UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): June 30, 2014
 
UHF Incorporated
(Exact name of registrant as specified in its charter)

Delaware
 000-49729
38-1740889
 (State of incorporation)
 (Commission File Number)
 (IRS Employer Identification No.)
 
Chunshugou Luanzhuang Village
 Zhuolu County, Zhangjiakou
 Hebei Province, China, 075600
  (Address of principal executive offices)
 
86-313-6732526
 (Registrant's telephone number, including area code)
 
c/o Unity Venture Capital Associates Ltd.
825 Third Avenue
New York, New York 10022
  (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
 
This report contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking statements include, among other things, statements relating to:
 
 
●
our ability to produce concentrated  iron powder at a profitable margin;
●
the uncertainty of acquiring mining rights in the areas around the production facilities;
●
the impact that a downturn or negative changes in the steel market may have on sales;
●
our ability to obtain additional capital to fund our expansion;
●
economic, political, regulatory, legal and foreign exchange risks associated with our operations; and
●
the loss of key members of our senior management.
 
Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report and the documents that we reference and filed as exhibits to the report completely and with the understanding that our actual future results may be materially different from what we expect. Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.
 
Use of Certain Defined Terms
 
Except where the context otherwise requires and for the purposes of this report only:
 
 
the “Company,” “we,” “us,” and “our” refer to the combined business of (i) Target Acquisitions I, Inc., or “Target Acquisitions,” a Delaware corporation, which has been merged into UHF Incorporated, the registrant, or  “UHF”, (ii) China Real Fortune Mining Limited, or “Real Fortune BVI,” a BVI  limited company , (iii) Real Fortune Holdings Limited, or “Real Fortune HK,” a Hong Kong limited company and wholly-owned subsidiary of Real Fortune BVI,  (iv) Zhangjiakou TongDa Mining Technologies Service Co., Ltd., or “China Tongda,” a Chinese limited company and wholly-owned subsidiary of Real Fortune HK, (v) Zhuolu Jinxin Mining Co., Ltd., or “China Jinxin,” a Chinese limited company which is effectively and substantially controlled by China Tongda through a series of agreements, and (vi) Haixing Huaxin Mining Industry Co., Ltd.or  “China Huaxin”, a Chinese limited liability company and wholly-owned subsidiary of China Tongda, as the case may be;
   
 
“BVI” refers to the British Virgin Islands;
 
 
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
 
 
“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China;
 
 
“PRC,” “China,” and “Chinese,” refer to the People’s Republic of China (excluding Hong Kong and Taiwan);
 
 
“Renminbi” and “RMB” refer to the legal currency of China;
 
 
“Securities Act” refers to the Securities Act of 1933, as amended;
 
 
“US dollars,” “dollars” and “$” refer to the legal currency of the United States; and
 
 
“tons” or “tonnes” refer to metric tonnes (2,205 pounds).
 
 
 
i
 
 
In this report we refer to information contained in government reports and third party publications.  Although we are unable to verify the accuracy of all of such information we believe you may rely upon such information in evaluating the prospects of our Company.  We are responsible for the accuracy of the third party information to which we make reference and for all information contained in this report.
 
  Implications of Being an Emerging Growth Company
 
As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
 
• a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and
 
• an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002.
 
We may take advantage of these provisions until the end of the fiscal year ending after the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company and if we do, the information that we provide stockholders may be different than you might get from other public companies in which you hold equity.

We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenue, have more than $700 million in market value of our ordinary shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.
 
The JOBS Act permits an "emerging growth company" like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
 
 
ii
 
 
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
 
 
On June 30, 2014, we entered into and closed a share exchange agreement, or the Target Share Exchange Agreement, with Target Acquisitions I, Inc., a Delaware corporation (“Target”), and the stockholders of Target (the “Target Stockholders”), pursuant to which we acquired 100% of the issued and outstanding capital stock of Target in exchange for a total of 43,375,638 shares of our common stock and one share of our series A convertible preferred stock, convertible into an additional 17,839,800 shares of common stock.  Since our certificate of incorporation only authorizes the issuance of 50,000,000 shares of common stock, we did not have sufficient authorized but unissued shares of common stock in order to complete the acquisition of Target, and so our Board of Directors authorized the issuance to one of the Target Stockholders of one share of series A convertible preferred stock convertible into 17,839,800 shares of common stock at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion. The series A convertible preferred stock votes together with the common stock on an as converted basis on all matters submitted to stockholders, including the election of directors, with the one outstanding share of series A convertible preferred stock entitled to 17,839,800 votes.  As of June 30, 2014, we had outstanding 45,926,278 shares of common stock and one share of series A convertible preferred stock.

The foregoing description of the terms of the Target Share Exchange Agreement is qualified in its entirety by reference to the provisions of the agreement filed as Exhibit 2.4 to this report, which are incorporated by reference herein.
                           
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
 
  On June 30, 2014, we then a shell company, completed a reverse acquisition transaction through a share exchange with Target and the Target Stockholders whereby we acquired 100% of the outstanding shares of common stock of Target in exchange for a total of 43,375,638 shares of our common stock and one share of our series A convertible preferred stock convertible into an additional 17,839,800 shares common stock at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion. The series A convertible preferred stock votes together with the common stock on an as converted basis on all matters submitted to stockholders, including the election of directors, with the one outstanding share of series A convertible preferred stock entitled to 17,839,800 votes. As a result of the reverse acquisition, Target became our wholly-owned subsidiary and the former stockholders of Target became our controlling stockholders.  For accounting purposes, the share exchange transaction with Target and the Target Stockholders was treated as a reverse acquisition, with Target as the acquirer and UHF as the acquired party.    
 
As a result of our acquisition of Target, we now own all of the issued and outstanding capital stock of Real Fortune BVI, which in turn owns all of the issued and outstanding capital stock of Real Fortune Holdings Limited, a Hong Kong limited company (“Real Fortune HK”), which in turn owns all of the issued and outstanding capital stock of Zhangjiakou TongDa Mining Technologies Service Co., Ltd., a Chinese limited company (“China Tongda”).
 
China Tongda has entered into a series of agreements with Zhuolu Jinxin Mining Co., Ltd., a Chinese limited company (“China Jinxin”) and its shareholders pursuant to which China Tongda effectively controls the operations of China Jinxin and is entitled to receive the pre-tax profits of China Jinxin.  China Jinxin is an iron ore processing and high grade iron ore concentrate producer. China Jinxin has an iron ore concentrate production line located on the Zhuolu Mine, with an annual capacity of approximately 300,000 tons and associated plant and office buildings.  The Zhuolu Mine is located in Zhuolu County, Zhangjiakou City, Hebei Province, China. 
 
Real Fortune BVI was established in the BVI in September 2010 to serve as an intermediate holding company.  Real Fortune HK was established in HK in April 2010. China Tongda was established in the PRC in August 2010, and in August 2010, the local government of the PRC issued a certificate of approval regarding the foreign ownership of China Tongda by Real Fortune HK.  China Jinxin, our operating affiliate, was established in the PRC in December 2006.
 
 
1
 
 
On January 17, 2014, China Tongda acquired all of the outstanding shares of Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”), which is expected to produce Direct Reduced Iron (DRI) using advanced reduction rotary kiln technology with iron sand as the principal raw material.  China Huaxin intends to import iron sands from New Zealand, Australia, Indonesia and the Philippines. To date China Huaxin has conducted no business activities other than construction of its DRI production facility (the “DRI Facility”) in Haixing County, Hebei Province, about 50 km from the nearest port. The total amount expended to construct the DRI Facility, inclusive of both hard and soft costs, was approximately 244,270,000 RMB  or US $39 million and China Huaxin currently has liabilities of approximately 233,470,000 RMB or US$38 million.  Construction of the DRI Facility has been completed and trial production has commenced. It is anticipated that commercial production will commence in September 2014.
 
On July 2, 2014, we merged Target, our wholly-owned subsidiary, into our company pursuant to Section 253 of the Delaware General Corporation Law.
 
By written consents dated July 4, 2014, our Board of Directors and holders of approximately 67.58%  of our outstanding voting shares authorized and approved an Agreement and Plan of Merger with our newly formed wholly owned subsidiary, Adamant DRI Processing and Minerals Group, a Nevada corporation (“Adamant”), as a result of which upon consummation of the merger  we would be merged with and into Adamant and become a Nevada corporation (the “Reincorporation Merger”) with the name Adamant DRI Processing and Minerals Group. Each stockholder of UHF would continue to own the same number of shares of common stock in Adamant following the Reincorporation Merger. We have filed an Information Statement with the Securities and Exchange Commission (the “SEC”) in connection with the Reincorporation Merger which will be distributed to stockholders upon clearance by the staff of the SEC. The Reincorporation Merger will become effective on the twenty-first day after the Information Statement has been distributed to stockholders.
 
The chart below presents our corporate structure after giving effect to the Reincorporation Merger:
 
Adamant DRI Processing and Minerals Group (a Nevada corporation)
 
                                                                              |                                                                                     
                                                                           100%                                                                                     
                           |                                   
                                               China Real Fortune Mining Limited (BVI)
                                                               (“Real Fortune BVI”)
                                                                                |
                                                                            100%
                                                                                |
                                                 Real Fortune Holdings Limited (HK)
                                                              (“Real Fortune HK”)
                                                                                |
                                                                            100%
                                                                                |
                                  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (PRC)
                                                                     (“WFOE”)
                                                               |                                                        |

                                        VIE Contractual Arrangements       Haixing Huaxin Mining Industry Co., Ltd. (PRC)
                                                               |                                                 (“China Huaxin”)
                                                               |       
                                                               |
                                Zhuolu Jinxin Mining Co., Ltd. (PRC)
                                                   (“China Jinxin”)
 
 
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FORM 10 DISCLOSURE
 
As disclosed elsewhere in this report, on June 30, 2014, we acquired Target Acquisition I, Inc., pursuant to the Target Share Exchange Agreement (the “Target Acquisition”).  Item 2.01(f) of Form 8-K states that if the registrant was a shell company like we were immediately before the Target Acquisition, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10.  Accordingly, we are providing below the information that would be included in a Form 10 if we were to file a Form 10.  Please note that the information provided below relates to the combined enterprises after the Target Acquisition., except that information relating to periods prior to the date of the Target Acquisition only relate to UHF Incorporated unless otherwise specifically indicated. 
 
DESCRIPTION OF BUSINESS

Overview
 
Iron Ore (Zhuolu Jinxin Mining Co., Ltd.)

We operate our business in China through China Jinxin, our variable interest entity which we control through a series of agreements described herein. China Jinxin is an early stage mining company which processes iron ore at its production facilities in Hebei Province. China Jinxin currently does not own any mines or hold any mining rights.
 
The PRC government continues to exercise substantial control over many sectors of the Chinese economy.  Part of this control is through regulations.  Among these are regulations on foreign ownership of certain companies and regulations on the ability of Chinese citizens to shift ownership of domestic Chinese companies to offshore enterprises.  In August 2006, the Ministry of Commerce, or MOFCOM, the China Securities Regulatory Commission, or CSRC, the State-owned Assets Supervision and Administration Commission, the State Administration of Taxation, or SAT, the State Administration of Industry and Commerce and the State Administration of Foreign Exchange, or SAFE, jointly promulgated the “Rules on the Mergers and Acquisition of Domestic Enterprises by Foreign Investors,” which became effective in September 2006, and were amended on June 22, 2009.  These rules are referred to herein as the “M&A Rules.” The M&A Rules confirmed that MOFCOM is a key regulator for mergers and acquisitions in China and require MOFCOM approval of a broad range of mergers, acquisitions and investment transactions.  Among other things, the M&A Rules include provisions that purport to require that an offshore special purpose vehicle, or SPV, controlled directly or indirectly by PRC companies or individuals, formed for the purpose of offering their equity interests in domestic companies they control, must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange.

On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of these regulations remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement to various types of transactions, including those which involve the use of VIE agreements.
 
At the time of the acquisition of Real Fortune BVI by Target, the shareholders of China Jinxin desired to access the capital markets outside of China to expand its operations.  These shareholders believed that prior consent of the CSRC would be required if they were to cause the shares of China Jinxin to be owned by a foreign entity but that consent would not be required if they and China Jinxin entered into the VIE Agreements with China Tongda, even if China Tongda was owned by a foreign entity. Through these contractual arrangements or VIE Agreements, acting through China Tongda, we have the ability to substantially influence China Jinxin’s daily operations and financial affairs, appoint its senior executives and approve all matters requiring stockholder approval. As a result of these contractual arrangements pursuant to generally accepted accounting principles in the United States (“US GAAP”), we are considered the primary beneficiary of China Jinxin. The shareholders further believed that there was no need to obtain the approval of the CSRC pursuant to the M&A Rules given that:
 
 
3
 
 
 
●
Our Company and its offshore subsidiaries did not acquire an equity interest in any PRC company.

 
●
China Tongda was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition by our Company of the equity interests or assets of any “domestic company” as defined under the M&A Rules, and no provision in the M&A Rules classifies the contractual arrangements between China Jinxin and China Tongda as a type of acquisition transaction falling under the M&A Rules.
 
Although we believe there are no justifiable grounds for the PRC government to terminate or amend the VIE Agreements, the PRC government has taken actions to assert control over businesses regardless of whether or not there was clear authority or precedent for it to do so.  Further, on August 25, 2011, MOFCOM issued Announcement No. 53 “Measures on the Security Review System of Foreign Investors Merging and Acquiring Domestic Enterprises” which came into effect on September 1, 2011, and it helps implement Circular 6, the “Notice on Establishing a Security Review System for Acquisition of Domestic Enterprises by Foreign Investors.”  Circular 6 gives the PRC Government authority to determine what transactions affect national security interests and to change the terms of a transaction or cancel it to mitigate national security risks.  Announcement No. 53 makes it clear that use of a VIE structure does not exempt a transaction from review pursuant to Circular 6. The list of industries which may be deemed to implicate national security interests is broad and may be increased by the PRC authorities.  The grant of such broad authority and the absence of relevant guidelines and precedent creates the risk that the PRC authorities, for reasons not known to us, could determine that the VIE Agreements need to be canceled or amended.

Pursuant to the VIE Agreements whereby China Tongda controls the management and operations of China Jinxin, as compensation for its services China Tongda is entitled to receive each month an amount equal to the pre-tax profits of China Jinxin. Through the VIE Agreements, we are irrevocably given the right to control the operations of China Jinxin and to exercise the rights of its shareholders and Board of Directors (“BOD”). The rights we were granted include the right to make all decisions implicating the operational management, financial management, capital management, asset management, human resource management and daily operations of China Jinxin. Pursuant to the VIE Agreements, we also assume all the operational risks associated with China Jinxin and are responsible for any loss incurred by China Jinxin. See “Acquisition of Real Fortune BVI” for a more detailed description of the VIE Agreements.
 
In connection with their decision to seek access to the capital markets outside of China and satisfy certain debts incurred in connection with the organization and operation of China Jinxin, the principal shareholders of China Jinxin determined to reduce their effective holdings in China Jinxin by transferring a portion of their anticipated allocable portions of  the shares of Real Fortune Mining BVI in satisfaction of debts due other individuals, some of whom were shareholders of China Jinxin and some of whom had made loans to the shareholders. As a consequence of these transfers, the equity interests of the shareholders of China Jinxin did not correspond to their equity interests in Real Fortune Mining BVI at the time of the consummation of our acquisition of Real Fortune Mining BVI.  These transactions are described under “Certain Relationships and Related Transactions, and Director Independence.”
 
China Jinxin was established in December 2006 in Zhuolu County, Hebei Province, Northern China. China Jinxin has registered capital of RMB 36 million ($5.7 million). When formed, China Jinxin had registered capital of RMB 6 million ($909,000). China Jinxin currently has 15 shareholders.
 
China Jinxin is engaged in iron ore processing and the production of iron ore concentrate. China Jinxin has an iron ore concentrate production line with an annual capacity of 300,000 tons and associated plant and office buildings (hereinafter collectively referred to as the "production facilities"). The production facilities are located in Zhuolu County, Zhangjiakou City, Hebei Province, China. Construction of the production facilities commenced in May 2007 and was completed in February 2010.  In December 2011, the Company halted production to upgrade the production lines at the facility to improve iron ore refinement and increase the iron ore concentration rate. As a result of recent design changes, the Company now anticipates the upgrade will be completed in July 2014 and production will be resumed in September 2014.
 
 
4
 
 
Temporary manufacturing licenses for the production facilities were obtained from Zhangjiakou City on March 22, 2009, March 23, 2010, January 1, and December 30, 2011, respectively.  The Company's license has been extended and it is valid from December 29, 2011 to December 28, 2014.
 
China Jinxin has entered into a 10 year contract with Handan Steel Group Company (“HSG”), a subsidiary of Hebei Steel and Iron Company, a state owned enterprise, which expires in January 2019, whereby China Jinxin agreed to sell and HSG agreed to purchase all of the output from our production facility. The price we receive for our output is determined by HSG in light of market prices and the quality of our product and is to result in a reasonable profit margin to us.  If China Jinxin is not satisfied with the price set by HSG it can attempt to renegotiate the price. China Jinxin has withheld deliveries from HSG since the end of 2011 because of its dissatisfaction with the price offered by HSG. If this dispute should continue, we will not be able to generate revenue from our production of iron ore which would have a materially adverse effect on our operations.
 
DRI Processing (Haixing Huaxin Mining Industry Co., Ltd.)

On January 17, 2014, we entered into a series of substantially identical agreements (“Haixing Huaxin Share Purchase Agreements”) with Jiazhen Liu, Changkui Zhu, Dongli Sun, Meijie Wang and Xingwang Shao, the shareholders of Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”) pursuant to which we acquired the right to acquire 100% of the outstanding shares of China Huaxin.  The consideration to be paid to the shareholders of China Huaxian (the “Shareholders”) for their interests consisted, in the aggregate, of 10 million RMB, or US$1.65 million, and 5.1 million shares of Target common stock.
 
China Tongda, our wholly-owned Chinese subsidiary, filed a notice of transfer with respect to the change of ownership of China Huaxin with the local company registration authority which was approved in January 2014.
 
 
To consummate the acquisition of China Huaxin, in a private placement completed on January 20, 2014, we issued to three Chinese investors our 4% convertible promissory notes due June 30, 2014 in the aggregate face amount of 10 million RMB, or US$1.65 million (the “Notes”).  The Notes bore interest at the rate of 4% per annum and the face amount of the Notes were convertible into shares of Target common stock at an effective conversion price of $11.11 per RMB or US $1.79 per share, with accrued interest payable in cash. The convertible debt was fully converted into 900,000 shares of Target’s common stock in March 2014 by the three investors.
 
China Huaxin was established in August 2010 and is located in Haixing Qingxian Industrial Park, Cangzhou, Heibei Province PRC. The business of the company will be to produce and sell Direct Reduced Iron (DRI) produced using advanced reduction rotary kiln technology with iron sand as the principal raw material.  China Huaxin intends to import iron sands from New Zealand, Australia, Indonesia and the Philippines. To date China Huaxin has conducted no business activities other than construction of its DRI Facility in Haixing County, Hebei Provice, about 50 km from the nearest port. The total amount expended to construct the DRI Facility, inclusive of both hard and soft costs, was approximately 244,270,000 RMB  or US $39 million and China Huaxin currently has liabilities of approximately 233,470,000 RMB or US$38 million.  Construction of the DRI Facility has been completed and trial production has commenced. It is anticipated that commercial production will commence in September 2014.
 
‘Reduced iron’ derives its name from the chemical change that iron ore undergoes when it is heated in a furnace at high temperatures in the presence of hydrocarbon-rich gasses. ‘Direct reduction’ refers to processes which reduce iron oxides to metallic iron below the melting point of iron. The product of such solid state processes are called direct reduced iron (DRI). The Company’s DRI Facility is projected to produce DRI with an iron grade of over 92%.
 
The Company’s DRI Facility occupies an area of 200,000 m. 2     The DRI Facility occupies 60,000 m 2, of land and there is a raw material storage area of 14,000 m 2 with a 100,000 ton storage capacity, a workshop area of 4500 m 2 , a water storage pool of 4000m 3 to supplement water supplies, and an office building of 2,400 m 2 . The plant design is intended to permit the processing of 2,000,000 tons of iron sand per annum with an annual output capacity of 1,000,000 tons of DRI.
 
 
5
 
 
The equipment installed in the DRI Facility includes 2 sets of Rotary Kilns that are 36m each in length and capable of processing 6000 tons of raw material per day, and 3 sets of Gas Furnaces to produce carbon monoxide for use in the reduction process. The equipment also includes 6 sets of Grinding Equipment and 3 sets of Wet Magnetic Separation Machineries with processing capacity of 7200 tons per day. In addition there are 30 sets of Hydraulic Machines with a capacity of 5,000 tons per day to press block the finished product
 
Corporate History and Background
 
UHF Incorporated

UHF Incorporated was incorporated in Michigan on March 13, 1964 with the name State Die & Manufacturing Company. On March 1, 1971 its name was changed to State Manufacturing, Inc., on April 1, 1981 its name was changed to State Die and Engineering Inc., on July 19, 1984 its name was changed to Universal Robotics and Automation, Inc., on October 23, 1984 its name was changed to Universal Automation Corporation, and on March 4, 1992 its name was changed to UHF Incorporated.
 
On December 28, 2011, UHF Incorporated effected a one for five (1-for-5) reverse stock split of its shares of common stock, with special treatment for shareholders owning less than 500 shares, but at least 250 shares, to preserve round lot holders. Holders of less than 500 shares but at least 250 shares received 100 post-split shares. No fractional shares were issued.

On December 29, 2011, UHF Incorporated completed a domicile merger with its newly-formed wholly owned subsidiary, the surviving company, UHF Incorporated, a Delaware corporation, pursuant to an Agreement and Plan of Merger dated December 1, 2011, as a result of which it became a Delaware corporation and the corporate existence of UHF Incorporated, a Michigan corporation (“UHF Michigan”), was terminated. Each shareholder of UHF Michigan received a number of shares of our common stock equal to the number of shares previously owned in UHF Michigan after giving effect to the reverse split.
 
From 1994 until the acquisition of Target on June 30, 2014, UHF had been inactive and had no assets or employees and was a “shell company,” as that term is defined in Rule 12b-2 under the Exchange Act. As a result of the acquisition of Target, UHF is no longer a shell company.
 
Target Acquisition I, Inc.

Target Acquisitions I, Inc. was incorporated in the State of Delaware on June 27, 2008. It was formed as a vehicle to pursue a business combination and prior to the acquisition of Real Fortune BVI conducted no operations.
 
Acquisition of Real Fortune BVI
 
On October 1, 2011, Target, then a publicly traded shell company, acquired all of the outstanding shares of Real Fortune BVI (the “Real Fortune BVI Acquisition”) through a share exchange with the shareholders of Real Fortune BVI, or the Real Fortune Shareholders, whereby Target 100% of the issued and outstanding capital stock of Real Fortune BVI for 8 million shares of Target common stock which effectively constituted 100% of the issued and outstanding capital stock of Target immediately after the consummation of the share exchange (the “Real Fortune BVI Share Exchange”). As a result of the Real Fortune BVI Share Exchange, Real Fortune BVI became Target’s wholly-owned subsidiary and the former shareholders of Real Fortune BVI became the controlling stockholders of Target.  For accounting purposes, the Real Fortune BVI Share Exchange was treated as a recapitalization of Real Fortune BVI.
 
As a result of our acquisition of Target, we now own all of the issued and outstanding capital stock of Real Fortune BVI, which in turn owns all of the issued and outstanding capital stock of Real Fortune HK, which in turn owns all of the issued and outstanding capital stock of China Tongda. In addition, we effectively and substantially control China Jinxin through the VIE Agreements among China Tongda, China Jinxin and the shareholders of China Jinxin.  
 
 
6
 
 
Real Fortune BVI was established in the BVI in September 2010 to serve as an intermediate holding company.  Real Fortune HK was established in HK in April 2010. China Tongda was established in the PRC in August 2010 as an entity wholly-owned by Real Fortune HK, and in August 2010, the local government of the PRC issued a certificate of approval regarding the foreign ownership of China Tongda by Real Fortune HK.  China Jinxin, our operating affiliate, was established in the PRC in December 2006. 
 
Prior to the consummation of the Share Exchange Agreement among Target Acquisitions I, Real Fortune BVI and the Real Fortune Shareholders (the “Real Fortune BVI Share Exchange Agreement”), China Tongda and China Jinxin and its shareholders entered into a series of agreements known as variable interest entity agreements, or the VIE Agreements, pursuant to which China Jinxin became contractually controlled by China Tongda.  The use of VIE agreements is a common structure used to acquire control of PRC corporations.  The material terms of the VIE Agreements are summarized below, which summaries are qualified in their entirety by reference to the full text of the VIE Agreements, which are filed as exhibits 10.7, 10.8., 10.9 and 10.10 to this report.
 
 
(1)
Management Entrustment Agreement : Pursuant to this Agreement China Tongda has the right and obligation to manage all aspects of the operations of China Jinxin and the Board of Directors and shareholders of China Jinxin may not take any actions without the consent of China Tongda. The scope of the authority granted to China Tongda includes, but is not limited to, the right to make all major decisions, the right to manage the assets, capital and finances of China Jinxin, authority for all decisions related to human resources, daily operation management and technical support. To facilitate its exercise of such rights, China Tongda has been granted powers of attorney by the shareholders of China Jinxin granting China Tongda the right to participate in all shareholders’ meetings of China Jinxin and to make all significant decisions at such meetings, including the designation of candidates for election to the Board of China Jinxin. In consideration of its services, China Tongda shall be paid quarterly an amount equal to the pre-tax profits of China Jinxin and shall be required to pay to China Jinxin the amount of any loss incurred by China Jinxin within 30 days of a request for payment. Further, if China Jinxin is unable to pay its debts, China Tongda will be responsible therefor.  Similarly, if losses sustained by China Jinxin result in a capital deficiency, China Tongda shall be obligated to make up the deficiency.  To facilitate China Tongda’s management of China Jinxin, China Tongda shall have access to and the right to maintain all books and records and other relevant documentation of China Jinxin.  Further, during the term of the Management Entrustment Agreement, without the consent of China Tongda, China Jinxin will not issue, purchase or redeem any of its equity securities or debt or create any liens upon its property or assets, other than for expenses incurred in the ordinary course of business and permitted exceptions; or declare or pay any dividends. The term of the Management Entrustment Agreement is for 30 years, or until May 9, 2041, and will be extended automatically for successive 10-year periods thereafter, except that the agreement will terminate (i) at the expiration of the initial 30-year term, or any 10-year  renewal term, if China Tongda notifies China Jinxin not less than 30 days prior to the applicable expiration date that it does not want to extend the term, (ii) upon prior written notice from China Tongda, or (iii) upon the date China Tongda acquires all of the assets or at least 51% of the equity interests of China Jinxin.
 
 
(2)
Exclusive Purchase Option Agreement : Pursuant to this Agreement China Jinxin and each of China Jinxin’s shareholders granted to China Tongda an exclusive option to purchase all of the assets or outstanding shares of China Jinxin at such time as the purchase of such assets or shares is permissible under the laws of the PRC.  The options are for an initial period of 30 years and will renew automatically for successive periods of 10 years each unless voluntarily terminated by China Tongda. At such time during the term as China Tongda determines to exercise its option to purchase either the assets or equity of China Jinxin it shall send a notice to China Jinxin or its shareholders, as the case may be.  Upon receipt of such notice, China Jinxin or its shareholders shall take such steps and execute such documents as are necessary to transfer the assets or shares. Unless an appraisal is required by the laws of China, the purchase price of the assets or outstanding equity shall be equal to the lower of (i) the actual registered capital of China Jinxin and (ii) RMB 500,000 ($80,195); provided that if the laws of the PRC do not permit the purchase at that price, the purchase price shall be the lowest price allowed under the laws of the PRC.  All taxes relating to such purchase shall be borne by China Tongda.
 
 
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(3)
Power of Attorney : Each shareholder of China Jinxin entered into a Power of Attorney irrevocably authorizing China Tongda to exercise all of its rights as a shareholder of China Jinxin. The rights granted include,  without limitation, the right to: (i) attend the shareholders’ meetings of China Jinxin  and execute actions by written consent; (ii) exercise all of  holder’s rights as a shareholder under the laws of the PRC and the Articles of Association of China Jinxin, including but not limited to the right to transfer or pledge or dispose of the grantor’s shares in China Jinxin; (iii) designate and appoint  the legal representatives, Chairman of the Board of Directors , directors, supervisors, the chief executive officer, the chief financial officer and other senior management members of China Jinxin; (iv) execute the relevant share and/or asset purchase agreements contemplated in the Exclusive Purchase Option Agreement, and to effect the terms of the Equity Pledge Agreement and Exclusive Purchase Option Agreement; and (v) to transfer allocate, or utilize in some other ways the cash dividends and non-cash income of China Jinxin.  The power of attorney shall be in effect as long as the shareholder owns shares of China Jinxin.

 
(4)
Equity Pledge Agreement : Pursuant to an Equity Pledge Agreement each of the shareholders  of China Jinxin has pledged all of such shareholder’s shares  in China Jinxin as security for the performance by China Jinxin and each of its shareholders of their obligations under the VIE Agreements. In addition to pledging his shares in the Equity Pledge Agreement, each shareholder has agreed not to impose any encumbrances or restrictions on his shares, not to sell, lease or transfer any of his shares and to provide notice to China Tongda should he receive any notice, order, ruling, verdict or other instrument in relation to the pledged shares or which may affect his ownership of the pledged shares.
 
Acquisition of China Huaxin
 
On January 17, 2014, Target entered into a series of substantially identical agreements (“China Huaxin Share Purchase Agreements”) with the shareholders of Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”) pursuant to which Target acquired the right to acquire 100% of the outstanding shares of China Huaxin.  The consideration to be paid to the shareholders of China Huaxian (the “Shareholders”) for their interests consisted, in the aggregate, of 10 million RMB and 5,100,000 shares of Target common stock.  China Tongda, Target’s wholly-owned Chinese subsidiary, filed a notice of transfer with respect to the change of ownership of China Huaxian with the local company registration authority which was approved in January 2014.
 
Unlike China Jinxin, which we control through the VIE Agreements, China Huaxin is directly owned by China Tongda, our wholly owned subsidiary.
 
 
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The chart below presents our corporate structure after giving effect to the Reincorporation Merger:
 
 
Our Industry:
 
Introduction to iron ore

Iron ore is the main source of iron for the world’s iron and steel industries. It is an essential component used in the production of steel. Approximately 98% of the global supply of iron ore is used in steelmaking. Iron ore refers to rock that contains a sufficient level of iron minerals that can be mined economically. Iron ore is mainly composed of compounds of iron and oxygen (iron oxides) mixed with gangue, or impurities that are not generally utilized commercially. The most common types of iron ore are magnetite and hematite. Other iron ore types that naturally occur include limonite, siderite geothite, pyrite, chamosite and greenalite. When heated in the presence of a reductant, iron ore will yield metallic iron (Fe). Iron ore is graded according to size as “lumps” or “fines” based on whether the individual particles have a diameter of more or less than six millimeters. Iron concentrate is the valuable fines that are separated commercially from iron ore in the form of rock with gangue by crushing, grinding, and beneficiation and can be agglomerated before being used in an iron making blast furnace or a direct reduction furnace. Iron ore is used directly as lump ore, or as concentrate or fines converted into pellets or sinter.
 
 
9
 
 
China’s iron ore production
 
According to Mineral Commodity Summaries 2012 and the 2010 Minerals Yearbook issued by US Geological Survey (“USGS”), China ranked fourth globally in terms of crude ore reserves, accounting for approximately 13.5% of global crude ore reserves. China also was the leading producer of iron ore in terms of iron content and produced approximately 1,070 million metric tons of iron ore in 2010. [ Source : h ttp://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/mcs-2012-feore.pdf ; and http://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/myb1-2010-feore.pdf]  The major iron ore reserve areas in China are mainly distributed in Liaoning province, eastern Hebei province, Sichuan province, western Shandong province, southwestern Fujian province, Henan province and Xinjiang province. [ Source: http://english.people.com.cn/90001/90778/90860/6939202.html]
  
China’s iron ore consumption                                                        
 
In 2013, Government stimulus measures are likely to moderately improve the economic situation in China. This follows sluggish exports resulting from the global economic slowdown. Thus China’s apparent steel use is expected to rise by 3.1% and will reach 659.2 Million ton in 2013. [Source: http://www.worldsteel.org/media-centre/press-releases/2012/april-sro.html ] China is one of the fastest growing countries in terms of iron ore demand and the main driver behind the growth of the global iron ore sector. With its substantial demand for iron ore, China is the largest iron ore importer in the world. According to a report titled “China Iron Ore Supply & Demand Forecast 2012-2016” posted on steelease.com, China has been dependent on imported iron ore over the last few years. Below is a graph which shows the Consumption of Domestic and Imported Iron Ores in China:
http://file.smm.cn/Upload/en/2011-09/publication/files/SE_2011%20China%20Iron%20Ore%20Supply%20&%20Demand%20Forecast.pdf
 
Our Production Facilities

China Jinxin
 
China Jinxin has an iron ore concentrate production line with an annual capacity of 300,000 tons and associated plant and office buildings (hereinafter collectively referred to as "production facilities") in Zhangjiakou, Hebei Province (coordinates of N 40°16’-40°17’, E 115°16’~117°17’). The production facilities include a crushing line, a magnetic separation facility, a tailing disposal line and electric transformers.  China Jinxin started building its facilities in May 2007 and started production in March 2010.  During the six months of 2010 during which our plant was in operation and the seven months of 2011 during which we processed iron ore, we processed 397,860 tons and 326,293 tons, respectively, of crude iron ore from which we recovered 110,569 tons and 70,440 tons, respectively, of iron ore concentrate. In December 2011, the Company halted production to upgrade the production lines at the facility to improve iron ore refinement and increase the iron ore concentration rate. As a result of recent design changes, the Company expects the project to be completed in July 2014, and production to be resumed in September 2014. China Jinxin’s production facilities were constructed on the surface of a portion of the Zhuolu Mine. The Zhuolu Mine is currently state-owned.  The local Zhuolu county government is in the process of registering the Zhuolu Mine with the State Department of Land and Resources of Hebei Province and once such process is completed, the rights to explore the mine will be granted by the Province to the Zhuolu County government and then it will be in a position to grant mining rights to a mining and exploration company through public bidding.
   
The production facilities were granted a Record-keeping Certificate of Fixed Assets Investment by the development and reform commission of the county-level government in July 2007. The evaluation report of the environmental effects of the project was approved by the city-level environmental protection authorities in July 2007. In connection with the development of these facilities China Jinxin acquired the necessary water permit which was originally valid through December 2011 and which was extended until April 13, 2016.

China Jinxin successively obtained temporary manufacturing licenses for metallurgical mineral production from Zhangjiakou City on March 22, 2009, March 23, 2010, January 1, and December 30, 2011, respectively.  The Company's license has been extended and it is valid from December 29, 2011 to December 28, 2014. The licenses permit China Jinxin to produce only metallic iron and no other metals. The right to grant manufacturing licenses is held by Zhangjiakou City and if the Company receives the mining rights on Zhuolu Mine, it intends to apply for a permanent manufacturing license which, if granted, will have a term of three years.   
 
 
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C rushing Line:
 
The crushing line can process up to 8,000 tons of crude iron ore per day. It has 45 crushing machines, six ball mills, three belt conveyors.
Magnetic separation line:

China Jinxin has 24 magnetic separation machines and 16 mechanical flotation machines. The magnetic separators can process up to 8,000 tons of crude iron ore per day. Ore is generally run through the magnetic separators three times before it moves to the next stage of processing.
 
 
Tailing disposal line:
 
The tailing disposal line can process up to 5,000 cubic meters of water per day.  In addition, there is an impounding reservoir on the mine which has a capacity of 50 million cubic meter of water for use in processing iron ore.
 
 
China Huaxin   
 
China Huaxin has constructed a DRI production facility (the “DRI Facility”) in Haixing County, Hebei Province, about 50 km from the nearest port. The total amount expended to construct the DRI Facility, inclusive of both hard and soft costs, was approximately 244,270,000 RMB or US $39 million.  This DRI Facility will produce direct reduced iron using advanced reduction rotary kiln technology with iron sand as the principal raw material.  China Huaxin intends to import iron sands from New Zealand, Australia, Indonesia and the Philippines.
 
 
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‘Reduced iron’ derives its name from the chemical change that iron ore undergoes when it is heated in a furnace at high temperatures in the presence of hydrocarbon-rich gasses. ‘Direct reduction’ refers to processes which reduce iron oxides to metallic iron below the melting point of iron. The product of such solid state processes are called direct reduced iron (DRI). The Company’s DRI Facility is projected to produce DRI with an iron grade of over 92%.
 
The Company’s DRI Facility occupies an area of 200,000 m. 2     The DRI Facility occupies 60,000 m 2, of land and there is a raw material storage area of 14,000 m 2 with a 100,000 ton storage capacity, a workshop area of 4500 m 2 , a water storage pool of 4000m 3 to supplement water supplies, and an office building of 2,400 m 2 . The plant design is intended to permit the processing of 2,000,000 tons of iron sand per annum with an annual output capacity of 1,000,000 tons of DRI.
 
The equipment installed in the DRI Facility includes 2 sets of Rotary Kilns that are 36m each in length and capable of processing 6000 tons of raw material per day, and 3 sets of Gas Furnaces to produce carbon monoxide for use in the reduction process. The equipment also includes 6 sets of Grinding Equipment and 3 sets of Wet Magnetic Separation Machineries with processing capacity of 7200 tons per day. In addition there are 30 sets of Hydraulic Machines with a capacity of 5,000 tons per day to press block the finished product
 
Our Products
 
To date we have produced iron ore concentrate from iron ore extracted from the state-owned Zhuolu Mine. The concentrate we produced has had a number of commercially attractive characteristics, including high iron content and relatively low levels of impurities, such as sulphur, phosphorus, silicon and titanium, the presence of which is generally undesirable for steel production. As a result, we have been able to efficiently produce high quality iron ore concentrate through simple, low-cost magnetic processing methods. Our iron concentrate have been graded at 66%, sufficient for the production of crude steel which generally requires concentrated iron graded at 63.5%~66%.
 
We have mined and processed iron ore from the Zhuolu Mine. In connection with the construction of our Facilities we were granted the right to process ore displaced during the course of construction.  However, the ore from the Zhuolu Mine we mined and processed exceeds what we were permitted to mine, and we have not been granted mining rights by the Department of Land and Resources of Hebei.  Pursuant to the Mineral Resources Law of PRC, promulgated on March 19, 1986, effective on October 1, 1986 and amended on August 29, 1996, and the related implementation rules promulgated on March 26, 1994 (collectively, the “Mineral Resources Law”), any entity which mines without a mining permit shall be ordered to cease mining and compensate for the losses caused; any mineral products and unlawful proceeds it realized shall be confiscated; and it also should receive fines of up to 50% of its unlawful proceeds. If we were sanctioned in accordance with these rules, all of the net income from our mining activities could be confiscated, and we could be subject to fines of up to 50% of the total net income. In such event, our results of operation and financial condition would be materially and adversely affected.
 
Although we have ceased mining while we upgrade our facilities, the authorities in Hebei know we have mined iron ore in excess of what we were permitted to mine when constructing our facilities and have taken no action to halt our activities.  In any event we will seek to acquire iron ore from third parties due to the uncertainty over our ability to extract ore from the Zhuolu Mine.  The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results.
 
Customers
 
To date, one customer, Handan Steel Group Company (“HSG”), a subsidiary of Hebei Steel and Iron Company, a state owned enterprise, has accounted for nearly 100% of our sales.  China Jinxin has entered into a 10 years contract with HSG expiring in January 2019 whereby China Jinxin agreed to sell and HSG agreed to purchase all of the output from our production facility. The price we receive for our output is determined by HSG in light of market prices and the quality of our product and is to result in a proper profit margin to us.  If China Jinxin is not satisfied with the price set by HSG it can attempt to renegotiate the price.  China Jinxin has withheld deliveries from HSG since the end of 2011 because of its dissatisfaction with the price offered by HSG.  There is no assurance as to what recourse China Jinxin would have if the prices set by HSG were unacceptable.
 
 
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Product Delivery
 
Our product is delivered to HSG by truck.  Currently, pursuant to our agreement HSG absorbs the cost of shipping.  We believe the roads surrounding our facility are adequate for purposes of delivering our products which generally will be sold to users which anticipate receiving delivery by trucks and that the proximity of our facilities to HSG provides us with a competitive advantage with respect to sales to HSG.   
 
Employees
 
We currently have 60 full-time employees, the majority of which work at our production facilities. We believe we are in material compliance with all applicable labor and safety laws and regulations in the PRC, including the PRC Labor Contract Law (“LCL”), the PRC Unemployment Insurance Law, the PRC Provisional Insurance Measures for Maternity of Employees, PRC Interim Provisions on Registration of Social Insurance, PRC Interim Regulation on the Collection and Payment of Social Insurance Premiums and other related regulations, rules and provisions issued by the relevant governmental authorities for our operations in the PRC.  According to the PRC LCL, we are required to enter into labor contracts with our employees and to pay them no less than the local minimum wage.

Our senior management is comprised of a group of highly experienced professionals in the iron ore mining and processing field with an average industry experience exceeding 10 years. We have filled mid-level management positions and other key functions in our Company with specialists to support our senior management. We require our employees to have appropriate education, training and/or work experience in their respective fields. We believe that our management team possesses in-depth knowledge critical to our Company’s success in the iron ore industry and is capable of identifying and seizing market opportunities, formulating sound business strategies, assessing and managing risks, implementing management and production schemes, and increasing our overall profit to maximize our shareholder value. Below is a breakdown table of the number of our employees in each department:
 
Department
 
Employee #
 
Administrative
   
17
 
Finance
   
9
 
Quality Control
   
3
 
Production
   
12
 
Exploration
   
19
 
Total
   
60
 
 
Competition 
 
Iron ore mines are classified by their annual production capacity of iron ore. Large-scale mines have a production capacity greater than 2,000 ktpa. Medium-scale mines have a production capacity between 600 ktpa to 2,000 ktpa. Small-scale mines have a production capacity of less than 600 ktpa. The Chinese iron ore industry is highly fragmented and is dominated by small-sized producers.  The majority of China's iron ore output comes from small and medium scale mines.   The remaining iron ore output is produced by large scale mines, most of which belong to state-owned steel companies.

In our primary market, Hebei Province, we face competition from local iron ore producers.  There are approximately 2,700 small-scale iron ore mines in Hebei Province. Key iron ore producers in Hebei Province include Hebei Steel Group, Shougang Group and Hanxing Mining, all of which are state-owned enterprises. Of the top 10 iron ore mines in Hebei Province, eight are owned by state-owned enterprises.
 
We are in the early stages of our business development and will compete with other iron ore concentrate producers mainly on the basis of price and quality of our output.  If we are successful in obtaining rights to or otherwise acquiring iron ore from mines in the vicinity of our property we believe we will be in a good position to compete with other local concentrate producers because of (i) the high grade and quality of the iron ore in the mines surrounding our property which, if we obtain the output from these mines, will allow us to efficiently produce high grade concentrate and (ii) our close proximity to major potential customers and the associated low transportation costs.  There can be no assurance that we will be successful in obtaining the mining rights we seek and will likely have to compete with other better capitalized companies to obtain such rights.
 
 
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Because of the economies of transportation, most large iron producers supply their products to steel companies relatively near their facilities. Given that iron ore concentrates tend to be sold on the basis of market prices and that demand for iron concentrates in China currently exceeds the capacity of the larger producers, smaller producers such as us, generally supply their iron ore to the same steel companies as the larger companies and their ability to operate profitably, as well as ours, is determined by their ability to produce at a cost which allows them to operate profitably.  Consequently, we believe that if we have sufficient capital and can obtain access to iron ore from the mines surrounding our facility, we can compete effectively and profitably.
 
Mining Rights
 
Iron ore mining enterprises in China must obtain a mining permit and a production safety permit for each mine prior to conducting mining operations.  In connection with the construction of our facilities we were granted the right to process ore displaced during the course of construction.  However, the ore from the Zhuolu Mine we have mined and processed since August 2011, exceeds what we were permitted to mine, and we have not been granted mining rights by the Department of Land and Resources of Hebei or by any other mining authority We have, however, obtained a temporary manufacturing license for metallurgical mineral production, which enables us to process iron ore.  Pursuant to the Mineral Resources Law, any entity which mines without a mining permit shall be ordered to cease mining and compensate for the losses caused; any mineral products and unlawful proceeds it realized shall be confiscated; and it also should receive fines of up to 50% of its unlawful proceeds. If we were sanctioned in accordance with these rules, all of the net income from our mining activities will be confiscated, and we will be subject to fines of up to 50% of the total net income. In such event, our results of operation and financial condition would be materially and adversely affected. So far, we have not received any penalty notice from any relevant authorities.
 
If we do not obtain mining rights to the Zhuolu Mine in the foreseeable future, we will seek to acquire iron ore from third parties.  The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results.  The Company is currently in the process of applying for mining rights, and expects to be granted such rights, though there is no assurance that such rights will be obtained.
 
The Zhuolu county government engaged the Hebei Province Institute of Geological Survey (“the Institute”), an independent state-owned authorized geological survey entity, to carry out a geological survey on the Zhuolu Mine. The Institute obtained survey approval from the State Department of Land and Resources of Hebei Province and conducted the survey. In May 2011, the Institute issued its Geological Evaluation Report (“the Report”) and submitted the Report to Department of Land and Resources of Hebei.  The Zhuolu county government has applied to the State Department of Land and Resources of Hebei for mining permit for the Zhuolu Mine (“Mining Rights”) and expects to receive the rights within one year. Once the Mining Rights are granted by the Province, the Zhuolu county government will assign the Mining Rights to outside mining and exploration companies through public bidding.
 
To accelerate the process whereby China Jinxin might obtain a mining permit, China Jinxin entered an agreement dated April 11, 2011, with the Zhuolu county government regarding the geological survey of the Zhuolu Mine. Pursuant to this agreement, China Jinxin prepaid all the fees related to the geological survey for the Zhuolu county government, RMB1.98 million ($313,000).   The Zhuolu county government agreed that if China Jinxin obtains the Mining Rights through public bidding, the amount paid for the survey by China Jinxin will be credited against the price of the Mining Rights and if China Jinxin does not obtain the Mining Rights, the Zhuolu county government will reimburse the geological survey fees to China Jinxin.  The county government also agreed that if China Jinxin were not to obtain the mining rights it would cause the winning bidder to give China Jinxin priority to purchase the crude iron ores extracted from the Zhuolu Mine.
 
 
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Suppliers
 
Our major suppliers include suppliers of machinery and equipment, spare parts, diesel fuel, electricity and water. Our operations use electricity supplied by the local power grid. We use water sourced from nearby rivers at our processing plants. We also recycle and reuse water from our tailings ponds.
 
We obtain gas and diesel fuel from local gas stations and incurred costs of RMB 399,292 ($63,000) and RMB 617,536 ($101,286) for 2012 and 2013, respectively.  We also purchase spare parts from a local supplier, NanguoTengfei Ore Machinery Co., Ltd., and our costs for spare parts were RMB 71,230 ($11,000) and RMB 0 ($0) for 2012 and 2013, respectively. We believe there are a number of suppliers of each of the items we need available to us and do not anticipate any material shortages. 
 
The energy produced in parts of China is not yet sufficient to satisfy the needs of all businesses seeking to obtain power. Consequently, there are occasional power outages and brownouts.  We ceased production from September 2010 to March 2011 due to the implementation by the local government of an “Energy Saving and Emission Reduction Plan.”  To reduce power consumption for a certain period the local government adopted this plan whereby nearly all construction and processing plants in Zhuolu County were required to halt production for a specified period.  In an effort to insulate ourselves from this problem, we have installed an Electricity Converting Station which can convert high voltage electricity to low voltage electricity, and it can also use diesel to generate power when there’s no electricity.  This should enable us to maintain full production should we once again be cut off from electricity generated by the local power company.  Nevertheless, management believes that the Energy Saving and Emission Reduction Plan enacted by the local government which forced all iron ore producers in the area of our plant to shut down was a one-time event and disruptions to our access to energy will not have material impact on our production in the future.
 
Research and Development
 
We had no research and development expenses in 2012 or 2013. We currently have no plans for any research and development activities and do not anticipate any material research and development costs.
 
Our Growth Strategy
 
Chinese demand for iron or steel products has increased rapidly in recent years.  We believe demand for high quality iron ore concentrate will continue to grow domestically and globally, thus affording us an opportunity to grow and expand our business operations. We intend to seek to grow our business through the acquisition of mines and other production facilities, in particular, by acquiring the right to mine in the areas surrounding our current production facilities.  
 
We anticipate some of our acquisitions will be of existing mines and some of undeveloped properties.  In all cases, they will be properties with established reserves.  Our five-year goal is to control 50 million tons of reserves and to produce iron ore concentrate up to 1.1 million tons per year.  Our primary criteria for selecting target mines are as follows:

1.  
the resources, reserves and mining operations of the target mines;
2.  
the grade, mining costs and sustainability of the target resources and reserves;
3.  
exploration potential;
4.  
the financial costs and benefits of the acquisition;
5.  
valid land use rights and property ownership and no material legal risks; and
6.  
the contributions of the acquisition towards the overall sustainability of our business.
 
We will finance our acquisitions, as well as the improvements necessary to existing mines and the development of mines on undeveloped properties, by using internally generated cash, if available, as well as cash raised by issuing equity securities and debt financing.
 
 
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We anticipate all of our acquisitions will be in China.  We also expect that our customer base will increase as we gain access to additional steel manufacturers.
 
Government Regulation
 
Regulations Relating to Exploitation and Mineral Rights
 
The PRC government maintains a Catalogue for the Guidance of Foreign Investment Industries (“Catalogue”), which was promulgated and is amended from time to time by the Ministry of Commerce (“MOFCOM”) and the National Development and Reform Commission (“NDRC”). The Catalogue divides industries into three categories: encouraged, restricted and prohibited. Industries not listed in the Catalogue are generally open to foreign investment unless specifically restricted by other PRC regulations. According to the Catalogue as revised on October 31, 2007, iron ore exploration, mining and mineral processing projects belong to the category of Encouraged Foreign Investment Industries.  Despite the fact that iron ore exploration, mining and mineral processing projects belong to Category of Encouraged Foreign Investment Industries, the shareholders of China Jinxin elected to utilize the VIE structure in their efforts to raise capital because this structure has been accepted by investors in the United States and the shareholders believed that because it did not involve an acquisition of a domestic Chinese company it reduced the filings required to be made with and the permissions to be obtained from Chinese regulatory authorities relating to what could be deemed to be the transfer of their ownership interests outside of China. 
 
Mining activities in the PRC are subject to the PRC Mineral Resources Law (“Mineral Resources Law”), promulgated by the PRC Government on March 19, 1986 and amended on August 29, 1996. The Mineral Resources Law regulates matters relating to the planning or engaging in the exploration, exploitation and mining of mineral resources. According to the Mineral Resources Law all mineral resources, including iron ore, are owned by the State. Except under limited circumstances, any enterprise planning to engage in the exploration, exploitation and mining of mineral resources must first apply for and obtain exploration rights and mining rights before commencing the relevant activities. The Mineral Resources Law prohibits the transfer of exploration and exploitation rights in general unless the transfer falls within certain specified circumstances.  Pursuant to the Mineral Resources Law, any entity which mines without a mining permit shall be ordered to cease mining and compensate for the losses caused; any mineral products and unlawful proceeds it realized shall be confiscated; and it also should receive fines of up to 50% of it unlawful proceeds.  Although we have extracted iron ore from the Zhuolu Mine, we do not have the right to do so.  If we were sanctioned in accordance with the rules promulgated under the Mineral Resources Law, we could be required to cease operations at the mining site, all of the net income from our mining activities could be confiscated, and we could be subject to fines of up to 50% of the total net income.  In such event, our results of operation and financial condition would be materially and adversely affected. So far, we have not received any penalty notice from any relevant authorities.  If we do not obtain mining rights to the Zhuolu Mine in the future, we will have to cease mining operations at the Zhuolu Mine and we will seek to acquire iron ore from third parties.  The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results.

Exploration, exploitation and mining operations must comply with the relevant provisions of the Mineral Resources Law and other relevant regulations, and are under the supervision of the Ministry of Land and Resources. Exploration and exploitation of mineral resources also are subject to examination and approval by the Ministry of Land and Resources and relevant local authorities. Upon approval, a mining permit is issued by the relevant administrative authorities, which are responsible for supervision and inspection of mining exploitation in their jurisdictions. The holders of mining rights are required to file annual reports with the relevant administrative authorities.
 
Mineral products illegally extracted and incomes derived from such activities may be confiscated and may result in fines, revocation of the mining permit and, in serious circumstances, criminal liability.
 
 
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Regulations Relating to Metallurgical Mineral Production License
 
The Hebei Provincial Government implemented a production license system for metallurgical mineral products. On November 1, 2006, the Hebei Provincial Government promulgated Regulations on Supervision and Administration of Production and Operation of Metallurgical Mineral Products, and on January 28, 2011, issued its implementation regulations. According to these regulations, any company that engages in metallurgical mineral production must acquire a metallurgical mineral production license with a valid period of three years from the Hebei Provincial Government. If the business license, mining right or non-coal mine safety production license of the company is revoked or withdrawn, the metallurgical mineral production license will lapse.
 
China Jinxin obtained and then renewed our annual basis temporary metallurgical mineral production licenses issued by Zhangjiakou Metallurgical and Mineral Industrial Administration Agency.  The current temporary license expires on February 26, 2015. China Jinxin intends to apply to the Hebei Provincial Government for a formal metallurgical mineral production license after obtaining its mining rights. There can be no assurance China Jinxin will be able to obtain a formal metallurgical production license.  The failure to obtain the licenses necessary to continue to operate would have a material adverse effect on our operations and financial results. 
 
Regulation Relating to Investment Projects
 
According to the Decision of the State Council on Reforming the Investment System promulgated on July 6, 2004, with the exception of iron ore projects with proved industrial reserves equal or above 50 million tons and iron making, steel making and steel rolling projects increasing production capacity, which shall be verified and approved by the investment administration authority of the State Council; all other iron ore development projects must be verified and approved by the investment administration authorities of provincial governments. China Jinxin’s iron ore concentration projects with annual production capacity of 300,000 tons was verified and approved by the Hebei Development and Reform Commission on January 22, 2007.
 
Regulations on Environmental Protection
 
The major environmental regulations applicable to us include the Environmental Protection Law of the PRC, the Water Pollution Prevention Law of the PRC, the Atmospheric Pollution Prevention Law of the PRC, the Environmental Impact Assessment Law of the PRC and the Law of the PRC on the Prevention and Control of Environmental Pollution by Solid Waste and the Regulations Governing Environmental Protection in Construction Projects. Also, general environmental regulations relating to noise and the treatment of industrial waste are applicable to our operations.
 
All phases of our operations are subject to environmental regulations and discharge standards promulgated by governmental agencies in China. Before we may begin project development and production, we must comply with environmental regulations and standards. Environmental regulations set forth limits and prohibitions on spills, releases or emissions of various substances produced in association with certain processing and manufacturing operations. A breach of any regulations may result in imposition of fines and penalties and even curtailment or suspension of our operations. Furthermore, future changes in environmental laws and regulations could result in stricter standards and enforcement, larger fines and liability, and increased capital expenditures and operating costs, any of which could have a material adverse effect on our financial condition or results of operations.
 
China Jinxin entrusted the Environmental Protection and Research Institute of Zhangjiakou city to conduct the environmental impact assessment of its iron ore mining and selecting project, and the Environmental Impact Report was issued in May 2007. Based on this report, Zhangjiakou Environmental Protection Department approved constructing and upgrading China Jinxin's production facility on July 26, 2007.
 
Regulations on Water Drawing
 
Pursuant to the Regulation on the Administration of the License for Water Drawing and the Levy of Water Resource Fees promulgated on February 21, 2006, effective on April 15, 2006, any entity or individual that draws water resources shall, except for the circumstances prescribed in the Regulation, apply for a license certificate for water drawing, and pay water resource fees. The valid term of a license certificate for water drawing is generally five years, and may not exceed 10 years. If, at expiry of the valid term, the license certificate needs to be renewed, the water drawing entity or individual shall file an application with the organization which granted the certificate within 45 days prior to the expiry of the term. The organization shall, prior to the expiry of the term, decide whether or not to approve the renewal.
 
 
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China Jinxin received a License for Water Drawing from the local water bureau with yearly water drawing of 20,000 cubic meters of water on December 7, 2006.  In April 2011, China Jinxin renewed the License and the current water license expires on April 13, 2016, with yearly water drawing of 15,000 cubic meters of water per annum.
   
Regulations on Annual Inspection
 
In accordance with relevant PRC laws, all types of enterprises incorporated under PRC laws are required to conduct annual inspections with the State Administration for Industry and Commerce of the PRC or its local branches. In addition, foreign-invested enterprises are subject to annual inspections conducted by other applicable PRC governmental authorities. In order to reduce enterprises’ burden of submitting inspection documentation to different governmental authorities, the Measures on Implementing Joint Annual Inspection on Foreign-invested Enterprises issued in 1998 by SAFE, together with six other ministries, stipulated that foreign-invested enterprises must participate in an annual inspection jointly conducted by all relevant PRC governmental authorities.
 
Regulation Relating to Mining Safety
 
Pursuant to the Work Safety Law of the PRC promulgated on June 29, 2002 and effective on November 1, 2002 and the Law of the PRC on Safety in Mines and its related implementation rules promulgated on November 7, 1992 and October 30, 1996 and effective on May 1, 1993 and October 30, 1996, respectively, (a) safety facilities in mine construction projects must be designed, constructed and put into operation at the same time as the commencement of the principal parts of the projects; (b) the design of a mine shall comply with the safety rules and technological standards of the mining industry and shall be approved by the relevant authorities; and (c) such mines may start production or operations only after they have passed the safety check and approval process as required by the relevant PRC laws and administrative regulations.
 
The Regulation on Work Safety Licenses was promulgated and became effective on January 13, 2004. Pursuant to the regulation, (a) the work safety licensing system is applicable to any enterprise engaging in mining and such enterprise may not produce any products without obtaining a work safety license; (b) prior to producing any products, the mining enterprise shall apply for a work safety license, which is valid for three years; and (c) if a work safety license is required to be extended, the enterprise must apply for an extension with the administrative authority who issued the original license within three months prior to the expiration of the original license.

In addition, the Implementation Measures for non-coal mining enterprises work safety licenses was promulgated and became effective on June 8, 2009. Under this legislation, non-coal mining enterprises, i.e., metal and non-metal mine enterprises, and also its tailings ponds, geological exploration units, mining engineering corporations, oil and natural gas enterprises need to obtain a safety production permit before any productive activities, every independent productive system of the metal and nonmetal mine enterprises need to obtain a separate safety production permit. The licenses last for three years, and can be extended if the non-coal mining enterprises apply to the administrative authority three months before its expiration date.
 
Pursuant to the Provisional Regulations on the Installation, Use, Monitoring and Inspection of the ‘‘Six Major Systems’’ for Safety and Refuge in Underground Metal and Non-metal Mines promulgated on October 9, 2010 by the State Administration of Work Safety, underground metal and non-metal mines should install the ‘‘six major systems’’ for safety and refuge, namely monitoring and control systems, underground workers positioning system, emergency refuge system, pressurizing self-rescue system, water supply rescue system and communications system according to the time limit set down by the regulations, and should also have in place specially designated staff for the management and maintenance of these systems. The safety production permits shall be withheld by safety production regulation authorities above county level for enterprises operating on underground mines which have failed to comply with the requirements to complete the construction of such ‘‘six major systems’’ for safety and refuge within the time limit, which shall be ordered to make rectifications within a time limit, failing which the local government is entitled to shut down the operations of such enterprises.
 
 
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Pursuant to the Provisional Regulations on Requirements for Management Members of Metal and Non-metal Mining Enterprises to Accompany Workers in Descending and Ascending Underground Mines and the Monitoring and Inspection of Compliance Therewith in effect from November 15, 2010, mining enterprises must ensure there is at least one responsible person (person-in-charge, member of the management or deputy chief engineer) for each group to carry out on-site underground mining operations and that he shall accompany workers in descending and ascending the underground mines. Where mining enterprises have failed to establish a complete and sound or any system for management members to lead workers in underground mining operations in accordance with the regulations, such enterprises shall be given warnings and shall be fined RMB 30,000 ($4,800); the persons-in-charge shall also be warned and fined RMB 10,000 ($1,600); where the contravention is serious, the safety production permit shall be withheld and the operation shall be suspended for rectifications in accordance with the law. Where management members of mining enterprises have failed to lead workers in underground mining operations, such enterprises shall be given warnings and be fined RMB 30,000; where the contravention is serious, the operation shall be suspended for rectifications in accordance with the law, and management members who have breached the regulations shall be deemed to have left their post without permission and shall be fined RMB 10,000 ($1,600).
 
Pursuant to the Law Of The PRC On Safety In Mines adopted on November 7, 1992, and Implementing Rules on the Law Of The PRC On Safety In Mines of Hebei Province effective in September 1995, as amended in December 1997, the designs of safety facilities in mine construction projects must be examined by the administration department of mining enterprises together with the participation of the competent department of labor administration; and upon completion, the safety facilities in mine construction projects shall be subject to inspection for acceptance by the authorities in charge of mining enterprises, with participation of the competent department of labor administration; those failing to comply with the safety rules and technological standards for mining industry may not pass inspection for acceptance, and may not be put into operation; managers of mines must prove, through examination, to have special knowledge of safety and the capability of leading safe production and disposing of accidents in mines; personnel in charge of safety work in mining enterprises must possess necessary specialized knowledge of safety and experience in safety work in mines; special operators in charge of safe production in mining enterprises must receive special training; they may take up a post of such duty only after they have obtained a certificate of operation qualification after passing due examination and verification. The law also provides for the conditions for safe production, the requirements to implement safety rules and industry technical specifications, and to prepare and implement operational procedures.
 
In March 2009 China Jinxin received its first temporary production license pursuant to which it began production in March 2010.  Because China Jinxin has not been granted a mining license, as opposed to a production license, it is not required to obtain the production safety licenses described above.  If China Jinxin was to obtain mining rights, it would apply for the required production safety licenses. Currently, China Jinxin is recruiting mining managers with experience in obtaining the required safety certificates.
 
Pursuant to the Regulation on the Safety Administration of Explosives for Civilian Use adopted on April 26, 2006, the State applies a licensing system to the production, sale, purchase, transport and blasting operation of explosives for civilian use. As a mining company, China Jinxin needs to obtain the Purchase Permit of Explosives for Civil Use and Blasting Operation Permit to purchase and use explosives legally. China Jinxin is currently applying for the two permits.
 
Regulations on Work Safety
 
The Work Safety Law of PRC (the “Work Safety Law”) was promulgated as of June 29, 2002. It regulates the work safety of entities that engage in production and business operation activities within the territory of the PRC (hereinafter referred to as “production and business operation entities”). All production and business operation entities must observe the Work Safety Law and any other relevant laws or regulations concerning work safety, strengthen the administration of work safety, establish and perfect the system of responsibility for work safety, perfect the conditions for safe production, and ensure safety during production. The production and business operation entities must provide conditions for safe production as provided in the Work Safety Law and other relevant laws, administrative regulations, national standards and industrial standards.
 
 
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Any entity that does not maintain the conditions for safe production may not engage in production and business operation activities.
 
The Department of the State Council in charge of the supervision and administration of work safety is required to implement comprehensive supervision and administration of work safety in the PRC. The relevant governmental authorities superior to the county level and in charge of the supervision and administration of work safety are required to implement comprehensive supervision and administration of work safety within their respective administrative jurisdictions according to the Work Safety Law.
 
In case of a violation of the Work Safety Law, the relevant authorities can order the decision-making department or key person-in-charge of any production and business operation entity to correct the violation, suspend production or business and can take other administrative measures. If a work safety accident has resulted and a crime has been committed, the key person-in-charge may assume criminal liabilities according to the relevant provisions of the Criminal Law. 
 
Regulations on Foreign Currency Exchange
 
Pursuant to the Foreign Currency Administration Rules promulgated in 1996 and amended in 2008 and various regulations issued by the State Administration of Industry and Commerce and the State Administration of Foreign Exchange (“SAFE”) and other relevant PRC governmental authorities, Renminbi are freely convertible only to the extent of current account items, such as trade related receipts and payments, interest and dividends. Capital account items, such as direct equity investments, loans and repatriation of investment, require prior approval from SAFE or its local counterpart for conversion of Renminbi into a foreign currency, such as US dollars, and remittance of the foreign currency outside the PRC.
 
Payments for transactions that take place within the PRC must be made in Renminbi. Unless otherwise approved, PRC companies must repatriate foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts with designated foreign exchange banks subject to a cap set by SAFE or its local counterpart. Unless otherwise approved, domestic enterprises must convert all of their foreign currency receipts into Renminbi.
 
On August 29, 2008, SAFE promulgated a circular regulating the conversion by a foreign-invested company of its registered capital in foreign currency into Renminbi by restricting how the converted Renminbi may be used. This circular stipulates that the registered capital of a foreign-invested company settled in Renminbi converted from foreign currencies may only be used for purposes within the business scope approved by the applicable governmental authority and may not be used for equity investments within China. Violations of this circular can result in severe penalties, including monetary fines.
 
In addition, any foreign loans to an operating subsidiary in China that is a foreign invested enterprise, cannot, in the aggregate, exceed the difference between its respective approved total investment amount and its respective approved registered capital amount.
 
