Document:

(HOLTER TECHNOLOGIES LETTERHEAD OMITTED)

                        EXCLUSIVE DISTRIBUTION AGREEMENT

                       "UV systems for water disinfection"

         Between:

         Laboratory of Impulse Technique  (L.I.T.) ZAO., a company organized and
         existing under the laws of Russia and having its  registered  office at
         9, Institutskiy Per, Dolgoprudny, Moscow Region, Russia 141700, and its
         principal  place of business  at 44,  Krasnobogatyrskaya  Str.,  Moscow
         107076, Russia, in the person of Director Mr. S. Kostiouchenko,  acting
         on the basis of the power of Attorney  No.98-10-20-1  dd. 20.10.1998 on
         the one party hereinafter called "LIT,

         and

         PHILAQUA  Aufbereitungstechnik  GmbH, a company  organized and existing
         under the laws of  Germany  and having its  offices  at,  Beisenstrasse
         39-41,  D-45964 Gladbeck,  Germany, in the person of the Director Prof.
         Dr. H. Holler and Director Dr. O.  Leitzke,  acting on the basis of the
         Statutes  of  the  company,  on the  other  party,  hereinafter  called
         "PHILAQUA".

         Hereafter  respectively or together called as the context  requires the
         "Party/Parties".

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<PAGE>

         ARTICLE 1 - DEFINITIONS

         In this  Agreement,  the  following  terms  shall  bear  the  following
         meanings Unless the context clearly indicates otherwise:

         1.1.  "Territory" means world regions where the terms of this exclusive
         Agreement  are valid and  which  are  specified  in the Annex 1 to this
         Agreement.  The  Territory  contents  are  subject to change by written
         approval of both Parties.

         1.2.  "Products" means those UV-based water treatment devices as listed
         in Annex 2 of this  Agreement  and such other  products the Parties may
         from time to time decide upon prior written approval. Such decision may
         only be evidenced by express  written  agreement  duly  executed by the
         Parties.  1.3.  ,,Trademarks" means registered under the name of LIT or
         PHILAQUA  trademarks  which  are  agreed  to b8 used  for the  Products
         according to the terms of this Agreement.

         ARTICLE 2. PURPOSE OF THE AGREEMENT AND REPRESENTATION

         2.1.  PHILAQUA hereby agrees to procure  Products  exclusively from LIT
         and to take delivery of tile  Products  from LIT and to distribute  the
         same according to the terms of this Agreement.

         2.2.  LIT hereby authorizes PHILAQUA, under the conditions set forth in
         this  Agreement,  to distribute  Products  under the  Trademarks in the
         Territory.

         2.3.  During the terms of this  Agreement LIT  undertakes not to supply
         Products to other  distributors in the Territory.  in case LIT receives
         an order for delivery of Products from third parties in the  Territory,
         which are not  caused by the  marketing  activity  of  Philaqua,  as an
         exception,  LIT may sell the Products  directly to these third  parties
         upon preliminary written agreement of such sale with Philaqua. LIT will
         inform  PHILAQUA  about  every  third  party  which  is  acting  in the
         Territory and which contacts LIT directly with the intention to buy the
         Products.

         2.4.  During the terms of this  Agreement  PHILAQUA  undertakes  not to
         sell Products  outside the Territory.  If the Parties consider it to be
         necessary,  PHILAQUA will  undertake the sales of Products  outside the
         Territory.  Such  decision  should  be  confirmed  in  written  by both
         Parties.

         2.5.  This  Agreement  shall  not  confer  on  PHILAQUA  any  right  or
         authority  to assume  obligations  in the name of or on account of LIT,
         PHILAQUA shall not make any  representations or warranties with respect
         to Products  except as it is expressly  provided herein or as it may be
         subsequently authorized in writing by LIT.

         2.6.  PHILAQUA  is not  allowed  in any  kind to act on  behalf  of LIT
         unless this is specifically agreed upon in writing by LIT.

         2.7.  LIT is not  allowed  in any  kind to act on  behalf  of  PHILAQUA
         unless this is specifically agreed upon in writing by PHILAQUA.

         2.8.  PHILAQUA  shall  be  deemed  at all  times  to be an  independent
         contractor and nothing  contained  herein shall be deemed to create any
         agency or other relationship of any kind between PHILAQUA and LIT.

         2.9   PHILAQUA represents and agrees that it shall not procure Products
         (in the  form of kits or  otherwise)  from  any  party  other  than LIT
         without prior written consent of LIT.

         2.10. LIT  guarantees  that the Products  under this Agreement meet all
         standards  and  requirements  of DVGW and CE and which are specified in
         the technical documentation and manuals for the Products.  Annex 5 will
         specify the minimal technical requirements of the products. The parties

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<PAGE>

         agreed to sign this  Annex by the 31.  January  1999.  To this  extent,
         PHILAQUA  agrees to inform LIT timely and actively in a written form of
         all applicable standards,  norms and laws, etc. in the Territory and of
         any changes of such, whatsoever.

         2.11. PHILAQUA  represents  that it  is  perfectly  familiar  with  the
         features and  capabilities  of Products,  and that it shall perform its
         undertakings under this Agreement.

         ARTICLE 3 - MARKETING AND DISTRIBUTION OF PRODUCTS

         3.1.  PHILAQUA  shall  devote its best  efforts to promote  the sale of
         Products  throughout  the  Territory.  PHILAQUA  shall  market and sell
         Products as it considers  appropriate,  according to commonly  accepted
         commercial practices.

         3.2.  Without  limiting the  generality  of the  foregoing,  PHILAQUA's
         duties shall include:

         3.2.1.Carrying  out  appropriate   advertising  and  promotion  of  the
         Products In the Territory at its own cost;

         3.2.2.Maintaining adequate inventory levels of Products; in particular,
         PHILAQUA shall keep on hand a minimum stock of each type of Product and
         spare parts therefor,  as determined by PHILAQUA in  consultation  with
         LIT, corresponding to the probable sales and servicing requirements for
         the next  succeeding  six months,  or such other  period of time as the
         parties consider reasonable with respect to market conditions. PHILAQUA
         will ensure that this stock is  maintained  in good  condition and that
         all reasonable  precautions are taken to prevent its  deterioration.  A
         detailed  stock  position  will  be  communicated  in  writing  to  LIT
         periodically and at least by the end of each calendar quarter;

         3.2.3.Performing  warranty and after-sales  services of Products as set
         forth in Article 5 below;

         3.2.4.Causing a sufficient  number of adequately  trained and competent
         sales and  technical  (service)  personnel  to be  available  to ensure
         proper  and full  performance  of all of its  duties,  obligations  and
         responsibilities under this Agreement.

         3.2.5.Periodically advising LIT of any information  which may be useful
         to LIT and/or its affiliates in the manufacture, promotion or servicing
         of  Products,   including  information  relating  to  volume  of  sales
         initiated and concluded,  customer specifications,  import regulations,
         safety  codes or  similar  regulations  in the  Territory,  in order to
         enable UT to improve  Products  according to market  requirements,  and
         copies of promotional  and sale materials  relating to Products,  which
         are used by PHILAQUA or by its customers.

         3.3.  LIT will perform  research and development  activities to improve
         the Products  according to the changes in the regulations and standards
         in the Territory.

         3.4.  Should  PHILAQUA so request,  LIT shall  supply  PHILAQUA  with a
         reasonable  amount of written or oral information  concerning  relevant
         technical and/or marketing  questions.  This information  shall include
         service instructions and lists of spare parts.

