Unassociated Document


    

      Exhibit
        10.2

      


      THE
        SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
        OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
        SUCH
        ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144,
        OR
        THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES,
        REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
        ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
        DELIVERY REQUIREMENTS OF SUCH ACT.

       

      


      OPTION
        TO
        PURCHASE COMMON STOCK

      OF

      Touchstone
        Resources USA, Inc.

      Void
        after August 14, 2012

      


      This
        certifies that, for value received, Roger Abel ("Holder") is entitled, subject
        to the terms set forth below, to purchase from Touchstone
        Resources USA Inc.,
        a
        Delaware corporation (the "Company"), shares of the common stock, $.001 par
        value per share, of the Company ("Common Stock"), as constituted on July
        13,
        2005 (the "Option Issue Date"), with the Notice of Exercise attached hereto
        duly
        executed, and simultaneous payment therefor in lawful money of the United
        States
        or as otherwise provided in Section 3 hereof, at the Exercise Price then
        in
        effect. The number, character and Exercise Price of the shares of Common
        Stock
        issuable upon exercise hereof are subject to adjustment as provided
        herein.

       

      1. Term
        of Option.
        Subject
        to Holder commencing employment with the Company pursuant to that certain
        employment agreement (the “Employment Agreement”) dated the date hereof by and
        between the Company and Holder and compliance with the vesting provisions
        identified at Section 2.3 hereof, this Option shall be exercisable, in whole
        or
        in part, during the term commencing on August 15, 2005 and ending at 5:00
        p.m.
        EST on August 14, 2012 (the "Option Expiration Date") and shall be void
        thereafter.

       

      2. Number
        of Shares, Exercise Price and Vesting Provisions.

       

      2.1 Number
        of Shares.
        The
        number of shares of Common Stock which may be purchased pursuant to this
        Option
        shall be 4,876,540 shares (the "Shares"), subject, however, to adjustment
        pursuant to Section 11 hereof.

       

      2.2 Exercise
        Price.
        The
        Exercise Price at which this Option, or portion thereof, may be exercised
        shall
        be $.86 per Share (the last sale price on Option Issue Date reported on OTCBB),
        subject, however, to adjustment pursuant to Section 11 hereof.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      2.3 Vesting.  
        This
        Option shall vest in accordance with the following schedule:

       

      (a) 2,438,120
        Shares shall vest on August 15, 2006 (the “First Anniversary Date”) provided
        Holder either remains continuously employed by the Company from August 15,
        2005
        through the First Anniversary Date or is receiving payment from the Company
        pursuant to section 4(e) of the Employment Agreement through the First
        Anniversary Date. In the event that Holder dies, voluntarily leaves the employ
        of the Company, or is terminated for Cause, as that term is defined in the
        Employment Agreement, prior to the First Anniversary Date, upon the date
        of
        death or such cessation of employment, this Option shall no longer continue
        to
        vest and Holder shall forfeit the right to vest in any of the Shares issuable
        upon exercise of this Option; and 

      


      (b) 2,438,120
        Shares shall vest on August 15, 2007 (the “Second Anniversary Date”) provided
        Holder either remains continuously employed by the Company from August 15,
        2005
        through the second Anniversary Date or is receiving payment from the Company
        pursuant to section 4(e) of the Employment Agreement through the Second
        Anniversary Date. In the event that Holder dies or voluntarily leaves the
        employ
        of the Company prior to the Second Anniversary Date, upon the date of death
        or
        such cessation of employment, this Option shall no longer continue to vest
        and
        Holder shall forfeit the right to vest in 2,438,120 of the Shares issuable
        upon
        exercise of this Option. In the event that Holder is terminated for Cause,
        as
        that term is defined in the Employment Agreement, prior to the Second
        Anniversary Date, upon the date of such termination, this Option shall forthwith
        terminate and Holder shall forfeit all rights under this Option, including
        the
        right to vest in any of the Shares issuable upon exercise of this
        Option.

