Document:

Unassociated Document

    
      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-EXHIBIT
        10.5

      

      AUTHORIZATION

      

      This
        Authorization (the “Authorization”) is made by and between the following parties
        on 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

       

      In
        this
        Authorization, each Party A, Party B and Party C 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 the same date hereof (“Consulting
        Agreement”), an Operating Agreement dated same date hereof (“Operating
        Agreement”), and a Technology License Agreement dated 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; and

       

      WHEREAS,
        Party
        A, Party B and Party C agree to further clarify matters relating to the
        operation of Party B and its Business, the governance of Party B, and the
        exercise of voting power over the registered capital of Party B owned and
        held
        by Party C pursuant to provisions of this Authorization.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      NOW,
        THEREFORE, upon
        mutual discussions and negotiations, the Parties have reached the following
        agreements:

       

      1.    Authorization
        of Voting Power

      

      1.1    Party
        C
        hereby irrevocably authorizes Party A to undertake and exercise all of his
        rights as a holder and owner of registered capital of Party B (“Holder”)
        pursuant to the laws of the PRC and the organization documents of Party B
        (“Authorized Rights”). The Authorized Rights include, but are not limited to:
        (a) appointment of Party A as the duly authorized representative of the Holder;
        (b) participation in the meetings of the Holders and voting of the registered
        capital of Party B either in person or by proxy; (c) appointment of Party
        B’s
        directors; and (d) auditing the financial information of Party B. 

      

      1.2    Party
        A
        accepts the authorization contained in Section 1.1 and shall exercise such
        Authorized Rights in the name of Party C according to the provisions of this
        Authorization.

      

      1.3    Party
        B
        acknowledges and accepts this Authorization and shall not take any actions
        or
        act in any manner inconsistent with the provisions of this Authorization.
        

      

      1.4    Party
        C
        agrees that, upon the request of Party A at any time and from time to time,
        it
        will execute any and all further documentation including, without limitation,
        powers of attorney, voting rights authorizations and/or proxies, to enable
        Party
        A to exercise the Authorized Rights granted to it hereunder at any meeting
        of
        the holders of Party B’s registered capital, and to further take any and all
        actions necessary for Party A to exercise the Authorized Rights hereunder.
        

      

      2.    Term
        of
        Authorization

      

      The
        term
        of this authorization is from the date hereof until June 1, 2025. Within
        three
        months prior the expiration of the term of this authorization, Party A may
        elect
        to renew this authorization for an additional twenty (20) year period after
        the
        initial term hereof or any renewal term. 

      

      3.    Remuneration

      

      Party
        A
        shall not receive any remuneration for exercising the Authorized Rights
        hereunder. 

      

      4.    Warranties
        and Representations 

      

      4.1    The
        Parties
        of this Authorization hereby represent and warrantee that they:

      

      (a)    Possess
        appropriate competence, authority and power to conclude this
        Authorization;

       

      (b)    have
        capability to fulfill obligations under this Authorization;

       

      (c)    No
        performance of obligations under this Authorization is in breach of their
        obligations under any other binding agreements;

       

      (d)    the
        execution
        and delivery of this Authorization by the Parties and the performance of
        provisions hereof will not (i) violate any applicable laws, regulations,
        rules,
        judicial or administrative orders, or arbitral wards or judgments binding
        on the
        Parties, (ii) contravene any article, condition or provision of the
        organizational documents of Party B, or (iii) breach any provision of any
        agreement or contract or any undertaking to which the Parties are a party.
        

      

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      4.2    Party
        C
        hereby warrants, represents and covenants with respect to his registered
        capital
        of Party B that: (i) he has the full and legal right and title to the Authorized
        Rights; (ii) he possesses the full legal capacity to convey the Authorized
        Rights to Party A; (iii) he has taken and will take all steps necessary to
        authorize and approve the conveyance of the Authorized Rights to Party A;
        and
        (iv) he possesses the full and non-defective rights and title to the Authorized
        Rights and there is no pledge, guarantee, other types of encumbrances or
        any
        other rights or claims that another party can make to the Authorized Rights.
        

       

      5.    Settlement
        of
        Dispute; Governing Law

      

      5.1    The
        Parties
        shall first strive to settle all disputes regarding interpretation and
        enforcement of any provisions of this Authorization through friendly
        consultation.

      

      5.2    If
        the
        parties fail to settle the disputes through consultation, the disputes shall
        be
        referred to China International Economic and Trade Arbitration Committee
        for
        arbitration according to its existing arbitration rules. The place of
        arbitration shall be in Hong Kong; and the language used in arbitration shall
        be
        English. The decision of arbitration shall be final and binding upon all
        parties.

      

      5.3    This
        Authorization shall be interpreted and construed in accordance with the laws
        and
        regulations of the PRC. 

      

      6.    Miscellaneous.

      

      6.1    This
        Authorization is made in one or more counterparts
        and each
        counterpart shall constitute one and the same instrument.

      

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

      

      6.3    In
        the
        event that one or several of the provisions of this Authorization 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 Authorization 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.

      

      6.4    Any
        Party
        may waive the terms and conditions of this Authorization, 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.

      

      6.5    Any
        amendment and supplement of this Authorization shall come into force only
        after
        a written agreement in the English language is signed by all parties. The
        amendment and supplement duly executed by all parties shall be part of this
        Authorization and shall have the same legal effect as this
        Authorization.

      

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

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

      

      6.7    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 the English
        language. 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.

      

      

      [Remainder
        of this page intentionally left blank.]

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF the parties hereto have caused this Authorization to be duly
        executed on their behalf by a duly authorized representative as of the effective
        date first written above.

       

      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 

      

       

      
        
           

        

          -5-

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