EXHIBIT 10.4

EXCLUSIVE OPTION AGREEMENT

This Exclusive Option Agreement (this "Agreement") is executed by and among the
parties below as of June 24, 2005:

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

PARTY C: Zhao Ming
ADDRESS: 16-1 Tianditan Wuxiang, Xinghualing District, Taiyuan, Shanxi Province,
China
 
PARTY D: Zhao Yao
ADDRESS: Meiyun Jiashu Yuan, Liulin County, Shanxi Province, China.

In this Agreement, each Party A, Party B, Party C and Party D shall be referred
to individually as a “Party”, and they shall be collectively referred to as the
“Parties”.

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”), an Operating Agreement dated as of the same date
hereof, and a Technology License Agreement dated as of the same date hereof
(“License Agreement”) (collectively the foregoing agreements are hereinafter
referred to as the “Affiliation Agreements”);
 
WHEREAS, Party B is an affiliated Chinese entity of Party A;
 
WHEREAS, pursuant to the Affiliation Agreements between Party A and Party B,
Party B shall pay Party A certain fees as set forth in the Affiliation
Agreements, and Party B’s daily operations will have a material effect on its
ability to pay the fees payable to Party A;
 
WHEREAS, Party C presently owns 80% of the registered capital of Party B;
 
WHEREAS, Party D presently owns 20% of the registered capital of Party B; and
 
WHEREAS, Party A, Party B, Party C and Party D agree to further clarify matters
relating to the operation of Party B and its Business and the transfer of any
registered capital of Party B pursuant to provisions of this Agreement.
 

--------------------------------------------------------------------------------

NOW THEREFORE, Party A, Party B, Party C and Party D through negotiations hereby
agree as follows:
 
1.
Stock Option Grant and Procedures

1.1
Stock Option Grant

Party C and Party D hereby irrevocably grant to Party A an irrevocable right to
purchase, or designate one or more persons (each, a "Designee") to purchase, all
of the registered capital of Party B now or hereafter owned and held by Party C
and Party D at any time, in part or in whole, at Party A's sole and absolute
discretion to the extent permitted by the laws of The People’s Republic of China
(the “PRC”) and at the price described in Section 1.3 herein (such rights being
the "Stock Option"). Except for Party A and any Designee, no other person shall
be entitled to such Stock Option. Party B hereby agrees to the grant by Party C
and Party D of the Stock Option to Party A. The term "person" as used herein
shall refer to individuals, corporations, partnerships, partners, enterprises,
trusts or non-corporate organizations.

1.2
Exercise Procedures

Subject to the provisions of the laws of the PRC, Party A may exercise the Stock
Option by issuing a written notice to Party C and/or Party D (the "Stock Option
Notice") and specifying the portion of the registered capital of Party B to be
purchased from Party C and/or Party D (the "Option Shares").

1.3
Stock Option Price

Unless an appraisal is required by the laws of the PRC applicable to the Stock
Option exercised by Party A, the purchase price of the Option Shares (the "Stock
Option Price") shall equal the actual capital contributions paid in by Party C
and/or Party D for their respective purchase of the Option Shares at the time of
original issuance of the registered capital by Party B. As of the date of this
Agreement, the total registered and invested capital of Party B is
RMB22,500,000.

1.4
Transfer of Option Shares

For each exercise of the Stock Option:

 
(a)
Party C and Party D shall cause to promptly convene a meeting of the owners of
Party B’s registered capital, at which a resolution shall be adopted approving
Party C's and/or Party D’s transfer of Option Shares to Party A and/or any
Designee;

 
(b)
Party C and Party D shall execute a share transfer contract with respect to each
transfer of Option Shares to Party A and/or any Designee (whichever is
applicable), in accordance with the provisions of this Agreement and the Stock
Option.

 
(c)
The relevant Parties shall take any and all necessary action and execute all
other necessary contracts, agreements or documents, obtain all necessary
government licenses and permits and take all necessary actions, to give valid
ownership of the Option Shares to Party A and/or any Designee unencumbered by
any security interest or other encumbrance and cause Party A and/or any Designee
to become the registered owner of the Option Shares.

1.5
Payment for the Stock Option Price

The Stock Option Price shall be paid in such installments as mutually agreed to
by the parties and as permitted by the laws of the PRC.
 