Regulation on Foreign Exchange in Certain Onshore and Offshore Transactions
 
In October 2005, SAFE issued Circular 75, which regulates foreign exchange matters in relation to the use of a “special purpose vehicle” by PRC residents to seek offshore equity financing and conduct “return investment” in China. Under Circular 75, a “special purpose vehicle” refers to an offshore entity established or controlled, directly or indirectly, by PRC citizens or PRC entities (collectively, as PRC residents) for the purpose of seeking offshore equity financing using assets or interests owned by such PRC residents or PRC entities in onshore companies, while “round trip investment” refers to the direct investment in China by PRC residents through the use of “special purpose vehicles,” including without limitation, establishing foreign invested enterprises and using such foreign invested enterprises to purchase or control (by way of contractual arrangements) onshore assets. Circular 75 requires that, before establishing or controlling a “special purpose vehicle,” PRC residents are required to complete foreign exchange registration with the competent local counterparts of SAFE for their overseas investments. In addition, such PRC resident is required to amend his or her SAFE registration or to file with SAFE or its competent local branch, with respect to that offshore special purpose vehicle in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China by the offshore special purpose vehicle. To further clarify the implementation of such amendment or filing procedure, SAFE requires domestic enterprises under Circular 75 to coordinate and supervise such amendment or filings with SAFE or its local counterparts by such PRC residents. If PRC residents fail to comply, the domestic enterprises are required to report to the local SAFE authorities.
 
 
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Failure to comply with the registration procedures set forth in Circular 75 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including being prohibited from distributing its profits and proceeds from any reduction in capital, share transfer or liquidation to its offshore parent or affiliate, and restrictions on the ability to contribute additional capital from the offshore entity to the PRC entities, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations.
 
Regulation on Overseas Listings
 
On August 8, 2006, MOFCOM, the CSRC, the State-owned Assets Supervision and Administration Commission, the SAT, the State Administration of Industry and Commerce and SAFE jointly promulgated the “Rules on the Mergers and Acquisition of Domestic Enterprises by Foreign Investors,” which became effective on September 8, 2006, and was further amended on June 22, 2009, or the M&A Rules.
 
Among other things, the M&A Rules include provisions that purport to require that an offshore special purpose vehicle, or SPV, formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published on its official website procedures specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. However, the application of this PRC regulation remains unclear with no consensus currently existing among the leading PRC law firms regarding the scope and applicability of the CSRC approval requirement to various types of transactions, including those which involve the use of variable interest entity agreements.
 
Regulations on Dividend Distribution

The principal regulations governing dividend distributions by wholly foreign-owned enterprises include: Wholly Foreign-Owned Enterprise Law (1986), as amended in 2000 and Wholly Foreign-Owned Enterprise Law Implementing Rules (1990), as amended in 2001. Under these regulations, wholly foreign-owned enterprises in the PRC may pay dividends only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Additionally, these foreign-invested enterprises are required to set aside 10% of their after-tax profits based on the PRC accounting standards each year, if any, to fund their general reserve fund, until the accumulative amount of such reserves reaches 50% of their registered capital. These reserves are not distributable as cash dividends. Besides the compulsory reserve fund, wholly foreign-owned enterprises may also set aside any funds from their after-tax profits, at the discretion of their shareholders. In addition, dividends we pay to our non-PRC shareholders may be subject to a 10% withholding tax, unless otherwise set forth in the tax treaties between China and other countries or areas.
 
Regulations Relating to Taxation

The PRC Enterprise Income Tax Law applies a 25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except to the extent tax incentives are granted to special industries and projects. Under the PRC Enterprise Income Tax Law and its implementation regulations, dividends generated from the business of a PRC subsidiary after January 1, 2008 and payable to its foreign investor may be subject to a withholding tax rate of 10% if the PRC tax authorities determine that the foreign investor is a non-resident enterprise, unless there is a tax treaty with China that provides for a preferential withholding tax rate. Distributions of earnings generated before January 1, 2008 are exempt from PRC withholding tax.
 
 
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Under the PRC Enterprise Income Tax Law, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. A circular issued by the State Administration of Taxation in April 2009 regarding the standards used to classify certain Chinese-invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as “resident enterprises” clarified that dividends and other income paid by such PRC “resident enterprises” will be considered PRC-source income and subject to PRC withholding tax, currently at a rate of 10%, when paid to non-PRC enterprise shareholders. This circular also subjects such PRC “resident enterprises” to various reporting requirements with the PRC tax authorities.
 
Under the implementation regulations to the PRC Enterprise Income Tax Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, the tax circular mentioned above specifies that certain PRC-invested overseas enterprises controlled by a Chinese enterprise or a Chinese enterprise group in the PRC will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, the company seal, and minutes of board meetings and shareholders’ meetings; and 50% or more of the senior management or directors having voting rights.
 
Pursuant to the Notice of Value-added Tax Rate in Metal and Non-metal Mineral Dressing Products promulgated on December 19, 2008 and effective on January 1, 2009, beginning from January 1, 2009, the value-added tax rate for metal and non-metal mineral dressing products, including iron ore, is adjusted from 13% to 17%.

RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Notes Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
 
Risks Related to Our Business

We have a limited operating history which makes it difficult to assess our business or prospects.
 
Our operations to date have been limited. We have not yet obtained the necessary permits to mine any iron ore. Initially we processed iron ore recovered during the construction of our production facilities and ancillary roads in accordance with approvals granted by the local mineral authorities.  We have processed all of such ore and recently started extracting iron ore on the mine upon which our production facilities are located even though we do not have the right to do so. If we are unable to obtain the necessary permits to mine in the areas surrounding our production facilities in the future and are challenged by related government authorities, we will have to purchase iron ores from third parties for processing at our production facilities. To date, all of our sales have been made to a single customer.  In addition, we do not expect to commence operations at our DRI Facility until September 30, 2014, and we have not entered into any agreements for the output of our DRI facility. Consequently, it is difficult to assess our business or prospects.
 
We have extracted ore without a permit.

We have extracted and continue to extract and process iron ore from the mine upon which our production facilities are located even though we do not have a permit to do so.  If we were sanctioned for mining ore without a permit in accordance with the rules promulgated under the Mineral Resources Law, we could be required to cease operations at the mining site, all of the net income from our mining activities could be confiscated, and we could be subject to fines of up to 50% of the total net income. In such event, our results of operation and financial condition would be materially and adversely affected.
 
 
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We have not yet obtained the necessary permits to mine in the areas surrounding our production facilities. Our failure or inability to obtain, retain or renew required government approvals, permits and licenses for mining activities in the area surrounding our production facilities could have a material and adverse effect our business, financial condition and results of operations.

Pursuant to the Mineral Resource Law of PRC, promulgated on March 19, 1986, effective on October 1, 1986 and amended on August 29, 1996, and the related implementation rules promulgated on March 26, 1994, mineral resources are owned by the State with the State Council exercising ownership over such resources on behalf of the State. Any enterprise that intends to exploit mineral resources must acquire mining rights and production safety permits for each mine prior to conducting mining.  Besides, the mining enterprise must also pass periodic inspections conducted by relevant environmental protection authorities, which are required by PRC production safety and environmental protection-related laws as well as the local laws and regulations of Hebei Province, where our operations are located.
  
Therefore, our ability to conduct our business is subject to our ability to obtain, renew and maintain the requisite mining and exploration approvals, permits and licenses. In particular, we have not received any mining rights for the Zhuolu Mine or any other mine in the area of our current production facilities.  If we do not acquire rights to mines in the area of our production facilities, we will be forced to purchase iron ore and other metals for processing from third parties.  There is no guarantee that iron ores or any other metals of suitable quality will be available to us, will be available on reasonable prices or will be located sufficiently close to our facilities to make their processing by us economically feasible. In such event, we would not be able to realize the potential of our production facilities and our business, results of operations, financial condition and ability to realize our business plans would be materially and adversely affected.
  
We have not yet obtained all the necessary permits to operate our production facilities.

We do not have long term permits and licenses necessary to operate our production facilities and, to date, have been operating pursuant to temporary licenses with the consent of the local governmental authorities. Our most recent license to operate our facilities expires December 28, 2014.  We cannot guarantee we will be able to obtain, retain and renew the approvals, permits and licenses required to operate our facilities or that we will be able to successfully obtain, retain or renew future approvals, permits and licenses in a timely manner, or that such approvals, permits and licenses will not be revoked by the relevant authorities or contain limitations that will adversely impact our ability to fully utilize our facilities. Moreover, the authorities may impose different or additional conditions on our approvals, permits and licenses that may be burdensome and costly to fulfill. We have been operating under temporary manufacturing licenses for metallurgical mineral production, which have been granted on an annual basis, the last of which expires on December 28, 2014.  Failure to obtain, retain or renew and ensure continued compliance with such approvals, permits and licenses as planned may cause us to experience delays in our production plans or have to cease or limit our production.  In such event we would not be able to realize the potential of our production facilities and our business, results of operations, financial condition and ability to realize our business plans would be materially and adversely affected.

We are dependent on a single customer who has ceased purchases due to a failure to agree on sales price.

To date, all of our iron ore concentrate has been sold to HSG. The price we receive for our output is determined by HSG in light of market prices and the quality of our product and is to result in a proper profit margin to us.  If China Jinxin is not satisfied with the price set by HSG it can attempt to renegotiate the price.  China Jinxin has withheld deliveries from HSG since the end of 2011 because of its dissatisfaction with the price offered by HSG. If this customer significantly reduces its purchases of iron ore concentrate from us, or if we are unable to sell iron ore concentrate to it on favorable terms or at all, and we are unable to obtain additional customers, our business, financial condition and results of operations may be materially and adversely affected. Our ability to receive payment for the sale of our iron ore concentrate depends on the continued creditworthiness of our customers. Furthermore, the bankruptcy of any of our customers could materially and adversely affect our business. We may be required to extend credit to customers, including on terms that could increase the risk of payment default, in order to compete with the terms offered by other iron ore concentrate suppliers.
 
 
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Our business and results of operations will depend on the market price of iron ore concentrate, which is driven by factors beyond our control.

As discussed in the previous risk factor, we face various operational risks in connection with our business.. However, we are not insured against certain risks.

The price of iron ore concentrate has historically been subject to significant fluctuations in response to market forces, such as global iron ore production levels, demand for steel products and general global and PRC economic conditions. Any sustained adverse movement in the price of iron ore concentrate in the future will have a material adverse effect on our business, financial condition and results of operations.
 
We do not have the land use rights to the property upon which our production facilities are located.

The land occupied by our production facilities is listed in the overall plan for land utilization of Zhangjiakou City as land to be used for construction. According to Chinese laws and regulations related to land management, only state-owned land can be used for construction.  The land occupied by our production facilities is still owned collectively by local villagers and should only be used by us for construction after it is changed to state-owned land through acquisition by the local government. We cannot assure you that we will obtain the land use rights to the property upon which our production facility is located. The failure to obtain such land use rights would have a material and adverse effect on our business, financial condition and results of operations.
 
Mining operations have a finite life, and eventual closure of these operations will entail costs and risks regarding ongoing monitoring, rehabilitation and compliance with environmental standards.

Any mining operation we might undertake would have a finite life. The closure of any mine entails significant costs and risks, including among others:

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long-term management of permanent engineered structures;
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compliance with environmental closure standards;
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orderly retrenchment of employees; and
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relinquishment of the site with associated permanent structures and community development infrastructure and programs to new owners.

If we were to commence mining operations, the successful completion of these tasks depends on our ability to implement negotiated agreements with the relevant governmental authorities, community organizations and employees. The consequences of a difficult closure range from increased closure costs and handover delays to ongoing environmental rehabilitation costs and damage to our reputation if desired outcomes cannot be achieved, which could materially and adversely affect our business and results of operations.
 
Our plan to acquire mineral reserves may not succeed.

We intend to acquire the right to mine mineral reserves. However, we will encounter intense competition from other companies seeking to acquire the same assets and we may fail to select or value targets appropriately. One of the important factors we will consider when we select or value targets is their resource and reserve estimates. Resource and reserve estimates involve professional judgments based on factors such as technical data, experience and industry practice. The accuracy of these estimates may be affected by many factors, including the quality of the results of exploration drilling, sampling of the ore, analysis of the ore samples, estimation procedures and the technical expertise and experience of the persons making the estimates. There are also many assumptions and variables beyond our control that may result in inherent uncertainties in estimating reserves. As a result, resource and reserve estimates may be inaccurate and may lead to a failure to select or value targets appropriately, which may in turn result in our inability to successfully implement our expansion plans at a reasonable cost, or at all.
 
 
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Even if we discover or acquire mineral reserves at a price that we believe is in the interests of our Company, it can take several years from the initial phases of drilling until production is possible, during which the economic feasibility of production may change. It takes substantial time and expenditures to:

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comprehensively establish ore reserves through drilling;
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determine appropriate mining and production processes for optimizing the recovery of iron contained in ore;
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obtain environmental and other licenses;
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construct mining and processing facilities; and
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obtain the ore or extract iron content from the ore.
 
If a project proves not to be economically feasible by the time we are able to exploit it, we may incur substantial losses or write-offs. In addition, potential changes or complications involving metallurgical and other technological processes arising during the life of a project may result in cost overruns that may render the project not economically feasible. We also face risks in relation to changes to applicable laws and regulations, compliance with which may make extracting the ore more expensive than we had previously estimated. We therefore cannot assure you that new mineral reserves will be successfully developed or integrated within our existing operations at a reasonable cost within a reasonable period of time or at all or that they will generate the expected economic returns. If our expansion plans are delayed or they fail to deliver the expected economic benefits, our business, financial condition and results of operations would be materially and adversely affected.
 
We face certain risks and uncertainties beyond our control that are associated with our operations and our customers’ operations.

Our mining and processing operations are subject to a number of operating risks and hazards, some of which are beyond our control. These operating risks and hazards include the need to carry out unscheduled maintenance; critical equipment failures in our mining or ore processing operations; industrial accidents; water, power or fuel supply interruptions; fires, inclement or hazardous weather conditions and natural disasters; and unusual or unexpected variations in the ore and in the geological or mining conditions such as instability of the open-pit slopes and subsidence of the working areas. Any of these risks and hazards or any combination thereof may disrupt or result in a suspension of our operations, increase production costs, result in property damage, personal injuries and liability to us and harm our reputation. Natural disasters and industrial accidents also may interrupt our customers’ operations and production, impacting the demand they may have for our products. Moreover, natural disasters and industrial accidents may damage or substantially hamper critical ancillary operations such as the transportation of our products to our customers. The occurrence of any natural disaster or industrial accident adversely affecting our customers and their ancillary operations may have a material adverse effect on our business, financial condition and results of operations.
 
Our insurance coverage may be insufficient to cover our business risks.

We face various operational risks in connection with our business. Our operations are subject to numerous inherent risks, particularly unplanned events such as explosions, fires, other accidents, natural disasters such as floods or earthquakes, unplanned critical equipment failures, acts of terrorism, inclement weather and transportation interruptions. However, we are not insured against certain risks.
 
We cannot assure you that the safety measures we have in place for our operations will be sufficient to mitigate or reduce industrial accidents. We also cannot assure you that casualties or accidents will not occur or that our insurance coverage would be sufficient to cover costs associated with major accidents. In the event that we incur substantial losses or liabilities and our insurance does not cover such losses or liabilities adequately or at all, our business, financial condition and results of operations may be materially and adversely affected.
 
 
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We may not be able to obtain and renew land use rights and building ownership rights for our facilities.
 
China Jinxin leases 15.80 hectares of land, on which it built its production facilities and office buildings for a term ending in December 2026.  China Jinxin constructed five houses on its land.  Pursuant to the certificates of ownership, the total area is 9,755 square meters. The valid period of the land use right corresponding to 9,646 square meters terminated on August 30, 2009, and the Company is in the process of renewing such land use right. The balance terminates on March 6, 2015. There can be no assurance we will be able to renew our leases upon expiration of their current terms.
 
The land occupied by our production facilities has been designated for construction. According to Chinese laws and regulations, only state-owned land can be used for construction. However, the land occupied by China Jinxin’s production facilities is not and has never been state-owned.  It is currently owned collectively by local villagers.  As a result, the land has to be acquired by the local government and then transferred to China Jinxin. Because this process has not been completed, the houses, office buildings and production facilities on the land are subject to limitations on transfer or the granting of mortgages.  Further, there can be no assurance that China Jinxin will be able to continue to use its facilities if the transfer process is not completed.
 
Our business requires significant and continuous capital investment.

We will require a high level of capital expenditure in the foreseeable future to fund our ongoing operations and future growth. We will require significant additional capital to implement our strategy of acquiring mining assets and undertaking exploration activities. We intend to fund our capital expenditures, future acquisitions and exploration activities out of internal sources of liquidity and/or through access to additional financing from external sources. Our ability to obtain external financing in the future at a reasonable cost is subject to a variety of uncertainties, including:
 
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our future financial condition, results of operations and cash flows;
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the condition of the global and domestic financial markets; and
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changes in the monetary policy of the PRC government with respect to bank interest rates and lending practices.

If we require additional funds and cannot obtain them on acceptable terms when required or at a reasonable financing cost or at all, we may be unable to fulfill our working capital needs, upgrade our existing facilities or expand our business. These or other factors may also prevent us from entering into transactions that would otherwise benefit our business or implementing our future strategies. Any of these factors may have a material adverse effect on our business, financial condition and results of operations.

We may have difficulty in managing our future growth and any associated increased scale of our operations.

We expect to expand through both organic growth and acquisitions. Our future expansion may place a significant strain on our managerial, operational, technical and financial resources. In order to better allocate our resources to manage our growth, we must hire, recruit and manage our workforce effectively and implement adequate internal controls in a timely manner. If we are unable to effectively manage our growth and the associated increased scale of our operations, our business, financial condition and results of operations could be materially and adversely affected.
 
If we are unable to attract and retain senior management and qualified technical and sales personnel, our operations, financial condition and prospects could be materially adversely affected.
 
Our future success depends in part on the contributions of our management team and key technical and sales personnel and our ability to attract and retain qualified new personnel.  In particular, our success depends on the continuing employment of our Chief Executive Officer, Mr. Changkui Zhu, and our Chief Financial Officer, Mr. Zhengting Deng.  There is significant competition in our industry for qualified managerial, technical and sales personnel and we cannot assure you that we will be able to retain our key senior managerial, technical and sales personnel or that we will be able to attract, integrate and retain other such personnel that we may require in the future. If we are unable to attract and retain key personnel in the future, our business, operations, financial condition, results of operations and prospects could be materially adversely affected.
 
 
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Our business depends on reliable and adequate transportation capacity for our products.

Iron ore and iron ore-related products are bulky and heavy. Although our sole customer has assumed responsibility for payment of transportation of our mining products, other customers may be unwilling to do so, and as a result, transportation expenses may become a significant component of our selling expenses. Fluctuations in transportation expenses may adversely affect our ability to produce and deliver our products as well as our selling expenses, margins and profitability. If the capacity of transportation networks to or from our processing plants is reduced or cut off entirely for any long period of time, we may lose our customers or breach existing sales contracts. Any difficulties experienced by us in delivering our products may increase our transportation costs, reduce demand for our products and have a material adverse effect on our business, financial condition and results of operations.
 
Our operating costs may increase.

Mining costs generally increase over the lifespan of a mine as pits or underground mining faces become deeper. In addition, labor costs and raw material and utilities costs in China are generally expected to increase. If our mining costs, labor costs or other operating costs increase and we cannot increase our production efficiency to offset any such increase or pass any such increase on to our customers, our business, financial condition and results of operations may be materially and adversely affected.
 
We may not be able to maintain an adequate and timely supply of electricity, natural gas, water, equipment, auxiliary materials and other critical supplies at reasonable prices or at all.

Cost effective operations of our production facilities depend, among other things, on the adequate and timely supply of electricity, natural gas, water and auxiliary materials, such as grinding balls, diesel and explosives. The operation of our DRI processing facility requires significant quantities of natural gas. Electricity and water are the main utilities used in our mining operations. Any increase in the prices of electricity, water or natural gas, or disruption in our electricity, water or natural gas supply could materially and adversely affect our financial condition and results of operations. We source our auxiliary materials and equipment from domestic suppliers in the PRC. If our supplies of auxiliary materials, equipment or spare parts are interrupted or their prices increase, or our existing suppliers cease to supply us on acceptable terms, our business, financial condition and results of operations could be materially and adversely affected.

The accounting treatment of equity method investments, goodwill and other long-lived assets could result in future asset impairments, which would reduce our earnings.
 
We periodically test our equity method investments, goodwill and other long-lived assets to determine whether their estimated fair value is less than their value recorded on our balance sheet. The results of this testing for potential impairment may be adversely affected by the continuing uncertain market conditions for the our industry, as well as changes in interest rates and general economic conditions. If we determine that the fair value of any of these long-lived assets is less than the value recorded on our balance sheet, and in the case of equity method investments the decline is other than temporary, we would likely incur a non-cash impairment loss that would negatively impact our results of operations.
 
We may be subject to disputes with employees or other third parties.

The businesses we operate involve dealings with both permanent and temporary employees as well as numerous third parties including land use rights holders, suppliers and customers, and we may be subject to claims or litigation involving such employees or third parties from time to time such as labor disputes and claims under business contracts with suppliers or customers. We may also be subject to labor disputes, labor shortages or other impositions on our business operations, such as supply shortages, if we are unable to amicably resolve disputes with any such parties. Issues with the local communities surrounding the areas where we operate might also arise from the implementation of our business activities, which may result in community protests, blocking of access to our operations and third party claims. Our operations may be affected if we fail to successfully settle any such issues with local communities or groups. We cannot assure you that any such disputes will not arise in the future and that the occurrence of one or multiple disputes will not have a material adverse effect on our business and financial condition.
 
 
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Risks Related to Doing Business in China
 
The PRC government exerts substantial influence over the manner in which we must conduct our business activities.
 
The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.
 
Our business depends on China’s economic growth.

Our business and prospects depend on the rate of economic growth in the PRC which, in turn, affects demand for iron and steel. The PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange, and allocation of resources. The PRC economy has grown significantly in recent years; however, we cannot assure you that such growth will continue.  If the PRC’s economic growth slows or if the PRC economy experiences a recession, the demand for our products may decrease and our business, financial condition and results of operations may be materially and adversely affected.
 
We derive substantially all of our revenue from the sale of iron ore concentrate. Growth in demand for iron ore concentrate is fuelled largely by the growth of the PRC iron and steel industries. Demand for our iron ore concentrate is, in particular, heavily dependent on the production levels of major steel producers in Liaoning Province and Hebei Province in the PRC and their demand for our products.
 
In 2008 and 2009, the economies of the US, Europe and certain countries in Asia experienced a severe and prolonged recession and China experienced a slowdown in growth, which led to a reduction in economic activity. As a result, the demand for, and market prices of, iron ore concentrate in China also declined significantly. Any prolonged slowdown of the PRC economy in the future could have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to extensive regulations and affected by government policies in the PRC mining industry.
 
We are subject to extensive national, provincial and local government regulations, policies and controls in the PRC that govern many aspects of our industry, including, without limitation:
 
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limits on increases in ore output volume;
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grant and renewal of mining rights;
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grant and renewal of safety production permits;
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production safety and casualty ratings;
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taxes and fees;
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environmental, health and safety standards; and
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annual verification of mining permits and exploration permits.
 
 
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The liabilities, costs, obligations and requirements associated with these laws and regulations may be significant and may delay or interrupt our operations. Failure to comply with the relevant laws and regulations in our mining operations may result in penalties or suspension of our operations. Additionally, we cannot assure you that the relevant government agencies will not alter these laws or regulations or impose additional or more stringent laws or regulations. Compliance with new laws or regulations may require us to incur significant costs, capital expenditures or other obligations and secure new sources of financing. More stringent laws or regulations may also restrict our business operations. The cost of compliance with regulations is and will continue to be substantial, and any increase in costs due to changes in laws or regulations or to our failure to comply may have a material adverse effect on our business, financial condition and results of operations.
 
In addition, the current PRC government policies favor the acquisition and consolidation of mines by large mining companies. However, we cannot assure you that such policies will not change in the future. In the event that those policies favoring our acquisition and expansion plans change, our costs of carrying out our acquisition and expansion plans may increase substantially and our ability to effect such plans may decrease.

Our operations are exposed to risks in relation to environmental protection and rehabilitation and our business operations may be affected by current or future safety and environmental regulations.

Our operations are subject to environmental risks and hazards and we are subject to extensive and increasingly stringent safety and environmental protection laws and regulations in the PRC. These laws and regulations:
 
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impose fees for the discharge of waste substances;
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require the establishment of reserves for reclamation and rehabilitation;
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impose fines for serious environmental offences; and
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allow the PRC government, at its discretion, to close down any facilities failing to comply with orders to correct or stop operations that have caused environmental damage.
 
Environmental hazards may occur in connection with our operations as a result of human negligence, force majeure or otherwise. The occurrence of any environmental hazards may delay production, increase production costs, cause personal injuries or property damage, result in liability to us and/or damage our reputation. Claims may be asserted against us arising out of our operations in the normal course of business, including claims relating to land use, safety, health and environmental matters. Some incidents may also result in a breach of conditions of our mining permits and exploration permit, or other consents, approvals or authorizations, which may result in fines or penalties or even possible revocation or our mining permits and/or exploration permit. We are not insured against environmental liabilities and there can be no assurance that environmental liabilities would not materially and adversely affect our business and results of operations.
 
The PRC government is currently moving towards more rigorous enforcement of applicable laws and regulations, as well as the adoption and enforcement of more stringent environmental standards. As a result, our budgeted capital expenditures for safety and environmental regulatory compliance may be insufficient and we may need to allocate additional funds. Moreover, we cannot assure you that we can comply with all applicable safety and environmental laws and regulations that may be adopted or amended in the future. If we fail to comply with current or future safety or environmental laws and regulations, we may be required to stop production, pay penalties or fines and take corrective actions, any of which may have a material adverse effect on our business, financial condition and results of operations.
 
Restrictions on foreign investment in the PRC mining industry could materially and adversely affect our business and results of operations.

In the PRC, foreign companies have been, and currently are required to operate within a framework different from that imposed on domestic PRC companies. However, the PRC government has been opening up opportunities for foreign investment in mining projects and this process is expected to continue, especially following the PRC’s accession into the World Trade Organization. Iron ore mining is an encouraged industry for foreign investment in China. However, if the PRC government should reverse this trend, or impose greater restrictions on foreign companies, or seek to nationalize our PRC operations, our business and results of operations could be materially and adversely affected.
 
 
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Fluctuations in exchange rates could adversely affect our business and the value of our securities.
 
The value of our common stock will be indirectly affected by the foreign exchange rate between U.S. dollars and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future.
 
Since July 2005, the RMB is no longer pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.
 
Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.
 
Restrictions under PRC law on our WFOE’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our businesses.
 
Practically all of our revenues are earned by China Tongda, our wholly-owned foreign enterprise or WFOE, through its VIE China Jinxin.  PRC regulations restrict the ability of our WFOE to make dividends and other payments to its offshore parent company.  PRC legal restrictions permit payments of dividends by our WFOE only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our WFOE also is required under PRC laws and regulations to allocate at least 10% of its annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of its registered capital.  Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends.  Any limitations on the ability of China Tongda to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.
 
Governmental control of currency conversion may affect the value of your investment.

The PRC government imposes controls on currency conversion between Renminbi and foreign currencies and, in certain cases, the remittance of currency out of and into China. We receive all of our revenue in Renminbi, which is currently not a freely convertible currency. Under our current corporate structure, income of our Company will be primarily derived from dividend payments from China Tongda. Shortages in the availability of foreign currency may restrict the ability of China Tongda to remit sufficient foreign currency to pay dividends to us, or otherwise satisfy its foreign currency dominated obligations.
 
 
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Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, in most cases, particularly payments of capital account items, approval from appropriate PRC governmental authorities is required where (i) Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of offshore bank loans denominated in foreign currencies, and (ii) any foreign currency is to be converted into Renminbi for investment in China. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. In addition, the ‘‘Notice of SAFE on Issues Relating to Foreign Exchange Control on Fund Raisings by Domestic Residents Through Offshore Special Purpose Vehicles and Round-trip Investments’’ (‘‘Circular 75’’) promulgated by SAFE, which came into force on November 1, 2005, applies to our Company and the Controlling Shareholders. All of the Chinese beneficial owners of our shares have filed the application of foreign exchange registration for overseas investment with the local branch of SAFE but have not yet received the requisite approvals. However, they are required to file a modification to the foreign exchange registration for overseas investment in the event of any material capital changes, including, without limitation, (i) a subsequent equity financing for our Company outside of the PRC; (ii) a capital change in our Company; and (iii) any share transfer or share swap involving our Company in accordance with Circular 75. Payment of dividends, profits and other payments to our Company will not be permitted unless the aforesaid modification has been filed. If the foreign exchange control system prevents us from converting Renminbi into foreign currencies or vice versa, and obtaining sufficient Renminbi or foreign currency to satisfy our currency demands, our ability to transfer Renminbi to fund our business operations in China or to pay dividends in foreign currencies to our shareholders, including holders of our common shares, may be adversely affected.
 
Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiary or affiliate, limit our PRC subsidiary’s and affiliate’s ability to distribute profits to us or otherwise materially adversely affect us.
 
In October 2005, SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, generally referred to as Circular 75, which required PRC residents to register with the competent local SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (1) purporting to cover the establishment or acquisition of control by PRC residents of offshore entities which merely acquire “control” over domestic companies or assets, even in the absence of legal ownership; (2) adding requirements relating to the source of the PRC resident’s funds used to establish or acquire the offshore entity; covering the use of existing offshore entities for offshore financings; (3) purporting to cover situations in which an offshore SPV establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China; and (4) making the domestic affiliate of the SPV responsible for the accuracy of certain documents which must be filed in connection with any such registration, notably, the business plan which describes the overseas financing and the use of proceeds.  Amendments to registrations made under Circular 75 are required in connection with any increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment or creation of any security interest in any assets located in China to guarantee offshore obligations, and Notice 106 makes the offshore SPV jointly responsible for these filings. In the case of an SPV which was established, and which acquired a related domestic company or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006; this date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations.  Failure to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign exchange restrictions. Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers of funds into or out of China.
 
 
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We have advised our shareholders who are PRC residents, as defined in Circular 75, to register with the relevant branch of SAFE, as currently required, in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiary and affiliate. However, we cannot provide any assurances that their existing registrations have fully complied with, and they have made all necessary amendments to their registration to fully comply with, all applicable registrations or approvals required by Circular 75. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiary’s and affiliate’s ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 by our PRC resident beneficial holders. In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75. We also have little control over either our present or prospective direct or indirect shareholders or the outcome of such registration procedures. A failure by our PRC resident beneficial holders or future PRC resident shareholders to comply with Circular 75, if SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s and affiliate’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.
 
Our business and financial performance may be materially adversely affected if the PRC regulatory authorities determine that our acquisition of China Jinxin constitutes a Round-trip Investment without MOFCOM approval.
 
On August 8, 2006, six PRC regulatory agencies promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the 2006 M&A Rule, which became effective on September 8, 2006. According to the 2006 M&A Rule, when a PRC business that is owned by PRC individual(s) is sold to a non-PRC entity that is established or controlled, directly or indirectly, by those same PRC individual(s) it must be approved by the Ministry of Commerce, or MOFCOM, and any indirect arrangement or series of arrangements which achieves the same end result without the approval of MOFCOM is a violation of PRC law.
 
The PRC regulatory authorities may take the view that the Real Fortune BVI Share Exchange Agreement is part of an overall series of arrangements which constitute a Round-trip Investment, because at the end of these transactions, the current owners of China Jinxin will have effective control of a foreign entity that acquired ownership of our Chinese subsidiary. The PRC regulatory authorities may also take the view that the registration of the acquisition of China Tongda with the relevant AIC and the filings with the SAFE may not be evidence that the acquisition has been properly approved because the relevant parties did not fully disclose to the AIC, SAFE or MOFCOM the overall restructuring arrangements, the existence of the Real Fortune BVI Share Exchange Agreement and its link with the acquisition.  If the PRC regulatory authorities take the view that the acquisition constitutes a Round-trip Investment under the 2006 M&A Rules, we cannot assure you we will be able to obtain the approval required from MOFCOM.
 
If the PRC regulatory authorities take the view that the acquisition constitutes a Round-trip Investment without MOFCOM approval, they could invalidate our acquisition and ownership of our Chinese subsidiary.  Additionally, the PRC regulatory authorities may take the view that the acquisition constitutes a transaction which requires the prior approval of the China Securities Regulatory Commission, or CSRC, before MOFCOM approval is obtained. We believe that if this takes place, we may be able to find a way to re-establish control of our Chinese subsidiary’s business operations through a series of contractual arrangements rather than an outright purchase of our Chinese subsidiary.  But we cannot assure you that such contractual arrangements will be protected by PRC law or that the registrant can receive as complete or effective economic benefit and overall control of our Chinese subsidiary’s business than if the Company had direct ownership of our Chinese subsidiary.  In addition, we cannot assure you that such contractual arrangements can be successfully effected under PRC law.  If we cannot obtain MOFCOM or CSRC approval if required by the PRC regulatory authorities to do so, and if we cannot put in place or enforce relevant contractual arrangements as an alternative and equivalent means of control of our Chinese subsidiary, our business and financial performance will be materially adversely affected.
 
Under the EIT Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.
 
Under the PRC Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise.
 
 
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On April 22, 2009, the Chinese State Administration of Taxation (“SAT”) issued the Notice Concerning Relevant Issues Regarding Cognizance of Chinese Investment Controlled Enterprises Incorporated Offshore as Resident Enterprises pursuant to Criteria of de facto Management Bodies, or the Notice, further interpreting the application of the EIT Law and its implementation to a non-Chinese enterprise or group controlled offshore entities. Pursuant to the Notice, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate chops, board and shareholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management often reside in China. A resident enterprise would be subject to an enterprise income tax rate of 25% on its worldwide income and must pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders. However, it remains unclear as to whether the Notice is applicable to an offshore enterprise incorporated by a Chinese natural person. Nor are detailed measures on imposition of tax from non-domestically incorporated resident enterprises are available. Therefore, it is unclear how tax authorities will determine tax residency based on the facts of each case.
 
We may be deemed to be a resident enterprise by Chinese tax authorities. If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In our case, this would mean that income such as interest on financing proceeds and non-China source income would be subject to PRC enterprise income tax at a rate of 25%. Second, although under the EIT Law and its implementing rules dividends paid to us from our PRC subsidiary would qualify as “tax-exempt income,” we cannot guarantee that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, it is possible that future guidance issued with respect to the new “resident enterprise” classification could result in a situation in which a 10% withholding tax is imposed on dividends we pay to our non-PRC shareholders and with respect to gains derived by our non-PRC shareholders from transferring our shares. We are actively monitoring the possibility of being treated as a “resident enterprise”.
 
If we were treated as a “resident enterprise” by PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be creditable against our U.S. tax and out U.S. tax may not be creditable against our PRC tax.
 
We face uncertainty from China’s Circular on Strengthening the Administration of Enterprise Income Tax on Non-Resident Enterprises' Share Transfer, or Circular 698, released in December 2009 with retroactive effect from January 1, 2008.

SAT released a circular on December 15, 2009 that addresses the transfer of shares by nonresident companies, generally referred to as Circular 698. Circular 698, which is effective retroactively to January 1, 2008, may have a significant impact on many companies that use offshore holding companies to invest in China. Circular 698, which provides parties with a short period of time to comply with its requirements, indirectly taxes foreign companies on gains derived from the indirect sale of a Chinese company. Where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise by selling the shares in an offshore holding company, and the latter is located in a country or jurisdiction where the effective tax burden is less than 12.5% or where the offshore income of its residents is not taxable, the foreign investor is required to provide the tax authority in charge of that Chinese resident enterprise with the relevant information within 30 days of the transfers. Moreover, where a foreign investor indirectly transfers equity interests in a Chinese resident enterprise through an abuse of form of organization and there are no reasonable commercial purposes to the organization and the corporate income tax liability is avoided, the PRC tax authority will have the power to re-assess the nature of the equity transfer in accordance with PRC’s “substance-over-form” principle and deny the existence of the offshore holding company that is used for tax planning purposes. There is uncertainty as to the application of Circular 698. For example, while the term "indirectly transfer" is not defined, it is understood that the relevant PRC tax authorities have jurisdiction regarding requests for information over a wide range of foreign entities having no direct contact with China. It is also unclear, in the event that an offshore holding company is treated as a domestically incorporated resident enterprise, whether Circular 698 would still be applicable to a transfer of shares in such offshore holding company. Moreover, the relevant authority has not yet promulgated any formal provisions or formally declared or stated how to calculate the effective tax in the country or jurisdiction and to what extent and the process of the disclosure to the tax authority in charge of that Chinese resident enterprise. In addition, there are not any formal declarations with regard to how to decide what is an “abuse of form of organization” or a “reasonable commercial purpose,” which can be utilized by us to determine if our Company complies with the Circular 698. If Circular 698 is determined to be applicable to us based on the facts and circumstances, we or those that transfer our shares may become at risk of being taxed under Circular 698 and we or those that transfer our shares may be required to expend valuable resources to comply with Circular 698 or to establish that we or they should not be taxed under Circular 698, which could have a material adverse effect on our financial condition and results of operations.  Moreover, if it is determined that Circular 698 is applicable to transfers of our shares, the price of our shares may be adversely affected if individuals who might otherwise purchase our shares determine not to do so due to the threat of having to comply with or pay taxes pursuant to Circular 698.
 
 
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We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption laws, and any determination that we violated these laws could have a material adverse effect on our business .
 
We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by US persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. We have operations, agreements with third parties and we make the majority of our sales in China. PRC also strictly prohibits bribery of government officials. Our activities in China create the risk of unauthorized payments or offers of payments by the employees, consultants, sales agents or distributors of our Company, even though they may not always be subject to our control. It is our policy to implement safeguards to discourage these practices by our employees. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, sales agents or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or Chinese anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the US government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Uncertainties with respect to the PRC legal system could limit the legal protections available to you and us.
 
We conduct substantially all of our business through our operating subsidiaries and affiliate in the PRC.  Our principal operating subsidiaries and affiliate, China Tongda, China Huaxin and China Jinxin, are subject to laws and regulations applicable to foreign investments in China and, in particular, laws applicable to foreign-invested enterprises. The PRC legal system is based on written statutes, and prior court decisions may be cited for reference but have limited precedential value. Since 1979, a series of new PRC laws and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to you and us. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. In addition, all of our executive officers and all of our directors are residents of China and not of the US, and substantially all the assets of these persons are located outside the US.  As a result, it could be difficult for investors to effect service of process in the US or to enforce a judgment obtained in the US against our Chinese operations, subsidiary and affiliate.
 
 
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You may have difficulty enforcing judgments against us.
 
We are a Delaware holding company, but Real Fortune HK is a Hong Kong company, and our principal operating subsidiaries and affiliate, China Tongda, China Huaxin and China Jinxin, are located in the PRC.  Most of our assets are located outside the US and most of our current operations are conducted in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the US.  A substantial portion of the assets of these persons is located outside the US. As a result, it may be difficult for you to effect service of process within the US upon these persons. It may also be difficult for you to enforce in US courts judgments predicated on the civil liability provisions of the US federal securities laws against us and our officers and directors, most of whom are not residents in the US and the substantial majority of whose assets are located outside the US. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of US courts. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. Courts in China may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based on treaties between China and the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other arrangements that provide for the reciprocal recognition and enforcement of foreign judgments with the US. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates basic principles of PRC law or national sovereignty, security or the public interest. So it is uncertain whether a PRC court would enforce a judgment rendered by a court in the US.
   
Future inflation in China may inhibit our ability to conduct business in China .
 
In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.
 
Risks Relating to the VIE Agreements
 
The PRC government may determine that the VIE Agreements are not in compliance with applicable PRC laws, rules and regulations.
 
China Tongda manages and operates our iron ore processing and iron ore concentrate producing business through China Jinxin pursuant to the rights its holds under the VIE Agreements.  Almost all economic benefits and risks arising from China Jinxin’s operations are transferred to China Tongda under these agreements.  Details of the VIE Agreements are set out in “DESCRIPTION OF BUSINESS - Acquisition of Real Fortune HK Limited”   above.
  
There are risks involved with the operation of our business in reliance on the VIE Agreements, including the risk that the VIE Agreements may be determined by PRC regulators or courts to be unenforceable.  If the VIE Agreements were for any reason determined to be in breach of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such breach, including:
 
●
imposing economic penalties;
●
discontinuing or restricting the operations of China Jinxin or China Tongda;
●
imposing conditions or requirements in respect of the VIE Agreements with which China Jinxin or China Tongda may not be able to comply;
●
requiring our company to restructure the relevant ownership structure or operations;
●
taking other regulatory or enforcement actions that could adversely affect our company’s business; and
●
revoking the business licenses and/or the licenses or certificates of China Tongda, and/or voiding the VIE Agreements.

Any of these actions could adversely affect our ability to manage, operate and gain the financial benefits of China Jinxin, which would have a material adverse impact on our business, financial condition and results of operations.
 
 
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Our ability to manage and operate China Jinxin under the VIE Agreements may not be as effective as direct ownership.
 
We conduct our business in the PRC and generate virtually all of our revenues through the VIE Agreements. Our plans for future growth are based substantially on growing the operations of China Jinxin.  However, the VIE Agreements may not be as effective in providing us with control over China Jinxin as direct ownership.  Under the VIE Agreements, as a legal matter, if China Jinxin fails to perform its obligations under these contractual arrangements, we may have to (i) incur substantial costs and resources to enforce such arrangements, and (ii) rely on legal remedies under PRC law, which we cannot be sure would be effective. Therefore, if we are unable to effectively control China Jinxin, it may have an adverse effect on our ability to achieve our business objectives and grow our revenues.
 
As the VIE Agreements are governed by PRC law, we would be required to rely on PRC law to enforce our rights and remedies under them; PRC law may not provide us with the same rights and remedies as are available in contractual disputes governed by the law of other jurisdictions.
 
The VIE Agreements are governed by the PRC law and provide for the resolution of disputes through arbitral proceedings pursuant to PRC law. If China Jinxin or its shareholders fail to perform the obligations under the VIE Agreements, we would be required to resort to legal remedies available under PRC law, including seeking specific performance or injunctive relief, or claiming damages. We cannot be sure that such remedies would provide us with effective means of causing China Jinxin to meet its obligations, or recovering any losses or damages as a result of non-performance. Further, the legal environment in China is not as developed as in other jurisdictions. Uncertainties in the application of various laws, rules, regulations or policies in PRC legal system could limit our liability to enforce the VIE Agreements and protect our interests.
 
The payment arrangement under the VIE Agreements may be challenged by the PRC tax authorities.
 
We generate our revenues through the payments we receive pursuant to the VIE Agreements. We could face adverse tax consequences if the PRC tax authorities determine that the VIE Agreements were not entered into based on arm’s length negotiations. For example, PRC tax authorities may adjust our income and expenses for PRC tax purposes which could result in our being subject to higher tax liability, or cause other adverse financial consequences.
             
Our principal shareholders have potential conflicts of interest with our company which may adversely affect our business.
 
Changkui Zhu is our chief executive officer.   Mr. Zhu also is an officer and certain of our other shareholders owning in excess of five percent of our outstanding shares also are   shareholders of China Jinxin (the “China Jinxin Shareholders”) .  There could be conflicts that arise from time to time between our interests and the interests of Mr. Zhu or the China Jinxin Shareholders.. There could also be conflicts that arise between us and China Jinxin that would require our shareholders and China Jinxin’s shareholders to vote on corporate actions necessary to resolve the conflict. There can be no assurance in any such circumstances that the China Jinxin Shareholders will vote their shares in our best interest or otherwise act in the best interests of our company.  If Mr. Zhu or the China Jinxin Shareholders fail to act in our best interests, our operating performance and future growth could be adversely affected.
 
If China Tongda exercises the purchase option it holds over China Jinxin’s share capital pursuant to the VIE Agreements, the payment of the purchase price could materially and adversely affect our financial position.
 
Under the VIE Agreements, China Jinxin’s shareholders have granted China Tongda an option for thirty years beginning from the effective date of the agreement (or longer if the term of the option is extended) or the maximum period of time permitted by law to purchase all of the equity interest in China Jinxin at a price equal to the capital paid in by the transferors, adjusted pro rata for purchase of less than all of the equity interest, unless applicable PRC laws and regulations require an appraisal or stipulate other restrictions regarding the purchase price of the equity interest.  As China Jinxin is already our contractually controlled affiliate, China Tongda’s exercising of the option would not bring immediate benefits to our company, and payment of the purchase prices could adversely affect our financial position.
 
 
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Risks Relating to Our Common Stock and Our Status as a Public Company
 
The absence of an active trading market for our common stock may have an unfavorable impact on our stock price and liquidity .
 
Our common stock is quoted on the OTCQB under the symbol "UHFI.OB." However, prior to the reverse acquisition transaction as a result of which we acquired the business operations of Target, given the fact that we were a "shell company" (as defined in Rule 12b-2 under the Exchange Act), there was not an active trading market for our shares of common stock. We cannot assure you that an active trading market in our common stock will develop, or if an active market does develop, that it will be sustained.   In addition , the trading market for securities of companies quoted on the OTCQB or other quotation systems is substantially less liquid than the average trading market for companies listed on a national securities exchange.  The quotation of our shares on the OTCQB or other quotation system may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. The absence of an active trading market for our common stock may have an unfavorable impact on our stock price and liquidity.
 
We do not intend to pay cash dividends on our common stock.

We have not declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.
 
Substantially all of our revenues will be earned by China Tongda, China Huaxin or China Jinxin, our PRC subsidiaries or affiliate. PRC regulations restrict the ability of our PRC subsidiaries to make dividends and other payments to our company, their offshore parent company.  PRC legal restrictions permit payments of dividend by our PRC subsidiaries only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.  Each of our PRC subsidiaries also is required under PRC laws and regulations to allocate at least 10% of its annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of its registered capital. Allocations to this statutory reserve fund can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.
 
Certain of our stockholders have substantial influence over our company, and their interests may not be aligned with the interests of our other stockholders.
 
Jiazhen Liu owns approximately 32.15% of our outstanding voting shares and as of March 31, 2014 we are indebted to her in the amount of $10,582,308 . In addition, four other former shareholders of Real Fortune BVI own in the aggregate approximately 31.93% of our outstanding voting shares.  As a result, Ms. Liu and the other former shareholders of Real Fortune BVI have significant influence over our business, including decisions regarding mergers, consolidations, the sale of all or substantially all of our assets, election of directors and other significant corporate actions. As a result of this concentration of ownership, you and our other stockholders, acting alone, may not have the ability to determine the outcome of matters requiring stockholder approval, including the election of our directors or significant corporate transactions. In addition, this concentration of ownership, which is not subject to any voting restrictions, may discourage, delay or thwart efforts by third parties to take-over or effect a change in control of our company which could deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company, and may limit the price that investors are willing to pay for our common stock.
 
 
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Our management is not familiar with the United States securities laws.
 
Our management is generally unfamiliar with the requirements of the US securities laws and may not appreciate the need to devote the resources necessary to comply with such laws. A failure to adequately respond to applicable securities laws could lead to investigations by the Securities and Exchange Commission (“SEC”) and other regulatory authorities that could be costly, divert management's attention and disrupt our business.

Our accounting personnel who are primarily responsible for the preparation and supervision of the preparation of our financial statements under generally accepted accounting principles in the US have had no education or training in US GAAP and SEC rules and regulations pertaining to financial reporting, which could impact our ability to prepare our financial statements and convert our books and records to US GAAP.

We maintain our books and records in accordance with generally accepted accounting principles in the PRC, or PRC GAAP. Our accounting personnel in the PRC who have the primary responsibilities of preparing and supervising the preparation of financial statements under US GAAP have had no education or training in US GAAP and related SEC rules and regulations. As such, they may be unable to identify potential accounting and disclosure issues that may arise upon the conversion of our books and records from PRC GAAP to US GAAP, which could affect our ability to prepare our financial statements in accordance with US GAAP. We have taken steps to ensure that our financial statements are in accordance with US GAAP, including our hiring of a US accounting firm to work with our PRC accounting personnel and management to convert our books and records to US GAAP and prepare our financial statements. However, the measures we have taken may not be sufficient to mitigate the foregoing risks. Furthermore, the need to comply with US GAAP may require us to expend substantial amounts of resources and time that could divert our management’s attention and disrupt our business.
 
We will incur significant costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance requirements, including establishing and maintaining internal controls over financial reporting, and we may be exposed to potential risks if we are unable to comply with these requirements.

As a public company we will incur significant legal, accounting and other expenses under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), together with rules implemented by the Securities and Exchange Commission and applicable market regulators. These rules impose various requirements on public companies, including requiring certain corporate governance practices.  Our management and other personnel will need to devote a substantial amount of time to these requirements. These rules will increase our legal and financial costs and will make some activities more time-consuming and costly.
 
PRC companies have historically not adopted a Western style of management and financial reporting concepts and practices, which include strong corporate governance, internal controls and, computer, financial and other control systems. Most of our middle and top management staff are not educated and trained in the Western system, and we may have difficulty hiring new employees in the PRC with such training.  As a result of these factors, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet Western standards.
 
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluations and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Compliance with Section 404 may require that we incur substantial accounting expenses and expend significant management efforts. When we completed the Acquisition, we adopted the financial reporting controls and disclosure controls and procedures of China Jinxin, a private company.  The financial controls and disclosure controls and procedures of China Jinxin are not adequate for a public company.  Among others weaknesses, the lack of familiarity of our accounting staff with US GAAP constitutes a material weakness in our controls for financial reporting.   We have taken steps to rectify this weakness, including hiring a US accounting firm to work with our management and accounting personnel. There is no assurance, however, that the steps taken to date will be sufficient to rectify this material weakness. In the event that we fail to remedy the weaknesses in our controls over financial reporting and adopt appropriate disclosure controls and procedures, our financial reporting may be deficient and we may fail to comply with the reporting requirements of the Securities Exchange Act and other US securities laws,  in which event, the market price of our common stock could decline if investors and others lose confidence in the reliability of our financial statements and we could be subject to sanctions or investigations by the SEC or other applicable regulatory authorities.
 
 
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We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
 
The JOBS Act permits "emerging growth companies" like us to rely on some of the reduced disclosure requirements that are already available to companies having a public float of less than $75 million, for as long as we qualify as an emerging growth company. During that period, we are permitted to omit the auditor's attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act. Companies with a public float of $75 million or more must otherwise procure such an attestation beginning with their second annual report after their initial public offering. For as long as we qualify as an emerging growth company, we are also excluded from the requirement to submit "say-on-pay", "say-on-pay frequency" and "say-on-parachute" votes to our stockholders and may avail ourselves of reduced executive compensation disclosure compared to larger companies. In addition, as described in the following risk factor, as an emerging growth company we can take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.
 
Until such time as we cease to qualify as an emerging growth company, investors may find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
 
As an "emerging growth company" we may take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

Section 107 of the JOBS Act also provides that, as an emerging growth company, we can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. We can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.  We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Please refer “Management's Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” for further discussion of the extended transition period for complying with new or revised accounting standards.
 
At such time as we cease to qualify as an "emerging growth company" under the JOBS Act, the costs and demands placed upon management will increase.
 
We will continue to be deemed an emerging growth company until the earliest of (i) the last day of the fiscal year during which we had total annual gross revenues of $1,000,000,000 (as indexed for inflation), (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock under a registration statement under the Securities Act ; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which we are deemed to be a ‘large accelerated filer’ as defined by the SEC, which would generally occur upon our attaining a public float of at least $700 million.  Once we lose emerging growth company status, we expect the costs and demands placed upon management to increase, as we would have to comply with additional disclosure and accounting requirements, particularly if our public float should exceed $75 million.
 
 
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Since our Certificate of Incorporation authorizes the issuance of one million shares of “blank-check” preferred stock, our Board of Directors will have authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stock holders and with the ability to adversely affect stockholder voting power and perpetuate the board's control over our company.

Our Certificate of Incorporation authorizes our Board of Directors to issue up to 1,000,000 shares of preferred stock. The preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors without further action by stockholders. These terms may include preferences as to dividends and liquidation, voting rights, conversion rights, redemption rights and sinking fund provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of such common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our Board of Directors to issue preferred stock could make it more difficult, delay, discourage, prevent or make it more costly to acquire or effect a change-in-control, which in turn could prevent our stockholders from recognizing a gain in the event that a favorable offer is extended and could materially and negatively affect the market price of our common stock.
 
We may, in the future, issue additional shares of our common stock, which would reduce investors' percent of ownership and may dilute our share value.
 
Our Certificate of Incorporation authorizes the issuance of 50 million shares of common stock, of which 45,926,278 shares of common stock are outstanding.  An additional 17,839,800 shares of common stock are issuable upon conversion of the series A convertible preferred stock at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock.

The price of our common stock may be adversely impacted by developments applicable to other Chinese companies.

There has been substantial press regarding certain Chinese companies that have apparently engaged in frauds and deceptive practices resulting in significant losses to investors. Such activities and the resulting negative press has had a negative impact on the prices of the stocks of Chinese companies generally.  There is no guarantee that such that such activities will not continue causing investors to avoid buying our stock. Such activities could have a depressive impact on the price of our common stock.

Increased scrutiny of Chinese companies by short-sellers.

The fraudulent activities of certain Chinese issuers has encouraged analysts to investigate Chinese companies in an effort to discredit the disclosures in their public filings or otherwise uncover deceptive practices. If such analysts elect to investigate a company they will often short the stock and release materials disparaging the issuer or questioning the accuracy of its public disclosures.  Given the current environment for Chinese stocks, if an analyst were to publish a negative article about us, it could cause an immediate and substantial decline in the price of our stock, regardless of the accuracy of the claims in the article.
 
 
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If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S. publicly-traded Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation and could result in a loss of your investment in our stock, especially if such matter cannot be addressed and resolved favorably.
 
Recently, U.S. public companies that have substantially all of their operations in China, particularly companies that have completed reverse merger transactions, have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the United States Securities and Exchange Commission. Much of the scrutiny, criticism and negative publicity have focused on  financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many Chinese companies has sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to stockholder lawsuits, SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what affect this sector-wide scrutiny, criticism and negative publicity will have on our company, our business and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly and time consuming and distract our management from growing our company. If such allegations are not proven to be groundless, our company and business operations will be severely impacted and your investment in our stock could be rendered worthless.
 
The market price of our common stock can become volatile, leading to the possibility of its value being depressed at a time when you may want to sell your holdings.
 
The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include:
 
 
●
our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors;
 
●
changes in financial estimates by us or by any securities analysts who might cover our stock;
 
●
speculation about our business in the press or the investment community;
 
●
significant developments relating to our relationships with our customers or suppliers;
 
●
stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry;
 
●
customer demand for our products;
 
●
investor perceptions of our industry in general and our Company in particular;
 
●
the operating and stock performance of comparable companies;
 
●
general economic conditions and trends;
 
●
announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures;
 
●
changes in accounting standards, policies, guidance, interpretation or principles;
 
●
loss of external funding sources; and
 
●
sales of our common stock, including sales by our directors, officers or significant stockholders; and departures of key personnel.
 
Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management’s attention and resources.
 
Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in us.
   
Our common stock is subject to the "Penny Stock" Rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
 
The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person's account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
 
 
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In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience and objectives of the person; and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
 
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common shares and cause a decline in the market value of our stock.
 
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview
 
We are a company engaged in iron ore processing and the production of iron ore concentrate in the People’s Republic of China (“PRC”) through our variable interest entity ("VIE"), China Jinxin.  On January 17, 2014, we acquired a direct reduced iron production facility in Haixing County, Hebei Province. To date, our only product has been iron ore concentrate produced at our original facility located at the Zhuolu Mine. 

On October 1, 2011, effective September 30, 2011, Target acquired 100% of the issued and outstanding capital stock of Real Fortune BVI for 8,000,000 shares of Target common stock, which effectively constituted 100% of Target’s issued and outstanding capital stock immediately after the consummation of the acquisition. The Real Fortune BVI Share Exchange was accounted for as a recapitalization of Real Fortune BVI effected by a share exchange, wherein Real Fortune BVI was considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Real Fortune BVI were brought forward at their book value and no goodwill was recognized.

In January 2014, Target acquired 100% of the outstanding shares of China Huaxin. The consideration paid to the shareholders of China Huaxin consisted, in the aggregate, of 10 million RMB and 5,100,000 shares of Target common stock.  Unlike China Jinxin, which we control through the VIE Agreements, China Huaxin is directly owned by China Tongda, our wholly owned subsidiary.
 
As a result of our acquisition of Target, , we now own all of the issued and outstanding capital stock of Real Fortune BVI, which in turn owns all of the issued and outstanding capital stock of Real Fortune HK, which in turn owns all of the issued and outstanding capital stock of China Tongda, which in turn owns all of the outstanding shares of China Huaxin. In addition, we effectively control China Jinxin through the VIE Agreements among China Tongda, China Jinxin and the shareholders of China Jinxin.
 
 
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Status of Production
 
Through China Huaxin we own a direct reduced iron production facility which was recently constructed at a cost of approximately $34 million.  This plant has yet to commence operations.
 
Through China Jinxin we currently own an iron ore concentrate production line in Zhuolu County with an annual production capacity of 300,000 tons of iron ore concentrate. We began construction of this facility in 2007 and initiated production in March 2010. Our operations to date have been limited. We have not obtained the necessary permits to mine any iron ore. Initially we were granted the right to process iron ore recovered during the construction of our production facilities and ancillary roads; however, from August 2010 until December 2011, we mined iron ore on the mine upon which our production facilities are located even though we do not have the right to do so. In December 2011, we stopped mining because we shut down our production facility to upgrade the production lines. If, in the future, we are unable to obtain the necessary permits to mine at the mine on which our production facility is located or in the areas surrounding our production facilities, we will have to purchase iron ore from third parties for processing at our production facilities.
 
To date, we have received only temporary manufacturing licenses granted by the agencies of the local government, which allow us to process ore that we obtained from Zhuolu Mine, the mine on which our facility is located, or other third parties to utilize our facility.

Our ability to profit from our facility is dependent upon our ability to extract and process iron ore from the Zhuolu Mine and sell the output for a price that enables us to profit. To date, all of our sales have been made to a single customer. We entered into a ten-year contract with this customer which expires in January 2019. Pursuant to this agreement, we agreed to sell the customer, Handan Steel Group Company (“HSG”) all of the output from our Zhuolu facility, which it agreed to purchase. The price paid to us by HSG is to be determined by HSG in light of the quality of our product and market prices and is to be such that it results in a proper margin to us. Thus, our ability to profit from our current production facility over the next six years will be determined by the prices we receive from HSG. We cannot guarantee that HSG will not offer a price below what it pays to the Company’s competitors. The lower price will reduce our profit margin. However, if we are not satisfied with the price set by HSG, we can attempt to renegotiate the price. In an effort to obtain a higher price from HSG, we have yet to deliver iron ore concentrate we produced in the fourth quarter of 2011.
 
The volume of the iron ore concentrate we sell is determined, in part, by the quality of the crude iron ore we process and the rate at which we process such crude ore. Inasmuch as the price we sell our concentrate to HSG should result in a gross profit, our ability to operate profitably will be determined by the volume of iron ore concentrate we produce and our operating expenses. Our facilities began processing crude iron ore in March 2010 and were idle for approximately six months because of the government shutdown of our electricity and have been idle since December 2011 because of our decision to upgrade our production lines. Thus, to date, our facilities have not operated at maximum capacity for a full year on an uninterrupted basis.
 
Our current Zhuolu production plant can process up to 800,000 tons of iron ore every year from which we can derive approximately 300,000 tons of iron ore concentrate. However, in December 2011 we halted production to upgrade the production lines to improve their iron ore refinement and iron ore concentration rates. We estimate this upgrade will be finished by July 2014. Because our production lines were shut down and we did not resolve our dispute with HSG and continue to hold the concentrate produced in 2011, we generated no revenues and incurred no production costs during 2012 and 2013. We are continuing to negotiate with HSG to resolve our dispute over the price to be paid for our output.

There was no production for the three months ended March 31, 2014 and 2013.
 
All mineral resources in China are owned by the state. Thus, our ability to obtain iron ore depends upon our ability to obtain mineral licenses from the relevant state authorities, purchase ore from another party that has mining rights or import ore from outside of China. It is generally not feasible to transport iron ore any significant distance before processing. We believe, as evidenced by our shareholders willingness to finance the construction of our facilities, there is sufficient iron ore in the vicinity of our facilities to enable us to operate them at a profit.
 
 
43
 
 
Nevertheless, we have yet to obtain long term rights to any iron mine and there is no assurance we will be able to do so. Although we extracted iron ore from the Zhuolu Mine where our production facilities are located, we do not have the right to do so and can be subjected to various fines and penalties. However, since we paid geological survey fees on behalf of the local government so it could process applications related to the right to mine the Zhuolu Mine and has not received any challenges from any authorities regarding our mining activities, we believe that even if fines and penalties are assessed against us in the future, the amount should be negotiable with the authorities. If we are unable to obtain mining rights to the Zhuolu Mine, we will have to acquire iron ore from third parties. The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results.
 
To date we have been dependent upon cash advances from one of the stockholders of the Company. If we were not to obtain sufficient iron ore for processing, it is likely our operations would cease unless this shareholder continue to provide sufficient funds to maintain our plant and equipment until such time as our operations could be resumed.

We may seek to grow our operations by acquiring mining rights and other production facilities. The cash necessary to acquire such rights may exceed that which we have on hand. In such event, we may seek to raise the necessary cash through bank loans or the issuance of equity to the vendors of such rights, our shareholders or third parties. There can be no assurance such cash will be available to us on reasonable terms, if at all. The prices and terms at which we issue equity securities and the performance of any rights or facilities we acquire, will determine whether we operate profitably.
 
The profitability of the mining industry in China and of our Company in particular, is dependent upon the demand for iron ore and other metals within China. This demand in turn, is influenced by general economic factors, such as the rate of growth of the economy and of the construction industry. There can be no assurance that China will maintain the rapid rates of growth it has experienced in the recent past. If the rate of growth of the Chinese economy were to slow down, demand for iron and steel could fall, adversely impacting our operations.
 
Results of Operations
 
Comparison of the three months ended March 31, 2014 and 2013
 
                           
Dollar
   
Percentage
 
   
2014
   
% of Sales
   
2013
   
% of Sales
   
Increase (Decrease)
   
Increase (Decrease)
 
Operating expenses
 
$
935,818
     
-
   
$
381,741
     
-
%
 
 $
554,077
     
145
%
Loss from operations
   
(935,818
)
   
-
     
(381,741
)
   
-
%
   
554,077
     
145
%
Other expense, net
   
(1,487
)
   
-
     
(203
)
   
-
%
   
1,284
     
633
%
Loss before income taxes
   
(937,305
)
   
-
     
(381,944
)
   
-
%
   
555,361
     
145
%
Income tax benefit
   
(102,127)
     
-
     
-
     
-
%
   
 102,127
     
-
%
Net loss
 
$
(835,178
)
   
-
   
$
(381,944
)
   
-
%
 
$
453,234
     
119
%
 
Sales

Our revenues are derived from the sale of iron ore concentrate. We commenced production in March 2010. However, we ceased production from September 2010 to March 2011 because the local government implemented an “Energy Saving and Emission Reduction Plan” to reduce local power consumption. We installed power equipment to enable it to maintain a stable power supply to our production equipment and management believes the Energy Saving and Emission Reduction Plan is one-time event and disruptions to our access to energy will not have a material impact on our production in the future. We also ceased production since December 2011 to upgrade our production facilities and this upgrade is continuing. Further, due to a pricing dispute with HSG, our customer, we have not delivered concentrate produced in 2011. Consequently, sales for the three months ended March 31, 2014 and 2013 were $0. We estimate the upgrade to our facilities and testing of the upgrade will be finished by July 2014. We are continuing to negotiate with HSG to resolve our dispute over the price to be paid for our output. We acquired a new subsidiary China Huaxin in January 2014, through China Huaxin we own a direct reduced iron production facility which was recently constructed, and expect to put into operation by July 2014.
 
 
44
 
 
Cost of Goods Sold

Cost of goods ("COGS") sold consists primarily of fuel, power, direct material, direct labor, depreciation of production plant items and equipment, and accrual of the mining rights, which are attributable to the production of iron ore and iron ore concentrate.

Due to absence of sales and production for the reasons discussed above, ("COGS") for the three months ended March 31, 2014 and 2013 were $0.

Gross Profit
 
Because we did not have any sales and production, there was no gross profit for the three months ended March 31, 2014 and 2013.
 
Operating Expenses

Operating expenses consists mainly of employee salaries and welfare, business meeting and promotion expense, depreciation and amortization of items not associated with production, utilities expenses, and audit and legal expenses.

Operating expenses were $935,818 for the three months ended March 31, 2014, compared to $381,741 for the 2013 period, an increase of $554,077 or 145%. The increase was mainly due to acquisition of China Huaxin, which had operating expenses of $458,348, mainly from depreciation of fixed assets and amortization of land use right, as well as increased electricity expense, payroll and related social security expenses for China Jinxin resulting from continuous overall inflation in China in the three months ended March 31, 2014 comparing with the same period of 2013.

Net Loss

As a result of the lack of sales and production discussed above, the Company had a net loss of $835,178 for the three months ended March 31, 2014, compared to $381,944 for the three months ended March 31, 2013.

