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                                                    EMPLOYMENT AGREEMENT



      This Agreement was entered on 10/31/97 by and between:

      1.The Hartcourt Companies, a Utah corporation, NASDAQ BB Symbol: HRCT,
located at 19104 S.
        Norwalk BI, Artesia, CA. 90701 USA, herein after referred to as 
"HARTCOURT"; and

      2.Mr. Alan V. Phan , an individual, US citizen, resides at 4141 Ball Road
 # 156 Cypress, CA. 90630 USA,
        herein after referred to as "PHAN".

      WHEREAS:

      Hartcourt  agreed  to  employ  Phan;  and Phan  accepted  employment  with
      Hartcourt, under the following terms and conditions:

      1.Term: The term of this Agreement is five (5) years,  starting on January
        1, 1997  through  December  31,  2001.  The term  will be  automatically
        extended for an additional term of three (3) years,  unless Hartcourt or
        Phan gives  written  notice to the other  party at least 90 days  before
        expiration of the term.

      2.Position:  Hartcourt  shall employ Phan as the  company's  President and
        Chief Executive Officer, to perform when and where necessary such duties
        related to the overall  operation of  Hartcourt,  and as assigned by the
        Board of  Directors.  Phan will  devote  his best  efforts in and to the
        faithful  performance  of his  duties  to  the  exclusion  of all  other
        employment.

      3.Compensation:

               a.      In consideration of the services to be rendered by Phan
 and for his duties as assigned by the
                       Board of Directors, Hartcourt shall pay Phan a annual
 base salary as follows:

                          -For the year ending 12/31/1997         $175,000.
                          -For the year ending 12/31/1998         $200,000.
                          -For the year ending 12/31/1999         $225,000.
                          -For the year ending 12/31/2000         $250,000.
                          -For the year ending 12/31/2001         $250,000.

                       Payments will be made in equal monthly  installments.  In
                       the event Hartcourt does not have sufficient cash flow to
                       make above payments,  Phan will accept Hartcourt's common
                       restricted  shares for the same amount.  Share price will
                       be  calculated  at 50% of  market  trading  bid  price on
                       January 1st of the year of the employment.

               b.      Phan will be entitled to reimbursement for all reasonable
 expenses incurred by him in connection
                       with the performance of his duties, upon presentation of 
expense reports per Hartcourt's usual
                       procedure.  Such expenses shall not exceed $1,000. per
 month without the authorization of the
                       Board.


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               c.      Phan will be entitled to participate and receive standard
                       benefits  as  other   Hartcourt   employees   in  similar
                       position,  and in  accordance  with the benefit  plans or
                       programs  set forth by the Board,  now or in the  future.
                       These plans will include a medical insurance plan.

               d.      An automotive allowance up to $600. per month will be
 granted to Phan.

      4.Termination: Hartcourt may terminate this Agreement upon the occurrence 
of any of the following
        events;

               a.      Subject to Section 5(a) below, Hartcourt may terminate 
such employment at any time without
                       good cause upon written notice to Phan;

               b.      Such employment shall terminate automatically on the 
death of Phan;

               c.      Hartcourt may terminate such employment  immediately upon
                       written  notice to Phan for good  cause.  In such  event,
                       Hartcourt  shall  pay to Phan an  amount,  equal to three
                       months Base Salary. For purpose of this Agreement,  "good
                       cause" shall include the following circumstances:

                       i.       If Phan is convicted of a felony offense;

                       ii.      If there is a repeated and demonstrable  failure
                                on the part of Phan to perform  material  duties
                                in a competent  manner,  and where Phan fails to
                                substantially   remedy  the  failure   within  a
                                reasonable   period  of  time  after   receiving
                                written  notice of such failure  from  Hartcourt
                                (three  written  notices  shall be sufficient to
                                establish "repeated and demonstrable failure');

                       iii.     If Phan or any member of his family makes any 
personal profit at Hartcourt's expense
                                without prior written consent of Hartcourt;

                       iv.      If Phan disobeys reasonable instructions given
 by the Board that are not inconsistent
                                with his management position.

               d.      Phan may terminate his employment hereunder upon two
months prior written notice to
                       Hartcourt.


      5.Payments on Termination; Change of Control:

               a.      Upon  termination  of Phan's  employment  for any reason,
                       Hartcourt shall pay to Phan, or his estate in case of his
                       death, any accrued unpaid Base  Compensation  prorated to
                       the effective date of termination.

               b.      In addition to above, in the event of termination without
                       good cause;  or in case of Phan's death;  Hartcourt shall
                       make  severance  payments equal to and in the same manner
                       as Phan's  Base  Compensation  in effect at such time for
                       the remaining term of this Agreement;

               c.      In the event of  termination  with good cause,  Hartcourt
                       shall make a severance  payment  equal to three months of
                       Base Compensation in effect at such time.



      6.Covenant Not To Compete:

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               Phan agrees that during the term of his employment,  he will not,
               directly  or  indirectly,  have any  ownership  interest  of five
               percent or more in a  corporation,  firm,  trust,  association or
               other entity which is in competition with Hartcourt.

      7.     Proprietary Information.

               a.      For purposes of this Agreement, "proprietary information"
                       shall  mean  any  information   relating  to  Hartcourt's
                       business that has not previously  been publicly  released
                       by  Hartcourt;  and shall  include,  but not  limited to,
                       inventions,   computer  code,  software,  notes,  written
                       concepts, drawings, designs, plans, proposals,  marketing
                       and  sales   plans,   financial   information,   customer
                       information,  and other  data,  methods  concepts,  ideas
                       reasonably related to Hartcourt's business.

               b.      Phan agrees to regard and preserve as confidential all 
proprietary information obtained; during
                       or prior to his employment term.  Phan will not use these
 information for his benefit or purpose,
                       nor disclose to others.
               c.      Phan  agrees  not to remove  from  Hartcourt's  premises,
                       except in pursuing  his  employment  duties or by written
                       consent of the Board,  any document or object  containing
                       proprietary  information.  Phan  recognizes that all such
                       documents or objects, whether developed by him or others,
                       are the exclusive property of Hartcourt. A breach of this
                       provision shall be considered good cause for

      8.     Notices: Any notice required or permitted to be given hereunder 
shall be in writing and shall be delivered
             by prepaid registered or certified mail, return receipt requested. 
 The address for mail notices shall be
             same as per first paragraph of this Agreement.

      9.     Governing Law; Entire Agreement:

               This  Agreement  shall be construed  according to the laws of the
               State of California;  and  constitutes  the entire  understanding
               between  the  parties,   superseding   and  replacing  all  prior
               understandings and agreements.  This Agreement cannot be changed,
               amended or terminated  except by written agreement signed by both
               parties.. If any of the provision of this Agreement is invalid or
               unenforceable, the remainder of this Agreement shall nevertheless
               remain in full force and effect.

               In  witness  whereof,  the  undersigned  have duly  executed  and
               delivered this Agreement as of the date first written above.



                                                THE HARTCOURT COMPANIES, INC.


                                       By: /s/ Frederic Cohn
                                             Corporate Secretary

                                      ALAN V. PHAN


                                      /s/ Alan V. Phan

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