Document:

Coop Agr on China Princely Education Technology

    EXHIBIT 10.2

     

    

      Dated
        the 29th
        day of December 2006

      

      

      

      

      Zhou
        Haisheng

      Liu
        Gang

      

      

      and

      

      

      AI-ASIA
        INFORMATION TECHNOLOGY (SHANGHAI) CO., LTD. 

      

      

       

      
        
 COOPERATIVE
        AGREEMENT 

      ON
        CHINA PRINCELY EDUCATION TECHNOLOGY DEVELOPMENT (BEIJING) COMPANY
        LIMITED

      
        
 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Table
        of Contents

       

      

      
        	
                1

              	
                Definitions

              	
                3

              
	
                2

              	
                Preconditions

              	
                6

              
	
                3

              	
                Assets
                  and Operation of China Princely

              	
                6

              
	
                4

              	
                Sale
                  and Purchase of the Sale Interests

              	
                6

              
	
                5

              	
                Representations
                  and Warranties

              	
                7

              
	
                6

              	
                Fees
                  and Taxes

              	
                8

              
	
                7

              	
                Registration
                  of the Ownership Change of China Princely

              	
                9

              
	
                8

              	
                Business
                  Term of Wholly owned foreign China Princely

              	
                9

              
	
                9

              	
                Confidentiality

              	
                9

              
	
                10

              	
                Breach
                  of the Agreement

              	
                9

              
	
                11

              	
                Dispute
                  Settlement

              	
                9

              
	
                12

              	
                Governing
                  Law and Jurisdiction

              	
                9

              
	
                13

              	
                Effectiveness

              	
                9

              
	
                14

              	
                Miscellaneous

              	
                10

              
	
                Schedule
                  1:

              	
                Acknowledged
                  Due Diligence Results & Financial Projections

              	
                12

              
	
                Schedule
                  2:

              	
                Assets
                  and Liabilities List and Relevant Proofs of China Princely

              	
                13

              
	
                Schedule
                  3:

              	
                Licenses
                  and Permits for China Princely to be an Authorized Accrediting
                  Organization in Vocational
                  Education

              	
                14

              
	
                Schedule
                  4:

              	
                Primary
                  Terms and Conditions of the Sale and Purchase Agreement

              	
                15

              
	
                Schedule
                  5:

              	
                Primary
                  Terms and Conditions of the Share Consideration

              	
                16

              

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      THIS
        AGREEMENT
        is
        entered into on the 29th
        day of
        December 2006 in Shanghai.

      

      BETWEEN:

      

      
        	(1)	
                Zhou
                  Haisheng,
                  (Holder of PRC ID Number 110227631007331) of Room 601, No.2, Building
                  64,
                  Hua Yan Bei Li, Chaoyang District, Beijing, People’s Republic of
                  China;

              

      

      

      Liu
        Gang,
        (Holder
        of PRC ID Number 330302195504173617) of Wenzhou, Zhejiang, People’s Republic of
        China; and

      

      
        	(2)	
                Ai-Asia
                  Information Technology (Shanghai) Co., Ltd.,
                  a wholly-owned foreign company with limited liability and registered
                  office at Room 628-14, Building 2, Guo Shou Jing Road, Zhangjiang
                  Hi-Tech
                  Park, Shanghai, People’s Republic of China and legal representative of
                  Zhou Bizheng. Currently it is in the process of changing its name
                  to
                  Hartcourt
                  Education Investment Management & Consulting (Shanghai) Co.,
                  Ltd.
                  (hereinafter “Hartcourt
                  Education”).

              

      

      

      WHEREAS:

      

      
        	
                1.

              	
                China
                  Princely Education Technology Development (Beijing) Co., Ltd
                  (“China
                  Princely”)
                  is a company duly incorporated and validly existing with limited
                  liability
                  and has legally obtained Business License from Commercial and Industrial
                  Administrative Bureau (License No.
                  1101082787475);

              

      

      

      
        	
                2.

              	
                Zhou
                  Haisheng and Liu Gang are both Chinese natural persons, who are
                  the
                  shareholders of China Princely with each holding 50% equity
                  interest;

              

      

      

      
        	
                3.

              	
                Hartcourt
                  Education is a wholly-owned foreign company duly incorporated and
                  validly
                  existing with limited liability in
                  China;

              

      

      

      
        	
                4.

              	
                Zhou
                  Haisheng and Liu Gang hereby jointly agree to sell all their 100%
                  equity
                  interests in China Princely to Hartcourt Education, and Hartcourt
                  Education agrees to purchase it; 

              

      

      

      
        	
                5.

              	
                Zhou
                  Haisheng signed the Memorandum of Understanding with Hartcourt
                  Companies,
                  Inc, the parent company of Hartcourt Education, on October 12,
                  2006.

              

      

      

      THEREFORE,
        IT IS HEREBY AGREED BY ZHOU HAISHENG, LIU GANG AND HARTCOURT EDUCATION AS
        FOLLOWS:

      

      
        	
                1.

