Unassociated Document


    CONVERTIBLE
NOTE

    


    THIS
NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

    


    
      
        	
                Principal
      Amount: $10,000,000.00

              	
                Issue
      Date: August 31,
      2010       

              


      

    

    


    3%
CONVERTIBLE NOTE

    


    FOR VALUE
RECEIVED, Jintai Mining Group, Inc., a Delaware corporation (“Jintai Delaware”)
and Huanjiang Jintai Mining Co., Limited, a limited liability Companies formed
in the People’s Republic of China (“PRC”) (“Huanjiang Jintai”) (collectively the
“Borrowers”), jointly and severally promise to pay to Liwen Hu (the “Holder”),
without demand, the sum of Ten Million Dollars ($10,000,000), with interest
thereon as set forth below, on or before August 31, 2011 (the “Maturity Date”),
if not paid sooner.

    


    This
convertible note (the “Note”) has been entered into pursuant to the terms of a
Subscription Agreement between the Borrowers and the Holder, of even date
herewith (the “Subscription Agreement”), and shall be governed by the terms of
such Subscription Agreement. Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement. The following terms shall apply to this
Note:

    


    ARTICLE
I

    


    GENERAL
PROVISIONS

    


    1.1.         Interest Rate.
Interest payable on this Note shall accrue at the rate of three percent (3%) per
annum and shall be payable on the Maturity Date. Interest will be payable in
cash or, provided an Event of Default, or an event which with the passage of
time or giving of notice could become an Event of Default, has not occurred, at
the election of the Holder, by the delivery of registered shares of Jintai
Delaware’s common stock, par value $0.0001 (the “Common Stock”). The conversion
of accrued interest due on this Note into Common Stock shall be calculated in
accordance with Article II hereof.

    


    1.2.         Payment Grace Period.
The Borrowers shall have a twelve (12) business day grace period to pay any
monetary amounts due under this Note, after which grace period and during the
pendency of an Event of Default (as defined in Article III), a default interest
rate of twelve percent (12%) per annum shall apply to the amounts owed
hereunder.

    


    1.3.         Conversion
Privileges. The conversion rights of the Holder as set forth in Article
II of this Note shall remain in full force and effect immediately from the date
hereof and until the Note is paid in full, regardless of the occurrence of an
Event of Default. The principal amount of the Note and the unpaid interest shall
be payable in full on the Maturity Date, unless previously paid or converted
into Common Stock in accordance with Article II hereof.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    1.4.         Application of
Payments. Payments received by Holder from Borrowers shall be applied
first to outstanding liquidated and other damages, if any, then to accrued but
unpaid interest, and thereafter, to principal.

    


    1.5.         Optional Redemption by
Borrowers. At any time after the date of issuance of this Note, the
Borrowers may deliver a notice to the Holder (an “Optional Redemption Notice”
and the date such notice is deemed delivered hereunder, the “Optional Redemption
Notice Date”) of its irrevocable election to redeem, without penalty, all of the
then outstanding principal amount and interest due on this Note for cash in an
amount equal to 125% of the then outstanding principal and accrued and unpaid
interest hereunder (“Optional Redemption Amount”), on the 30th day
following the Optional Redemption Notice Date (such date, the “Optional
Redemption Date” and such redemption, the “Optional Redemption”). The Optional
Redemption Amount may not be paid prior to the Optional Redemption Date. The
Optional Redemption Amount shall payable in full on the Optional Redemption
Date. The Borrowers covenant that Jintai Delaware will honor all Notices of
Conversion tendered from the time of delivery of the Optional Redemption Notice
through the date all amounts owing thereon are due and paid in
full.

    


    ARTICLE
II

    


    CONVERSION
RIGHTS

    


    The
entire principal amount under this Note and the accrued but unpaid interest
thereon shall convert, or may be converted by the Holder, into shares of Jintai
Delaware’s Common Stock as set forth below.

    


    2.1          Automatic Conversion into
Jintai Delaware’s Common Stock.  In the event that Jintai
Delaware conducts an initial public offering (“IPO”) of its shares of Common
Stock, the outstanding principal amount under this Note, and the accrued and
unpaid interest thereon, as of the date of such IPO shall automatically be
converted into fully paid and non-assessable shares of Common Stock, at the
Conversion Price (as defined in Section 2.2(b) hereof) set forth in Section
2.2(c) below.