         3.5.  In all  circumstances,  PHILAQUA  shall  indemnify  and  hold LIT
         harmless against any claim, action,  damage, loss or reasonable expense
         related  to the use of  Products  sold by  PHILAQUA,  except for claims
         based  upon the design or  manufacture  of the  Products  for which LIT
         shall be  responsible.  PHILAQUA  shall have and keep,  for the term of
         this  Agreement,   adequate   insurance  against  any  consequences  of
         PHILAQUA's  operations  pursuant  to this  Agreement,  shall  hold  LIT
         harmless against claims related thereto

         3.6.  PHILAQUA  agrees  to give LIT the  right  upon  request  to visit
         PHILAQUA  and/or  affiliates and have access to all documents and stock
         related to this Agreement.

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<PAGE>

         ARTICLE 4. CERTIFICATIONS

         4.1.  PHILAQUA   shall  obtain  at  its  own  expense  all   approvals,
         authorizations   and  certifications   from  all  competent   standards
         institutes,  laboratories,  government  agencies or  authorities of the
         Territory  that  may be  required  for  importing,  marketing  or using
         Products,  or which are reasonably  necessary to the marketing and sale
         of  Products.  LIT  shall  make  its  best  efforts  to  give  PHILAQUA
         reasonable assistance in applying for and obtaining the same.

         4.2.  PHILAQUA shall not sell to any  distributor,  dealer or agent any
         Product in any area where local  regulations  prohibit  the sale of the
         same, including any area where any required approval,  authorization or
         certification  has not been  obtained.  In case of any doubts  Philaqua
         will obtain written agreement from it's dealers, distributors or agents
         with  the  confirmation  of the  conformity  of the  Products  to local
         regulations.

         ARTICLE 5. GUARANTEE

         5.1.  As LIT does not have an appointed after-sales  service network at
         its  disposal in the  Territory  to effect  guarantee  and  after-sales
         service itself, the prices quoted to PHILAQUA,  as detailed in Annex 2,
         already  include  a  discount  of 2 % (two  per  cent)  which  shall be
         considered by the Parties as putting PHILAQUA in the position to effect
         a 1  (one)-year  guarantee  and  after-sales-service  for  Products and
         thereby excluding any obligation of third parties on LIT to provide for
         or supply the same.  All  obligations  on LIT by PHILAQUA  concerning 1
         (one)-year warranty and after-sales-service are not effected by this.

         5.2.  PHILAQUA  shall  establish  and  maintain  for  the  term of this
         Agreement the technical staff referred to under Article 3.2.4.  for the
         proper  performance of the services described above, and shall promptly
         take action on all reasonable  service  requests  concerning  Products.
         PHILAQUA  shall  adequately  and  expeditiously  perform  all the tasks
         described  under  this  Article  5, in  order  that  Product  users  be
         satisfied and that reputations of both Parties be maintained thereby.

         5.3   In order to enable LIT to Improve its Product  line and images of
         both Parties,  PHILAQUA shall supply LIT with quarterly written reports
         on PHILAQUA's guarantee and after-sales  activities undertaken pursuant
         to this Article 5.

         ARTICLE 6. ORDERS AND STOCK OF PRODUCTS.

         6.1.  Parties  agreed  herein on the minimum  planned  sale of Products
         during the terms of this Agreement which is represented in the Annex 4.

         6.2.  LIT shall make all reasonable  efforts,  within the limits of its
         plant capacity,  production schedules and subject to the fulfillment of
         prior  orders,  to supply to PHILAQUA the Products  during the terms of
         this  Agreement,  provided that PHILAQUA has placed the orders and made
         all payments as agreed under Article 7 below.

         6.3.  PHILAQUA  will  place  an  order  to LIT  for  each  purchase  of
         Products.

         6.4.  LIT will undertake the obligations to manufacture  and to prepare
         shipment of the Products after getting official order for the specified
         set of Products by sending an acknowledgement  of order.  Delivery time
         depends on the amount of the purchased products, can vary between 4 and
         14 weeks as it is stated in the Annex 2.

         6.5.  To ensure best  service for the  customer, Parties  will create a
         Stock of  Products  and spare  parts in the amounts to be agreed in the

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         beginning of every calendar year. The Stock contents for the first year
         of this agreement is agreed as it is specified in the Annex 3. Position
         of the Stock will be chosen by PHILAQUA to be the most convenient.

         6.6.  In order to fill  initially the Stock of Products as specified in
         the Annex 3, Philaqua will place an order with LIT for the whole volume
         of equipment  as  mentioned  in the Annex 3. The delivery  time of this
         equipment  will be not later than 12 weeks from the day of placing  the
         order.

         6.7.  In case Philaqua will receive a certain order from a customer for
         the  Products  which are in stock,  it will place an order with LIT for
         these Products with a view to complete the stock. Time of such an order
         will be agreed upon by the Parties.

         ARTICLE 7. PRICES, PAYMENT AND PROCEDURE OF GETTING PRODUCTS

         7.1.  Basic  prices  of the  Products  are  agreed  by the  Parties  as
         specified in the Annex2_  Basic prices are subject to change by written
         approval of both sides.

         7.2.  Prices  for the set of Products  which  will be  ordered  for the
         initial filling of the Stock (as specified in Annex 3) are agreed to be
         85(degree)k  of the  basic  prices  specified  in the  Annex  2 of this
         Agreement.

         7.3.  All  prices  are  quoted on the basis of FICA  Moscow  conditions
         (Incoterms 1990).

         7.4.  PHILAQUA will pay 100% of the amount of ordered  Products  within
         10 (ten)  days  after  receiving  the  shipment  but not later  than 20
         (twenty) days after receiving from LIT the shipping  documents (invoice
         and packing list)

         7.5.  The date when the money is  credited  to the bank  account of LIT
         will be considered  as the date of payment.

         7.6.  In case  PHILAQUA  will  discover  any  faults o  defects  of the
         Products  caused by improper  manufacturing,  it shall send a letter to
         LIT with the detailed description of the problems.

         7.7.  LIT will  admit  the  claims  of  defects  within  30 days  after
         receiving the Products by PHILAQUA.  This does not concern the warranty
         claims according to Article 5 of this Agreement.

         7.8.  LIT is obliged to repair all defects at its own  expenses  within
         30 days after  receiving  the  written  information  about the  defects
         (according to ch. 7.7) from PHILAQUA.

         ARTICLE 8. INTELLECTUAL PROPERTY RIGHTS

         8.1   LIT has all rights on the "LIT" trademark, which is registered in
         Russia and in any other country where LIT considers it to be necessary.
         PHILAQUA  has  all  rights  on  the  _  "PHILIT"  trademark,  which  is
         registered in Germany and in any other country where PHILAQUA considers
         it to be necessary.

         8.2   The Trademarks, PHILIT"  and "LIT" are allowed to be used for the
         Products  mentioned  in the  Annex  to  this  Agreement.  If one of the
         Parties wishes to use the Trademarks  for any other  purposes,  written
         approval of the other Party should be  obtained.  The said use shall be
         in accordance with the shape, form and color as agreed by both Parties.

         8.3   LIT will give to PHILAQUA free license to us ,,LIT" trademark for
         the Products.

         8.4   PHILAQUA  will give to LIT free license to us ,PHILIT"  trademark
         for the Products.

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<PAGE>

         8.5. In conjunction  with Products or the marketing  thereof,  PHILAQUA
         shall  not use any  trade  names,  trademarks  or logo  other  than the
         "PHILIT" and/or "LIT" trademarks. PHILAQUA's obligation hereunder shall
         survive the expiration or termination  of this  Agreement.  Use of free
         licenses terminates when this Agreement terminates or expires.