              	
                DEFINITIONS

              

      

      

      In
        this
        Agreement (including the Schedules), unless the context otherwise defines,
        the
        following words and expressions in capital letters shall have the following
        meanings: 

       

      
        	
                “Zhou
                  Haisheng”

              	
                Chinese
                  natural person and a shareholder of China Princely with 50% equity
                  interest in it prior to the execution of the Agreement.
                  

              

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      

      
        	
                “Liu
                  Gang”

              	
                Chinese
                  natural person and a shareholder of China Princely, holding 50%
                  equity
                  interest in it through capital increase to China Princely prior
                  to the
                  execution of the Agreement. 

              
	
                “Hartcourt
                  Education”

              	
                Ai-Asia
                  Information Technology (Shanghai) Co., Ltd. It is now in the process
                  of
                  changing its name to Hartcourt Education Investment Management
                  and
                  Consulting (Shanghai) Co., Ltd. Hartcourt Education is the wholly
                  owned
                  subsidiary of Hartcourt. 

              
	
                “Hartcourt”

              	
                The
                  Hartcourt Companies, Inc. is incorporated in State of Utah, United
                  States,
                  the shares of which are currently listed on the Over-the-Counter
                  Bulletin
                  Board (“OTCBB”)
                  of the United States. Hartcourt conducts and focuses its business
                  on the
                  education investment and management. 

              
	
                “China
                  Princely”

              	
                China
                  Princely Education Technology Development (Beijing) Co., Ltd. Prior
                  to the
                  execution of the Agreement, Zhou Haisheng and Liu Gang are the
                  investors
                  of China Princely. 

              
	
                “CIVTE”

              	
                The
                  Central Institute of Vocational and Technical Education of the
                  Ministry of
                  Education, a non-enterprise entity directly under the Ministry
                  of
                  Education. Founded in 1990, CIVTE is a vocational education research
                  and
                  development institution at the national level.

              
	
                “Vocational
                  Competency Certificate”

              	
                The
                  certificate that CIVTE authorized China Princely to grant according
                  to the
                  Letter issued by CIVTE on Sept 9, 2005, “The Letter on Consigning the Work
                  of Developing Curriculum Program, Training and Certifying the Vocational
                  Competency Based on Computer Internet (Jiao Zhi Suo [2005]
                  No.4)

              
	
                “CASTIP”

              	
                China
                  Association of Science And Technology Industry Parks. CASTIP has
                  signed
                  with China Princely a series of cooperation agreements, including
                  without
                  limitation to the joint issuance of the vocational competency
                  certificates.

              

      

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      

      
        	
                “Financial
                  Due Diligence”

              	
                The
                  Financial Due Diligence conducted by Hartcourt Education prior
                  to December
                  20, 2006 on China Princely’s financial standing as of November 30, 2006.
                  Detailed Financial Due Diligence results are set out in the Schedule
                  1.
                  

              
	
                “Financial
                  Projections”

              	
                In
                  relation to the year ending on December 31, 2007, 2008 and 2009,
                  the
                  Financial Projection on China Princely conducted by Hartcourt Education
                  prior to December 20, 2006. Detailed Financial Projections is set
                  out in
                  the Schedule 1. 

              
	
                “Sale
                  Interests”

              	
                The
                  100% entire interest in the registered capital of China Princely
                  to be
                  sold by Zhou Haisheng and Liu Gang to Hartcourt Education.
                  

              
	
                “Agreement
                  for Sale and Purchase of the 

                Entire
                  Interest in the Registered Capital 

                of
                  China Princely”

              	
                The
                  agreement executed by Zhou Haisheng, Liu Gang and Hartcourt Education
                  on
                  the sale and purchase of the 100% entire interest in the registered
                  capital of China Princely.

              
	
                “Consideration”

              	
                The
                  total consideration payable by Hartcourt Education of which includes
                  RMB2,400,000 cash and 5,400,000 new Hartcourt Restricted Shares
                  of Common
                  Stock. The Consideration payment terms are set out in Clause 4.2
                  and
                  4.5.

              
	
                “Restricted
                  Shares of Hartcourt Common Stock”

              	
                The
                  ordinary restricted shares of common stock with par value of US$0.001
                  each
                  in the capital of Hartcourt to be allotted and issued. Trading
                  symbol:
                  U.S. HRCT.OB, Frankfurt 900009.

              
	
                “Delivery
                  Date of the Sale Interests in 

                China
                  Princely”

              	
                The
                  delivery date of the 100% sale interests in China Princely, on
                  which,
                  pursuant to the PRC law, 100% control of China Princely has changed
                  from
                  Zhou Haisheng and Liu Gang to Hartcourt Education. Delivery Date
                  of Sale
                  Interests in China Princely shall be within 30 business days upon
                  obtaining all necessary consents permits and approvals from relevant
                  Governmental Agency on Foreign Investment.

              
	
                “Consideration
                  Shares Trading Dates”

              	
                The
                  dates on which the restricted shares of Hartcourt common stock
                  as share
                  consideration are permitted to be freely traded at the stock exchange.
                  The
                  date shall be the first trading date after one anniversary of the
                  date
                  when Hartcourt issues the consideration shares to Zhou Haisheng
                  and Liu
                  Gang. 