Comparison of the years ended December 31, 2013 and 2012
 
                           
Dollar
   
Percentage
 
   
2013
   
% of Sales
   
2012
   
% of Sales
   
Increase (Decrease)
   
Increase (Decrease)
 
Operating expenses
 
$
1,902,271
     
-
   
$
1,649,372
     
-
%
   
252,899
     
15
%
Loss from operations
   
(1,902,271
)
   
-
     
(1,649,372
)
   
-
%
   
252,899
     
15
%
Other expense, net
   
(388
)
   
-
     
(1,117
)
   
-
%
   
(729)
     
(65
)%
Loss before income taxes
   
(1,902,659
)
   
-
     
(1,650,489
)
   
-
%
   
252,170
     
15
%
Income tax benefit
   
-
     
-
     
(8,388)
     
-
%
   
 (8,388)
     
100
%
Net loss
 
$
(1,902,659
)
   
-
   
$
(1,642,101
)
   
-
%
 
$
260,558
     
16
%
 
 
45
 
 
Sales

Our revenues are derived from the sale of iron ore concentrate. We commenced production in March 2010. However, we ceased production from September 2010 to March 2011 because the local government implemented an “Energy Saving and Emission Reduction Plan” to reduce local power consumption. We installed power equipment to enable it to maintain a stable power supply to our production equipment and management believes the Energy Saving and Emission Reduction Plan is one-time event and disruptions to our access to energy will not have a material impact on our production in the future. We also ceased production since December 2011 to upgrade our production facilities and this upgrade is continuing. Further, due to a pricing dispute with HSG, our customer, we have not delivered concentrate produced in 2011. Consequently, sales for the years ended December 31, 2013 and 2012 were $0. We estimate the upgrade to our facilities and testing of the upgrade will be finished by July 2014. We are continuing to negotiate with HSG to resolve our dispute over the price to be paid for our output.
 
Cost of Goods Sold

Cost of goods ("COGS") sold consists primarily of fuel, power, direct material, direct labor, depreciation of production plant items and equipment, and accrual of the mining rights, which are attributable to the production of iron ore and iron ore concentrate.

Due to absence of sales and production for the reasons discussed above, ("COGS") for the years ended December 31, 2013 and 2012 were $0.

Gross Profit
 
Because we did not have any sales and production, there was no gross profit for the years ended December 31, 2013 and 2012.
 
Operating Expenses

Operating expenses consists mainly of employee salaries and welfare, business meeting and promotion expense, depreciation and amortization of items not associated with production, utilities expenses, and audit and legal expenses.

Operating expenses were $1,902,271 for the year ended December 31, 2013, compared to $1,649,372 for the 2012 period, an increase of $252,899 or 15%. The  increase was mainly due to increased electricity expense as a result of paying capacity increase fee of $3,200 per month starting from September 2012, and a one time fee of $64,000 to the local electricity company for not fully utilizing the power supply line due to no operation, as well as increased payroll and related social security expenses, and maintenance fee resulting from overall inflation in China in the year ended December 31, 2013 comparing with the same period of 2012.

Net Loss

As a result of the lack of sales and production discussed above, the Company had a net loss of $1,902,659 for the year ended December 31, 2013, compared to $1,642,101 for the year 2012.

Liquidity and Capital Resources
 
The Company’s ability to generate cash from operations is dependent upon its ability to obtain iron ore to process and to maintain the permits necessary to process such ore at its current facilities, neither of which is assured. If the Company cannot obtain iron ore to process or is no longer able to process ore, it would be dependent upon cash infusions from its current shareholders or third parties in the form of loans or equity contributions, or a combination thereof, to maintain its facilities until it can resume operations. One shareholder has indicated she will continue to fund China Jinxin, though there is no written agreement in place and China Jinxin currently owes $10.58 million to the shareholder. In addition, China Huaxin borrowed $21.33 million from two shareholders (one is the same lender of China Jinxin, and the other is the CEO of the Company). Despite such commitments, there is no assurance adequate cash will be available from current shareholders or from third parties and, if it is available, what the terms of any loan or investment might be. If we are unable to obtain the funding required, we may have to curtail or cease our operations. The Company has no specific plans, understandings or agreements with respect to the raising of such funds, and it may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since we have no such arrangements or plans currently in effect, its inability to raise funds may have a severe negative impact on its ability to become a viable company.  
 
 
46
 
 
Other than current construction in progress, which will be funded by one of the Company’s shareholder, we do not anticipate significant cash expenditures in the immediate future on our current production facilities. Nevertheless, we may require working capital once we resume production at our facilities. The shareholders of the Company verbally agreed to continue to provide cash to satisfy the Company’s working capital needs. However, in the future, the Company intends to continue the expansion of operations by acquiring new production facilities and mines. The acquisitions will be paid for with cash or our equity securities, or combinations of both. Failure to obtain such financing could have a material adverse effect on our business expansion. The sale by the Company of its equity securities would dilute the interest of its current shareholders. Further, there is no guarantee of the terms on which such an issuance would occur, if at all, would be favorable to the Company’s current shareholders.

As of March 31, 2014, cash and equivalents were $526,369 (of which, $133,495 was cash received from acquisition of China Huaxin), compared to $27,310 as of December 31, 2013 and $28,302 as of December 31, 2012.

At March 31, 2014, we had a working capital deficit of $35.93 million, an increase of $25.55 million from the deficit at December 31, 2013 of $10.38 million which was driven by acquisition of China Huaxin which had a working capital deficit of $23.11 million, as well as increased advances from shareholders in the form of loans for our construction of the iron ore refining facility as a result of our lack of sales and cash inflow. The working capital deficit at December 31, 2013 of $10.38 million at December 31, 2013, an increase of $8,968,717 from the deficit of $1,418,917 at December 31, 2012, was driven by increased advances from a shareholder in the form of loans for our construction of the iron ore refining facility as a result of our lack of sales and cash inflow.

The Company had no bank loans at March 31, 2014, December 31, 2013 and December 31, 2012.

Our customer is a state-owned company and has good credit. Currently, no further significant capital improvements are planned for our production facilities at the Zhuolu Mine.
   
As of March 31, 2014, China Jinxin was indebted to Jiazhen Liu, one of its shareholders and our largest stockholder in the amount of $10,582,308, as compared to $9,466,133 and $1,465,541 at December 31, 2013 and  2012, respectively,  for working capital and production facility construction needs.  The indebtedness of $10,582,308 does not bear interest prior to the commencement of  production pursuant to an amended loan agreement entered on January 16, 2013. Commencing on the production date, interest will begin to accrue at the bank's annual interest rate on certificate of deposit at that time on the amount outstanding from time to time and all amounts inclusive of accrued interest is to be repaid within three years of our commencement of production at the Zhuolu Mine. China Huaxin borrowed $21.25 million from two shareholders, the borrowing bore no interest, and is payable upon demand.
     
To consummate the acquisition of China Huaxin, in January 2014 we completed a private placement whereby we issued to three Chinese investors our 4% convertible promissory notes in the aggregate face amount of 10 million RMB. The Notes bore interest at the rate of 4% per annum and the principal amount is convertible into shares of our common stock at an effective conversion price of 11.11 RMB or US $1.79 per share. The convertible debt was fully converted into 900,000 shares of Target’s common stock in March 2014 by the three investors.  In addition to the repayment of the Notes, we will require additional working capital to bring the DRI production facility owned by China Huaxin on-line and commence production.
 
 
47
 
 
Cash Flow For Years Ended December 31, 2013 and 2012

The following is a summary of cash provided by or used in each of the indicated types of activities during the years ended December 31, 2013 and 2012, respectively.
 
   
2013
   
2012
 
Net cash used in operating activities
 
$
(960,913
)
 
$
(1,191,972
)
Net cash used in investing activities
   
(6,846,075
)
   
(1,306,160
)
Net cash provided by financing activities
 
$
7,805,155
   
$
2,330,559
 
 
Net cash used in operating activities
 
Cash has historically been used in operations. Net cash used by operating activities was $960,913 for the year ended December 31, 2013, compared to net cash used in operating activities of $1,191,972 in 2012 period. The less cash outflow from operating activities for the year ended December 31, 2013 was principally attributable less payment made for accrued expenses and other payables.

Net cash used in investing activities
 
Net cash used in investing activities was $6,846,075 for the year ended December 31, 2013, compared to cash used in investing activities of $1,306,160 for the 2012 period. The increased cash outflow during the year ended December 31, 2013 and 2012 was mainly attributable to purchases of equipment and construction in progress for installation for future iron ore refining system.  We paid $6.19 million for construction in progress and $0.64 million for advance to suppliers for construction in the year ended December 31, 2013, comparing with $0.89 million for construction in progress and $0.39 million for advance to suppliers for construction in the year ended December 31, 2012.
 
Net cash provided by financing activities
 
Net cash provided by financing activities was $7,805,155 for the year ended December 31, 2013, compared to $2,330,559 net cash provided by financing activities in 2012. The net cash provided by financing activities in the years ended December 31, 2013 and 2012 was due to advances from one shareholder for the Company’s working capital and construction needs as a result of Company’s lack of cash inflow due to temporary cease of the production and sales.
 
At December 31, 2013, we had a working capital deficit of $10,387,634, an increase of $8,968,717 from the deficit at December 31, 2012 of $1,418,917 which was driven by increased advances from a shareholder in the form of loans for our construction of the iron ore refining facility as a result of our lack of sales and cash inflow. The Company had no bank loans at December 31, 2013 and 2012. Our customer is a state-owned company and has good credit. Currently, there are no significant capital improvements planned for our production facilities at the Zhuolu Mine.
 
Net cash used in operating activities
 
Cash has historically been used in operations. Net cash used in operating activities was $918,550 for the three months ended March 31, 2014, compared to net cash provided by operating activities of $94,613 in the same period of 2013. The increase of cash outflow from operating activities for the three months ended March 31, 2014 was principally attributable to increased payment made for inventory, other receivable, accrued expenses and other payables.
 
 
48
 
 
Net cash used in investing activities
 
Net cash used in investing activities was $2,830,905 for the three months ended March 31, 2014, compared to cash used in investing activities of $798,352 for the same period of 2013. The increased cash outflow during the three months ended March 31, 2014 and 2013 was mainly attributable to purchases of equipment, construction in progress for installation for future iron ore refining system, and cash paid for acquisition of China Huaxin.  We paid $1.21 million for construction in progress, $0.17 million for purchase of equipment, and $1.50 million for acquisition of China Huaxin (after net with $133,495 cash received from the acquisition) in the three months ended March 31, 2014, comparing with $0.80 million for construction in progress in the three months ended March 31, 2013.
 
Net cash provided by financing activities
 
Net cash provided by financing activities was $4,250,897 for the three months ended March 31, 2014, compared to $703,990 net cash provided by financing activities in the same period of 2013. The net cash provided by financing activities in the three months ended March 31, 2014 was due to advances from shareholders of $2.61 million for the Company’s working capital and construction needs as a result of Company’s lack of cash inflow due to temporary cease of the production and sales, and proceeds from convertible debts of $1.64 million, comparing with $0.70 million advance from the same shareholder for the three months ended March 31, 2013 .  The convertible debt was fully converted into 900,000 shares of Target’s common stock in March 2014.
 
Cash Flow For Three Months Ended March 31, 2014 and 2013

The following is a summary of cash provided by or used in each of the indicated types of activities during the three months ended March 31, 2014 and 2013, respectively.
 
   
2014
   
2013
 
Net cash provided by (used in) operating activities
 
$
(918,550
)
 
$
94,613
 
Net cash used in investing activities
   
(2,830,905
)
   
(798,352
)
Net cash provided by financing activities
 
$
4,250,897
   
$
703,990
 
 
Contractual Obligations
 
We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We present below a summary of the most significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations, and cash flows.
 
The following table summarizes our contractual obligations as of March 31, 2014, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.
 
   
Payments Due by Period
 
   
Total
   
Less than 1
Year
   
1-3 Years
   
3-5 Years
   
5 Years +
 
                               
Contractual Obligations:
                             
Payable to contractor
 
$
894,004
   
$
894,004
   
$
     
$
-
   
$
-
 
 
 
49
 
 
Off-Balance Sheet Arrangements
 
We have not entered into any financial guarantees or other commitments to guarantee the obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
 
Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which were prepared in accordance with US GAAP. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis.
 
Emerging Growth Company

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging growth company,” we may, under Section 7(a)(2)(B) of the Securities Act, delay adoption of new or revised accounting standards applicable to public companies until such standards would otherwise apply to private companies. We may take advantage of this extended transition period until the first to occur of the date that we (i) are no longer an "emerging growth company" or (ii) affirmatively and irrevocably opt out of this extended transition period. We elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. Until the date we are no longer an "emerging growth company" or affirmatively and irrevocably opt out of the exemption provided by Securities Act Section 7(a)(2)(B), upon issuance of a new or revised accounting standard that applies to our financial statements and that has a different effective date for public and private companies, we will disclose the date on which adoption is required for non-emerging growth companies and the date on which we will adopt the recently issued accounting standard.
 
Basis of Presentations

Our financial statements are prepared in accordance with US GAAP and the requirements of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”).
 
Going Concern

We incurred a net loss of $1.90 million for the year ended December 31, 2013 and a net loss of $0.84 million for the three months ended March 31, 2014. We also had a working capital deficit of $10.39 million as of December 31, 2013 and of $35.93 million as of March 31, 2014. In addition we have refused to sell our iron ore concentrate to our sole customer because of the low price offered for our product. The price of iron ore concentrate is still in decline. These conditions raise a substantial doubt as to whether we can continue as a going concern.. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We are in the process of upgrading our equipment. Once the upgrading project is completed, we will be able to resume production. One shareholder has indicated she will continue to fund China Jinxin, though there is no written agreement in place and the Company currently owes $10.58 million to the shareholder. In addition, China Huaxin borrowed $21.33 million from two shareholders. Despite such commitments, there is no assurance that adequate cash will be available from current shareholders or from third parties and, if it is available, what the terms of any loan or investment might be. If we are unable to obtain the funding required, we may have to curtail or cease our operations. The Company has no specific plans, understandings or agreements with respect to the raising of such funds, and it may seek to raise the required capital by the issuance of equity or debt securities or by other means. Since it has no such arrangements or plans currently in effect, its inability to raise funds may have a severe negative impact on its ability to become a viable company.
 
 
50
 
 
Use of Estimates
 
In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.

Revenue Recognition

The Company’s revenue recognition policies are in compliance with SEC Staff Accounting Bulletin (“SAB”) 104 (codified in FASB ASC Topic 605). Sales are recognized when a formal arrangement exists, which is generally represented by a contract between the Company and the buyer; the price is fixed or determinable; title has passed to the buyer, which generally is at the time of delivery; no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as unearned revenue.
 
Sales represent the invoiced value of iron ore and iron ore concentrate, net of value-added tax (“VAT”). All of the Company’s iron ore concentrate sold in the PRC is subject to a VAT of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government.
              
The Company uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders.
 
Foreign Currency Translation and Comprehensive Income (Loss)

The functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.
 
Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in income. There has been no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.
 
The fluctuation of exchange rates does not imply free convertibility of RMB to other foreign currencies. All foreign exchange transactions continue to take place either through the People’s Bank of China (“PBOC”) or other banks authorized to buy and sell foreign currencies at the exchange rate quoted by the PBOC.

The Company uses FASB ASC Topic 220, “Comprehensive Income”.  Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders.
 
 
51
 
 
DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

Name
 
Age
 
Position
Changkui Zhu
 
51
 
Director and Chief Executive Officer
Zhengting Deng
 
48
 
Director and Chief Financial Officer
 
Mr. Changkui Zhu , a Director and the Chief Executive Officer of our company since September 29, 2011, has been CEO of Zhuolu Jinxin Mining Co., Ltd. since January 1, 2010, providing fiscal, strategic and operational leadership for the Company. From 1997 to 2009, Mr. Zhu was the Vice President of the Shandong Dashan Mining Co., Ltd., where he collected geology information and conducted evaluations on mining in order to develop and design mining exploration projects. During the period from 1991 to 1997, Mr. Zhu worked as a workshop superintendent in Heibei Jinding Mining Co., Ltd, responsible for providing physical solutions and new techniques to increase mining recovery rates and decrease the impurities rate in the ore.  In 1986, Mr. Zhu graduated from Tianjin Second Institute of Light Industry with a degree in mining. Mr. Zhu’s experience in the mining industry qualifies him to serve as a director of the Company.
 
Mr. Zhengting Deng, a Director and the Chief Financial Officer of our company since September 29, 2011, has been the CFO of Zhuolu Jinxin Mining Co., Ltd. since January 1, 2010.  From 2007 to 2009, Mr. Deng was an independent financial consultant. As an independent consultant, Mr. Deng assisted various companies establish an internal control system and improve their organizational structure and corporate accounting system. From 1995 to 2006, Mr. Deng was a financial manager in Shenzhen Xindawei Printing Co., Ltd. Mr. Deng graduated from Zhongnan University of Economics in 1987 with a degree in Accounting. Mr. Deng’s extensive business and financial experience qualifies him to serve as a director of the Company.
 
There are no family relationships among any of our officers and directors.
  
Compensation of Directors
 
No member of our board of directors received any compensation for his services as a director during the year ended December 31, 2013 and currently no compensation arrangements are in place for the compensation of directors.
 
EXECUTIVE COMPENSATION
 
UHF Incorporated

During the fiscal year ended December 31, 2013, we did not pay or accrue any compensation for our chief executive officer or any other executive officer and we have not entered into an employment or consulting agreement with any of our executive officers. We have not granted any equity-based compensation, awards or stock options to our chief executive officer or any other executive officer. We do not have any retirement, pension, profit sharing or stock option plans or insurance or medical reimbursement plans covering our officers and directors. No value has been assigned to any of the services performed by our officers (employees) and no compensation will be awarded to, earned by, or paid to these officers. At December 31, 2013, none of the individuals that served as our chief executive officer during 2012 or any other executive officer held any outstanding stock options.

Target Acquisitions I, Inc.

The following table sets forth information concerning compensation awarded to, earned by or paid to the chief executive officer of Target Acquisitions I, Inc. and the chief executive officer of China Jinxin for services rendered in all capacities during the periods indicated. No other executive officer of Target Acquisitions I, Inc. or China Jinxin received total annual salary and bonus compensation in excess of $100,000 for the year ended December 31, 2013.
 
 
52
 
 
Summary Compensation Table

Name and Principal Position
Year
 
Salary ($)
   
Bonus ($)
   
Total ($)
 
Changkui Zhu, Chief Executive Officer *
2013
   
0
     
-
     
0
 
 
2012
   
0
     
-
     
0
 
___ 
* Due to the lack of production in 2013 and 2012, the executives of Target decided to forego any compensation for those years.
 
Summary of Employment Agreements and Material Terms
 
Prior to our acquisition of Real Fortune BVI, China Jinxin, our operating affiliate was a private limited company organized under the laws of the PRC, and in accordance with PRC regulations, the salary of our executives was determined by our shareholders.  In addition, each employee is required to enter into an employment agreement.  Accordingly, all our employees, including management, have executed our employment agreement.  Our employment agreements with our executives provide the amount of each executive officer’s salary and establish their eligibility to receive a bonus.  Mr. Changkui Zhu’s employment agreement has been renewed on December 28, 2013, it provides for an annual salary of RMB 42,000 ($6,759), it terminates on December 31, 2018. Mr. Zhengting Deng’s employment agreement has been renewed on December 28, 2013, it provides for annual salary of RMB 49,200 ($7,917), and it terminates on December 31, 2018. 
 
Other than the salary and necessary social benefits required by the government, which are defined in the employment agreement, we currently do not provide other benefits to the officers at this time. Our executive officers are not entitled to severance payments upon the termination of their employment agreements or following a change in control.

We have not provided retirement benefits (other than a state pension scheme in which all of our employees in China participate) or severance or change of control benefits to our named executive officers.
 
Outstanding Equity Awards at Fiscal Year End
 
For the year ended December 31, 2013, no director or executive officer has received compensation from us pursuant to any compensatory or benefit plan. There is no plan or understanding, express or implied, to pay any compensation to any director or executive officer pursuant to any compensatory or benefit plan, although we anticipate that we will compensate our officers and directors for services to us with stock or options to purchase stock, in lieu of cash. Our current officers and directors also serve as the officers of China Jinxin, a private company in China. It is likely that we will need to attract new individuals to serve as officers and directors of our Company and that the compensation to be paid to these individuals will be greater than that previously paid to the management of China Jinxin.   Further, as a public company, we might adopt incentive plans, including stock and option plans, in order to compensate management for services rendered to the Company.
 
 
53
 
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
 AND DIRECTOR INDEPENDENCE
 
Transactions with Related Persons
 
The following includes a summary of transactions since January 1, 2011, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
   
UHF Incorporated

On August 11, 2011, our directors and officers named below (or their affiliates), together with certain other investors, purchased from us an aggregate of 8,103,846 shares of common stock for a total purchase price of $133,500 ($0.01645 per share). The number of shares purchased by each purchaser is set forth below:
 
Name of Purchaser
Number of Shares
Lawrence Burstein
1,620,770
Omar Cunha
1,620,769
Peter van Voorst Vader
1,620,769
Sidney Levy
1,620,769
Selmo Nissenbaum
1,620,769
 
Subsequently, each of the purchasers (or their affiliates) purchased an additional 93,703 shares of our common stock for a total purchase price of $3,000 (or $0.032 per share) and entered into an Option Agreement with another individual pursuant to which that individual has the right to purchase up to 145,758 shares of common stock from such purchaser for a total purchase price of $4,666.59 (or $0.032 per share).

In February 2012, each of the purchasers (or their affiliates) purchased an additional 18,500 shares for a purchase price of $7,000 ($0.378 per share), from which we derived net proceeds of $35,000 in the aggregate.

Target Acquisitions I, Inc .
 
On May 9, 2011, prior to the Acquisition, China Tongda and China Jinxin and its shareholders entered into the VIE Agreements pursuant to which China Jinxin became China Tongda’s contractually controlled affiliate.  The use of VIE agreements is a common structure used to acquire control of PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government. Other than their allocable portion of shares in Target, none of the shareholders of China Jinxin received any consideration for entering into the VIE Agreements.  As noted below, however, certain shareholders of China Jinxin transferred all or portions of their anticipated shares in Target to others for consideration. The VIE Agreements included:
    
 
(1)
Management Entrustment Agreement : Pursuant to this Agreement China Tongda has the right and obligation to manage all aspects of the operations of China Jinxin and the Board of Directors and shareholders of China Jinxin may not take any actions without the consent of China Tongda. The scope of the authority granted to China Tongda includes, but is not limited to, the right to make all major decisions, the right to manage the assets, capital and finances of China Jinxin, authority for all decisions related to human resources, daily operation management and technical support. To facilitate its exercise of such rights, China Tongda has been granted powers of attorney by the shareholders of China Jinxin granting China Tongda the right to participate in all shareholders’ meetings of China Jinxin and to make all significant decisions at such meetings, including the designation  of candidates for election to the Board of China Jinxin. In consideration of its services, China Tongda shall be paid quarterly an amount equal to the pre-tax profits of China Jinxin and shall be required to pay to China Jinxin the amount of any loss incurred by China Jinxin within 30 days of a request for payment. Further, if China Jinxin is unable to pay its debts, China Tongda will be responsible therefor.  Similarly, if losses sustained by China Jinxin result in a capital deficiency, China Tongda shall be obligated to make up the deficiency.  To facilitate China Tongda’s management of China Jinxin, China Tongda shall have access to and the right to maintain all books and records and other relevant documentation of china Jinxin.  Further, during the term of the Management Entrustment Agreement, without the consent of China Jinxin, China Jinxin will not issue, purchase or redeem any of its equity securities; issue any debt or create any liens upon its property or assets, other than for expenses incurred in the ordinary course of business and permitted exceptions; or declare or pay any dividends The term of the Management Entrustment Agreement is for 30 years, or until May 9, 2041, and will be extended automatically for successive 10-year periods thereafter, except that the agreement will terminate (i) at the expiration of the initial 30-year term, or any 10-year  renewal term, if China Tongda notifies China Jinxin not less than 30 days prior to the applicable expiration date that it does not want to extend the term, (ii) upon prior written notice from China Tongda, or (iii) upon the date China Tongda acquires all of the assets or at least 51% of the equity interests of China Jinxin.
 
 
 
54
 
 
 
(2)
Exclusive Purchase Option Agreement : Pursuant to this Agreement China Jinxin and each of China Jinxin’s shareholders granted to China Tongda an exclusive option to purchase all of the assets or outstanding shares of China Jinxin at such time as the purchase of such assets or shares is permissible under the laws of the PRC.  The options are for 30 years and will renew automatically for successive periods of 10 years each unless voluntarily terminated by China Tongda. At such time during the term as China Tongda determines to exercise its option to purchase either the assets or equity of China Jinxin it shall send a notice to China Jinxin or its shareholders, as the case may be.  Upon receipt of such notice,  China Jinxin or its shareholders shall take such steps and execute such documents as are necessary to transfer the assets or shares. Unless an appraisal is required by the laws of China, the purchase price of the assets or outstanding equity shall be equal to the lower of (i) the actual registered capital of China Jinxin and (ii) RMB 500,000 ($80,195); provided that if the laws of the PRC do not permit the purchase at that price, the purchase price shall be the lowest price allowed under the laws of the PRC.  All taxes relating to such purchase shall be borne by China Tongda.
 
 
(3)
Power of Attorney : Each shareholder of China Jinxin entered into a Power of Attorney irrevocably authorizing China Tongda to exercise all of its rights as a shareholder of China Jinxin. The rights granted include,  without limitation, the right to: (i) attend the shareholders’ meetings of China Jinxin  and execute actions by written consent; (ii) exercise all of  holder’s rights as a shareholder under the laws of the PRC and the Articles of Association of China Jinxin, including but not limited to the right to  transfer or pledge or dispose of the grantor’s shares in China Jinxin; (iii) designate and appoint  the legal representatives, Chairman of the Board of Directors, directors, supervisors, the CEO, the CFO and other senior management members of China Jinxin; (iv) execute the relevant share and/or asset purchase agreements contemplated in the Exclusive Purchase Option Agreement, and to effect the terms of the Equity Pledge Agreement and Exclusive Purchase Option Agreement; and (v) to transfer allocate, or utilize in some other ways the cash dividends and non-cash income of China Jinxin.  The power of attorney shall be in effect as long as the shareholder owns shares of China Jinxin.
 
 
(4)
Equity Pledge Agreement : Pursuant to an Equity Pledge Agreement each of the shareholders  of China Jinxin has pledged all of such shareholder’s shares  in China Jinxin as security for the performance by China Jinxin and each of its shareholders of their obligations under the  VIE Agreements. In addition to pledging his shares in the Equity Pledge Agreement, each shareholder has agreed not to impose any encumbrances or restrictions on his shares, not to sell, lease or transfer any of his shares and to provide notice to China Tongda should he receive any notice, order, ruling, verdict or other instrument in relation to the pledged shares or which may affect his ownership of the shares.
 
The foregoing description of the terms of the Entrusted Management Agreement, the Power of Attorney, the Exclusive Purchase Option Agreement and the Equity Pledge Agreement is qualified in its entirety by reference to the provisions of the agreements which are included as Exhibits 10.7, 10.8, 10.9 and 10.10 to this report, respectively, and are incorporated by reference herein.
 
 
55
 
 
The shareholders of China Jinxin at the time of entry into the VIE Agreements and the percentage of the outstanding shares of China Jinxin owned by each at that time were as follows: Jianzhen Liu (47.00%), Changqing Han (21.87%), Jianxin Wei (7.18%), Xia Wang (6.33%), Ying Li (3.50%), Jiaqi Liu (3.50%), Jianhua Zhang (3.00%), Junyan Tian (1.79%), Fengqin Ji (1.73%), Lixin Shi (1.16%), Huiqin Wang (1.05%), Wenyan Yang (0.79%), Dengwei Gao (0.46%), Shaofeng Han (0.32%),  and Yuqin Wei (0.32%).

In March 2011, Changqing Han transferred shares representing 1.74% of the shares in Target Acquisitions I to Lixin Shi in consideration of RMB 626,707, approximately $96,416.

In March 2011, Jianxin Wei transferred shares representing 0.29% of the shares in Target Acquisitions I to Wenyan Yang in satisfaction of a loan in the amount of RMB 104,426, approximately $16,065.

In March 2011, Jianxin Wei transferred shares representing 6.32% of the shares in Target Acquisitions I to Xia Wang in satisfaction of a loan in the amount of RMB 2,275,141, approximately $350,021.

In March 2011, Jiazhen Liu transferred shares representing 3.67% of the shares in Target Acquisitions I to Wenyan Yang in satisfaction of a loan in the amount of RMB 1,101,210, approximately $169,416.

In March 2011, Jiazhen Liu transferred shares representing 1.53% of the shares in Target Acquisitions I to Huiqin Wang in satisfaction of a loan in the amount of RMB 459,660, approximately $70,717.

In March 2011, Jiazhen Liu transferred shares representing 5.43% of the shares in Target Acquisitions I to Lixin Shi in satisfaction of a loan in the amount of RMB 1,628,550, approximately $250,546.

In March 2011, Jiazhen Liu transferred shares representing 1.99% of the shares in Target Acquisitions I to Shaofeng Han in satisfaction of a loan in the amount of RMB 596,430, approximately $91,758.

In March 2011, Jiazhen Liu transferred shares representing 1.99% of the shares in Target Acquisitions I to Yuqin Wei in satisfaction of a loan in the amount of RMB 596,430, approximately $91,758.

In March 2011, Jiazhen Liu transferred shares representing 11.15% of the shares in Target Acquisitions I to Junyan Tian in satisfaction of a loan in the amount of RMB 3,345,930, approximately $514,758.

In March 2011, Jiazhen Liu transferred shares representing 10.76% of the shares in Target Acquisitions I to Fengqin Ji in satisfaction of a loan in the amount of RMB 3,227,490, approximately $496,537.

In March 2011, Jiazhen Liu transferred shares representing 2.88% of the shares in Target Acquisitions I to Dengwei Gao in satisfaction of a loan in the amount of RMB 864,330, approximately $132,974. 
 
In March 2011, Ying Li transferred shares representing 3.50% of the shares in Target Acquisitions I to Chiahua Lee for services rendered at the request of Mr. Li.

In March 2011, Jianhua Zhang transferred shares representing 1.50% of the shares in Target Acquisitions I to Chiahua Lee for services rendered at the request of Mr. Zhang.
 
In March 2011, Jianhua Zhang transferred shares representing 1.50% of the shares in Target Acquisitions I to Hu Lien-Hsiang for services rendered at the request of Mr. Zhang.
 
 
56
 
 
In March 2011, Jiaqi Liu transferred shares representing 3.50% of the shares in Target Acquisitions I to Hu Lien-Hsiang for services rendered at the request of Mr. Liu.
 
As a result of the foregoing transfers, the percentage of the outstanding shares of Target by each of the shareholders of China Jinxin was, immediately after giving effect to the foregoing: Jiazhen Liu (7.60%), Changqing Han (20.13%), Jianxin Wei (0.57%), Xia Wang (12.65%), Junyan Tian (12.94%), Fengqin Ji (12.49%), Lixin Shi (8.33%), Huiqin Wang (2.58%), Wenyan Yang (4.75%), Dengwe i Gao (3.34%), Shaofeng Han (2.31%),  and Yuqin Wei (2.31%).
  
Jiaqi Liu, who owns 3.50% of outstanding shares of China Jinxin, is China Jinxin's supervisor and administrative officer and receives an annual salary of RMB 30, 000 ($4,800). Mr. Liu was the only shareholder of China Jinxin receiving a salary or any other compensation from tTarget.
 
To finance the upgrade to our production lines and for working capital, we have borrowed monies from Jiazhen Liu, one of our principal shareholders. The amount due to Jiazhen Liu was $10,582,308 as of March 31, 2014, as compared to $9,466,133 and $1,465,541 at December 31,2013 and  2012, respectively   Jiazhen Liu has agreed t he amount due her will not bear interest prior to the commencement of production pursuant to an amended loan agreement entered on January 16, 2013. Commencing on the production date, interest will begin to accrue at the bank's annual interest rate on certificates of deposit at that time on the amount outstanding from time to time and all amounts inclusive of accrued interest is to be repaid within three years of our commencement of production at the Zhuolu Mine. It is anticipated that commercial production will resume in September 2014.
 
Acquisition of Haixing Huaxin Mining Industry Co., Ltd.

On January 23, 2014, with the approval of the local business registration authority, we acquired all of the outstanding shares of China Huaxin from Jiazhen Liu, Changkui Zhu, Dongli Sun, Meijie Wang and Xingwang Shao, the shareholders of Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”) for an aggregate consideration of 10 million RMB, or US$1.65 million, and 5,100,000 shares of Target common stock.  Changkui Zhu is our Chief Executive Officer and a director of our company, and Jiazhen Liu, owned approximately 7.60% of Target’s outstanding shares prior to the acquisition. As stated above, as of March 31, 2014, we were indebted to Jiazhen Liu in the amount of  $10,582,308.  Jianzhen Liu received $1.32 million (8 million RMB) and 4,080,000 shares of Target common stock in consideration for her 80% equity interest in China Huaxin and Changkui Zhu received $165,527  (1,000,000RMB) and 510,000 shares of Target common stock in consideration for his 10% equity interest in China Huaxin.   
 
Insider Transactions Policies and Procedures
 
The Company does not currently have an insider transaction policy.
 
Director Independence
 
We currently do not have any independent directors as the term “independent” is defined by the rules of the Nasdaq Stock Market.
 
 
57
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Change in Control
 
HC Limited Transaction
 
On June 24, 2014 , certain of our directors, officers, principal stockholders and two other stockholders sold a total of 11,024,444 shares of our common stock, representing approximately 95% of our then outstanding shares of common stock, to HC Consulting Limited, a Hong Kong entity (“HC Consulting”), pursuant to a Stock Purchase Agreement dated as of June 19, 2014 (the “HC Consulting Transaction”). As a result, HC Consulting became the principal stockholder of the Company. The following individuals and entities sold the number of shares indicated below to HC Consulting in the HC Consulting Transaction:
 
Name of Record Stockholder
    Name of Beneficial Owner
Position
Number of Shares
       
Frontera Holdings Limited Partnership
Omar Cunha
Director, CEO and President
1,986,248
       
Lawrence Burstein
Lawrence Burstein
Director, Treasurer and Secretary
1,986,250
       
WIT Global Services Inc.
Sidney Levy
Director
1,986,248
       
Nissen Investments LLC
Selmo Nissenbaum
---
1,986,248
       
Peter van Voorst Vader
Peter van Voorst Vader
---
1,986,248
       
Shelly Schoppe
Shelly Schoppe
----
  546,601
       
Wayne Brannan
 Wayne Brannan
----
 546,601
 
On June 24, 2014, in conjunction with the closing of the HC Transaction, our then Board of Directors elected Changkui Zhu and Zhengting Deng as directors of the Company, and Mr. Zhu as Chief Executive Officer and Mr. Deng as Chief Financial Officer, of the Company, effective upon the closing, and Messrs. Cunha and Burstein resigned all of their positions with the Company, and Messrs. Levy and Vincent J. McGill resigned as directors of the Company, effective at the closing.

Subsequent to the HC Consulting Transaction and  in connection with the acquisition of Target pursuant to the Target Share Exchange Agreement, HC Consulting contributed 9,111,464 shares of common stock to UHF. After giving effect to the contribution of such shares, HG Consulting owns 1,912,980 shares of our common stock, representing approximately 3% of our outstanding voting shares.
 
Security Ownership
 
The following table sets forth information concerning beneficial ownership of our common stock as of July 4 , 2014 by (i) any person or group with more than 5% of our common stock, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all such executive officers and directors as a group.  Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, Chunshugou Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province, China, 075600.  To our knowledge, the persons named in the table have sole voting and investment power with respect to all shares of securities shown as beneficially owned by them. As of July 4, 2014, we had outstanding 45,926,278 shares of common stock and one share of series A convertible preferred stock convertible into an additional 17,839,800 shares of common stock at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion. The series A convertible preferred stock votes together with the common stock on an as converted basis on all matters submitted to stockholders, including the election of directors, with the one outstanding share of series A convertible preferred stock entitled to 17,839,800 votes.  For purposes of computing the total voting power of the shares owned by the individuals and entities listed in the table below, the number of outstanding voting shares is 63,766,078.
 
 
58
 
 
Name of Shareholder
Amount and Nature of
Beneficial Ownership
Percent of Common Stock(1)
Our Directors and Executive Officers:
   
Changkui Zhu, CEO
2,230,412
3.50%
Section 1, Apt.202, Shenlan Apartment Building 2, Xihu Rd., Nankai District
Tianjin, China
 
All Directors and Executive officers as a group
(one person owning shares)
2,230,412
3.50%
     
The Owners of More than 5% of Common Stock
   
     
 
Jiazhen Liu
20,498,280(1)(2)
32.15%
Section 1, Apt 609, Building 7, Quxizhongli, Chengyin Rd., Hedong District
 Tianjin, China
 
Changqing Han
7,041,474
11.04%
Section 65, Apt.105, Yilin Rd., Kuanfuli
 Hexi District, Tianjin, China 
 
Junyan Tian
4,526,412
 7.10%
3 tiao, #13, Wanxinzhuang Blvd.,
Hedong District, Tianjin, China
 
 Xia Wang
4,424,970
6.94%
Section 1, Apt.101, Building 2
Shiji Garden, Nanmenwai St.
 Nankai District, Tianjin, China
   
 
Fengqin Ji
4,369,002
6.85%
#7, Apt 201, Building One
 97 Guangdongshanzhuang Rd.
 Hedong District, Tianjin, China
___
(1) Gives effect to the conversion of the series A convertible preferred stock.
(2) Includes 2,658,480 shares owned of record by Idea Vantage Limited, of which Ms. Liu is the beneficial owner.
 
 
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MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the OTCQB under the symbol "UHFI.OB." However, prior to the reverse acquisition transaction as a result of which we acquired the business operations of Target, given the fact that we were a "shell company" (as defined in Rule 12b-2 under the Exchange Act), there was not an active trading market for our shares of common stock. We cannot assure you that an active trading market in our common stock will develop, or if  an active market does develop, that it will be sustained.

Record Holders

On July 4, 2014, we had approximately 230 holders of record of our common stock.
 
Dividends

We have not declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Substantially all of our revenues are earned by China Jinxin, China Tongda or China Huaxin, our PRC affiliate and subsidiaries. PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its offshore parent company.  PRC legal restrictions permit payments of dividend by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations.  Our PRC subsidiary is also required under PRC laws and regulations to allocate at least 10% of its annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of its registered capital. Allocations to this statutory reserve fund can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.
 
Purchases of Our Equity Securities

Neither we nor any of our affiliates purchased any equity securities from our stockholders during the fourth quarter of the fiscal year ended December 31, 2013.
 
 
60
 
 
Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information about the common stock available for issuance under compensatory plans and arrangements as of December 31, 2013.
 
           
(c)
           
Number of securities
   
(a)
     
remaining available
   
Number of
 
(b)
 
for future issuance
   
securities to be
 
Weighted-average
 
under equity
   
issued upon
 
exercise price of
 
Compensation
   
exercise of
 
outstanding options
 
plans (excluding
   
outstanding
 
under equity
 
securities reflected in
Plan Category
 
options
 
compensation plans
 
column (a))
             
Equity compensation
           
plan approved by
           
security holders
 
None
 
--
 
None
             
Equity compensation
           
plans not approved by
         
security holders
 
None
 
--
 
None
             
Total
 
None
 
--
 
None
 
Penny Stock Regulations

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock” and is subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market, thus possibly making it more difficult for us to raise additional capital.
 
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule required by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
 
There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
 
 
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RECENT SALES OF UNREGISTERED SECURITIES

On August 11, 2011, we issued an aggregate of 8,103,846 shares of common stock for a total purchase price of $133,500 ($0.01645 per share) to the purchasers named below pursuant to subscription agreements:
 
Name of Purchaser
Number of Shares
Lawrence Burstein
1,620,770
Omar Cunha
1,620,769
Peter van Voorst Vader
1,620,769
Sidney Levy
1,620,769
Selmo Nissenbaum
1,620,769
 
Subsequently, each of the purchasers (or their affiliates) purchased an additional 93,703 shares of our common stock for a total purchase price of $3,000 (or $0.032 per share).
 
In February 2012, each of the purchasers (or their affiliates) purchased an additional 18,500 shares for a purchase price of $7,000 ($0.378 per share), from which we derived net proceeds of $35,000 in the aggregate.
 
Each of the purchasers was an accredited investor, as defined in Rule 501(a) of Regulation D. The issuance and sale of these shares were exempt from the registration requirements of the Securities Act under the exemptions provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. The certificates evidencing  these  shares were endorsed with a restrictive legend.  No brokers were involved in the sale of the shares and no commissions were paid.
 
On June 30, 2014, we issued to the former stockholders of Target a total of 43,375,638 shares of our common stock and one share of our series A convertible preferred stock, convertible into an additional 17,839,800 shares common stock, in exchange for all of the outstanding shares of Target pursuant to the Target Share Exchange Agreement.  Since our certificate of incorporation only authorizes the issuance of 50,000,000 shares of common stock, we did not have sufficient authorized but unissued shares of common stock in order to complete the acquisition of Target, and so our Board of Directors authorized the issuance of one share of Series A convertible preferred stock convertible into 17,839,800 shares of common stock to one of the Target Stockholders   at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion.  The issuance of the shares issued to the former Target stockholders, none of who is a “U.S. person”, as defined in Rule 902 of Regulation S under the Securities Act, was exempt from the registration requirements of the Securities Act under Regulation S. The certificates evidencing the shares are endorsed with a restrictive Securities Act legend. The names of the former stockholders of Target and the number of shares issued to each of them is set forth below:
 
 
62
 
                                                  
Name of Target Stockholder Number of Shares
   
Jiazhen Liu
17,839,800*
   
Idea Vantage Limited (Jiazhen Liu)
2,658,480
   
Wealth Sino Trading Limited (Changqing Han)
7,041,474
   
Sui Feng Limited (Junyan Tian)
4,526,412
   
True South Limited ( Xia Wang)
4,424,970
   
Splendid Shine Limited (Fengqin Ji)
4,369,002

Changkui Zhu, CEO
2,230,412
   
Chia-Hua Lee
3,060,750
   
 Lien-Hsiang Hu
3,060,750
   
Trophy Journey Limited
2,913,834
   
United Ample International Limited
1,661,550
   
Wanli Liu
1,311,750
   
Southern Sleek Limited
1,168,332

Dongli Sun
1,114,988
   
True Sino Enterprises Limited
902,484
   
Talent Lead Investments Limited
808,038
   
Talent Horse Limited
808,838

Meijie Wang
668,993
   
Xingwang Shao
445,995
   
 Wisdom Thrive Limited
199,386
__
* Represents shares issuable upon conversion of series A convertible preferred stock.
 
 
63
 
 
DESCRIPTION OF CAPITAL STOCK

We are authorized to issue 50,000,000 shares of common stock, $.001 par value per share, and 1.000,000 shares of preferred stock, $.001 par value per share.
 
Common Stock
 
As of July 4, 2014, we had outstanding 45,926,278 shares of common stock.
 
Holders of our common stock are entitled to receive dividends when and as declared by our Board out of funds legally available therefore. Upon dissolution of our company, the holders of common stock are entitled to share, pro rata, in our net assets after payment of or provision for all of our debts and liabilities, and subject to the preferential rights of any class of preferred stock or other senior security which we may issue. Each share of common stock is entitled to participate on a pro rata basis with each other share of such stock in dividends and other distributions declared on shares of common stock.
 
The holders of common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders and may not cumulate their votes for the election of directors. The holders of common stock do not have preemptive rights to subscribe for additional shares of any class that we may issue, and no share of common stock is entitled in any manner to any preference over any other share of such stock.
 
Preferred Stock
 
We are authorized to issue a total of 1,000,000 shares of "blank check" preferred stock, $.001 par value per share. In connection with our acquisition of Target, our Board of Directors authorized the filing of a certificate of designation for our series A convertible preferred stock, which authorizes the issuance of one share of series A convertible preferred stock convertible an additional 17,839,800 shares of common stock at such time as we amend our certificate of incorporation to increase the number of authorized shares of common stock or merge with and into another corporation which has sufficient shares of authorized but unissued shares of common stock for issuance upon conversion. The series A convertible preferred stock votes together with the common stock on an as converted basis on all matters submitted to stockholders, including the election of directors, with the one outstanding share of series A convertible preferred stock entitled to 17,839,800 votes.   

In accordance with our Certificate of Incorporation, our Board of Directors may, by resolution, issue additional preferred stock in one or more series at such time or times and for such consideration as the Board of Directors may determine. The Board of Directors is expressly authorized to provide for such designations, preferences, voting power (or no voting power), relative, participating, optional or other special rights and privileges as it determines.
 
We may issue preferred stock to effect a business combination, to raise capital or for other reasons. In addition, preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of our company.
 
 
64
 
 
SHARES ELIGIBLE FOR SALE
 
As of July 4, 2014, we had outstanding 45,926,278 shares of common stock, of which 45,288,618 shares are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. In addition, the 17,839,800 shares of common stock issuable upon conversion of the series A convertible preferred stock owned by Jiazhen Liu, our largest stockholder, when issued, will be restricted securities.
 
Rule 144
 
Rule 144 permits a person who has beneficially owned restricted shares for at least six months to sell their shares provided that: (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale.
  
Persons who have beneficially owned restricted shares for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, are subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of either of the following:
 
 
●
1.0% of the number of shares of common stock then outstanding, which is now 459,262 shares; and
 
●
if the common stock is listed on a national securities exchange, the average weekly trading volume of the shares of common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
 
Sales Under Rule 144 By Non-Affiliates
 
Under Rule 144, a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted shares of common stock proposed to be sold for at least six months, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares without complying with the manner of sale and volume limitation or notice provisions of Rule 144. We must be current in our public reporting if the non-affiliate is seeking to sell under Rule 144 after holding his shares of common stock between six months and one year. After one year, non-affiliates do not have to comply with any other Rule 144 requirements.
 
Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies
 
Rule 144 is not available for the resale of securities initially issued by companies that are, or previously were, blank check companies like us, to their promoters or affiliates despite technical compliance with the requirements of Rule 144. Rule 144 also is not for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. The SEC has provided an exception to this prohibition, however, if the following conditions are met:
 
 
●
the issuer of the securities that was formerly a shell company has ceased to be a shell company;
 
●
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;
 
●
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and
 
●
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.
 
As a result, HC Consulting and the former Target Stockholders will not be able to sell any of the 63,128,418 shares of common stock which they own, or may acquire upon conversion of the series A convertible preferred stock, pursuant to Rule 144 without registration until July 7, 2015.
 
 
65
 
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
Section 145 of the Delaware General Corporation Law authorizes a corporation to grant, and authorizes a court to award, indemnity to officers, directors and other corporate agents.
 
As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the Company’s certificate of incorporation includes a provision that eliminates the personal liability of its directors for breach of their fiduciary duty as directors, except that a director shall be liable to the extent provided by applicable law (i) for breach of the director’s duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law or (iv) for any transaction from which the director derived an improper personal benefit.

In addition, as permitted by Section 145 of the Delaware General Corporation Law, the bylaws of the Company provide that:

·  
The Company shall indemnify its directors, officers, employees or agents for serving the Company in those capacities or for serving other business enterprises at the Company’s request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.

·  
The Company is authorized to obtain insurance to indemnify such persons.
   
These indemnification provisions may be sufficiently broad to permit indemnification of the Company’s officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.  The Company may at the discretion of the BOD purchase and maintain insurance on behalf of any person who holds or who has held any position identified in the paragraph above against any and all liability incurred by such person in any such position or arising out of his status as such.
 
Insofar as indemnification by us for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling the company pursuant to provisions of our certificate of incorporation and bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted.  We are not aware of any threatened litigation or proceeding, which may result in a claim for such indemnification.
 
 
66
 
 
PROPERTIES

We do not own any real property.

China Jinxin

China Jinxin has leased 15.80 hectares land located on the Zhuolu Mine, on which it built its production facilities and office buildings. This lease was confirmed by the local villagers’ committee and received the relevant approvals from the local township government which entered into appropriate agreements with China Jinxin. Pursuant to such agreements, the lease term is from December 30, 2006 to December 30, 2026 and the total compensation was approximately RMB 5,000,000 ($0.75 million USD).

China Jinxin has constructed five houses at its production facilities. Pursuant to the certificates of ownership, the total area of the houses is 9,755 square meters. The valid period of the corresponding land use right as to 9,646 square meters terminated on August 30, 2009, and the Company is in the process of renewing such land use right. The balance terminates on March 6, 2015.  The houses are used as residences by some of our employees which work at the facilities and as offices and guest facilities.   Although the valid period of the corresponding land right terminated as to 9,646 square meters on August 30, 2009, and the Company is in the process of renewing such land use right. The balance terminates on March 6, 2015, we have continued to use the houses without interruption and anticipate that such use will not be interrupted so long as we hold a temporary or permanent license to use our production facilities.  Because the use of the houses is not relevant to the production of iron ore concentrate, the loss of the use of our houses would not have a material adverse impact on our operations.
 
The land occupied by our production facilities has been designated for construction. According to Chinese laws and regulations, only state-owned land can be used for construction. However, the land occupied by China Jinxin’s production facilities is not state-owned.  It is currently owned collectively by local villagers.  Thus, questions could be raised by state agencies as to our right to build our facilities. To minimize the possibility that state agencies will challenge our right to use our production facilities, the land has to be acquired by the local government from the local villages and then transferred to China Jinxin.  China Jinxin is working with the authorities to complete this process.  Because the requisite procedures have not been completed, the houses, office buildings and production facilities on the land are subject to limitations on transfer or the granting of mortgages.  Although there is the possibility that the local government will fail to complete the land transfer process, given that the local Ministry of Construction granted us permission to build the production facilities, we believe it is not likely they will do so.  If, however, China Jinxin did not ultimately obtain appropriate rights to the land on which it has built its facilities, its right to operate the facilities could be suspended in which event our business and financial results would be materially adversely affected.

China Huaxin

The China Huaxin DRI Facility is located in Haixing Qingxian Industrial Park, Cangzhou, Heibei Province PRC. The Company’s DRI Facility occupies an area of 200,000 m. 2     The DRI Facility occupies 60,000 m 2, of land and there is a raw material storage area of 14,000 m 2 with a 100,000 ton storage capacity, a workshop area of 4500 m 2 , a water storage pool of 4000m 3 to supplement water supplies, and an office building of 2,400 m 2 .
 
LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results. 
 
 
67
 
 
CHANGES IN REGISTERED INDEPENDENT PUBLIC ACCOUNTANT
 
 
Louis Plung & Co., LLP has been the independent registered public accountants for UHF and Louis Plung & Co., LLP audited the financial statements of UHF as at and for the years ended December 31, 2013 and December 31, 2012.

Goldman Kurland Mohidin LLP (“GKM”) has been the registered independent public accountants for Target Acquisitions, I, Inc. and GKM audited the consolidated financial statements of Target Acquisitions, I, Inc. and its subsidiaries and issued an audit report on the consolidated financial statements of Target Acquisitions, I, Inc as at and for the years ended December 31, 2013 and December 31, 2012.

Since as a result of the reverse acquisition Target and its consolidated subsidiaries are treated as accounting acquirer, it is anticipated that GKM will be the independent registered public accountants for our company.
 
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
 
Reference is made to the disclosure set forth Item 2.01 of this Current Report under the caption “Recent Sales of Unregistered Securities”, which disclosure is incorporated by reference into this section.
 
ITEM 4.01 CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
 
Reference is made to the disclosure set forth Item 2.01 of this Current Report under the caption “Change in Registered Independent Certified Public Accountant”, which disclosure is incorporated by reference into this section.
 
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT
 
Reference is made to the disclosure set forth under Item 2.01 of this report, which disclosure is incorporated herein by reference.
 
As a result of the closing of the reverse acquisition with Target Acquisitions I, Inc., the former stockholders of Target Acquisitions I, Inc. own approximately 96%  of the outstanding voting shares of our company. 
 
  ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
 
On June 30, 2014, immediately prior to the closing of the HC Transaction , our then Board of Directors elected   Changkui Zhu and Zhengting Deng as directors of the Company, and Mr. Zhu as Chief Executive Officer and Mr. Deng as Chief Financial Officer, of the Company, effective upon the closing, and Messrs. Cunha and Burstein   resigned all of their positions with the Company, and Messrs. Levy and Vincent J. McGill resigned as directors of the Company, effective at the closing.
 
Mr. Changkui Zhu , aged 51, the chief executive of officer of our company, has been CEO of Zhuolu Jinxin Mining Co., Ltd. since 2009. Mr. Zhu has over 15 years of experience in production and quality control in the mining industry. From 1997 to 2009 Mr. Zhu was a Vice President of Shandong Dashan Mining Co., Ltd.  In such capacity Mr. Zhu evaluated the economic feasibility of prospective mines and designed exploration projects. In addition, he monitored daily mining activities, provided technical support and designed safety training programs. In 1986, Mr. Zhu graduated from Tianjin Second Institute of Light Industry with a degree in mining.
 
 
68
 
 
Mr. Zhengting Deng, aged 48, the chief financial officer of our company, has been the chief accountant of Zhuolu Jinxin Mining Co., Ltd. since January 2010.  From 2007 to 2010, Mr. Deng was an independent financial consultant. As an independent consultant, Mr. Deng assisted various companies in establishing internal control systems and effectuating improvements to their organizational structure and corporate accounting systems. From 1995 to 2006, Mr. Deng was a financial manager in Shenzhen Xindawei Printing Co., Ltd. Mr. Deng graduated from Zhongnan University in 1987 with a bachelor’s degree in Economics and Law.
 
ITEM 5.06  CHANGE IN SHELL COMPANY STATUS
 
Prior to the closing of the reverse acquisition, UHF Incorporated was a “shell company” as defined in Rule 12b-2 of the Exchange Act.  As described in Item 2.01 above, which is incorporated by reference into this Item 5.06, UHF Incorporated ceased being a shell company upon completion of the reverse acquisition on June 30, 2014.
 
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
 
(a) Financial Statements of Business Acquired
 
 
69
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012

Contents
             
 
Page
Report of Independent Registered Public Accounting Firm      
F-1
Consolidated Financial Statements:
 
Consolidated Balance Sheets as of December 31, 2013 and 2012  
F-2
Consolidated Statements of Income and Other Comprehensive Income for the Years Ended December 31, 2013 and 2012 
F-3
 Consolidated Statements of Cash Flows for the Years Ended December 31,  2013 and 2012 
F-4
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2013 and 2012  
F-5
Notes to Consolidated Financial Statements 
F-6-18
 
 
 
 
 
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of
Target Acquisition I, Inc.
 
We have audited the accompanying consolidated balance sheets of Target Acquisitions I, Inc. and Subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ equity and other comprehensive loss, and consolidated cash flows for the years ended December 31, 2013 and 2012. These financial statements are the responsibility of the Company`s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Target Acquisitions I, Inc. and Subsidiaries as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years ended December 31, 2013 and 2012, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. For the year ended December 31, 2013, the Company incurred a net loss of $1.9 million, had negative cash flows from operating activities of $0.9 million and had a working capital deficiency of $10.4 million. These factors, among others, as discussed in Note 2 to the consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Goldman Kurland and Mohidin, LLP
Encino, California
April 15, 2014
 
 
F-1
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2013 AND DECEMBER 31, 2012
 
   
2013
   
2012
 
             
ASSETS
           
             
CURRENT ASSETS
           
   Cash & equivalents
 
$
27,310
   
$
28,302
 
   Inventory
   
692,859
     
671,728
 
   Other receivable
   
4,891
     
4,744
 
                 
      Total current assets
   
725,060
     
704,774
 
                 
NONCURRENT ASSETS
               
   Property and equipment, net
   
8,071,846
     
8,632,604
 
   Intangible assets, net
   
536,697
     
560,132
 
   Construction in progress
   
7,432,928
     
1,092,722
 
   Advance to suppliers for construction
   
1,051,458
     
389,786
 
   Deferred tax assets
   
3,356
     
3,256
 
                 
      Total noncurrent assets
   
17,096,285
     
10,678,499
 
                 
TOTAL ASSETS
 
$
17,821,345
   
$
11,383,273
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
   Accounts payable
 
$
248
   
$
239
 
   Accrued liabilities and other payables
   
608,621
     
526,383
 
   Income tax payable
   
135,594
     
131,528
 
   Payable to contractors
   
902,098
     
-
 
   Advance from related party
   
9,466,133
     
1,465,541
 
                 
       Total current liabilities
   
11,112,694
     
2,123,691
 
                 
NONCURRENT LIABILITIES
               
   Payable to contractors
   
-
     
875,030
 
   Accrued expense
   
13,426
     
13,023
 
                 
       Total noncurrent liabilities
   
13,426
     
888,053
 
                 
       Total liabilities
   
11,126,120
     
3,011,744
 
                 
STOCKHOLDERS' EQUITY
               
Preferred stock: $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value; authorized shares 100,000,000; issued and outstanding 8,000,100
   
8,000
     
8,000
 
      Additional paid in capital
   
5,296,312
     
5,296,312
 
      Statutory reserves
   
557,253
     
557,253
 
      Accumulated other comprehensive income
   
794,673
     
568,318
 
      Retained earnings
   
38,987
     
1,941,646
 
                 
         Total stockholders' equity
   
6,695,225
     
8,371,529
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
17,821,345
   
$
11,383,273
 
 
 
F-2
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
YEARS ENDED DECEMBER 31, 2013 AND 2012
 
   
Year Ended December 31,
 
   
2013
   
2012
 
Operating expenses
           
   General and administrative
 
$
1,902,271
   
$
1,649,372
 
                 
Loss from operations
   
(1,902,271
)
   
(1,649,372
)
                 
Non-operating income (expenses)
               
   Interest income
   
80
     
188
 
   Other
   
48
     
(874
)
   Financial expense
   
(516
)
   
(431
)
                 
      Total non-operating expenses, net
   
(388
)
   
(1,117
)
                 
Loss before income tax
   
(1,902,659
)
   
(1,650,489
)
                 
Income tax benefit
   
-
     
(8,388
)
                 
Net loss
   
(1,902,659
)
   
(1,642,101
)
                 
Other comprehensive income
               
      Foreign currency translation gain
   
226,355
     
17,748
 
                 
Net comprehensive loss
 
$
(1,676,304
)
 
$
(1,624,353
)
                 
Basic weighted average shares outstanding
   
8,000,100
     
8,000,100
 
                 
Basic net loss per share
 
$
(0.24
)
 
$
(0.21
)
 
 
F-3
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2013 AND 2012
 
   
2013
   
2012
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
            Net loss
 
$
(1,902,659
)
 
$
(1,642,101
)
            Adjustments to reconcile net loss to net cash
               
            used in operating activities:
               
            Depreciation and amortization
   
873,476
     
1,047,726
 
                  (Increase) decrease in assets and liabilities:
               
                       Inventory
   
(346
)
   
2,038
 
                       Other receivable
   
-
     
(4,724
)
                       Accounts payable
   
-
     
238
 
                       Accrued liabilities and other payables
   
68,616
     
(595,149
)
                 
            Net cash used in operating activities
   
(960,913
)
   
(1,191,972
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                        Construction in progress
   
(6,187,412
)
   
(892,405
)
                        Advance to suppliers for construction
   
(637,357
)
   
(388,119
)
                        Acquisition of property, plant & equipment
   
(21,306
)
   
(25,636
)
                 
            Net cash used in investing activities
   
(6,846,075
)
   
(1,306,160
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
                        Advance from related party
   
7,805,155
     
1,459,272
 
                        Payable to contractor
   
-
     
871,287
 
                 
            Net cash provided by financing activities
   
7,805,155
     
2,330,559
 
                 
EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS
   
841
     
(241
)
                 
NET DECREASE IN CASH & EQUIVALENTS
   
(992
)
   
(167,814
)
                 
CASH & EQUIVALENTS, BEGINNING OF YEAR
   
28,302
     
196,116
 
                 
CASH & EQUIVALENTS, END OF YEAR
 
$
27,310
   
$
28,302
 
                 
Supplemental Cash flow data:
               
             Income tax paid
 
$
-
   
$
-
 
             Interest paid
 
$
-
   
$
-
 
 
 
F-4
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2013 AND 2012
 
   
Shares
   
Amount
   
Additional paid in capital
   
Statutory reserves
   
Retained earnings
   
Accumulated other comprehensive income
   
Total stockholders' Equity
 
                                           
Balance at January 1, 2012
   
8,000,100
   
$
8,000
   
$
5,296,312
   
$
557,253
   
$
3,583,747
   
$
550,570
   
$
9,995,882
 
                                                         
Net loss
   
-
     
-
     
-
     
-
     
(1,642,101
)
   
-
     
(1,642,101
)
                                                         
Foreign currency translation gain
   
-
     
-
     
-
     
-
     
-
     
17,748
     
17,748
 
                                                         
Balance at December 31, 2012
   
8,000,100
     
8,000
     
5,296,312
     
557,253
     
1,941,646
     
568,318
     
8,371,529
 
                                                         
Net loss
   
-
     
-
     
-
     
-
     
(1,902,659
)
   
-
     
(1,902,659
)
                                                         
Foreign currency translation gain
   
-
     
-
     
-
     
-
     
-
     
226,355
     
226,355
 
                                                         
Balance at December 31, 2013
   
8,000,100
   
$
8,000
   
$
5,296,312
   
$
557,253
   
$
38,987
   
$
794,673
   
$
6,695,225
 
 
 
F-5
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013 AND 2012
 
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 
Target Acquisitions I, Inc. (“the Company” or “Target” or “Group”) was incorporated in Delaware on June 27,  2008.
 
Effective October 1, 2011, the Company entered into a share exchange with China Real Fortune Mining Limited (“Real Fortune BVI”), and shareholders, pursuant to which the Company acquired 100% of the issued and outstanding capital stock of Real Fortune BVI for 8,000,000 of the Company’s common shares.  Immediately prior to the consummation of the share exchange, there were 100 shares of the Company’s common stock outstanding (after retirement of 4,999,900 common shares). Upon completion of the foregoing transactions, the Company had 8,000,100 shares of common stock issued and outstanding.  Real Fortune BVI was incorporated on September 13, 2010 in the British Virgin Islands (“BVI”) to serve as an intermediate holding company.
 
The acquisition of Real Fortune BVI was accounted for as a recapitalization effected by a share exchange, wherein Real Fortune BVI was considered the acquirer for accounting and financial reporting purposes with no adjustment to the historical basis of its assets and liabilities. Real Fortune BVI’s shareholders become the Company’s majority shareholders and control the Company. Target was a non-operating public shell prior to the acquisition. As a result of the acquisition of Real Fortune BVI, Target is no longer a shell company. Pursuant to Securities and Exchange Commission (“SEC”) rules, the merger or acquisition of a private operating company into a non-operating public shell with nominal net assets is considered a capital transaction in substance, rather than a business combination. As a result, the accompanying consolidated financial statements were retroactively restated to reflect the recapitalization.
 
Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (“China Tongda”) was incorporated on August 17, 2010 as a wholly foreign owned entity under the laws of the People’s Republic of China (“PRC”).  China Tongda is 100% owned by Real Fortune Holding Limited (“Real Fortune HK”), a company incorporated and registered in Hong Kong on April 23, 2010 by Changkui Zhu, the CEO of the Company, who then owned 100% of Real Fortune HK. On April 14, 2011, Mr. Zhu sold 100% of his ownership interest in Real Fortune HK to Real Fortune BVI for HKD 10,000 ($1,286), which was the registered share capital of Real Fortune HK. Both China Tongda and Real Fortune HK had no operations at the time of ownership transfer.  Accordingly, since April 14, 2011, Real Fortune HK has been 100% owned by Real Fortune BVI.  Real Fortune BVI is ultimately owned by a group of shareholders who are the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“China Jinxin”). Therefore, China Tongda was directly controlled by Real Fortune HK, and Real Fortune HK was directly controlled by Real Fortune BVI prior to the execution of a series of contractual agreements between China Tongda and China Jinxin in May 2011, described below.
 
China Jinxin was incorporated in China on December 21, 2006. China Jinxin is engaged in iron ore processing and concentrate production in the PRC. The main product of China Jinxin is iron ore concentrate.
 
On May 9, 2011, China Jinxin and its shareholders entered into a series of agreements, including a Management Entrustment, an Exclusive Purchase Option and Equity Pledge Agreements with China Tongda, and each shareholder of China Jinxin granted China Tongda an irrevocable power of attorney to appoint China Tongda as its attorney-in-fact to exercise all of its rights as equity owner of China Jinxin. According to these agreements, Wholly Foreign Owned Enterprise (“WFOE”) acquired management control of China Jinxin whereby WFOE is entitled to all net profits of China Jinxin as a management consultation and technical supporting fee, and is obligated to manage and fund China Jinxin’s operations and pay its debts. As a result of these agreements, China Tongda is considered the primary beneficiary of China Jinxin, and China Tongda must consolidate the results of operations of China Jinxin, as China Tongda contractually controls the management of China Jinxin and China Jinxin granted an irrevocable proxy to China Tongda or its designee as defined in ASC Topic 810, “Consolidation”.  Consolidation of Variable Interest Entities (“VIE”), included in ASC Topic 810, requires certain VIEs to be consolidated by the entity’s primary beneficiary if the equity investors in the entity do not have the characteristics of a controlling financial interest or sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.
 
 
F-6
 
 
The Management Entrustment Agreement is for 30 years, or until May 9, 2041, and will be extended automatically for successive 10 year periods thereafter, except that the agreement will terminate (i) at the expiration of the initial 30-year term, or any 10-year renewal term, if WFOE notifies China Jinxin not less than 30 days prior to the applicable expiration date that it does not want to extend the term, (ii) upon prior written notice from WFOE, or (iii) upon the date WFOE acquires all of the assets, or at least 51% of the equity interests, of China Jinxin. The term of each Exclusive Purchase Option Agreement is 30 years, or until May 9, 2041, and will be extended automatically for successive 10-year periods thereafter, unless WFOE notifies China Jinxin and the shareholder of China Jinxin granting the option at least 30 days prior to the applicable expiration date that it does not want to extend the option.
 