         8.6.  No representation  is made by LIT,  expressly or by  implication,
         that any Products  used by, sold to, or to be sold by PHILAQUA will not
         infringe third party proprietary rights. Accordingly,  LIT shall not be
         responsible,  either  directly or as an  indemnitor  of PHILAQUA or its
         vendees,  for any consequence of any alleged,  purported or established
         infringement  of  said  third  party's  rights  in  connection  with or
         resulting  from said use or sale of Products.

         8.7.  PHILAQUA  will not  apply  to  obtain  any  kind of  intellectual
         property  rights  related to the Products in the  Territory  and beyond
         without prior written approval by LIT.

         8.8.  If both Parties  decide that it is needed for the better sales of
         the  Products,  they  may  apply  and  obtain  additional  intellectual
         property  rights  related to the Products in the  countries  inside the
         Territory  according to a separate  written  agreement in each case. If
         one of the parties will not support to get intellectual property rights
         in the  Territory for mutual  ownership  each Party is allowed to apply
         and obtain these  rights by itself upon  written.  confirmation  of the
         other Party.

         ARTICLE 9. TERMINATION

         9.1.  This Agreement  shall  retroactively  come into force on the date
         when it is signed by both parties,  and,  unless  sooner  terminated as
         hereinafter  provided,  shall remain in force until  December 31, 2001.
         Subject to the  PHILAQUA  fulfilling  its  obligations  and meeting the
         sales  targets,  this  Agreement  may be extended  subject to terms and
         conditions  to be agreed upon by the Parties  hereto at least 3 (three)
         months prior to its expiration,  it being  understood that such renewal
         should be  substantially  similar to the terms and  conditions  of this
         Agreement.

         9.2.  If either LIT or PHILAQUA do not have any longer the intention to
         extend  this  Agreement  they  have to inform  the other  Party 6 (six)
         months prior to its expiration at the least.

         9.3.  Without  limiting  the  generality  of  the  foregoing,  LIT  may
         forthwith terminate this Agreement:

         9.3.1.If PHILAQUA fails (i) to take delivery as scheduled of any of its
         orders  provided  for  under  Article  6,  (ii) to  supply  information
         requested in  conformity  with Article  3.2.2 and 3.7. or (iii) to make
         any payments as provided for in this Agreement;

         9.3.2.If PHILAQUA  fails to fulfill the sales  program as agreed in the
         Annex 4 to this Agreement.

         9.3.3.In the event of the  bankruptcy,  winding  up or  liquidation  of
         PHILAQUA,  whether  voluntary  or  involuntary,   or  of  the  sale  of
         substantially  all of PHILAQUA's  assets, or of taking over of PHILAQUA
         directly or indirectly by a third party.

         9.4.  Without  limiting the generality of the  foregoing,  PHILAQUA may
         forthwith terminate this Agreement

         9.4.1 If LIT violates the exclusivity right as specified in ch 2.3.

         9.4.2 If LIT does not fulfill its  obligations as mentioned in ch. 2.10
         and does not  cooperate  with  PHILAQUA  to  eliminate  problems  which
         prevent from distribution of the Products in the Territory.

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<PAGE>

         9.4.3      If LIT  fails its  obligation  concerning  delivery  time as
         specified in Annex 2.

         9.5.       The rights and obligations of the parties upon expiration or
         early   termination  of  this  Agreement  for  any  reason   whatsoever
         (including,  but not limited to,  cancellation  caused by court order),
         shall be as follows:

         9.5.1.     PHILAQUA  shall 9.5.1.1 Settle all payments for the Products
         according to the article 7 of this Agreement.

         9.5.1.2.   Return to LIT within  thirty (30) days of LIT's  request all
         documents of any kind  communicated  to PHILAQUA by LIT,  which contain
         any confidential  information relating to Products, and likewise return
         all  materials  bearing  the  Trademark  prepared  by LIT,  and destroy
         PHILAQUA prepared material bearing the Trademark;

         9.5.1.3.   Cease  any  business  or  activity  directly  or  indirectly
         connected  with  this  Agreement  except  (i)  for  the  guarantee  and
         after-sales  services explained under Article 5, and (ii) insofar as is
         necessary for the safe of the remaining inventory of Products.

         9.5.1.4.   Cancel, within the shortest  possible  time,  any  insertion
         relating to Products,  the  Trademark or any  tradenames  of LIT in all
         telephone and trade or professional  directories,  and remove forthwith
         any signs or advertising  referring to or in connection  with Products,
         the  Trademark  or  tradenames  of LIT and,  in general,  refrain  from
         holding forth thereafter in any manner whatsoever that PHILAQUA has, or
         has had, any connection with Products.

         9.5.2      LIT shall:

         9.5.2.1    Return to PHILAQUA  within  thirty  (30) days of  PHILAQUA's
         request all  documents  of any kind  communicated  to LIT by PHILAQUA,
         which contain any confidential  information  relating to Products,  and
         likewise  return  all  materials  bearing  the  Trademark  prepared  by
         PHILAQUA, and destroy LIT prepared material bearing the Trademark;

         ARTICLE 10. GENERAL PROVISIONS

         10.1. Waiver
         Failure by either party on one or more occasions to avail itself of one
         or more  provisions of this Agreement shall in no event be construed as
         a waiver thereof.

         10.2. Delayed Performance - Force Majeure
         Neither  party  shall be  liable  in any way  because  of any  delay in
         performance  hereunder  which  is due to  unforeseen  circumstances  or
         causes  beyond its  control.  including,  but not limited  to,  strike;
         lockout; riot; war; fire; flood; changing in national regulations which
         can prevent from implementation of this Agreement.

         10.3. Notices
         All notices, summons and communications related to this Agreement shall
         be written do English and native language of the sender,  and addressed
         by registered air mail to the other Party at its  hereinabove set forth
         address,  or any new  address  that has been  notified In the same way.
         Each Party is  entitled to  disregard  any text not written in English.

         10.6. Infringement of laws or regulations
         In case any provision of this Agreement infringes any applicable law or
         legally  enforceable rule, said law or rule shall prevail,  but only to

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         the extent necessary to comply therewith,  and the infringing provision
         shall be null and void to that extent,  while the other  provisions  of
         this Agreement shall remain in full force and effect; In which case the
         parties shall then endeavor to replace any such infringing provision by
         mutually  acceptable  substitutes,  in order  that the  balance of this
         Agreement remain unchanged to the extent permissible.

         10.7. Governing Law - Competence
         This Agreement, its interpretation,  performance, or any breach thereof
         shall be  governed  by and  construed  according  to Dutch law  without
         reference  to  the  rules  on  conflicts  of  laws,  and in  case  of a
         disagreement that cannot be settled amicably,  the Rotterdam  arbitrage
         court, The Netherlands, exclusively, shall be competent.

         IN WITNESS  WHEREOF the Parties  have signed this  Agreement  on .Y2a o
         &cew6?F 1998 in duplicate in the Russian, German and English languages,
         the  three  texts  being  equally  authentic.  In  case  there  is  any
         divergence of interpretation  between the Russian and German texts, the
         English text shall be operative.