              

      

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      

      
        	
                “Governmental
                  Agency on Foreign Investment”

              	
                Relevant
                  PRC Administrative authority on Foreign Economic &
                  Trade.

              
	
                “Consideration
                  Payment Date”

              	
                The
                  date on which Hartcourt Education pays cash consideration and issues
                  Restricted Shares of Hartcourt Common Stock to Zhou Haisheng and
                  Liu Gang
                  as set out in Clause 4.5. 

              
	
                “Net
                  Profit”

              	
                Net
                  Profit = total realized profit - income tax (all based on U.S.
                  GAAP and
                  audited by independent auditor) 

              

      

      

      
        	
                2.

              	
                PRECONDITIONS

              

      

      

      
        	
                2.1

              	
                Hartcourt
                  Education has entrusted independent professionals to perform financial
                  due
                  diligence and financial projections on China Princely. Hartcourt
                  Education, Zhou Haisheng and Liu Gang hereby acknowledge the results
                  of
                  the due diligence in writing. Acknowledged results of financial
                  due
                  diligence and financial projections are set out in Schedule 1.
                  

              

      

      

      
        	
                2.2

              	
                The
                  authorization granted by CIVTE to China Princely to issue the Vocational
                  Competency Certificates and the cooperation agreements that China
                  Princely
                  and CIVTE had executed prior to the Agreement, shall remain valid
                  after
                  the Sale and Purchase of the Sale Interests.

              

      

      

      
        	
                3.

              	
                ASSETS
                  AND OPERATIONS OF CHINA
                  PRINCELY

              

      

      

      
        	
                3.1

              	
                Prior
                  to the Sale and Purchase of the Sale Interests, total amount of
                  assets of
                  China Princely, including but not limit to fixed assets, intellectual
                  property right, etc. Assets and Liabilities list and Relevant Proofs
                  of
                  China Princely are set out in Schedule 2.

              

      

       

      
        	3.2	 	
                China
                  Princely has obtained all the licenses and permits for granting
                  Vocational
                  Competency Certificates, including but not limit to the documents
                  and
                  agreements from or with CIVTE and CASTIP, details of which are
                  set out in
                  Schedule 3. 

              

      

      

      
        	
                4

              	
                SALE
                  AND PURCHASE OF THE SALE
                  INTERESTS

              

      

      

      
        	
                4.1

              	
                Within
                  30 business days upon the Preconditions are satisfied and the
                  prerequisites are met in respect of the Assets and Operations of
                  China
                  Princely referred to in Clause 3, Zhou Haisheng, Liu Gang and Hartcourt
                  Education shall sign and execute an Agreement for Sale and Purchase
                  of the
                  Entire Interest in the Registered Capital of China Princely. Subject
                  to
                  the terms and conditions of the agreement, Zhou Haisheng and Liu
                  Gang
                  shall sell their 100% equity interest in China Princely to Hartcourt
                  Education. The primary terms and conditions of the Agreement for
                  Sale and
                  Purchase of the Entire Interest in the Registered Capital of China
                  Princely are set out in Schedule 4.

              

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
        	
                4.2

              	
                The
                  Consideration for the sale and purchase of the Sale Interests shall
                  be an
                  aggregate of RMB2,400,000 cash and 5,400,000 Restricted Shares
                  of
                  Hartcourt Common Stock, based on the assets of China Princely,
                  the capital
                  injected to China Princely from Zhou Haisheng and Liu Gang as well
                  as the
                  financial projections each year in the future years. Among the
                  total
                  Consideration, RMB300,000 cash and the Consideration Shares shall
                  be paid
                  and issue to Zhou Haisheng and Liu Gang proportionally to their
                  percentage
                  of equity interest in China Princely, while the rest RMB2,100,000
                  cash
                  shall be invested in China Princely as capital
                  injection.

              

      

      

      
        	
                4.3

              	
                Hartcourt
                  Education shall credit the Consideration to the accounts designated
                  by
                  Zhou Haisheng and Liu Gang. 

              

      

      

      
        	
                4.4.

              	
                Since
                  the Delivery Date of the Sale Interests in China Princely, Hartcourt
                  Education shall take over the 100% control of China Princely from
                  Zhou
                  Haisheng and Liu Gang as shareholder pursuant to the
                  Agreement.

              

      

      

      
        	
                4.5.

              	
                Hartcourt
                  Education shall credit the Consideration, satisfied as details
                  hereunder:-

              

      

      

      
        	
              	(1)	
                Within
                  10 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall credit RMB150,000 cash to Zhou
                  Haisheng, and RMB150,000 cash to Liu Gang.

              

      

      

      
        	
              	(2)	
                With
                  30 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall injected RMB2,100,000 cash
                  to China
                  Princely to increase its registered capital.

              

      

      

      
        	
              	(3)	
                With
                  30 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall issue and allot the Consideration
                  of
                  total 5,400,000 Restricted Shares of Hartcourt Common Stock to
                  Zhou
                  Haisheng and Liu Gang with 2,700,000 shares each. Hartcourt and
                  Hartcourt
                  Education shall jointly guarantee the average closing price of
                  the 3 days
                  immediately prior to the Consideration Shares Trading Date at not
                  less
                  than US$0.50 per share, otherwise, Hartcourt shall credit additional
                  cash
                  or issue and allot additional new Restricted Shares of Hartcourt
                  Common
                  Stock to make it up. The primary terms and conditions of issuance
                  of
                  Restricted Shares of Hartcourt Common Stock and Consideration Shares
                  Trading Date are set out in Schedule 5.