China Jinxin’s results of operations, assets and liabilities are consolidated in the Company’s financial statements from the earliest period presented. The Group’s structure as of December 31, 2013 is as follows:
 
Through contractual arrangements among China Tongda and China Jinxin, and its shareholders, the Company controls China Jinxin’s operations and financial affairs. As a result of these agreements, China Tongda is considered the primary beneficiary of China Jinxin (see Note 2) and accordingly, China Jinxin’s results of operations and financial condition are consolidated in the Group financial statements. All issued and outstanding shares of China Jinxin are held by 15 Chinese citizens.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are prepared in conformity with US GAAP. Target and Real Fortune BVI’s functional currency is the US Dollar (‘‘USD’’ or “$”), Real Fortune HK’s functional currency is Hong Kong Dollar (‘‘HKD’’) and China Tongda’s and China Jinxin’s functional currency is Chinese Renminbi (‘‘RMB’’). The accompanying financial statements are translated from functional currencies and presented in USD.
 
 
F-7
 
 
Principles of Consolidation
 
The consolidated financial statements include the financial statements of the Company, its subsidiaries and its VIE for which the Company’s subsidiary China Tongda is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and VIE are eliminated in consolidation.
 
The Company follows ASC 810 which requires a VIE be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE or is entitled to a majority of the VIE’s residual returns. In determining China Jinxin is the VIE of China Tongda, the Company considered the following indicators, among others:
 
China Tongda has the right to control and administer the financial affairs and operations of China Jinxin and to manage and control all assets of China Jinxin. The equity holders of China Jinxin as a group have no right to make any decision about China Jinxin’s activities without the consent of China Tongda. China Tongda will be paid quarterly, management consulting and technical support fees equal to all pre-tax profits, if any, of that quarter. If there are no earnings before taxes and other cash expenses, then no fee shall be paid. If China Jinxin sustains losses, they will be carried to the next period and deducted from the next service fee. China Jinxin has the right to require China Tongda to pay China Jinxin the amount of any loss incurred by China Jinxin.
 
The shareholders of China Jinxin pledged their equity interests in China Jinxin to China Tongda to guarantee China Jinxin’s performance of its obligations under the Equity Pledge Agreement. If either China Jinxin or its equity owners is in breach of the Equity Pledge or Exclusive Purchase Option Agreements, then China Tongda is entitled to require the equity owners of China Jinxin to transfer their equity interests in China Jinxin to it.
 
The shareholders of China Jinxin irrevocably granted China Tongda or its designated person an exclusive option to acquire, at any time, all of the assets or outstanding shares of China Jinxin, to the extent permitted by PRC law. The purchase price for the shareholders’ equity interests in China Jinxin shall be the lower of (i) the actual registered capital of China Jinxin or (ii) RMB 500,000 ($78,000), unless an appraisal is required by the laws of China.
 
Each shareholder of China Jinxin executed an irrevocable power of attorney to appoint China Tongda as its attorney-in-fact to exercise all of its rights as equity owner of China Jinxin, including 1) attend the shareholders’ meetings of China Jinxin and/or sign the relevant resolutions; 2) exercise all the shareholder's rights and shareholder's voting rights that the shareholder is entitled to under the laws of the PRC and the Articles of Association of China Jinxin, including but not limited to the sale or transfer or pledge or disposition of the shares in part or in whole; 3) designate and appoint the legal representative, Chairman of the Board of Directors (“BOD”), Directors, Supervisors, the Chief Executive Officer, Financial Officer and other senior management members of China Jinxin; and 4) execute the relevant share purchases and other terms stipulated in the Exclusive Purchase Option and Share Pledge Agreements.
 
However, the VIE is monitored by the Company to determine if any events have occurred that could cause its primary beneficiary status to change. These events include:
 
a.
The legal entity's governing documents or contractual arrangements are changed in a manner that changes the characteristics or adequacy of the legal entity's equity investment at risk.
 
b.
The equity investment or some part thereof is returned to the equity investors, and other interests become exposed to expected losses of the legal entity.
 
c.
The legal entity undertakes additional activities or acquires additional assets, beyond those anticipated at the later of the inception of the entity or the latest reconsideration event, that increase the entity's expected losses.
 
d.
The legal entity receives an additional equity investment that is at risk, or the legal entity curtails or modifies its activities in a way that decreases its expected losses.
 
 
F-8
 
 
There has been no change in the VIE structure during the year and none of the events listed in a-d above have occurred.
 
Going Concern

The Company incurred a net loss of $1.90 million for the year ended December 31, 2013. The Company also had a working capital deficit of $10.39 million as of December 31, 2013. In addition, the Company has refused to sell its iron ore concentrate to its sole customer because of the low price offered. These conditions raise a substantial doubt about the Company's ability to continue as a going concern. The Company is upgrading its equipment. Once the upgrading project is completed, the Company will be able to resume production. Also, one shareholder of the Company indicated she will continue to fund the Company, although there is no written agreement in place and the Company currently owes $9.47 million to this shareholder.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Use of Estimates
 
In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.
 
Cash and Equivalents
 
For financial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
 
Accounts Receivable
 
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had no accounts receivable or bad debt allowances at December 31, 2013 and 2012.

Inventory
 
Inventory consists of iron ore, iron ore concentrate and supplies. Inventory is valued at the lower of average cost or market, cost being determined on a moving weighted average basis method; including labor and all production overheads. 
 
Property and Equipment
 
Property and equipment are stated at cost, less accumulated depreciation. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using shorter of useful live of the property or the unit of depletion method. For shorter-lived assets the straight-line method over estimated lives ranging from 3 to 20 years is used as follows:
 
 
F-9
 
 
Office Equipment
3-5 years
Machinery
10 years
Vehicles
5 years
Building
20 years

Impairment of Long-Lived Assets
 
Long-lived assets, which include property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
 
Recoverability of long-lived assets to be held and used is measured by comparing of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by it. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds its fair value (“FV”). FV is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Based on its review, the Company believes that, as of December 31, 2013 and 2012, there were no impairments of its long-lived assets.  
 
Income Taxes
 
The Company utilizes FASB ASC Topic 740, “Income Taxes”, which requires recognition of deferred tax assets and liabilities for expected future tax consequences of events included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
 
When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about their merits or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits are classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. At December 31, 2013 and 2012, the Company did not take any uncertain positions that would necessitate recording a tax related liability. 
 
Revenue Recognition
 
The Company’s revenue recognition policies are in compliance with FASB ASC Topic 605, “Revenue Recognition”.   Sales are recognized when a formal arrangement exists, which is generally represented by a contract between the Company and the buyer; the price is fixed or determinable; title has passed to the buyer, which generally is at the time of delivery; no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are recorded as unearned revenue. 
 
 
F-10
 
 
Sales are the invoiced value of iron ore concentrate, net of value-added tax (“VAT”). All of the Company’s iron ore concentrate sold in the PRC is subject to a value-added tax of 17% of the gross sales price. This VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing the finished product. The Company records VAT payable and VAT receivable net of payments in the financial statements. The VAT tax return is filed offsetting the payables against the receivables. Sales and purchases are recorded net of VAT collected and paid as the Company acts as an agent for the government.
 
Cost of Goods Sold
 
Cost of goods sold (“COGS”) consists primarily of fuel and power, direct material and labor, depreciation of mining plant and equipment, attributable to the production of iron ore concentrate. Write-down of inventory to lower of cost or market is also recorded in COGS.
 
  Concentration of Credit Risk
 
The operations of the Company are in the PRC.  Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic, and legal environments in the PRC, and by the general state of the PRC economy.
 
The Company has cash on hand and demand deposits in accounts maintained with state-owned banks within the PRC. Cash in state-owned banks is not covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in these bank accounts.
 
Statement of Cash Flows
 
In accordance with FASB ASC Topic 230, “Statement of Cash Flows”, cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

Fair Value of Financial Instruments
 
Certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and accounts payable, carrying amounts approximate their fair values due to their short maturities.  FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the FV of financial instruments held by the Company. The carrying amounts reported in the balance sheets for current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and the current market rate of interest.
 
Fair Value Measurements and Disclosures
 
ASC Topic 820, “Fair Value Measurements and Disclosures,” defines FV, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for FV measures. The three levels are defined as follow:

 
●
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
●
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
 
●
Level 3 inputs to the valuation methodology are unobservable and significant to the FV measurement.
 
As of December 31, 2013 and 2012, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at FV.
 
 
F-11
 
 
Foreign Currency Translation and Comprehensive Income (Loss)
 
The functional currency of China Jinxin is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.
 
Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.  
 
The Company uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income (loss) is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive (loss for the years ended December 31, 2013 and 2012 consisted of net loss and foreign currency translation adjustments.
 
Earnings (loss) per Share (EPS)
 
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later). The Company did not have any outstanding securities as of December 31, 2013.
 
Segment Reporting
 
FASB ASC Topic 280, “Segment Reporting”, requires use of the “management approach” model for segment reporting.  The management approach   model is based on the way a company’s management organizes segments within the Company for making operating decisions and assessing performance.  Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.
 
FASB ASC Topic 280 has no effect on the Company’s financial statements as substantially all of its operations are conducted in one industry segment – iron ore mining.
 
New Accounting Pronouncements

In February 2013, the FASB issued ASU 2013-2, Comprehensive Income (ASC Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, the new ASU requires entities to disclose in a single location (either on the face of the financial statement that reports net income or in the notes) the effects of reclassifications out of accumulated other comprehensive income (AOCI). For items reclassified out of AOCI and into net income in their entirety, entities must disclose the effect of the reclassification on each affected net income item. For AOCI reclassification items that are not reclassified in their entirety into net income, entities must provide a cross-reference to other required U.S. GAAP disclosures. There is no change in the requirement to present the components of net income and other comprehensive income in either a single continuous statement or two separate consecutive statements. The ASU does not change the items currently reported in other comprehensive income. 
 
 
F-12
 
 
For public entities, the new disclosure requirements are effective for annual reporting periods beginning after December 15, 2012, and interim periods within those years. The ASU applies prospectively, and early adoption is permitted. The adoption of this ASU did not have a material impact to the Company’s consolidated financial statements.
 
As of December 31, 2013, there are no recently issued accounting standards not yet adopted that would have a material effect on the Company’s interim consolidated financial statements.
 
3. INVENTORY
 
Inventory consisted of the following at December 31, 2013 and December 31, 2012:
 
   
2013
   
2012
 
Material
 
$
16,950
   
$
16,099
 
Finished goods
   
675,909
     
655,629
 
Total
 
$
692,859
   
$
671,728
 
 
4. MINING RIGHTS

The Company is currently negotiating with the Department of Land and Resources of Hebei Province and the local Zhuolu County government to obtain the rights to mine in the location where it currently mines. Pending the final contract, the Company accrued the cost of mining rights based on the quantity of ore extracted (see Note 10). The Company used $0.38 (RMB 2.4 per ton) based on a royalty rate prescribed by the local authority based on purity of ore in the subject mines. If the rate per ton of ore changes when the contract is finalized, the Company will account for the change prospectively as a change in accounting estimate. The Company did not produce in 2013 and 2012, accordingly did not accrued the cost of mining rights for the years ended December 31, 2013 and 2012.
 
5. PROPERTY AND EQUIPMENT, NET
 
Property and equipment consisted of the following at December 31, 2013 and December 31, 2012:
 
   
2013
   
2012
 
Building
 
$
7,153,152
   
$
6,938,518
 
Production equipment
   
4,215,104
     
4,074,421
 
Transportation equipment
   
1,265,110
     
1,227,149
 
Office equipment
   
108,520
     
98,406
 
Total
   
12,741,886
     
12,338,494
 
Less: Accumulated depreciation
   
(4,670,040
)
   
(3,705,890
)
Net
 
$
8,071,846
   
$
8,632,604
 
 
Depreciation for the years ended December 31, 2013 and 2012 was $833,480 and $963,400, respectively.
 
6. ADVANCE FROM RELATED PARTY
 
At December 31, 2013 and 2012, the Company owed a shareholder $9,466,133 and $1,465,541, respectively, for the purchase of equipment used in construction in progress and for working capital.  The $9,466,133 will not bear interest prior to the commencement of the Company's production pursuant to an amended loan agreement entered on January 16, 2013. Commencing on the production date, interest will begin to accrue at the bank's annual interest rate on certificates of deposit at that time on the amount outstanding from time to time and all amounts inclusive of accrued interest is to be repaid within three years of our commencement of production at the Zhuolu Mine. The Company had not commenced production as of December 31, 2013.
 
 
F-13
 
 
7. INTANGIBLE ASSETS
 
Intangible assets consisted solely of land use rights. All land in the PRC is government-owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land. The Company acquired land use rights during 2006 for $0.75 million (RMB 5 million). The Company has the right to use the land for 20 years and is amortizing such rights on a straight-line basis for 20 years.
 
Intangible assets consisted of the following at December 31, 2013 and December 31, 2012:
 
   
2013
   
2012
 
Land use rights
 
$
815,236
   
$
790,774
 
Less: Accumulated amortization
   
(278,539
)
   
(230,642
)
Net
 
$
536,697
   
$
560,132
 
 
Amortization of intangible assets for the years ended December 31, 2013 and 2012 was $39,992 and $39,370, respectively. Annual amortization for the next five years from January 1, 2014, is expected to be: $39,990; $39,990; $39,990; $39,990 and $39,990.
 
8. CONSTRUCTION IN PROGRESS

Construction in progress is for purchase of equipment and installation for future iron ore refining. The Company spent $6,187,412 and $892,405 for construction during the years ended December 31, 2013 and 2012, respectively, and had total construction in progress of $7,432,928 and $1,092,722 at December 31, 2013 and 2012, respectively. The project is estimated to be completed by July 2014.
 
9. DEFERRED TAX ASSETS
 
Deferred tax asset is the difference between the tax and book for accrued mine restoration cost.
 
10. ACCRUED LIABILITIES AND OTHER PAYABLES

CURRENT

Accrued liabilities and other payables consisted of the following at December 31, 2013 and December 31, 2012:

   
2013
   
2012
 
Accrued payroll
 
$
21,706
   
$
12,432
 
Accrued service and consulting fee
   
69,273
     
56,384
 
Accrued mining rights (see note 4)
   
72,558
     
70,381
 
Other payables
   
445,084
     
387,186
 
Total
 
$
608,621
   
$
526,383
 
 
As of December 31, 2013, other payables mainly consisted of a short-term borrowing of $128,700 from a third party for a capital contribution to China Tongda by Real Fortune HK, which bears no interest and is payable on demand; an advance from third parties of $209,942 for the new production line construction, this advance bears no interest and will be repaid when the project is completed, and payable for construction of $106,442. As of December 31, 2012, other payables consisted of the short-term borrowing of $128,700 from a third party for a capital contribution to China Tongda by Real Fortune HK, which bears no interest and is payable on demand, an advance from third parties of $258,486 for the new production line construction, this advance bears no interest and will be repaid when the project is completed.
 
 
F-14
 
 
NONCURRENT
 
Under local environmental regulations, the Company is obligated at the end of the mine’s useful life to restore and rehabilitate the land that is used in the mining operation. The Company estimates it would cost $560,000 (RMB 3.5 million) to restore the entire mine after extracting all the economical ore for such efforts. 
 
The Company accrued certain mine restoration expenses based on the actual production volume during the period it mines. As of December 31, 2013 and December 31, 2012, the long term accrued mine restoration cost was $13,426 and $13,023, respectively. There was no production during the years ended December 31, 2013 and 2012.
 
11. PAYABLE TO CONTRACTORS
 
In 2007 and 2008, the Company entered into contracts with an equipment supplier and a construction company for equipment and construction of a water pipeline for $5.75 million (RMB 38 million). The Company recorded the payable in 2009. In 2010, the Company amended the payment terms and paid $2.2 million (RMB 14.5 million) and agreed to pay the remaining balance as follows: $2.08 million (RMB 13.5 million) on December 31, 2011, and $1.47 million (RMB 10 million) on December 31, 2012. During 2011, the Company paid $2.86 million (RMB 18.0 million). During 2012, the Company did not make any payment on this payable. On March 20, 2013, the Company amended the payment terms and agreed to pay the remaining balances of $902,098 (RMB 5,500,000) on December 31, 2014. Based on the amended agreement, if the Company pays in full by December 31, 2014, no interest will be charged. If the Company defaults, the Company agreed to pay interest starting on January 1, 2015 based on the current bank interest rate for the remaining balance at that time. As of December 31, 2013 and 2012, the Company has $902,098 and $875,030 of payable to contractors, respectively.  The Company expects to make the payment in full by the end of 2014.
 
The Company recorded the restructuring of this payable in accordance with ASC 470-60-35-5, as it was a modification of its terms, it did not involve a transfer of assets or grant of an equity interest. Accordingly, the Company accounted for the effects of the restructuring prospectively from the time of restructuring, and did not change the carrying amount of the payable at the time of the restructuring as the carrying amount did not exceed the total future cash payments specified by the new terms.
 
12. INCOME TAXES
 
The Company’s operating subsidiary is governed by the Income Tax Laws of the PRC and various local tax laws. Effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises).
 
The following table reconciles the statutory rates to the Company’s effective tax rate for the years ended December 31, 2013 and 2012:
 
   
2013
   
2012
US statutory rates (benefit)
   
(34.0
)%
   
(34.0
)%
Tax rate difference
   
9.0
%
   
9.0
%
Valuation allowance on NOL
   
25.0
%
   
24.5
%
Tax per financial statements
   
-
%
   
0.5
%
 
Consolidated foreign pretax loss approximated $1.90 million and $1.65 million for the years ended December 31, 2013 and 2012, respectively. Pretax earnings of a foreign subsidiary are subject to US taxation when effectively repatriated. The Company provides income taxes on the undistributed earnings of non-US subsidiaries except to the extent those earnings are invested indefinitely outside the US.
  
13. MAJOR CUSTOMER AND VENDORS
 
There were no sales in the years ended December 31, 2013 and 2012.
 
 
F-15
 
 
The Company made a 10 year contract with Handan Steel Group Company (“HSG”) a state-owned enterprise, and agreed to sell all of its output to HSG. The selling price was to be based on market prices from time to time at a level that would ensure the Company a proper profit margin. HSG agreed to purchase all the Company’s products regardless of changes in the market. The Company is economically dependent on HSG. However, due to the high demand of iron ore concentrate in China, the Company believes there are other buyers available if HSG is unable or unwilling to execute the contract. The Company had no sales in the years ended December 31, 2013 or 2012 due to the upgrading of its production lines for improving the iron ore refinement and iron ore concentration rate and its continued refusal to deliver concentrate produced during 2011 due to a pricing dispute with HSG. The upgraded production line project is expected to be finished by July 2014.

There were no vendors which accounted for over 10% of the Company’s total purchases for the years ended December 31, 2013 and 2012 as we did not have any purchases.
 
14. STATUTORY RESERVES
 
Pursuant to the corporate law of the PRC effective January 1, 2006, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
 
15. OPERATING RISKS
 
The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
 
The Company’s sales, purchases and expenses are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to effect the remittance.

All mineral resources in China are owned by the state. Thus, the Company’s ability to obtain iron ore is dependent upon the ability to obtain mineral rights from the relevant state authorities or purchase ore from another party that has mining rights from the state. It is generally not feasible to transport iron ore any significant distance before processing. The Company has yet to obtain long term rights to any iron mine and there is no assurance the Company will be able to do so. Although the Company has extracted iron ore from the Zhuolu Mine on which the Company’s production facilities are located, the Company does not have the right to do so and can be subjected to various fines and penalties. The Company is not able to determine the amount of fines and penalties at current stage; however, the Company believes the fine and penalty is negotiable with the authority. If the Company is not able to obtain mining rights to the Zhuolu Mine in the future, the Company will have to cease mining operations at the Zhuolu Mine and the Company will seek to acquire iron ore from third parties. The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results.
 
16. SUBSEQUENT EVENT

On January 17, 2014, our Board of Directors approved the acquisition of Haixing Huaxin Mining Industry Co., Ltd. ("China Huaxin"). On January 17,  2014, we entered into a series of substantially identical agreements ("Share Purchase Agreements") with the shareholders of Haixing Huaxin Mining Industry Co., Ltd. ("China Huaxin") pursuant to which we acquired the right to acquire 100% of the outstanding shares of China Huaxin. The consideration to be paid to the shareholders of China Huaxin (the "Shareholders") for their interests consisted, in the aggregate, of 10 million RMB and 5.1 million shares of our common stock. China Tongda, our wholly-owned Chinese subsidiary, filed a notice of transfer with respect to the change of ownership of China Huaxin with the local company registration authority which was approved 0n January 23, 2014. To consummate the acquisition of China Huaxin, in a private placement completed on January 20, 2014, we issued to 3 Chinese investors our Convertible Promissory Note in the face amount of 10 million RMB. The Promissory Note bears interest at the rate of 4% per annum and the principal amount and interest accrued is convertible into shares of our common stock at an effective conversion price of 11.11 RMB or US$ 1.79 per share.
 
 
F-16
 
   
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2014 AND 2013
(UNAUDITED)
 
   
Consolidated Balance Sheets as of March 31, 2014 (Unaudited) and December 31, 2013
F-20
   
Consolidated Statements of Operations and Other Comprehensive Loss for the Three Months Ended March 31, 2014 and 2013 (Unaudited)                                                              
F-22
   
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013 (Unaudited)
F-23
   
Notes to Consolidated Financial Statements
F-24
 
 
F-17
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2014 (UNAUDITED) AND DECEMBER 31, 2013
 
   
2014
   
2013
 
ASSETS
           
             
CURRENT ASSETS
           
   Cash & equivalents
 
$
526,369
   
$
27,310
 
   Inventory
   
4,251,651
     
692,859
 
   Advance to suppliers
   
60,870
     
-
 
   Income tax receivable
   
2,235,025
     
-
 
   Other receivables
   
70,066
     
4,891
 
   Advance to related parties
   
2,320,213
     
-
 
                 
      Total current assets
   
9,464,194
     
725,060
 
                 
NONCURRENT ASSETS
               
   Property and equipment, net
   
36,815,977
     
8,071,846
 
   Intangible assets, net
   
5,542,638
     
536,697
 
   Construction in progress
   
8,569,629
     
7,432,928
 
   Advance to suppliers for construction and equipment
   
2,088,328
     
1,051,458
 
   Deferred tax assets
   
62,493
     
3,356
 
   Goodwill
   
1,101,399
     
-
 
                 
      Total noncurrent assets
   
54,180,464
     
17,096,285
 
                 
TOTAL ASSETS
 
$
63,644,658
   
$
17,821,345
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
   Accounts payable
 
$
2,748,632
   
$
248
 
   Accrued liabilities and other payables
   
20,384,960
     
608,621
 
   Income tax payable
   
134,377
     
135,594
 
   Payable to contractors
   
894,004
     
902,098
 
   Advance from related parties
   
21,228,460
     
9,466,133
 
                 
       Total current liabilities
   
45,390,433
     
11,112,694
 
                 
NONCURRENT LIABILITIES
               
   Accrued expense
   
13,305
     
13,426
 
   Advance from related parties
   
10,688,789
     
-
 
                 
       Total noncurrent liabilities
   
10,702,094
     
13,426
 
                 
       Total liabilities
   
56,092,527
     
11,126,120
 
                 
STOCKHOLDERS' EQUITY
               
Preferred stock: $0.001 par value; 10,000,000 shares authorized, no shares issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value; authorized shares 100,000,000; issued and outstanding 14,000,100 and  8,000,100 shares at March 31, 2014 and December 31, 2013, respectively
   
14,000
     
8,000
 
      Additional paid in capital
   
7,052,915
     
5,296,312
 
      Statutory reserves
   
557,253
     
557,253
 
      Accumulated other comprehensive income
   
724,154
     
794,673
 
      Retained earnings
   
(796,191
)
   
38,987
 
                 
         Total stockholders' equity
   
7,552,131
     
6,695,225
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
63,644,658
   
$
17,821,345
 
 
 
F-18
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(UNAUDITED)
 
   
2014
   
2013
 
             
             
Operating expenses
           
   General and administrative
 
$
935,818
   
$
381,741
 
                 
Loss from operations
   
(935,818
)
   
(381,741
)
                 
Non-operating income (expenses)
               
   Interest income
   
358
     
19
 
   Financial expense
   
(213
)
   
(222
)
   Other expense
   
(1,632
)
   
-
 
                 
      Total non-operating expenses, net
   
(1,487
)
   
(203
)
                 
Loss before income tax
   
(937,305
)
   
(381,944
)
Income tax benefit
   
(102,127
)
   
-
 
                 
Net loss
   
(835,178
)
   
(381,944
)
                 
Other comprehensive income
               
      Foreign currency translation gain
   
70,519
     
21,924
 
                 
Net comprehensive loss
 
$
(764,659
)
 
$
(360,020
)
                 
Basic weighted average shares outstanding
   
12,313,433
     
8,000,100
 
Diluted weighted average shares outstanding
   
12,903,433
     
8,000,100
 
                 
Basic net loss per share
 
$
(0.07
)
 
$
(0.05
)
Diluted net loss per share
 
$
(0.07
)
 
$
(0.05
)
 
 
F-19
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2014 AND 2013
(UNAUDITED)
 
   
2014
   
2013
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
            Net loss
 
$
(835,178
)
 
$
(381,944
)
            Adjustments to reconcile net loss to net cash
               
            provided by (used in) operating activities:
               
            Depreciation and amortization
   
630,218
     
262,926
 
            Change in deferred tax
   
(102,127
)
   
-
 
                  (Increase) decrease in assets and liabilities:
               
                       Inventory
   
(213,017
)
   
(161
)
                       Other receivable
   
(110,390
)
   
-
 
                       Accounts payable
   
64,921
     
-
 
                       Accrued liabilities and other payables
   
(303,666
)
   
213,792
 
                       Tax payable
   
(49,311
)
   
-
 
                 
            Net cash provided by (used in) operating activities
   
(918,550
)
   
94,613
 
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                        Construction in progress
   
(1,210,094
)
   
(798,352
)
                        Advance to suppliers for construction and equipment
   
48,364
     
-
 
                        Acquisition of property, plant & equipment
   
(164,668
)
   
-
 
                        Acquisition of China Huaxin, net of cash acquired
   
(1,504,507
)
   
-
 
                 
            Net cash used in investing activities
   
(2,830,905
)
   
(798,352
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
                        Proceeds from convertible debts
   
1,638,002
     
-
 
                        Advance from related parties
   
2,612,895
     
703,990
 
                 
            Net cash provided by financing activities
   
4,250,897
     
703,990
 
                 
EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS
   
(2,383
)
   
76
 
                 
NET INCREASE IN CASH & EQUIVALENTS
   
499,059
     
327
 
                 
CASH & EQUIVALENTS, BEGINNING OF PERIOD
   
27,310
     
28,302
 
                 
CASH & EQUIVALENTS, END OF PERIOD
 
$
526,369
   
$
28,629
 
                 
Supplemental Cash flow data:
               
             Income tax paid
 
$
-
   
$
-
 
             Interest paid
 
$
-
   
$
-
 
                 
Supplemental Disclosure of Non-Cash Financing Activities:
               
           Conversion of convertible debts into common stock
 
$
1,638,002
   
$
-
 
 
 
F-20
 
 
TARGET ACQUISITIONS I, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2014 (UNAUDITED) AND DECEMBER 31, 2013
 
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 
Target Acquisitions I, Inc. (“the Company” or “Target” or “Group”) was incorporated in Delaware on June 27, 2008.
 
The Company operates in China through Zhuolu Jinxin Mining Co., Ltd. (“China Jinxin”), the Company’s variable interest entity which the Company controls through a series of agreements and, as of January 23, 2014, through its wholly-owned subsidiary, Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”).  The Group’s structure as of March 31, 2014 is as follows:
 
 
China Jinxin is an early stage mining company which processes iron ore at its production facility in Hebei Province. China Jinxin currently does not own any mines or hold any mining rights. Through contractual arrangements among China Tongda and China Jinxin, and its shareholders, the Company controls China Jinxin’s operations and financial affairs. As a result of these agreements, China Tongda is considered the primary beneficiary of China Jinxin (see Note 2) and accordingly, China Jinxin’s results of operations and financial condition are consolidated in the Group financial statements. All issued and outstanding shares of China Jinxin are held by 15 Chinese citizens.
 
 
F-21
 
 
On January 17, 2014, the Company’s Board of Directors approved the acquisition of China Huaxin. On January 17, 2014, the Company entered into a series of substantially identical agreements with 5 shareholders of Haixing Huaxin Mining Industry Co., Ltd. (“China Huaxin”) pursuant to which the Company acquired the right to acquire 100% of the outstanding shares of China Huaxin.  The consideration to be paid to the shareholders of China Huaxin for their interests consisted, in the aggregate, of cash of 10 million RMB, (US$1.64 million) and 5.1 million shares of the Company’s common stock, valued at $0.014 per share.
 
Zhangjiakou Tongda Mining Technologies Services Co., Ltd (“China Tongda”), the Company’s wholly-owned Chinese subsidiary, filed a notice of transfer with respect to the change of ownership of China Huaxin with the local company registration authority which was approved on January 23, 2014.

China Huaxin was established in August 2010 and is located in Haixing Qingxian Industrial Park, Cangzhou, Hebei Province PRC.  China Huaxin is engaged in producing and selling Direct Reduced Iron (DRI).  To date, China Huaxin has conducted no business activities other than construction of its DRI production facility.  Construction of the DRI Facility has been completed and China Huaxin is currently in trial production.

The consolidated interim financial information as of March 31, 2014 and for the three month periods ended March 31, 2014 and 2013 was prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) was not included. The interim consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, previously filed with the SEC. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2014, results of operations and cash flows for the three month periods ended March 31, 2014 and 2013, as applicable, were made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are prepared in conformity with US GAAP. Target and Real Fortune BVI’s functional currency is the US Dollar (‘‘USD’’ or “$”), Real Fortune HK’s functional currency is Hong Kong Dollar (‘‘HKD’’), and China Tongda, China Jinxin and China Huaxin’s functional currency is Chinese Renminbi (‘‘RMB’’). The accompanying financial statements are translated from functional currencies and presented in USD.
 
Principles of Consolidation
 
The consolidated financial statements include the financial statements of the Company, its subsidiaries and its VIE (China Jinxin) for which the Company’s subsidiary China Tongda is the primary beneficiary; and China Tongda 100% owned subsidiary China Huaxin. All transactions and balances among the Company, its subsidiaries and VIE are eliminated in consolidation.
 
The Company follows ASC 810 which requires a VIE be consolidated by a company if that company is subject to a majority of the risk of loss from the VIE or is entitled to a majority of the VIE’s residual returns.
 
 
F-22
 
 
Going Concern

The Company incurred a net loss of $0.84 million for the three months ended March 31, 2014. The Company also had a working capital deficit of $35.93 million as of March 31, 2014. In addition, the Company has refused to sell its iron ore concentrate to its sole customer because of the low price offered. These conditions raise a substantial doubt about the Company's ability to continue as a going concern. The Company is upgrading its equipment. Once the upgrading project is completed, the Company will be able to resume production. Also, one shareholder of the Company indicated she will continue to fund China Jinxin, although there is no written agreement in place and Jinxin currently owes $10.58 million to this shareholder.  In addition, China Huaxin currently owes $21.33 million to two of the Company’s shareholders (one is the same fund provider of China Jinxin, and the other one is the Company’s CEO) for constructing its Direct Reduced Iron (“DRI”) facility. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Use of Estimates
 
In preparing financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Significant estimates, required by management, include the recoverability of long-lived assets, allowance for doubtful accounts, and the reserve for obsolete and slow-moving inventories. Actual results could differ from those estimates.

Business Combination

For a business combination, the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree are recognized at the acquisition date, measured at their fair values as of that date. In a business combination achieved in stages, the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, are recognized at the full amounts of their fair values. In a bargain purchase in which the total acquisition-date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred plus any noncontrolling interest in the acquiree that excess in earnings is recognized as a gain attributable to the acquirer.

Deferred tax liability and asset are recognized for the deferred tax consequences of differences between the tax bases and the recognized values of assets acquired and liabilities assumed in a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 740-10. 

Goodwill

Goodwill is the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with ASC Topic 350, “Intangibles-Goodwill and Other,” goodwill is not amortized but is tested for impairment, annually or when circumstances indicate a possible impairment may exist. Impairment testing is performed at a reporting unit level. An impairment loss generally would be recognized when the carrying amount of the reporting unit exceeds its fair value, with the fair value of the reporting unit determined using discounted cash flow (“DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF analysis to forecast operating cash flows, including the discount rate, the internal rate of return and projections of realizations and costs to produce. Management considers historical experience and all available information at the time the fair values of its reporting units are estimated.

On January 23, 2014, the Company completed the acquisition of China Huaxin.  Under the acquisition method of accounting, the total purchase is allocated to tangible assets and intangible assets acquired and liabilities assumed based on their fair values with the excess recorded to goodwill. The Company recognized $1.11 million goodwill from the acquisition.
 
 
F-23
 
 
Cash and Equivalents
 
For financial statement purposes, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
 
Accounts Receivable
 
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Based on historical collection activity, the Company had no accounts receivable or bad debt allowances at March 31, 2014 and December 31, 2013.
 
Inventory
 
Inventory consists of iron ore, iron ore concentrate and supplies. Inventory is valued at the lower of average cost or market, cost being determined on a moving weighted average basis method; including labor and all production overheads. 
 
Property and Equipment
 
Property and equipment are stated at cost, less accumulated depreciation. Major repairs and betterments that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using shorter of useful live of the property or the unit of depletion method. For shorter-lived assets the straight-line method over estimated lives ranging from 3 to 20 years is used as follows:

Office Equipment
3-5 years
Machinery
10 years
Vehicles
5 years
Building
20 years

Statement of Cash Flows
 
In accordance with FASB ASC Topic 230, “Statement of Cash Flows”, cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

Foreign Currency Translation and Comprehensive Income (Loss)
 
The functional currency of China Jinxin and China Huaxin is RMB. For financial reporting purposes, RMB is translated into USD as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet dates. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.
 
Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in income. There was no significant fluctuation in the exchange rate for the conversion of RMB to USD after the balance sheet date.
 
The Company uses FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income (loss) is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive (loss for the three months ended March 31, 2014 and 2013 consisted of net loss and foreign currency translation adjustments.
 
 
F-24
 
 
Earnings (loss) per Share (EPS)
 
Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
  
The following table presents a reconciliation of basic and diluted loss per share for the three months ended March 31, 2014 and 2013, the diluted loss per share is same as the basic loss per share due to anti-dilutive feature.

   
Three Months Ended March 31,
 
   
2014
   
2013
 
                 
Net loss
 
$
(835,178)
   
$
(381,944)
 
                 
Weighted average shares outstanding – basic
   
12,313,433
     
8,000,100
 
Effect of dilutive securities:
               
Convertible debts
   
590,000
     
-
 
                 
Weighted average shares outstanding – diluted
   
12,903,433
     
8,000,100
 
                 
Loss per share – basic
 
$
(0.07)
   
$
(0.05)
 
Loss per share – diluted
 
$
(0.07)
   
$
(0.05
) 
 
New Accounting Pronouncements

In January 2014, FASB issued, Accounting Standards Update 2014-01, Investments—Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects. The objective of this Update is to provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014.  The adoption of this ASU will not affect the Company’s financial statements.
 
In January 2014, FASB issued, Accounting Standards Update 2014-05, Service Concession Arrangements (Topic 853), The objective of this Update is to specify that an operating entity should not account for a service concession arrangement within the scope of this Update as a lease in accordance with Topic 840, Leases. Service concession arrangements may become more prevalent in the United States as public-sector entities seek alternative ways to provide public services on a more efficient and cost-effective basis. The amendments apply to an operating entity of a service concession arrangement entered into with a public-sector entity grantor when the arrangement meets certain conditions. The amendments in this Update should be applied on a modified retrospective basis to service concession arrangements that exist at the beginning of an entity’s fiscal year of adoption. The modified retrospective approach requires the cumulative effect of applying this Update to arrangements existing at the beginning of the period of adoption to be recognized as an adjustment to the opening retained earnings balance for the annual period of adoption. The amendments are effective for a public business entity for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of this ASU will not affect the Company’s financial statements.
 
 
F-25
 
   
3. INVENTORY
 
Inventory consisted of the following at March 31, 2014 and December 31, 2013:
 
   
2014
   
2013
 
Material
 
$
2,700,748
   
$
16,950
 
Finished goods
   
1,550,903
     
675,909
 
Total
 
$
4,251,651
   
$
692,859
 
 
4. MINING RIGHTS

The Company is currently negotiating with the Department of Land and Resources of Hebei Province and the local Zhuolu County government to obtain the rights to mine in Zhuolu County where its production facility is located. Pending the final contract, the Company accrued the cost of mining rights based on the quantity of ore extracted (see Note 12). The Company used $0.38 (RMB 2.4 per ton) based on a royalty rate prescribed by the local authority based on purity of ore in the subject mines. If the rate per ton of ore changes when the contract is finalized, the Company will account for the change prospectively as a change in accounting estimate. The Company did not extract any ore in the three months ended March 31, 2014 and 2013, and accordingly did not accrue the cost of mining rights for the three months ended March 31, 2014 and 2013.

5. OTHER RECEIVABLE

Other receivables mainly consisted of short-term advance to third party companies, bore no interest and were payable upon demand.
 
6. PROPERTY AND EQUIPMENT, NET
 
Property and equipment consisted of the following at March 31, 2014 and December 31, 2013:
 
   
2014
   
2013
 
Building
 
$
24,621,900
   
$
7,153,152
 
Production equipment
   
15,921,870
     
4,215,104
 
Transportation equipment
   
1,312,218
     
1,265,110
 
Office equipment
   
187,706
     
108,520
 
Total
   
42,043,694
     
12,741,886
 
Less: Accumulated depreciation
   
(5,227,717
)
   
(4,670,040
)
Net
 
$
36,815,977
   
$
8,071,846
 
 
Depreciation for the three months ended March 31, 2014 and 2013 was $602,417 and $253,031, respectively.

7. ADVANCE TO RELATED PARTY

At March 31, 2014, China Huaxin lent $2.32 million to a related party company who was owned by the brother of the Company’s more than 10% shareholders.  This advance bore no interest, payable upon demand.
 
 
F-26
 
 
8. ADVANCE FROM RELATED PARTIES
 
At March 31, 2014 and December 31, 2013, China Jinxin owed a shareholder $10,582,308 and $9,466,133, respectively, for the purchase of equipment used in construction in progress and for working capital.  The $10,582,308 will not bear interest prior to the commencement of the Company's production pursuant to an amended loan agreement entered on January 16, 2013. Commencing on the production date, interest will begin to accrue at the bank's annual interest rate on certificates of deposit at that time on the amount outstanding from time to time and all amounts inclusive of accrued interest is to be repaid within three years of commencement of production at the Zhuolu Mine. China Jinxin had not commenced production as of March 31, 2014.
  
In addition, at March 31, 2014, China Huaxin owed two shareholders $21.33 million for constructing DRI facility. One shareholder was the same lender of China Jinxin, and the other shareholder was the Company’s CEO. Of the $21.33 million, $10.69 million was long-term payable with an annual interest rate of 10%, due date on the anniversary of 2.5 years from the date of official production.  The remaining payable bore no interest, and was payable upon demand.
 
9. INTANGIBLE ASSETS
 
Intangible assets consisted solely of land use rights. All land in the PRC is government-owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land. China Jinxin acquired land use rights during 2006 for $0.75 million (RMB 5 million). China Huaxin acquired land use right for $2.96 million (RMB 18.24 million) in November 2012 with fair value of $5.04 million (RMB 31 million) at acquisition date. China Jinxin and China Huaxin has the right to use the land for 20 and 49 years, respectively, and is amortizing such rights on a straight-line basis for 20 and 49 years, respectively.
 
Intangible assets consisted of the following at March 31, 2014 and December 31, 2013:
 
   
2014
   
2013
 
Land use rights
 
$
5,846,347
   
$
815,236
 
Less: Accumulated amortization
   
(303,709
)
   
(278,539
)
Net
 
$
5,542,638
   
$
536,697
 
 
Amortization of intangible assets for the three months ended March 31, 2014 and 2013 was $27,801 and $9,896, respectively. Annual amortization for the next five years from April 1, 2014, is expected to be: $146,630; $146,630; $146,630; $146,630 and $146,630.
 
10. CONSTRUCTION IN PROGRESS

Construction in progress is for the purchase and installation of equipment for future iron ore refining for China Jinxin. The Company spent $1,210,100 and $798,300 for construction during the three months ended March 31, 2014 and 2013, respectively, and had total construction in progress of $8,569,629 and $7,432,928 at March 31, 2014 and December 31, 2013, respectively. The construction was estimated to be completed by July 2014.
 
11. DEFERRED TAX ASSET
 
Deferred tax asset of $3,326 represented the difference between the tax and book for accrued mine restoration cost, and $59,167 differences between the tax bases and book bases of property and equipment and intangible assets arising from the acquisition of China Huaxin, which was not allowed per tax purpose.
 
 
F-27
 
 
12. ACCRUED LIABILITIES AND OTHER PAYABLES

CURRENT

Accrued liabilities and other payables consisted of the following at March 31, 2014 and December 31, 2013:

   
2014
   
2013
 
Accrued payroll
 
$
11,347
   
$
21,706
 
Accrued service and consulting fee
   
68,651
     
69,273
 
Accrued mining rights (see note 4)
   
71,907
     
72,558
 
Accrued interest
   
1,859,279
     
-
 
Due to unrelated parties
   
14,628,586
     
-
 
Payable for purchase of equipment
   
2,154,518
     
-
 
Payable for construction
   
866,379
     
-
 
Payable for purchase of material
   
595,427
         
Other payables
   
128,866
     
445,084
 
Total
 
$
20,384,960
   
$
608,621
 
   
As of March 31, 2014, due to unrelated parties of $14,628,586 represented short-term advance from unrelated companies or individuals for the Company’s construction and working capital needs, these advances bore no interest, and payable upon demand; other payables mainly consisted of a short-term borrowing of $128,700 from a third party for a capital contribution to China Tongda by Real Fortune HK, which bears no interest and is payable on demand.

As of December 31, 2013, other payables mainly consisted of a short-term borrowing of $128,700 from a third party for a capital contribution to China Tongda by Real Fortune HK, which bears no interest and is payable on demand; an advance from third parties of $209,942 for the new production line construction, this advance bears no interest and will be repaid when the project is completed, and payable for construction of $106,442.

NONCURRENT
 
Under local environmental regulations, the Company is obligated at the end of the mine’s useful life to restore and rehabilitate the land that is used in the mining operation. The Company estimates it would cost $560,000 (RMB 3.5 million) to restore the entire mine after extracting all the economical ore for such efforts.  
 
The Company accrued certain mine restoration expenses based on the actual production volume during the period it extracted ore. As of March 31, 2014 and December 31, 2013, the long term accrued mine restoration cost was $13,305 and $13,426, respectively. There was no production during the three months ended March 31, 2014 and 2013.
 
13. PAYABLE TO CONTRACTORS
 
In 2007 and 2008, the Company entered into contracts with an equipment supplier and a construction company for equipment and construction of a water pipeline for $5.75 million (RMB 38 million). The Company recorded the payable in 2009. In 2010, the Company amended the payment terms and paid $2.2 million (RMB 14.5 million) and agreed to pay the remaining balance as follows: $2.08 million (RMB 13.5 million) on December 31, 2011, and $1.47 million (RMB 10 million) on December 31, 2012. During 2011, the Company paid $2.86 million (RMB 18.0 million). During 2012, the Company did not make any payment on this payable. On March 20, 2013, the Company amended the payment terms and agreed to pay the remaining balance of $902,098 (RMB 5,500,000) on December 31, 2014. Based on the amended agreement, if the Company pays in full by December 31, 2014, no interest will be charged. If the Company defaults, the Company agreed to pay interest starting on January 1, 2015 based on the current bank interest rate for the remaining balance at that time. As of March 31, 2014 and December 31, 2013, the Company has $894,004 and $902,098 of payable to contractors, respectively.  The Company expects to make the payment in full by the end of 2014.
 
 
F-28
 
 
The Company recorded the restructuring of this payable in accordance with ASC 470-60-35-5, as it was a modification of its terms, it did not involve a transfer of assets or grant of an equity interest. Accordingly, the Company accounted for the effects of the restructuring prospectively from the time of restructuring, and did not change the carrying amount of the payable at the time of the restructuring as the carrying amount did not exceed the total future cash payments specified by the new terms.

14. CONVERTIBLE NOTES 

To consummate the acquisition of China Huaxin, in a private placement completed on January 20, 2014, the Company issued to three Chinese investors 4% convertible promissory notes due June 30, 2014, in the aggregate face amount of 10 million RMB (US$1.64 million).  The Notes bore interest at the rate of 4% per annum and the face amount of the Notes is convertible into shares of the Company’s common stock at an effective conversion price of 11.11 RMB (US $1.79) per share, with accrued interest payable in cash.

On March 20, 2014, three investors fully converted their convertible promissory notes into 900,000 the Company’s common shares, and waived the repayment of accrued interest at the conversion.
   
15. INCOME TAXES

The Company’s operating subsidiary is governed by the Income Tax Laws of the PRC and various local tax laws. Effective January 1, 2008, China adopted a uniform tax rate of 25% for all enterprises (including foreign-invested enterprises).
 
The following table reconciles the statutory rates to the Company’s effective tax rate for the three months ended March 31, 2014 and 2013:
 
   
2014
   
2013
US statutory rates (benefit)
   
(34.0
)%
   
(34.0
)%
Tax rate difference
   
9.0
%
   
9.0
%
Valuation allowance on NOL
   
14.1
%
   
25.0
%
Tax per financial statements
   
(10.9
)%
   
-
%
 
The income tax for the three months ended March 31, 2014 and 2013, consisted of the following:

   
2014
   
2013
 
Income tax (benefit) expense - current
 
$
-
   
$
-
 
Income tax benefit - deferred
   
  (102,127
)
   
-
 
Total income tax benefit
 
$
(102,127
) 
 
$
-
 

16. MAJOR CUSTOMER AND VENDORS
 
There were no sales in the three months ended March 31, 2014 and 2013.
 
The Company made a 10-year contract with Handan Steel Group Company (“HSG”) a state-owned enterprise, and agreed to sell all of its output from its Zhuolu production facility to HSG. The selling price was to be based on market prices from time to time at a level that would ensure the Company a proper profit margin. HSG agreed to purchase all the Company’s products from its Zhuolu production facility regardless of changes in the market. The Company is economically dependent on HSG. However, due to the high demand of iron ore concentrate in China, the Company believes there are other buyers available if HSG is unable or unwilling to execute the contract. The Company had no sales in the three months ended March 31, 2014 or 2013 due to the upgrading of its production lines for improving the iron ore refinement and iron ore concentration rate and its continued refusal to deliver concentrate produced during 2011 due to a pricing dispute with HSG. The upgraded production line project is expected to be finished by July 2014.
 
 
F-29
 
 
Two vendors accounted for 93% of the Company’s total purchases for the three months ended March 31, 2014, and each vendor accounted for 82% and 11%, respectively. At March 31, 2014, the total payable to these vendors was $0.

No vendors accounted for over 10% of the Company’s total purchases for the three months ended March 31, 2013.
 
17. STATUTORY RESERVES
 
Pursuant to the corporate law of the PRC effective January 1, 2006, the Company is now only required to maintain one statutory reserve by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserve represents restricted retained earnings.
 
18. OPERATING RISKS

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
   
The Company’s sales, purchases and expenses are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The RMB is not freely convertible into foreign currencies under the current law. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions. Remittances in currencies other than RMB may require certain supporting documentation in order to effect the remittance.

All mineral resources in China are owned by the state. Thus, the Company’s ability to obtain iron ore is dependent upon the ability to obtain mineral rights from the relevant state authorities, purchase ore from another party that has mining rights from the state or import ore from outside the PRC. It is generally not feasible to transport iron ore any significant distance before processing. The Company has yet to obtain long term rights to any iron mine and there is no assurance the Company will be able to do so. Although the Company has extracted iron ore from the Zhuolu Mine on which the Company’s production facilities are located, the Company does not have the right to do so and can be subjected to various fines and penalties. The Company is not able to determine the amount of fines and penalties at current stage; however, the Company believes the fine and penalty is negotiable with the authority. If the Company is not able to obtain mining rights to the Zhuolu Mine in the future, the Company will have to cease mining operations at the Zhuolu Mine and the Company will seek to acquire iron ore from third parties. The failure to obtain iron ore reserves for processing at all or on reasonably acceptable terms would have a material adverse impact on our business and financial results. 
 
19. BUSINESS ACQUISITION AND UNAUDITED PRO FORMA INFORMATION

On January 24, 2014, The Company completed the acquisition and acquired all the outstanding capital stock representing 100% equity interest of China Huaxin for $1.64 million in cash and 5.1 million shares of the Company’s common shares valued at $0.014 per share which was paid in full at the closing pursuant to a stock purchase agreement entered into with 5 shareholders of China Huaxin on January 17, 2014. Prior to the acquisition, of the 5 selling shareholders, one major shareholder with 80% ownership of China Huaxin was also a shareholder of Target with 7.6% ownership of Target, and another shareholder with 10% of China Huaxin was the CEO of Target.

As a result of the acquisition, China Huaxin became a wholly owned subsidiary of the Company. The purchase of China Huaxin was accounted for as a business combination under ASC Topic 805, “Business Combinations”.  
 
 
F-30
 
 
The following table summarizes the fair values of the assets acquired and liabilities assumed as of January 24, 2014. The fair values of the assets acquired and liabilities assumed at acquisition closing date were used for the purpose of purchase price allocation. The acquisition closing date was January 24, 2014, since there were no material transactions from January 24, 2014 to January 31, 2014, and for convenience of reporting the acquisition for accounting purposes, February 1, 2014 has been designated as the acquisition date.  Under purchase method of accounting, the total purchase is allocated to tangible assets and intangible assets acquired and liabilities assumed based on their fair values with the excess charged recorded as goodwill.  Goodwill represents the synergies expected from combining China Huaxin’s business with the Company’s existing operations.   The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition, and is a preliminary purchase price allocation based on unaudited financial statements of China Huaxin

Cash
 
$
133,951
 
Inventory
   
3,378,770
 
Other receivable
   
232,269
 
Advance to suppliers
   
1,163,898
 
Advance to related parties
   
188,370
 
Tax receivable
   
2,202,788
 
Property and equipment, net
   
29,477,864
 
Intangible assets, net
   
5,077,297
 
Goodwill
   
1,109,896
 
Accounts payable
   
(2,704,488
)
Other payables and accrued liabilities
   
(20,291,146
)
Advance from related parties
   
(18,217,214
)
Deferred tax liabilities
   
(42,853
)
Purchase price
 
$
1,709,402
 
 
  The following unaudited pro forma consolidated results of operations of Target and China Huaxin for the three months ended March 31, 2014 and 2013, presents the operations of Target and China Huaxin as if the acquisition of China Huaxin occurred on January 1, 2014 and 2013, respectively. The pro forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of the periods presented, nor are they necessarily indicative of future consolidated results.

   
 
For the three months ended March 31, 2014
   
 
For the three months ended March 31, 2013
 
   
(Unaudited)
   
(Unaudited)
 
Net sales
 
$
-
   
$
-
 
                 
Net loss
 
$
(1,068,893
)
 
$
(842,105
)
                 
Basic weighted average shares outstanding
   
13,220,100
     
13,100,100
 
Diluted weighted average shares outstanding
   
13,810,100
     
13,100,100
 
                 
Basic net loss per share
 
$
(0.08
)
 
$
(0.06
)
Diluted net loss per share
 
$
(0.08
)
 
$
(0.06
)
 
 
F-31
 
 
(b) Pro Forma Financial Information
 
UHF INCORPORATED
AND TARGET ACQUISITIONS I, INC.
Pro forma Consolidated Balance Sheet
As of March 31, 2014
(unaudited)
 
      (1)       (2)                
   
UHF
   
TARGET
   
Pro forma
 
Pro forma
 
                   
Adjustments
 
Consolidated
 
ASSETS
 
(historical)
   
(historical)
               
                               
CURRENT ASSETS
                             
     Cash & equivalents
  $ 5,232     $ 526,369     $ (5,232 )
 (B)
  $ 526,369  
     Inventory
            4,251,651                 4,251,651  
     Advance to suppliers
    -       60,870                 60,870  
     Income tax receivable
            2,235,025                 2,235,025  
     Other receivables
            70,066                 70,066  
     Advance to related parties
    -       2,320,213                 2,320,213  
                                   
        Total current assets
    5,232       9,464,194                 9,464,194  
                                   
NONCURRENT ASSETS
                                 
     Property and equipment, net
    -       36,815,977                 36,815,977  
     Intangible assets, net
            5,542,638                 5,542,638  
 Construction in progress
    -       8,569,629                 8,569,629  
     Advance to suppliers for construction and equipment
    -       2,088,328                 2,088,328  
     Deferred tax assets
            62,493                 62,493  
 Goodwill
    -       1,101,399                 1,101,399  
                                   
        Total noncurrent assets
    -       54,180,464                 54,180,464  
                                   
TOTAL ASSETS
  $ 5,232     $ 63,644,658               $ 63,644,658  
                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
                   
                                   
CURRENT LIABILITIES
                                 
     Accounts payable
  $ -     $ 2,748,632               $ 2,748,632  
     Accrued liabilities and other payables
    50,428       20,384,960       (50,428 )
 (B)
    20,384,960  
     Payable to contractors
    -       894,004                 894,004  
     Advance from related parties
            21,228,460.00                 21,228,460  
     Income tax payable
    -       134,377                 134,377  
                                   
         Total current liabilities
    50,428       45,390,433                 45,390,433  
                                   
NONCURRENT LIABILITIES
                                 
     Accrued expense
    -       13,305                 13,305  
 Advance from related parties
    -       10,688,789                 10,688,789  
                                   
         Total noncurrent liabilities
    -       10,702,094                 10,702,094  
                                   
         Total liabilities
    50,428       56,092,527                 56,092,527  
                                   
CONTINGENCIES AND COMMITMENTS
                           
                                   
STOCKHOLDERS' EQUITY (DEFICIT)
                           
     Preferred stock
    -       -       0  
 (A)
    0  
     Common stock
    11,662       14,000       20,264  
 (A)(B)
    45,926  
     Additional paid in capital
    86,838       7,052,915       (118,764 )
 (A)(B)
    7,020,989  
     Statutory reserves
    -       557,253                 557,253  
     Accumulated other comprehensive income
    -       724,154                 724,154  
     Accumulated deficit
    (143,696 )     (796,191 )     143,696  
 (B)
    (796,191 )
                                   
         Total stockholders' equity (deficit)
    (45,196 )     7,552,131                 7,552,131  
                                   
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  $ 5,232     $ 63,644,658               $ 63,644,658  
 
(1)
Source:  unaudited financial statements of UHF INCORPORATED as of March 31, 2014, as filed in the Form 10-Q filed with the SEC on May 14, 2014.
(2)
Source:  unaudited financial statements of TARGET ACQUISITIONS I, INC. as of March 31, 2014, as filed in the Form 10-Q filed with the SEC on May 23, 2014.
 
(A)
Reflection of 9,111,464 shares out of 11,662,104 outstanding common stock of UHF being retired; and the issuance of 1 preferred share and 43,375,638 common shares to the shareholders of Target, resulting in 1 preferred share and 45,926,278 common shares outstanding of UHF after the reverse merger.
 
(B)
Elimination of UHF capital accounts and accumulated deficit as result of recapitalization, and reflection of payment of all liabilities of UHF prior to closing.
 
See accompanying notes to pro forma consolidated financial statements
 
 
70
 
 
UHF INCORPORATED
AND TARGET ACQUISITIONS I, INC.
Pro forma Consolidated Statement of Operations
For the Three Months Ended March 31, 2014
(unaudited)
 
   
(1)
   
(2)
             
   
UHF
   
TARGET
   
Pro forma
   
Pro forma
 
               
Adjustments
   
Consolidated
 
   
(historical)
   
(historical)
             
                         
Net sales
  $ --     $ -     $ --     $ --  
                                 
Cost of sales
    --       -       --       --  
                                 
Gross profit
    --       --       --       --  
                                 
Operating expenses
                               
     General and administrative
    9,275       935,818       --       945,093  
                                 
     Total operating expenses
    9,275       935,818       --       945,093  
                                 
Income (loss) from operations
    (9,275 )     (935,818 )     --       (945,093 )
                                 
Non-operating income (expenses)
                               
     Interest income
    1       358       --       359  
     Financial expense
            (213 )             (213 )
     Other expense
    --       (1,632 )     --       (1,632 )
                              -  
     Total non-operating expenses, net
    1       (1,487 )     --       (1,486 )
                                 
Income (loss) before income tax
    (9,274 )     (937,305 )     --       (946,579 )
                                 
Income tax benefit
    --       (102,127 )     --       (102,127 )
                                 
Net loss
  $ (9,274 )   $ (835,178 )   $ --     $ (844,452 )
                                 
Loss per common and diluted share
  $ (0.00 )   $ (0.07 )           $ (0.01 )
                                 
Weighted average common and diluted shares outstanding
    11,662,104       12,313,433       39,790,541       63,766,078  
 
(1)
Source: unaudited financial statements of UHF INCORPORATED as of March 31, 2014, as filed in the Form 10-Q filed with the SEC on May 14, 2014.
 
(2)
Source: unaudited financial statements of TARGET ACQUISITIONS I, INC. as of March 31, 2014, as filed in the Form 10-Q filed with the SEC on May 23, 2014.
 
See accompanying notes to pro forma consolidated financial statements
 
 
71
 
 
UHF INCORPORATED
AND TARGET ACQUISITIONS I, INC.
Pro forma Consolidated Statement of Operations
For the Year Ended December 31, 2013
(unaudited)
 
   
(1)
   
(2)
             
   
UHF
   
TARGET
   
Pro forma
   
Pro forma
 
               
Adjustments
   
Consolidated
 
   
(historical)
   
(historical)
             
                         
Net sales
  $ --     $ --     $ --     $ --  
                                 
Cost of sales
    --       --       --       --  
                                 
Gross profit
    --       --       --       --  
                                 
Operating expenses
                               
     General and administrative
    31,760       1,902,271       --       1,934,031  
                                 
     Total operating expenses
    31,760       1,902,271       --       1,934,031  
                                 
Income from operations
    (31,760 )     (1,902,271 )     --       (1,934,031 )
                                 
Non-operating income (expenses)
                               
     Interest income
    --       80       --       80  
     Financial expense
    --       (516 )             (516 )
     Other income
    6       48       --       54  
                                 
     Total non-operating expenses, net
    6       (388 )     --       (382 )
                                 
Income before income tax
    (31,754 )     (1,902,659 )     --       (1,934,413 )
                                 
Income tax expense
    --       --       --       --  
                                 
Net loss
  $ (31,754 )   $ (1,902,659 )   $ --     $ (1,934,413 )
                                 
Loss per common and diluted share
  $ (0.00 )   $ (0.24 )           $ (0.03 )
                                 
Weighted average common and diluted shares outstanding
    11,662,104       8,000,100       44,103,874       63,766,078  
                                 
 
(1)
Source:  Audited financial statements of UHF INCORPORATED as of December 31, 2013, as filed in the annual report of Form 10-K filed with the SEC on March 17, 2014.
 
(2)
Source:  Audited financial statements of TARGET ACQUISITIONS I, INC. as of December 31, 2013, as filed in the annual report of Form 10-K filed with the SEC on April 16, 2014.
 
See accompanying notes to pro forma consolidated financial statements
 
 
72
 
 
UHF Incorporated and
Target Acquisitions I, Inc.
Notes to Pro forma Consolidated Financial Statements
 
NOTE 1 - BASIS OF PRESENTATION

 
Effective June 30, 2014, UHF Incorporated (“UHF” or “the Company) entered into and closed a share exchange agreement, with Target Acquisitions I Inc. (“Target”), and the shareholders of Target pursuant to which UHF acquired 100% of the issued and outstanding capital stock of Target for the issuance of an aggregate of 1 share of UHF’s Series A Convertible Preferred Stock (which, upon the occurrence of certain events, the 1 share Preferred Stock will automatically convert into 17,839,800 shares of the common stock of UHF); and 43,375,638 shares of UHF’s common stock (the “ Exchange Shares ”), representing approximately 96% of the total voting power of UHF’s capital stock. The preferred share has no dividend rights, has same voting power of the common stock, and is considered the common stock in nature. Upon completion of the foregoing transactions, UHF had 1 share of preferred share and 45,926,278 shares of its common stock issued and outstanding. 

The accompanying pro forma consolidated statements of operations present the accounts of UHF and Target and its wholly-owned subsidiaries for the three months ended March 31, 2014, and for the year ended December 31, 2013, as if the acquisition occurred on January 1, 2013, and January 1, 2014, for the purpose of the statements of operations, respectively. The accompanying pro forma consolidated balance sheet presents the accounts of UHF and Target and its wholly-owned subsidiaries as if the acquisition of Target by UHF occurred on March 31, 2014.  

For accounting purposes, the transaction has been accounted for as a reverse acquisition of UHF by Target, the shares issued to Target’s shareholders has been accounted for as a recapitalization of Target because after the share exchange, Target’s shareholders will own the majority of the UHF’s shares and will exercise significant influence over the operating and financial policies of the consolidated entity, and UHF was a non-operating shell with nominal net assets prior to the acquisition. Pursuant to Securities and Exchange Commission (“SEC”) rules, this is considered a capital transaction in substance, rather than a business combination.

The following adjustments would be required if the acquisition occurred as indicated above:

a.  
Reflection of 9,111,464 shares out of 11,662,104 outstanding common stock of UHF being retired; and the issuance of 1 preferred share and 43,375,638 common shares to the shareholders of Target, resulting in 1 preferred share and 45,926,278 common shares outstanding of UHF after the reverse merger.

b.  
Elimination of UHF capital accounts and accumulated deficit as result of recapitalization, and reflection of payment of all liabilities of UHF prior to closing.
 
 
73
 
 
(d) Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this Report:

Exhibit
No.
 
Description
     
2.1
 
Agreement and Plan of Merger dated as of December 1, 2011 ( incorporated by reference herein from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed March 19, 2012 (the “Company’s 2011 Form 10-K)).
     
2.2
 
Certificate of Merger filed with the Office of the Secretary of State of Delaware merging UHF Incorporated , a Michigan corporation, into the Company ( incorporated by reference herein from the Company’s 2011 Form 10-K).
     
2.3
 
Share Exchange Agreement, dated as of October 1, 2011, among Target Acquisitions I, Inc., China Real Fortune Mining Limited (“Real Fortune BVI”), and the shareholders of Real Fortune BVI (incorporated by reference herein from the Company’s Current Report on Form 8-K filed August 11, 2011(the “Company’s August 2011 Form 8-K”)).
     
2.4
 
Share Exchange Agreement among the Company, Target Acquisitions I, Inc. (“Target”) and the Stockholders of Target.
     
2.5
 
Certificate of Merger filed with the Secretary of State of Delaware merging Target into the Company.
     
3.1  
Certificate of Incorporation ( incorporated by reference herein from the Company’s 2011 Form 10-K).
     
3.2
 
Certificate of Designation authorizing the issuance of series A convertible preferred stock.
     
3.3
 
By-laws ( incorporated by reference herein from the Company’s 2011 Form 10-K).
     
10.1
 
Subscription Agreement dated as of August 1, 2011 by and among the Company and Lawrence Burstein, Omar Cunha, Peter van Voorst Vader, Sidney Levy and Selmo Nissenbaum ( incorporated by reference herein from the Company’s August 2011 Form 8-K).
     
10.2
 
Stock Purchase Agreement dated as of August 1, 2011 by and among Dachris Ltd. and Lawrence Burstein, Omar Cunha, Peter van Voorst Vader, Sidney Levy and Selmo Nissenbaum ( incorporated by reference herein from the Company’s August 2011 Form 8-K).
     
10.3
 
Subscription Agreement dated as of August 3, 2011 by and among the Company and Lawrence Burstein, Omar Cunha, Peter van Voorst Vader, Sidney Levy, Nissen Holdings & Co. Ltd. Shellie Schoppe and Wayne Brannan ( incorporated by reference herein from the Company’s 2011 Form 10-K).
     
10.4
 
Option Agreement dated as of August 3, 2011 by and among Lawrence Burstein, Frontera Holdings Limited Partnership, Peter van Voorst Vader, Wit Services Global Inc., Nissen Holdings & Co. Ltd. and Wayne Brannan (incorporated by reference herein from the Company’s 2011 Form 10-K).
     
10.5
 
Subscription Agreement dated as of February 15, 2012 by and among the Company, Lawrence Burstein, Omar Cunha, Peter van Voorst Vader, Sidney Levy and Nissen Holdings & Co. ( incorporated by reference herein from the Company’s 2011 Form 10-K).
     
10.6
 
Stock Purchase Agreement dated as of June 26, 2014 among certain directors, officers and other stockholders of the Company and HC Consulting Limited (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 27, 2014).
 
10.7
 
 
English translation of Management Entrustment Agreement, dated May 9, 2011, between ZhangJiaKou TongDa Mining Service Co., Ltd. and Zhuolu Jinxin Mining Co., Ltd.
 
10.8
 
 
English translation of Powers of Attorney, dated May 9, 2011.
 
10.9
 
 
English translation of Exclusive Purchase Option Agreements, dated May 9, 2011, among ZhangJiaKou TongDa Mining Service Co., Ltd. and Zhuolu Jinxin Mining Co., Ltd. and its shareholders.
 
10.10
 
 
English translation of Equity Pledge Agreements, dated May 9, 2011, among ZhangJiaKou TongDa Mining Service Co., Ltd. and Zhuolu Jinxin Mining Co., Ltd. and its shareholders.
 
10.11
 
 
English translation of Lease Agreement, dated December 27, 2006, between Zhuolu County Luanzhuang Township People’s Government and Zhuolu Jinxin Mining Co., Ltd..
 
 
74
 
 
10.12
 
English translation of form of Long Term Strategic Agreement dated January 16, 2009 between Zhuolu Jinxin Mining Co., Ltd. and Handan Steel Group.
 