         Correspondent addresses of the Parties:
         -----------------------------------------------------------------------
         L.I.T. ZAO.                            PHILAQUA Aufbereitungstechnik
         107076 Moscow, Russia                  GmbH
         Krasnobogatyrskaya str. 44             Beisenst. 39 -41
                                                D-45964 Gladbeck
         -----------------------------------------------------------------------
         Bank:                                  Bank
         Federal Bank for Innovations &         Commerzbank Gladbeck
         Development                            Account No. 82 88 666
         account No. 4070 2280 9000 0000 0001   BLZ: 360 400 39
         Corr. Bank: Commerzbank,
         Frankfurt/Main, Germany
         SWTFT: COBA DE FF
         Corr. Acc-No.: 4008864324 DEM
         -----------------------------------------------------------------------
         Signed:                                Signed:
         /s/ Sergei Kostiouchenko               /s/ Dr. H. Holter
         ------------------------               -----------------
         Name: Sergei Kostiouchenko             Name: Prof. Dr. H. Holter
         Title: Director                        Title: Director
         -----------------------------------------------------------------------
                                                Signed:
                                                /s/ Dr. O. Leitzke
                                                ------------------
                                                Name: Dr. O. Leitzke
                                                Title: Director
         -----------------------------------------------------------------------

                                       8
<PAGE>

         Annex 1.

         Territory  under the EXCLUSIVE  DISTRIBUTION AGREEMENT, UV  systems for
         water disinfection.

         The Territory  agreed by the Parties  includes all the countries in the
         wood with exception of the countries of the former Soviet Union.

                                       9
<PAGE>

         Annex 2.

         List of Products under the EXCLUSIVE DISTRIBUTION AGREEMENT "UV systems
         for water disinfection":

         UV systems for  disinfection of drinking water (PHILIT series according
         to Tablet).  UV systems for  disinfection of secondary  effluent at the
         sewage water  purification  plants including  packaged and open channel
         systems,  spare  parts  for  the  mentioned  UV  systems.  Table  1. UV
         Sterilizers of PHILIT series:
<TABLE>
<CAPTION>

         -------------------------------------------------------------------------------------------
         No    Equipment description                                        Price           Delivery
                                                                            [DM]              Time
                                                                                             (weeks)
         -------------------------------------------------------------------------------------------
<S>            <C>                                                          <C>                 <C>
         1     UV Sterilizer PHILIT 5,                                      2300                4
               UV reactor of polished stainless steel, 6 m3/h water
               flow at 98% transmissivity, IP-65 plastic control
               cabinet, UV sensor, with control system and
               stainless steel connection box
               Options:
               Stainless steel control cabinet                              500
               Clearting system VB-2(2)                                     110
               Painted steel frame                                          120
               Stainless steel frame                                        300
               Spare lamp DB-75-2                                           50
               Spare quartz sleeve                                          36
         ------------------------------------------------------------------------------------------
         2     UV Sterilizer PHILIT 12,                                     3000                4
               UV reactor of polished stainless steel, 13.9 m3/h
               water flow at 98% transmissivity, IP-65 plastic
               control cabinet, UV sensor with control system and
               stainless steel connection box
               Options:
               Stainless steel control cabinet                              500
               cleaning system WB-2(2)                                      110
               painted steel frame                                          120
               stainless steel frame                                        300
               spare lamp DB-75-2                                           50
               spare oartz sleeve                                           36
         ------------------------------------------------------------------------------------------
         3     UV Sterilizer PHILIT 50,                                     5000                4
               UV reactor of polished stainless steel, 50 m3/h
               water flow at 98% transmissivity. IP-65 plastic
               control cabinet, UV sensor with control system told
               stainless steel connection box
               Options:
               Stainless steel control cabinet                              500
               cleaning system WB-5(2)                                      153
               painted steel frame                                          120
               stainless steel frame                                        300
               spare lamp DB-75-2                                           50
               spare uartz sleeve                                           36
         ------------------------------------------------------------------------------------------
         4     UV Sterilizer PHILIT 100,                                    6000                4
               UV reactor of polished stainless steel, 100 m3/h
               water flow at 98% transmissivity, IP-65 plastic
               control cabinet, UV sensor with control system and
         ------------------------------------------------------------------------------------------
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>

         -------------------------------------------------------------------------------------------
         No    Equipment description                                        Price           Delivery
                                                                            [DM]              Time
                                                                                             (weeks)
         -------------------------------------------------------------------------------------------
<S>            <C>                                                          <C>                 <C>
               stainless steel connection box
               Options:
               Stainless steel control cabinet                              500
               cleaning system WB-5(2)                                      153
               painted steel frame                                          120
               stainless steel frame                                        300
               spare lamp DB-75-2                                           50
               spare quartz sleeve                                          36
         -------------------------------------------------------------------------------------------
         5     UV Sterilizer PHILIT 200,                                    11500               6
               UV reactor of polished stainless steel, 200 m3/h
               water flow at 98% transmissivity, IP-65 plastic
               control cabinet, UV sensor with control system and
               stainless steel connection box
               Options:
               Stainless steel control cabinet                              500
               cleaning system WB-5(2)                                      153
               painted steel frame                                          120
               stainless steel frame                                        300
               spare lamp DB-75-2                                           5O
               spare quartz sleeve.                                         36
         -------------------------------------------------------------------------------------------
         6     UV Sterilizer PHILIT 400,                                    22000               14
               UV reactor of polished stainless steel, 486 m3/h
               water flow at 98% transmissivity, IP-65 stainless
               steel control cabinet and connection box, UV
               sensor with control system
               Options:
               Cleaning system WB-5(2)                                      153
               Spare lamp DB-75-2                                           50
               Spare quartz sleeve                                          36
         -------------------------------------------------------------------------------------------
         7     UV Sterilizer PHILIT 800,                                    43000               14
               UV reactor of polished stainless steel, 1000 m3/h
               water flow at 99% transmissivity, IP-65 stainless
               steel control cabinet and connection box UV
               sensor with control system
               Options:
               Cleaning system WB-5(2)                                      153
               spare lamp DB-75-2                                           50
               spare quartz sleeve                                          36
         -------------------------------------------------------------------------------------------
</TABLE>
         Delivery time means period of time between LIT receiving the order from
         PHILADUA and LIT  informing  PHIUIOUA  that the order is completed  and
         ready for  shipment  and  sends the  shipping  documents  (invoice  and
         packing list).

                                       11
<PAGE>

         Annex3.

         Stuck  of  Products  in  Philaquft  under  Me  EXCLUSIVE   DISTRIBUTION
         AGREEMENT.UV  systems for wafer disinfection" for the first year of the
         Agreement validity.

             1. Philit 5 - 5 pieces,
             2. Philit 12 - 5 pieces,
             3. Philit 50 - 2 pieces,
             a. Philit 100 - 2 pieces,
             5  Philit 200 - 1 piece.
             6. Spare lamps DB-75 - 50 lamps,
             7. Spare quartz sleeves - 30 pieces,
             8. Cleaning system WB-2 - 2 pieces,
             9. Cleaning system WB-5 - 2 pieces.

                                       12
<PAGE>

         Annex4.

         The minimum  volumes of sales to maintain the conditions of Exclusivity
         under  the  EXCLUSIVE  DISTRIBUTION  AGREEMENT  "UV  systems  for water
         disinfection"

              Year                            Volume of purchase of
                                              Products from LIT
         -----------------------------------------------------------------------
              1999                              250 000 DM
              2000                            1 500 000 DM
              2001                            3 000 000 DM

         The aim of the parties is to achieve total volume of purchase of 5 Mio.
         DM dunng the mentioned three years.