              

      

      

      In
        the
        event of, as deemed by Hartcourt Education reasonably, the team of Zhou Haisheng
        and Liu Gang fails to fulfill the Financial Projections of 2007 as represented
        and guaranteed in the Agreement, Zhou Haisheng and Liu Gang agree to postpone
        the Consideration Shares Trading Date for one more year. 

      

      
        	
                5

              	
                REPRESENTATIONS
                  AND WARRANTS

              

      

      

      
        	
                5.1

              	
                Zhou
                  Haisheng hereby represents and warrants as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Zhou
                  Haisheng shall be the actual beneficial owner of the 50% Sale Interests
                  in
                  the registered capital of China Princely and has full rights, interests,
                  and control in this 50% interest. 

              

      

      

      
        	 	
                (2)

              	
                Zhou
                  Haisheng assures that no third-party interest has been put against
                  the
                  Sale Interests such as pledge, lien, etc. from its incorporation
                  till the
                  Delivery Date of the Sale Interests in China Princely, and no conflicts
                  or
                  disputes in respect of any interest stand
                  thereon.

              

      

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
        	 	
                (3)

              	
                The
                  Net Profit of China Princely in 2007 shall be not less than RMB2,000,000.
                  

              

      

      

      
        	 	
                (4)

              	
                No
                  false investment or capital withdrawal happens to China Princely,
                  otherwise, Zhou Haisheng shall take full responsibility and liabilities
                  and indemnify China Princely and Hartcourt Education for all the
                  losses
                  incurred; all the risks and losses before Hartcourt Education obtaining
                  the 100% equity interests in China Princely, except otherwise expressly
                  acceptable by Hartcourt Education, shall be borne by Zhou Haisheng,
                  and
                  provided any losses caused herewith to China Princely or Hartcourt
                  Education, Zhou Haisheng shall assume the liabilities to indemnify.
                  

              

      

      

      
        	 	
                (5)

              	
                As
                  of the date of the Agreement, Zhou Haisheng shall not, directly
                  or
                  indirectly, sponsor or participate in sponsoring any education
                  institutions that might potentially be competitive to China Princely
                  in
                  China.

              

      

      

      
        	5.2	
                Liu
                  Gang hereby represents and warrants as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Liu
                  Gang shall be the actual beneficial owner of the 50% Sale Interests
                  in the
                  registered capital of China Princely and has full rights, interests,
                  and
                  control in this 50% interest.

              

      

      

      
        	 	
                (2)

              	
                Liu
                  Gang assures that no third-party interest has been put against
                  the Sale
                  Interests such as pledge, lien, etc. from its incorporation till
                  the
                  Delivery Date of the Sale Interests in China Princley, and no conflicts
                  or
                  disputes in respect of any interest stand
                  thereon.

              

      

      

      
        	 	
                (3)

              	
                Liu
                  Gang guarantees that his capital injection in China Princely is
                  all real
                  and no withdrawal any of the capital from China Princely will happen,
                  otherwise, Liu Gang shall take full responsibility and liabilities
                  and
                  indemnify China Princely and Hartcourt Education for all the losses
                  incurred;

              

      

      

      
        	 	
                (4)

              	
                As
                  of the date of the Agreement, Liu Gang shall not, directly or indirectly,
                  sponsor or participate in sponsoring any education institutions
                  that might
                  potentially be competitive to China Princely in
                  China.

              

      

      

      
        	5.3	
                Hartcourt
                  Education hereby represents and warrants as
                  follows:-

              

      

      

      
        	 	
                (1)

              	
                Hartcourt
                  Education is a duly incorporated and validly existing
                  company.

              

      

      

      
        	 	
                (2)

              	
                Hartcourt
                  Education has the corporate powers and authority to sign and execute
                  this
                  Agreement. 

              

      

      

      
        	 	
                (3)

              	
                Hartcourt
                  Education guarantees to pay the Consideration of the Sale Interests
                  in
                  full when due.

              

      

      

      
        	 	
                (4)

              	
                Hartcourt
                  Education guarantees that all the documents presented to Zhou Haisheng
                  and
                  Liu Gang are true, and in the event of any losses caused by the
                  untrue
                  documents, Hartcourt Education shall assume the liabilities and
                  indemnify
                  China Princely, Zhou Haisheng and Liu Gang for the losses incurred
                  hereof.
                  

              

      

       

      
        	
                6

              	
                FEES
                  AND TAXES

              

      

      

      
        	6.1	
                Zhou
                  Haisheng, Liu Gang and Hartcourt Education shall assume the respective
                  share of the expenses incurred for the Sale Interests in China
                  Princely
                  and be obliged to pay taxes due and payable.