10.13  
 
 
English translation of Employment Agreement between Zhuolu Jinxin Mining Co., Ltd. and Changkui Zhu.  
 
10.14
 
 
English translation of Employment Agreement between Zhuolu Jinxin Mining Co., Ltd. and Zhengting Deng.  
 
10.15
 
 
English translation of Agreement dated March 20, 2010 between Zhuolu Jinxin Mining Co., Ltd. and Baoding Hongye Mechanical Engineering Equipments Company Limited.
 
10.16
 
 
English translation of Agreement dated March 20, 2010 between Zhuolu Jinxin Mining Co., Ltd. and Zhuolu Hydraulic and Hydro-Power Engineering Company Limited.
 
10.17
 
 
Stock Purchase Agreement dated January 17, 2014, among Target Acquisitions I, Inc., ZhangJiaKou TongDa Mining Technologies Service Co., Ltd. and Jiazhen Liu.
 
10.18
 
 
Stock Purchase Agreement dated January 17, 2014, among Target Acquisitions I, Inc., ZhangJIaKou TongDa Mining Technologies Service Co., Ltd. and Changkui Zhu.
 
10.19
 
 
Stock Purchase Agreement dated January 17, 2014, among Target Acquisitions I, Inc., ZhangJiaKou TongDa Mining Technologies Service Co. Ltd., and Dongli Sun.
 
10.20
 
 
Stock Purchase Agreement dated January 17, 2014, among Target Acquisitions I, Inc., ZhangJiaKou TongDa Mining Technologies Service Co. Ltd., and Meijie Wang.
 
10.21
 
 
Stock Purchase Agreement dated January 17, 2014, among Target Acquisitions I, Inc., ZhangJiaKou TongDa Mining Technologies Service Co. Ltd., and Xingwang Shao.
 
10.22
 
 
Convertible Promissory Note with a private investor in the face amount of RMB 3,333,333.
 
10.23
 
 
Convertible Promissory Note with a private investor in the face amount of RMB 3,333,333.
 
10.24
 
 
Convertible Promissory Note with a private investor in the face amount of RMB 3,333,333.
 
21.1
 
 
Subsidiaries
 
 
75
 
 
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
TARGET ACQUISITIONS I, INC.
 
       
       
Date: July 7 , 2014
By:
/s/ Changkui Zhu
 
   
Changkui Zhu
Chief Executive Officer
 (Principal Executive Officer
 
       
       
 
By:
/s/ Zhengting Deng
 
   
 Zhengting Deng
 Chief Financial Officer
(Principal Financial Officer)
 
 
76
SHARE EXCHANGE AGREEMENT
 
THIS SHARE EXCHANGE AGREEMENT (hereinafter referred to as this “ Agreement ”) is entered into as of this 30th day of June, 2014, by and among UHF Incorporated, a Delaware corporation (the “Company”), Target Acquisitions I, Inc., a Delaware corporation (“ Target ”), and the stockholders of Target (the “ Stockholders ”), upon the following premises:

Preliminary Statement
 
The Company is a publicly traded company whose shares of common stock are quoted on the OTCQB under the symbol "UHFI.OB.”
 
Target is a corporation whose shares of common stock are registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), which through its wholly-owned subsidiaries and variable interest entity has rights in certain mineral processing facilities in China.

UHF desires to acquire 100% of the issued and outstanding shares of Target from the Stockholders in exchange for the issuance of an aggregate of one (1) share of the Company’s Series A Convertible Preferred Stock which, upon the occurrence of certain events as described herein will automatically convert into 17,829,600 shares of the common stock of the Company and forty three million three hundred seventy-five thousand six hundred thirty eight (43,375,638) shares of the Company’s common stock (the “ Exchange Shares ”), representing approximately 96% of the total voting power of the Company’s capital stock (the “ Exchange Shares ”), and the Stockholders are willing to exchange their shares of Target  in exchange for the Exchange Shares on the terms and subject to the conditions set forth herein (the “ Exchange ”). On the Closing Date (as defined in Section 4.05), Target will become a wholly-owned subsidiary of the Company, assuming all of the Stockholders exchange their shares of Target for Exchange Shares.
 
The boards of directors of the Company and Target have determined, subject to the terms and conditions set forth in this Agreement, that the transaction contemplated hereby is desirable and in the best interests of their respective stockholders.  This Agreement is being entered into for the purpose of setting forth the terms and conditions of the proposed acquisition.
 
 
NOW THEREFORE , on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived here from, and intending to be legally bound hereby, it is hereby agreed as follows:
 
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TARGET
 
As an inducement to, and to obtain the reliance of the Company, except as set forth in the Target Schedules (as hereinafter defined), Target represents and warrants as of the Closing Date, as defined below, as follows:
 
Section 1.01  Incorporation .  Target is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  Target has delivered to the Company or its representatives complete and correct copies of the certificate of incorporation and by-laws of Target, each  as in effect on the date hereof (collectively, the “Target Charter Documents”).  The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of Target’s Charter Documents.  Target has taken all actions required by law, the Target Charter Documents, or otherwise to authorize the execution and delivery of this Agreement.  Target has full power, authority, and legal capacity and has taken all action required by law, the target Charter Documents, and otherwise to consummate the transactions herein contemplated.
 
 
 
 
 
                      Section 1.02  Authorized Shares .  As of the date hereof, the authorized capital of Target consists of  ten million shares of “blank check” preferred stock, none of which has been issued, and one hundred  million (100,000,000) shares of common stock, of which 14,000,100 shares are issued and outstanding.  The issued and outstanding shares are validly issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.
 
Section 1.03  Subsidiaries and Predecessor Corporations .  The Target SEC Reports (as defined in Section 1.04, below), sets forth all of the subsidiaries of Target all other entities which Target, directly or indirectly, controls or has an equity interest.
 
        Section 1.04  SEC Filings; Financial Statements . 
 
(a) Target has made available to the Company a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive proxy statement filed by Target with the SEC since October 1, 2012 (the “ Target SEC Reports ”), which are all the forms, reports and documents required to be filed by the Company with the SEC since October 1, 2012. As of their respective dates, the Target SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Target SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
 
(b) Included in the Target SEC Reports are (i) the audited balance sheets of Target as of December 31, 2013 and December 31, 2012 and the related audited statements of operations, stockholders’ equity and cash flows for December 31, 2013 and December 31, 2012, together with the notes to such statements and the opinion of its independent certified public accountants, with respect thereto; and (ii) the unaudited balance sheet of Target as of March  31, 2014 and the related unaudited statements of operations, stockholders’ equity and cash flows for the three months ended March 31, 2014 and March 31, 2013, together with the notes to such statements.
 
(c) Each set of financial statements (including, in each case, any related notes thereto) contained in the Target  SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and each fairly presents in all material respects the financial position of Target at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a  material adverse effect upon the business, prospects, management, properties, operations, condition (financial or otherwise) or results of operations of Target, taken as a whole (“Material Adverse Effect”). The balance sheets of Target included in the Target SEC Reports are true and accurate and present fairly as of their respective dates the financial condition of Target.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, Target had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets reflected therein are properly reported and present fairly the value of the assets of Target, in accordance with generally accepted accounting principles. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles. All of Target’s assets are reflected on its financial statements, and, except as set forth in the Target Schedules or the financial statements of Target or the notes thereto, Target has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.

(d) Target has no material liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.
 
 
 
 
 
(e) Target has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from October 1, 2012  to the date hereof.  Each of such income tax returns reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.
  
 
(f) The books and records, financial and otherwise, of Target are in all material aspects complete and correct and have been maintained in accordance with generally accepted accounting principles consistently applied throughout the periods involved.
 
Section 1.05  Information    The information concerning Target set forth in this Agreement, the Target SEC Reports and the Target Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, Target has fully disclosed in writing to the Company (through this Agreement, the Target SEC Reports  or the Target Schedules) all information relating to matters involving Target or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $1,000 liability , (ii) have led or may lead to a competitive disadvantage on the part of the Company or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on Target, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.
 
Section 1.06  Options or Warrants.    There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued stock of Target.
 
Section   1.07  Absence of Certain Changes or Events.   Since March 31, 2014:
 
(a) There has not been (i) any material adverse change in the business, operations, properties, assets or condition of Target, or (ii) any damage, destruction or loss Target (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets or condition of Target.
 
(b) Target has not (i) amended the Target Charter Documents, except as required by this Agreement; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of Target; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any transactions or agreements other than in the ordinary course of business; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or  termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceed $1,000; or  (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees.
 
(c) Target has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligations or liabilities (absolute or contingent) other than current liabilities reflected in or shown on the most recent Target balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value less than $1,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of Target; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement.
 
 
 
 
 
(d)  Target has not become subject to any law or regulation which materially and adversely affects, or in the future, may adversely affect, the business, operations, properties, assets or condition of Target.
 
Section 1.08  Litigation and Proceedings .  There are no actions, suits, proceedings, or investigations pending or, to the knowledge of Target after reasonable investigation, threatened by or against Target or affecting Target or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind.  Target does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.
 
Section  1.09  Contracts.
 
(a)   The Target SEC Reports list all “material” contracts, agreements, franchises, license agreements, debt instruments or other commitments to Target is a party or by which it or any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business.  A “material” contract, agreement, franchise, license agreement, debt instrument or commitment is one which (i) will remain in effect for more than six (6) months after the date of this Agreement or (ii) involves aggregate obligations of at least one [hundred thousand dollars ($100,000)];
  
(b)   All contracts, agreements, franchises, license agreements, and other commitments to which the Target is a party or by which its properties are bound and which are material to the operations of Target taken as a whole are valid and enforceable by Target in all respects, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally.
 
(c) Except as disclosed in the Target SEC Reports, Target is not a party to or bound by, and the properties of Target are not subject to any judgment, order, writ, injunction, decree, or award.
 
(d) Except as disclosed in the Target SEC Reports, Target is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of the Company.
 
Section 1.10  No Conflict With Other Instruments.    The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which Target is a party or to which any of its assets, properties or operations are subject.
 
Section 1.11  Compliance With Laws and Regulations.   Except as disclosed in the Target SEC Reports, Target has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of Target or except to the extent that noncompliance would not result in the occurrence of any material liability for Target. .  
 
Section 1.12    Approval of Agreement.   The Board of Directors of the Company has authorized the execution and delivery of this Agreement by the Company and has approved this Agreement and the transactions contemplated hereby, and has recommend to the Shareholders that the Exchange be accepted.
 
 
 
 
 
Section 1.13  Material Transactions or Affiliations.   Except as disclosed herein, the Target SEC Reports  and in the Target Schedules, there exists no contract, agreement or arrangement between Target and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by Target to own beneficially, 5% or more of the issued and outstanding shares of Target common stock (“Target 5% Stockholder”) and which is to be performed in whole or in part after the date hereof or was entered into since October 1, 2012.  Neither any officer, director, nor 5% Stockholder of Target has, or has had since January 1, 2012, any known interest, direct or indirect, in any such transaction with Target which was material to the business of Target.  Target has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.  

 Section 1.14    Target Disclosure Schedules.    Target has delivered to the Company  a schedule of any exceptions to the representations made herein,  certified by the chief executive officer of Target as complete, true, and correct as of the date of this Agreement in all material respects. Target shall cause the Target Schedules and the instruments and data delivered to the Company hereunder to be promptly updated after the date hereof up to and including the Closing Date.
 
Section 1.14  Valid Obligation.   This Agreement and all agreements and other documents executed by the Company in connection herewith constitute the valid and binding obligation Target, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.
   
Section 1.15  PRC Laws and Regulations . To the best of its knowledge, each of Target’s subsidiaries is in compliance with all applicable laws and regulations of the PRC and Hebei Province and of each other locality located therein.  All material consents, approvals, authorizations or licenses requisite under PRC law for the due and proper establishment and operation of the Company’s subsidiaries doing business in the PRC have been duly obtained from the relevant PRC governmental authorities and are in full force and effect.
 
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
 
Each of the Stockholders hereby represents and warrants to the Company as follows.
 
Section 2.01  Good Title .  The Stockholder is the record and beneficial owner, and has good title to the shares of Target owned by such Stockholder (“Target Shares”), with the right and authority to sell and deliver such Target Shares, free and clear of all liens, claims, charges, encumbrances, pledges, mortgages, security interests, options, rights to acquire, proxies, voting trusts or similar agreements, restrictions on transfer or adverse claims of any nature whatsoever.  Upon delivery of any certificate or certificates duly assigned, representing the same as herein contemplated and/or upon registering of the Company as the new owner of such Target Shares in the share register of the Target, the Company will receive good title to such Target Shares, free and clear of all liens.
 
Section 2.02  Power and Authority . The Stockholder has the legal power, capacity and authority to execute and deliver this Agreement to consummate the transactions contemplated by this Agreement, and to perform such Stockholder’s obligations under this Agreement.  This Agreement constitutes a legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with the terms hereof.
 
Section 2.03  No Conflicts.   The execution and delivery of this Agreement by the Stockholder and the performance by the Stockholder of such Stockholder’s obligations hereunder in accordance with the terms hereof: (a) will not require the consent of any third party or governmental entity under any laws; (b) will not violate any laws applicable to the Stockholder and (c) will not violate or breach any contractual obligation to which the Stockholder is a party.
 
Section 2.04  Finder’s Fee .  The Stockholder has not created any obligation for any finder’s, investment banker’s or broker’s fee in connection with the Exchange.
 
 
 
 
 
Section 2.05  Purchase Entirely for Own Account . The Exchange Shares proposed to be acquired by the Stockholder hereunder will be acquired for investment for such Stockholder’s own account, and not with a view to the resale or distribution of any part thereof, and the Stockholder has no present intention of selling or otherwise distributing the Exchange Shares, except in compliance with applicable securities laws.
   
Section 2.06  Acquisition of Exchange Shares for Investment .
 
(a) The Stockholder is acquiring the Exchange Shares for investment for such Stockholder’s own account and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Stockholder has no present intention of selling, granting any participation in, or otherwise distributing the same.  The Stockholder further represents such Stockholder does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Exchange Shares.
 
(b) The Stockholder represents and warrants that such Shareholder (i) can bear the economic risk of such Stockholder’s respective investments, and (ii) possesses such knowledge and experience in financial and business matters that such Stockholder is capable of evaluating the merits and risks of the investment in the Company and its securities.
 
(c) The Stockholder is not a “U.S. Person” as defined in Rule 902(k) of Regulation S of the Securities Act (“ Regulation S ”) and understands that the Exchange Shares are not registered under the Securities Act and that the issuance thereof to such Shareholder is intended to be exempt from registration under the Securities Act pursuant to Regulation S.  The Stockholder has no intention of becoming a U.S. Person.  At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Stockholder was outside of the United States.  Each certificate representing the Exchange Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

“THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”
 
“TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
 (d) The Stockholder acknowledges that neither the SEC, nor the securities regulatory body of any state or other jurisdiction, has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement.
  
(e) The Stockholder acknowledges that such Stockholder has carefully reviewed such information as such Stockholder has deemed necessary to evaluate an investment in the Company and its securities.  To the full satisfaction of such Stockholder, the Stockholder has been furnished all materials that he has requested relating to the Company and the issuance of the Exchange Shares hereunder, and such Stockholder has been afforded the opportunity to ask questions of the Company’s representatives to obtain any information necessary to verify the accuracy of any representations or information made or given to the Stockholder.  Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of the Company set forth in this Agreement, on which the Stockholder has relied in making an exchange of such Stockholder’s Target Shares for the Exchange Shares.
 
(g) The Stockholder understands that the Exchange Shares may not be sold, transferred, or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Exchange Shares or any available exemption from registration under the Securities Act, the Exchange Shares may have to be held indefinitely.  The Stockholder further acknowledges that the Exchange Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of Rule 144 are satisfied (including, without limitation, the Company’s compliance with the reporting requirements under the Exchange Act).
 
 
 
 
 
(h) The Stockholder agrees that, notwithstanding anything contained herein to the contrary, the warranties, representations, agreements and covenants of the Stockholder under this Section 2.06 shall survive the Closing for the period set forth in Section 8.11.
 
Section 2.07  Additional Legend; Consent . The Stockholder consents to the Company making a notation on its records or giving instructions to any transfer agent of Exchange Shares in order to implement the restrictions on transfer of the Exchange Shares.
 
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY
 
As an inducement to, and to obtain the reliance of Target and the Stockholders, except as set forth in the Company Schedules or the Company SEC Reports (as each of those terms is hereinafter defined), the Company represents and warrants, as of the date hereof and as of the Closing Date, as follows:

Section 3.01  Organization.  The Company is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Delaware and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted.  The Company has made available to Target and the Stockholders or there is included on the Securities and Exchange Commission’s website (“EDGAR”) complete and correct copies of the certificate of incorporation (including the certificate of designation authorizing the issuance of the Series A Convertible Preferred Stock) and bylaws of the Company, each as in effect on the date hereof (together, the “ Company Charter Documents ”). The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of Company Charter Documents.  The Company has taken all action required by law, its Charter Documents, or otherwise to authorize the execution and delivery of this Agreement, and the Company has full power, authority, and legal right and has taken all action required by law, its Charter Documents, or otherwise to consummate the transactions herein contemplated.
 
Section 3.02  Capitalization. 
 
(a) The authorized capital stock of the Company consists of 1,000,000 shares of “blank check” preferred stock, including one (1) share of Series A Convertible Preferred Stock, none of which have been issued, and 50,000,000 shares of common stock.  Immediately prior to the execution and delivery hereof, HC Consulting Limited, the owner of 11,024,444 shares of the common stock of the Company has contributed to the capital of the Company 9,111,464 shares of the common stock of the Company.  As a result of such capital contribution there are now issued and outstanding an aggregate of 2,550,640 shares of the common stock of the Company of which 1,912,980 shares are owned by HC Consulting Limited.  The Series A Convertible Preferred Stock has the rights, powers, privileges and limitations sets forth in the certificate of designation authorizing its issuance filed with the secretary of state of Delaware. Among such rights are the right to vote on an as converted basis on all matters with the holders of the common stock and the right to automatically convert into 17,829,600 shares of the common stock of the Company at such time as the certificate of incorporation of the Company is amended to permit the issuance of such common shares.  All issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person. As of the Closing Date, no shares of the Company’s common stock were reserved for issuance upon the exercise of outstanding options to purchase the common stock; no shares of common stock were reserved for issuance upon the exercise of outstanding warrants to purchase shares of Company common stock; and no shares of common stock were reserved for issuance upon the conversion of any outstanding convertible notes, debentures or other securities, other than shares reserved for issuance upon conversion of the Series A Convertible Preferred Stock (the “Conversion Shares”).  All outstanding shares of the Company’s common stock have been issued and granted in compliance with (i) all applicable securities laws and (in all material respects) other applicable laws and regulations, and (ii) all requirements set forth in any applicable Contracts.
 
 
 
 
 
                   (b) There are no equity securities, partnership interests or similar ownership interests of any class of any equity security of the Company, or any securities exchangeable or convertible into or exercisable for such equity securities, partnership interests or similar ownership interests, issued, reserved for issuance or outstanding, except for the Conversion Shares..   There are no subscriptions, options, warrants, equity securities, partnership interests or similar ownership interests, calls, rights (including preemptive rights), commitments or agreements of any character to which the Company is a party or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause the repurchase, redemption or acquisition of, any shares of capital stock, partnership interests or similar ownership interests of the Company or obligating the Company to grant, extend, accelerate the vesting of or enter into any such subscription, option, warrant, equity security, call, right, commitment or agreement.  There is no plan or arrangement to issue shares of the Company’s common stock, except as set forth in this Agreement.
 
Except as contemplated by this Agreement, there are no registration rights, and there is no voting trust, proxy, rights plan, anti-takeover plan or other agreement or understanding to which the Company is a party or by which it is bound with respect to any equity security of any class of the Company, and there are no agreements to which Company is a party, or of which the Company has knowledge, which conflict with this Agreement or the transactions contemplated herein or otherwise prohibit the consummation of the transactions contemplated hereunder.
 
Section 3.03  Subsidiaries and Predecessor Corporations.    Except as disclosed in the Company SEC Reports, the Company does not have any predecessor corporation(s), no subsidiaries, and does not own, beneficially or of record, any shares of any other corporation.
 
        Section  3.04  SEC Filings; Financial Statements . 
 
(a) The Company has made available to Target and the Stockholders a correct and complete copy, or there has been available on EDGAR, copies of each report, registration statement and definitive proxy statement filed by the Company with the SEC since January 1, 2012 (the “ Company SEC Reports ”), which are all the forms, reports and documents required to be filed by the Company with the SEC since January 1, 2012. As of their respective dates, the Company SEC Reports: (i) were prepared in accordance and complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Company SEC Reports, and (ii) did not at the time they were filed (and if amended or superseded by a filing prior to the date of this Agreement then on the date of such filing and as so amended or superseded) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
 
(b) Included in the Company SEC Reports are (i) the audited balance sheets of the Company as of December 31, 2013 and December 31, 2012 and the related audited statements of operations, stockholders’ equity and cash flows for December 31, 2013 and December 31, 2012, together with the notes to such statements and the opinion of its independent certified public accountants, with respect thereto; and (ii) the unaudited balance sheet of the Company as of March  31, 2014 and the related unaudited statements of operations, stockholders’ equity and cash flows for the three months ended March 31, 2014 and March 31, 2013, together with the notes to such statements.
 
(c) Each set of financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports comply as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and each fairly presents in all material respects the financial position of The Company at the respective dates thereof and the results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to have a  material adverse effect upon the business, prospects, management, properties, operations, condition (financial or otherwise) or results of operations of the Company, taken as a whole (“Material Adverse Effect”). The balance sheets of the Company included in the Company SEC Reports are true and accurate and present fairly as of their respective dates the financial condition of the Company.  As of the date of such balance sheets, except as and to the extent reflected or reserved against therein, the Company had no liabilities or obligations (absolute or contingent) which should be reflected in the balance sheets or the notes thereto prepared in accordance with generally accepted accounting principles, and all assets reflected therein are properly reported and present fairly the value of the assets of the Company, in accordance with generally accepted accounting principles. The statements of operations, stockholders’ equity and cash flows reflect fairly the information required to be set forth therein by generally accepted accounting principles. All of the Company’s assets are reflected on its financial statements, and, except as set forth in the Company Schedules or the financial statements of Company or the notes thereto, the Company has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise.
 
 
 
 
 
(d) The Company has no material liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest or penalties), except for taxes accrued but not yet due and payable.
 
(e) The Company has timely filed all state, federal or local income and/or franchise tax returns required to be filed by it from inception to the date hereof.  Each of such income tax returns reflects the taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.
  
(f) The books and records, financial and otherwise, of the Company are in all material aspects complete and correct and have been maintained in accordance with generally accepted accounting principles consistently applied throughout the periods involved.
 
Section 3.05  Information    The information concerning the Company set forth in this Agreement and the Company Schedules is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.  In addition, the Company has fully disclosed in writing to Target and the Stockholders (through this Agreement or the Company Schedules) all information relating to matters involving the Company or its assets or its present or past operations or activities which (i) indicated or may indicate, in the aggregate, the existence of a greater than $1,000 liability , (ii) have led or may lead to a competitive disadvantage on the part of the Company or (iii) either alone or in aggregation with other information covered by this Section, otherwise have led or may lead to a material adverse effect on the Company, its assets, or its operations or activities as presently conducted or as contemplated to be conducted after the Closing Date, including, but not limited to, information relating to governmental, employee, environmental, litigation and securities matters and transactions with affiliates.
 
Section 3.06  Options or Warrants.    There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued stock of the Company, other than the Conversion Shares which have been reserved for issuance upon conversion of the Series A Convertible Preferred Stock.
 
Section  3.07  Absence of Certain Changes or Events.   Since March 31, 2014:
 
(a) There has not been (i) any material adverse change in the business, operations, properties, assets or condition of the Company or (ii) any damage, destruction or loss to the Company (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets or condition of the Company.
 
(b) The Company has not (i) amended the Company Charter Documents, except as required by this Agreement; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of the Company; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any transactions or agreements other than in the ordinary course of business; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or  termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceed $1,000; or  (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for or with its officers, directors, or employees.
 
 
 
 
 
(c) The Company has not (i) granted or agreed to grant any options, warrants, or other rights for its stock, bonds, or other corporate securities calling for the issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligations or liabilities (absolute or contingent) other than current liabilities reflected in or shown on the most recent Company balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transaction contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value less than $1,000); (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of the Company; or (vi) issued, delivered or agreed to issue or deliver, any stock, bonds or other corporate securities including debentures (whether authorized and unissued or held as treasury stock), except in connection with this Agreement.
  
(d)  The Company has not become subject to any law or regulation which materially and adversely affects, or in the future, may adversely affect, the business, operations, properties, assets or condition of the Company.
 
Section 3.08  Litigation and Proceedings.   There are no actions, suits, proceedings or investigations pending or, to the knowledge of the Company, threatened against the Company, or affecting the Company or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind except as disclosed in the Company Schedule 3.08 .  The Company is not in default with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality.
 
  Section 3.09  Contracts.
 
(a) The Company  is not a party to, and its assets, products, technology and properties are not bound by, any contract, franchise, license agreement, agreement, debt instrument or other commitments whether such agreement is in writing or oral;
 
(b) The Company is not a party to or bound by, and the properties of the Company are not subject to any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award; and
 
(c) The Company is not a party to any oral or written (i) contract for the employment of any officer or employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan, (iii) agreement, contract, or indenture relating to the borrowing of money, (iv) guaranty of any obligation, (vi) collective bargaining agreement; or (vii) agreement with any present or former officer or director of the Company.
 
Section 3.10  No Conflict With Other Instruments.    The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or to which any of its assets, properties or operations are subject.
 
Section 3.11  Compliance With Laws and Regulations.   The Company has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof.  This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities.
 
 
 
 
 
Section 3.12   Approval of Agreement.   The Board of Directors of the Company has authorized the execution and delivery of this Agreement by the Company and has approved this Agreement and the transactions contemplated hereby.
  
Section 3.13  Material Transactions or Affiliations.   Except as disclosed herein and in the Company Schedules, there exists no contract, agreement or arrangement between the Company and any predecessor and any person who was at the time of such contract, agreement or arrangement an officer, director, or person owning of record or known by the Company to own beneficially, 5% or more of the issued and outstanding common shares of the Company and which is to be performed in whole or in part after the date hereof or was entered into since January 1, 2012.  Neither any officer, director, nor 5% Stockholder  of the Company  has, or has had since January 1, 2012, any known interest, direct or indirect, in any such transaction with the Company which was material to the business of the Company.  The Company has no commitment, whether written or oral, to lend any funds to, borrow any money from, or enter into any other transaction with, any such affiliated person.
 
Section 3.14    Company Schedules.   The Company has delivered to Target and the Stockholders the following schedules, which are collectively referred to as the “Company Schedules” and which consist of separate schedules, which are dated the date of this Agreement, all certified by the chief executive officer of the Company to be complete, true, and accurate in all material respects as of the date of this Agreement.
 
(a) a schedule of any exceptions to the representations made herein; and
 
(e) a schedule containing the other information requested herein.
 
The Company shall cause the Company Schedules and the instruments and data delivered to Target and the Stockholders hereunder to be promptly updated after the date hereof up to and including the Closing Date.
 
Section 3.15  Valid Obligation .  This Agreement and all agreements and other documents executed by Acquirer in connection herewith constitute the valid and binding obligation of the Company, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.
 
Section 3.16  Exchange Act Compliance .   The Company is in compliance with, and current in, all of the reporting, filing and other requirements under the Exchange Act, the Company’s common stock has been registered under Section 12(g) of the Exchange Act, and the Company is in compliance with all of the requirements under, and imposed by, Section 12(g) and Section 13(a) of the Exchange Act, except where a failure to so comply is not reasonably likely to have a Material Adverse Effect on The Company.
 
Section 3.17  Title to Property.   The Company does not own or lease any real property or personal property.  There are no options or other contracts under which the Company has a right or obligation to acquire or lease any interest in real property or personal property.
 
Section 3.18     Liabilities .  As of the completion of the Closing, the Company will have no liabilities or obligations other than those not in excess of $15,000, arising in connection with this transaction.
 
ARTICLE IV
PLAN OF EXCHANGE
 
Section 4.01  The Exchange . On the terms and subject to the conditions set forth in this Agreement, on the Closing Date, each of the Stockholders who has elected to accept the exchange offer described herein by executing this Agreement, shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the number of shares of Target set forth on the Target Schedules attached hereto, constituting all of the shares of Target held by such Stockholder; the objective of such Exchange being the acquisition by the Company of not less than 100% of the issued and outstanding shares of Target.  In exchange for the transfer of such securities by the Stockholders, the Company shall issue to the Stockholders other than the holder of 4,080,000 shares of the common stock of target (the “Preferred Recipient”), their affiliates or assigns, a total of 43,350,837 shares of the Company’s common stock in such proportions as indicated on Table 1 attached hereto and issue to the Preferred Recipient one shares of the Company’s Series A Preferred Stock which shall, at the time described herein, automatically convert into 17,829,600 shares of the Company’s common stock for all of the outstanding shares of the Target held by the Stockholders.  At the Closing Date, each of the Stockholders shall, on surrender of their certificate or certificates representing such Stockholder’s shares to the Company or its registrar or transfer agent, be entitled to receive a certificate or certificates evidencing his proportionate interest in the Exchange Shares. The Stockholders acknowledge that the distribution of the Exchange Shares among them has been determined by agreement among them and the Preferred recipient has agreed to receive the Series A Preferred Share provided for herein.
 
 
 
 
  
Upon consummation of the transaction contemplated herein and assuming all of the Stockholders accept the Exchange Shares in exchange for all of their shares of Target, all of the issued and outstanding shares of Target shall be held by the Company. Upon consummation of the transaction contemplated herein there shall be one shares of Company preferred  stock (convertible into 17,829,600 shares of Company Common Stock) and  45,900,497  shares of Company common stock issued and outstanding.
 
Section 4.02  Closing.  The closing (the “ Closing ” or the “ Closing Date ”) of the transactions contemplated by this Agreement shall occur on June 30, 2014 upon the exchange of the shares of Target and the Company as described in Section 4.01 herein. Such Closing shall take place at a mutually agreeable time and place, and be conditioned upon all of the conditions of the Exchange being met.
 
Section 4.03  Closing Events.  At the Closing or as soon as reasonably practicable thereafter, the Company, Target and the Stockholders shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered), any and all certificates, opinions, financial statements, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.
 
Section 4.04  Termination. This Agreement may be terminated by the Board of Directors of the Company or Target only in the event that the Company or Target does not meet the conditions precedent set forth in Articles VI and VII.  If this Agreement is terminated pursuant to this section, this Agreement shall be of no further force or effect, and no obligation, right or liability shall arise hereunder.

Section 4.05. Resignations. At the Closing, the directors and officers of Target shall delver their resignations to the Company.

ARTICLE V
SPECIAL COVENANTS
 
Section 5.01  Delivery of Books and Records.    At the Closing, Target shall deliver to the Company, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Target which is now in the possession of Target or its representatives.
  
Section 5.02  Third Party Consents and Certificates.   Target and the Company agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.
 
Section 5.03  Indemnification .
 
(a) Target hereby agrees to indemnify the Company and each of the officers, agents and directors of Acquirer as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) (the “ Loss ”), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article I of this Agreement.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement for one year following the Closing.
 
 
 
 
 
(b)  Each of the Stockholders, severally but not jointly, agrees to indemnify the Company and each of the officers, agents and directors of the Company as of the date of execution of this Agreement against any Loss, to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article II of this Agreement.  The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement for one year following the Closing.
 
Section 5.04 The Acquisition of Exchange Shares.  Target and the Company understand and agree that the consummation of this Agreement including the issuance of the Exchange Shares to the Stockholders in exchange for the Exchange Shares as contemplated hereby constitutes the offer and sale of securities under the Securities Act and applicable state statutes.  Target and the Company agree that such transactions shall be consummated in reliance on exemptions from the registration and prospectus delivery requirements of such statutes, which depend, among other items, on the circumstances under which such securities are acquired.
 
(a) In connection with the transaction contemplated by this Agreement, Target and the Company shall each file, with the assistance of the other and their respective legal counsel, such notices, applications, reports, or other instruments as may be deemed by them to be necessary or appropriate in an effort to document reliance on such exemptions, all to the extent and in the manner as may be deemed by such parties to be appropriate.
 
(b) In order to more fully document reliance on the exemptions as provided herein, the Company, Target and the Stockholders shall execute and deliver to the other, at or prior to the Closing, such further letters of representation, acknowledgment, suitability, or the like as the Company or Target and their respective counsel may reasonably request in connection with reliance on exemptions from registration under such securities laws.
 
(c) The Stockholders acknowledge that the basis for relying on exemptions from registration or qualifications are factual, depending on the conduct of the various parties, and that no legal opinion or other assurance will be required or given to the effect that the transactions contemplated hereby are in fact exempt from registration or qualification.  
 
Section 5.05  Sales of Securities Under Rule 144, If Applicable .
 
(a) The Company will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act so that its stockholders can sell restricted securities that have been held for six months or more or such other restricted period as required by Rule 144 as it is from time to time amended.
 
(b) Upon being informed in writing by any person holding restricted stock of The Company that such person intends to sell any shares under rule 144 promulgated under the Securities Act (including any rule adopted in substitution or replacement thereof), the Company will certify in writing to such person that it is compliance with Rule 144 current public information requirement to enable such person to sell such person’s restricted stock under Rule 144, as may be applicable under the circumstances.
 
(c) If any certificate representing any such restricted stock is presented to the Company’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s) in each case with reasonable assurances that such endorsements are genuine and effective, and is accompanied by a legal opinion that such transfer has complied with the requirements of Rule 144, as the case may be, the Company will promptly instruct its transfer agent to register such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate under the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.
 
 
 
 
 
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
 
The obligations of the Company under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:
 
Section 6.01  Accuracy of Representations and Performance of Covenants.   The representations and warranties made by the Company in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement).  Target shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Target prior to or at the Closing.  The Company shall be furnished with a certificate, signed by a duly authorized executive officer of Target and dated the Closing Date, to the foregoing effect. The representations and warranties made by the Shareholders in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement).  
 
Section 6.02  No Governmental Prohibition.    No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.
 
Section 6.03   Consents.   All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of Target after the Closing Date on the basis as presently operated shall have been obtained.  
 
Section 6.04  Other Items. The Company shall have received such further opinions, documents, certificates or instruments relating to the transactions contemplated hereby as the Company may reasonably request.
 
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF TARGET
AND THE SHAREHOLDERS
 
The obligations of Target and the Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions:
 
Section 7.01  Accuracy of Representations and Performance of Covenants.  The representations and warranties made by the Company in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date.  Additionally, the Company shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by the Company. Target shall be furnished with a certificate, signed by a duly authorized executive officer of the Company and dated the Closing Date, to the foregoing effect.
 
Section 7.02  No Governmental Prohibition.  No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.
 
Section 7.03  Consents.  All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of the Company after the Closing Date on the basis as presently operated shall have been obtained.
 
 
 
 
 
Section 7.04    Other Items.   Target shall have received further opinions, documents, certificates, or instruments relating to the transactions contemplated hereby as Target may reasonably request.
 

ARTICLE VIII
MISCELLANEOUS
 
Section 8.01  Brokers.   Target and the Company agree that, except as set out on Schedule 8.01 attached hereto, there were no finders or brokers involved in bringing the parties together or who were instrumental in the negotiation, execution or consummation of this Agreement.  Target and the Company agree to indemnify the other against any claim by any third person other than those described above for any commission, brokerage, or finder’s fee arising from the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.
 
Section 8.02  Governing Law.  This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of Delaware.  Venue for all matters shall be in New York, New York, without giving effect to principles of conflicts of law thereunder.  Each of the parties (a) irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in the federal courts of the United States. By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction.
 
Section 8.03  Notices.   Any notice or other communications required or permitted hereunder shall  be in writing and shall be sufficiently given if personally delivered to it or sent by telecopy, overnight courier or registered mail or certified mail, postage prepaid, addressed to the recipient at such address as it has provided to the other parties hereto at the time of execution of this Agreement or such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (i) upon receipt, if personally delivered, (ii) on the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3) days after mailing, if sent by registered or certified mail.

                  Section 8.04  Attorney’s Fees.  In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
 
                   Section 8.05  Confidentiality.  Each party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (i) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement.  In the event of the termination of this Agreement, each party shall return to the other party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein.
 
Section 8.06  Public Announcements and Filings.  Unless required by applicable law or regulatory authority, none of the parties will issue any report, statement or press release to the general public, to the trade, to the general trade or trade press, or to any third party (other than its advisors and representatives in connection with the transactions contemplated hereby) or file any document, relating to this Agreement and the transactions contemplated hereby, except as may be mutually agreed by the parties.  Copies of any such filings, public announcements or disclosures, including any announcements or disclosures mandated by law or regulatory authorities, shall be delivered to each party at least one (1) business day prior to the release thereof.
 
 
 
 
 
Section 8.07  Schedules; Knowledge.  Each party is presumed to have full knowledge of all information set forth in the other party’s schedules delivered pursuant to this Agreement.
 
Section 8.08  Third Party Beneficiaries.  This contract is strictly between Target and the Company, and, except as specifically provided, no director, officer, stockholder (other than the Stockholders), employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.  
 
Section 8.09  Expenses.  Subject to Article VI and VII above, whether or not the Exchange is consummated, each of Target and the Company will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other transactions contemplated hereby.
 
Section 8.10  Entire Agreement.  This Agreement represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter.
 
Section 8.11  Survival; Termination.  The representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated for a period of one year.
 
Section 8.12  Counterparts.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.
 
Section 8.13  Amendment or Waiver.  Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing.  At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended.
 
Section 8.14  Best Efforts.   Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable.  Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein.
 
[Signature Pages Follow]
 
 
 
 
 
IN WITNESS WHEREOF , the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written.
 
Target Acquisitions I, Inc.

By: / s/Changkui Zhu
Changkui Zhu
Chief Executive Officer

UHF Incorporated

By: / s/Changkui Zhu
Changkui Zhu
Chief Executive Officer
 
Accepted and Approved by
the Stockholders:  

  s/Changkui Zhu
Changkui Zhu
 
/s/ Jiazhen Liu
Jiazhen Liu
 
Wealth Sino Trading Limited
 
By: /s/ Changqing Han
 
Sui Feng Limited
 
By: /s/Junyan Tian
 
True South Limited
 
By: /s/ Xia Wang
 
Splendid Shine Limited
 
By: /s/Fengqin Ji
 
/s/ Chia-Hua Lee
Chia-Hua Lee
 
/s/ Lien-Hsiang Hu
Lien-Hsiang Hu
 
 
 
 
 
 
Trophy Journey Limited
 
By: /s/ Lixin Shi
 
Idea Vantage Limited
 
By: /s/ Jiazhen Liu
 
United Ample International Limited
 
By: /s/ Wenyan Yang
 
/s/ Wanli Liu
Wanli Liu
 
Southern Sleek Limited
 
By: /s/ Dengwei Gao
 
/s/ Dongli Sun
Dongli Sun
 
True Sino Enterprises Limited
 
By: /s/ Huiqin Wang
Talent Lead Investments Limited
 
By: /s/ Shaofeng Han
Talent Horse Limited
 
By: /s/ Yuqin Wei
 
/s/ Meijie Wang
Meijie Wang
 
/ s/ Xingwang Shao
Xingwang Shao
 
Wisdom Thrive Limited
 
By: /s/ Jianxin Wei
 
 
 
 
 
Table 1
   Exchange Shares to be Issued
 

Name of Target Stockholder
Number of Exchange Shares    
Number of Target Shares
 
 
Series A Preferred
 
Common
   
 
 
               
Changkui Zhu
      2,229,975       510,000  
Jiazhen Liu
“1” converts into      17,839,800       4,080,000  
Wealth Sino Trading Limited
      7,041,474       1,610,400  
Sui Feng Limited
      4,526,412       1,035,200  
True South Limited
      4,424,970       1,012,000  
Splendid Shine Limited
      4,369,002       999,200  
Chia-Hua Lee                                                                                 
      3,060,750       700,000  
Lien-Hsiang Hu
      3,060,750       700,000  
Trophy Journey Limited
      2,913,834       666,400  
Idea Vantage Limited
      2,658,480       608,000  
United Ample International Limited
      1,661,550       380,000  
Wanli Liu
      1,311,750       300,000  
Southern Sleek Limited                                                                  
      1,168,332       267,200  
Dongli Sun
      1,114,988       255,000  
True Sino Enterprises Limited
      902,484       206,400  
Talent Lead Investments Limited
      808,038       184,800  
Talent Horse Limited
      808,038       184,800  
Meijie Wang
      668,993       153,000  
Xingwang Shao
      445,995       102,000  
Wisdom Thrive Limited
      199,386       45,600  
Target Acquisitions I, Inc.
      437        100  
Total
“1”      61,215,43 8       14,000,100  
 
 
 
 
 
Share Exchange Agreement
Target Schedules
Exceptions to Representations
 
 
None. 

 
 
 
 
 
Share Exchange Agreement
Company Schedules
Exceptions to Representations
 
None.
 
 
 
 
 
 
Schedule 8.01
 
None.
 
 
 
 
 
 
 
 

 
  STATE OF DELAWARE
CERTIFICATE OF OWNERSHIP
SUBSIDIARY INTO PARENT
Section 253
CERTIFICATE OF OWNERSHIP
MERGING
TARGET ACQUISITION I, INC .
INTO
UHF INCORPORATED
___________________________________________
(Pursuant to Section 253 of the General Corporation Law of Delaware)

UHF Incorporated, a corporation incorporated on the 1st day of November,2011, pursuant to the provisions of the General Corporation Law of the State of Delaware;

DOES HEREBY CERTIFY that this corporation owns 100% of the capital stock of Target Acquisitions I, Inc., a corporation incorporated on the 27 th day of June, 2008 A.D., pursuant to the provisions of the General Corporation Law of the State of Delaware, and that this corporation, by a resolution of its Board of Directors duly adopted by unanimous written consent in lieu of a meeting this 30th day of June, 2014 A.D., determined to and did merge into itself said Target Acquisitions I, Inc., which resolution is in the following words to wit:

WHEREAS this corporation lawfully owns 100% of the outstanding stock of Target Acquisitions I, Inc., a corporation organized and exiting under the laws of the State of Delaware, and

WHEREAS this corporation desires to merge into itself the said Target Acquisitions I, Inc., and to be possessed of all the estate, property, rights, privileges and franchises of said corporation,

NOW, THEREFORE, BE IT RESOLVED , that this corporation merge into itself said Target Acquisitions I, Inc., and assumes all of its liabilities and obligations, and

FURTHER RESOLVED , that an authorized officer of this corporation be and he is hereby directed to make and execute a certificate of ownership setting forth a copy of the resolution to merge said Target Acquisitions I, Inc., and assume its liabilities and obligations, and the date of adoption thereof, and to file the same in the office of the Secretary of State of Delaware, and a certified copy thereof in the office of the Recorder of Deeds of New Castle County; and
 
 
 
 
 
FURTHER RESOLVED , that the officers of this corporation be and they hereby are authorized and directed to do all acts and things whatsoever, whether within or without the State of Delaware; which may be in any way necessary or proper to effect said merger.
 
IN WITNESS WHEREOF , said parent corporation has caused its corporate seal to be affixed and this certificate to be signed by an authorized officer this 2nd day of July, 2014 A.D.

       
 
By:
/s/ Changkui Zhu  
    Changkui Zhu  
    Chief Executive Officer  
       

                                                                                                                
 
 
 
 
 
UHF INCORPORATED

Certificate of Designation
Series A Convertible Preferred Stock

Pursuant to Section 151
of the
General Corporation Law of the State of Delaware

UHF Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware (hereinafter called the "Corporation"), DOES HEREBY CERTIFY that, by unanimous written consent in lieu of a meeting dated as of June 30, 2014, the following resolution was duly adopted by the Board of Directors of the Corporation pursuant to Section 151 of the General Corporation Law of the State of Delaware:

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation by Article 4 of the Corporation's certificate of incorporation, as amended (the “Certificate of Incorporation”), a series of Preferred Stock of the Corporation be, and it hereby is, created out of the authorized but unissued shares of the capital stock of the Corporation, such series to be designated Series A Convertible Preferred Stock (the "Series A Preferred Stock"), to consist of one (1) share, par value $0.001 per share, of which the preferences and relative and other rights, and the qualifications, limitations or restrictions thereof, shall be (in addition to those set forth in the Corporation's Certificate of Incorporation) as follows:

1.            Dividend Rights .  Holders of shares of Series A Preferred Stock shall have no right to receive dividends.except that if the holders of the common stock shall be entitled to receive any dividend, the holders of the Series A Preferred Sock shall participate in the same on an as if converted basis.

2.            Liquidation Rights .

2.1           In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary (each of which is hereinafter referred to as a "Liquidation"), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount per share equal to the amount they would be entitled to receive as holders of Common Stock if all outstanding shares of Series A Preferred Stock had been converted into Common Stock, before any distribution shall be made to the holders of Common Stock or any other stock junior to Series A Preferred Stock as to the distribution of assets upon Liquidation.  If upon Liquidation the Corporation's assets are not sufficient to pay in full the amounts so payable to the holders of shares of Series A Preferred Stock and the holders of any other series of Preferred Stock ranking on a parity as to the distribution of assets on Liquidation with shares of Series A Preferred Stock, all shares of Series A Preferred Stock and of such other series of Preferred Stock shall participate ratably in the distribution of assets in proportion to the full amounts to which they are respectively entitled.
 
                        2.2            For the purpose of this Paragraph 2, a consolidation or merger of the Corporation with any other corporation, or the sale, transfer or lease of all or substantially all of its assets, shall constitute and be deemed a Liquidation.

3.            Voting Rights .  Holders of Series A Preferred Stock will vote together with holders of Common Stock as a single class, with each share of Series A Preferred Stock having the number of votes corresponding to the number of shares of Common Stock into which the Series A Preferred Stock may then be converted, on all matters as to which stockholders are entitled to vote, including the election of directors, except with respect to matters for which a class vote is required by law.
 
 
 
 
 
4.            Conversion Rights .

4.1           Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, into 17,839,800 shares of Common Stock (the "Conversion Rate”), subject to adjustment as hereinafter provided, at any time or from time to time upon the terms and in the manner hereinafter set forth in this Paragraph 4.

4.2           In order to convert shares of Series A Preferred Stock into Common Stock, the holder thereof shall (i) surrender the certificate or certificates for such shares of Series A Preferred Stock, duly endorsed to the Corporation or in blank, to the Corporation at its principal office or at the office of the agency maintained for such purposes, (ii) give written notice to the Corporation at such office that such holder elects to convert such shares of Series A Preferred Stock, and (iii) state in writing therein the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued.  Each conversion shall be deemed to have been effected at the close of business on the date on which the Corporation or such agency shall have received such surrendered Series A Preferred Stock certificate(s), and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the record holder or holders of the shares represented thereby on such date.  As soon as practicable after such conversion, the Corporation shall issue or deliver at such office to the holder for whose account such shares of Series A Preferred Stock were so surrendered, or to such holder's nominee or nominees, certificates (bearing such legend(s) as may be required under applicable securities laws) for the number of whole shares of Common Stock to which such holder shall be entitled.  The Corporation shall not be under any obligation to issue fractional shares or payments in lieu of fractional shares.

4.3           The conversion rate shall be subject to adjustment from time to time in case the Corporation shall pay a stock dividend on its Common Stock (other than in shares of the Series A Preferred Stock), or in case the Corporation shall subdivide or combine the outstanding shares of Common Stock, the conversion rate shall immediately be proportionately adjusted.  In case of any capital reorganization or any reclassification of the capital stock of the Corporation, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation then deliverable upon conversion of such share of Series A Preferred Stock would have been entitled upon such reorganization or reclassification, and appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the shares of Series A Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the shares of Series A Preferred Stock.
 
4.4           Whenever the conversion rate is adjusted as herein provided, an officer of the Corporation shall compute the adjusted conversion rate in accordance with the foregoing provisions and shall prepare a written instrument setting forth such adjusted conversion rate and showing in detail the facts upon which such adjustment is based, and a copy of such written instrument shall forthwith be mailed to each holder of record of the Series A Preferred Stock, and made available for inspection by the stockholders of the Corporation.

4.5           The Corporation will pay and all taxes that may be payable in respect of the issuance or delivery of shares of Common Stock on conversion of shares of Series A Preferred Stock pursuant hereto.  The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable.
 
 
 
 
 
4.6           All issued and outstanding shares of Series A Preferred Stock shall be deemed to have been converted into, and shall (without any action of the holder thereof) become, that number of fully paid and non-assessable shares of Common Stock into which such shares of Series A Preferred Stock are then convertible in accordance with the provisions of this Paragraph 4 immediately upon the earlier of the filing (the “Effective Time”)  of (x) a Certificate of Amendment to the Certificate of Incorporation of the Corporation with the Office of the Secretary of State of Delaware, which increases the number of authorized but unissued shares of Common Stock  to an amount sufficient for the conversion of all of the outstanding shares of Series A Preferred Stock, or (y) a certificate of merger with the Secretary of State of Delaware and/or other designated governmental authority of a foreign jurisdiction effecting a merger of the Corporation with and into another corporation as the surviving corporation (the “Certificate of Merger”), with authorized but unissued shares of capital stock into which the shares of Common Stock of the Corporation are to be converted in connection with the merger sufficient for issuance upon the conversion of the outstanding shares of Series A Preferred Stock  (in either case, an “Automatic Conversion Event”).  The Corporation shall give the holders of the Series A Preferred Stock written notice of the filing of a Certificate of Amendment or Certificate of Merger which results in an Automatic Conversion Event within three days after the Effective Time (the “Automatic Conversion Notice”). The Automatic Conversion Notice shall be sent by first class or registered mail, postage prepaid, to each record holder of Series A Preferred Stock at such holder's address last shown on the records of the transfer agent for the Series A Preferred Stock (or the records of the Corporation, if it serves as its own transfer agent). Upon receipt of any the Automatic Conversion Notice, each holder of shares of Series A Preferred Stock shall surrender his, her or its certificate or certificates for all such shares to the Corporation at the place designated in such notice, and shall thereafter receive certificates for the number of shares of Common Stock to which such holder is entitled.  Following the Effective Time, all outstanding shares of Series A Preferred Stock shall be deemed to have been converted into shares of Common Stock, which shall be deemed to be outstanding of record, and all rights with respect to the Series A Preferred Stock so converted, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock) will terminate, except only the right of the holders thereof, upon surrender of their certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Series A Preferred Stock has been converted. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. As soon as practicable after the Effective Time and the surrender of the certificate or certificates for Series A Preferred Stock, the Corporation shall cause to be issued and delivered to such holder, or on his, her or its written order, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof.
 
All certificates evidencing shares of Series A Preferred Stock required to be surrendered for conversion in accordance with the provisions of this paragraph 4.6 shall, from and after the Effective Time, be deemed to have been retired and cancelled and the shares of Series A Preferred Stock represented thereby converted into Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date. The Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the number of authorized shares of Series A Preferred Stock accordingly.”

4.7         The Corporation shall cause the shares of Common Stock issued upon conversion of the Series A Preferred Stock to be listed, subject to notice of issuance, on any stock exchange(s) or automated quotation system on which outstanding shares of Common Stock may then be listed or quoted.

5.            Exclusion of Other Rights .  Except as may otherwise be required by law, the shares of Series A Preferred Stock shall not have any preferences or relative, participating, optional or other special rights other than those specifically set forth in this resolution and in the Certificate of Incorporation, as amended.

6.            Status of Series A Preferred Stock Reacquired .  Shares of Series A Preferred Stock which have been issued and reacquired in any manner shall (upon compliance with applicable provisions of the laws of the State of Delaware), be deemed to be canceled and have the status of authorized and unissued shares of the class of Preferred Stock issuable in series undesignated as to series and may be redesignated and reissued.

7.            Severability of Provisions .  If any right, preference or limitation of the Series A Preferred set forth in this resolution is invalid, unlawful, or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.
 
 
 
 
 
                        8.            Headings of Subdivisions .  The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed by its duly authorized officer this 30th day of June, 2014.

 
 
UHF Incorporated
 
       
 
By:
/s/ Changkui Zhu
 
   
Changkui Zhu
 
   
Chief Executive Officer
 
       
 
Management Entrustment Agreement
 
Management Entrustment Agreement
 
This Agreement is made and entered into on May 9th, 2011 in Tianjin, China, by and between the following parties:
 
Party A: Zhuolu Jinxin Mining Co., Ltd.
 
Registered business address: Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province
 
Party B: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.
 
Registered business address: Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
WHEREAS:
 
1. Party A is a corporation registered with Zhuolu Administration for Industry & Commerce in Hebei Province and validly existing in the territory of the PRC pursuant to the laws of the PRC with business license registration number: 130731000000165 .
 
2. Party B is a wholly foreign-owned enterprise which has been duly organized and registered with Zhangjiakou Administration for Industry & Commerce in Hebei Province and validly existing under the laws of the PRC, with business license registration number: 130700400001670.
 
3. In order to let Party B have actual control of Party A, Party A intends to irrevocably entrust to Party B for its management the right of operation management of Party A and the responsibilities and authorities of the shareholders and the Board of Directors of Party A.
 
4. Party B agrees to accept the entrustment of Party A, and to exercise the right of operation management of Party A and the responsibilities and authorities of the shareholders and the Board of Directors of Party A.
 
5. Party A has obtained the approval of its shareholders to enter into this Agreement.
 
 
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Management Entrustment Agreement
 
NOW, THEREFORE, through friendly consultation, under the principle of equality and mutual benefits, in accordance with the relevant laws and regulations of the People’s Republic of China, the parties agree to enter into this Agreement and to be bound with the terms and conditions as follows:
 
Article 1     Management Entrustment
 
1.1     Entrusted Operation
 
Party A agrees to irrevocably entrust the right of operation management of Party A and the responsibilities and authorities of Party A’s investor, shareholders and the Board of Directors to Party B in accordance with the terms and conditions of this Agreement.  Party B agrees to exercise the aforesaid rights and responsibilities in accordance with the terms and conditions of this Agreement. All the shareholders of Party A issued Power of Attorney (“Power of Attorney”) to Party B by on the same day as this Agreement.  Except that this Agreement terminates, the aforesaid entrustment shall be irrevocable.
 
1.2     Term of Entrusted Operation
 
 
1.2.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to the termination provisions of Sections 1.2.2. and 1.2.3 below (collectively, the “Early Termination Provisions”), shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated prior to the end of the Initial Term or a Renewal Term (as the case may be) in accordance with the Early Termination Provisions, the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party B notifies Party A in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party A have the right to unilaterally terminate this Agreement.  Anything to the contrary in the foregoing notwithstanding, upon the occurrence of the events set forth below this Agreement shall terminate on the date specified:
 
 
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Management Entrustment Agreement
 
 
1.2.2  
the day when the Agreement is terminated by Party B in its sole and absolute discretion by the delivery to Party A of a written notice of termination; or
 
 
1.2.3  
the day when Party B completes the acquisition of all the assets or at least 51% of the equity interests of Party A.
 
1.3     Purpose of Entrusted Operation
 
Party B shall fully manage the operation activities of Party A as its exclusive managing consultant and provide Party A with exclusive technical support for Party A. Party B shall perform the responsibilities and rights of Party A’s shareholders and the Board of Directors. Party A shall pay its profit (if any) to Party B and Party B shall be responsible to Party A’s loss (if any).  During the term of the entrusted operation, Party B, as the entrusted manager, shall provide full management to Party A’s operations.
 
1.4     Content of Entrusted Operation
 
As of the day when this Agreement comes into effect, Party B shall be in charge of all aspects of party A’s operations. The contents of the entrusted operation shall include but not limited to major decision right management, capital management, financial management, assets management, human resource management, daily operation management and technical support. For Party B’s operation decision for the operation management of Party A, Party A shall unconditionally provide necessary assistance.
 
1.4.1   Major Decision Right Management
 
 
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Management Entrustment Agreement
 
( 1 )  
Pursuant to Power of Attorney issued by the shareholders of Party A on the same day as this Agreement (“Power of Attorney”), Party B shall have the right to participate in the shareholder’s meeting of Party A, vote on the matters proposed at the meeting, suggest the holding of temporary shareholders’ meeting as the agent of the shareholders of Party A, and have other shareholders’ voting rights as stipulated in the Articles of Association of Party A and the Companies Law of the PRC. Party B shall also have the right to make the following major decisions:
 
a)  
to decide the operation plan and investment scheme for Party A;
 
b)  
to discuss and approve the reports of the Board of Directors and the supervisor;
 
c)  
to discuss  and approve the annual financial budget and settlement plan;
 
d)  
to discuss approve the profit distribution plan and the loss compensation plan;
 
e)  
within the authorization of the shareholder’s meeting, to decide such matters of Party A as investment, assets purchase or sale, assets mortgage, external guarantee, assets management and related party transaction;
 
f)  
to resolve on the increase or decrease of the registered capital;
 
g)  
to resolve on the issuance of the corporate bond;
 
h)  
to resolve on the matters including merger, division, change of corporate form, dissolution and liquidation of the company;
 
i)  
to amend the articles of association;
 
j)  
 to retain or replace the Certified Public Accounting (“CPA”) firm providing auditing service for Party A.
 
 
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Management Entrustment Agreement
 
(2)   
Party B shall have the right to designate candidates of the directors and supervisor of Party A.
 
(3)   
Party B shall have the right to prepare the scheme to purchase or repurchase the shares of Party A, the scheme of reorganization and the scheme to go public for Party A; Party A should make sure that the shareholders of Party A shall agree such schemes and go through the necessary legal procedures to complete said schemes.
 
1.4.2   Capital Management
 
Party B shall manage and control all funds of Party A. Party A shall open or appoint a management account for its funds (“Management Account”) and Party B shall be responsible for and have the right in deciding the inward and outward remittance of its funds. The seals affixed to such account shall be that of the person appointed and confirmed by Party B. As of the day when this Agreement comes into effect, all cashes of Party A, including but not limited to revenues from sales, existing working capitals, collecting of receivables, and all payables and operating expenses, employees’ salaries and compensations and assets acquisition, must be saved and transacted in this Management Account.
 
1.4.3   Financial Management
 
(1)   
Party B shall establish the financial and accounting system of Party A pursuant to the applicable laws of the PRC.
 
(2)   
Party B shall submit annual budget and settlement scheme to the shareholders of Party A.
 
(3)   
Party B shall on a quarterly basis file financial statements to the shareholders of Party A, and prepare the annual financial statements of Party A within one hundred and twenty (120) days after the end of each fiscal year, and provide them to the shareholders after they are audited by the CAP firm.
 
 
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Management Entrustment Agreement
 
1.4.4   Assets Management
 
(1)   
Party A shall deliver the list of all its assets on March 31, 2011 (“Base Date”) to Party B, within 5 days after the effective date of this Agreement and undertake it has no action adversely affecting such assets after the Base Date and before the execution of this Agreement.  Party B has the right to use such assets for the necessary operation scope.
 
(2)   
Within the term of the entrusted operation, Party A shall not transfer the assets of Party A or reduce their value, unless otherwise arising in the ordinary course of business of Party A and obtaining approval from Party B.
 
1.4.5   Human Resource Management (“HR Management”)
 
(1)   
Party B have the right to decide the setup of the internal governance structure of Party A;
 
(2)   
Party B shall have the right to decide all matters in relation to HR of Party A, including but not limited to the employment, removal, staffing and remuneration of senior officers.
 
(3)   
Within the term of the entrusted operation, Party B shall continue to perform the labor contracts signed by Party A and its employees according to the PRC labor laws.
 
1.4.6    Daily Operation Management  and Technical Support
 
(1)   
Party B shall have the right to decide all daily production and sales arrangements of Party A such as the production scale, product category, sales strategy and execution of operating contracts.
 
(2)   
Party B undertakes to make full use of its existing advanced methods of management and technologies, to improve product quality, broaden sales channels, reduce product cost and operating expenses.
 
 
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Management Entrustment Agreement
 
1.5     Entrustment Fee
 
 
1.5.1
In consideration of the services to be provided by Party B, Party A shall pay to Party B each quarter a management consulting fee equal to all pre-tax profits, if any, of Party A for that quarter (such pre-tax profits are referred to herein as the “Profits”).
 
 
1.5.2
Such fees that Party A shall pay (or cause to be paid) to Party B are to be paid in the following manner: during the term of this Agreement: the Profits for each quarter shall be computed no later than 45 days after the end of each quarter, except that in the case of the final quarter of a fiscal year the period for calculating the Profits shall be 90 days.  Once such computation is completed, but in all events within 45 days of the end of each fiscal quarter (90 days in the case of the fourth quarter), 100% of all Profits for that quarter shall be paid to Party B.  If the Profits for any quarter are zero or negative, meaning that Party A had a loss for such quarter, Party A will not pay Party B a management consulting fee for that quarter, and any loss for a quarter shall be deducted from the management consulting fee for the following quarters; provided further, if at any time Party A shall request that Party B pay to it the amount of any loss that has not been offset against a Profit, Party B will do so within thirty days of such request. 
 
 
1.5.3
Should Party A fail to pay all or any part of the fees due to Party B under this Agreement within the time stipulated, Party A shall pay to Party B interest on the amount overdue based at an adjustable rate equal to the three (3) month lending rate for RMB announced from time to time by the People’s Bank of China from the date due until the date paid in full.
 
 
1.5.4
Following the end of each fiscal year of Party A, the parties shall conduct an  examination and verification of the management consulting fees paid by Party A based upon the Profits of Party A for each of the quarters during such fiscal year as confirmed by the audit report by the CPA firm retained by Party A and make appropriate adjustments within fifteen (15) business days following the issuance of such audit report, so that any overcharge will be refunded or any deficiency will be compensated for. Party A covenants and warrants to Party B that it will provide all necessary materials and assistance to such CPA firm and cause the preparation and issuance to the parties of the foregoing audit report by such CPA firm within ninety (90) days following the end of each fiscal year of Party.
 
 
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Management Entrustment Agreement
 
1.6     Assumption of the Entrustment Risk
 
Party B shall assume all the operation risks in association with the management of Party A entrusted to it.  Party B shall be responsible for any loss incurred to Party A’s operation.  If Party A’s cash is not enough to pay its debt, Party B is liable to pay the debt; if the loss leads to Party A’s net asset less than the total contribution of Party A’s all shareholders (i.e. paid-in capital), Party B shall be liable to make up for the deficiency.
 
Article 2     Rights and Obligations of the Parties A
 
During the term of the entrusted operation, the rights and obligations of Party A shall include:
 
(1)   
After the execution of this Agreement, the management of Party A shall be handed over to Party B. Party A shall, within 5 days after the effective date of this Agreement, deliver Party A’s business data, personal archives, business licenses, seals, financial records, legal title certificates and other relevant documentation to Party B or representative authorized by Party B, in order to guarantee Party B to execute its operation responsibilities.
 
(2)   
During the term of the entrusted operation, without Party B’s consent, Party A and its shareholders and the Board of Directors shall not make any decision on Party A’s operations, and they shall not intervene with Party B’s entrusted management activities in any form;
 
 
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Management Entrustment Agreement
 
(3)   
During the term of the entrusted operation, Party A’s Board of directors shall have  the obligation to cooperate with Party B in accordance with Party B’s request to ensure the stability and consistency of the operation;
 
(4)   
To entrust the authorities of the shareholders and the Board of Directors to Party B;
 
(5)   
To timely pay the entrustment fee to Party B;
 
(6)   
Without Party B’s consent, Party A shall not entrust any third party other than Party B in any form to manage Party A’s businesses;
 
(7)   
The Board of Directors and shareholders of Party A shall issue necessary documents for the purpose of accomplishing the management by Party B;
 
(8)   
Party A shall do or cause to be done, all things necessary to preserve and keep in full force and effect its existence and its material rights, franchises and licenses;
 
(9)   
Party A shall actively assist Party B in transacting foreign merger formalities provided that doing so is permitted by the laws of the PRC;
 
(10)   
Party A shall not unilaterally early terminate this Agreement for any reason.
 
(11)   
Other rights and obligations of Party A provided under this Agreement.
 
Article 3     Negative Covenants
 
Party A covenants and agrees that, during the term of this Agreement, without the prior written consent of Party B:
 
 
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Management Entrustment Agreement
 
(1)   
Party A will not issue, purchase or redeem any equity securities of Party A;
 
(2)   
Party A will not create, incur, assume or suffer to exist any liens upon or with respect to any property or assets of Party A whether now owned or hereafter acquired, provided that the provisions of this subsection shall not prevent the creation, incurrence, assumption or existence of:
 
a)  
liens for taxes not yet due, or liens for taxes being contested in good faith and by appropriate proceedings for which adequate reserves have been established; and
 
b)  
liens in respect of property or assets of Party A imposed by the laws of the PRC, which were incurred in the ordinary course of business, and (i) which do not in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of Party A or (ii) which are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property of assets subject to any such lien.
 