      


      3. Exercise
        of Option.

       

      3.1 Payment
        of Exercise Price.
         Subject
        to the terms hereof, the purchase rights represented by this Option are
        exercisable by the Holder in whole or in part, at any time, or from time
        to
        time, by the surrender of this Option and the Notice of Exercise annexed
        hereto
        duly completed and executed on behalf of the Holder, at the office of the
        Company (or such other office or agency of the Company as it may designate
        by
        notice in writing to the Holder at the address of the Holder appearing on
        the
        books of the Company) accompanied by payment of the Exercise Price in full
        (i)
        in cash or by bank or certified check for the Shares with respect to which
        this
        Option is exercised; (ii) by delivery to the Company of shares of the Company's
        Common Stock having a Fair Market Value (as defined below) equal to the
        aggregate Exercise Price of the Shares being purchased which Holder is the
        record and beneficial owner of and which have been held by the Holder for
        at
        least six (6) months; (iii) if the Shares are eligible for public resale,
        by
        delivering to the Company a Notice of Exercise together with an irrevocable
        direction to a broker-dealer registered under the Securities Exchange Act
        of
        1934, as amended (the "Exchange Act"), to sell a sufficient portion of the
        Shares and deliver the sales proceeds directly to the Company to pay the
        Exercise Price; or (iv) by any combination of the procedures set forth in
        subsections (i), (ii) and (iii) of this Section 3.1. 

       

      3.2
         Fair
        Market Value.
        If
        previously owned shares of Common Stock are tendered as payment of the Exercise
        Price, the value of such shares shall be the "Fair Market Value" of such
        shares
        on the trading date immediately preceding the date of exercise. For the purpose
        of this Agreement, the "Fair Market Value" shall be:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (a) If
        the
        Common Stock is admitted to quotation on the National Association of Securities
        Dealers Automated Quotation System ("NASDAQ"),
        the
        Fair Market Value on any given date shall be the average of the highest bid
        and
        lowest asked prices of the Common Stock as reported for such date or, if
        no bid
        and asked prices were reported for such date, for the last day preceding
        such
        date for which such prices were reported;

       

      (b) If
        the
        Common Stock is admitted to trading on a United States securities exchange
        or
        the NASDAQ National Market System, the Fair Market Value on any date shall
        be
        the closing price reported for the Common Stock on such exchange or system
        for
        such date or, if no sales were reported for such date, for the last day
        preceding such date for which a sale was reported; 

       

      (c) If
        the
        Common Stock is traded in the over-the-counter market and not on any national
        securities exchange nor in the NASDAQ Reporting System, the Fair Market Value
        shall be the average of the mean between the last bid and ask prices per
        share,
        as reported by the National Quotation Bureau, Inc., or an equivalent generally
        accepted reporting service, or if not so reported, the average of the closing
        bid and asked prices for a share as furnished to the Company by any member
        of
        the National Association of Securities Dealers, Inc., selected by the Company
        for that purpose; or 

       

      (d) If
        the
        Fair Market Value of the Common Stock cannot be determined on the basis
        previously set forth in this definition on the date that the Fair Market
        Value
        is to be determined, the Board of Directors of the Company shall in good
        faith
        determine the Fair Market Value of the Common Stock on such date. 

       

      If
        the
        tender of previously owned shares would result in an issuance of a whole
        number
        of Shares and a fractional Share of Common Stock, the value of such fractional
        share shall be paid to the Company in cash or by check by the
        Holder.

       

      3.3 Termination
        of Employment; Death.

      


      (a) If
        Holder
        shall cease to be employed by the Company for any reason other than being
        terminated for Cause, as that term is defined in the Employment Agreement,
        all
        Options to which Holder is entitled to exercise on the date his employment
        is
        terminated (and in the event that Holder is terminated without cause, such
        additional Options that Holder becomes entitled to exercise pursuant to the
        vesting provisions identified in Section 2.3 above) may be exercised at any
        time
        prior to the Option Termination Date. In the event that any termination of
        employment shall be for Cause, as that term is defined in the Employment
        Agreement, then this Option shall forthwith terminate.