-2-

--------------------------------------------------------------------------------

 
2.
Covenants by the Parties

2.1
Covenants regarding Party B

Without the prior written consent of Party A, Party B, Party C and Party D
hereby covenant and agree to:

 
(a)
Not in any manner supplement, change or amend the articles and bylaws or other
organizational documents of Party B, increase or decrease its registered
capital, change its structure of registered capital in any other manner, or
issue any registered capital or ownership interests of any kind in Party B to
any persons including employees;

 
(b)
Maintain Party B's corporate existence in accordance with good financial and
business standards and practices by prudently and effectively operating its
business and handling its affairs;

 
(c)
Not at any time following the date of execution hereof, sell, transfer, mortgage
or dispose of in any other manner any assets of Party B or legal or beneficial
interest in the profits, cash flow or revenues of Party B or the Business, or
allow any encumbrance thereon of any security interest in Party B or its assets,
other than in the ordinary course of business;

 
(d)
Not incur, inherit, assume or undertake any debt on behalf of Party B , except
for (i) debt incurred in the ordinary course of business; and (ii) debt already
disclosed to Party A for which Party A's written consent has been obtained;

 
(e)
Operate the Business in the ordinary course of business, maintain the asset
values of Party B and refrain from any action or omission sufficient to affect
Party B's operating status and asset value;

 
(f)
Not execute or enter into any contracts or guarantees of the debt of others on
behalf of Party B, except for contracts in the ordinary course of business (for
purpose of this subsection, a contract whose value exceeds RMB1,000,000 shall be
deemed outside the ordinary course of business);

 
(g)
Not provide any person with any loan or credit made by Party B;

 
(h)
Provide Party A with information on Party B's business operations and financial
condition at Party A's request;

 
(i)
Procure and maintain insurance from an insurance carrier acceptable to Party A,
and the amount and types of coverage maintained shall be identical to the amount
and types of coverage usually maintained by companies that operate similar
businesses and hold similar properties or assets in the same area where Party B
is located;

 
(j)
Not cause Party B to be merged or be consolidated with any person, or acquire
any person or make investments in any person;

 
 
-3-

--------------------------------------------------------------------------------

 

 
(k)
Immediately notify Party A of the occurrence or possible occurrence of any
litigation, arbitration or other administrative proceedings, or governmental
action relating to Party B's assets, Business or revenue;

 
(l)
To maintain the ownership by Party B of all of its assets, execute all necessary
or appropriate documents, take all necessary or appropriate actions and file all
necessary or appropriate complaints or raise necessary and appropriate defenses
against all claims;

 
(m)
Not in any manner make or declare any cash, property or stock dividends or
distributions to the shareholders of Party B;

 
(n)
Appoint such persons as designated by Party A to act as the directors, officers
and managers of Party B, and not declare any bonuses or increase the
compensation of any director , officer or manager of Party B.

2.2
Covenants regarding Party C and Party D

Without the prior written consent of Party A, Party B and Party C hereby
covenant and agree to :

 
(a)
Not at any time following the date of execution hereof sell, transfer, mortgage
or dispose of in any other manner any legal or beneficial interest in the
registered capital or ownership interests of Party B now or hereafter owned and
held by Party C and Party D, or allow any encumbrance on or create any security
interest in the registered capital or ownership interests of Party B now or
hereafter owned and held by Party C and Party D;

 
(b)
Cause the directors of Party B not to approve the sale, transfer, mortgage or
disposition in any other manner any legal or beneficial interest in the
registered capital or ownership interests of Party B now or hereafter owned and
held by Party C or Party D, or allow the any encumbrance on or create any
security interest in the equity interests of Party B owned and held by Party C
and Party D;

 
(c)
Cause the directors or managers of Party B not to approve the merger or
consolidation with any person, or the acquisition of or investment in any
person;

 
(d)
Immediately notify Party A of the occurrence or possible occurrence of any
litigation, arbitration or administrative proceedings relating to the equity
interests of Party B owned and held by Party C or by Party D;

 
(e)
Cause the directors or managers of Party B to vote their approval of the
transfer of the Option Shares as set forth in this Agreement;

 
(f)
To maintain Party C’s and Party D’s ownership of registered capital or ownership
interests in Party B, execute all necessary or appropriate documents, take all
necessary or appropriate actions and file all necessary or appropriate
complaints or raise necessary and appropriate defenses against all claims;

 
(g)
Appoint any designee of Party A as director or manager of Party B, at the
request of Party A;

 

 
-4-

--------------------------------------------------------------------------------

 

 
(h)
At the request of Party A at any time, promptly and unconditionally transfer its
registered capital or ownership interests in Party B to Party A or any Designee
at any time, and waive any right of first refusal to such transfer by any other
existing holder of Party B’s equity interests; and

 
(i)
Strictly abide by the provisions of this Agreement and other contracts jointly
or separately executed by and among Party A, Party B, Party C and Party D,
effectively perform the obligations thereunder, and refrain from any action or
omission sufficient to affect the effectiveness and enforceability thereof.