(3)   
Party A will not liquidate ,dissolve or  terminate its operations or enter into any transactions of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or assets (other than purchases or other acquisitions of inventory, materials and equipment in the ordinary course of business) of any person, except that (i) Party A may make sales of inventory in the ordinary course of business; and (ii) Party A may, in the ordinary course of business, sell equipment which is uneconomic or obsolete;
 
(4)   
Party A will not declare or pay any dividends, or return any capital, to its shareholders or authorize or make any other distribution, payment or delivery of property or cash to its shareholders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for a consideration, any shares of any class of its capital stock now or hereafter outstanding (or any options or warrants issued by Party A with respect to its capital stock), or set aside any funds for any of the foregoing purposes;
 
 
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Management Entrustment Agreement
 
(5)   
Party A will not contract, create, incur, assume or suffer to exist any indebtedness, except accrued expenses and current trade accounts payable incurred in the ordinary course of business, and obligations under trade letters of credit inclined by Party A in the ordinary course of business, which are to be repaid in full not longer than one year after the date on which such indebtedness is originally incurred to finance the purchase of goods by Party A;
 

(6)   
Party A will not lend money or credit or make advances to any person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other person, except that Party A may acquire and hold receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;
 
(7)   
Party A will not enter into any transactions or series of related transactions, whether or not in the ordinary course of business, with any affiliates of Party A, other than on terms and conditions substantially as favorable to Party A as would be obtainable by Party A at the time in a comparable arm’s-length transaction with a person other than an affiliate and with the prior written consent of Party B;
 
(8)   
Party A will not make any expenditures for fixed or capital assets (including, without limitation, expenditures for maintenance and repairs which should be capitalized in accordance with generally accepted accounting principles in the PRC or in the United States) in excess of US $1,000,000, without the prior written consent of Party B; and
 
 
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Management Entrustment Agreement
 
(9)   
Party A will not: (i) make any voluntary or optional payment or prepayment on or redemption or acquisition for value of (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) any existing indebtedness; (ii) amend or modify, or permit the amendment or modification of, any provision of any existing indebtedness or of any agreement (including, without limitation, any purchase agreement, indenture, loan agreement or security agreement) relating to any of the foregoing; or (iii) amend, modify or change its Article of Association or Business License, or any agreement entered into by it, with respect to its shares, or enter into any new agreement with respect to its shares.
 
Article 4     Rights and Obligations of the Parties B
 
During the term of the entrusted operation, the rights and obligations of Party B shall include:
 
(1)   
Party B shall enjoy independent and comprehensive management right over Party A’s operations;
 
(2)   
Party B shall have the right to adjust the organizational structure and the personnel placement of Party A based on the needs of the management;
 
(3)   
Party B shall have the right to dispose of all the assets of Party A, and Party B can dispose of any of the aforesaid assets without any prior consent of Party A;
 
(4)   
Party B shall be entitled to entrustment fees in accordance with this Agreement.
 
 
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Management Entrustment Agreement
 
(5)   
Party B shall carry out all the responsibilities and rights entrusted to it under this Agreement in good faith, and shall pay reasonable attention to the entrusted matters and notify Party A timely of relevant matters;
 
(6)   
Party B shall act in good faith and consult with Party A in regards to the handling of matters  covered by this Agreement;
 
(7)   
Other obligations shall be performed by Party B under this Agreement.
 
Article 5     Warranties and Representations
 
5.1     Party A has stated to Party B and Party B has knowledge of the following circumstances:
 
(1)   
Party A has an iron ore concentrate production line with an annual capacity of 300,000 tons and associated plant and office building (hereinafter collectively referred to as "production facilities") , which  was put into trial production from March to September 2010. Party A successively obtained temporary manufacturing licenses for metallurgical mineral production license of Zhangjiakou City on March 22, 2009, March 23, 2010 and January 1, 2011, respectively.  The valid period of the latest one is one year.
 
Party A leased both the land occupied by production facilities and also the land around it (hereinafter referred to as "the land "collectively), with a total of 15.80 hectares. This lease was agreed and confirmed by the local villagers committee, and was subject to relevant agreements between and among Party A and the local township government. Pursuant to such agreements: the lease term was from December 30, 2006 to December 30, 2026; the rent was RMB 76,000 Yuan per hectare, which should be paid by two installments; Party A should pay a annual service fee to the local township government, with RMB 50,000 Yuan for the first year , RMB20,000Yuan from the second year to the tenth year, RMB30,000 Yuan from the eleventh year to the twentieth year; if the lease agreements can’t be fulfilled  due to the governments at a higher level or state policy adjustments, the lease agreements would terminate correspondingly and the local township government would not bear any economic liabilities.
 
 
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Management Entrustment Agreement
 
The land occupied by Party A’s production facilities is for construction. According to Chinese laws and regulations related to land management, only the state-owned land can be used for construction.  The land occupied by Party A’s production facilities is still owned collectively by local villagers at present and only could  be used by Party A for construction after it is changed to state-owned land through acquisition by the local government  firstly and Party A wins the bid of the land. The land occupied by Party A’s production facilities has been listed in the overall plan for land utilization of Zhangjiakou City as the land to be used for construction. Whereas Party A has not acquired the state-owned land use right at present, the corresponding legal effects include but not limited to: ( i ) some mandatory administrative licenses for Party A’s iron ore concentrate project have not been granted; (ii) the houses such plants, office building and others shall be subject to limitations in case of transfer or mortgage.
 
(2)   
The local county government has commissioned a qualified provincial mineral resources exploration agency (“the Agency”) to carry out a geological survey of ultra-poor magnetite around Party A’s production facilities, covering an area about  5.73KM 2 . Pursuant to the commission agreement, the local county government shall pay geological survey fees ("Survey fee", which has been already paid); the Agency would obtain mineral exploration right in its own name ("Geological Survey Certificate”: No. D13020100600001085; valid period: from June 18, 2010 to June 18, 2013); if the search results meet the establishment conditions of mining rights, the mining rights will belong to the local county government ("the mining rights"); the local county government will adopt an open tender to sell the mining rights.
 
 
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Management Entrustment Agreement
 
Party A entered an agreement with the local county government, pursuant to which: Party A shall bear geological survey fees (which has already been paid); when the local county government invites a public bidding for the mining rights, Party A will have the right to enter a bid; if Party A wins the bid, party A shall pay the transfer price of the mining rights (geological survey fees already paid will be regarded as part of the transfer price); if Party A doesn’t win the bid, the local county government will return Party A the geological survey fees, and undertake to coordinate the winning bidder to give Party A priority  under the same conditions to purchase iron ores under the mining rights
 
Party A has informed Party B: Party A shall purchase iron ores as materials from outside prior to acquiring the mining rights. The iron ores used during the trial production came from the construction of the production facilities and roads, which was approved by the local mineral authorities.
 
Party A has informed Party B: If the search results of geological survey do not meet the conditions for the establishment of mining rights, or Party A does not win the bid for the mining right in the tender and could not purchase iron ores from the winning bidder with a reasonable price, or ore reserves or ore grade does not fully meet the demands of Party A even if Party A wins the bid or reach an agreement with the winning bidder, Party A shall purchase iron ores as materials from other areas.
 
(3)   
Party A undertakes to assist Party B and coordinate the local governments at various levels during the period of the entrusted operation to acquire the mining license(s) in relation to the areas around the production facilities, the state-owned land use right occupied by the production facilities, and to go through the relevant lacking legal procedures of the production facilities according to Chinese laws. If Party A's own capital is not sufficient to pay the relating consideration or expenses, Party B shall be responsible for the shortage.
 
 
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Management Entrustment Agreement
 
5.2     Each party shall warrant and represent to the other party, on the execution day of this Agreement, that:
 
(1)   
Each party shall have the right to enter into this Agreement, and the ability to perform this Agreement;
 
(2)   
In order to execute and perform this Agreement, each party has gone through the necessary internal decision-making procedures and obtained the approval;
 
(3)   
Each party has duly authorized its representative to execute this Agreement;
 
(4)   
Each party shall not have any reason of its own that will encumber the effectiveness of this Agreement from the effective date and become binding on such party;
 
(5)   
The execution of this Agreement and the performance of the obligations hereunder will NOT:
 
a)  
violate the business license, articles of association or any other similar documents of that party;
 
b)  
violate the laws and regulations of China or the government authorization or permit;
 
c)  
violate any other contracts or agreements to which that party is a party (or is bound), or lead to that party’s breach of contract under such contracts or agreements.
 
 
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Management Entrustment Agreement
 
Article 6    Effect of the Agreement
 
This Agreement shall be valid upon the subscription of both parties’ legal representatives or duly authorized representatives and the affixture of both parties’ corporate seals.
 
Article 7    Liability of Beach of the Agreement
 
After the effectiveness of this Agreement, apart from the situation described in Article 8 of this Agreement, either party’s violation of any provisions under this Agreement shall constitute a breach of this Agreement and thus be liable to compensate the non-breaching party for any damages that may arise thereof.
 
Article 8    Force Majeure
 
Either party’s failure to perform the obligations or part of the obligations of this Agreement due to a force majeure event shall not be deemed as a breach of the agreement; however, the non-performing party shall timely provide effective evidence of the force majeure event to the other party, and the parties shall discuss a settlement plan through consultation.
 
Article 9    The Governing Law
 
The execution, effectiveness, interpretation, performance and dispute resolution of this Agreement shall be governed by the laws and regulations of China.
 
Article 10   Dispute Resolution
 
Any dispute arising under this Agreement shall be first settled by the parties through friendly consultation.   If the negotiation fails within 45 days, either party  is entitled to submit the dispute to the China international Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration which shall be conducted in accordance with the Commission's arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
 
 
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Management Entrustment Agreement
 
Article 11   Confidentiality
 
 
11.1  
The parties agree and shall cause their relevant personnel to keep strict confidence of all the terms and conditions of this Agreement and all the matters of the entrusted operation that have access to. They shall not disclose the aforesaid information to any third party unless it is required by the explicit provision of law, or the instruction of judicial or governmental agencies or with consent of the other party, otherwise, the disclosing party shall bear the relevant legal consequences.
 
 
11.2  
The confidentiality obligation of the parties shall survive the termination of this Agreement.
 
Article 12   Severability of the Clauses
 
 
12.1  
If any clause of this Agreement is invalidated or non-enforceable due to the provisions of laws or regulations, this clause is invalid while all other clauses shall remain in full force and effect and binding upon both parties.
 
 
12.2  
In the event the aforesaid situation occurs, the parties shall, through friendly consultation, agree upon supplemental clause to replace the invalid clause at their earliest possible time.
 
Article 13   Non-waiver of Rights
 
 
13.1  
If one party fails or delays to exercise a certain right provided under this Agreement, such failure or delay shall not constitute the waiver of such right by that party.
 
 
13.2  
If one party fails to require the other party to perform a certain obligation provided under this Agreement, such failure shall not constitute the waiver by that party of the right to require the other party to perform at a later time.
 
 
13.3  
If one party violates any clause of this Agreement and obtains a waiver of liability from the non-violating party, such waiver shall not constitute the waiver of liability by the non-violation party over the violations by the other party at a later time or of other clauses of this Agreement.
 
 
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Management Entrustment Agreement
 
Article 14   No Transfer
 
Unless otherwise provided in this Agreement, without the prior written consent of the other party, one party shall not transfer or entrust this Agreement or any right or obligation under this Agreement to a third party, nor shall one party provide any guarantee to a third party or do other similar things.
 
Article 15   Miscellaneous
 
 
15.1  
Any supplemental agreements entered into by the parties after the effective date of this Agreement shall be an effective part of this Agreement and have the same legal effect as this Agreement.  If there is any discrepancy between the supplemental agreement and this Agreement, the supplemental agreement shall prevail.
 
 
15.2  
This Agreement is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
 
15.3  
This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Management Entrustment Agreement
 
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement specified on the first page of this Agreement.
 
Party A: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
Party B: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
Page 20 / 21
 
 
Management Entrustment Agreement
 
Statement
 
Date: May 9 th , 2011
 
I agree that Zhuolu Jinxin Mining Co., Ltd. signs the Management Entrustment Agreement with Zhangjiakou Tongda Mining Technologies Service Co., Ltd., which irrevocably entrusts Zhangjiakou Tongda Mining Technologies Service Co., Ltd. for its management the right of operation management of Zhuolu Jinxin Mining Co., Ltd. and the right from me according to the laws and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd.
 
Stated by :
 
Jiazhen Liu (ID No.120102196305211080):
Changqing Han (ID No. 120103196501136125):
Jianxin Wei (ID No.130102197010052138):
Xia Wang (ID No.120106196301100522):
Ying Li (ID No.12010219610517107X):
Jiaqi Liu (ID No.120102195905141077):
Jianhua Zhang (ID No.120101196112195014):
Junyan Tian (ID No.120102195502161161):
Fengqin Ji (ID No.120105194510092121):
Lixin Shi (ID No.132928197402226028):
Huiqin Wang (ID No.120104195512061829):
Wenyan Yang (ID No.120222196411287020):
Dengwei Gao (ID No.120105195401094229):
Shaofeng Han (ID No.120112196402271643):
Yuqin Wei (ID No.120223197107061669):

Page 21 / 21

 
 
Power of Attorney
   
Power of Attorney

I, Jiazhen Liu, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120102196305211080, and a holder of 47% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Jiazhen Liu
Jiazhen Liu
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney
 
I, Changqing Han, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120103196501136125, and a holder of 21.87% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Changqing Han
Changqing Han
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney
 
I, Jianxin Wei, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 130102197010052138, and a holder of 7.18% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Jianxin Wei
Jianxin Wei
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Xia Wang, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120106196301100522, and a holder of 6.33% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Xia Wang
Xia Wang
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Ying Li, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 12010219610517107X, and a holder of 3.50% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Ying Li
Ying Li
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Jiaqi Liu, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120102195905141077, and a holder of 3.50% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Jiaqi Liu
Jiaqi Liu
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Jianhua Zhang, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120101196112195014,, and a holder of 3% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Jianhua Zhang
Jianhua Zhang
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Junyan Tian, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120102195502161161,, and a holder of 1.79% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Junyan Tian
Junyan Tian
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Fengqin Ji, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120105194510092121,, and a holder of 1.73% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
Page 1 / 2
 
 
Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Fengqin Ji
Fengqin Ji
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
Page 2 / 2
 
 
Power of Attorney
   
Power of Attorney

I, Lixin Shi, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 132928197402226028,, and a holder of 1.16% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Lixin Shi
Lixin Shi
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
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Power of Attorney
   
Power of Attorney

I, Huiqin Wang, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120104195512061829, and a holder of 1.05% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Huiqin Wang
Huiqin Wang
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
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Power of Attorney
   
Power of Attorney

I, Wenyan Yang, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120222196411287020, and a holder of 0.79% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Wenyan Yang
Wenyan Yang
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
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Power of Attorney
   
Power of Attorney

I, Dengwei Gao, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120105195401094229, and a holder of 0.46% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Dengwei Gao
Dengwei Gao
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
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Power of Attorney
   
Power of Attorney

I, Shaofeng Han, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120112196402271643, and a holder of 0.32% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Shaofeng Han
Shaofeng Han
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
 
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Power of Attorney
   
Power of Attorney

I, Yuqin Wei, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 120223197107061669, and a holder of 0.32% of the shares of Zhuolu Jinxin Mining Co., Ltd. (" My Shareholding "), hereby irrevocably authorize Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (" WOFE ") to exercise the following rights relating to My Shareholding during the term of this Power of Attorney:
 
WOFE is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attend the shareholders’ meetings of Zhuolu Jinxin Mining Co., Ltd.  and/or sign the relevant resolution(s); 2) exercise all the shareholder's rights and shareholder's voting rights I am entitled to under the laws of the PRC and the Articles of Association of Zhuolu Jinxin Mining Co., Ltd., including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, Chairman of the board of directors ) and/or director, supervisor, the chief executive officer, financial officer and other senior management members of Zhuolu Jinxin Mining Co., Ltd.
 
Without limiting the generality of the powers granted hereunder, WOFE shall have the power and authority under this Power of Attorney to execute the relevant share and/or assets agreements stipulated in the Exclusive Purchase Option Agreement, to which I am required to be a party, on behalf of myself, and to effect the terms of the Share Pledge Agreement and Exclusive Purchase Option Agreement, both dated the date hereof, to which I am a party.
 
Except as otherwise provided hereunder, WOFE is entitled to perform, at its discretion, all the necessary rights incurred from My Shareholding without my oral or written instructions.
 
Except as otherwise provided hereunder, WOFE is entitled to transfer, allocate or utilize in some other ways the dividends-in-cash and other non-cash income arising from My Shareholding in accordance with my oral or written instructions.
 
 
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Power of Attorney
 
All the actions related to My Shareholding conducted by WOFE shall be deemed as my own actions, and all the documents related to My Shareholding executed by WOFE shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the WOFE.
 
WOFE is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. However, WOFE shall immediately inform me of such reauthorization or assignation and such reauthorization or assignation shall not impair my benefits.
 
This Power of Attorney shall be irrevocable and continuously valid from the date of execution of this Power of Attorney, so long as I am a shareholder of Zhuolu Jinxin Mining Co., Ltd.
 
During the term of this Power of Attorney, I hereby waive all the rights related to My Shareholding, which have been authorized to WOFE through this Power of Attorney, and shall not exercise such rights by myself.
 
This Power of Attorney is written both in Chinese and English; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.
 
By: /s/ Yuqin Wei
Yuqin Wei
May 9 th , 2011
 
By: /s/Lidong Li
Witness: Lidong Li
May 9 th , 2011
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Jiazhen Liu, a citizen of the PRC with Chinese identification No.: 120102196305211080, with the address at No. 609, Unit 1, Building 7, Quxizhongli, Chengyin Road, Hedong District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 47% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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Exclusive Purchase Option Agreement
 
 
1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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Exclusive Purchase Option Agreement
 
 
2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Jiazhen Liu (signature): /s/ Jiazhen Liu
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal) Jiazhen Liu
Legal Representative or Authorized Representative (signature):
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Changqing Han, a citizen of the PRC with Chinese identification No.: 120103196501136125, with the address at No. 105, Unit 65, Kuanfuli, Yilin Road, Hexi District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 21.87% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Changqing Han (signature):/s/ Changqing Han
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Jianxin Wei, a citizen of the PRC with Chinese identification No.: 130102197010052138, with the address at No. 101, Unit 1, Building 82, Tangu Community, Tangu West Street, Changan District, Shijianzhuang, Hebei Province; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 7.18% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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Exclusive Purchase Option Agreement
 
However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Jianxin Wei (signature):/s/ Jianxin Wei 
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Xia Wang, a citizen of the PRC with Chinese identification No.: 120106196301100522, with the address at No. 101, Unit 1, Building 2, Shiji Garden Community, Nanmenwai Street, Nankai  District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 6.33% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Xia Wang  (signature):/s/ Xia Wang
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Ying Li, a citizen of the PRC with Chinese identification No.: 12010219610517107X, with the address at No. 301, Unit 1, Building 14, Chunhuali, Huaxing Street, Hedang  District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 3.50% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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Exclusive Purchase Option Agreement
 
 
2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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Exclusive Purchase Option Agreement
 
However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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Exclusive Purchase Option Agreement
 
 
8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Exclusive Purchase Option Agreement
 
 
13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Ying Li  (signature):/s/ Ying Li
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Jiaqi Liu, a citizen of the PRC with Chinese identification No.: 120102195905141077, with the address at No. 310, Unit 1, Building 14, Yishoudongli, Weiguo Street, Hedong District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 3.50% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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Exclusive Purchase Option Agreement
 
 
1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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Exclusive Purchase Option Agreement
 
 
2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Jiaqi Liu (signature):/s/ Jiaqi Liu
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Jianhua Zhang, a citizen of the PRC with Chinese identification No.: 120101196112195014, with the address at No. 609, Unit 1, Building 7, Quizhongli, Chengyin Road, Hedong District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 3% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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Exclusive Purchase Option Agreement
 
 
1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Jianhua Zhang (signature):/s/ Jianhua Zhang
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Junyan Tian, a citizen of the PRC with Chinese identification No.: 120102195502161161, with the address at No. 13, Xinzhuang San Tiao, Unit 1, Hedong District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 1.79% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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Exclusive Purchase Option Agreement
 
 
1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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Exclusive Purchase Option Agreement
 
 
2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Jianhua Zhang (signature):/s/ Jianhua Zhang
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Fengqin Ji, a citizen of the PRC with Chinese identification No.: 120105194510092121, with the address at No. 201, Unit 7, Building 1, Guangdong  Shanzhuang Road, Hedong District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 1.73% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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Exclusive Purchase Option Agreement
 
 
1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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Exclusive Purchase Option Agreement
 
 
2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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Exclusive Purchase Option Agreement
 
 
2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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Exclusive Purchase Option Agreement
 
 
2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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Exclusive Purchase Option Agreement
 
If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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Exclusive Purchase Option Agreement
 
 
5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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Exclusive Purchase Option Agreement
 
However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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Exclusive Purchase Option Agreement
 
 
13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Fengqin Ji (signature):/s/ Fengqin Ji
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Lixin Shi, a citizen of the PRC with Chinese identification No.: 132928197402226028, with the address at No. 501, Unit 3, Building 12818, Oil Community, North Street, Nanpi Town, Nanpi County, Cangzhou City, Hebei Province; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 1.16% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Lixin Shi  (signature):/s/ Lixin Shi
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Huiqin Wang, a citizen of the PRC with Chinese identification No.: 120104195512061829, with the address at No. 505, Building 1, Jiahai Garden, Shizlin Street, Hebei District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 1.05% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Huiqin Wang  (signature):/s/ Huiqin Wang
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Wenyan Yang, a citizen of the PRC with Chinese identification No.: 120222196411287020, with the address at No. 407, Unit 3, Building 11, Guangshazhongli, Yangcun Town, Wuqing District, Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 0.79% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Wenyan Yang  (signature):/s/ Wenyan Yang
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Dengwei Gao, a citizen of the PRC with Chinese identification No.: 120105195401094229, with the address at No. 14, Xiaschichang, Tiaowei Road, Hebei District,Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 0.46% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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Exclusive Purchase Option Agreement
 
 
8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Dengwei Gao  (signature):/s/ Dengwei Gao
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Shaofeng Han, a citizen of the PRC with Chinese identification No.: 120112196402271643, with the address at No. 6, Nanjingli, Luzhuangzi Village, Shungguang Town, Jin’nan District,Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 0.32% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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Exclusive Purchase Option Agreement
 
(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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Exclusive Purchase Option Agreement
 
 
1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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Exclusive Purchase Option Agreement
 
 
5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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Exclusive Purchase Option Agreement
 
 
5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Shaofeng Han (signature):/s/ Shaofeng Han
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Exclusive Purchase Option Agreement
 
EXCLUSIVE PURCHASE OPTION AGREEMENT
 
This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
  
Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd, a wholly foreign-owned enterprise which has been duly organized and  is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.

Party B:  Yuqin Wei, a citizen of the PRC with Chinese identification No.: 120223197107061669, with the address at No. 3, Zhongxin’yixiang, Zhangjiawo Town, Xiqing District,Tianjin; and
 
Party C: Zhuolu Jinxin Mining Co., Ltd., a company with limited liability which has been duly incorporated and  is validly existing in the territory of the PRC pursuant to the laws of the PRC with its address at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.

In this Agreement, each of Party A, Party B and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
WHEREAS:
 
(1) On the date of execution of this Agreement, Party B is one of the shareholders of Party C and duly holds 0.32% of the shares of Party C;

(2) Party B agrees to irrevocably confer Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or the third party designated by Party A (“Designee”) may have the right to purchase all the equities Party B holds in Party C (“Object Equities”) at any time when the law of the PRC permits and Party A deems it proper.  And Party A agrees to accept the above-mentioned exclusive purchase option.
 
 
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(3) Party C agrees to irrevocably confer Party A the purchase option to purchase all the assets of Party C, so that Party A or its Designee may have the right to purchase all the assets of Party C (“Object Assets”) at any time when the laws of the PRC permits and Party A deems it proper.  And all the shareholders of Party C agree to such grant and Party A agrees to accept the above-mentioned exclusive purchase option.

NOW, THEREFORE , with the consensus reached through negotiation, all parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”).

1.
 Conferring and Exercise of Purchase Option

 
1.1
Exclusive Purchase Option of the Object Equities.  Party B agrees to irrevocably confer Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 
1.1.1
This Agreement is executed on the date first above written and shall take effect as of such date (such day, the “Effective Date”), and subject to earlier termination by Party A, shall continue in effect until the thirtieth anniversary of the Effective Date (the “Initial Term”); provided, that if this Agreement has not been terminated by Party A prior to the end of the Initial Term or a Renewal Term (as the case may be), the term of this Agreement automatically and without any action of any party shall be extended for additional successive ten year periods thereafter (each a “Renewal Term,” and collectively with the Initial Term, the “Term”), unless not less than 30 days prior to the end of the Initial Term or any Renewal Term Party A notifies Party B and Party C in writing that this Agreement shall terminate at the end of the Initial Term or that Renewal Term, as the case may be.  In no event shall Party B or Party C have the right to unilaterally terminate this Agreement.

 
1.1.2
Commencing upon the Effective Date and continuing through the Term of this Agreement (“ Exercise Period ”), Party A or its Designee shall have the right to purchase all or part of the equities Party B holds in Party C pursuant to the related terms and conditions under this Agreement and at the Exercise Price for Equity Purchase Option (as defined hereunder), provided that the laws of the PRC at that time permits.  Party B agrees to enter into an Equity Transfer Agreement (“ Equity Transfer Agreement ”) with Party A or its Designee in the format.  The Exercise Period under this Agreement may be extended by the written consent of Party A before the expiration date.  The term of extension shall be determined through mutual agreement by all parties to this Agreement.
 
 
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1.1.3
Where the laws of the PRC permits and Party A sends the Equity Purchase Exercise Notice (as defined in Subsection 2.2.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Equities to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.1.4
The Object Equities shall be free of any Security Interest.  For the purpose of this Agreement, Security Interest means any mortgage, pledge, the right or interest of the third party, any purchase right of equity interest, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements; however, it does not include any security interests created under Equity the Pledge Agreement entered into by Party A and Party B on the same day as this Agreement (“ Equity Pledge Agreement ”).
 
 
1.1.5
During the Exercise Period, if the holding of all or part of the Object Equities by Party B is or will be deemed to violate the applicable laws, Party B and Party C shall immediately send a written notice to Party A to explain the reason in detail.
 
 
1.2
Exclusive Purchase Option to the Object Assets.  Party C here agrees to irrevocably confer Party A the purchase option to purchase all of its assets (“ Assets Purchase Option ”).  The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option ”:
 
 
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1.2.1
During the Exercise Period, Party A or its Designee shall have the right to purchase all or part of the assets owned by Party C pursuant to the terms and conditions under this Agreement at the Exercise Price for Assets Purchase Option or a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits.  Party C agrees to enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee.

 
1.2.2
Where the laws of the PRC permits and Party A sends the Asset Purchase Exercise Notice (as defined in Subsection 2.3.1), Party B and Party C shall unconditionally cooperate with Party A to carry out the above procedures and transfer all or part of the Object Assets to Party A or its Designee, and transact all necessary formalities such as review and approval, permit, registration and filing.
 
 
1.2.3
When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure other shareholders of Party C will approve the asset transfer under this Agreement.
 
2.
Exercise Steps
 
 
2.1
Pursuant to the applicable laws of the PRC, Party A shall have the right to determine the time, manner and number of purchases for the Purchase Option.
 
 
2.2
Exercise steps to purchase equities:
 
 
2.2.1
During the Exercise Period, Party A may send an exercise notice (“ Equity Purchase Exercise Notice ”) to Party B to exercise the Equity Purchase Option under this Agreement to purchase all or part of the Object Equities or transfer all or part of the Object Equities to a Designee, provided that the laws of the PRC permits at that time.
 
 
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2.2.2
Upon receipt of the Equity Purchase Notice pursuant to Subsection 2.2.1 above or earlier if requested by Party A, Party B shall immediately:
 
 
(a)
obtain the waiver concerning the first refusal of other shareholders of Party C at that time on the purchase of such equities;

 
(b)
enter into an Equity Transfer Agreement in the format attached as Annex 1 hereto with Party A and/or its Designee according the requirements of the Equity Purchase Exercise Notice;
 
 
(c)
revise the Articles of Association of Party C together with Party A and/or its Designee and other shareholders of Party C at that time pursuant to the Equity Transfer Agreement;
 
 
(d)
cause Party C to promptly convene a shareholder’s meeting to pass the resolutions to approve the equity transfer pursuant to the exercise of the Equity Purchase Option and the amendment to the Articles of Association of Party C;
 
 
(e)
together with Party A and/or its Designee and other shareholders of Party C at that time, handle all necessary approval and examination, registration and filing procedures required by the laws of the PRC within thirty (30) business days as of the date of receipt of the Equity Purchase Exercise Notice by Party B or an earlier time agreed upon by the parties; and

 
(f)
execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any Security Interest, of the Object Equities to Party A and/or its Designee, and cause Party A and/or its Designee to be the registered owner of the Object Equities.
 
 
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2.3
Exercise steps to purchase assets:
 
 
2.3.1
During the Exercise Period, Party A may send an exercise notice (“ Assets Purchase Exercise Notice ”) to Party C to exercise the Assets Purchase Option under this Agreement, purchase all or part of the Object Assets owned by Party C or transfer all or part of the Object Assets to a Designee, provided that the laws of the PRC permits at that time.

 
2.3.2
Once Party C receives the Assets Purchase Exercise Notice pursuant to Subsection 2.3.1 above or earlier if requested by Party A, Party C shall immediately:
 
 
(a)
enter into an Assets Transfer Agreement in the format attached as Annex 2 hereto and any other necessary agreements with Party A and/or its Designee according to the requirements set forth in the Assets Purchase Exercise Notice;
 
 
(b)
convene a shareholder's meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and
 
 
(c)
together with all the shareholders of Party C at that time execute all other requisite contracts, agreements or documents, obtain all requisite approvals and consents of the government, conduct all necessary actions to transfer the valid ownership, without any security interest,  of the Object Assets to Party A and/or it Designee, and cause Party A and/or its Designee to be the registered owner of the Object Assets (if necessary).
 
 
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2.4
Before Party A obtains the Object Equities or the Object Assets by means of exercising either the Equity Purchase Option or the Assets Purchase Option, Party B and/or Party C shall entrust Party A to manage Party C pursuant to the Management Entrustment Agreement entered into by and between Party A and Party C on the same day as this Agreement.
 
3.
Exercise Conditions

During the Exercise Period, where Party A deems it necessary and the laws of the PRC at that time permits to purchase the equities or assets of Party C, Party A may immediately exercise the Equity Purchase Option or the Assets Purchase Option, and purchase the Object Equities or Object Assets.  Party A shall have the right to choose to exercise either the Equity Purchase Option or the Assets Purchase Option; and the exercise of the Equity Purchase Option will not affect the exercise of the Assets Purchase Option and vice versa.

4.
Exercise Price
 
 
4.1
Exercise price for Equity Purchase Option (“ Exercise Price for Equity Purchase Option ”) or Assets Purchase Option (“ Exercise Price for Assets Purchase Option ”)
 
Unless an appraisal is required by the laws of China for the consummation of the Equity Purchase Option and/or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities and/or Object Assets (the "Purchase Price") shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Object Equities to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Object Equities being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C on the date of the Equity Purchase Exercise Notice or Assets Purchase Exercise Notice, as the case may be, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Assets Purchase Exercise Notice.
 
 
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If after the delivery of the Assets Purchase Exercise Notice or the Equity Purchase Option Exercise Notice, it is determined that the laws of China do not permit the purchase of the Optioned Equity Interests and/or Assets at the price provided for herein, the Purchase Price shall be the lowest price allowed by law and Party A shall have the right to rescind its Purchase option Notice and continue the management arrangements then in place. 
 
5.
Representations and Warranties
 
 
5.1
Each party respectively represents and warranties to the other parties that:
 
 
5.1.1
it has the right to execute this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and the capability to perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.1.2
it has carried out necessary internal derision-making procedures, obtained proper authority, acquired all the necessary consent and approval of any requisite third party and government authority to enter into and perform its obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement; and
 
 
5.1.3
once executed, this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement will constitute the legal, valid, and binding obligation of each party, and each party will be subject to compulsory enforcement on it pursuant to the terms and conditions under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.
 
 
5.2
Party B hereby represents and warrants to Party A that:
 
 
5.2.1  Party B is a shareholder, duly and legally registered, of Party C and has paid the subscribed registered capital in full sum pursuant to the laws of the PRC;
 
 
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5.2.2  The Object Equities held by Party B can be freely transferred without anyone's prior consent, and the Object Equities are free of encumbrances of any kind, other than the Security Interest pursuant to the Equity Pledge Agreement.
 
 
5.2.3  Party B has complied with all the laws of the PRC and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;

 
5.2.4  No litigation, arbitration or administrative procedure relevant to the Object Equities or Party B is in process or to be settled, and Party B has no knowledge of any pending or threatened claim;

 
5.2.5  Party B has not sold or agreed to sell the Object Equities to any third party other than Party A or its Designee, and Party B has no future plans to sell or agree to sell the Object Equities to any third party other than Party A or its Designee;

 
5.2.6  Party B strictly abides by the obligations under the Articles of Association of Party C.  There are no circumstances that may affect the legal status of Party B as the shareholder of Party C, or any circumstance that may prevent Party A from exercising the Equity Purchase Option under this Agreement;

 
5.2.7  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC;  (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party B is a party or which bind Party B; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
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5.2.8  Party B, upon the request of Party A, will appoint any person designated by Party A to be the director of Party C; and

 
5.2.9  Party B shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at its own expense.
 
 
5.3
Party C hereby represents and warrants to Party A that:
 
 
5.3.1  Party C is a company with limited liability, which has been duly incorporated and validly existing pursuant to the laws of the PRC;

 
5.3.2  Party C has stated to Party A, in the Article 5.1 of Management Entrustment Agreement by on the same day as this Agreement, the legal status of land occupied for production facilities, the legal status of production facilities and the contractual arrangement with the local county government in connection with mining rights surrounding the production facilities.

 
5.3.3  Party C complies with all PRC laws and regulations applicable to the purchase of assets and equities in connection with this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement;
 
 
5.3.4  The shares of Party C are transferable, and Party C has not permitted or caused any Security Interest to be imposed upon the shares of Party C, other than the Security Interest pursuant to the Equity Pledge Agreement;
 
 
5.3.5  Party C does not have any unpaid debt, other than (i) debt arising from the ordinary course of business; and (ii) debt disclosed to Party A and obtained written consent by Party A;
 
 
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Exclusive Purchase Option Agreement
 
 
5.3.6  No litigation, arbitration or administrative procedure relevant to Object Equities, the Object Assets or Party C itself is in process or to be settled and Party C has no knowledge of any pending or threatened claim;
 
 
5.3.7  Party C has not sold or agreed to sell any of its assets to any third party other than Party A or its Designee, and Party C has no future plans to sell or agree to sell the Object Assets to any third party other than Party A or its Designee;
 
 
5.3.8  Neither the execution and delivery of this Agreement, the Equity Transfer Agreements or Assets Transfer Agreements, nor the performance of the obligations under this Agreement, any Equity Transfer Agreements or Assets Transfer Agreements will: (i) violate any laws of the PRC; (ii) conflict with its Articles of Association or other organizational documents; (iii) breach any contracts or documents to which Party C is a party or which bind Party C; (iv) violate any acquired permits, approvals or any valid qualifications; or (v) result in the ceasing or revocation or additional conditions to the acquired permits or approvals;
 
 
5.3.9  Party C will agree to look for insurance from an insurance company acceptable to Party A.  The amount and category of insurance shall be the same as those held by the companies which are in the same industry with similar business and own the similar properties and assets as Party C;

 
5.3.10  Upon the request of Party A, Party C shall provide all related operation and finance materials of Party C to the extent that those materials are available to Party C; and

 
5.3.11  Party C shall promptly notify Party A of any pending or threatened litigation, arbitration or administrative procedure related to the assets, business and income of Party C, and tender to Party A the sole control of the defense and settlement of such claim and cooperate with such defense and/or settlement at Party C's expense.
 
 
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5.4
Before Party A obtains the Object Equities and Object Assets of Party C by means of exercising either the Equity Purchase Option or the Assets Purchase Option, without the prior written consent by Party A, Party B and Party C shall not jointly or separately:
 
 
5.4.1
amend, modify or revise the Articles of Association of Party C in any form, or change the structure of the shareholders of Party C;

 
5.4.2
agree to increase or decrease the registered capital or the number of existing shareholders of Party C;

 
5.4.3
cause Party C to have transactions, which may materially affect the assets, business, net assets or other legal rights and liabilities of Party C, unless these transactions are related to the ordinary course of business or have been disclosed to and the written consent from Party A has been obtained;
 
 
5.4.4
transfer or dispose the Object Equities in any manner or grant any security interest or any other third party right on the Object Equities;
 
 
5.4.5
sell, transfer, mortgage or dispose in any other form, any asset, income and any other legal yield and interest of Party C, or approve any encumbrance or imposition of any Security Interest on Party C’s assets;
 
 
5.4.6
issue or provide guarantee, loan or credit to any third party or incur any debt, other than (i) the debt arising from ordinary course of business; and (ii) the debt has been disclosed to Party A and the written consent by Party A has been obtained.
 
 
5.4.7
terminate or cause Party C to terminate any material agreement (whose definition is at Party A’s discretion at that time) entered into by Party C, or enter into any agreement that would conflict with the existing material agreements of Party C and/or Party B;
 
 
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Exclusive Purchase Option Agreement
 
 
5.4.8
distribute any distributable profit, bonus, dividends or interests of Party C, unless otherwise stipulated by the laws of the PRC; or

 
5.4.9
approve or adopt any shareholders resolution at a shareholder meeting of Party C which may cause Party C to be merged, acquired or invested, or to merge, acquire or invest in or associate with any entity other than Party A.
 
6.
Transfer of this Agreement
 
 
6.1
Without the prior written consent by Party A, Party B and Party C shall not sub-contract, license or transfer its rights and obligations under this Agreement to any third party or its affiliate; and any transfer of this Agreement without prior written consent of Party A shall be invalid.
 
 
6.2
Party B and Party C agree and confirm that Party A may transfer its rights and obligations under this Agreement, without the consent of Party B and/or Party C, to any third party, provided that Party A notifies Party B and Party C of such transfer in writing.

7.
Confidentiality
 
 
7.1
All parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, whether commercial, technical or in any other form (“Confidential information"), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement.  Unless the other parties consent in writing, none of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
7.2
Each party may disclose the Confidential Information in the following circumstances: (1) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (2) where the competent authority or government department requires; (3) where such Confidential Information has been known to the general public; (4) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (5) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (6) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, the Equity Transfer Agreement, and the Assets Transfer Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 7.
 
 
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Exclusive Purchase Option Agreement
 
However, for the circumstances aforesaid, where any party discloses the Confidential Information, it shall inform the other parties of the Confidential Information to be disclosed.
 
 
7.3
Nonetheless other provisions of this Section 7, each party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 7.1 of this Section.
 
 
7.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
7.5
This Section 7 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.
 
8.
Liability for breach
 
 
8.1
Any parties shall sufficiently perform this Agreement.  Any Party breaching this Agreement shall bear the liability as arising out of and in relation thereto.  If such breach causes damages to any other party, the breaching party shall compensate such party for all such damages.
 
 
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Exclusive Purchase Option Agreement
 
 
8.2
If Party B breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:

 
8.2.1
require Party B to transfer all or any part of the Object equities immediately at the Exercise Price for Equity Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time; and
 
 
8.2.2
require Party B to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
 
8.3
If Party C breaches this Agreement, in addition to the remedies stipulated by the laws of the PRC, Party A may also take the following measures:
 
 
8.3.1         require Party C to transfer all or part of the Object Assets immediately at the Exercise Price for Assets Purchase Option to Party A or its Designee, provided that the laws of the PRC permit at that time;
 
 
8.3.2         require Party B to exercise the rights as a shareholder of Party C, and cure the breach of Party C; if after ten (10) days after Party A sends a written notice to Party B or Party C, such breach has not been cured, Party A shall have the right to require Party B to transfer all or part of the Object Equities immediately at the Exercise price for Equity Purchase Option to Party A or its Designee provided that the laws of the PRC permit at that time; or

 
8.3.3         require Party B and Party C to compensate all direct and indirect damages, including but not limited to all the legal fees, travel fees and investigation fees paid for seeking and enforcing such remedies.
 
9.
Governing Law and Dispute Resolution
 
 
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Exclusive Purchase Option Agreement
 
 
9.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
9.2
All parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, each party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind all parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
9.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
10.
Effect and Termination
 
 
10.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by all parties.
 
 
10.2
In any of the following circumstances, this Agreement shall be terminated:
 
 
10.2.1
where, during the Exercise Period, all parties reach an agreement to terminate this Agreement;

 
10.2.2
where, during the Exercise Period, Party A notifies the other parties thirty (30) days in advance to terminate this Agreement; in such circumstance, Party A shall not assume any liabilities as arising out of and in relation thereto;
 
 
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Exclusive Purchase Option Agreement
 
 
10.2.3
at the expiration of the Exercise Period provided; however, Party A may extend the Exercise Period and this Agreement in its sole discretion; or
 
 
10.2.4
upon the unanimous agreement by all parties.
 
 
10.3
Section 7 regarding confidentiality and Section 12 regarding indemnification shall survive the termination of this Agreement.
 
11.
Taxes and Fees

All taxes and fees resulting from the execution and performance of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement shall be borne by Party 【】 .
 
12.
Indemnification

Party B and Party C shall indemnify and hold harmless Party A or its Designee, their affiliates and each of their respective successors and assigns, and their respective officers, directors, employees and agents (collectively, “ Indemnified Party” ) from and against any liabilities, claims (including claims by third parties), demands, judgments, losses, costs, damages or expenses whatsoever (including reasonable attorneys', consultants' and other professional fees and disbursements of every kind, nature and description) (collectively, “ Damages” ) such Indemnified Party may sustain, suffer or incur and that result from, arise out of or relate to the willful breach of this Agreement, the Equity Purchase Agreement and the Assets Purchase Agreement by Party B or Party C.
 
13.
General Terms
 
 
13.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Exclusive Purchase Option Agreement
 
 
13.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of all parties.  Such revision shall be a valid integral part of this Agreement.
 
 
13.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
13.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (a) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (b) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
13.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
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Exclusive Purchase Option Agreement
 
 
13.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
13.7
Succession of this Agreement.  This Agreement shall bind the successors and transferees of all parties.
 
 
13.8
Language.  This Agreement is in both Chinese and English and signed by all parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
13.9
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Exclusive Purchase Option Agreement
 
IN WITNESS HEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

Party A: Zhangjiakou Tongda Mining Technologies Service Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
Party B: Yuqin Wei (signature):/s/ Yuqin Wei
 
Party C: Zhuolu Jinxin Mining Co., Ltd.(seal)
Legal Representative or Authorized Representative (signature): /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Jiazhen Liu, a citizen of the PRC with Chinese identification No.: 120102196305211080, with the address at No. 609, Unit 1, Building 7, Quxizhongli, Chengyin Road, Hedong District, Tianjin; and

Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.  
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 47% of the shares of Jinxin Company;

 
2.  
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.  
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Jiazhen Liu (signature): /s/ Jiazhen Liu
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Changqing Han, a citizen of the PRC with Chinese identification No.: 120103196501136125, with the address at No. 105, Unit 65, Kuanfuli, Yilin Road, Hexi District, Tianjin; and

Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.  
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 21.87% of the shares of Jinxin Company;

 
2.  
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.  
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Changqing Han (signature): /s/ Changqing Han
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Jianxin Wei, a citizen of the PRC with Chinese identification No.: 130102197010052138, with the address at No. 101, Unit 1, Building 82, Tan’gu Community, Tan’gu West Street, Chang’an District, Shijianzhuang, Hebei Province; and

Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.  
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 7.18% of the shares of Jinxin Company;

 
2.  
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.  
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Jianxin Wei (signature): /s/ Jianxin Wei
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement


 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Xia Wang, a citizen of the PRC with Chinese identification No.: 120106196301100522, with the address at No. 101, Unit 1, Building 2, Shiji Garden Community, Nanmenwai Street, Nankai  District, Tianjin; and

Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 6.33% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Xia Wang (signature): /s/ Xia Wang
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Ying Li, a citizen of the PRC with Chinese identification No.: 12010219610517107X, with the address at No. 301, Unit 1, Building 14, Chunhuali, Huaxing Street, Hedang  District, Tianjin; and

Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 3.50% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement

In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Ying Li (signature): /s/ Ying Li
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Jiaqi Liu, a citizen of the PRC with Chinese identification No.: 120102195905141077, with the address at No. 310, Unit 1, Building 14, Yishoudongli, Weiguo Street, Hedong District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 3.50% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Jiaqi Liu (signature): /s/ Jiaqi Liu
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 

Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Jianhua Zhang, a citizen of the PRC with Chinese identification No.: 120101196112195014, with the address at No. 609, Unit 1, Building 7, Quizhongli, Chengyin Road, Hedong District, Tianjin ; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 3% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Jianhua Zhang (signature): /s/ Jianhua Zhang
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
  
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Junyan Tian, a citizen of the PRC with Chinese identification No.: 120102195502161161, with the address at No. 13, Xinzhuang San Tiao, Unit 1, Hedong District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 1.79% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Junyan Tian (signature): /s/ Junyan Tian
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Fengqin Ji, a citizen of the PRC with Chinese identification No.: 120105194510092121, with the address at No. 201, Unit 7, Building 1, Guangdong  Shanzhuang Road, Hedong District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 1.73% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Fengqin Ji (signature): /s/ Fengqin Ji
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Lixin Shi, a citizen of the PRC with Chinese identification No.: 132928197402226028, with the address at No. 501, Unit 3, Building 12818, Oil Community, North Street, Nanpi Town, Nanpi County, Cangzhou City, Hebei Province; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 1.16% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement

In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Lixin Shi (signature): /s/ Lixin Shi
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Huiqin Wang, a citizen of the PRC with Chinese identification No.: 120104195512061829, with the address at No. 505, Building 1, Jiahai Garden, Shizlin Street, Hebei District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 1.05% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement

In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Huiqin Wang (signature): /s/ Huiqin Wang
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Wenyan Yang, a citizen of the PRC with Chinese identification No.: 120222196411287020, with the address at No. 407, Unit 3, Building 11, Guangshazhongli, Yangcun Town, Wuqing District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 0.79% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement
 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Wenyan Yang (signature): /s/ Wenyan Yang
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Dengwei Gao, a citizen of the PRC with Chinese identification No.: 120105195401094229, with the address at No. 14, Xiaschichang, Tiaowei Road, Hebei District, Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 0.46% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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Equity Pledge Agreement

 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Dengwei Gao (signature): /s/ Dengwei Gao
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Shaofeng Han, a citizen of the PRC with Chinese identification No.: 120112196402271643, with the address at No. 6, Nanjingli, Luzhuangzi Village, Shungguang Town, Jin’nan District,Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 0.32% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
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Equity Pledge Agreement

 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Shaofeng Han (signature): /s/ Shaofeng Han
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
 
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Equity Pledge Agreement
 
Equity Pledge Agreement
 
This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on May 9, 2011, in Tianjin, the People’s Republic of China (“PRC”):
 
Party A :  Yuqin Wei, a citizen of the PRC with Chinese identification No.: 120223197107061669, with the address at No. 3, Zhongxin’yixiang, Zhangjiawo Town, Xiqing District,Tianjin; and
 
Party B : Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a wholly foreign-owned enterprise which has been duly organized and is validly existing under the laws of the PRC, with its address at Tianyang Residence Community, Qiaodong District, Zhangjiakou City, Hebei Province.
 
In this Agreement, Party A, Party B shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.
 
Whereas:
 
 
1.
On the date of execution of this Agreement, Party A is one of the shareholders of Zhuolu Jinxin Mining Co., Ltd. (“Jinxin Company”) and duly holds 0.32% of the shares of Jinxin Company;

 
2.
Jinxin Company is a corporation incorporated and validly existing in the territory of the PRC pursuant to the law of the PRC with business license registration number: 130731000000165 and its address at at Chunshugou Village, Luanzhuang Town, Zhuolu County, Hebei Province.
 
 
3.
In order to ensure all the shareholders of Jinxin Company and/or Jinxin Company to perform all obligations under the Management Entrustment Agreement, Power of Attorney and Exclusive Purchase Option Agreement (collectively referred to as “Onshore Agreements”) entered into on the same day as this Agreement, Party A agrees to pledge all the shares held by Party A in Jinxin Company to Party B as the guarantee for the performance of the Onshore Agreements by the related responsible parties pursuant to the terms and conditions of this Agreement, and Party B agrees to accept such pledge provided by Party A.
 
 
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Equity Pledge Agreement

NOW, THEREFORE, under the principle of equality and mutual benefit and with the consensus reached through negotiation, both parties have entered into this Agreement and agreed to abide by it pursuant to the applicable laws, regulations and rules of the PRC(“laws of the PRC”).
 
1.
Pledge of Equity

 
1.1
In order to guarantee Jinxin Company, all the shareholders of Jinxin Company (“Shareholders” )and other related responsible parties to perform all obligations and liabilities under the Onshore Agreements, Party A agrees to pledge the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B pursuant to the terms and conditions of this Agreement, and Party B agrees to accept the above equity pledge, and have priority right to the proceeds from the conversion, auction, or sale of the Pledged Equities.

 
1.2
The pledge under this Agreement includes the rights owned by Party B to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Jinxin Company and/or the Shareholders shall pay under the Onshore Agreements, and civil liabilities that Jinxin Company and/or the Shareholders shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 
1.3
Unless consent in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Jinxin Company and the Shareholders have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing.  If Jinxin Company or the Shareholders have not fully performed all or part of its or their obligations or liabilities under the Onshore Agreements at the expiration of such agreements, Party B will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.
 
2.
Representations and Warranties
 
 
2.1
Party A represents and warrants to Party B, on the day of execution of this Agreement:

 
2.1.1.
Party A has the right to execute this Agreement and the capability to perform the same;

 
2.1.2.
Party A has gone through necessary internal decision-making procedures, obtained proper authority, acquire all the necessary consents and approvals of any requisite third party and government authority to enter into and perform this Agreement and this Agreement does not violate the laws of the PRC and contracts binding or affecting it;
 
 
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Equity Pledge Agreement
 
 
2.1.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties will be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement;

 
2.1.4.
Party A is the exclusive and duly owner of the Pledged Equities, has paid up all capitals subscribed, has obtained the capital verification report issued by the duly qualified Certified Public Accounting firm and has the right to set the pledge of the first priority on such Pledged Equities for Party B;

 
2.1.5.
except for the pledge under this Agreement, there is not: (i) any other encumbrance or any security interests for the benefit of any third party on the equity interests pledged by Party A (including but not limited to pledge); (ii) any mortgages or other guarantee rights set for any third party; (iii) any pending or possible civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder on the date of execution of this Agreement; (iv) any trusts or conditions of limited use; (v) any exemptions from lawsuit, execution, enforcement or other legal proceedings; or (vi) any outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder on the date of execution of this Agreement;

 
2.1.6.
Party A has not effected and will not effect an Event of Default (as defined in Section 8) and has no knowledge of any risk of an Event of Default under this Agreement or any other agreement to which Party A are a party;

 
2.1.7.
Party A has abided by and performed all obligations stipulated by the applicable laws, regulations and rules and all applicable authorizations and permissions; Party A does not have any circumstances that go against any laws, regulations or rules and may have material and adverse effect on the validity, effect, performance and enforceability of this Agreement; and

 
2.1.8.
to the best knowledge of Party A, no court, arbitral tribunal or government authority starts to take any legal proceedings or administrative proceedings against Party A or the Pledged Equities, neither does any courts, arbitral tribunals or government authority start to file any legal proceedings or administrative proceedings against Party A or the Pledged Equities, and Party A has no knowledge of any such risks.

 
2.2
Party B presents and warranties to Party A on the day of execution of this Agreement:
 
 
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Equity Pledge Agreement
 
 
2.2.1.
it has the right, to execute this Agreement and the capability to perform the same;

 
2.2.2.
it has carried out necessary internal decision-making procedures, obtained proper authority, acquire the necessary consents and approvals of any third party and government authority to enter into and perform this Agreement and it does not go against the laws and contracts binding or affecting it; and

 
2.2.3.
upon the execution, this Agreement will constitute the legal, valid, binding obligation of both parties and both parties shall be subject to compulsory enforcement pursuant to the terms and conditions of this Agreement.

3.
Guaranteed Liabilities
 
The liabilities guaranteed under this Agreement are the obligations and liabilities of Jinxin Company, the Shareholders, and all related responsible parties incurred under the Onshore Agreements (including the extended agreements to these agreements and the revised and supplementary agreements to such agreements), including but not limited to the Entrustment fees, interest, liquidated damages, indemnities, fees for realization of the creditor’s right arising out of and in relation to the Onshore Agreements and payable by the Jinxin Company and/or the Shareholders to Party B, and the damages and other fees that are payable by Jinxin Company and/or the Shareholders to Party B due to the default.

4.
Pledged Equities
 
The Pledged Equities are 47% of the shares of Jinxin Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities.
 
5.
Pledge Procedures and Transaction
 
Within thirty (30) days of the execution of this Agreement, Party A shall transact the registration procedures in relation to this pledge of equity at Zhuolu Administration of Industry and Commerce.  If the registration for such pledge of equity fails due to the reason of Zhuolu Administration of Industry and Commerce, Party A shall demand Jinxin Company to write down the matter about such pledge of equity into the stock ledger of Jinxin Company and apply to Zhuolu Administration of Industry and Commerce for the transaction of the registration of the pledge of equity within thirty (30) days as of the day when Zhuolu Administration of Industry and Commerce approves such registration or the information about the approval for such registration is obtained.
 
6.
Party A’s Undertaking
 
Within the term of this Agreement, Party A undertakes to Party B that:
 
 
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Equity Pledge Agreement
 
 
6.1
without the prior written consent of Party B, Party A shall not impose any other encumbrance (whether prevailing over the pledge under this Agreement or not) or other restrictive conditions on all or part of the Pledged Equities;

 
6.2
without the prior written consent of Party B, Party A shall not sell, lease, lend, transfer, assign, grant, remortgage, trust, or participate in equity investment by, the Pledged Equities or dispose by any other means all or part of the Pledged Equities;

 
6.3
Party A shall not use or allow others to use the Pledged Equities for any actions or events against any laws or this Agreement;

 
6.4
after receiving any notice, order, ruling, verdict or other instruments in relation to the Pledged Equities from the government, judicial authority or arbitral organization, Party A shall immediately notify Party B and within the period provided by the applicable laws take all necessary steps to reduce the risks that such notice, order or other instruments may bring to the Pledged Equities.  Where Party B deems necessary, Party A shall file a lawsuit, arbitration or administrative lawsuit against the above notice, order or other instruments and bear all fees that arising therefrom and in relation thereto;

 
6.5
Party A shall immediately notify Party B of any events or any received notices which may affect the equity interest of Party A or any part of its right, and any events or any received notices which may change the covenants and obligations of Party A under this Agreement or which may affect the performance of its obligations under this Agreement, and take actions in accordance with the instructions of Party B;

 
6.6
Party A agrees that the right of Party B to exercise the pledge pursuant to this Agreement shall not be suspended or hampered by Party A or any successors or transferees of Party A or any other persons;

 
6.7
Party A warrants to Party B that in order to protect and perfect the security over the obligations of Party A and/or Jinxin Company under the Onshore Agreements, Party A shall make any necessary amendment (if applicable), execute in good faith and cause any third party who has interests in the pledge to execute all the title certificates, contracts, and /or perform and cause any third party who has interests to take action as required by Party B and make access to exercise the rights and authorization vested in Party B under this Agreement, and execute all the documents with respect to the changes of equity interests owned by Party B or another party designated by Party B, and provides Party B with all the necessary documents within the reasonable time; and

 
6.8
Party A warrants to Party B that Party A will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of Party B.  Party A shall indemnity Party B for all the damages suffered by Party B for the reasons that Party A does not perform or fully perform such guarantees, covenants, agreements, representations and conditions.
 
 
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Equity Pledge Agreement
 
7.
Exercise of Pledge
 
 
7.1
Subject to Clause 8.3, Party B may dispose the Pledged Equities at any time upon or after sending the notice for the exercise of the pledge.

 
7.2
Party B shall have the priority right to dispose all or part of Pledged Equities under this Agreement (including but not limited to purchase of shares at discounted price by agreement, sell at auction by the laws of the PRC, sell-off Pledged Equities) as per legal procedures and to be paid with the sum gained from the disposal until all guaranteed liabilities of Jinxin Company and the Shareholders under the Onshore Agreements are fulfilled completely.

 
7.3
Where Party B disposes the Pledged Equities pursuant to this Agreement, Party A shall provide and cause Jinxin Company to provide necessary assistance so that Party B can realize its pledge.

8.
Event of Default
 
 
8.1
The following events shall be regarded as an Event of Default:

 
8.1.1.
where Party A and/or Jinxin Company and related responsible parties fail to perform any obligations under the Onshore Agreements in time or fails to discharge any guaranteed liability as scheduled in full sum;

 
8.1.2.
where there are any falsity, fraud, misleading statements or errors relating to any representation and undertaking Party A makes in Section 2   herein;

 
8.1.3.
where Party A violates any undertaking in Section 6 of this Agreement;

 
8.1.4.
where Party A violates any other terms and conditions of this Agreement;

 
8.1.5.
where Party A refuses or intentionally delays the registration procedures for the pledge under this Agreement and fails to correct such action within ten (10) days as of the day when Party B requires in writing to do so;

 
8.1.6.
where any loan, guarantee, indemnity, undertaking or other compensation liability of Party A: (i) is required to be repaid or performed in advance due to an event of default; or (ii) is due but unable to be repaid or performed as scheduled, which makes Party B reasonably believe that the ability of Party A to perform its obligations under this Agreement has been materially and adversely affected;
 
 
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Equity Pledge Agreement
 
 
8.1.7.
where this Agreement becomes ineffective, revocable, unenforceable or Party A cannot continue performing its obligations under this Agreement in time and fully due to the fault (including omission) of Party A after the issuance of new laws of the PRC;

 
8.1.8.
Party A waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Party B;

 
8.1.9.
any approval, permits, licenses or authorization from the competent authority of the government needed to perform under this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

 
8.1.10.
the property of Party A is adversely changed and causes Party B to deem that the capability of Party A to perform the obligations herein is affected; and

 
8.1.11.
other circumstances in which Party B cannot exercise and dispose the pledge due to the fault (including omission) of Party A.

 
8.2
If Party A knows or should have known the occurrence of any event stated above in Subsection 8.1 or any matter that may incur the above events, Party A shall immediately notify Party B in writing.

 
8.3
Unless Party A immediately takes the measures satisfactory to Party B to correct the Event of Default listed in Subsection 8.1 above, Party B may send written notice of exercising the pledge to Party A at any time upon or after the occurrence of Event of Default, demand Party A and/or Jinxin Company to: (i) make full payment of the outstanding fees pursuant to the Onshore Agreement, and (ii) immediate perform their obligations under the Onshore Agreements, and require disposal of the Pledged Equities pursuant to this Agreement.

 
8.4
The Event of Default provided in this Section 8 will not affect the exercise of other remedies by the parties pursuant to the laws of the PRC.

9.
Liability in the Event of Default
 
Both parties shall sufficiently perform their obligations under this Agreement.  Either party breaching this Agreement shall bear the liability as arising therefrom and in relation thereto.  If such breach causes damages to the other party, the breaching party shall indemnify the other party for all such damages.

10.
Assignment

 
10.1
 Without the prior written consent of Party B, Party A shall not have the right to assign or delegate its rights and obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
 
10.2
This Agreement shall be binding on Party A and its successors and permitted assigns, and shall be valid with respect to Party B and each of its successors and assigns.

 
10.3
At any time, Party B may assign any and all of its rights and obligations under the Onshore Agreements to its designee(s) (natural or legal persons), in which case the assigns shall have the rights and obligations of Party B under this Agreement, as if it were the original party to this Agreement. When Party B assigns the rights and obligations under the Onshore Agreements, at the request of Party B, Party A shall execute relevant agreements or other documents relating to such assignment.

 
10.4
In the event of a change in the pledgee due to an assignment, Party A shall, at the request of Party B, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register for change of the pledgee with the competent Administration of Industry and Commerce.

11.
Termination
 
Upon the date that all guaranteed liabilities of Jinxin Company and Party A under the Onshore Agreements are fulfilled completely, this Agreement shall be terminated.  In such case, Party B shall cancel the pledge registration under this Agreement as soon as possible within the reasonable and feasible period.
 
12.
Taxes, Fees and Other Expenses
 
All taxes, fees and other expenses arising from the execution and performance of this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees shall be borne by Party B.
 
13.
Confidentiality
 
 
13.1
Both parties agree that, all materials, documents, communications and other information obtained in the negotiation, execution or performance of this Agreement, whether commercial, technical or in any other form (“ Confidential information "), shall be strictly kept confidential and used only for the performance of the obligations under this Agreement.  Unless the other parties consent in writing, neither of the parties shall release, leak or disclose any Confidential Information to any third party.
 
 
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Equity Pledge Agreement
 
 
13.2
Either party may disclose the Confidential Information in the following circumstances: (i) where the laws, court orders or the competent courts with jurisdiction require, and such disclosure may be conducted only within such requirement; (ii) where the competent authority or government department requires; (iii) where such Confidential Information has been known to the general public; (iv) where such Confidential Information was owned duly and legally by the disclosing party rather obtained from the other party before the disclosing party obtains it; (v) the information is required to be disclosed subject to the applicable laws or the rules or provisions of a stock exchange or securities governing authority; and (vi) the information is disclosed by each party to its legal or financial consultant relating the transaction of this Agreement, and this legal or financial consultant shall comply with the confidentiality set forth in this Section 13.  However, for the circumstances aforesaid, where either party discloses the Confidential Information, it shall inform the other party of the Confidential Information to be disclosed.
 
 
13.3
Nonetheless other provisions of this Section 13, either party shall have the right to disclose the Confidential Information to its lawyer, accountant, other professional consultants, directors or senior officers; such personnel shall undertake in writing to treat such information as Confidential Information by taking the measures similar to those provided in 13.1 of this Section.
 
 
13.4
The disclosure of the Confidential Information by staff or employed institution of any party shall be deemed as the disclosure of such Confidential Information by such party, and such party shall bear the liabilities for breaching the agreement.
 
 
13.5
This Section 13 shall survive whatever this Agreement is invalid, amended, revoked, terminated or unable to implement by any reason.

14.
Governing Law and Dispute Resolution

 
14.1
The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the 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.
 
 
14.2
Both parties agree that any dispute arising from or in relation to this Agreement shall first be settled by the friendly negotiation of both parties.  If the negotiation fails within 45 days, either party shall have the right to file the dispute with China International Economic and Trade Arbitration Commission (“ CIETAC ”) in Beijing for arbitration pursuant to the currently effective arbitration rules of CIETAC at the time of application.  This arbitration shall be final and bind both parties and shall be enforceable in any court of competent jurisdiction.  The arbitration fees shall be born by the losing party.

 
14.3
Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.
 
 
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Equity Pledge Agreement
 
15.
Effect, Change and Recession of this Agreement

 
15.1
This Agreement shall come into effect on and after the date that it is signed and/or stamped by both parties.

 
15.2
After this Agreement comes into effect, except otherwise provided by this Agreement, neither party shall amend or terminate this Agreement in advance.  If it is necessary to amend or terminate this Agreement, both parties shall negotiate to reach a written agreement.  Before such written agreement is reached, this Agreement shall remain in effect.

16.
Physical Possession Of Documents
 
 
16.1
Party A shall deliver the physical possession of the certificates of registration (original) of the pledge to Party B, provide the proper record relating to the registration of such pledge to Party B, and transact various approval and examination, registration and filling procedures required by the laws of the PRC within thirty (30) business days as of the date of execution of this Agreement or an earlier time agreed upon by the parties.

 
16.2
If the subjects of the pledge change and such changes need to be registered or filed, Party A shall register or file or cause Jinxin Company to register or file such changes within five (5) business days as of the day of change, and shall deliver relevant registration of change or filling documents to Party B.

 
16.3
During the term of the equity pledge, Party A shall instruct Jinxin Company not to distribute any dividends, or adopt any profits distribution plans; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Jinxin Company to transform such interests into cash and pay such interests into the bank account designated by Party B in accordance with Party B’s requirements, and Party A shall not use any money deposited into the bank account without the prior written consent of Party B.

 
16.4
During the term of equity pledge, if Party A subscribes new capital contribution or accepts an equity transfer (“Newly-added Equities”), the Newly-added Equities shall be automatically become Pledged Equities under this Agreement, and Party A shall accomplish all the procedures with respect to the pledge of the Newly-added Equities within ten (10) business days after acquiring the Newly-added Equities.  If Party A fails to accomplish the relevant procedures as specified in this Section 16, Party B shall have the right to exercise the pledge right under this Agreement.
 
17.
General Terms

 
17.1
Entire Agreement.  This Agreement and the Exhibits and Schedules hereto contain the entire understanding between the parties, no other representations, warranties or covenants having induced any party to execute this Agreement, and supersede all prior or contemporaneous agreements with respect to the subject matter hereof.  All references to schedules and exhibits are to exhibits and schedules attached to and to become a part of this Agreement unless otherwise indicated.
 
 
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Equity Pledge Agreement
 
 
17.2
Amendment.  Any amendment and/or rescission shall be in writing and signed by the authorized representatives of both parties.  Such revision shall be a valid integral part of this Agreement.
 
 
17.3
Headings.  The headings of any Sections or other portion of this Agreement are for convenience only and are not to be considered in construing this Agreement.

 
17.4
Construction.  References in this Agreement to "Sections," "Schedules" and "Exhibits" shall be to the Sections, Schedules and Exhibits of this Agreement, unless otherwise specifically provided; any use in this Agreement of the singular or plural, or the masculine, feminine or neuter gender, shall be deemed to include the others, unless the context otherwise requires; the words "herein”, "hereof" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; the word "including" when used in this Agreement shall mean “including without limitation”; and except as otherwise specified in this Agreement, all references in this Agreement (i) to any agreement, document, certificate or other written instrument shall be a reference to such agreement, document, certificate or instrument, in each case together with all exhibits, schedules, attachments and appendices thereto, and as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof; and (ii) to any law, statute or regulation shall be deemed references to such law, statute or regulation as the same may be supplemented, amended, consolidated, superseded or modified from time to time.
 