      


      (b) If
        Holder
        shall die, any Options exercisable as of the date Holder’s death may be
        exercised prior to the Option Termination Date and only by the Holder's personal
        representative or persons entitled thereto under the Holder's will or the
        laws
        of descent and distribution.

       

      3.4 Exercise
        Date; Delivery of Certificates.  This
        Option shall be deemed to have been exercised immediately prior to the close
        of
        business on the date of its surrender for exercise as provided above, and
        Holder
        shall be treated for all purposes as the holder of record of such Shares
        as of
        the close of business on such date. As promptly as practicable on or after
        such
        date and in any event within ten (10) days thereafter, the Company at its
        expense shall issue and deliver to the Holder a certificate or certificates
        for
        the number of Shares issuable upon such exercise. In the event that this
        Option
        is exercised in part, the Company at its expense will execute and deliver
        a new
        Option of like tenor exercisable for the number of shares for which this
        Option
        may then be exercised.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      4. No
        Fractional Shares or Scrip.
        No
        fractional shares or scrip representing fractional shares shall be issued
        upon
        the exercise of this Option. In lieu of any fractional share to which the
        Holder
        would otherwise be entitled, the Company shall make a cash payment equal
        to the
        Exercise Price multiplied by such fraction.

       

      5. Replacement
        of Option.
        On
        receipt of evidence reasonably satisfactory to the Company of the loss, theft,
        destruction or mutilation of this Option and, in the case of loss, theft
        or
        destruction, on delivery of an indemnity agreement reasonably satisfactory
        in
        form and substance to the Company or, in the case of mutilation, on surrender
        and cancellation of this Option, the Company at its expense shall execute
        and
        deliver, in lieu of this Option, a new Option of like tenor and
        amount.

       

      6. Rights
        of Stockholder.
        Except
        as otherwise contemplated herein, the Holder shall not be entitled to vote
        or
        receive dividends or be deemed the holder of Common Stock or any other
        securities of the Company that may at any time be issuable on the exercise
        hereof for any purpose, nor shall anything contained herein be construed
        to
        confer upon the Holder, as such, any of the rights of a stockholder of the
        Company or any right to vote for the election of directors or upon any matter
        submitted to stockholders at any meeting thereof, or to give or withhold
        consent
        to any corporate action (whether upon any recapitalization, issuance of stock,
        reclassification of stock, change of par value, or change of stock to no
        par
        value, consolidation, merger, conveyance or otherwise) or to receive notice
        of
        meetings, or to receive dividends or subscription rights or otherwise until
        the
        Option shall have been exercised as provided herein.

       

      7. Transfer
        of Option.

       

      7.1. Non-Transferability.
        This
        Option shall not be assigned, transferred, pledged or hypothecated in any
        way,
        nor subject to execution, attachment or similar process, otherwise than by
        will
        or by the laws of descent and distribution. Any attempted assignment, transfer,
        pledge, hypothecation or other disposition of this Option contrary to the
        provisions hereof, and the levy of an execution, attachment, or similar process
        upon the Option, shall be null and void and without effect.

       

      7.2. Compliance
        with Securities Laws; Restrictions on Transfers. In
        addition to restrictions on transfer set forth in Section 7.1
        above.