3.
Representations and Warranties by Party B, Party C and Party D

Party B, Party C and Party D hereby jointly and severally represent and warrant
to Party A, as of the date of execution of this Agreement and each date of
transfer of the Option Shares, that:

 
(a)
Each of them has the authority to execute and deliver this Agreement and any
share transfer contracts to which they are a Party concerning the Option Shares
to be transferred thereunder (each, a "Transfer Contract"), and to perform their
obligations under this Agreement and any Transfer Contracts, and the execution
of this Agreement and the Transfer Contracts to which they are a Party shall
constitute their legal, valid and binding obligations and shall be enforceable
against them in accordance with the provisions thereof under the laws of the PRC
and any other jurisdiction;

 
(b)
The execution and delivery of this Agreement or any Transfer Contract and the
obligations under this Agreement or any Transfer Contract shall not: (i) cause
any violation of any applicable the laws of the PRC; (ii) be inconsistent of
their articles, bylaws or other organizational documents; (iii) cause the
violation of any contracts or instruments to which they are a party or which are
binding on them, or constitute any breach under any contracts or instruments to
which they are a party or which are binding on them; (iv) cause any violation of
any condition for the grant and/or continued effectiveness of any licenses or
permits issued to or granted by any of them; or (v) cause the suspension or
revocation of or imposition of additional conditions to any licenses or permits
issued to any of them;

 
(c)
Party B has a good and merchantable title to all of its assets, and Party B has
not placed any encumbrances on or created any security interests in the
aforementioned assets;

 
(d)
Party B does not have any outstanding debt, except for (i) debt incurred in the
ordinary course of business; and (ii) debt already disclosed to Party A for
which Party A's written consent has been obtained;

 
(e)
Party B has complied with all laws and regulations of the PRC applicable to it;

 
(f)
There are no pending or possible litigation, arbitration or administrative
proceedings relating to the equity interests in Party B or the assets of Party
B; and

 
(g)
Party C has good and merchantable title to 80% of the registered capital of
Party B, free and clear of all encumbrances and security interests, and there
are no preemptive rights held by any person with respect to such registered
capital.

 
(h)
Party D has good and merchantable title to 20% of the registered capital of
Party B, free and clear of all encumbrances and security interests, and there
are no preemptive rights held by any person with respect to such registered
capital

 
 
-5-

--------------------------------------------------------------------------------

 
4.
Effective Date

This Agreement shall take effect upon the date of execution of this Agreement
and remain effective for a term of 10 years, and shall be automatically renewed
at Party A’ election for an additional 10 year period after the initial term or
any renewal term. During the term of this Agreement or any renewal term, Party
B, Party C and Party D shall not terminate this Agreement. Notwithstanding the
above stipulation, Party A shall have the right to terminate this Agreement at
any time by issuing a thirty days prior written notice to Party B, Party C and
Party D.

5. Applicable Laws; Resolution of Disputes

5.1
Applicable Laws

The execution, effectiveness, construction and performance of this Agreement and
the resolution of disputes hereunder shall be subject to the protection and
jurisdiction of formally published and publicly available laws of the PRC.
Matters not covered by formally published and publicly available laws of the PRC
shall be governed by international legal principles and practices.

5.2
Methods of resolution of disputes

The parties shall strive to settle any dispute arising from the interpretation
or performance, or in connection with this Agreement through friendly
negotiation. In case no settlement can be reached through negotiation, either
party may submit such dispute to China International Economic and Trade
Arbitration Commission ("CIETAC") for arbitration in accordance with the current
rules of CIETAC. The arbitration proceedings shall take place in Hong Kong and
shall be conducted in English. The arbitration award shall be final and binding
upon the parties.

6.
Taxes and Fees

Each Party shall pay any and all transfer and registration tax, expenses and
fees incurred thereby or levied thereon in accordance with the laws of the PRC
in connection with the preparation and execution of this Agreement and the
Transfer Contracts, as well as the consummation of the transactions contemplated
under this Agreement and the Transfer Contracts.

7.
Notices

Any notice which is given by the parties hereto for the purpose of performing
the rights, duties and obligations hereunder shall be in writing in English.
Where such notice is delivered personally, the time of notice is the time when
such notice actually reaches the addressee; where such notice is transmitted by
telex or facsimile, the notice time is the time when such notice is transmitted.
If such notice does not reach the addressee on business date or reaches the
addressee after the business time, the next business day following such day is
the date of notice. The delivery place is the address first written above of the
parties hereto or the address advised in writing from time to time. The writing
form includes facsimile and telex. 
 