         If PHILAQUA exceeds the specified volume for a given year the volume of
         excess will be added to the volume of the subsequent year.

                                       13JOINT VENTURE AGREEMENT
                            -----------------------

                                     between

                         Hoelter Technologies Holding AG
                         23548 Calabasas Road, Suite 203
                               Calabasas, CA 91302
                            United States of America
                            (Tel.: 001-818-224.2145)
                             (Fax: 001-818-224.2145)

                      - hereinafter referred to as "HTH" -

       represented by Prof. Dr. Dr. Heinrich Holter, Chairman of the Board
                                       and

                            Fushun Coal Mining Bureau
                    No. 25, Zhongyang Street, Xinfu District
                        113008 Fushun, Liaoning Province,
                           People's Republic of China
                            (Tel.: 0086-413-253.8888)
                            (Fax: 0086-413-253.2267)

                    - hereinafter referred to as the "FCMB" -

             represented by Mr. Wang Zhan Zhou, Director of the FCMB

     - FCMB and HTH hereinafter collectively referred to as the "Partners" -

                                       1
<PAGE>

                                    Preamble

To improve  commercial  viability at the FCMB's  Laohutai  Colliery by producing
additional   coking  coal  from  slurry  and  to  reduce  the  impact  upon  the
environment,  the  Joint  Venture  Company  to be  established  by FCMB  and HTH
(hereinafter  referred  to as the JV) intends to erect and operate a coal slurry
preparation plant (hereinafter referred to as the CSPP).

Heinrich  Holter GmbH  (Holter)  of  Gladbeck,  Germany,  an  affiliate  of HTH,
possesses  the  know-how  and  technology  needed  to erect and  operate  such a
preparation plant.

The Partners  subscribe to the  principle of equality and mutual  benefit and by
way of amicable  negotiations  have agreed to establish a Joint Venture  Company
pursuant to the "Law of the  People's  Republic  of China on Joint  Undertakings
with  Sino-Foreign   Participation"   and  other  applicable  Chinese  laws  and
regulations.

                                Article 1 Purpose

The purpose pursued by the JV Partners conforms to their desire:

o  to promote  economic  cooperation and technology  transfer;
o  to increase the commercial strength of both Partners;
o  to promote environmental  protection;
o  to create jobs.

All activities of the JV are subject to the laws,  orders,  and other applicable
statutory provisions and regulations of the People's Republic of China.

On approval and  registration  by the competent  Chinese  authority the JV shall
enjoy the status of a juristic  person under  Chinese law and be entitled to the
protection and benefits offered by the applicable Chinese laws and regulations.

The company of the JV is a limited liability company.

This means that in settling  the debts of the JV the  creditors  of the JV shall
have recourse only to the assets of the Joint Venture Company.

                                       2
<PAGE>

Each JV  Partner  shall be  liable to the JV only in the  amount of the  capital
subscribed.  The profits,  risks,  and losses of the JV shall be  distributed in
accordance with each Partner's contribution to the registered capital.  However,
no Partner shall in any case assume  liability for the debts or  obligations  of
the other.

With respect to the debts or  obligations of the JV the Partners shall be liable
only in the amount of their subscribed, but as yet unpaid capital contributions.

                            Article 2 Name of the JV

The JV has the Chinese name:

             "Fushun-Holter Jingmei Youxian Zeren Gongsi"

The name of the JV in German is:

    "Fushun-Holter Kohlenaufbereitungs-Gesellschaft mit beschrankter Haftung"

The official address of the JV is:

No. 19, Huwan Street, Dongzhou District
Fushun, Liaoning Province, People's Republic of China
Zip code 113003.

       Article 3 - Nominal Capital of the JV, Percentage of Participation

The nominal capital of the JV equals 50% of the total investment and amounts to:

                                 30 200 000 yuan
                (conversion into USD effected on the basis of the
              official exchange rate in China on 8 September 2000)

The nominal capital shall be paid in cash by the  shareholders  (in yuan by FCMB
and in USD by HTH) in the amount of their JV stake.

In accordance with their stakes in the JV, FCMB shall subscribe 49% and HTH 51 %
of the nominal capital.

                                       3
<PAGE>

The nominal capital of the JV Company shall be paid by the Parties  according to
their share of the  registered  capital onto an account held by the JV within 30
days of the JV being approved by the competent Chinese local authority.

All USD amounts  referred to in this  Agreement  shall be converted into yuan on
the basis of the yuan-USD  exchange rate published by the State Foreign Exchange
Control Authority of the People's Republic of China as of the date hereunder.

                            Article 4 Term of the JV

The term of the JV shall be 7-1/2 years, commencing on the date the plant enters
into full  production.  On  completion  of the term the JV shall be dissolved in
accordance with the terms set forth in the Bylaws.

If,  on  completion  of the  term of the  JV,  both  Partners  are  desirous  of
continuing  the JV, the Partners in the joint  undertaking  shall  without delay
make and submit to the local authority  responsible for the joint  undertaking a
written  agreement  contrary  to the  terms  of  Paragraph  1  providing  for an
extension of the term of the joint undertaking.

Upon  affixation of signatures to this  Agreement the JV shall be deemed to have
been established on the day the JV is authorized to commence trading.

                              Article 5 Fiscal Year

The fiscal year of the JV shall commence on 1 January of a calendar year and end
on 31 December of the relevant year. An abridged fiscal year shall be formed for
the year 2000.

                        Article 6 Assignment of Interests

No Partner of the JV may assign  its  subscribed  interest  in the JV to a third
party in whole or in part  without  the  consent  of the  other JV  Partner  and
agreement of the original control and approval body.

Should a JV Partner assign its interest in the JV in whole or in part, the other
Partner shall have the right of first  refusal.  "Right of first refusal" in the
aforementioned  sense means that the other  Partner can call upon the  assigning

                                       4
<PAGE>

Partner to transfer its interest to the other Partner on the same  conditions as
would be agreed for an assignment to a third party.

                          Article 7 Business of the JV

The JV's  production  and business  scope covers the  production of two saleable
coal products from raw coal slurry at Laohutai Colliery and the sale thereof.

The following products shall be produced:

- coking coal:           K I containing 8-9% ash and 12-15% H2O,(K8 according to
                         Standard)
- industrial grade coal: K II containing 30-35% ash and 22-26% H2O.

To this end the JV shall  erect and  operate  a coal  slurry  preparation  plant
(CSPP) on the site of Laohutai  Colliery,  partly in buildings already belonging
to the existing preparation plant and partly in new buildings.

              Article 8 Technology and Performance of the Partners

Process know-how and development is by Heinrich Holter GmbH, Gladbeck,  Germany.
In addition,  Holter shall supply the core  preparation  equipment for the plant
from Germany.

The FCMB   shall  supply  the  remaining  parts of the plant and  construct  the
aforementioned buildings.

The goods and  services  supplied  by both  Partners  for the  construction  and
operation of the CSPP have been laid down  individually  in two separate  supply
contracts, the terms and conditions of which have already been negotiated by the
JV and Holter and the FCMB respectively. The supply contracts shall be concluded
immediately  in their  existing form and substance by the JV upon  affixation of
signatures to the JV Agreement.

The entire raw slurry needed to operate the plant, in the size range approx. < 2
mm, shall be supplied to the JV by the FCMB from the existing  preparation plant
at Laohutai  Colliery at a cost price of 20 yuan/t  containing 22% H20,  surface
moist.