       

      (a) The
        Holder of this Option, by acceptance hereof, acknowledges that this Option
        and
        the Shares to be issued upon exercise hereof are being acquired solely for
        the
        Holder's own account and not as a nominee for any other party, and for
        investment (unless such shares are subject to resale pursuant to an effective
        prospectus), and that the Holder will not offer, sell or otherwise dispose
        of
        any Shares to be issued upon exercise hereof except under circumstances that
        will not result in a violation of applicable federal and state securities
        laws.
        Upon exercise of this Option, the Holder shall, if requested by the Company,
        confirm in writing, in a form satisfactory to the Company, that the Shares
        of
        Common Stock so purchased are being acquired solely for the Holder's own
        account
        and not as a nominee for any other party, for investment (unless such shares
        are
        subject to resale pursuant to an effective prospectus), and not with a view
        toward distribution or resale.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      (b) Neither
        this Option nor any share of Common Stock issued upon exercise of this Option
        may be offered for sale or sold, or otherwise transferred or sold in any
        transaction which would constitute a sale thereof within the meaning of the
        Securities Act of 1933 Act, as amended (the “1933 Act”), unless (i) such
        security has been registered for sale under the 1933 Act and registered or
        qualified under applicable state securities laws relating to the offer an
        sale
        of securities; (ii) exemptions from the registration requirements of the
        1933
        Act and the registration or qualification requirements of all such state
        securities laws are available and the Company shall have received an opinion
        of
        counsel satisfactory to the Company that the proposed sale or other disposition
        of such securities may be effected without registration under the 1933 Act
        and
        would not result in any violation of any applicable state securities laws
        relating to the registration or qualification of securities for sale, such
        counsel and such opinion to be satisfactory to the Company. The Holder of
        this
        Option, by acceptance hereof, acknowledges that the Company has no obligation
        to
        file a registration statement with the Securities and Exchange Commission
        or any
        state securities commission to register the issuance of the Shares upon exercise
        hereof or the sale or transfer of the Shares after issuance.

       

      (c) All
        Shares issued upon exercise hereof shall be stamped or imprinted with a legend
        in substantially the following form (in addition to any legend required by
        state
        securities laws).

       

      THE
        SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
        OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
        SUCH
        ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144,
        OR
        THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES,
        REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
        ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
        DELIVERY REQUIREMENTS OF SUCH ACT.

       

      (d) Holder
        recognizes that investing in the Option and the Shares involves a high degree
        of
        risk, and Holder is in a financial position to hold the Option and the Shares
        indefinitely and is able to bear the economic risk and withstand a complete
        loss
        of its investment in the Option and the Shares. The Holder is a sophisticated
        investor and is capable of evaluating the merits and risks of investing in
        the
        Company. The Holder has had an opportunity to discuss the Company's business,
        management and financial affairs with the Company's management, has been
        given
        full and complete access to information concerning the Company, and has utilized
        such access to its satisfaction for the purpose of obtaining information
        or
        verifying information and has had the opportunity to inspect the Company's
        operation. Holder has had the opportunity to ask questions of, and receive
        answers from the management of the Company (and any person acting on its
        behalf)
        concerning the Option and the Shares and the agreements and transactions
        contemplated hereby, and to obtain any additional information as Holder may
        have
        requested in making its investment decision.

       

      (e) Holder
        acknowledges and represents: (i) that he has been afforded the opportunity
        to
        review and is familiar with the business prospects and finances of the Company
        and has based his decision to invest solely on the information contained
        therein
        and has not been furnished with any other literature, prospectus or other
        information except as included in such reports; (ii) he maintains his domicile
        and is not a transient or temporary resident at the address on the books
        and
        records of the Company; (iii) he understands that no federal or state agency
        has
        approved or disapproved the Option or Shares or made any finding or
        determination as to the fairness of the Option and Common Stock for investment;
        and (iv) that the Company has made no representations, warranties, or assurances
        as to (A) the future trading value of the Common Stock, (B) whether there
        will
        be a public market for the resale of the Common Stock or (C) the filing of
        a
        registration statement with the Securities and Exchange Commission or any
        state
        securities commission to register the issuance of the Shares upon exercise
        hereof or the sale or transfer of the Shares after issuance. 

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      8. Reservation
        and Issuance of Stock; Payment of Taxes.