              

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
        	
                7

              	
                THE
                  REGISTRATION OF THE OWNERSHIP CHANGE OF CHINA
                  PRINCELY

              

      

      

      
        	7.1	
                In
                  respect of registration of the ownership change with Commercial
&
                  Industrial Bureau related to the Sale Interests, Zhou Haisheng
                  and Liu
                  Gang shall cooperate with the China Princely to complete it before
                  the
                  Delivery Date of the Sale Interests in China Princely, Hartcourt
                  Education
                  shall provide necessary assistance
                  thereto.

              

      

      

      
        	8	 	
                BUSINESS
                  TERM OF THE WHOLLY OWNED FOREIGN CHINA PRINCELY 

              

      

      

      
        	
                8.1

              	
                After
                  Hartcourt Education controls the 100% equity interest in China
                  Princely,
                  the business term of the wholly owned foreign China Princely shall
                  be 50
                  years. 

              

      

      

      
        	
                9

              	
                CONFIDENTIALITY

              

      

      

      
        	
                9.1

              	
                Zhou
                  Haisheng, Liu Gang and Hartcourt Education undertakes the responsibilities
                  to keep all the known information and documents in connection with
                  this
                  Agreement strictly confidential;

              

      

      

      
        	
                9.2

              	
                Except
                  legally required by relevant governmental authority or securities
                  supervisory administration in respect hereof, without the consent
                  of all
                  its counterparties, no party shall divulge anything to any third
                  party
                  other than the parties in this Agreement.

              

      

      

      
        	
                10

              	
                BREACH
                  OF THE AGREEMENT

              

      

      

      
        	
                10.1

              	
                Any
                  party of Zhou Haisheng, Liu Gang and Hartcourt Education, when
                  fails to
                  fulfill its obligations specified in this Agreement without legal
                  reasons,
                  shall assume the liabilities of breach to non-breaching
                  party.

              

      

      

      
        	
                11

              	
                DISPUTE
                  SETTLEMENT

              

      

      

      
        	11.1	
                Any
                  dispute, controversy or claim arising out of or relating to this
                  Agreement, shall be settled by negotiation and discussion between
                  Zhou
                  Haisheng, Liu Gang and Hartcourt Education in good faith. This
                  negotiation
                  and discussion shall start immediately after one party sending
                  out the
                  written notice to the other parties in this
                  regards.

              

      

      

      
        	11.2	
                In
                  the event that the dispute, controversy or claim cannot be solved
                  within
                  90 days of the aforesaid written notice, this dispute, controversy
                  or
                  claim, as any parties requires, and after informing the other parties,
                  shall be submitted and settled by China International Economic
                  and Trade
                  Arbitration Commission, Shanghai Branch. Arbitration Rules will
                  be final,
                  and will be binding on Zhou Haisheng, Liu Gang and Hartcourt Education.
                  

              

      

      

      
        	12	
                GOVERNING
                  LAW AND JURISDICATION

              

      

      

      
        	12.1	
                This
                  Agreement shall be governed, construed and interpreted in accordance
                  with
                  the laws of the People’s Republic of
                  China.

              

      

      

      
        	13	
                EFFECTIVENESS

              

      

      

      
        	13.1	
                This
                  Agreement will be effective immediately upon duly signed by Zhou
                  Haisheng,
                  Liu Gang and Hartcourt Education or their authorized
                  representative.

              

      

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      
        	
                14

              	
                MISCELLANEOUS 

              

      

      

      
        	
                14.1

              	
                The
                  headings of the Clause in this Agreement are for reference only
                  and shall
                  not be construed as the interpretation of this Agreement.
                  

              

      

      

      
        	
                14.2

              	
                This
                  Agreement will supersede all previous agreements, arrangements,
                  memorandum
                  of understandings between the parties hereto upon signed and executed
                  by
                  all parties. 

              

      

      

      
        	
                14.3

              	
                This
                  Agreement will be in three original copies, one copy with each
                  party, and
                  each copy shall be deemed as equally authentic.

              

      

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

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

      

      

      SIGNED
        by

      

        /S/
          ZHOU
          HAISHENG

      

      ZHOU
        HAISHENG

      

      

      

      SIGNED
        by

      

        /S/
          LIU
          GANG

      

      LIU
        GANG

      

      

      

      SIGNED
        by

      for
        and
        on behalf of 

      

        /S/
          AI-ASIA
          INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD

      

      AI-ASIA
        INFORMATION TECHNOLGOY (SHANGHAI) CO., LTD

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      Schedule
        1:  Acknowledged
        Due Diligence Results & Financial Projections

      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      Schedule
        2:  Assets
        and Liabilities List and Relevant Proofs of China Princely

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      Schedule
        3:  Licenses
        and Permits for China Princely to be an Authorized Accrediting Organization
        in
        respect of Vocational Education 

      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      Schedule
        4: Primary Terms and Conditions of the Sale and Purchase
        Agreement

      

      
        	1	
                Zhou
                  Haisheng will sell his 50% equity interest in China Princely to
                  Hartcourt
                  Education. 

              

      

      

      
        	2	
                Liu
                  Gang will sell his 50% equity interest in China Princely to Hartcourt
                  Education. 