                                       5
<PAGE>

The coal slurry  price shall be linked to  developments  in the market price for
industrial  grade coal (KII).  Changes in the coal slurry price will be effected
in accordance with the percentage change in the price for industrial grade coal.

The agreed raw slurry quantity is 168 000 tonnes/year  (surface dry). The agreed
water  content is 22% H20,  giving a quantity  of 215 000  tonnes/year  (surface
moist).  (The individual  water content  definitions are provided at Exhibit 7.)
These quantities can fluctuate to a certain extent.

Upon  preparation  of the slurry by the JV, the FCMB shall on a long-term  basis
purchase  the  aforementioned  two saleable  products  from the JV at the market
price.  The market price is defined as being the average amount  received by the
FCMB  from  the sale of  coking  coal  (KI)  and  industrial  grade  coal  (KII)
respectively.

At the beginning of 2000 the market price for coking coal from Laohutai Colliery
was 280 yuan/tonne, in accordance with Exhibit 6 (price list).

KI:

Accordingly,  the JV shall on the basis of the 2000  price  receive a payment in
the amount of 277.5 yuan/t, moist from the FCMB for the KI product.

When the plant goes into  operation  this payment shall be adjusted on the basis
of the FCMB's price list for the year 2002.

The  difference in the FCMB's coal price between the years 2002 and 2000 will be
added to or subtracted from the payment made to the JV for KI.

Based upon a range of 12-15%,  the  assumed  water  content of the KI product is
approx. 13.5%. The ash content is approx. 8-9%.

                                       6
<PAGE>

KII

On the basis of the year 2000  price the sales  price  charged  by the JV to the
FCMB for  industrial  grade coal (K II) is 55 yuan/t,  moist.  The price will be
adjusted as for KI.

Based upon a range of 22-26%,  the assumed  water  content of the KII product is
approx. 24%. The assumed ash content is approx. 30-35%.

In the  event of any  changes  in price  the FCMB  shall on 21  December  of the
relevant  calendar year inform the JV of the price levels for the following year
by submission  of the new price lists.  The price changes shall take effect on 1
January of the following calendar year.

As the FCMB will incur  additional  sales  costs in selling  the JV's  products,
these shall be refunded to the FCMB in the amount of 1.0% of the JV's turnover.

For the erection and operation of the CSPP the FCMB is to make  available to the
JV buildings and any equipment still in a utilizable  condition at a charge. The
costs hereof are included in the FCMB's supply contract with the JV.

The JV shall pay the FCMB an annual rent of 30 000 yuan for the use of the site.

The FCMB shall make  available  all the  necessary  utilities  to the JV at cost
price without any mark-up (the current price for electrical energy, for example,
is 0.59 yuan/kWh and 1.20 yuan/m3 for water).

Holter shall make available the process know-how.

Holter is  available  to monitor  the process  technology  and  machinery  in an
advisory  capacity.  To this end a Holter  specialist  will  visit the site four
times a year for two weeks at a time. The costs hereof shall be borne by the JV.

Holter  shall  provide the spare parts  service for the imported  machinery  and
plant components on behalf and for the account of the JV.

As  and  when  required  by  the JV  this  shall  include  the  inquiry,  order,
organization  of the  transport,  and  control of quality  and  delivery  dates.
Important plant  production data  shall be sent to Holter in Germany on a  daily

                                       7
<PAGE>

basis using an SMS (short message  service)  system,  thus  permitting the early
provision of technical assistance in the event of any disruptions in the routine
operation of the plant.

                    Article 9 Investment Realization Schedule

The coming into effect of this Agreement,  its performance,  and the erection of
the CSPP shall be effected in accordance with the schedules attached at Exhibits
1 and 2.

The  collective  goal of the FCMB and  Holter is to keep the plant  construction
period as short as possible.

                             Article 10 JV Personnel

On  handover  of the CSPP by Holter  and the FCMB to the JV the  plant  shall be
operated by and at the responsibility of the Ms own specialist personnel.

The specialist  personnel  consists of the plant managers employed by the JV and
the operating personnel.

The operating  personnel  selected by the JV will be made  available by Laohutai
Colliery in return for a reimbursement of personnel costs.

For the  duration  of the  secondment  this  personnel  shall be  subject to the
disciplinary control of the JV.

The details shall be laid down in a personnel  secondment  agreement still to be
made between Laohutai Colliery and the JV.

                                       8
<PAGE>

                      Article 11 Duties of the JV Partners

Duties of the FCMB:

The FCMB shall:

-    submit applications for the approval,
     registration,  licensing of the business, and any other matters relating to
     the formation of the JV by the competent government offices of the People's
     Republic of China;

-    if necessary, submit an application to prolong the right to use the site to
     the authority in the People's Republic of China responsible for the site;

-    obtain the  license to operate  the plant and  provide  the  infrastructure
     required to operate the plant and the premises and other  facilities of the
     JV during the term thereof;

-    pay its contribution to the nominal capital and secure the financing of the
     JV in a total amount of 49% of the funds invested;

-    procure  the goods and  services in  accordance  with the  separate  supply
     contract negotiated by and between the JV and the FCMB;

-    process the import customs  declaration  and all other such  formalities in
     conjunction   with  the  import  of  machinery   and   equipment   and  the
     transportation of the imported goods on Chinese territory;

-    assist  the  JV in  recruiting  Chinese  management  staff  and  any  other
     necessary staff on request by the JV;

-    assist  foreign  personnel  in  applying  for entry  visas,  work  and,  if
     necessary,  route  permits,  and process any travel  formalities  as may be
     required in the People's Republic of China;

-    handle any other matters entrusted to it by the JV.

Duties of HTH:

HTH shall:

-    procure  the goods and  services in  accordance  with the  separate  supply
     contract negotiated by and between the JV and Heinrich Holter GmbH;

-    pay its contribution to the nominal capital and secure the financing of the
     JV in a total amount of 51 % of the funds invested;

-    supply the know-how and modern and reliable equipment and CSPP technology;

                                       9
<PAGE>

-    guarantee the following technical product standards:

     -   KI: ash content  8-9%,  moisture  12-15%,  45%  (plus/minus  2%) of the
         saleable product, ash content of the raw slurry 20.15%;

     -   KII: ash content  30-35%,  moisture  22-26%, 55% (plus/minus 2%) of the
         saleable  product,   ash  content  of  the  raw  slurry  20.15%;  -

-    if  applicable,  handle any matters  entrusted  to it by the JV such as the
     selection and purchase of additional  machinery and equipment outside China
     etc.

                           Article 12 Bodies of the JV

                              A) The Managing Board

-    The  supreme  authority  of the JV is the  Managing  Board.  It shall  have
     decision-making powers for all major issues.