       

      (a) The
        Company covenants that during the term that this Option is exercisable, the
        Company will reserve from its authorized and unissued Common Stock a sufficient
        number of shares to provide for the issuance of the Shares upon the exercise
        of
        this Option, and from time to time will take all steps necessary to amend
        its
        Certificate of Incorporation to provide sufficient reserves of shares of
        Common
        Stock issuable upon the exercise of the Option.

       

      (b) The
        Company further covenants that all shares of Common Stock issuable upon the
        due
        exercise of this Option will be free and clear from all taxes or liens, charges
        and security interests created by the Company with respect to the issuance
        thereof, however, the Company shall not be obligated or liable for the payment
        of any taxes, liens or charges of Holder, or any other party contemplated
        by
        Section 7, incurred in connection with the issuance of this Option or the
        Common
        Stock upon the due exercise of this Option. The Company agrees that its issuance
        of this Option shall constitute full authority to its officers who are charged
        with the duty of executing stock certificates to execute and issue the necessary
        certificates for the shares of Common Stock upon the exercise of this Option.
        The Common Stock issuable upon the due exercise of this Option, will, upon
        issuance in accordance with the terms hereof, be duly authorized, validly
        issued, fully paid and non-assessable.

       

      (c) Upon
        exercise of the Option, the Company shall have the right to require the Holder
        to remit to the Company an amount sufficient to satisfy federal, state and
        local
        tax withholding requirements prior to the delivery of any certificate for
        Shares
        of Common Stock purchased pursuant to the Option, if in the opinion of counsel
        to the Company such withholding is required under applicable tax
        laws.

       

      (d) If
        Holder
        is obligated to pay the Company an amount required to be withheld under
        applicable tax withholding requirements may pay such amount (i) in cash;
        (ii) in
        the discretion of the Board of Directors of the Company, through the delivery
        to
        the Company of previously-owned shares of Common Stock having an aggregate
        Fair
        Market Value equal to the tax obligation provided that the previously owned
        shares delivered in satisfaction of the withholding obligations must have
        been
        held by the Holder for at least six (6) months; (iii) in the discretion of
        the
        Board of Directors of the Company, through the withholding of Shares of Common
        Stock otherwise issuable to the Holder in connection with the Option exercise;
        or (iv) in the discretion of the Board of Directors of the Company, through
        a
        combination of the procedures set forth in subsections (i), (ii) and (iii)
        of
        this Section 8(d).

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      9. Notices.

       

      (a) Whenever
        the Exercise Price or number of shares purchasable hereunder shall be adjusted
        pursuant to Section 11 hereof, the Company shall issue a certificate signed
        by
        its Chief Financial Officer setting forth, in reasonable detail, the event
        requiring the adjustment, the amount of the adjustment, the method by which
        such
        adjustment was calculated, and the Exercise Price and number of shares
        purchasable hereunder after giving effect to such adjustment, and shall cause
        a
        copy of such certificate to be mailed (by first-class mail, postage prepaid)
        to
        the Holder of this Option.

       

      (b) All
        notices, advices and communications under this Option shall be deemed to
        have
        been given, (i) in the case of personal delivery, on the date of such delivery
        and (ii) in the case of mailing, on the third business day following the
        date of
        such mailing, addressed as follows:

       

      If
        to the
        Company: 

      


      If
        to the
        Company:

       

      Touchstone
        Resources USA, Inc.

      111
        Presidential Boulevard

      Suite
        165

      Bala
        Cynwyd, PA 19004

      Attn:
        Board of Directors

      With
        a
        copy to:

      


      Duane
        Morris LLP

      240
        Princeton 

      Hamilton,
        NJ 08619-2304

      Attn:
        Vincent A. Vietti, Esquire

      


      and
        to
        the Holder:

      


      Roger
        Abel
8045
        Chalk Knoll Dr.
Austin,
        TX 78735

      


      


      Either
        of
        the Company or the Holder may from time to time change the address to which
        notices to it are to be mailed hereunder by notice in accordance with the
        provisions of this Paragraph 9.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      10. Amendments.