    


    2.2          Voluntary Conversion into
Jintai Delaware’s Common Stock.

    


    (a)           The
Holder shall have the right from and after the Issue Date of the issuance of
this Note and then at any time until this Note is fully paid, to convert any
outstanding and unpaid principal amount of this Note, at the election of the
Holder (the date of giving of such notice of conversion being a “Conversion
Date”) into fully paid and non-assessable shares of Common Stock, or any shares
of capital stock of Jintai Delaware into which such Common Stock shall hereafter
be changed or reclassified, at the Conversion Price (as defined in Section
2.2(b) hereof) determined as provided herein. Upon delivery to the Borrowers of
a completed Notice of Conversion, a form of which is annexed as Exhibit A
hereto, Borrowers shall issue and deliver to the Holder within three (3)
business days after the Conversion Date (such third day being the “Delivery
Date”) such number of shares of Common Stock for the portion of the Note
converted in accordance with the foregoing. The number of shares of Common Stock
to be issued upon each conversion of this Note shall be determined by dividing
that portion of the principal and interest of the Note to be converted, by the
Conversion Price.


    
      
         


      

      
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    (b)           Subject
to adjustment as provided for in Section 2.2(c) hereof, the conversion price per
share of Common Stock shall be the offering price for the Common Stock in the
IPO, provided however that in the event that the IPO is not conducted by Jintai
Delaware within ninety (90) days from the date hereof, the Holder may opt to
convert the unpaid principal of the Notes, and all accrued and unpaid interest
thereon, pursuant to Section 2.2(a) above at a Conversion Price of four dollars
($4.00) per share (the “Conversion Price”).

    


    (c)           The
Conversion Price and the number and kind of shares or other securities to be
issued upon conversion of this Note, shall be subject to adjustment from time to
time upon the happening of certain events while this conversion right remains
outstanding, as follows:

    


    (i.)     
     Merger, Sale of Assets,
etc. If the Borrowers at any time shall consolidate with or merge into or
sell or convey all or substantially all its assets to any other corporation,
this Note, as to the unpaid principal portion thereof and accrued interest
thereon, shall thereafter be deemed to evidence the right to purchase such
number and kind of shares or other securities and property as would have been
issuable or distributable on account of such consolidation, merger, sale or
conveyance, upon or with respect to the securities subject to the conversion or
purchase right, immediately prior to such consolidation, merger, sale or
conveyance. The foregoing provision shall similarly apply to successive
transactions of a similar nature by any such successor or purchaser. Without
limiting the generality of the foregoing, the anti-dilution provisions of this
Section shall apply to such securities of such successor or purchaser or
surviving entity of the surviving corporation after any such consolidation,
merger, sale or conveyance; or

     

    (ii.)     
    Stock Splits, Combinations
and Dividends. If the shares of Common Stock are subdivided or combined
into a greater or smaller number of shares of Common Stock, or if a dividend is
paid on the Common Stock in shares of Common Stock, the Conversion Price shall
be proportionately reduced in case of subdivision of shares or stock dividend or
proportionately increased in the case of combination of shares, in each such
case by the ratio which the total number of shares of Common Stock outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.

    


    (d)          Whenever
the Conversion Price is adjusted pursuant to Section 2.2(c) above, Jintai
Delaware shall promptly provide notice to the Holder setting forth the
Conversion Price after such adjustment and setting forth a statement of the
facts requiring such adjustment.

    


    (e)           Jintai
Delaware will reserve from its authorized and unissued shares of Common Stock,
the number of shares of Common Stock during the time periods and in the amounts
described in the Subscription Agreement. Jintai Delaware represents that upon
issuance, such shares of Common Stock will be duly and validly issued, fully
paid, and non-assessable.  Jintai Delaware agrees that its issuance of
this Note shall constitute full authority to its officers, agents, and transfer
agents who are charged with the duty of executing and issuing stock
certificates, to execute and issue the necessary certificates for shares of
Jintai Delaware’s Common Stock upon the conversion of this Note.

    


    2.3          No Fractional Shares.
No fractional shares of Common Stock shall be issued upon conversion of this
Note, but an adjustment in cash will be made, in respect of any fraction of a
share (which will be valued based on the Conversion Price) which would otherwise
be issuable upon the surrender of this Note for conversion, and a check in the
amount of the value of such fractional share shall be delivered to the
Holder.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

    


    2.4          Method of Conversion.
This Note may be converted by the Holder in whole or in part, as described
above. Upon partial conversion of this Note, a new Note containing the same date
and provisions of this Note shall, at the request of the Holder, be issued by
the Borrowers to the Holder for the principal balance of this Note and interest
which shall not have been converted or paid.