-    The following items must be agreed by unanimous vote:

     -   general  company policy and development  plans,  short- and medium-term
         objectives,    in   particular    business-related   plans,   including
         investments, financial planning and loans;

     -   annual plans including financing;

     -   applicable finance and budgeting principles;

     -   selection,  acquisition,  use, and closure of branch  offices and other
         facilities;

     -   percentage  relationship,  amount,  and  utilization  of allocations to
         reserves and/or provisions and the expansion, bonus and welfare funds;

     -   allocation  of  net  profits  and  losses  plus  special   measures  in
         unforeseen circumstances;

     -   staffing  guidelines   including   recruitment   conditions  and  labor
         protection as well as disciplinary guidelines;

     -   organization   and   modification   of  the  JV  structure;   areas  of
         responsibility of the management and their appointment,  dismissal, and
         recruitment   conditions,   and  the  salary   paid  to  the   managers
         [Geschaftsfuhrer];

     -   major changes in the business scope of the JV;

     -   mergers  with,  investment  in, or  withdrawal  from  other  commercial
         undertaking and company formation;

                                       10
<PAGE>

     -   all items  requiring a resolution  by the Managing  Board at its annual
         meeting such as annual reports and profit-and-loss statements;

     -   appointment and dismissal of one or more than one external auditor;

     -   increases in the registered capital;

     -   amendments of this JV Agreement and/or the company Bylaws;

     -   use of  registered  capital and  allocation  in whole or in part of the
         registered capital or the capital contributions made by the Partners;

     -   expansion, termination, dissolution, and liquidation of the JV;

     -   any other items as considered appropriate by the Managing Board.

The  Managing  Board  shall be  appointed  by the  Partners  without  delay upon
conclusion of the JV Agreement.

The Managing Board shall consist of four members, two of whom shall be appointed
by the FCMB and two by HTH.

Initially,  the chairman of the Managing Board shall be appointed by HTH and the
deputy  chairman  by the FCMB.  On expiry of the first  term of office  the FCMB
shall nominate the board chairman. Thereafter, chairmanship of the Managing Bard
shall alternate per period of office between the Partners.

The term of office of the board  chairman and his deputy is three years.  It may
be extended by the relevant party if the appointment is to be continued.

The term of office of the ordinary board members is also three years.  It may be
extended by the relevant party if the appointment is to be continued.

FCMB hereby nominates:

Mr. Wang Zhanzhou (Deputy Managing Board Chairman)

Mr. Chen Naikang (ordinary board member)

HTH hereby nominates:

Prof. Dr. Dr. Heinrich Holter (Chairman of the Managing Board)

                                       11
<PAGE>

Dr. Li Xixian (ordinary board member).

The Chairman of the Managing Board is the legal representative of the JV.

If, for whatever  reason,  the chairman is unable to carry out his duties,  said
duties shall be carried out by the deputy chairman.

The  Managing  Board shall  convene at least one meeting per year.  The meetings
shall  normally  be held at the head  office of the JV; one  meeting may also be
held at another venue by mutual agreement of the Partners.

All outlays  incurred by the members of the Managing  Board in  connection  with
board meetings  (flight and local travel costs plus hotel and subsistence  costs
etc.) shall be borne by the JV in the amount of the actual  costs  incurred  and
backed by documentary evidence.

The board chairman  shall convene and preside over the meetings.  Minutes of the
meetings shall be taken and kept on file.

                                B) The Management

Upon being appointed the Managing Board shall immediately  select the management
team, which shall consist of a director and a deputy-director.

The management  shall be responsible  for conducting the day-to-day  business of
the JV under the stewardship of the Managing  Board.  The  management's  term of
office shall be three (3) years; the management may be re-appointed.

Initially,  the director shall be appointed by the FCMB and the  deputy-director
by HTH.  On expiry of the  period of office  HTH shall  nominate  the  director.
Thereafter,  the  position  of  director  shall  alternate  per period of office
between the Partners.

The management is obliged to effect the resolutions of the Managing Board and to
organize and conduct the day-to-day business of the JV.

                                       12
<PAGE>

The  Partners  shall not refuse to appoint the manager  proposed by the relevant
Partner without good cause.

In  the  absence  of  the  director  his  duties  shall  be  transferred  to the
deputy-director  or an employee of the JV empowered to stand in for the director
in his absence. This shall also apply in the absence of the deputy-director.

The Managing  Board is  empowered  to dismiss a manager at any time  following a
breach of faith or major breach of duty.

The managers shall represent the JV collectively.

Details shall be laid down in management agreements yet to be concluded.

                               Article 13 Staffing

All  contracts  of  employment  concerned  with  the  recruitment,  appointment,
dismissal,  or  withdrawal  of  employees  or  with  wages,  salaries,  employee
insurance,  unemployment insurance,  rewards,  penalties, and any other measures
affecting the employees of the JV, insofar as these employees have been seconded
from the  colliery,  are to be made by and between the JV and Laohutai  Colliery
pursuant  to  the   "Regulations   of  the   People's   Republic  of  China  for
Employee-Employer    Relations   at   Joint    Undertakings   with   SinoForeign
Participation" and their implementing provisions plus any other relevant Chinese
laws.

The  signed  contracts  of  employment  shall be filed at the local  office  for
employee-employer relations.

The  Managing  Board shall  appoint  the senior  administrative  staff,  who are
recommended  by both  Partners,  and fix the level of the  salaries,  social and
unemployment insurance payments, and travel expenses etc..

                      Article 14 Taxes, Finances and Audits

The JV shall pay taxes in  accordance  with the  provisions of the laws of China
and other relevant regulations.

                                       13
<PAGE>

The employees of the JV shall pay income tax in accordance  with the "Income Tax
Act of the People's Republic of China".

Allocations to the reserves/provisions, the JV expansion funds, and the employee
welfare and bonus funds shall be made in accordance  with the  provisions of the
"Law of the People's  Republic of China on Joint  Undertakings with Sino-Foreign
Participation".

The  Managing  Board shall fix the annual  percentage  of these  allocations  in
accordance with the JV's current business situation.

All vouchers, receipts, statistics, balance sheets, reports, and books of the JV
shall be prepared in Chinese.  The JV shall make German  translations on request
by HTH.

The audits of the JV shall be conducted by an  internationally  approved firm of
auditors  operating  in China whose  reports are to be presented to the Managing
Board and the management in Chinese and German.

In the first three months of each fiscal year the  management  shall prepare the
previous  year's  balance  sheet and  profit-and-loss  statement.  It shall also
present  proposals  in Chinese and German for the use of profits and submit them
to the Managing  Board for approval  once they have been  reviewed and signed by
the reviewing party.

             Article 15 Disposal of Assets on Termination of the JV

On termination  of the JV the company shall be dissolved in accordance  with the
"Law of the People's  Republic of China on Joint  Undertakings with Sino-Foreign
Participation"  and  other  relevant  regulations  as  well as the  Articles  of
Incorporation of the JV.

The liquidated  assets shall be  distributed to the Partners in accordance  with
their interests in the JV.

                                       14
<PAGE>

                             Article 16 JV Insurance

The value and term of the insurance contracts to be concluded by the JV to cover
various  kinds of risk are to be agreed with the People's  Insurance  Company of
China in accordance with the provisions of this insurance company.

The Managing Board is entitled to instruct the management to take out additional
coverage against risks with an international insurance company.

       Article 17 Amendment and Performance of the Joint Venture Agreement

Amendments of this Joint Venture Agreement or its Exhibits shall take not effect
until the written amendment has been signed by both Partners and approved by the
original control and approval body.

Should the  performance of this Joint Venture  Agreement or the  continuation of
business be impossible as a result of heavy losses in successive  years,  the JV
shall be dissolved by unanimous  decision of the Managing  Board and on approval
by the original control and approval body.

Should the JV be unable to continue in  business  or achieve  the  purposes  set
forth in this Joint Venture Agreement due to a failure of one of the Partners to
perform the duties  prescribed  in the Joint  Venture  Agreement  or Bylaws or a
serious breach of the terms of the Joint Venture Agreement or Bylaws, this shall
be  deemed  to  constitute  a  unilateral  breach  of  contract  by the  Partner
concerned.