 
17.5
Severability.  Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 
 
17.6
Waiver.  No failure or delay of either party to enforce any right hereunder shall constitute a waiver of any such right hereunder.  No waiver shall be effective hereunder unless in writing and a waiver shall only be effective for the specific act or circumstance for which it is given and not for any future act or circumstance.
 
 
17.7
Language.  This Agreement is in both Chinese and English and signed by both parties, and the two versions have the same effect.  Should there be any discrepancy between the two language versions, the Chinese version shall prevail.
 
 
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Equity Pledge Agreement
 
 
17.8
Copies of this Agreement.  This Agreement shall be executed in four counterparts; each party holds one and the rest are used for the transaction of related formalities.  Each of the copies shall be deemed as the original one and has the same effect.
 
[The remainder of this page is intentionally left blank.]
 
 
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Equity Pledge Agreement

 
In witness hereof , both parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.
 
Party A: Yuqin Wei (signature): /s/ Yuqin Wei
 
Party B:  Zhangjiakou Tongda Mining Technologies Service Co., Ltd. (seal)
Legal Representative or Authorized Representative (signature):  /s/ Jiazhen Liu
 
Page 13 / 13
 
 
Land Lease Agreement
 
(English Translation)
 
Party A: Zhuolu Jinxin Mining Co.,Ltd.
 
Party B: The People’s Government of Luanzhuang Township, Zhuolu County
 
In consideration of the premises and mutual terms, covenants and conditions hereinafter set forth, and for other good and valuable consideration, the parties hereto agree as follows:
 
1. The purpose of this Land Lease Agreement permits Party A use of the land owned by Party B in total of 237 Mu (15.8 hectares).
 
2.  During the lease period, Party A has rights to manage and operate the land.
 
3.  The total compensation of the lease is RMB 4,970,411.75.
 
4. The total land lease fee shall be made in two installments.
 
5. Party B permits Party A to conduct construction on the leased land upon execution of this Land Lease Agreement.
 
6. The lease period is 20 years and Party A shall have the priority to re-lease the land upon the expiration of the current lease period.
 
7. Party A shall have the property rights of all the workshops, office buildings, electricity facilities and production facilities that built by Party A on the leased land, and Party A is eligible to transfer the property rights. Party B shall have the property rights of infrastructures such as concrete road that built by Party A on the leased land.
 
8. Upon the execution of this Land Lease Agreement, Party A shall make the first installment to Party B. Upon receiving the first installment from Party A and by January 20, 2007, Party B shall clear and get the lease land ready for Party A. If Party A cannot use the land due to any reason that caused by Party B within a certain period of time that agreed by both parties, Party B shall pay Party A the penalty at a rate of 2% of total lease price per day.
 
The above terms has been reviewed and in mutual agreement between both parties. The local People’s Court shall be forum to adjudicate any disputes arising under this agreement.
 
Party A: /s/____________________________
 
Zhuolu Jinxin Mining Co., Ltd.
 
Date: 12/27/2006
 
Party B: /s/____________________________
 
The People’s Government of Luanzhuang Township, Zhuolu County
 
Date: 12/27/2006
 
Long Term Strategic Agreement
 
(English Translation)
 
Party A: Zhuolu Jinxin Mining Co., Ltd.
 
Party B: Handan Steel Group – Beijing Office
 
In consideration of the premises and mutual terms, covenants and conditions hereinafter set forth regarding the supply and demand of iron ore concentrates, and for other good and valuable consideration, the parties hereto agree as follows:
 
1. Party A agrees to sell all of iron ore concentrates that produced by Party A to Party B, no matter the variation of the market.
 
2. Party B agrees to purchase all of iron ore concentrates that produced by Party A for Handan Steel Group, no matter of the variation of the market.
 
3. Party A shall maintain the quality of the iron ore concentrates: Acid iron ore concentrates Tfe>=65%, S<=0.5%, SiO2<=6.5%, TiO2<=1.9%, Degree of finess-200>=70%, Water content<=9%; Alkaline iron ore concentrates: Tfe>=64%, S<=0.3%, SiO2<=4%, MgO>=2.5%, Water content<=9%, R>=0.8%.
 
4. Price. The selling price of iron ore concentrates shall base on listing price of Handan Steel Group and remains certain profit for Party A after deduction of transportation cost and wear and tear. It shall be adjusted frequently to reflect the fluctuation of the listing price of Handan Steel Group.
 
5. Party B shall bear the transportation responsibility.
 
6. Product Quality Acceptance. The production quality approval shall base on both Party A and Party B’s inspection reports. If both inspection reports are different, both parties shall solve the issues by negotiation.
 
7. Payment. Party B shall make payments to Party A when Party B picks up the products.
 
8. The validity of this Agreement is ten years.
 
9. There are two copies of this Agreement, held by both parties.
 
10. All other miscellaneous shall be solved by the negotiation between both parties.
 
Party A: Zhuolu Jinxin Mining Co., Ltd.                         Party B: Handan Steel Group – Beijing Office
 
Date: 01/16/2009                                                            Date: 01/16/2009
 
/s/_________________                                                     /s/______________________
 
Executive Management Employment Agreement
 
(English Translation)
 
Party A: Zhuolu Jinxin Mining Co., Ltd. (the “Company”)
 
Party B: Changkui Zhu
 
In consideration of the premises and mutual terms, covenants and conditions hereinafter set forth, and for other good and valuable consideration, the parties hereto agree as follows:
 
1. Party A hires Party B as Chief Executive Officer of Zhuolu Jinxin Mining Co.,Ltd., and the employment shall be for a period of four years commencing January 1, 2010 and terminating December 31, 2013.
 
2. Party A agrees to pay Party B base salary of RMB 3,500 per month, which shall include all the taxes and fees according to government regulations.  In addition, Party B shall be eligible to receive bonus on the Company’s projects that Party B manages, and the amount of the bonus shall be decided independently by other agreements signed by Party A and Party B.
 
3. During the employment period, Party B shall not be employed by any other party, entity or individual, especially the competitors of Party A, otherwise, Party B shall bear responsibilities set by “Anti-Unfair Competition Law of People’s Republic of China”.
 
4. Without the consent of the Board of the Company, Party B shall not implement any policy or action to the Company if the said policy or action will have material impact on the Company’s operation.  The Board of Directors shall give Party B a reply within three days upon receiving Party B’s suggestions and advices, and Party B shall follow the instructions and decisions that made by the Board.
 
5. Payment: Party A will pay to Party B RMB3,500 per month, and such amount to be paid on the 10 th day of each following month (“Payment Date”). If the Payment Date falls on weekend or federal holiday, the payment shall be made on the last business day before the weekend or federal holiday.  If Party A decides to dismiss Party B, Party A shall clear all the salary that Party A owes to Party B and grant Party B a package of three months’ salary in one time.
 
6. All other miscellaneous shall be solved by the negotiation between both parties and any further agreements. There are two copies of the Agreement and it becomes effective once both parties sign or seal on it.
 
Party A: Zhuolu Jinxin Mining Co., Ltd.                         Party B: Changkui Zhu
 
Date: 12/10/2009                                                             Date: 12/10/2009
 
/s/_________________                                                     /s/______________________
 
Executive Management Employment Agreement
 
(English Translation)
 
Party A: Zhuolu Jinxin Mining Co., Ltd. (the “Company”)
 
Party B: Zhengting Deng
 
In consideration of the premises and mutual terms, covenants and conditions hereinafter set forth, and for other good and valuable consideration, the parties hereto agree as follows:
 
1. Party A hires Party B as Chief Financial Officer of Zhuolu Jinxin Mining Co.,Ltd., and the employment shall be for a period of three years commencing January 1, 2010 and terminating December 31, 2012.
 
2. Party A agrees to pay Party B base salary of RMB 1,800 per month, which shall include all the taxes and fees according to government regulations.  In addition, Party B shall be eligible to receive bonus on the Company’s projects that Party B manages, and the amount of the bonus shall be decided independently by other agreements signed by Party A and Party B.
 
3. During the employment period, Party B shall not be employed by any other party, entity or individual, especially the competitors of Party A, otherwise, Party B shall bear responsibilities set by “Anti-Unfair Competition Law of People’s Republic of China”.
 
4. Without the consent of the Board of the Company, Party B shall not implement any policy or action to the Company if the said policy or action will have material impact on the Company’s operation.  The Board of Directors shall give Party B a reply within three days upon receiving Party B’s suggestions and advices, and Party B shall follow the instructions and decisions that made by the Board.
 
5. Payment: Party A will pay to Party B RMB1,800 per month, and such amount to be paid on the 10 th day of each following month (“Payment Date”). If the Payment Date falls on weekend or federal holiday, the payment shall be made on the last business day before the weekend or federal holiday.  If Party A decides to dismiss Party B, Party A shall clear all the salary that Party A owes to Party B and grant Party B a package of three months’ salary in one time.
 
6. All other miscellaneous shall be solved by the negotiation between both parties and any further agreements. There are two copies of the Agreement and it becomes effective once both parties sign or seal on it.
 
Party A: Zhuolu Jinxin Mining Co., Ltd.                         Party B: Zhengting Deng
 
Date: 12/10/2009                                                             Date: 12/10/2009
 
/s/_________________                                                     /s/______________________
 
 
Agreement
 
(English Translation)
 
Party A: Baoding Hongye Mechanical Engineering Equipments Company Limited
 
Party B: Zhuolu Jinxin Mining Company Limited
 
Whereas:
 
As of March 12, 2010, Party B owed Party A equipments and construction fee in a total of RMB 22,000,000(the “Fee”).
 
NOW, THEREFORE, with the consensus reached through negotiation, the parties have entered into this Agreement and agree to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”):
 
Item I
 
Party B will pay the total amount of RMB 22,000,000 to Party A in three payments as follows:
 
1. RMB 8,500,000 on or before December 31, 2010.
 
2. RMB 8,500,000 on or before December 31, 2011.
 
3. RMB 5,000,000 on or before December 31, 2012.
 
Item II
 
The Fee bears no interests until any amount of the Fee is overdue according to the payment terms stated in Item I.  Interest will be charged on any overdue amount at the benchmark rate issued by Commercial Bank during the same period when the amount is overdue.
 
Item III
 
Any disputes arising from or in relation to this Agreement shall first be settled by the negotiation of both parties. If the dispute could not be solved by negotiation, each party can file the dispute to any court of competent jurisdiction.
 
Item IV
 
This Agreement shall be executed in two copies, each party holds one.  Each of the copies shall be deemed as the original one and has the same effect upon the signing on the Agreement.
 
Party A: Baoding Hongye Mechanical Engineering Equipment Company Limited
 
Representative:
 
Date:  03/20/2010
 
Party B: Zhuolu Jinxin Mining Co., Ltd.
 
Representative:
 
Date: 3/20/2010
 
 
Agreement
 
(English Translation)
 
Party A: Zhuolu Hydraulic and Hydro-Power Engineering Company Limited
 
Party B: Zhuolu Jinxin Mining Company Limited
 
Whereas:
 
As of March 20, 2010, Party B owed Party A equipments and construction fee in a total of RMB 16,000,000(the “Fee”).
 
NOW, THEREFORE, with the consensus reached through negotiation, the parties have entered into this Agreement and agree to abide by it pursuant to the applicable laws, regulations and rules of the PRC (“laws of the PRC”):
 
Item I
 
Party B will pay the total amount of RMB 16,000,000 to Party A in three payments as follows:
 
1. RMB 6,000,000 on or before December 31, 2010.
 
2. RMB 5,000,000 on or before December 31, 2011.
 
3. RMB 5,000,000 on or before December 31, 2012.
 
Item II
 
The Fee bears no interests until any amount of the Fee is overdue according to the payment terms stated in Item I.  Interest will be charged on any overdue amount at the benchmark rate issued by Commercial Bank during the same period when the amount is overdue.
 
Item III
 
Any disputes arising from or in relation to this Agreement shall first be settled by the negotiation of both parties. If the dispute could not be solved by negotiation, each party can file the dispute to any court of competent jurisdiction.
 
Item IV
 
This Agreement shall be executed in two copies, each party holds one.  Each of the copies shall be deemed as the original one and has the same effect upon the signing on the Agreement.
 
Party A: Zhuolu Hydraulic and Hydro-Power Engineering Company Limited
 
Representative:
 
Date:  03/20/2010
 
Party B: Zhuolu Jinxin Mining Co., Ltd.
 
Representative:
 
Date: 3/20/2010
 
 
STOCK PURCHASEAGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of this 17th day of January, 2014 by and among TARGET ACQUISITIONS I, INC., a Delaware corporation (“Target”), ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD., a Chinese limited company (“Buyer” or “Tongda”) and an indirectly wholly-owned subsidiary of Target and Jiazhen Liu, a resident of the People’s Republic of China (“Seller”).

Preliminary Statement

Seller is one of the five shareholders (collectively, the “Shareholders”) of Haixing Huaxin Mining Iindustry Co., Ltd., an entity organized under the laws of the People’s Republic of China (“China Huaxin”).  China Huaxin is in the late stages of constructing a facility (the “Production Facility”) in Haixing County, Hebei Province, China for the conversion of iron sands into direct reduced iron.

Target desires to acquire all of the outstanding shares of China Huaxin and, concurrently herewith, is entering into agreements with the four other shareholders of China Huaxin to acquire all of their shares in China Huaxin.

NOW, THEREFORE, the parties hereto in consideration of the mutual promises and covenants herein contained and intending to be legally bound, do hereby agree as follows:

1.            Purchase and Sale .  Subject to the terms and conditions hereinafter set forth, and on the basis of the representations and warranties contained herein, Seller hereby sells, conveys, transfers and assigns  to Buyer, free and clear of all encumbrances, liens and liabilities,  all right, title and interest in and to the shares of capital stock of China Huaxin owned by Seller (the “Shares”), which Shares represent 80 % of the shares of capital stock of China Huaxin outstanding as of the date hereof.  Simultaneously with the execution and delivery hereof Seller is executing and delivering to Buyer such documents and instruments as are necessary to transfer title to the Shares.

In consideration of all right, title and interest in the Shares, Target is paying to Seller 8,000,000 RMB and shall issue to the order of Seller   4,080,000  shares of the common stock of Target (collectively, the “Purchase Price”).

2.        Representations and Warranties .   As an inducement to Target to enter into this Agreement and acquire the Shares, the Seller hereby represents and warrants to Target as of the date hereof:

2.1. Organization, Good Standing, Power .    China Huaxin is a corporation duly organized, validly existing and in good standing under the  Company Law of the People’s Republic of China . China Huaxin has the power and authority to own, lease and operate its assets. The minute books, stock ledgers and stock transfer records of China Huaxin, if any, will be furnished to Target.
 
 
 
 

 
2.2. Company Documents .  Correct and complete copies of the organizational documents of China Huaxin, in each case as amended to date have been provided to Target.

2.3. Shares .     The Seller owns the Shares and has good, valid and marketable title to the Shares.  The Shares represent 80 % of the outstanding capital stock of China Huaxin.  Such Shares are held free and clear of any covenant, condition, restriction, voting arrangement, charge, security interest, option or adverse claim.  Upon payment of the Purchase Price, Target will acquire good and marketable title to the Shares, free and clear of any Security Interest, restrictions or claims.  The Shares, together with the shares currently owned by the individuals named in Schedule 2.3 represent 100% of the issued and outstanding shares of capital stock of the Company.

2.4 Authorization .  Seller possesses the legal right and capacity to execute, deliver and perform this Agreement, without obtaining any approval, authorization, consent or waiver or giving any notice. The Seller has taken all action required by applicable law or otherwise to be taken to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligations of Seller.

2.5. Effect of Agreement .  The execution, delivery and performance of this Agreement by Seller and the sale of the Shares contemplated hereby will not, with or without the giving of notice and the lapse of time, or both, violate any provision of law, statute, rule, regulation or executive order to which China Huaxin or the Seller is subject.

2.6. Governmental and Other Consents .   Except for such consents as have been obtained prior to the date hereof (i) no notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by Seller of this Agreement and (ii) no notice to, consent, authorization or approval of, any person under any agreement, arrangement or commitment of any nature to which Seller is party to, or by which the Shares are bound by or subject to, is required in connection with the execution, delivery and performance by Seller of this Agreement.
 
2.7. Title to Assets; Absence of Liens and Encumbrances .      The sole asset of China Huaxin is the Production Facility.  China Huaxin has good and marketable title to, and owns outright, the Production Facility, free and clear of all liens, claims and encumbrances, other than those related to the Accrued Liabilities.

2.8. Equipment .  China Huaxin owns outright all equipment and fixtures in the Production Facility.

2.9.    Agreements, Arrangements; Conduct of Business .    China Huaxin has yet to conduct any business operations other than construction of the Production Facility and purchasing the equipment and fixtures therein.  China Huaxin is not party to any agreements or contracts calling for expenditures in excess of 100 RMB, in the aggregate.
 
 
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2.10.   Permits .    China Huaxin has provided Target with copies of all permits and other government licenses it has obtained with respect to the Production Facility.

2.11   Litigation.    China Huaxin is not a party to any litigation.

2.12. Labor Matters .  China Huaxin has no employees.

2.13   Brokers and Finders .   Neither the Seller nor China Huaxin, nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement.  Seller agrees to indemnify, defend and hold Target harmless from any liability, loss, cost, claim and/or demand that any other broker or finder may have in connection with this transaction as a result of actions taken by the Company or the Seller.

   2.14    Securities Laws .   Seller understands that the shares of Target to be issued to Seller (the “Target Shares”) are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”) and that Target is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the applicability of such exemptions.  In this regard, the Seller represents, warrants and agrees that:

      (i)           The Seller is not a U.S. Person (as defined in the Securities Act) and is not acquiring the Target Shares for the account or benefit of a U.S. Person.

      (ii)          At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Seller was outside of the United States.

      (iii)         Seller will not, during the period commencing on the date of issuance of the Target Shares and ending on the six month anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Target Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

     (iv)          Seller will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Target Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

     (v)           Seller was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Target Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
 
 
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    (vi)           Neither Seller nor any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Target Shares and the Seller and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

    (vii)          The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

   (viii)          Neither the Seller nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Target Shares.  The undersigned agrees not to cause any advertisement of the Target Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Target Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

   (ix)            Each certificate representing the Target Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
        8.                       Representations and Warranties of Buyer .  As a material inducement to Seller to enter into this Agreement, Buyer makes the following representations and warranties to Seller:

(a)       Buyer has been duly organized and is validly existing in its jurisdiction of organization and is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby.
 
 
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(b)       Buyer is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated thereby and this Agreement represents a valid and binding obligation of Buyer in accordance with its terms.

(c)        Neither the execution nor delivery of this Agreement nor consummation of the transactions herein by Buyer constitutes a violation or breach of applicable law or of any provision  of any contract or instrument to which Buyer is a party or by which it is bound, or any order, writ, injunction, decree or judgment applicable to Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

(d)        Buyer has made, either alone or together with its advisors, such independent investigation of the Business as Buyer deems to be, or such advisors have advised to be, necessary or advisable in connection with the transactions contemplated by this Agreement; provided that such investigation by Buyer shall not relieve Seller of any liability for a breach of its representations and warranties contained herein.

(e)         The shares of Target upon issuance:

                            (i) will be free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;

                            (ii)  will have been duly and validly authorized and duly and validly issued, and will be fully paid and non-assessable (with no personal liability attaching to the holders thereof or to the Company) and will be free from preemptive rights or rights of first refusal held by any person; provided Seller’s representations herein are true and accurate and Seller takes no actions or fails to take any actions required for the acquisition of the Shares to be in compliance with all applicable laws and regulations; and

                            (iii) will have been issued in reliance upon an exemption from the registration requirements of and will not result in a violation of Section 5 under the Securities Act.

5.            Covenant Not To Compete .  In further consideration for the purchase of the Purchased Assets, for a period of 1 year following the date of the Closing, (i) none of Seller, its director, officers, managers or other related persons will directly, or indirectly, own, operate, manage, or serve as an officer, director, employee or independent contractor to any person or entity engaged in the Business or act as an advisor to any person or entity engaged in  the Business, or solicit, directly or indirectly, on behalf of themselves or any third party, the customers of the Buyer (whether existing as of the Closing Date or at any time thereafter), or otherwise engage in the Business, within a 200_Kilometers (124.27) mile radius of the Site, and (ii) will not solicit any past, future  or present customers of the Business or interfere in any way in the relationships between the Business and its customers, employees or staff, without Buyer’s written consent].
 
12.            Further Assurances .  Each party agrees to execute and deliver all instruments and take action as the other party may request from time to time in order to effectuate the transactions contemplated hereby.
 
 
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13.            Notices .  Any and all notices or other communications required or permitted to be given under any of the provisions of this Agreement shall be in writing and shall be deemed to have been given two business days after deposit with a recognized overnight courier fee paid, addressed to the intended recipient at such party’s address as set forth below, or such other address as such party may designate by like notice to the other party hereto.
 
To Seller at:

7-1-609, Quxi Zhongli,
Chengyin Road, Hedong District,
Tianjin, PRC
 
To Buyer at:

Tianyang Xiaoqu, Qiaodong District,
Zhangjiakou, Hebei Province

With a copy to, which shall not constitute notice:

Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill
 
14.            Survival; Indemnification .  All covenants, representations and warranties in this Agreement shall survive for a period of twelve months after the date hereof, except that any representation or warranty relating to taxes shall survive for the applicable statutory limitation period and any claim for amounts payable hereunder or any indemnity claim hereunder asserted prior to the end of the foregoing survival periods shall survive until resolved.  Each party hereby agrees to defend, indemnify and hold the other party, its directors, officers, employees, advisors and affiliates, harmless from and against any and all losses, claims, liabilities or damages (collectively, “Losses”) arising out of or in connection with or founded on a claim that any of the foregoing representations, warranties and covenants of the indemnifying party are untrue, together with any and all costs and expenses (including reasonable attorneys’ fees) relating to such losses or arising therefrom or incurred by the other in connection with enforcement of this indemnification provision. Each party shall be responsible for its or his own costs and expenses in connection with the transactions being contemplated hereby, including attorneys’ fees.  Buyer shall promptly notify Seller of any claims and fully cooperate with Seller in the defense thereof.
 
 
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The parties have agreed that there shall be no escrow or other security withheld to secure Buyer against claim arising out of or related to the Seller’s Business.  In lieu of an escrow, Seller has agreed that Buyer may offset any Losses arising out of a breach by Seller of their representations, warranties and covenants contained herein, or out of any claims made against Buyer related to the Business prior to the Closing out of the deferred portion of the Purchase Price.

15.            Confidentiality .  Buyer has received certain business records, tax returns and privileged communications in connection with the due diligence process.  Buyer covenants, represents and warrants that all information will be kept strictly confidential, except to the extent used in the business of Buyer and to the extent disclosure is required by law or pursuant to legal process.

16.            Miscellaneous .

                        a.           This writing constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written agreement specifically referring to this Agreement signed by Seller and Buyer.

b.           This Agreement may not be assigned by either party without written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

c.           The paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said paragraph.

d.           This Agreement shall be governed by and construed in accordance with the laws of China without regard to the conflicts of law provisions thereof.  Jurisdiction for the resolution of any conflicts or disputes arising hereunder, if not resolved through good faith negotiation, shall be in Hebei Province, China.

e.           This Agreement may be executed in any number of counterparts, all of which when taken together shall be deemed to be one and the same instrument.

f.           The Parties to this Agreement acknowledge that each has had the input of legal counsel in drafting this Agreement as well as in conjunction with the negotiation and execution of this transaction.  Accordingly the Parties to this Agreement hereby waive any rule of construction or interpretation that would otherwise require ambiguities under this Agreement to be interpreted or constructed to his favor by virtue of such rule or rules regarding contract ambiguities.
[signatures are on the following page]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 
 
ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD.
Seller
 
Buyer
 
By: /s/ Jiazhen Liu                                                                      
 
By: /s/ Jiazhen Liu                                                                      
       Name: Jiazhen Liu
 
       Name: Jiazhen Liu
       Title:
 
 
       Title:
 
     
    Target Acquisitions I, Inc.
     
   
By: /s/ Changkui Zhu                                                                  
           Name: Changkui Zhu
   
       Title:
 
 

8
 
STOCK PURCHASEAGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of this 17 th   day of January, 2014 by and among TARGET ACQUISITIONS I, INC., a Delaware corporation (“Target”), ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD., a Chinese limited company (“Buyer” or “Tongda”) and an indirectly wholly-owned subsidiary of Target and Changkui Zhu , a resident of the People’s Republic of China (“Seller”).

Preliminary Statement

Seller is one of the five shareholders (collectively, the “Shareholders”) of Haixing Huaxin Mining Iindustry Co., Ltd., an entity organized under the laws of the People’s Republic of China (“China Huaxin”).  China Huaxin is in the late stages of constructing a facility (the “Production Facility”) in Haixing County, Hebei Province, China for the conversion of iron sands into direct reduced iron.

Target desires to acquire all of the outstanding shares of China Huaxin and, concurrently herewith, is entering into agreements with the four other shareholders of China Huaxin to acquire all of their shares in China Huaxin.

NOW, THEREFORE, the parties hereto in consideration of the mutual promises and covenants herein contained and intending to be legally bound, do hereby agree as follows:

1.            Purchase and Sale .  Subject to the terms and conditions hereinafter set forth, and on the basis of the representations and warranties contained herein, Seller hereby sells, conveys, transfers and assigns  to Buyer, free and clear of all encumbrances, liens and liabilities,  all right, title and interest in and to the shares of capital stock of China Huaxin owned by Seller (the “Shares”), which Shares represent 10 % of the shares of capital stock of China Huaxin outstanding as of the date hereof.  Simultaneously with the execution and delivery hereof Seller is executing and delivering to Buyer such documents and instruments as are necessary to transfer title to the Shares.

In consideration of all right, title and interest in the Shares, Target is paying to Seller 1,000,000 RMB and shall issue to the order of Seller   510,000  shares of the common stock of Target (collectively, the “Purchase Price”).

2.        Representations and Warranties .   As an inducement to Target to enter into this Agreement and acquire the Shares, the Seller hereby represents and warrants to Target as of the date hereof:

2.1. Organization, Good Standing, Power .    China Huaxin is a corporation duly organized, validly existing and in good standing under the Company Law of the People’s Republic of China . China Huaxin has the power and authority to own, lease and operate its assets. The minute books, stock ledgers and stock transfer records of China Huaxin, if any, will be furnished to Target.
 
 
 
 

 
2.2. Company Documents .       Correct and complete copies of the organizational documents of China Huaxin, in each case as amended to date have been provided to Target.

2.3. Shares .     The Seller owns the Shares and has good, valid and marketable title to the Shares.  The Shares represent 10 % of the outstanding capital stock of China Huaxin.  Such Shares are held free and clear of any covenant, condition, restriction, voting arrangement, charge, security interest, option or adverse claim.  Upon payment of the Purchase Price, Target will acquire good and marketable title to the Shares, free and clear of any Security Interest, restrictions or claims.  The Shares, together with the shares currently owned by the individuals named in Schedule 2.3 represent 100% of the issued and outstanding shares of capital stock of the Company.

2.4 Authorization .  Seller possesses the legal right and capacity to execute, deliver and perform this Agreement, without obtaining any approval, authorization, consent or waiver or giving any notice. The Seller has taken all action required by applicable law or otherwise to be taken to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligations of Seller.

2.5. Effect of Agreement .  The execution, delivery and performance of this Agreement by Seller and the sale of the Shares contemplated hereby will not, with or without the giving of notice and the lapse of time, or both, violate any provision of law, statute, rule, regulation or executive order to which China Huaxin or the Seller is subject.

2.6. Governmental and Other Consents .   Except for such consents as have been obtained prior to the date hereof (i) no notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by Seller of this Agreement and (ii) no notice to, consent, authorization or approval of, any person under any agreement, arrangement or commitment of any nature to which Seller is party to, or by which the Shares are bound by or subject to, is required in connection with the execution, delivery and performance by Seller of this Agreement.
 
2.7. Title to Assets; Absence of Liens and Encumbrances .      The sole asset of China Huaxin is the Production Facility.  China Huaxin has good and marketable title to, and owns outright, the Production Facility, free and clear of all liens, claims and encumbrances, other than those related to the Accrued Liabilities.

2.8. Equipment .  China Huaxin owns outright all equipment and fixtures in the Production Facility.

2.9.    Agreements, Arrangements; Conduct of Business .    China Huaxin has yet to conduct any business operations other than construction of the Production Facility and purchasing the equipment and fixtures therein.  China Huaxin is not party to any agreements or contracts calling for expenditures in excess of 100 RMB, in the aggregate.
 
 
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2.10.   Permits .    China Huaxin has provided Target with copies of all permits and other government licenses it has obtained with respect to the Production Facility.

2.11.   Litigation.    China Huaxin is not a party to any litigation.

2.12. Labor Matters .  China Huaxin has no employees.

2.13.   Brokers and Finders .       Neither the Seller nor China Huaxin, nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement.  Seller agrees to indemnify, defend and hold Target harmless from any liability, loss, cost, claim and/or demand that any other broker or finder may have in connection with this transaction as a result of actions taken by the Company or the Seller.

   2.14    Securities Laws .   Seller understands that the shares of Target to be issued to Seller (the “Target Shares”) are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”) and that Target is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the applicability of such exemptions.  In this regard, the Seller represents, warrants and agrees that:

      (i)           The Seller is not a U.S. Person (as defined in the Securities Act) and is not acquiring the Target Shares for the account or benefit of a U.S. Person.

      (ii)           At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Seller was outside of the United States.

      (iii)          Seller will not, during the period commencing on the date of issuance of the Target Shares and ending on the six month anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Target Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

     (iv)           Seller will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Target Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

     (v)           Seller was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Target Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
 
 
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    (vi)           Neither Seller nor any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Target Shares and the Seller and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

    (vii)           The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

   (viii)           Neither the Seller nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Target Shares.  The undersigned agrees not to cause any advertisement of the Target Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Target Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

   (ix)           Each certificate representing the Target Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
        8.                       Representations and Warranties of Buyer .  As a material inducement to Seller to enter into this Agreement, Buyer makes the following representations and warranties to Seller:

(a)       Buyer has been duly organized and is validly existing in its jurisdiction of organization and is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby.
 
 
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(b) Buyer is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated thereby and this Agreement represents a valid and binding obligation of Buyer in accordance with its terms.

(c)           Neither the execution nor delivery of this Agreement nor consummation of the transactions herein by Buyer constitutes a violation or breach of applicable law or of any provision  of any contract or instrument to which Buyer is a party or by which it is bound, or any order, writ, injunction, decree or judgment applicable to Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

(d)           Buyer has made, either alone or together with its advisors, such independent investigation of the Business as Buyer deems to be, or such advisors have advised to be, necessary or advisable in connection with the transactions contemplated by this Agreement; provided that such investigation by Buyer shall not relieve Seller of any liability for a breach of its representations and warranties contained herein.

      (e)   The shares of Target upon issuance:
 
                             (i) will be free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;

                              (ii)  will have been duly and validly authorized and duly and validly issued, and will be fully paid and non-assessable (with no personal liability attaching to the holders thereof or to the Company) and will be free from preemptive rights or rights of first refusal held by any person; provided Seller’s representations herein are true and accurate and Seller takes no actions or fails to take any actions required for the acquisition of the Shares to be in compliance with all applicable laws and regulations; and

                            (iii) will have been issued in reliance upon an exemption from the registration requirements of and will not result in a violation of Section 5 under the Securities Act.

5.            Covenant Not To Compete .  In further consideration for the purchase of the Purchased Assets, for a period of_1_year following the date of the Closing, (i) none of Seller, its director, officers, managers or other related persons will directly, or indirectly, own, operate, manage, or serve as an officer, director, employee or independent contractor to any person or entity engaged in the Business or act as an advisor to any person or entity engaged in  the Business, or solicit, directly or indirectly, on behalf of themselves or any third party, the customers of the Buyer (whether existing as of the Closing Date or at any time thereafter), or otherwise engage in the Business, within a 200 kilometers (124.27) mile radius of the Site, and (ii) will not solicit any past, future  or present customers of the Business or interfere in any way in the relationships between the Business and its customers, employees or staff, without Buyer’s written consent].
 
12.            Further Assurances .  Each party agrees to execute and deliver all instruments and take action as the other party may request from time to time in order to effectuate the transactions contemplated hereby.
 
 
5
 

 
13.            Notices .  Any and all notices or other communications required or permitted to be given under any of the provisions of this Agreement shall be in writing and shall be deemed to have been given two business days after deposit with a recognized overnight courier fee paid, addressed to the intended recipient at such party’s address as set forth below, or such other address as such party may designate by like notice to the other party hereto.
 
To Seller at:
 2-1-202, Shenlan Gongyu,
Xihu Road, Nankai District
Tianjin, PRC

To Buyer at:
Tianyang Xiaoqu,
Qiaodong District,
 Zhangjiakou, Hebei Province, PRC

With a copy to, which shall not constitute notice:

Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill
 
14.            Survival; Indemnification .  All covenants, representations and warranties in this Agreement shall survive for a period of twelve months after the date hereof, except that any representation or warranty relating to taxes shall survive for the applicable statutory limitation period and any claim for amounts payable hereunder or any indemnity claim hereunder asserted prior to the end of the foregoing survival periods shall survive until resolved.  Each party hereby agrees to defend, indemnify and hold the other party, its directors, officers, employees, advisors and affiliates, harmless from and against any and all losses, claims, liabilities or damages (collectively, “Losses”) arising out of or in connection with or founded on a claim that any of the foregoing representations, warranties and covenants of the indemnifying party are untrue, together with any and all costs and expenses (including reasonable attorneys’ fees) relating to such losses or arising therefrom or incurred by the other in connection with enforcement of this indemnification provision. Each party shall be responsible for its or his own costs and expenses in connection with the transactions being contemplated hereby, including attorneys’ fees.  Buyer shall promptly notify Seller of any claims and fully cooperate with Seller in the defense thereof.

The parties have agreed that there shall be no escrow or other security withheld to secure Buyer against claim arising out of or related to the Seller’s Business.  In lieu of an escrow, Seller has agreed that Buyer may offset any Losses arising out of a breach by Seller of their representations, warranties and covenants contained herein, or out of any claims made against Buyer related to the Business prior to the Closing out of the deferred portion of the Purchase Price.
 
 
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15.            Confidentiality .  Buyer has received certain business records, tax returns and privileged communications in connection with the due diligence process.  Buyer covenants, represents and warrants that all information will be kept strictly confidential, except to the extent used in the business of Buyer and to the extent disclosure is required by law or pursuant to legal process.

16.            Miscellaneous .

                        a.           This writing constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written agreement specifically referring to this Agreement signed by Seller and Buyer.

b.           This Agreement may not be assigned by either party without written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

c.           The paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said paragraph.

d.           This Agreement shall be governed by and construed in accordance with the laws of China without regard to the conflicts of law provisions thereof.  Jurisdiction for the resolution of any conflicts or disputes arising hereunder, if not resolved through good faith negotiation, shall be in Hebei Province, China.

e.           This Agreement may be executed in any number of counterparts, all of which when taken together shall be deemed to be one and the same instrument.

f.           The Parties to this Agreement acknowledge that each has had the input of legal counsel in drafting this Agreement as well as in conjunction with the negotiation and execution of this transaction.  Accordingly the Parties to this Agreement hereby waive any rule of construction or interpretation that would otherwise require ambiguities under this Agreement to be interpreted or constructed to his favor by virtue of such rule or rules regarding contract ambiguities.
 
[signatures are on the following page]
 
 
7
 

 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 
 
ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD.
Seller
 
Buyer
 
By: /s/ Changkui Zhu                                                                  
 
By: /s/ Jiazhen Liu                                                                      
       Name: Changkui Zhu
 
       Name: Jiazhen Liu
       Title:
 
       Title:
     
     
    Target Acquisitions I, Inc.
     
   
By: /s/ Changkui Zhu                                                                  
           Name: Changkui Zhu
   
       Title:

 
8
 
STOCK PURCHASEAGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of this 17 th   day of January, 2014 by and among TARGET ACQUISITIONS I, INC., a Delaware corporation (“Target”), ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD., a Chinese limited company (“Buyer” or “Tongda”) and an indirectly wholly-owned subsidiary of Target and Dongli Sun , a resident of the People’s Republic of China (“Seller”).

Preliminary Statement

Seller is one of the five shareholders (collectively, the “Shareholders”) of Haixing Huaxin Mining Iindustry Co., Ltd., an entity organized under the laws of the People’s Republic of China (“China Huaxin”).  China Huaxin is in the late stages of constructing a facility (the “Production Facility”) in Haixing County, Hebei Province, China for the conversion of iron sands into direct reduced iron.

Target desires to acquire all of the outstanding shares of China Huaxin and, concurrently herewith, is entering into agreements with the four other shareholders of China Huaxin to acquire all of their shares in China Huaxin.

NOW, THEREFORE, the parties hereto in consideration of the mutual promises and covenants herein contained and intending to be legally bound, do hereby agree as follows:

1.            Purchase and Sale .  Subject to the terms and conditions hereinafter set forth, and on the basis of the representations and warranties contained herein, Seller hereby sells, conveys, transfers and assigns  to Buyer, free and clear of all encumbrances, liens and liabilities,  all right, title and interest in and to the shares of capital stock of China Huaxin owned by Seller (the “Shares”), which Shares represent 5 % of the shares of capital stock of China Huaxin outstanding as of the date hereof.  Simultaneously with the execution and delivery hereof Seller is executing and delivering to Buyer such documents and instruments as are necessary to transfer title to the Shares.

In consideration of all right, title and interest in the Shares, Target is paying to Seller 500,000 RMB and shall issue to the order of Seller   255,000  shares of the common stock of Target (collectively, the “Purchase Price”).

2.        Representations and Warranties .   As an inducement to Target to enter into this Agreement and acquire the Shares, the Seller hereby represents and warrants to Target as of the date hereof:

2.1. Organization, Good Standing, Power .    China Huaxin is a corporation duly organized, validly existing and in good standing under the Company Law of the People’s Republic of China . China Huaxin has the power and authority to own, lease and operate its assets. The minute books, stock ledgers and stock transfer records of China Huaxin, if any, will be furnished to Target.
 
 
 
 

 
2.2. Company Documents .       Correct and complete copies of the organizational documents of China Huaxin, in each case as amended to date have been provided to Target.

2.3. Shares .     The Seller owns the Shares and has good, valid and marketable title to the Shares.  The Shares represent 5 % of the outstanding capital stock of China Huaxin.  Such Shares are held free and clear of any covenant, condition, restriction, voting arrangement, charge, security interest, option or adverse claim.  Upon payment of the Purchase Price, Target will acquire good and marketable title to the Shares, free and clear of any Security Interest, restrictions or claims.  The Shares, together with the shares currently owned by the individuals named in Schedule 2.3 represent 100% of the issued and outstanding shares of capital stock of the Company.

2.4 Authorization .  Seller possesses the legal right and capacity to execute, deliver and perform this Agreement, without obtaining any approval, authorization, consent or waiver or giving any notice. The Seller has taken all action required by applicable law or otherwise to be taken to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligations of Seller.

2.5. Effect of Agreement .  The execution, delivery and performance of this Agreement by Seller and the sale of the Shares contemplated hereby will not, with or without the giving of notice and the lapse of time, or both, violate any provision of law, statute, rule, regulation or executive order to which China Huaxin or the Seller is subject.

2.6. Governmental and Other Consents .   Except for such consents as have been obtained prior to the date hereof (i) no notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by Seller of this Agreement and (ii) no notice to, consent, authorization or approval of, any person under any agreement, arrangement or commitment of any nature to which Seller is party to, or by which the Shares are bound by or subject to, is required in connection with the execution, delivery and performance by Seller of this Agreement.
 
2.7. Title to Assets; Absence of Liens and Encumbrances .      The sole asset of China Huaxin is the Production Facility.  China Huaxin has good and marketable title to, and owns outright, the Production Facility, free and clear of all liens, claims and encumbrances, other than those related to the Accrued Liabilities.

2.8. Equipment .  China Huaxin owns outright all equipment and fixtures in the Production Facility.

2.9.    Agreements, Arrangements; Conduct of Business .    China Huaxin has yet to conduct any business operations other than construction of the Production Facility and purchasing the equipment and fixtures therein.  China Huaxin is not party to any agreements or contracts calling for expenditures in excess of 100 RMB, in the aggregate.
 
 
2
 

 
2.10.   Permits .    China Huaxin has provided Target with copies of all permits and other government licenses it has obtained with respect to the Production Facility.

2.11   Litigation.    China Huaxin is not a party to any litigation.

2.12. Labor Matters .  China Huaxin has no employees.

2.13   Brokers and Finders .       Neither the Seller nor China Huaxin, nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement.  Seller agrees to indemnify, defend and hold Target harmless from any liability, loss, cost, claim and/or demand that any other broker or finder may have in connection with this transaction as a result of actions taken by the Company or the Seller.

   2.14    Securities Laws .   Seller understands that the shares of Target to be issued to Seller (the “Target Shares”) are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”) and that Target is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the applicability of such exemptions.  In this regard, the Seller represents, warrants and agrees that:

      (i)           The Seller is not a U.S. Person (as defined in the Securities Act) and is not acquiring the Target Shares for the account or benefit of a U.S. Person.

      (ii)          At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Seller was outside of the United States.

      (iii)         Seller will not, during the period commencing on the date of issuance of the Target Shares and ending on the six month anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Target Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

     (iv)          Seller will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Target Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

     (v)           Seller was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Target Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
 
 
3
 

 
    (vi)           Neither Seller nor any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Target Shares and the Seller and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

    (vii)          The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

   (viii)          Neither the Seller nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Target Shares.  The undersigned agrees not to cause any advertisement of the Target Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Target Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

   (ix)           Each certificate representing the Target Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
        8.                       Representations and Warranties of Buyer .  As a material inducement to Seller to enter into this Agreement, Buyer makes the following representations and warranties to Seller:

(a)       Buyer has been duly organized and is validly existing in its jurisdiction of organization and is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby.
 
 
4
 

 
(b) Buyer is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated thereby and this Agreement represents a valid and binding obligation of Buyer in accordance with its terms.

(c)           Neither the execution nor delivery of this Agreement nor consummation of the transactions herein by Buyer constitutes a violation or breach of applicable law or of any provision  of any contract or instrument to which Buyer is a party or by which it is bound, or any order, writ, injunction, decree or judgment applicable to Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

(d)           Buyer has made, either alone or together with its advisors, such independent investigation of the Business as Buyer deems to be, or such advisors have advised to be, necessary or advisable in connection with the transactions contemplated by this Agreement; provided that such investigation by Buyer shall not relieve Seller of any liability for a breach of its representations and warranties contained herein.

      (e)   The shares of Target upon issuance:
 
                             (i) will be free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;

                              (ii)  will have been duly and validly authorized and duly and validly issued, and will be fully paid and non-assessable (with no personal liability attaching to the holders thereof or to the Company) and will be free from preemptive rights or rights of first refusal held by any person; provided Seller’s representations herein are true and accurate and Seller takes no actions or fails to take any actions required for the acquisition of the Shares to be in compliance with all applicable laws and regulations; and

                            (iii) will have been issued in reliance upon an exemption from the registration requirements of and will not result in a violation of Section 5 under the Securities Act.

5.            Covenant Not To Compete .  In further consideration for the purchase of the Purchased Assets, for a period of 1 year following the date of the Closing, (i) none of Seller, its director, officers, managers or other related persons will directly, or indirectly, own, operate, manage, or serve as an officer, director, employee or independent contractor to any person or entity engaged in the Business or act as an advisor to any person or entity engaged in  the Business, or solicit, directly or indirectly, on behalf of themselves or any third party, the customers of the Buyer (whether existing as of the Closing Date or at any time thereafter), or otherwise engage in the Business, within a 200 kilometers (124.27) mile radius of the Site, and (ii) will not solicit any past, future  or present customers of the Business or interfere in any way in the relationships between the Business and its customers, employees or staff, without Buyer’s written consent].
 
12.            Further Assurances .  Each party agrees to execute and deliver all instruments and take action as the other party may request from time to time in order to effectuate the transactions contemplated hereby.
 
 
5
 

 
13.            Notices .  Any and all notices or other communications required or permitted to be given under any of the provisions of this Agreement shall be in writing and shall be deemed to have been given two business days after deposit with a recognized overnight courier fee paid, addressed to the intended recipient at such party’s address as set forth below, or such other address as such party may designate by like notice to the other party hereto.
 
To Seller at:

No. 55, Liulijing Xili
Chongwen District, Beijing
 
To Buyer at:

Tianyang Xiaoqu
Qiaodong District
Zhangjiakou, Hebei Province

With a copy to, which shall not constitute notice:

Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill
 
14.            Survival; Indemnification .  All covenants, representations and warranties in this Agreement shall survive for a period of twelve months after the date hereof, except that any representation or warranty relating to taxes shall survive for the applicable statutory limitation period and any claim for amounts payable hereunder or any indemnity claim hereunder asserted prior to the end of the foregoing survival periods shall survive until resolved.  Each party hereby agrees to defend, indemnify and hold the other party, its directors, officers, employees, advisors and affiliates, harmless from and against any and all losses, claims, liabilities or damages (collectively, “Losses”) arising out of or in connection with or founded on a claim that any of the foregoing representations, warranties and covenants of the indemnifying party are untrue, together with any and all costs and expenses (including reasonable attorneys’ fees) relating to such losses or arising therefrom or incurred by the other in connection with enforcement of this indemnification provision. Each party shall be responsible for its or his own costs and expenses in connection with the transactions being contemplated hereby, including attorneys’ fees.  Buyer shall promptly notify Seller of any claims and fully cooperate with Seller in the defense thereof.
 
 
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The parties have agreed that there shall be no escrow or other security withheld to secure Buyer against claim arising out of or related to the Seller’s Business.  In lieu of an escrow, Seller has agreed that Buyer may offset any Losses arising out of a breach by Seller of their representations, warranties and covenants contained herein, or out of any claims made against Buyer related to the Business prior to the Closing out of the deferred portion of the Purchase Price.

15.            Confidentiality .  Buyer has received certain business records, tax returns and privileged communications in connection with the due diligence process.  Buyer covenants, represents and warrants that all information will be kept strictly confidential, except to the extent used in the business of Buyer and to the extent disclosure is required by law or pursuant to legal process.

16.            Miscellaneous .

a.           This writing constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written agreement specifically referring to this Agreement signed by Seller and Buyer.

b.           This Agreement may not be assigned by either party without written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

c.           The paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said paragraph.

d.           This Agreement shall be governed by and construed in accordance with the laws of China without regard to the conflicts of law provisions thereof.  Jurisdiction for the resolution of any conflicts or disputes arising hereunder, if not resolved through good faith negotiation, shall be in Hebei Province, China.

e.           This Agreement may be executed in any number of counterparts, all of which when taken together shall be deemed to be one and the same instrument.

f.           The Parties to this Agreement acknowledge that each has had the input of legal counsel in drafting this Agreement as well as in conjunction with the negotiation and execution of this transaction.  Accordingly the Parties to this Agreement hereby waive any rule of construction or interpretation that would otherwise require ambiguities under this Agreement to be interpreted or constructed to his favor by virtue of such rule or rules regarding contract ambiguities.
 
[signatures are on the following page]
 
 
7
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 
 
ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD.
Seller
 
Buyer
 
By: /s/ Dongli Sun                                                                      
 
By: /s/ Jiazhen Liu                                                                      
       Name: Dongli Sun
 
       Name: Jiazhen Liu
       Title:
 
       Title:
     
    Target Acquisitions I, Inc.
     
   
By: /s/ Changkui Zhu                                                                  
           Name: Changkui Zhu
   
       Title:
     


8
 
STOCK PURCHASEAGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of this 17 th   day of January, 2014 by and among TARGET ACQUISITIONS I, INC., a Delaware corporation (“Target”), ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD., a Chinese limited company (“Buyer” or “Tongda”) and an indirectly wholly-owned subsidiary of Target and Meijie Wang , a resident of the People’s Republic of China (“Seller”).

Preliminary Statement

Seller is one of the five shareholders (collectively, the “Shareholders”) of Haixing Huaxin Mining Iindustry Co., Ltd., an entity organized under the laws of the People’s Republic of China (“China Huaxin”).  China Huaxin is in the late stages of constructing a facility (the “Production Facility”) in Haixing County, Hebei Province, China for the conversion of iron sands into direct reduced iron.

Target desires to acquire all of the outstanding shares of China Huaxin and, concurrently herewith, is entering into agreements with the four other shareholders of China Huaxin to acquire all of their shares in China Huaxin.

NOW, THEREFORE, the parties hereto in consideration of the mutual promises and covenants herein contained and intending to be legally bound, do hereby agree as follows:

1.            Purchase and Sale   Subject to the terms and conditions hereinafter set forth, and on the basis of the representations and warranties contained herein, Seller hereby sells, conveys, transfers and assigns  to Buyer, free and clear of all encumbrances, liens and liabilities,  all right, title and interest in and to the shares of capital stock of China Huaxin owned by Seller (the “Shares”), which Shares represent 3 % of the shares of capital stock of China Huaxin outstanding as of the date hereof.  Simultaneously with the execution and delivery hereof Seller is executing and delivering to Buyer such documents and instruments as are necessary to transfer title to the Shares.

In consideration of all right, title and interest in the Shares, Target is paying to Seller 300,000 RMB and shall issue to the order of Seller   153,000  shares of the common stock of Target (collectively, the “Purchase Price”).

2.        Representations and Warranties .   As an inducement to Target to enter into this Agreement and acquire the Shares, the Seller hereby represents and warrants to Target as of the date hereof:

2.1. Organization, Good Standing, Power .    China Huaxin is a corporation duly organized, validly existing and in good standing under the Company Law of the People’s Republic of China . China Huaxin has the power and authority to own, lease and operate its assets. The minute books, stock ledgers and stock transfer records of China Huaxin, if any, will be furnished to Target.
 
 
 
 

 
2.2. Company Documents .       Correct and complete copies of the organizational documents of China Huaxin, in each case as amended to date have been provided to Target.

2.3. Shares .     The Seller owns the Shares and has good, valid and marketable title to the Shares.  The Shares represent 3 % of the outstanding capital stock of China Huaxin.  Such Shares are held free and clear of any covenant, condition, restriction, voting arrangement, charge, security interest, option or adverse claim.  Upon payment of the Purchase Price, Target will acquire good and marketable title to the Shares, free and clear of any Security Interest, restrictions or claims.  The Shares, together with the shares currently owned by the individuals named in Schedule 2.3 represent 100% of the issued and outstanding shares of capital stock of the Company.

2.4 Authorization .  Seller possesses the legal right and capacity to execute, deliver and perform this Agreement, without obtaining any approval, authorization, consent or waiver or giving any notice. The Seller has taken all action required by applicable law or otherwise to be taken to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligations of Seller.

2.5. Effect of Agreement .  The execution, delivery and performance of this Agreement by Seller and the sale of the Shares contemplated hereby will not, with or without the giving of notice and the lapse of time, or both, violate any provision of law, statute, rule, regulation or executive order to which China Huaxin or the Seller is subject.

2.6. Governmental and Other Consents .   Except for such consents as have been obtained prior to the date hereof (i) no notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by Seller of this Agreement and (ii) no notice to, consent, authorization or approval of, any person under any agreement, arrangement or commitment of any nature to which Seller is party to, or by which the Shares are bound by or subject to, is required in connection with the execution, delivery and performance by Seller of this Agreement.
 
2.7. Title to Assets; Absence of Liens and Encumbrances .      The sole asset of China Huaxin is the Production Facility.  China Huaxin has good and marketable title to, and owns outright, the Production Facility, free and clear of all liens, claims and encumbrances, other than those related to the Accrued Liabilities.

2.8. Equipment .  China Huaxin owns outright all equipment and fixtures in the Production Facility.

2.9.    Agreements, Arrangements; Conduct of Business .    China Huaxin has yet to conduct any business operations other than construction of the Production Facility and purchasing the equipment and fixtures therein.  China Huaxin is not party to any agreements or contracts calling for expenditures in excess of 100 RMB, in the aggregate.
 
 
2
 

 
2.10.   Permits .    China Huaxin has provided Target with copies of all permits and other government licenses it has obtained with respect to the Production Facility.

2.11   Litigation.    China Huaxin is not a party to any litigation.

2.12. Labor Matters .  China Huaxin has no employees.

2.13   Brokers and Finders .       Neither the Seller nor China Huaxin, nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement.  Seller agrees to indemnify, defend and hold Target harmless from any liability, loss, cost, claim and/or demand that any other broker or finder may have in connection with this transaction as a result of actions taken by the Company or the Seller.

   2.14    Securities Laws .   Seller understands that the shares of Target to be issued to Seller (the “Target Shares”) are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”) and that Target is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the applicability of such exemptions.  In this regard, the Seller represents, warrants and agrees that:

      (i)           The Seller is not a U.S. Person (as defined in the Securities Act) and is not acquiring the Target Shares for the account or benefit of a U.S. Person.

      (ii)          At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Seller was outside of the United States.

      (iii)         Seller will not, during the period commencing on the date of issuance of the Target Shares and ending on the six month anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Target Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

     (iv)          Seller will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Target Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

     (v)           Seller was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Target Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
 
 
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    (vi)           Neither Seller nor any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Target Shares and the Seller and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

    (vii)          The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

   (viii)          Neither the Seller nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Target Shares.  The undersigned agrees not to cause any advertisement of the Target Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Target Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

   (ix)           Each certificate representing the Target Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
        8.                       Representations and Warranties of Buyer .  As a material inducement to Seller to enter into this Agreement, Buyer makes the following representations and warranties to Seller:

(a)       Buyer has been duly organized and is validly existing in its jurisdiction of organization and is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby.
 
 
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(b) Buyer is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated thereby and this Agreement represents a valid and binding obligation of Buyer in accordance with its terms.

(c)           Neither the execution nor delivery of this Agreement nor consummation of the transactions herein by Buyer constitutes a violation or breach of applicable law or of any provision  of any contract or instrument to which Buyer is a party or by which it is bound, or any order, writ, injunction, decree or judgment applicable to Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

(d)           Buyer has made, either alone or together with its advisors, such independent investigation of the Business as Buyer deems to be, or such advisors have advised to be, necessary or advisable in connection with the transactions contemplated by this Agreement; provided that such investigation by Buyer shall not relieve Seller of any liability for a breach of its representations and warranties contained herein.

(e)   The shares of Target upon issuance:

                             (i) will be free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;

                              (ii)  will have been duly and validly authorized and duly and validly issued, and will be fully paid and non-assessable (with no personal liability attaching to the holders thereof or to the Company) and will be free from preemptive rights or rights of first refusal held by any person; provided Seller’s representations herein are true and accurate and Seller takes no actions or fails to take any actions required for the acquisition of the Shares to be in compliance with all applicable laws and regulations; and

                            (iii) will have been issued in reliance upon an exemption from the registration requirements of and will not result in a violation of Section 5 under the Securities Act.

5.            Covenant Not To Compete .  In further consideration for the purchase of the Purchased Assets, for a period of 1 year following the date of the Closing, (i) none of Seller, its director, officers, managers or other related persons will directly, or indirectly, own, operate, manage, or serve as an officer, director, employee or independent contractor to any person or entity engaged in the Business or act as an advisor to any person or entity engaged in  the Business, or solicit, directly or indirectly, on behalf of themselves or any third party, the customers of the Buyer (whether existing as of the Closing Date or at any time thereafter), or otherwise engage in the Business, within a 200 kilometers (124.27) mile radius of the Site, and (ii) will not solicit any past, future  or present customers of the Business or interfere in any way in the relationships between the Business and its customers, employees or staff, without Buyer’s written consent].
 
12.            Further Assurances .  Each party agrees to execute and deliver all instruments and take action as the other party may request from time to time in order to effectuate the transactions contemplated hereby.
 
 
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13.            Notices .  Any and all notices or other communications required or permitted to be given under any of the provisions of this Agreement shall be in writing and shall be deemed to have been given two business days after deposit with a recognized overnight courier fee paid, addressed to the intended recipient at such party’s address as set forth below, or such other address as such party may designate by like notice to the other party hereto.
 
To Sellerat:

No. 78-15, Pinganli
Guta District, Jinzhou
Liaoning Province, PRC
 
To Buyer at:

Tianyang Xiaoqu, Qiaodong District
Zhangjiakou, Hebei Province

With a copy to, which shall not constitute notice:

Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill
 
14.            Survival; Indemnification .  All covenants, representations and warranties in this Agreement shall survive for a period of twelve months after the date hereof, except that any representation or warranty relating to taxes shall survive for the applicable statutory limitation period and any claim for amounts payable hereunder or any indemnity claim hereunder asserted prior to the end of the foregoing survival periods shall survive until resolved.  Each party hereby agrees to defend, indemnify and hold the other party, its directors, officers, employees, advisors and affiliates, harmless from and against any and all losses, claims, liabilities or damages (collectively, “Losses”) arising out of or in connection with or founded on a claim that any of the foregoing representations, warranties and covenants of the indemnifying party are untrue, together with any and all costs and expenses (including reasonable attorneys’ fees) relating to such losses or arising therefrom or incurred by the other in connection with enforcement of this indemnification provision. Each party shall be responsible for its or his own costs and expenses in connection with the transactions being contemplated hereby, including attorneys’ fees.  Buyer shall promptly notify Seller of any claims and fully cooperate with Seller in the defense thereof.
 
 
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The parties have agreed that there shall be no escrow or other security withheld to secure Buyer against claim arising out of or related to the Seller’s Business.  In lieu of an escrow, Seller has agreed that Buyer may offset any Losses arising out of a breach by Seller of their representations, warranties and covenants contained herein, or out of any claims made against Buyer related to the Business prior to the Closing out of the deferred portion of the Purchase Price.

15.            Confidentiality .  Buyer has received certain business records, tax returns and privileged communications in connection with the due diligence process.  Buyer covenants, represents and warrants that all information will be kept strictly confidential, except to the extent used in the business of Buyer and to the extent disclosure is required by law or pursuant to legal process.

16.            Miscellaneous .

a.           This writing constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written agreement specifically referring to this Agreement signed by Seller and Buyer.

b.           This Agreement may not be assigned by either party without written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

c.           The paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said paragraph.

d.           This Agreement shall be governed by and construed in accordance with the laws of China without regard to the conflicts of law provisions thereof.  Jurisdiction for the resolution of any conflicts or disputes arising hereunder, if not resolved through good faith negotiation, shall be in Hebei Province, China.

e.           This Agreement may be executed in any number of counterparts, all of which when taken together shall be deemed to be one and the same instrument.

f.           The Parties to this Agreement acknowledge that each has had the input of legal counsel in drafting this Agreement as well as in conjunction with the negotiation and execution of this transaction.  Accordingly the Parties to this Agreement hereby waive any rule of construction or interpretation that would otherwise require ambiguities under this Agreement to be interpreted or constructed to his favor by virtue of such rule or rules regarding contract ambiguities.
 
[signatures are on the following page]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 
 
ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD.
Seller
 
Buyer
 
By: /s/ Meijie Wang                                                                  
 
By: /s/ Jiazhen Liu                                                                      
       Name: Meijie Wang
 
       Name: Jiazhen Liu
       Title:
 
       Title:
     
    Target Acquisitions I, Inc.
     
   
By: /s/ Changkui Zhu                                                                  
           Name: Changkui Zhu
   
       Title:
 
 
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STOCK PURCHASEAGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement"), is made as of this 17 th   day of January, 2014 by and among TARGET ACQUISITIONS I, INC., a Delaware corporation (“Target”), ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD., a Chinese limited company (“Buyer” or “Tongda”) and an indirectly wholly-owned subsidiary of Target and Xingwang Shao , a resident of the People’s Republic of China (“Seller”).

Preliminary Statement

Seller is one of the five shareholders (collectively, the “Shareholders”) of Haixing Huaxin Mining Iindustry Co., Ltd., an entity organized under the laws of the People’s Republic of China (“China Huaxin”).  China Huaxin is in the late stages of constructing a facility (the “Production Facility”) in Haixing County, Hebei Province, China for the conversion of iron sands into direct reduced iron.

Target desires to acquire all of the outstanding shares of China Huaxin and, concurrently herewith, is entering into agreements with the four other shareholders of China Huaxin to acquire all of their shares in China Huaxin.

NOW, THEREFORE, the parties hereto in consideration of the mutual promises and covenants herein contained and intending to be legally bound, do hereby agree as follows:

1.            Purchase and Sale .  Subject to the terms and conditions hereinafter set forth, and on the basis of the representations and warranties contained herein, Seller hereby sells, conveys, transfers and assigns  to Buyer, free and clear of all encumbrances, liens and liabilities,  all right, title and interest in and to the shares of capital stock of China Huaxin owned by Seller (the “Shares”), which Shares represent 2 % of the shares of capital stock of China Huaxin outstanding as of the date hereof.  Simultaneously with the execution and delivery hereof Seller is executing and delivering to Buyer such documents and instruments as are necessary to transfer title to the Shares.

In consideration of all right, title and interest in the Shares, Target is paying to Seller 200,000 RMB and shall issue to the order of Seller   102,000  shares of the common stock of Target (collectively, the “Purchase Price”).

2.        Representations and Warranties .   As an inducement to Target to enter into this Agreement and acquire the Shares, the Seller hereby represents and warrants to Target as of the date hereof:

2.1. Organization, Good Standing, Power .    China Huaxin is a corporation duly organized, validly existing and in good standing under the Company Law of the People’s Republic of China . China Huaxin has the power and authority to own, lease and operate its assets. The minute books, stock ledgers and stock transfer records of China Huaxin, if any, will be furnished to Target.
 
 
 
 

 
2.2. Company Documents .       Correct and complete copies of the organizational documents of China Huaxin, in each case as amended to date have been provided to Target.

2.3. Shares .     The Seller owns the Shares and has good, valid and marketable title to the Shares.  The Shares represent 2 % of the outstanding capital stock of China Huaxin.  Such Shares are held free and clear of any covenant, condition, restriction, voting arrangement, charge, security interest, option or adverse claim.  Upon payment of the Purchase Price, Target will acquire good and marketable title to the Shares, free and clear of any Security Interest, restrictions or claims.  The Shares, together with the shares currently owned by the individuals named in Schedule 2.3 represent 100% of the issued and outstanding shares of capital stock of the Company.

2.4 Authorization .  Seller possesses the legal right and capacity to execute, deliver and perform this Agreement, without obtaining any approval, authorization, consent or waiver or giving any notice. The Seller has taken all action required by applicable law or otherwise to be taken to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Seller and constitutes the legal, valid and binding obligations of Seller.

2.5. Effect of Agreement .  The execution, delivery and performance of this Agreement by Seller and the sale of the Shares contemplated hereby will not, with or without the giving of notice and the lapse of time, or both, violate any provision of law, statute, rule, regulation or executive order to which China Huaxin or the Seller is subject.

2.6. Governmental and Other Consents .   Except for such consents as have been obtained prior to the date hereof (i) no notice to, consent, authorization or approval of, or exemption by, any governmental or public body or authority is required in connection with the execution, delivery and performance by Seller of this Agreement and (ii) no notice to, consent, authorization or approval of, any person under any agreement, arrangement or commitment of any nature to which Seller is party to, or by which the Shares are bound by or subject to, is required in connection with the execution, delivery and performance by Seller of this Agreement.
 
2.7. Title to Assets; Absence of Liens and Encumbrances .      The sole asset of China Huaxin is the Production Facility.  China Huaxin has good and marketable title to, and owns outright, the Production Facility, free and clear of all liens, claims and encumbrances, other than those related to the Accrued Liabilities.

2.8. Equipment .  China Huaxin owns outright all equipment and fixtures in the Production Facility.

2.9.    Agreements, Arrangements; Conduct of Business .    China Huaxin has yet to conduct any business operations other than construction of the Production Facility and purchasing the equipment and fixtures therein.  China Huaxin is not party to any agreements or contracts calling for expenditures in excess of 100 RMB, in the aggregate.
 
 
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2.10.   Permits .    China Huaxin has provided Target with copies of all permits and other government licenses it has obtained with respect to the Production Facility.

2.11   Litigation.    China Huaxin is not a party to any litigation.

2.12. Labor Matters .  China Huaxin has no employees.

2.13   Brokers and Finders .   Neither the Seller nor China Huaxin, nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement.  Seller agrees to indemnify, defend and hold Target harmless from any liability, loss, cost, claim and/or demand that any other broker or finder may have in connection with this transaction as a result of actions taken by the Company or the Seller.

   2.14    Securities Laws .   Seller understands that the shares of Target to be issued to Seller (the “Target Shares”) are being offered and sold in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the United States Securities Act of 1933 (the “Securities Act”) and that Target is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Seller set forth herein in order to determine the applicability of such exemptions.  In this regard, the Seller represents, warrants and agrees that:

      (i)           The Seller is not a U.S. Person (as defined in the Securities Act) and is not acquiring the Target Shares for the account or benefit of a U.S. Person.

      (ii)          At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the Seller was outside of the United States.

      (iii)         Seller will not, during the period commencing on the date of issuance of the Target Shares and ending on the six month anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Target Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

     (iv)          Seller will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Target Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

     (v)           Seller was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Target Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.
 
 
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    (vi)           Neither Seller nor any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Target Shares and the Seller and any person acting on its behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

    (vii)          The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

   (viii)          Neither the Seller nor any person acting on its behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Target Shares.  The undersigned agrees not to cause any advertisement of the Target Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Target Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

   (ix)           Each certificate representing the Target Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
 
        8.                       Representations and Warranties of Buyer .  As a material inducement to Seller to enter into this Agreement, Buyer makes the following representations and warranties to Seller:

(a)       Buyer has been duly organized and is validly existing in its jurisdiction of organization and is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated hereby.
 
 
4
 

 
(b) Buyer is fully authorized to enter into and perform its obligations under this Agreement and to carry out the transactions contemplated thereby and this Agreement represents a valid and binding obligation of Buyer in accordance with its terms.