              

      

      

      
        	3	
                The
                  Consideration for the sale and purchase of the Sale Interests Shall
                  be an
                  aggregate of RMB2,400,000 cash and 5,400,000 Restricted Shares
                  of
                  Hartcourt Common Stock, based on the assets of China Princely,
                  the capital
                  injected to China Princley from Zhou Haisheng and Liu Gang and
                  the
                  financial projections each year in the future years. Among
                  the total Consideration, RMB300,000 cash and the Consideration
                  Shares
                  shall be paid and issued to Zhou Haisheng and Liu Gang proportionally
                  to
                  their percentage of equity interest in China Princely, while the
                  rest
                  RMB2,100,000 cash shall be invested in China Princely as capital
                  injection.

              

      

      

      
        	4	
                Hartcourt
                  Education shall credit the Consideration to the accounts designated
                  by
                  Zhou Haisheng and Liu Gang.

              

      

      

      
        	
                5

              	
                The
                  Delivery Date of the Sale Interests in China Princely shall be
                  within 30
                  business days upon obtaining the offcial approval from Governmental
                  Agency
                  on Foreign Investment; and Since the Delivery Date of the Sale
                  Interests
                  in China Princely, Hartcourt Education shalll take over the 100%
                  control
                  of China Princely from Zhou Haisheng and Liu Gang as shareholder
                  pursuant
                  to the Agreement. 

              

      

      

      
        	
                6

              	
                Hartcourt
                  Education shall credit the Consideration, satisfied as details
                  hereunder:-

              

      

      

      
        	 	
                (1)

              	
                Within
                  10 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall credit RMB150,000 cash to Zhou
                  Haisheng, and RMB150,000 cash to Liu Gang.

              

      

      
        	 	
                (2)

              	
                With
                  30 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall injected RMB2,100,000 cash
                  to China
                  Princely to increase its registered capital.

              

      

      
        	 	
                (3)

              	
                With
                  30 business days upon the Delivery Date of the Sale Interests in
                  China
                  Princely, Hartcourt Education shall issue and allot the Consideration
                  of
                  total 5,400,000 Restricted Shares of Hartcourt Common Stock to
                  Zhou
                  Haisheng and Liu Gang with 2,700,000 shares each. Hartcourt and
                  Hartcourt
                  Education shall jointly guarantee the average closing price of
                  the 3 days
                  immediately prior to the Consideration Shares Trading Date at not
                  less
                  than US$0.50 per share, otherwise, Hartcourt shall credit additional
                  cash
                  or issue and allot additional new Restricted Shares of Hartcourt
                  Common
                  Stock to make it up. The primary terms and conditions of issuance
                  of
                  Restricted Shares of Hartcourt Common Stock and Consideration Shares
                  Trading Date are set out in Schedule 5.

              

      

      

      In
        the
        event of, as deemed by Hartcourt Education reasonably, the team of Zhou Haisheng
        and Liu Gang fails to fulfill the Financial Projections of 2007 as represented
        and guaranteed in the Agreement, Zhou Haisheng and Liu Gang agree to postpone
        the aforesaid Consideration Shares Trading Date for one more year. 

      

      
        
          
            	7	
                    After
                      Hartcourt Education controls the 100% equity interest in China
                      Princely,
                      China Princely will become a wholly owned foreign
                      company.

                  

          

        

      

      

      
        	8	
                The
                  business term of the wholly owned foreign China Princely shall
                  be 50
                  years. 

              

      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      Schedule
        5:  Primary
        Terms and Conditions of the Share Consideration

       

       

      16Agr for sale and purchase - share capital of Besteffort Investments

    EXHIBIT 10.3

     

     

    

      Dated
        the 18th
        day of September 2006

      

      

      

      HARTCOURT
        CAPITAL, INC.

      

      and

      

      

      GREAT
        FOCUS HOLDINGS LIMITED

      

       

      
        
          

        
AGREEMENT FOR SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL
        OF
        BESTEFFORT INVESTMENTS LIMITED

      
        
 

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      THIS
        AGREEMENT
        is
        entered into on the 18th
        day of
        September 2006 in Shanghai.

      

      BETWEEN:

      

      (1)
        HARTCOURT
        CAPITAL, INC.,
        (the
“Vendor”);
        and

      

      (2)
        GREAT
        FOCUS HOLDINGS LIMITED (the
        “Purchaser”).

      

      WHEREAS:

      

      
        	
                1.

              	
                As
                  at the date of this Agreement, Besteffort Investments Limited (the
                  “Company”)
                  is a company with limited liability incorporated in the British
                  Virgin
                  Islands and has an authorized share capital of US$50,000 divided
                  into
                  50,000 shares of US$1.00 each, of which 10 shares have been issued
                  and are
                  fully paid or credited as fully paid.

              

      

      

      
        	
                2.

              	
                As
                  at the date of this Agreement, Hartcourt is the registered and
                  beneficial
                  owner of 10 shares, representing 100% of the issued share capital
                  of the
                  Company. 

              

      

      

      
        	
                3.