       

      (a)
          Any
        term
        of this Option may be amended with the written consent of the Company and
        the
        Holder. Any amendment effected in accordance with this Section 10 shall be
        binding upon the Holder, each future holder and the Company.

       

      (b) No
        waivers of, or exceptions to, any term, condition or provision of this Option,
        in any one or more instances, shall be deemed to be, or construed as, a further
        or continuing waiver of any such term, condition or provision.

       

      11. Adjustments.
        The
        number of Shares of Common Stock purchasable hereunder and the Exercise Price
        is
        subject to adjustment from time to time upon the occurrence of certain events,
        as follows: 

       

      (a)
        If,
        through or as a result of any merger, consolidation, sale of all or
        substantially all of the assets of the Company, reorganization,
        recapitalization, reclassification, stock dividend, stock split, reverse
        stock
        split or other similar transaction, the outstanding shares of Common Stock
        are
        increased or decreased or are exchanged for a different number or kind of
        shares
        or other securities of the Company, or additional shares or new or different
        shares or other securities of the Company or other non-cash assets are
        distributed with respect to such shares of Common Stock or other securities,
        the
        Company shall make an appropriate or proportionate adjustment in (i) the
        number
        of Shares subject to this Option, and (ii) the Exercise Price for each Share
        subject to this Option, without changing the aggregate exercise price (i.e.,
        the
        Exercise Price multiplied by the number of Shares) as to which such Options
        remain exercisable. The adjustment by the Company shall be final, binding
        and
        conclusive.

       

      (b)
         In
        the
        event that, by reason of a corporate merger, consolidation, acquisition of
        property or stock, separation, reorganization or liquidation, the board of
        directors of the Company shall authorize the issuance or assumption of the
        Option in a transaction to which Section 424(a) of the Internal Revenue
        Code of 1986, as amended (the “Code), applies, then, notwithstanding any other
        provision of this Option, the Company may grant an option or options upon
        such
        terms and conditions as it may deem appropriate for the purpose of assumption
        of
        this Option, or substitution of a new option for this Option, in conformity
        with
        the provisions of Code Section 424(a) and the rules and regulations
        thereunder, as they may be amended from time to time.

       

      (c)
         No
        adjustment or substitution provided for in this Section 11 shall require
        the Company to issue or to sell a fractional share under this Option and
        the
        total adjustment or substitution with respect to this Option shall be limited
        accordingly.

       

      (d)
         In
        the
        case of (i) the dissolution or liquidation of the Company, (ii) a merger,
        reorganization or consolidation in which the Company is acquired by another
        person or entity (other than a holding company formed by the Company), (iii)
        the
        sale of all or substantially all of the assets of the Company to an unrelated
        person or entity, or (iv) the sale of all of the stock of the Company to
        a
        unrelated person or entity (in each case, a "Fundamental Transaction"), this
        Option may be terminated by the Company, unless provision is made in connection
        with the Fundamental Transaction for the assumption of this Option, or the
        substitution of such new options of the successor entity, with appropriate
        adjustment as to the number and kind of shares and, if appropriate, the per
        share exercise price as provided in Subsections (a) and (b) of this
        Section 11. In the event of such termination and in the event the
        Company
        does not provide for the Cash Payment described in Subsection (e) of this
        Section 11, this Option shall automatically become immediately exercisable
        in
        full and the Holder shall be notified of such proposed termination and permitted
        to exercise for a period of at least thirty (30) days prior to the date of
        such
        termination, all Options held by Holder.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (e) 
        In the
        event that the Company shall be merged or consolidated with another corporation
        or entity, other than a corporation or entity which is an "affiliate" of
        the
        Company under the terms of which holders of capital stock of the Company
        will
        receive upon consummation thereof a cash payment for each share of capital
        stock
        of the Company surrendered pursuant to such transaction (the "Cash Purchase
        Price"), the Company may provide that this Option shall terminate upon
        consummation of such transaction and the Holder shall receive, in exchange
        therefor, a cash payment equal to the amount (if any) by which (i) the Cash
        Purchase Price multiplied by the number of Shares subject to this Option
        held by
        such Holder exceeds (ii) the aggregate exercise price of this
        Option.