-6-

--------------------------------------------------------------------------------

 
8.
Confidentiality

The Parties acknowledge that any oral or written information exchanged among
them with respect to this Agreement is confidential information. Each Party
shall maintain the confidentiality of all such information, and without
obtaining the written consent of other Parties, it shall not disclose any
relevant information to any third parties, except in the following
circumstances: (a) such information is or will be in the public domain (provided
that this is not the result of a public disclosure by the receiving party); (b)
information disclosed as required by applicable laws or rules or regulation of
any stock exchange; or (c) information required to be disclosed by any Party to
its legal counsel or financial advisor regarding the transaction contemplated
hereunder, and such legal counsel or financial advisor are also required to be
bound by confidentiality duties similar to the duties in this section.
Disclosure of a secret by the staff members or agents hired by any Party shall
be deemed disclosure of a secret by such a Party, which shall be held liable for
breach of this Agreement. This section shall survive the termination of this
Agreement for any reason.

9.
Further Assurances

The Parties agree to promptly execute documents that are reasonably required for
the implementation of the provisions and purposes of this Agreement or that are
conducive thereto, and take further actions that are reasonably required for the
implementation of the provisions and purposes of this Agreement or that are
conducive thereto.

10.
Miscellaneous

10.1
Amendments, Changes and Supplements

 
Any amendments, changes and supplements to this Agreement shall require the
execution of a written agreement in English by all of the Parties.

10.2
Compliance with Laws

Each of the Parties shall comply with all formally published and publicly
available laws and regulations of the PRC and ensure that the operations of each
of the Parties are in compliance with all formally published and publicly
available laws and regulations of the PRC.

10.3
Entire Agreement

Except for any written amendments, supplements or changes executed after the
execution of this Agreement, this Agreement shall constitute the entire
agreement reached by and among the Parties hereto with respect to the subject
matter thereof, and shall supercede all prior oral and written consultations,
representations and contracts reached with respect to the subject matter of this
Agreement.

10.4
Headings

The headings of this Agreement are for convenience only, and shall not be used
to interpret, explain or otherwise affect the meanings of the provisions of this
Agreement.

10.5
Languages

This Agreement is executed in English only, and the executed English language
Agreement shall prevail in all cases. This Agreement may be executed in one or
more counterparts, each of which shall constitute one and the same agreement,
and by facsimile or electronic signature.
 
-7-

--------------------------------------------------------------------------------

 
10.6
Severability

In the event that one or several of the provisions of this Agreement are ruled
invalid, illegal or unenforceable in any aspect in accordance with any laws or
regulations, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected or compromised in any aspect.
The Parties shall strive in good faith to replace such invalid, illegal or
unenforceable provisions with effective provisions, and the economic effect of
such effective provisions shall be as close as possible to the economic effect
of those invalid, illegal or unenforceable provisions.

10.7
Successors

This Agreement shall be binding on and shall inure to the interest of the
respective successors of the Parties and the permitted assigns of such Parties.

10.8
Survival

 
(a)
Any obligations that occur or that are due as a result of this Agreement upon
the expiration or early termination of this Agreement shall survive the
expiration or early termination thereof.

 
(b)
The provisions of Articles 5 and 8 and this Section 10.8 shall survive the
termination of this Agreement.

10.9
Waivers

Any Party may waive the terms and conditions of this Agreement, provided that
such a waiver must be provided in writing in English and shall require the
signatures of the Parties. No waiver by any Party in certain circumstances with
respect to a breach by other Parties shall operate as a waiver by such a Party
with respect to any similar breach in other circumstances.

[Remainder of this page intentionally left blank.]

-8-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized
representatives to execute this Agreement as of the date first above written.

 
PARTY A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD
 

By:   /s/ Zhao Ming

--------------------------------------------------------------------------------

Zhao Ming, Chairman and CEO

 
PARTY B: SHANXI PUDA RESOURCES CO., LTD.
 

By:  /s/ Zhao Ming

--------------------------------------------------------------------------------

Zhao Ming, Chairman and CEO

 
PARTY C:
 
 
/s/ Zhao Ming

--------------------------------------------------------------------------------

Zhao Ming 

 
PARTY D:
 
 
/s/ Zhao Yao

--------------------------------------------------------------------------------

Zhao Yao

-9-

--------------------------------------------------------------------------------