              	
                The
                  Vendor has agreed to sell and the Purchaser has agreed to purchase
                  the
                  entire issued share capital of the Company. (the “Sale
                  Interests”)

              

      

      

      THEREFORE,
        IT IS HEREBY AGREED BY THE VENDOR AND THE PURCHASER AS
        FOLLOWS:

      

      

      
        	
                1.

              	
                INFORMATION
                  ON THE COMPANY

              

      

      

      Within
        30
        business days upon executing this Agreement, the Vendor shall fully and truly
        present to the Purchaser all the documents related to operational, financial
        and
        legal status of the Company since its incorporation, including but not limit
        to:-

      

      
        	
                1.1

              	
                The
                  registration and incorporation documents of the Company, incl.
                  the
                  approvals from relevant BVI authorities; and

              

      

      

      
        	
                1.2

              	
                All
                  business licenses and seals of the Company; and

              

      

      

      
        	
                1.3

              	
                All
                  the operational, financial and legal documents since the Company’s
                  incorporation, including the contracts, agreements or other related
                  hereof
                  that have been executed or not yet executed; and
                  

              

      

      

      
        	
                1.4

              	
                As
                  at the date of this Agreement, the list of all the assets and liabilities
                  of the Company, including existing and contingent assets, rights,
                  liabilities and the status of the constraints of any rights that
                  might
                  have existed; and 

              

      

      

      
        	
                1.5

              	
                Any
                  other documents of the Company that the Purchaser requires.
                  

              

      

      

      
        	
                2.

              	
                REPRESENTATIONS
                  AND WARRANTIES BY THE
                  VENDOR

              

      

      

      The
        Vendor hereby represents and warrants to the Purchaser as follows:-

      

      
        	
                2.1

              	
                The
                  Company is duly incorporated and validly existing with limited
                  liability
                  and has obtained all the approvals and permits from relevant BVI
                  authorities at its inception. The Vendor is the only registered
                  and
                  beneficial owner of the issued share capital of the Company;
                  

              

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        	
                2.2

              	
                The
                  Vendor has full rights, interests and controls in the 100% interest
                  in the
                  Company without any restrictions or constraints;
                  

              

      

      

      
        	
                2.3

              	
                The
                  Vendor assures that no third-party interest has been put again
                  the Sale
                  Interests such as pledge, lien, etc., and no litigation, arbitration
                  and
                  conflicts or disputes in respect of the Sale Interests stand thereon;
                  

              

      

      

      
        	
                2.4

              	
                The
                  list of assets and liabilities of the Company that the Vendor presents
                  are
                  real, complete and accurate, and as of the date of this Agreement,
                  all the
                  assets herein, including but not limit to all the inventories and
                  other
                  assets, etc. exist and are in the places as specified in the
                  list;

              

      

      

      
        	
                2.5

              	
                The
                  Vendor guarantees that all the operational and financial documents
                  of the
                  Company that will be presented to the Purchaser, truly, completely
                  and
                  accurately reflect the business and financial results of the Company
                  since
                  its incorporation;

              

      

      

      
        	
                2.6

              	
                The
                  Vendor, by executing this Agreement, does not breach any contract
                  or
                  agreement signed with any other party, or any covenant with legal
                  binding.
                  

              

      

      

      
        	
                3

              	
                REPRESENTATIONS
                  AND WARRANTIES BY THE
                  PURCHASER

              

      

      

      The
        Purchaser guarantees that it is a company duly incorporated and validly existing
        with limited liability in British Virgin Islands and has full rights and
        controls to purchase the Sale Interests in the Company. 

      

      
        	
                4

              	
                EXECUTION
                  DATE 

              

      

      

      The
        Vendor and the Purchaser hereby jointly agree that the signing date of this
        Agreement is the execution date of the sale and purchase of the Sale Interests
        in the Company. 

      

      
        	
                5

              	
                LIABILITIES
                  OF THE COMPANY 

              

      

      

      
        	
                5.1

              	
                Within
                  30 business days upon execution of this Agreement, the Vendor shall
                  rescind the employment contracts with all employees of the Company
                  (except
                  the employees that the Purchaser made in clear statement to retain),
                  and
                  the Company owned by the Purchaser after its fully control in the
                  Company
                  shall take no responsibility to hire any employee served for the
                  Company
                  before the execution of this
                  Agreement;

              

      

      

      
        	
                5.2

              	
                The
                  Company owned by the Purchaser after its fully control in the Company
                  shall take full responsibilities and liabilities of all assets
                  and
                  liabilities listed in the list of all assets and liabilities of
                  the
                  Company and existed before the Execution Date, which hereby was
                  presented
                  to the Purchaser by the Vendor. 

              

      

      

      
        	
                6

              	
                RIGHTS
                  AND OBLIGATIONS OF THE
                  SHAREHOLDER

              

      

      

      The
        Purchaser shall assume the responsibilities of all the rights and obligations
        as
        the shareholder of the Company since the Execution Date, which include but
        not
        limit to:-

      

      (1) Profit
        allocation rights and the voting rights;

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      (2)
        The
        unfulfilled rights and obligations of the Purchase upon the effect of this
        Agreement, which were covenanted in the “Agreement for Sale and Purchase of the
        Entire Issued Share Capital of Besteffort Investments Limited” dated November
        1st,
        2004,
        and other unfulfilled rights and obligations of the Purchase, which were
        covenanted in other contracts or agreements that the Purchaser as a party
        duly
        signed and executed before the effect of this Agreement. 