    


    ARTICLE
III

    


    EVENT
OF DEFAULT

    


    The
occurrence of any of the following events of default (“Event of Default”) shall,
at the option of the Holder hereof, make all sums of principal and accrued
interest then unpaid hereon immediately due and payable, upon demand, without
presentment or grace period, all of which hereby are expressly waived, except as
set forth below:

    


    3.1          Failure to Pay Principal or
Interest. The Borrowers fail to pay any amount when due, and such failure
continues for a period of twelve (12) business days after the due date. The
twelve (12) day period described in this Section 3.1 is the same twelve (12)
business day period described in Section 1.1 hereof.

    


    3.2          Breach of Covenant.
The Borrowers breaches any material covenant or other material term or condition
of the Subscription Agreement, or any other material term or condition of this
Note, in any material respect, and such breach continues for a period of twelve
(12) business days.

    


    3.3          Breach of Representations
and Warranties. Any material representation or warranty of the Borrowers
made herein, in any Transaction Document, or in any agreement, statement or
certificate given in writing pursuant hereto, or in connection herewith or
therewith, shall be false or misleading in any material respect as of the date
made and as of the Closing Date.

    


    3.4          Receiver or Trustee.
The Borrowers shall make an assignment for the benefit of creditors, or apply
for or consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business, or such a receiver or trustee
shall otherwise be appointed without the consent of the Borrowers, if such
receiver or trustee is not dismissed within forty-five (45) days from
appointment.

    


    3.5          Judgments. Any money
judgment, writ or similar final process amounting to more than $1,000,000 shall
be entered or filed against the Borrowers or any of its property or other
assets, and shall remain unpaid, unvacated, unbonded or unstayed for a period of
forty-five (45) days therefrom.

    


    3.6          Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law, or the issuance of any notice
in relation to such event, shall be instituted by or against the Borrowers and
the same is not dismissed within forty-five (45) days of
initiation.

    


    3.7          Failure to Deliver Common
Stock or Replacement Note. Jintai Delaware’s failure to deliver the
Common Stock to the Holder pursuant to and in the form required by this Note,
or, if required, a replacement Convertible Note, more than ten (10) business
days after the required delivery date of such Common Stock or replacement
Convertible Note.


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

    


    3.8          Reservation Default.
The failure by the Borrowers to have reserved for issuance upon conversion of
the Note the number of shares of Common Stock as required to enable the Holder
to convert the Note into Common Stock, as set forth herein, and such failure
continues uncured for a period of 10 business days.

    


    ARTICLE
IV

    


    MISCELLANEOUS

    


    4.1          Failure or Indulgence Not
Waiver. No failure or delay on the part of the Holder hereof in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof. All rights and remedies
existing hereunder are cumulative to, and not exclusive of, any other rights or
remedies otherwise available to the Holder.

    


    4.2          Notices. All notices,
demands, requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise specified herein,
shall be (a) personally served, (b) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (c) delivered by a
reputable overnight courier service with charges prepaid, or (d) transmitted by
telegram or facsimile, addressed as set forth below, or to such other address as
such party shall have specified by written notice. Any notice or other
communication required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by telegram or facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received), (ii) on the first business
day following the date deposited with an overnight courier service with charges
prepaid, or (iii) on the third business day following the date of mailing
pursuant to subpart (b) above, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:

    


    
      	
               
      

            	
              To
      Companies:

            	
              Jintai
      Mining Group, Inc.,

            


    

    No. 48
Qiaodong Road, Sien Town,

    Huanjiang
County Hechi City,

    Guangxi
Province, China

    Attn:
Kuizhong Cai

    Fax: (86
0778) 220-5911.

    


    Huanjiang
Jintai Mining Co., Limited

    No. 48
Qiaodong Road, Sien Town,

    Huanjiang
County Hechi City,

    Guangxi
Province, China

    Attn:
Kuizhong Cai

    Fax: (86
0778) 220-5911.

    


    With a
copy by fax to: Gersten Savage LLP

    600
Lexington Avenue, 9th Fl.

    New York,
NY 10022

    Attn:
Arthur  Marcus, Esq.

    Phone:
(212) 752-9700

    Fax:
(212) 980-5192


    
      
         


      

      
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              To
      Subscriber:

            	
              Liwen
      Hu

            


    

    No. 3,
1st
Street, Fengya Garden

    Phoenix
City, Guang Yuan Road East

    Phone: +
86(020) 38377188

    Fax:     +
86(020) 38377228

    


    
      	
            	
              With
      a copy by fax to:

            	
              ____________________

            


    

    ____________________

    ____________________

    Phone:
______________

    Fax:     ______________

    


    4.3          Amendment Provision.
The term “Note” and all reference thereto, as used throughout this instrument,
shall mean this instrument as originally executed, or if later amended or
supplemented, then as so amended or supplemented.

