                     55%  interest  in the  registered  capital  of  the  New JV
                     Company will be owned by the existing  shareholders  of the
                     Company;  for the avoidance of doubt,  the Vendors will, at
                     their  costs  and  expenses,  be  responsible  for  all the
                     contribution  to  the  registered  capital  of  the  New JV
                     Company and the  Purchaser's  Nominees will not be required
                     to make any  contribution  or be responsible  for any other
                     expenses;

           (b)       [all tangible and intangible assets and business  currently
                     owned by (HuaQing  Economics  Development  Company Limited)
                     will be  transferred to the New JV Company and all existing
                     shareholders   (and  each  of  their  respective   ultimate
                     beneficial  owners)  of  (HuaQing   Economics   Development
                     Company  Limited)  will consent to such transfer and attend
                     to all necessary  formalities and procedures to effect such
                     transfer;]

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

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

20.3       The  Purchaser  agrees that,  within five (5) Business Days after the
           fulfillment  of  the  undertakings  as set  out  Clause  20.2  to its
           satisfaction,  it will procure the Holding Company to allot and issue
           1,833,992 ordinary shares in the share capital of the Holding Company
           to the Vendors or their  nominees  in  addition to the  Consideration
           Shares.

20.4       For the  avoidance  of  doubt,  this  Clause  20  shall  survive  the
           Completion.


                                   SCHEDULE 1
                                   ----------
                           Particulars of the Company
                           --------------------------
Shanghai HuaQing Corporation Development Co Ltd

1.       Date of incorporation                     :       10 July 2000

2.       Place of incorporation                    :       PRC

3.       Registration No.                          :       3101062011473

4.       Registered  capital :
                                                           RMB20,000,000

5.       Registered Address                        :
5.       Nature                                    :       domestic
                                                           joint venture company
                                                           with          limited
                                                           liability

6.       Legal  Representative                     :
7.       Directors                                 :

8.       Financial year end                        :       31 December

9.       Auditors :

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



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

                                   The Vendors
                                   -----------
Shanghai HuaQing Corporation Development Co Ltd

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

                          600,000                             3%
                          600,000                             3%

Total(pound)(0)           1,200,000                           6%







































                                   SCHEDULE 3
                                   ----------
                                   Warranties
                                   ----------
1.         INTERPRETATION

(A)        In this schedule where the context admits:

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

           "Balance Sheet Date" means 31 December 2002;

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

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


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


2.         INFORMATION

(A)        Disclosures

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

(B)        Assessment of prospects

           The information  disclosed to the Purchaser or its representatives or
           professional advisers, by the Vendors and the directors,  officers or
           other  officials  of the  Company  regarding  its  current  status or
           prospects  comprises  all  information  which  is  material  for  the
           reasonable  assessment of the financial and trading  prospects of the
           Company or the Group as a whole.


3.         COMPLIANCE AND ABILITY TO SELL

(A)        Constitution of each member of the Group

           The copy of the memorandum and articles of association of the Company
           which have been  provided to the  Purchaser  are true and complete in
           all respects  and have  embodied in them or annexed to them a copy of
           every such  resolution  and  agreement  required by law to be annexed
           thereto and the Company has at all times  carried on its business and
           affairs in all respects in accordance with its respective  memorandum
           and articles of association and all such resolutions and agreements.

(B)        Statutory compliance

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

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

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

(C)        Power to sell

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


4.         CAPITAL STRUCTURE

(A)        Capital of the Company

           The Sale Interests  together  constitute 6% 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
           (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;

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

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

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

(B)        Liabilities

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

(C)        Stock valuation

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

(D)        Plant and machinery etc.

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

(E)        Profits

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

(F)        Depreciation

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

(G)        Books of account

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

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

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

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

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


6.         POST BALANCE SHEET DATE EVENTS

           Since the Balance Sheet Date, each member of the Group:

(A)        Business

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

(B)        Financial position and prospects

           has not  experienced  any  deterioration  in its financial or trading
           position or prospects or turnover or suffered any  diminution  of its
           assets by the  wrongful  act of any  person  and the value of its net
           assets is not less than the value of its net assets as at the Balance
           Sheet Date as shown by the  Accounts and each member of the Group has
           not had its business,  profitability or prospects  adversely affected
           by the loss of any  important  customer or source of supply or by any
           abnormal factor not affecting similar businesses to a like extent and
           there are no facts which are likely to give rise to any such effects;

(C)        Assets and liabilities

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

(D)        Distributions and loan repayments

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

(E)        Liability to tax

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

(F)        Employees

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

(G)        Debts

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

(H)        Contracts

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

(I)        Resolutions

           has  not  passed  any  resolution   whether  in  general  meeting  or
           otherwise;

(J)        Third party rights

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

(K)        Stock-in-trade

           has not  purchased  stocks  in  quantities  or at  prices  materially
           greater than was its practice prior to the Balance Sheet Date;

(L)        Creditors

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

(M)        Borrowings

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

7.         TRANSACTIONS WITH VENDORS, DIRECTORS AND CONNECTED PERSONS

(A)        Loans and debts

           There is not outstanding:

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

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

(B)        Contracts and arrangements

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

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

(C)        Competitive interests

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

(D)        Intellectual Property

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

(E)        Benefits

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

8.         FINANCE

(A)        Borrowings

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

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

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

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

(B)        Debts owed to each member of the Group

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

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

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

(C)        Bank accounts

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

(D)        Working capital requirements

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

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

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

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

(F)        Options, guarantees etc.

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


9.         TAXATION

(A)        General

           (i)       Notices and returns

                     All notices,  returns and  computations  of the Company for
                     the  purposes of Taxation  have been made  punctually  on a
                     proper  basis  and are  correct  and none of them is, or is
                     likely to be, the  subject of any  dispute  with any fiscal
                     authority.

           (ii)      Payment of tax due

                     All  Taxation  that the  Company  is liable to pay prior to
                     Completion has been or will be so paid prior to Completion.

           (iii)     Penalties or interest on tax

                     No member of the Group has paid or become liable to pay any
                     penalty,   fine  or  interest  charged  by  virtue  of  the
                     provisions   of  any  Taxation   statute,   law,   rule  or
                     regulation.

           (iv)      Compliance with tax collection obligations

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

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

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

           (v)       No back duty investigation

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

           (vi)      Tax provision

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

(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.

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 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.

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

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

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

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

(C)        Performance of contracts

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

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

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

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

(D)        Restrictive contracts

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

(E)        Agency and distributorship agreements

           Save as  disclosed,  the  Company  is not a party  to any  subsisting
           agency or distributorship agreement.

14.        EMPLOYEES

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

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

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

15.        INTELLECTUAL PROPERTY

(A)        Ownership and rights

           (i)       General

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

           (ii)      Enforcement

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

           (iii)     Intellectual Property Agreements

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

16.        CONSEQUENCE OF THE PURCHASE OF THE SALE INTERESTS

           The  purchase of the Sale  Interests by the  Purchaser or  compliance
           with the  terms  of this  Agreement  and any  change  in the  current
           management of the Company:

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

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

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

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

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

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

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





<PAGE>


                                   SCHEDULE 4
                                   ----------
                         Addresses and facsimile numbers
                                for communication
                                -----------------

Name                Address               Facsimile

                                          021-62588795
                                          021-62588795


Hartcourt Capital, Inc.                   021-52130664



<PAGE>


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


SIGNED by                                   )
                                            )
in the presence of:                         )



SIGNED by                                   )
                                            )
in the presence of:                         )




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