(c)           Neither the execution nor delivery of this Agreement nor consummation of the transactions herein by Buyer constitutes a violation or breach of applicable law or of any provision  of any contract or instrument to which Buyer is a party or by which it is bound, or any order, writ, injunction, decree or judgment applicable to Buyer.  This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms.

(d)           Buyer has made, either alone or together with its advisors, such independent investigation of the Business as Buyer deems to be, or such advisors have advised to be, necessary or advisable in connection with the transactions contemplated by this Agreement; provided that such investigation by Buyer shall not relieve Seller of any liability for a breach of its representations and warranties contained herein.

      (e)   The shares of Target upon issuance:

                             (i) will be free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;

                              (ii)  will have been duly and validly authorized and duly and validly issued, and will be fully paid and non-assessable (with no personal liability attaching to the holders thereof or to the Company) and will be free from preemptive rights or rights of first refusal held by any person; provided Seller’s representations herein are true and accurate and Seller takes no actions or fails to take any actions required for the acquisition of the Shares to be in compliance with all applicable laws and regulations; and

                            (iii) will have been issued in reliance upon an exemption from the registration requirements of and will not result in a violation of Section 5 under the Securities Act.

5.            Covenant Not To Compete .  In further consideration for the purchase of the Purchased Assets, for a period of 1 year following the date of the Closing, (i) none of Seller, its director, officers, managers or other related persons will directly, or indirectly, own, operate, manage, or serve as an officer, director, employee or independent contractor to any person or entity engaged in the Business or act as an advisor to any person or entity engaged in  the Business, or solicit, directly or indirectly, on behalf of themselves or any third party, the customers of the Buyer (whether existing as of the Closing Date or at any time thereafter), or otherwise engage in the Business, within a 200 kilometers (124.27) mile radius of the Site, and (ii) will not solicit any past, future  or present customers of the Business or interfere in any way in the relationships between the Business and its customers, employees or staff, without Buyer’s written consent].
 
12.            Further Assurances .  Each party agrees to execute and deliver all instruments and take action as the other party may request from time to time in order to effectuate the transactions contemplated hereby.
 
 
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13.            Notices .  Any and all notices or other communications required or permitted to be given under any of the provisions of this Agreement shall be in writing and shall be deemed to have been given two business days after deposit with a recognized overnight courier fee paid, addressed to the intended recipient at such party’s address as set forth below, or such other address as such party may designate by like notice to the other party hereto.
 
To Seller at:

No.47, Caiyan Road
Taishen District, Taian
Shandong Province, PRC
 
To Buyer at:

Tianyang Xiaoqu, Qiaodong District
Zhangjiakou, Hebei Province

With a copy to, which shall not constitute notice:

Eaton & Van Winkle LLP
3 Park Avenue
New York, New York 10016
Attn: Vincent J. McGill
 
14.            Survival; Indemnification .  All covenants, representations and warranties in this Agreement shall survive for a period of twelve months after the date hereof, except that any representation or warranty relating to taxes shall survive for the applicable statutory limitation period and any claim for amounts payable hereunder or any indemnity claim hereunder asserted prior to the end of the foregoing survival periods shall survive until resolved.  Each party hereby agrees to defend, indemnify and hold the other party, its directors, officers, employees, advisors and affiliates, harmless from and against any and all losses, claims, liabilities or damages (collectively, “Losses”) arising out of or in connection with or founded on a claim that any of the foregoing representations, warranties and covenants of the indemnifying party are untrue, together with any and all costs and expenses (including reasonable attorneys’ fees) relating to such losses or arising therefrom or incurred by the other in connection with enforcement of this indemnification provision. Each party shall be responsible for its or his own costs and expenses in connection with the transactions being contemplated hereby, including attorneys’ fees.  Buyer shall promptly notify Seller of any claims and fully cooperate with Seller in the defense thereof.

The parties have agreed that there shall be no escrow or other security withheld to secure Buyer against claim arising out of or related to the Seller’s Business.  In lieu of an escrow, Seller has agreed that Buyer may offset any Losses arising out of a breach by Seller of their representations, warranties and covenants contained herein, or out of any claims made against Buyer related to the Business prior to the Closing out of the deferred portion of the Purchase Price.
 
 
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15.            Confidentiality .  Buyer has received certain business records, tax returns and privileged communications in connection with the due diligence process.  Buyer covenants, represents and warrants that all information will be kept strictly confidential, except to the extent used in the business of Buyer and to the extent disclosure is required by law or pursuant to legal process.

16.            Miscellaneous .

a.           This writing constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified, amended or terminated except by a written agreement specifically referring to this Agreement signed by Seller and Buyer.

b.           This Agreement may not be assigned by either party without written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.

c.           The paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said paragraph.

d.           This Agreement shall be governed by and construed in accordance with the laws of China without regard to the conflicts of law provisions thereof.  Jurisdiction for the resolution of any conflicts or disputes arising hereunder, if not resolved through good faith negotiation, shall be in Hebei Province, China.

e.           This Agreement may be executed in any number of counterparts, all of which when taken together shall be deemed to be one and the same instrument.

f.           The Parties to this Agreement acknowledge that each has had the input of legal counsel in drafting this Agreement as well as in conjunction with the negotiation and execution of this transaction.  Accordingly the Parties to this Agreement hereby waive any rule of construction or interpretation that would otherwise require ambiguities under this Agreement to be interpreted or constructed to his favor by virtue of such rule or rules regarding contract ambiguities.
 
[signatures are on the following page]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 
 
ZHANGJIAKOU TONGDA MINING TECHNOLOGIES SERVICE CO., LTD.
Seller
 
Buyer
 
By: /s/ Xingwang Shao                                                               
  By: /s/ Jiazhen Liu                                                                      
       Name: Xingwang Shao
 
       Name: Jiazhen Liu
       Title:
 
       Title:
     
    Target Acquisitions I, Inc.
     
   
By: /s/ Changkui Zhu                                                                  
           Name: Changkui Zhu
   
       Title:
 
 
8
 
 
 
 
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
 
Target Acquisitions I, Inc.

4.0% Convertible Debenture
Due June 30, 2014

People’s Republic of China RMB 3,333,333

Target Acquisitions I, Inc., a Delaware corporation (the "Issuer"),  for value received, hereby promises to pay to China Concentric Capital Group Ltd. or registered assigns (the “Holder”), at Tianyang Xiaoqu, Qiaodong District, Zhangjiakou, Hebei Province the principal sum of Three million three hundred thirty three thousand three hundred thirty three (3,333,333) RMB Chinese Yuan, no later than June 30, 2014 (the "Maturity Date"), and to pay interest thereon from January 20, 2014, at the rate of four (4.0%) percent per annum until the principal hereof is paid.  Interest accrued shall be paid on the Maturity Date and if the principal hereof is not paid on the Maturity Date, thereafter, monthly in arrears.  The interest rate on any overdue principal or interest shall be eighteen (18%) percent, which amount shall accrue daily, from the due date of any principal or interest, as the case may be, through and including the date of payment.

If this Security is converted into shares of common stock of Issuer (the "Common Stock") pursuant to the provisions hereof, interest shall be calculated through and including the date of conversion and shall be paid on such date.

Principal of this Security shall be payable at the earliest of the Maturity Date, Redemption Date or Acceleration Date (each as hereinafter defined) against surrender hereof at the principal executive offices of the Issuer in China.  Payments of principal and of any interest on this Security shall be made in such coin or currency of China as at the time of payment is legal tender for payment of public and private debts.  Payments of interest on this Security shall be made by check mailed on or before the due date for such payment to the Holder as indicated below or to such other address as the  Holder may have previously given notice to the Issuer in writing.  Interest shall accrue and be payable on this Security through the earlier of the Maturity Date, Conversion Date or Redemption Date.
 
 
 
 

 
1.            Transfer .

(a)     The Issuer will at all times act as its own security registrar and paying and transfer agent and agrees to cause to be kept at its principal executive office a register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer will provide for the registration of Securities and registration of transfers of Securities.  As of the date this Security was originally issued, such principal executive offices of the Issuer were located at Chunshuguo Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province, China 075600.  The Issuer shall not change the location of its principal executive offices unless Issuer provides all Registered Holders with no less than thirty (30) days prior written notice. The Holders of this Security as indicated on the Security Register are referred to herein as the Registered Holders.

(b)  The transfer of a Security is registrable on the Security Register upon surrender of such Security at the principal executive offices of Issuer duly endorsed by, or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer duly executed by the Registered Holder thereof, or the Registered Holder’s attorney duly authorized in writing, together with any certifications and representations which Issuer may reasonably require to reflect compliance with all applicable securities laws, rules and regulations and the due authorization of the transaction.  Upon such surrender of this Security for registration of transfer, the Issuer shall execute and deliver, in the name of the designated transferee or transferees, one or more new Securities, dated the date of the execution thereof, of any authorized denominations and of a like tenor, form and aggregate principal amount.

(c)  At the option of the Registered Holder, upon request confirmed in writing, Securities may be exchanged for Securities of any authorized denominations and of a like tenor, form and aggregate principal amount upon surrender of the Securities to be exchanged at the principal executive offices of the Issuer.  Whenever any Securities are so surrendered for exchange, the Issuer shall execute and deliver the Securities which the Registered Holder making the exchange is entitled to receive.  Any registration of transfer or exchange will be effected only upon the Issuer being reasonably satisfied with the documents of title and identity of the person making the request and subject to compliance with applicable Federal and state securities laws.

(d)  All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits, as the Securities surrendered upon such registration of transfer or exchange.  No service or other charges shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

(e)  Prior  to due presentment of this Security for registration of transfer, the Issuer may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and the Issuer shall not be affected by notice to the contrary.
 
 
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2.            Representations and Warranties of the Issuer .  The Issuer represents and warrants to the Registered Holder as of January 20, 2014, as follows:

(a)           Issuer is a corporation duly organized, existing and in good standing under the laws of its state or province of incorporation and has the power to conduct the business which it conducts and proposes to conduct.

(b)           The execution, delivery and performance of the Securities by the Issuer has been duly approved by the Board of Directors of Issuer and all other actions required to authorize and effect the offer and sale of the Securities have been duly taken and approved.

(c)           The Securities and the Common Stock issuable upon conversion of the Securities (the "Conversion Shares") have been duly and validly authorized.  The Securities and Conversion Shares, when issued and paid for in accordance with the terms hereof, will be fully paid and non-assessable and valid and binding obligations of the Issuer enforceable in accordance with their respective terms.

(d)           Issuer will, at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for conversion of the Securities into shares of Common Stock.

(e)           Issuer has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and Issuer is in all material respects complying therewith.

(f)           Issuer knows of no pending or threatened legal or governmental proceedings to which Issuer is a party which could materially adversely affect the business, property, financial condition or operations of the Issuer.

(g)           Issuer is not in violation of or default under, nor will the execution and delivery of the Securities, the issuance of the Common Stock upon conversion of the Securities and the incurrence of the obligations herein and therein set forth and the consummation of the transactions herein or therein contemplated, result in a violation of, or constitute a default under the certificate of incorporation or by-laws, the performance or observance of any material obligations, agreement, covenant or condition contained in any bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint venture or other agreements or instrument to which the Issuer is a party or by which it or any of its properties may be bound or in violation of any material order, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign.
 
 
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3.            Covenants of the Issuer .  Issuer hereby covenants and agrees that for so long as any of the Securities shall remain outstanding:

(a)           it will duly and punctually pay the principal of and any interest on the Securities in accordance with the terms hereof;

(b)           it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charters and statutory) and franchises;

(c)           it will cause all material properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the reasonable judgment of  Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that the foregoing shall not prevent the Issuer from discontinuing the operation or maintenance of any such properties if such discontinuance is, in the reasonable judgment of Issuer, desirable in the conduct of its business or the business of any of its subsidiaries, and not disadvantageous in any material respect to the holders of Securities; and, provided , further , that the failure to comply herewith shall not be deemed a breach hereof unless such failure would have a material adverse effect on the business, financial condition or results of operations of Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect");

(d)           it will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Issuer or upon the income, profits or property of the Issuer, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Issuer; provided , however , that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and, provided , further , that the failure to comply herewith shall not be deemed a breach if it would not have a Material Adverse Effect;

(e)           it shall furnish to each Registered Holder of Securities a copy of all documents it is required to send to its shareholders at the time the same are sent to shareholders, including, without limitation, annual reports and proxy statements;

(f)           as soon as it becomes aware of the same, it shall give written notice to each Registered Holder of Securities of any event or occurrence which by itself or with notice or lapse of time or both would entitle the holders of the Securities to declare the principal of and any interest on the Securities immediately due and payable pursuant to the terms   hereof;
 
 
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(g)           it will promptly obtain and maintain from time to time all authorizations, permits, approvals, consents, licenses and exemptions which are required under any applicable law or regulation to enable it to perform all of its payment, conversion and other material obligations under the Securities or which may be required for the validity or enforceability of the Securities; provided, however, that the failure to obtain and maintain such authorizations, permits, approvals, consents, licenses and exemptions as to material obligations other than payment and conversion shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;

(h)           it will duly and punctually comply with and observe all statutes now or hereafter in force and all ordinances, regulation and by-laws thereunder and all requirements and orders of any government or other public authority; provided , however , that any non-compliance with any such statute, ordinance, regulation or by-law shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;

(i)           it shall permit any representative of any Registered Holder or Holders of at  least $250,000 aggregate principal amount of the Securities to make inspections of, and to report on, the property of, and business operations being carried out by, the Issuer or any of its subsidiaries;

(j)           it shall not:

(i)           declare or pay any cash dividends on its Common Stock or purchase, redeem or otherwise acquire or retire for value any shares of Common Stock (other than under the terms of the Issuer's stock option plan); or

(ii)           consolidate with or merge into any other Person, where the Issuer is not the surviving corporation, or convey, transfer, lease or otherwise dispose of all or substantially all of its assets, except in compliance with the terms and conditions set forth in Section 11 below.

4.            Voluntary Conversion .

(a)           Each Registered Holder of Securities may at any time convert all or any amount of the principal amount of the Securities then owned by such Registered Holder into shares of Common Stock of Issuer at a conversion price equal to 11.11 RMB per share of Common Stock, subject to adjustment as provided in this Section.
 
 
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(b)           The conversion right granted in Section 4(a) hereof may be exercised only by a Registered Holder of Securities, in whole or in part, by the surrender of the certificate or certificates representing the Securities to be converted at the principal executive offices of the Issuer against delivery of that number of shares of whole Common Stock as shall be computed by dividing the face amount of the Securities being converted by the Conversion Price on the Conversion Date.  At the time of conversion of Securities, the Issuer shall pay in cash to the Registered Holder thereof an amount equal to all accrued and unpaid interest, if any, to and including the Conversion Date.  Each Security surrendered for conversion shall be endorsed by the Registered Holder.  Issuer will transmit the Common Stock certificates issuable upon conversion of any Securities and a certificate representing the balance of the Securities to the Registered Holder via express courier within three (3) business days after the Conversion Date.  The term "Conversion Date" shall mean the date the original Notice of Conversion and Securities being converted are received by the Issuer.  The term "Notice of Conversion" shall mean the written notice from the Registered Holder to the Issuer.

(c)           All Common Stock which may be issued upon conversion of the Securities will, upon issuance, be duly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issue thereof.  At all times that any Securities are Outstanding, Issuer shall have authorized and shall have reserved for the purpose of issuance upon such conversion into Common Stock of all Securities, a sufficient number of shares of Common Stock to provide for the conversion of all Outstanding Securities at the then effective Conversion Price.  Without limiting the generality of the foregoing, if, at any time, the Conversion Price is decreased or increased, the number of shares of Common Stock authorized and reserved for issuance by Issuer upon the conversion of the Securities shall be proportionately increased or decreased, as the case may be.

(d)           The Initial Conversion Price is 11.11 RMB per share of Common Stock ("Initial Conversion Price").  The Initial Conversion Price shall be adjusted as provided for below in this Section (d) (the Initial Conversion Price and the Initial Conversion Price, as thereafter then adjusted, shall be referred to as the "Conversion Price") and the Conversion Price from time to time shall be further adjusted as provided for below in this Section (d).  Upon each adjustment of the Conversion Price, the Registered Holders of the Securities shall thereafter be entitled to receive upon conversion, at the Conversion Price resulting from such adjustment, the number of shares of Common Stock obtained by dividing the face amount of the Securities being converted by the Conversion Price, as then adjusted.  The Conversion Price shall be adjusted as follows:
 
 
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(i)           In the case of any amendment to the Certificate of Incorporation of Issuer to change the designation of the Common Stock or the rights, privileges, restrictions or conditions in respect to the Common Stock or division of the Common Stock, the Securities shall be adjusted so as to provide that upon conversion thereof the Registered Holder shall receive, in lieu of each share of Common Stock theretofore issuable upon such conversion, the kind and amount of shares, other securities, money and property receivable upon such designation, change or division by such holder issuable upon such conversion had the conversion occurred immediately prior to such designation, change or division.  The Securities shall be deemed thereafter to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4.  The provisions of this Subsection 4(d)(i) shall apply in the same manner to successive reclassifications, changes, consolidations and mergers.

(ii)           If Issuer shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, or declare a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or dividend or other distribution shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(iii)           If any capital reorganization or reclassification of the capital stock of the Issuer, or any consolidation or merger of the Issuer with another corporation or entity, or the sale of all or substantially all of the Issuer’s assets to another corporation or other entity shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive stocks, securities, other evidence of equity ownership or assets with respect to or in exchange for shares of Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale (except as otherwise provided below in this Section), lawful and adequate provisions shall be made whereby the Registered Holder shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein, such shares of stock, securities, other evidence of equity ownership or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of this Debenture under this Section had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of such Registered Holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Conversion Price and of the number of shares of Common Stock receivable upon the conversion of this Debenture) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities, other evidence of equity ownership or assets thereafter deliverable upon the conversion hereof (including an immediate adjustment, by reason of such consolidation or merger, of the Conversion Price to the value for the Common Stock reflected by the terms of such consolidation or merger if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation or merger).  Subject to the terms of this Debenture, in the event of a merger or consolidation of the Issuer with or into another corporation or other entity as a result of which the number of shares of common stock of the surviving corporation or other entity issuable to holders of Common Stock of the Issuer, is greater or lesser than the number of shares of Common Stock of the Issuer outstanding immediately prior to such merger or consolidation, then the Conversion Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock of the Issuer.  The Issuer shall not effect any such consolidation, merger or sale, unless, prior to the consummation thereof, the successor corporation (if other than the Issuer) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Registered Holder, the obligation to deliver to the Registered Holder such shares of stock, securities, other evidence of equity ownership or assets as, in accordance with the foregoing provisions, the Registered Holder may be entitled to receive or otherwise acquire.  If a purchase, tender or exchange offer is made to and accepted by the holders of more than fifty (50%) percent of the outstanding shares of Common Stock of the Issuer, the Issuer shall not effect any consolidation, merger or sale with the Person having made such offer or with any Affiliate of such Person, unless prior to the consummation of such consolidation, merger or sale the Registered Holder of this Debenture shall have been given a reasonable opportunity to then elect to receive upon the conversion of this Debenture the amount of stock, securities, other evidence of equity ownership or assets then issuable with respect to the number of shares of Common Stock of the Issuer in accordance with such offer.
 
 
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(e)           Whenever the Conversion Price shall be adjusted pursuant to Section 9(d) hereof, Issuer shall issue a certificate signed by its President or Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of Issuer made any determination hereunder), and the Conversion Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first-class mail, postage prepaid) to each Registered Holder of Securities.  Issuer shall make such certificate and mail it to each such holder promptly after each adjustment.

(f)           No fractional Common Stock shall be issued in connection with any conversion (or forced conversion, if applicable) of Securities, but in lieu of such fractional shares, the Issuer shall make a cash payment therefor equal in amount to the product of the applicable fraction multiplied by the Conversion Price then in effect.

5.            Change of Control .

(a) In the event that there is a "Change of Control Event" of the Issuer, the Issuer shall immediately notify each holder hereof.  Each holder may: (i) within fifteen (15) days after written notice from the Issuer, elect to accelerate the maturity date of the Debentures owned by such holder to a date not less than 30 but not more than 45 days after the date of such notice from Issuer ("Redemption Date"); or (ii) convert the Debentures owned by such holder into shares of Common Stock immediately prior to the Change of Control Event.
 
 
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(b) For purposes hereof, a "Change of Control Event" shall be deemed to have occurred if (i) any "person" (as such term is defined at Section 13(d) of the Securities Exchange Act of 1934) other than the Issuer or an entity then controlled by the Issuer is or becomes the beneficial owner, directly or indirectly of securities of the Issuer representing fifty (50%) percent or more of the combined voting power of the Issuer's then outstanding securities, including securities such person may have acquired directly from the Issuer; (ii) the Issuer merges or consolidates with another corporation and an entity controlled by the Issuer immediately prior to the merger or consolidation is not the surviving entity or if the Issuer is the surviving entity, holders of eighty (80%) percent or more of the voting power of the Issuer immediately prior to the merger or consolidation do not own, immediately after the merger or consolidation, sixty-five (65%) percent or more of the voting power of the surviving entity; or (iii) a sale, lease, exchange or other disposition of all or substantially all of the assets of the Issuer takes place.

6.            Issuance of New Securities .

(a)  If any mutilated Security is surrendered to the Issuer, the Issuer shall execute and deliver in exchange therefor a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

(b)  If there is delivered to the Issuer (a) evidence to its reasonable satisfaction of the destruction, loss or theft of any Security and (b) such reasonable security or indemnity as may be required by it to save it harmless, then, in the absence of notice to the Issuer that such Security has been acquired by a bona fide purchaser, the Issuer shall execute and deliver in lieu of any such destroyed, lost or stolen Security a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

(c) Upon the issuance of any new Security under this Section 12, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

(d)  Any new Security delivered pursuant to this Section 12 shall be so dated that neither gain nor loss in interest shall result from such exchange.

(e)  The provisions of this Section 12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
 
 
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7.            Notice .  Where the terms of the Securities provide for notice to the holders of any event, such notice shall be sufficiently given if given in writing and mailed, first class postage prepaid, to each Registered Holder affected by such event, at his address as it appears in the register for the Securities.  Any notice may be waived in writing by the person entitled thereto, either before or after the event, and such waiver shall be equivalent of such notice.

8.            Events of Default .  In the event of:

(a)           default in the payment of any interest on any Security for a period of ten (10) days after Maturity; or

(b)           default in the payment of the principal of any Security at Maturity; or

(c)           the breach by the Issuer of any of the representations and warranties set forth in Section 3 of the Securities; or

(d)           default in the performance or breach of any other material covenant or agreement contained in the Securities for a period of thirty (30) days after the date on which written notice of such default requiring the Issuer to remedy the same and stating that such notice is a "Notice of Default", shall first have been given to the Issuer by a Registered Holder; or

(e)           the entry by a court having jurisdiction of (i) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer under any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer, and any such decree or order for relief or any such other decree or order shall continue unstayed and in effect for a period of sixty (60) consecutive days; or

(f)           commencement by Issuer of a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Issuer to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Issuer, or the filing by the Issuer of a petition or answer or consent seeking reorganization or relief under any such applicable law, or the consent by the Issuer to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of its property, or the making by the Issuer of an assignment for the benefit of creditors, or the taking of action by the Issuer in furtherance of any such action;
 
 
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then a Registered Holder or Registered Holders owning fifteen (15%) percent or more of the Securities may, at their option, declare the principal of this Security and the interest accrued hereon to be due and payable immediately (such date being the "Acceleration Date") by written notice to the Issuer at its principal executive offices, and unless all such defaults shall have been cured by the Issuer prior to receipt of such written notice, the principal of this Security and the interest accrued thereon shall become and be immediately due and payable.

9.            Amendments and Modifications .  In the event that any of the terms of this Agreement are modified or amended, other than the date of issuance and face value of the Debenture, the Issuer shall notify each Registered Holder, in writing, of such modification(s) or amendment(s).  Each Registered Holder may accept all such terms, at the sole discretion of such Registered Holder by providing written notice to the Issuer within fifteen (15) days after having received such notification from the Issuer.  If no such acceptance is received by the Issuer within said fifteen (15) days, the term of this Debenture shall remain unmodified by such modification(s) or amendment(s).

10.            Governing Law; Jurisdiction .  This Security shall be governed by and construed in accordance with the laws of New York without regard to the conflicts-of-laws principles thereof.  The Issuer hereby irrevocably (a) submits to the exclusive jurisdiction of, and agrees that any action, suit or other proceeding at law, in equity or otherwise, shall only be brought in the Supreme Court, New York County, or Federal District Court for the Southern District of New York, for the purpose of any such suit, action or other proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("Action"); (b) waives, to the extent not prohibited by applicable law, rule or regulation, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that any such person is not subject personally to the jurisdiction of the aforementioned courts, that its property is exempt or immune from attachment or execution, that any such action brought in the aforementioned court is brought in an inconvenient forum, that the venue of any such action brought in the aforementioned court is improper, or that this Agreement, or the transactions contemplated hereby enforced in or by such court, and (c) consents to service of process in any such Action by recognized overnight courier service.  Nothing herein shall affect the right to serve process in any other manner permitted by law.
 
 
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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed and it corporate seal to be affixed hereto.

   
TARGET ACQUISITIONS I, INC.
       
   
By:
 
Witness:      Name: Changkui Zhu
      Title: Chief Executive Officer
       
Dated: January 20, 2014
     
       
       

 
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THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
 
Target Acquisitions I, Inc.

4.0% Convertible Debenture
Due June 30, 2014

People’s Republic of China RMB 3,333,333

Target Acquisitions I, Inc., a Delaware corporation (the "Issuer"),  for value received, hereby promises to pay to Jahoda Limited or registered assigns (the “Holder”), at Tianyang Xiaoqu, Qiaodong District, Zhangjiakou, Hebei Province the principal sum of Three million three hundred thirty three thousand three hundred thirty three (3,333,333) RMB Chinese Yuan, no later than June 30, 2014 (the "Maturity Date"), and to pay interest thereon from January 20, 2014, at the rate of four (4.0%) percent per annum until the principal hereof is paid.  Interest accrued shall be paid on the Maturity Date and if the principal hereof is not paid on the Maturity Date, thereafter, monthly in arrears.  The interest rate on any overdue principal or interest shall be eighteen (18%) percent, which amount shall accrue daily, from the due date of any principal or interest, as the case may be, through and including the date of payment.

If this Security is converted into shares of common stock of Issuer (the "Common Stock") pursuant to the provisions hereof, interest shall be calculated through and including the date of conversion and shall be paid on such date.

Principal of this Security shall be payable at the earliest of the Maturity Date, Redemption Date or Acceleration Date (each as hereinafter defined) against surrender hereof at the principal executive offices of the Issuer in China.  Payments of principal and of any interest on this Security shall be made in such coin or currency of China as at the time of payment is legal tender for payment of public and private debts.  Payments of interest on this Security shall be made by check mailed on or before the due date for such payment to the Holder as indicated below or to such other address as the  Holder may have previously given notice to the Issuer in writing.  Interest shall accrue and be payable on this Security through the earlier of the Maturity Date, Conversion Date or Redemption Date.
 
 
 
 

 
1.            Transfer .

(a)     The Issuer will at all times act as its own security registrar and paying and transfer agent and agrees to cause to be kept at its principal executive office a register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer will provide for the registration of Securities and registration of transfers of Securities.  As of the date this Security was originally issued, such principal executive offices of the Issuer were located at Chunshuguo Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province, China 075600.  The Issuer shall not change the location of its principal executive offices unless Issuer provides all Registered Holders with no less than thirty (30) days prior written notice. The Holders of this Security as indicated on the Security Register are referred to herein as the Registered Holders.

(b)  The transfer of a Security is registrable on the Security Register upon surrender of such Security at the principal executive offices of Issuer duly endorsed by, or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer duly executed by the Registered Holder thereof, or the Registered Holder’s attorney duly authorized in writing, together with any certifications and representations which Issuer may reasonably require to reflect compliance with all applicable securities laws, rules and regulations and the due authorization of the transaction.  Upon such surrender of this Security for registration of transfer, the Issuer shall execute and deliver, in the name of the designated transferee or transferees, one or more new Securities, dated the date of the execution thereof, of any authorized denominations and of a like tenor, form and aggregate principal amount.

(c)  At the option of the Registered Holder, upon request confirmed in writing, Securities may be exchanged for Securities of any authorized denominations and of a like tenor, form and aggregate principal amount upon surrender of the Securities to be exchanged at the principal executive offices of the Issuer.  Whenever any Securities are so surrendered for exchange, the Issuer shall execute and deliver the Securities which the Registered Holder making the exchange is entitled to receive.  Any registration of transfer or exchange will be effected only upon the Issuer being reasonably satisfied with the documents of title and identity of the person making the request and subject to compliance with applicable Federal and state securities laws.

(d)  All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits, as the Securities surrendered upon such registration of transfer or exchange.  No service or other charges shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

(e)  Prior  to due presentment of this Security for registration of transfer, the Issuer may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and the Issuer shall not be affected by notice to the contrary.
 
 
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2.            Representations and Warranties of the Issuer .  The Issuer represents and warrants to the Registered Holder as of January 20, 2014, as follows:

(a)           Issuer is a corporation duly organized, existing and in good standing under the laws of its state or province of incorporation and has the power to conduct the business which it conducts and proposes to conduct.

(b)           The execution, delivery and performance of the Securities by the Issuer has been duly approved by the Board of Directors of Issuer and all other actions required to authorize and effect the offer and sale of the Securities have been duly taken and approved.

(c)           The Securities and the Common Stock issuable upon conversion of the Securities (the "Conversion Shares") have been duly and validly authorized.  The Securities and Conversion Shares, when issued and paid for in accordance with the terms hereof, will be fully paid and non-assessable and valid and binding obligations of the Issuer enforceable in accordance with their respective terms.

(d)           Issuer will, at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for conversion of the Securities into shares of Common Stock.

(e)           Issuer has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and Issuer is in all material respects complying therewith.

(f)           Issuer knows of no pending or threatened legal or governmental proceedings to which Issuer is a party which could materially adversely affect the business, property, financial condition or operations of the Issuer.

(g)           Issuer is not in violation of or default under, nor will the execution and delivery of the Securities, the issuance of the Common Stock upon conversion of the Securities and the incurrence of the obligations herein and therein set forth and the consummation of the transactions herein or therein contemplated, result in a violation of, or constitute a default under the certificate of incorporation or by-laws, the performance or observance of any material obligations, agreement, covenant or condition contained in any bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint venture or other agreements or instrument to which the Issuer is a party or by which it or any of its properties may be bound or in violation of any material order, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign.
 
 
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3.            Covenants of the Issuer .  Issuer hereby covenants and agrees that for so long as any of the Securities shall remain outstanding:

(a)           it will duly and punctually pay the principal of and any interest on the Securities in accordance with the terms hereof;

(b)           it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charters and statutory) and franchises;

(c)           it will cause all material properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the reasonable judgment of  Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that the foregoing shall not prevent the Issuer from discontinuing the operation or maintenance of any such properties if such discontinuance is, in the reasonable judgment of Issuer, desirable in the conduct of its business or the business of any of its subsidiaries, and not disadvantageous in any material respect to the holders of Securities; and, provided , further , that the failure to comply herewith shall not be deemed a breach hereof unless such failure would have a material adverse effect on the business, financial condition or results of operations of Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect");

(d)           it will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Issuer or upon the income, profits or property of the Issuer, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Issuer; provided , however , that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and, provided , further , that the failure to comply herewith shall not be deemed a breach if it would not have a Material Adverse Effect;

(e)           it shall furnish to each Registered Holder of Securities a copy of all documents it is required to send to its shareholders at the time the same are sent to shareholders, including, without limitation, annual reports and proxy statements;

(f)           as soon as it becomes aware of the same, it shall give written notice to each Registered Holder of Securities of any event or occurrence which by itself or with notice or lapse of time or both would entitle the holders of the Securities to declare the principal of and any interest on the Securities immediately due and payable pursuant to the terms   hereof;
 
 
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(g)           it will promptly obtain and maintain from time to time all authorizations, permits, approvals, consents, licenses and exemptions which are required under any applicable law or regulation to enable it to perform all of its payment, conversion and other material obligations under the Securities or which may be required for the validity or enforceability of the Securities; provided, however, that the failure to obtain and maintain such authorizations, permits, approvals, consents, licenses and exemptions as to material obligations other than payment and conversion shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;

(h)           it will duly and punctually comply with and observe all statutes now or hereafter in force and all ordinances, regulation and by-laws thereunder and all requirements and orders of any government or other public authority; provided , however , that any non-compliance with any such statute, ordinance, regulation or by-law shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;

(i)           it shall permit any representative of any Registered Holder or Holders of at  least $250,000 aggregate principal amount of the Securities to make inspections of, and to report on, the property of, and business operations being carried out by, the Issuer or any of its subsidiaries;

(j)           it shall not:

(i)           declare or pay any cash dividends on its Common Stock or purchase, redeem or otherwise acquire or retire for value any shares of Common Stock (other than under the terms of the Issuer's stock option plan); or

(ii)           consolidate with or merge into any other Person, where the Issuer is not the surviving corporation, or convey, transfer, lease or otherwise dispose of all or substantially all of its assets, except in compliance with the terms and conditions set forth in Section 11 below.

4.            Voluntary Conversion .

(a)           Each Registered Holder of Securities may at any time convert all or any amount of the principal amount of the Securities then owned by such Registered Holder into shares of Common Stock of Issuer at a conversion price equal to 11.11 RMB per share of Common Stock, subject to adjustment as provided in this Section.
 
 
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(b)           The conversion right granted in Section 4(a) hereof may be exercised only by a Registered Holder of Securities, in whole or in part, by the surrender of the certificate or certificates representing the Securities to be converted at the principal executive offices of the Issuer against delivery of that number of shares of whole Common Stock as shall be computed by dividing the face amount of the Securities being converted by the Conversion Price on the Conversion Date.  At the time of conversion of Securities, the Issuer shall pay in cash to the Registered Holder thereof an amount equal to all accrued and unpaid interest, if any, to and including the Conversion Date.  Each Security surrendered for conversion shall be endorsed by the Registered Holder.  Issuer will transmit the Common Stock certificates issuable upon conversion of any Securities and a certificate representing the balance of the Securities to the Registered Holder via express courier within three (3) business days after the Conversion Date.  The term "Conversion Date" shall mean the date the original Notice of Conversion and Securities being converted are received by the Issuer.  The term "Notice of Conversion" shall mean the written notice from the Registered Holder to the Issuer.

(c)           All Common Stock which may be issued upon conversion of the Securities will, upon issuance, be duly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issue thereof.  At all times that any Securities are Outstanding, Issuer shall have authorized and shall have reserved for the purpose of issuance upon such conversion into Common Stock of all Securities, a sufficient number of shares of Common Stock to provide for the conversion of all Outstanding Securities at the then effective Conversion Price.  Without limiting the generality of the foregoing, if, at any time, the Conversion Price is decreased or increased, the number of shares of Common Stock authorized and reserved for issuance by Issuer upon the conversion of the Securities shall be proportionately increased or decreased, as the case may be.

(d)           The Initial Conversion Price is 11.11 RMB per share of Common Stock ("Initial Conversion Price").  The Initial Conversion Price shall be adjusted as provided for below in this Section (d) (the Initial Conversion Price and the Initial Conversion Price, as thereafter then adjusted, shall be referred to as the "Conversion Price") and the Conversion Price from time to time shall be further adjusted as provided for below in this Section (d).  Upon each adjustment of the Conversion Price, the Registered Holders of the Securities shall thereafter be entitled to receive upon conversion, at the Conversion Price resulting from such adjustment, the number of shares of Common Stock obtained by dividing the face amount of the Securities being converted by the Conversion Price, as then adjusted.  The Conversion Price shall be adjusted as follows:
 
 
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(i)           In the case of any amendment to the Certificate of Incorporation of Issuer to change the designation of the Common Stock or the rights, privileges, restrictions or conditions in respect to the Common Stock or division of the Common Stock, the Securities shall be adjusted so as to provide that upon conversion thereof the Registered Holder shall receive, in lieu of each share of Common Stock theretofore issuable upon such conversion, the kind and amount of shares, other securities, money and property receivable upon such designation, change or division by such holder issuable upon such conversion had the conversion occurred immediately prior to such designation, change or division.  The Securities shall be deemed thereafter to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4.  The provisions of this Subsection 4(d)(i) shall apply in the same manner to successive reclassifications, changes, consolidations and mergers.

(ii)           If Issuer shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, or declare a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or dividend or other distribution shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(iii)           If any capital reorganization or reclassification of the capital stock of the Issuer, or any consolidation or merger of the Issuer with another corporation or entity, or the sale of all or substantially all of the Issuer’s assets to another corporation or other entity shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive stocks, securities, other evidence of equity ownership or assets with respect to or in exchange for shares of Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale (except as otherwise provided below in this Section), lawful and adequate provisions shall be made whereby the Registered Holder shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein, such shares of stock, securities, other evidence of equity ownership or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of this Debenture under this Section had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of such Registered Holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Conversion Price and of the number of shares of Common Stock receivable upon the conversion of this Debenture) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities, other evidence of equity ownership or assets thereafter deliverable upon the conversion hereof (including an immediate adjustment, by reason of such consolidation or merger, of the Conversion Price to the value for the Common Stock reflected by the terms of such consolidation or merger if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation or merger).  Subject to the terms of this Debenture, in the event of a merger or consolidation of the Issuer with or into another corporation or other entity as a result of which the number of shares of common stock of the surviving corporation or other entity issuable to holders of Common Stock of the Issuer, is greater or lesser than the number of shares of Common Stock of the Issuer outstanding immediately prior to such merger or consolidation, then the Conversion Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock of the Issuer.  The Issuer shall not effect any such consolidation, merger or sale, unless, prior to the consummation thereof, the successor corporation (if other than the Issuer) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Registered Holder, the obligation to deliver to the Registered Holder such shares of stock, securities, other evidence of equity ownership or assets as, in accordance with the foregoing provisions, the Registered Holder may be entitled to receive or otherwise acquire.  If a purchase, tender or exchange offer is made to and accepted by the holders of more than fifty (50%) percent of the outstanding shares of Common Stock of the Issuer, the Issuer shall not effect any consolidation, merger or sale with the Person having made such offer or with any Affiliate of such Person, unless prior to the consummation of such consolidation, merger or sale the Registered Holder of this Debenture shall have been given a reasonable opportunity to then elect to receive upon the conversion of this Debenture the amount of stock, securities, other evidence of equity ownership or assets then issuable with respect to the number of shares of Common Stock of the Issuer in accordance with such offer.
 
 
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(e)           Whenever the Conversion Price shall be adjusted pursuant to Section 9(d) hereof, Issuer shall issue a certificate signed by its President or Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of Issuer made any determination hereunder), and the Conversion Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first-class mail, postage prepaid) to each Registered Holder of Securities.  Issuer shall make such certificate and mail it to each such holder promptly after each adjustment.

(f)           No fractional Common Stock shall be issued in connection with any conversion (or forced conversion, if applicable) of Securities, but in lieu of such fractional shares, the Issuer shall make a cash payment therefor equal in amount to the product of the applicable fraction multiplied by the Conversion Price then in effect.

5.            Change of Control .

(a) In the event that there is a "Change of Control Event" of the Issuer, the Issuer shall immediately notify each holder hereof.  Each holder may: (i) within fifteen (15) days after written notice from the Issuer, elect to accelerate the maturity date of the Debentures owned by such holder to a date not less than 30 but not more than 45 days after the date of such notice from Issuer ("Redemption Date"); or (ii) convert the Debentures owned by such holder into shares of Common Stock immediately prior to the Change of Control Event.
 
 
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(b) For purposes hereof, a "Change of Control Event" shall be deemed to have occurred if (i) any "person" (as such term is defined at Section 13(d) of the Securities Exchange Act of 1934) other than the Issuer or an entity then controlled by the Issuer is or becomes the beneficial owner, directly or indirectly of securities of the Issuer representing fifty (50%) percent or more of the combined voting power of the Issuer's then outstanding securities, including securities such person may have acquired directly from the Issuer; (ii) the Issuer merges or consolidates with another corporation and an entity controlled by the Issuer immediately prior to the merger or consolidation is not the surviving entity or if the Issuer is the surviving entity, holders of eighty (80%) percent or more of the voting power of the Issuer immediately prior to the merger or consolidation do not own, immediately after the merger or consolidation, sixty-five (65%) percent or more of the voting power of the surviving entity; or (iii) a sale, lease, exchange or other disposition of all or substantially all of the assets of the Issuer takes place.

6.            Issuance of New Securities .

(a)  If any mutilated Security is surrendered to the Issuer, the Issuer shall execute and deliver in exchange therefor a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

(b)  If there is delivered to the Issuer (a) evidence to its reasonable satisfaction of the destruction, loss or theft of any Security and (b) such reasonable security or indemnity as may be required by it to save it harmless, then, in the absence of notice to the Issuer that such Security has been acquired by a bona fide purchaser, the Issuer shall execute and deliver in lieu of any such destroyed, lost or stolen Security a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

(c) Upon the issuance of any new Security under this Section 12, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

(d)  Any new Security delivered pursuant to this Section 12 shall be so dated that neither gain nor loss in interest shall result from such exchange.

(e)  The provisions of this Section 12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

7.            Notice .  Where the terms of the Securities provide for notice to the holders of any event, such notice shall be sufficiently given if given in writing and mailed, first class postage prepaid, to each Registered Holder affected by such event, at his address as it appears in the register for the Securities.  Any notice may be waived in writing by the person entitled thereto, either before or after the event, and such waiver shall be equivalent of such notice.
 
 
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8.            Events of Default .  In the event of:

(a)           default in the payment of any interest on any Security for a period of ten (10) days after Maturity; or

(b)           default in the payment of the principal of any Security at Maturity; or

(c)           the breach by the Issuer of any of the representations and warranties set forth in Section 3 of the Securities; or

(d)           default in the performance or breach of any other material covenant or agreement contained in the Securities for a period of thirty (30) days after the date on which written notice of such default requiring the Issuer to remedy the same and stating that such notice is a "Notice of Default", shall first have been given to the Issuer by a Registered Holder; or

(e)           the entry by a court having jurisdiction of (i) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer under any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer, and any such decree or order for relief or any such other decree or order shall continue unstayed and in effect for a period of sixty (60) consecutive days; or

(f)           commencement by Issuer of a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Issuer to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Issuer, or the filing by the Issuer of a petition or answer or consent seeking reorganization or relief under any such applicable law, or the consent by the Issuer to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of its property, or the making by the Issuer of an assignment for the benefit of creditors, or the taking of action by the Issuer in furtherance of any such action;
 
 
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then a Registered Holder or Registered Holders owning fifteen (15%) percent or more of the Securities may, at their option, declare the principal of this Security and the interest accrued hereon to be due and payable immediately (such date being the "Acceleration Date") by written notice to the Issuer at its principal executive offices, and unless all such defaults shall have been cured by the Issuer prior to receipt of such written notice, the principal of this Security and the interest accrued thereon shall become and be immediately due and payable.

9.            Amendments and Modifications .  In the event that any of the terms of this Agreement are modified or amended, other than the date of issuance and face value of the Debenture, the Issuer shall notify each Registered Holder, in writing, of such modification(s) or amendment(s).  Each Registered Holder may accept all such terms, at the sole discretion of such Registered Holder by providing written notice to the Issuer within fifteen (15) days after having received such notification from the Issuer.  If no such acceptance is received by the Issuer within said fifteen (15) days, the term of this Debenture shall remain unmodified by such modification(s) or amendment(s).

10.            Governing Law; Jurisdiction .  This Security shall be governed by and construed in accordance with the laws of New York without regard to the conflicts-of-laws principles thereof.  The Issuer hereby irrevocably (a) submits to the exclusive jurisdiction of, and agrees that any action, suit or other proceeding at law, in equity or otherwise, shall only be brought in the Supreme Court, New York County, or Federal District Court for the Southern District of New York, for the purpose of any such suit, action or other proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("Action"); (b) waives, to the extent not prohibited by applicable law, rule or regulation, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that any such person is not subject personally to the jurisdiction of the aforementioned courts, that its property is exempt or immune from attachment or execution, that any such action brought in the aforementioned court is brought in an inconvenient forum, that the venue of any such action brought in the aforementioned court is improper, or that this Agreement, or the transactions contemplated hereby enforced in or by such court, and (c) consents to service of process in any such Action by recognized overnight courier service.  Nothing herein shall affect the right to serve process in any other manner permitted by law.
 
 
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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed and it corporate seal to be affixed hereto.

   
TARGET ACQUISITIONS I, INC.
       
   
By:
 
Witness:      Name: Changkui Zhu
      Title: Chief Executive Officer
       
Dated: January 20, 2014
     
       
       


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THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
 
Target Acquisitions I, Inc.

4.0% Convertible Debenture
Due June 30, 2014

People’s Republic of China RMB 3,333,333

Target Acquisitions I, Inc., a Delaware corporation (the "Issuer"),  for value received, hereby promises to pay to Wanli Liu or registered assigns (the “Holder”), at Tianyang Xiaoqu, Qiaodong District, Zhangjiakou, Hebei Province the principal sum of Three million three hundred thirty three thousand three hundred thirty three (3,333,333) RMB Chinese Yuan, no later than June 30, 2014 (the "Maturity Date"), and to pay interest thereon from January 20, 2014, at the rate of four (4.0%) percent per annum until the principal hereof is paid.  Interest accrued shall be paid on the Maturity Date and if the principal hereof is not paid on the Maturity Date, thereafter, monthly in arrears.  The interest rate on any overdue principal or interest shall be eighteen (18%) percent, which amount shall accrue daily, from the due date of any principal or interest, as the case may be, through and including the date of payment.

If this Security is converted into shares of common stock of Issuer (the "Common Stock") pursuant to the provisions hereof, interest shall be calculated through and including the date of conversion and shall be paid on such date.

Principal of this Security shall be payable at the earliest of the Maturity Date, Redemption Date or Acceleration Date (each as hereinafter defined) against surrender hereof at the principal executive offices of the Issuer in China.  Payments of principal and of any interest on this Security shall be made in such coin or currency of China as at the time of payment is legal tender for payment of public and private debts.  Payments of interest on this Security shall be made by check mailed on or before the due date for such payment to the Holder as indicated below or to such other address as the  Holder may have previously given notice to the Issuer in writing.  Interest shall accrue and be payable on this Security through the earlier of the Maturity Date, Conversion Date or Redemption Date.
 
 
 
 

 
1.            Transfer .

(a)     The Issuer will at all times act as its own security registrar and paying and transfer agent and agrees to cause to be kept at its principal executive office a register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer will provide for the registration of Securities and registration of transfers of Securities.  As of the date this Security was originally issued, such principal executive offices of the Issuer were located at Chunshuguo Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province, China 075600.  The Issuer shall not change the location of its principal executive offices unless Issuer provides all Registered Holders with no less than thirty (30) days prior written notice. The Holders of this Security as indicated on the Security Register are referred to herein as the Registered Holders.

(b)  The transfer of a Security is registrable on the Security Register upon surrender of such Security at the principal executive offices of Issuer duly endorsed by, or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer duly executed by the Registered Holder thereof, or the Registered Holder’s attorney duly authorized in writing, together with any certifications and representations which Issuer may reasonably require to reflect compliance with all applicable securities laws, rules and regulations and the due authorization of the transaction.  Upon such surrender of this Security for registration of transfer, the Issuer shall execute and deliver, in the name of the designated transferee or transferees, one or more new Securities, dated the date of the execution thereof, of any authorized denominations and of a like tenor, form and aggregate principal amount.

(c)  At the option of the Registered Holder, upon request confirmed in writing, Securities may be exchanged for Securities of any authorized denominations and of a like tenor, form and aggregate principal amount upon surrender of the Securities to be exchanged at the principal executive offices of the Issuer.  Whenever any Securities are so surrendered for exchange, the Issuer shall execute and deliver the Securities which the Registered Holder making the exchange is entitled to receive.  Any registration of transfer or exchange will be effected only upon the Issuer being reasonably satisfied with the documents of title and identity of the person making the request and subject to compliance with applicable Federal and state securities laws.

(d)  All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits, as the Securities surrendered upon such registration of transfer or exchange.  No service or other charges shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

(e)  Prior  to due presentment of this Security for registration of transfer, the Issuer may treat the person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and the Issuer shall not be affected by notice to the contrary.
 
 
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2.            Representations and Warranties of the Issuer .  The Issuer represents and warrants to the Registered Holder as of January 20, 2014, as follows:

(a)           Issuer is a corporation duly organized, existing and in good standing under the laws of its state or province of incorporation and has the power to conduct the business which it conducts and proposes to conduct.

(b)           The execution, delivery and performance of the Securities by the Issuer has been duly approved by the Board of Directors of Issuer and all other actions required to authorize and effect the offer and sale of the Securities have been duly taken and approved.

(c)           The Securities and the Common Stock issuable upon conversion of the Securities (the "Conversion Shares") have been duly and validly authorized.  The Securities and Conversion Shares, when issued and paid for in accordance with the terms hereof, will be fully paid and non-assessable and valid and binding obligations of the Issuer enforceable in accordance with their respective terms.

(d)           Issuer will, at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for conversion of the Securities into shares of Common Stock.

(e)           Issuer has obtained all licenses, permits and other governmental authorizations necessary to the conduct of its business; such licenses, permits and other governmental authorizations obtained are in full force and effect; and Issuer is in all material respects complying therewith.

(f)           Issuer knows of no pending or threatened legal or governmental proceedings to which Issuer is a party which could materially adversely affect the business, property, financial condition or operations of the Issuer.

(g)           Issuer is not in violation of or default under, nor will the execution and delivery of the Securities, the issuance of the Common Stock upon conversion of the Securities and the incurrence of the obligations herein and therein set forth and the consummation of the transactions herein or therein contemplated, result in a violation of, or constitute a default under the certificate of incorporation or by-laws, the performance or observance of any material obligations, agreement, covenant or condition contained in any bond, debenture, note or other evidence of indebtedness or in any material contract, indenture, mortgage, loan agreement, lease, joint venture or other agreements or instrument to which the Issuer is a party or by which it or any of its properties may be bound or in violation of any material order, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign.
 
 
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3.            Covenants of the Issuer .  Issuer hereby covenants and agrees that for so long as any of the Securities shall remain outstanding:

(a)           it will duly and punctually pay the principal of and any interest on the Securities in accordance with the terms hereof;

(b)           it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charters and statutory) and franchises;

(c)           it will cause all material properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the reasonable judgment of  Issuer may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided , however , that the foregoing shall not prevent the Issuer from discontinuing the operation or maintenance of any such properties if such discontinuance is, in the reasonable judgment of Issuer, desirable in the conduct of its business or the business of any of its subsidiaries, and not disadvantageous in any material respect to the holders of Securities; and, provided , further , that the failure to comply herewith shall not be deemed a breach hereof unless such failure would have a material adverse effect on the business, financial condition or results of operations of Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect");

(d)           it will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Issuer or upon the income, profits or property of the Issuer, and (ii) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Issuer; provided , however , that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings; and, provided , further , that the failure to comply herewith shall not be deemed a breach if it would not have a Material Adverse Effect;

(e)           it shall furnish to each Registered Holder of Securities a copy of all documents it is required to send to its shareholders at the time the same are sent to shareholders, including, without limitation, annual reports and proxy statements;

(f)           as soon as it becomes aware of the same, it shall give written notice to each Registered Holder of Securities of any event or occurrence which by itself or with notice or lapse of time or both would entitle the holders of the Securities to declare the principal of and any interest on the Securities immediately due and payable pursuant to the terms   hereof;
 
 
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(g)           it will promptly obtain and maintain from time to time all authorizations, permits, approvals, consents, licenses and exemptions which are required under any applicable law or regulation to enable it to perform all of its payment, conversion and other material obligations under the Securities or which may be required for the validity or enforceability of the Securities; provided, however, that the failure to obtain and maintain such authorizations, permits, approvals, consents, licenses and exemptions as to material obligations other than payment and conversion shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;
 
(h)           it will duly and punctually comply with and observe all statutes now or hereafter in force and all ordinances, regulation and by-laws thereunder and all requirements and orders of any government or other public authority; provided , however , that any non-compliance with any such statute, ordinance, regulation or by-law shall not constitute a breach of this provision unless such non-compliance materially adversely affects the Issuer’s ability to comply with its obligations under the Securities;

(i)           it shall permit any representative of any Registered Holder or Holders of at  least $250,000 aggregate principal amount of the Securities to make inspections of, and to report on, the property of, and business operations being carried out by, the Issuer or any of its subsidiaries;

(j)           it shall not:

(i)           declare or pay any cash dividends on its Common Stock or purchase, redeem or otherwise acquire or retire for value any shares of Common Stock (other than under the terms of the Issuer's stock option plan); or

(ii)           consolidate with or merge into any other Person, where the Issuer is not the surviving corporation, or convey, transfer, lease or otherwise dispose of all or substantially all of its assets, except in compliance with the terms and conditions set forth in Section 11 below.

4.            Voluntary Conversion .

(a)           Each Registered Holder of Securities may at any time convert all or any amount of the principal amount of the Securities then owned by such Registered Holder into shares of Common Stock of Issuer at a conversion price equal to 11.11 RMB per share of Common Stock, subject to adjustment as provided in this Section.
 
 
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(b)           The conversion right granted in Section 4(a) hereof may be exercised only by a Registered Holder of Securities, in whole or in part, by the surrender of the certificate or certificates representing the Securities to be converted at the principal executive offices of the Issuer against delivery of that number of shares of whole Common Stock as shall be computed by dividing the face amount of the Securities being converted by the Conversion Price on the Conversion Date.  At the time of conversion of Securities, the Issuer shall pay in cash to the Registered Holder thereof an amount equal to all accrued and unpaid interest, if any, to and including the Conversion Date.  Each Security surrendered for conversion shall be endorsed by the Registered Holder.  Issuer will transmit the Common Stock certificates issuable upon conversion of any Securities and a certificate representing the balance of the Securities to the Registered Holder via express courier within three (3) business days after the Conversion Date.  The term "Conversion Date" shall mean the date the original Notice of Conversion and Securities being converted are received by the Issuer.  The term "Notice of Conversion" shall mean the written notice from the Registered Holder to the Issuer.

(c)           All Common Stock which may be issued upon conversion of the Securities will, upon issuance, be duly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issue thereof.  At all times that any Securities are Outstanding, Issuer shall have authorized and shall have reserved for the purpose of issuance upon such conversion into Common Stock of all Securities, a sufficient number of shares of Common Stock to provide for the conversion of all Outstanding Securities at the then effective Conversion Price.  Without limiting the generality of the foregoing, if, at any time, the Conversion Price is decreased or increased, the number of shares of Common Stock authorized and reserved for issuance by Issuer upon the conversion of the Securities shall be proportionately increased or decreased, as the case may be.

(d)           The Initial Conversion Price is 11.11 RMB per share of Common Stock ("Initial Conversion Price").  The Initial Conversion Price shall be adjusted as provided for below in this Section (d) (the Initial Conversion Price and the Initial Conversion Price, as thereafter then adjusted, shall be referred to as the "Conversion Price") and the Conversion Price from time to time shall be further adjusted as provided for below in this Section (d).  Upon each adjustment of the Conversion Price, the Registered Holders of the Securities shall thereafter be entitled to receive upon conversion, at the Conversion Price resulting from such adjustment, the number of shares of Common Stock obtained by dividing the face amount of the Securities being converted by the Conversion Price, as then adjusted.  The Conversion Price shall be adjusted as follows:

(i)           In the case of any amendment to the Certificate of Incorporation of Issuer to change the designation of the Common Stock or the rights, privileges, restrictions or conditions in respect to the Common Stock or division of the Common Stock, the Securities shall be adjusted so as to provide that upon conversion thereof the Registered Holder shall receive, in lieu of each share of Common Stock theretofore issuable upon such conversion, the kind and amount of shares, other securities, money and property receivable upon such designation, change or division by such holder issuable upon such conversion had the conversion occurred immediately prior to such designation, change or division.  The Securities shall be deemed thereafter to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4.  The provisions of this Subsection 4(d)(i) shall apply in the same manner to successive reclassifications, changes, consolidations and mergers.
 
 
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(ii)           If Issuer shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, or declare a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, the Conversion Price in effect immediately prior to such subdivision or dividend or other distribution shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased.

(iii)           If any capital reorganization or reclassification of the capital stock of the Issuer, or any consolidation or merger of the Issuer with another corporation or entity, or the sale of all or substantially all of the Issuer’s assets to another corporation or other entity shall be effected in such a way that holders of shares of Common Stock shall be entitled to receive stocks, securities, other evidence of equity ownership or assets with respect to or in exchange for shares of Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale (except as otherwise provided below in this Section), lawful and adequate provisions shall be made whereby the Registered Holder shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein, such shares of stock, securities, other evidence of equity ownership or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of Common Stock immediately theretofore purchasable and receivable upon the conversion of this Debenture under this Section had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provisions shall be made with respect to the rights and interests of such Registered Holder to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Conversion Price and of the number of shares of Common Stock receivable upon the conversion of this Debenture) shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities, other evidence of equity ownership or assets thereafter deliverable upon the conversion hereof (including an immediate adjustment, by reason of such consolidation or merger, of the Conversion Price to the value for the Common Stock reflected by the terms of such consolidation or merger if the value so reflected is less than the Conversion Price in effect immediately prior to such consolidation or merger).  Subject to the terms of this Debenture, in the event of a merger or consolidation of the Issuer with or into another corporation or other entity as a result of which the number of shares of common stock of the surviving corporation or other entity issuable to holders of Common Stock of the Issuer, is greater or lesser than the number of shares of Common Stock of the Issuer outstanding immediately prior to such merger or consolidation, then the Conversion Price in effect immediately prior to such merger or consolidation shall be adjusted in the same manner as though there were a subdivision or combination of the outstanding shares of Common Stock of the Issuer.  The Issuer shall not effect any such consolidation, merger or sale, unless, prior to the consummation thereof, the successor corporation (if other than the Issuer) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Registered Holder, the obligation to deliver to the Registered Holder such shares of stock, securities, other evidence of equity ownership or assets as, in accordance with the foregoing provisions, the Registered Holder may be entitled to receive or otherwise acquire.  If a purchase, tender or exchange offer is made to and accepted by the holders of more than fifty (50%) percent of the outstanding shares of Common Stock of the Issuer, the Issuer shall not effect any consolidation, merger or sale with the Person having made such offer or with any Affiliate of such Person, unless prior to the consummation of such consolidation, merger or sale the Registered Holder of this Debenture shall have been given a reasonable opportunity to then elect to receive upon the conversion of this Debenture the amount of stock, securities, other evidence of equity ownership or assets then issuable with respect to the number of shares of Common Stock of the Issuer in accordance with such offer.
 
 
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(e)           Whenever the Conversion Price shall be adjusted pursuant to Section 9(d) hereof, Issuer shall issue a certificate signed by its President or Vice President and by its Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of Issuer made any determination hereunder), and the Conversion Price after giving effect to such adjustment, and shall cause copies of such certificates to be mailed (by first-class mail, postage prepaid) to each Registered Holder of Securities.  Issuer shall make such certificate and mail it to each such holder promptly after each adjustment.

(f)           No fractional Common Stock shall be issued in connection with any conversion (or forced conversion, if applicable) of Securities, but in lieu of such fractional shares, the Issuer shall make a cash payment therefor equal in amount to the product of the applicable fraction multiplied by the Conversion Price then in effect.

5.            Change of Control .

(a) In the event that there is a "Change of Control Event" of the Issuer, the Issuer shall immediately notify each holder hereof.  Each holder may: (i) within fifteen (15) days after written notice from the Issuer, elect to accelerate the maturity date of the Debentures owned by such holder to a date not less than 30 but not more than 45 days after the date of such notice from Issuer ("Redemption Date"); or (ii) convert the Debentures owned by such holder into shares of Common Stock immediately prior to the Change of Control Event.
 
 
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(b) For purposes hereof, a "Change of Control Event" shall be deemed to have occurred if (i) any "person" (as such term is defined at Section 13(d) of the Securities Exchange Act of 1934) other than the Issuer or an entity then controlled by the Issuer is or becomes the beneficial owner, directly or indirectly of securities of the Issuer representing fifty (50%) percent or more of the combined voting power of the Issuer's then outstanding securities, including securities such person may have acquired directly from the Issuer; (ii) the Issuer merges or consolidates with another corporation and an entity controlled by the Issuer immediately prior to the merger or consolidation is not the surviving entity or if the Issuer is the surviving entity, holders of eighty (80%) percent or more of the voting power of the Issuer immediately prior to the merger or consolidation do not own, immediately after the merger or consolidation, sixty-five (65%) percent or more of the voting power of the surviving entity; or (iii) a sale, lease, exchange or other disposition of all or substantially all of the assets of the Issuer takes place.

6.            Issuance of New Securities .

(a)  If any mutilated Security is surrendered to the Issuer, the Issuer shall execute and deliver in exchange therefor a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

(b)  If there is delivered to the Issuer (a) evidence to its reasonable satisfaction of the destruction, loss or theft of any Security and (b) such reasonable security or indemnity as may be required by it to save it harmless, then, in the absence of notice to the Issuer that such Security has been acquired by a bona fide purchaser, the Issuer shall execute and deliver in lieu of any such destroyed, lost or stolen Security a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding.

(c) Upon the issuance of any new Security under this Section 12, the Issuer may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith.

(d)  Any new Security delivered pursuant to this Section 12 shall be so dated that neither gain nor loss in interest shall result from such exchange.

(e)  The provisions of this Section 12 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
 
 
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7.            Notice .  Where the terms of the Securities provide for notice to the holders of any event, such notice shall be sufficiently given if given in writing and mailed, first class postage prepaid, to each Registered Holder affected by such event, at his address as it appears in the register for the Securities.  Any notice may be waived in writing by the person entitled thereto, either before or after the event, and such waiver shall be equivalent of such notice.

8.            Events of Default .  In the event of:

(a)           default in the payment of any interest on any Security for a period of ten (10) days after Maturity; or

(b)           default in the payment of the principal of any Security at Maturity; or

(c)           the breach by the Issuer of any of the representations and warranties set forth in Section 3 of the Securities; or

(d)           default in the performance or breach of any other material covenant or agreement contained in the Securities for a period of thirty (30) days after the date on which written notice of such default requiring the Issuer to remedy the same and stating that such notice is a "Notice of Default", shall first have been given to the Issuer by a Registered Holder; or

(e)           the entry by a court having jurisdiction of (i) a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Issuer a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Issuer under any applicable law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of the property of the Issuer, or ordering the winding up or liquidation of the affairs of the Issuer, and any such decree or order for relief or any such other decree or order shall continue unstayed and in effect for a period of sixty (60) consecutive days; or

(f)           commencement by Issuer of a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Issuer to the entry of a decree or order for relief in respect of the Issuer in an involuntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Issuer, or the filing by the Issuer of a petition or answer or consent seeking reorganization or relief under any such applicable law, or the consent by the Issuer to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Issuer or of any substantial part of its property, or the making by the Issuer of an assignment for the benefit of creditors, or the taking of action by the Issuer in furtherance of any such action;
 
 
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then a Registered Holder or Registered Holders owning fifteen (15%) percent or more of the Securities may, at their option, declare the principal of this Security and the interest accrued hereon to be due and payable immediately (such date being the "Acceleration Date") by written notice to the Issuer at its principal executive offices, and unless all such defaults shall have been cured by the Issuer prior to receipt of such written notice, the principal of this Security and the interest accrued thereon shall become and be immediately due and payable.

9.            Amendments and Modifications .  In the event that any of the terms of this Agreement are modified or amended, other than the date of issuance and face value of the Debenture, the Issuer shall notify each Registered Holder, in writing, of such modification(s) or amendment(s).  Each Registered Holder may accept all such terms, at the sole discretion of such Registered Holder by providing written notice to the Issuer within fifteen (15) days after having received such notification from the Issuer.  If no such acceptance is received by the Issuer within said fifteen (15) days, the term of this Debenture shall remain unmodified by such modification(s) or amendment(s).

10.            Governing Law; Jurisdiction .  This Security shall be governed by and construed in accordance with the laws of New York without regard to the conflicts-of-laws principles thereof.  The Issuer hereby irrevocably (a) submits to the exclusive jurisdiction of, and agrees that any action, suit or other proceeding at law, in equity or otherwise, shall only be brought in the Supreme Court, New York County, or Federal District Court for the Southern District of New York, for the purpose of any such suit, action or other proceeding arising out of or based upon this Agreement or the transactions contemplated hereby ("Action"); (b) waives, to the extent not prohibited by applicable law, rule or regulation, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that any such person is not subject personally to the jurisdiction of the aforementioned courts, that its property is exempt or immune from attachment or execution, that any such action brought in the aforementioned court is brought in an inconvenient forum, that the venue of any such action brought in the aforementioned court is improper, or that this Agreement, or the transactions contemplated hereby enforced in or by such court, and (c) consents to service of process in any such Action by recognized overnight courier service.  Nothing herein shall affect the right to serve process in any other manner permitted by law.
 
 
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IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed and it corporate seal to be affixed hereto.
 
   
TARGET ACQUISITIONS I, INC.
       
   
By:
 
Witness:      Name: Changkui Zhu
      Title: Chief Executive Officer
       
Dated: January 20, 2014
     
       
       
 

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Exhibit 21.1
 
Subsidiaries
 
Name
 
Jurisdiction of Incorporation
or Organization
Ownership
Direct or Indirect
China Real Fortune Mining Limited
 
British Virgin Islands
100%
Direct
Real Fortune Holdings Limited
 
Hong Kong
100%
Indirect
Zhangjiakou Tongda Mining Technologies Service Co., Ltd.
 
PRC
100%
Indirect
Haixing Huaxin Mining Industry Co., Ltd.
 
PRC 
              100%
            Indirect