    


    4.4          Assignability. This
Note shall be binding upon the Borrowers and its successors and assigns, and
shall inure to the benefit of the Holder and its successors and assigns. This
Note shall not be divided by the Holder except in increments of not less than
$1,000,000 in principal amount and, in any event, the Holder shall immediately
provide the Borrowers written notice of an assignment of any of the rights under
this Note.

    


    4.5          Cost of Collection.
If default is made in the payment of this Note, Borrowers shall pay the Holder
hereof all reasonable costs of collection, including reasonable attorneys'
fees.

    


    4.6          Governing Law. This
Note shall be governed by, and construed in accordance with, the laws of the
State of New York. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state or Federal courts located in the State and County of New York. All
parties agree to submit to the jurisdiction of such courts. The prevailing party
shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Note is held invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or unenforceability of any other provision of this Note.
Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Borrowers in any other
jurisdiction to collect on the Borrowers's obligations to Holder, to realize on
any collateral or any other security for such obligations, or to enforce a
judgment or other decision in favor of the Holder. This Note shall be deemed an
unconditional obligation of Borrowers for the payment of money and, without
limitation to any other remedies of Holder, may be enforced against Borrowers by
summary proceeding pursuant to New York Civil Procedure Law and Rules Section
3213, or any similar rule or statute in the jurisdiction where enforcement is
sought. For purposes of such rule or statute, any other document or agreement to
which Holder and Borrowers are parties or which the Borrowers deliver to the
Holder, which may be convenient or necessary to determine Holder’s rights
hereunder, or Borrowers’ obligations to Holder are deemed a part of this Note,
whether or not such other document or agreement was delivered together herewith
or was executed apart from this Note.

     

    
      
         


      

      
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    4.7          Maximum Payments.
Nothing contained herein shall be deemed to establish or require the payment of
a rate of interest or other charges in excess of the maximum rate permitted by
applicable law. In the event that the rate of interest required to be paid or
other charges hereunder exceed the maximum rate permitted by applicable law, any
payments in excess of such maximum rate shall be credited against amounts owed
by the Borrowers to the Holder.

    


    4.8          Shareholder Status.
The Holder shall not have rights as a shareholder of Jintai Delaware with
respect to unconverted portions of this Note. However, the Holder will have all
the rights of a shareholder of the Borrowers with respect to the shares of
Common Stock to be received by Holder after delivery by the Holder of a
Conversion Notice to the Borrowers.

    


    [THIS
SPACE INTENTIONALLY LEFT BLANK]


    
      
         


      

      
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    IN WITNESS WHEREOF, each of
the Borrowers has caused this Note to be signed in their names by an authorized
officer as of the 31st day of
August, 2010.

    


    
      
        	 
      	
                JINTAI
      MINING GROUP, INC.

              
	 
      	 
      
	 
      	
                Date:  August
      31, 2010

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Kuizhong Cai

              
	 
      	
                Name:
      Kuizhong Cai

              
	 
      	
                Title:
      President and Chairman of the Board

              
	 
      	 
      
	 
      	
                HUANJIANG
      JINTAI MINING CO.LTD

              
	 
      	 
      
	 
      	
                Date:  August
      31, 2010

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Kuizhong Cai

              
	 
      	
                Name:
      Kuizhong Cai

              
	 
      	
                Title:
      President and Chairman of the
Board

              


      

    


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

    


    EXHIBIT A TO CONVERTIBLE
NOTE

    


    NOTICE OF
CONVERSION

    


    (To be
executed by the Registered Holder in order to voluntarily convert the
Note)

    


    The
undersigned hereby elects to convert the principal amount of the Convertible
Note (the “Note”) issued by Jintai Mining Group, Inc. on August  ___,
2010, and the accrued but unpaid interest thereon, into shares of Common Stock
of Jintai Mining Group, Inc. according to the conditions set forth in such Note,
as of the date written below.

    


    Date of
Conversion:             ___________________

    


    Amount to
be Converted:     ___________________

    


    Shares To
Be
Delivered:      ___________________

    


    Signature:             ___________________

    


    Print
Name:          ___________________

    


    Address:               ___________________

    ___________________

    ___________________

     

    
      
         


      

      
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