TECHNOLOGY LICENSE AGREEMENT

This Technology License Agreement ("Agreement") is entered into on June 24, 2005, (the "Effective Date") among the following parties:

PARTY A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD .

LEGAL ADDRESS: 426 Xuefu Street, Taiyuan, Shanxi Province, China

PARTY B: SHANXI PUDA RESOURCES CO., LTD.

LEGAL ADDRESS: 426 Xuefu Street, Taiyuan, Shanxi Province, China

WHEREAS , Party A is a wholly foreign owned enterprise registered in The People's Republic of China (the "PRC") under the laws of the PRC;

WHEREAS , Puda Investment Holding Limited (“Puda”), an International Business Company incorporated in the British Virgin Islands, owns all of the registered capital of Party A;

WHEREAS , Party B is a domestic company with exclusively domestic capital registered in the PRC and is engaged in the business of coal crushing, preparation and cleaning (“Business”);

WHEREAS , Party A has established a business relationship with Party B by entering into an Exclusive Consulting Agreement dated as of the same date hereof (“Consulting Agreement”) and an Operating Agreement dated as of the same date hereof (“Operating Agreement”);

WHEREAS , pursuant to the Consulting Agreement and Operating Agreement between Party A and Party B, Party B shall pay Party A certain fees as set forth in the Consulting Agreement and the Operating Agreement (“Other Fees”);

WHEREAS , Party B is an affiliated Chinese entity of Party A;

WHEREAS , separately, Zhao Ming and Zhao Yao have irrevocably assigned and transferred to Party A certain intellectual property rights owned by them with respect to Party B’s coal crushing, preparation and cleaning pursuant to a Technology Assignment Agreement dated as of the same date hereof (“Business”);

WHEREAS , in connection with the cooperation of two parties, Party B desires to obtain from Party A, and Party A desires to provide to Party B, a license to use Party A’s water supported coal processing technology to permit Party B to use such technology for its Business, pursuant to provisions of this Agreement.

NOW THEREFORE , Party A and Party B through negotiations hereby agree as follows:

1.      Definitions.  

2.      License.

Party A hereby grants and agrees to grant to Party B a non-exclusive, world-wide, revocable license, under any and all copyrights, patents, trade secrets, mask work rights, and other intellectual property  rights now owned or hereafter acquired by Party A, to Use of the Product Technology for the purposes of: (i) using, designing, developing and manufacturing Derivative Products, (ii) providing services by applying Derivative Products, or (3) selling and otherwise distributing Derivative Products in the Designated Markets. Party A will deliver the Product Technology to Party B at Party B’s request for Use in accordance with this paragraph. Such delivery will include both the physical transfer of tangible embodiments of Product Technology and the oral and visual communication of non-tangible Product Technology. Party B is authorized to sub-license to any third parties, subject to the terms of this Agreement, provided that a prior written approval from Party A is obtained and a sharing of royalty agreement is reached between Party A and Party B for such sub-license.

3.      Royalties.

3.1       Within 30 days after execution hereof, Party B will pay Party A USD$50,000 in cash or a promissory note on terms to be negotiated by the parties.

3.2       In addition to the payment described in Section 3.1 above, Party B agrees to pay Party A a royalty fee (“Fee”) equal to 20% of Party B’s Operating Cash Flow. The Fee shall be paid monthly by Party B to Party A within 10 days following the end of each month based on the Operating Cash Flow for such month as estimated by Party A and Party B in good faith (“Estimated Monthly Amount”). Within sixty (60) days after the end of each fiscal quarter, Party A and Party B shall make a final determination of the actual Operating Cash Flow for such quarter (“Final Quarterly Amount”) based on the financial statements of Party B, which have been reviewed or audited by the Parties’ registered certifying accountant for U.S. financial reporting purposes (“Accountant”). To the extent the Final Amount is greater than the Estimated Monthly Amounts for such quarter, the Fee shall be adjusted and Party B shall promptly remit to Party A the additional Fee due and owing. To the extent the Final Amount is less than the Estimated Monthly Amounts for such quarter, the Fee shall be adjusted and Party A shall promptly remit to Party B the amount by which the Fee was overpaid.

Notwithstanding anything to the contrary contained in this Agreement, for each fiscal year of Party B, (i) in the event that 20% of Party B’s Net Income (as defined below) for the fiscal year is less than the Fee for such fiscal year, the Fee shall be adjusted such that it shall be equal to 20% of Party B’s Net Income for such fiscal year, and (ii) in the event that 20% of Party B’s Net Income is greater than the Fee for such fiscal year, the Fee shall be increased such that it shall be equal to 20% of Party B’s Net Income for such fiscal year. 

For purposes of this Agreement, the determination and calculation of Net Income and Operating Cash Flow shall made in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) as reflected on Party B’s U.S. GAAP financial state