      

      
        	
                7

              	
                CONSIDERATION
                  

              

      

      

      
        	
                7.1

              	
                The
                  consideration for the sale and purchase of the Sale Interests shall
                  be
                  US$400,000 except otherwise agreed by both
                  parties.

              

      

      

      
        	
                7.2

              	
                The
                  Purchaser shall credit to the account designated by the Vendor
                  in full
                  amount of the consideration within 45 business days upon execution
                  of this
                  Agreement. 

              

      

      

      
        	
                8

              	
                CHANGE
                  OF THE BOARD OF DIRECTORS

              

      

      

      
        	
                8.1

              	
                Upon
                  the execution of this Agreement, the Vendor shall present written
                  resolution specifying the resignation of Yungeng Hu as the director
                  of the
                  Company;

              

      

      

      
        	
                8.2

              	
                Upon
                  the execution of this Agreement, the Purchase shall nominate the
                  new
                  directors of the Board of the
                  Company.

              

      

      

      
        	
                9

              	
                REGISTRATION
                  OF THE SALE AND PURCHASE OF THE SALE INTERESTS IN THE
                  COMPANY

              

      

      

      Upon
        the
        execution of this Agreement, the Vendor shall assist the Purchase to apply
        for
        the registration of the sale and purchase of the Sale Interests and the change
        of the Board of the Company, etc. with BVI government. 

      

      
        	
                10

              	
                HANDOVER
                  OF THE BUSINESS OF THE
                  COMPANY

              

      

      

      
        	
                10.1

              	
                Upon
                  the execution of this Agreement, the Vendor shall cease all the
                  business
                  activities of the Company except otherwise covenanted in this Agreement
                  herein and the activities to maintain the continuance of the
                  business;

              

      

      

      
        	
                10.2

              	
                Before
                  the completion of the handover, the Vendor has the obligations
                  to maintain
                  the assets of the Company to avoid the devaluation or damage to
                  the
                  assets;

              

      

      

      
        	
                10.3

              	
                Within
                  30 business days upon the execution of this Agreement, the Vendor
                  and the
                  Purchase shall complete the handover of the business of the Company.
                  The
                  Vendor shall guarantee the corporate secretary of the Company to
                  handover
                  all the documents to the Purchaser, including but not limit to
                  financial
                  and legal documents, business license, bank accounts and company
                  seal,
                  etc., and the Purchaser shall assign management staff to manage
                  the
                  business of the Company and has the obligations to assign staffs
                  to assist
                  the Vendor in completing all the aforesaid
                  works.

              

      

      

      
        	
                10.4

              	
                Before
                  the completion of the handover, the Company shall cease all the
                  financial
                  expenditure except those for maintaining the continuance of the
                  business.
                  

              

      

      

      
        	
                10.5

              	
                After
                  the completion of the handover, the Purchaser shall take full
                  responsibility to decide and bear all the financial expenditure
                  of the
                  Company.

              

      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        	
                11

              	
                BREACH
                  OF THE AGREEMENT 

              

      

      

      Provided
        that the Purchaser fails to pay the Vendor full consideration amount before
        the
        agreed payment date, an interest at 0.05% per day shall be accrued to the
        due
        amount and paid by the Purchaser to the Vendor. 

      

      Either
        the Vendor or the Purchaser, when fails to fulfill its obligations specified
        in
        this Agreement without legal reasons, shall assume the liabilities of breach
        to
        non-breaching party.

      

      
        	
                12

              	
                EFFECTIVENESS

              

      

      

      
        	
                12.1

              	
                This
                  Agreement will be effective immediately upon duly signed by both
                  parties;

              

      

      

      
        	
                12.2

              	
                Any
                  amendments to this Agreement shall be approved by both parties
                  in written
                  consent;

              

      

       

      
        	13	
                DISPUTE
                  SETTLEMENT 

              

      

      

      Any
        dispute, controversy or claim arising out of or relating to this Agreement,
        shall be settled by negotiation and discussion between both parties in good
        faith. In the event that the dispute, controversy or claim cannot be solved,
        this dispute, controversy or claim, as any parties requires, and after informing
        the other parties, shall be submitted and settled by China International
        Economic and Trade Arbitration Commission, Shanghai Branch. Arbitration Rules
        will be final, and will be binding on the Vendor and the Purchaser.

      

      
        	14	
                MICELLANEOUS

              

      

      

      This
        Agreement will be in two original copies, one copy with each party, and each
        copy shall be deemed as equally authentic. 

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

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

      

      

      

      SIGNED
        by

      for
        and
        on behalf of 

      

        /S/
          HARTCOURT
          CAPITAL, INC. 

      

      HARTCOURT
        CAPITAL, INC. 

      

      

      

      

      SIGNED
        by

      for
        and
        on behalf of 

      

        /S/
          GREAT
          FOCUS HOLDINGS LIMITED

      

      GREAT
        FOCUS HOLDINGS LIMITED

       

       

      6

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