       

      (f)
         Whenever
        the Exercise Price or number of Shares purchasable hereunder shall be adjusted
        pursuant to Section 11 hereof, the Company shall issue a certificate signed
        by
        its Chief Financial Officer setting forth, in reasonable detail, the event
        requiring the adjustment, the amount of the adjustment, the method by which
        such
        adjustment was calculated, and the Exercise Price and number of shares
        purchasable hereunder after giving effect to such adjustment, and shall cause
        a
        copy of such certificate to be mailed (by first class mail, postage prepaid)
        to
        the Holder of this Option.

       

      12. Severability.
        Whenever possible, each provision of this Option shall be interpreted in
        such
        manner as to be effective and valid under applicable law, but if any provision
        of this Option is held to be invalid, illegal or unenforceable in any respect
        under any applicable law or rule in any jurisdiction, such invalidity,
        illegality or unenforceability shall not affect the validity, legality or
        enforceability of any other provision of this Option in such jurisdiction
        or
        affect the validity, legality or enforceability of any provision in any other
        jurisdiction, but this Option shall be reformed, construed and enforced in
        such
        jurisdiction as if such invalid, illegal or unenforceable provision had never
        been contained herein.

      


      13. Governing
        Law.
        The
        corporate law of the State of Delaware shall govern all issues and questions
        concerning the relative rights of the Company and its stockholders. All other
        questions concerning the construction, validity, interpretation and
        enforceability of this Option and the exhibits and schedules hereto shall
        be
        governed by, and construed in accordance with, the laws of the State of
        Delaware, without giving effect to any choice of law or conflict of law rules
        or
        provisions that would cause the application of the laws of any jurisdiction
        other than the State of Delaware.

       

      IN
        WITNESS WHEREOF,
        the
        Company and Holder have caused this Option to be executed as of July 13,
        2005.

       


      
        
          
          

        

        
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      TOUCHSTONE
        RESOURCES USA, INC.

      


      


      By:
        /s/
        Stephen P. Harrington  

      Name:
        Stephen P. Harrington 

      Title:
        Chief Executive Officer

      


      AGREED
        AND ACCEPTED:

      


      Roger
        Abel 

      


      


      _/s/
        Roger Abel______ 

      Signature


      
        
          
          

        

        
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      NOTICE
        OF
        EXERCISE

      


      TO:
        [_____________________________]

      


      (1) The
        undersigned hereby elects to purchase _______ shares of Common Stock of
Touchstone
        Resources USA, Inc. pursuant
        to the terms of the attached Option, and tenders herewith payment of the
        purchase price for such shares in full in the following manner (please check
        one
        of the following choices):

       

      In
        Cash

       

      Cashless
        exercise through a broker; or

       

      Delivery
        of previously owned shares.

       

      (2) In
        exercising this Option, the undersigned hereby confirms and acknowledges
        that
        the shares of Common Stock to be issued upon conversion thereof are being
        acquired solely for the account of the undersigned and not as a nominee for
        any
        other party, and for investment (unless such shares are subject to resale
        pursuant to an effective prospectus), and that the undersigned will not offer,
        sell or otherwise dispose of any such shares of Common Stock except under
        circumstances that will not result in a violation of the Securities Act of
        1933,
        as amended, or any state securities laws.

       

      (3) Please
        issue a certificate or certificates representing said shares of Common Stock
        in
        the name of the undersigned.

       

      


      


      


      [____________________________]
        

      


      


      
        
          	 	 	 
	 (Date)	 	  (Signature)


        

      

       

      


      


      
        
          
          

        

        
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