The other Partner shall be entitled to terminate the Joint Venture  Agreement in
accordance  with the terms set forth herein on approval by the original  control
and approval body and to demand compensation.

If the FCMB and HTH agree to a continuation of business and the business purpose
despite the occurrence of the aforementioned  situation,  the Partner that fails
to perform its duties shall be liable for the economic losses incurred by the JV
as a result.

                                       15
<PAGE>

          Article 18 Liability on Breach of the Joint Venture Agreement

Should a Partner fail to pay in its capital  contribution in accordance with the
terms of this Joint  Venture  Agreement  on time,  then the Partner in breach of
contract shall pay the JV interest on the unpaid  contribution  in the amount of
8% per annum with effect from the due date.

In the case of a default  lasting  more than three months the Partner who is not
in breach shall have the right to terminate  this Joint  Venture  Agreement  and
demand the  reimbursement of its direct costs arising out of this Agreement from
the Partner in breach.

The Partners  shall have no further  claims on each other,  in  particular  with
respect to the reimbursement of indirect and/or consequential damages.

                            Article 19 Force Majeure

Force majeure refers to events such as earthquake,  typhoon,  flood,  fire, war,
and  other  unforeseen  circumstances  whose  occurrence  and  consequences  are
unpreventable  and  inescapable  and  mutually  recognized  by both  Partners as
constituting acts of force majeure. Should one of the Partners be prevented from
performing this Joint Venture Agreement by force majeure,  the Partner concerned
shall immediately give the other Partner a detailed account of what has happened
via fax.

Within 15 days of the  occurrence of any force majeure,  a notarially  certified
document,   issued  by  a  relevant  notary  public's  office,   evidencing  the
aforementioned events shall be produced stating the reasons for the inability of
the Partner  concerned to perform this Joint  Venture  Agreement or for the late
performance in whole or in part of the Joint Venture Agreement.

In such cases both Partners shall confer and decide:

     -   whether this Joint Venture Agreement is to be terminated or

     -   whether that duty which is affected by force  majeure shall be exempted
         from the performance of this Joint Venture Agreement or

     -   whether  the  performance  of this  Joint  Venture  Agreement  is to be
         postponed due to the effects  these events may have on the  performance
         of the Joint Venture Agreement.

                                       16
<PAGE>

                        Article 20 Resolution of Disputes

All disputes arising out of or relating to the Joint Venture  Agreement shall be
resolved by the Partners by means of good faith negotiations.

If the dispute cannot be resolved by mutual agreement,  the Partners shall avail
themselves of the arbitration  services of a non-involved  country in accordance
with the "Regulations for Implementing the Law of the People's Republic of China
on Joint  Undertakings  with  Sino-Foreign  Participation  ", i.e.  those of the
International Chamber of Commerce in Zurich, Switzerland, under its rules and on
the basis of international commercial law.

The arbitrator's award shall be final and binding upon both Partners.  The costs
of  arbitration  and any other  associated  costs shall be borne by the defeated
Party or, in the event of both  Partners  being  partially  victorious,  by both
Partners on a pro-rata basis.

The arbitration proceedings shall be conducted in English.

During the arbitration  proceedings  both Partners shall continue to perform the
Joint Venture Agreement with the exception of the items under dispute.

                      Article 21 Language of the Agreement

This Joint Venture Agreement shall be made in German and Chinese.

Both versions shall have equal legal force.

In the  event  of  discrepancies  in the  language  of the  texts  the  court of
arbitration referred to in Article 20 shall reach a decision.

               Article 22 Exhibits, Taking Effect of the Agreement

The time schedules  (Exhibits 1 and 2), the organization  chart (Exhibit 3), the
Investment Volume Agreement (Exhibit 4), the Company Cash Flow Plan (Exhibit 5),
the current 2000 price list (Exhibit 6) and the agreed method of  calculation of
the raw slurry quantity

                                       17
<PAGE>

(Exhibit 7) have been  prepared in accordance  with the  principles of the Joint
Venture Agreement and constitute major parts thereof.

This Joint Venture Agreement and its Exhibits shall come into effect on the date
of approval by the competent local authority control and approval body.

                            Article 23 Correspondence

If a Partner sends out information  with respect to the rights and duties of the
other  Partner by telegram or fax etc.,  the other  Partner must be sent written
confirmation of the corresponding information.

The legally  effective  addresses of the Partners set forth in the Joint Venture
Agreement shall serve as the postal addresses for the purposes hereof.

Each  Partner is entitled  to specify a different  address by service of written
notice.  Correspondence  shall be sent to the new  address  with effect from the
notice date.

                            Article 24 Miscellaneous

This Joint  Venture  Agreement has been made in two copies in German and Chinese
respectively,  of which each shall be deemed an original,  and was signed by the
authorized representatives of both Partners on 8 September 2000 in Fushun.

Each Partner to this Joint Venture  Agreement shall receive one original of both
language versions.

/s/                                               /s/
-------------------------                         ------------------------------
Fushun Coal Mining Bureau                         Holter Technologies Holding AG

                                       18
<PAGE>

                    EXHIBIT 1 of the Joint Venture Agreement
                    ----------------------------------------

                                  Time schedule

8 September 2000
Signing of the Joint Venture Agreement,  the Bylaws and the Framework  Agreement
by the FCMB and HTH.

Immediately  upon  signing of the Joint  Venture  Agreement,  the Bylaws and the
Framework Agreement
Submission  of  application  for  approval of the Joint  Venture  Company to the
competent local authority control and approval bodies.

The  Managing  Board shall be appointed  by the  shareholders  as soon as the JV
Agreement and the Bylaws of the JV have been signed.

The Managing Board shall then appoint the two managers of the JV without delay.

On being appointed the management shall immediately place supply orders with the
FCMB and Heinrich Holter GmbH in accordance with the contracts negotiated.

The nominal capital of the JV shall be paid in by both Partners no later than 30
days after the Joint Venture Company is approved.

No later than 15 October 2000
Completion of all preparatory work required to commence the business activity of
the Joint Venture Company,  such as obtaining the necessary permits,  processing
the requisite registrations etc.

Beginning of November  2000
Start of coal slurry preparation plant project in accordance with Exhibit 2.

Both Partners  shall ensure that the funds required by the JV to erect the plant
will be made available  punctually in accordance  with the cash flow plan in the
amount of their participation.

                                       19
<PAGE>

Fushun, 8 September 2000

/s/                                              /s/
-------------------------                        -------------------------------
Fushun Coal Mining Bureau                        Hoelter Technologies Holding AG

                                       20
<PAGE>

Exhibit 4 of the JV Agreement

                        Total Investment by the Partners

The total investment by the Partners in the JV is:

                                            60 400 000 yuan
(sixty million four-hundred thousand yuan),

corresponding to:

                                             7 411 043 USD
(seven million four-hundred and eleven thousand forty-three USD),

(converted  into USD on the basis of the  official  exchange  rate in China on 8
September 2000),

corresponding to DM 15 100 000, at an exchange rate of 4.0 yuan = DM 1.00.

of which FCMB's supply share                        = DM 5 850 000

of which Heinrich Holter GmbH's supply share        = DM 9 250 000

Fushun, 8 September 2000

/s/                                              /s/
-------------------------                        -------------------------------
Fushun Coal Mining Bureau                        Hoelter Technologies Holding AG

                                       21

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