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 AND EXCHANGE ACT OF 1934

 

Date of report (date of earliest event reported): December 10, 2018

 

Adamant DRI Processing and Minerals Group

(Exact name of registrant as specified in its charter)

 

Nevada   000-49729   61-1745150

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

Chunshugou Luanzhuang Village

Zhuolu County, Zhangjiakou

Hebei Province, China

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: 86 317-6680916

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

[  ] Written communications 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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 
 

 

Item 1.01 Entry into a Material Definitive Agreement

 

On December 10, 2018, we entered into a series of agreements known as variable interest entity agreements, or the VIE Agreements, with Shenzhen Dingshang Technology Co., Ltd. (“Shenzhen Technology Company”), and its sole shareholder, Ms. Jing Xie. Shenzhen Technology Company was founded December 24, 2009, with registered capital of RMB1 million. The Company is dedicated to the provision of a complete set of intelligent digital implementation plans for exhibition center projects and display booths, and the provision of innovative model designs for different exhibition centers and real estate. Shenzhen Technology Company is located at 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, in Nanshan District, Shenzhen, Peoples’ Republic of China (PRC). In consideration of her entry into the VIE Agreements and causing Shenzhen Technology Company to enter into the VIE Agreements, we have agreed to issue 3,000,000 shares of our common stock to Ms. Xie.

 

The use of VIE agreements is a common structure used to acquire control of PRC corporations, and pursuant to the VIE Agreements, Shenzhen Technology Company became contractually controlled by us. The material terms of the VIE Agreements are summarized below:

 

(1) Management Entrustment Agreement :

 

This Agreement grants us the right and obligation to manage all aspects of the operations of Shenzhen Technology Company and the Board of Directors and shareholders of Shenzhen Technology Company may not take any actions without our consent. The scope of the authority granted to us includes, but is not limited to, the right to make all major decisions, the right to manage the assets, capital and finances of Shenzhen Technology Company, authority for all decisions related to human resources, daily operation management and technical support. To facilitate our exercise of such rights, we have been granted powers of attorney by Ms. Xie, the sole shareholder of Shenzhen Technology Company, granting us the right to participate in all shareholders’ meetings of Shenzhen Technology Company and to make all significant decisions at such meetings, including the designation of candidates for election to the Board of Shenzhen Technology Company. In consideration of our services, we shall be paid quarterly an amount equal to the pre-tax profits of Shenzhen Technology Company and shall be required to pay to Shenzhen Technology Company the amount of any loss incurred by Shenzhen Technology Company within 30 days of a request for payment. Further, if Shenzhen Technology Company is unable to pay its debts, we will be responsible therefor. Similarly, if losses sustained by Shenzhen Technology Company result in a capital deficiency, we shall be obligated to make up the deficiency. To facilitate our management of Shenzhen Technology Company, we shall have access to and the right to maintain all books and records and other relevant documentation of Shenzhen Technology Company. Further, during the term of the Management Entrustment Agreement, without our consent, Shenzhen Technology Company 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 December 10, 2048 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 we notify Shenzhen Technology Company not less than 30 days prior to the applicable expiration date that we do not want to extend the term, (ii) upon prior written notice from us, or (iii) upon the date we acquire all of the assets or at least 51% of the equity interests of Shenzhen Technology Company.

 

 
 

 

(2) Exclusive Purchase Option Agreement :

 

Pursuant to this Agreement Shenzhen Technology Company and its sole shareholder granted us an exclusive option to purchase all of the assets or outstanding shares of Shenzhen Technology Company 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 us. At such time during the term as we determine to exercise our option to purchase either the assets or equity of Shenzhen Technology Company we shall send a notice to Shenzhen Technology Company or its shareholder, as the case may be. Upon receipt of such notice, Shenzhen Technology Company or its shareholder 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 Shenzhen Technology Company and (ii) RMB 500,000 ($72,656 at RMB Exchange rate on date hereof); 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 us.

 

(3) Power of Attorney

 

Ms. Jing Xie, the sole shareholder of Shenzhen Technology Company entered into a Power of Attorney irrevocably authorizing us to exercise all of her rights as a shareholder of Shenzhen Technology Company. The rights granted include, without limitation, the right to: (i) attend the shareholders’ meetings of Shenzhen Technology Company and execute actions by written consent; (ii) exercise all of her rights as a shareholder under the laws of the PRC and the Articles of Association of Shenzhen Technology Company, including but not limited to the right to transfer or pledge or dispose of her shares in Shenzhen Technology Company; (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 Shenzhen Technology Company; (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) transfer allocate, or utilize in some other ways the cash dividends and non-cash income of Shenzhen Technology Company. The power of attorney shall be in effect as long as Ms. Xie owns shares of Shenzhen Technology Company.

 

(4) Equity Pledge Agreement

 

Pursuant to an Equity Pledge Agreement Ms. Xie, the sole shareholder of Shenzhen Technology Company, has pledged all of her shares in, representing all of the outstanding shares of, Shenzhen Technology Company as security for the performance by Shenzhen Technology Company and Ms. Xie of their respective obligations under the VIE Agreements. In addition to pledging her shares in the Equity Pledge Agreement, Ms. Xie has agreed not to impose any encumbrances or restrictions on the shares, not to sell, lease or transfer any of the shares and to provide notice to us should she receive any notice, order, ruling, verdict or other instrument in relation to the pledged shares or which may affect the ownership of the pledged shares.

 

 
 

 

The foregoing descriptions of the terms of the VIE Agreements are qualified in their entirety by reference to the full text of the VIE Agreements, which are filed as exhibits 10.1, 10.2., 10.3 and 10.4 to this Report.

 

Item 3.02 Sale of Unregistered Equity Securities.

 

On December 10, 2018, the Company agreed to issue 3,000,000 shares of its common stock to Ms. Jing Xie in consideration of her entry into, and causing Shenzhen Technology Company to enter into, a series of VIE Agreements. Pursuant to the VIE Agreements we have acquired operating control of Shenzhen Technology Company and the right to acquire all of its outstanding equity or assets for a price determined in accordance with a formula set forth in the VIE Agreements.

 

The shares of Common Stock issued to Ms. Xie were issued pursuant to an exemption from the registration requirements of the Securities Act under Regulation S of the Securities Act, and the certificate representing the shares was endorsed with the customary Securities Act legend.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits. The following exhibits are filed as part of, or incorporated by reference into, this Report.

 

10.1 Management Entrustment Agreement dated as of December 10, 2018 by and between Adamant DRI Processing and Minerals Group and Shenzhen Dingshang Technology Co., Ltd.
   
10.2 Exclusive Purchase Option Agreement dated as of December 10, 2018 by and among Adamant DRI Processing and Minerals Group and each of Shenzhen Dingshang Technology Co., Ltd. and its sole shareholder, Jing Xie.
 
10.3 Power of Attorney, dated as of December 10, 2018 by Jing Xie.
   
10.4 Equity Pledge Agreement dated as of December 10, 2018 by and between Adamant DRI Processing and Minerals Group and Jing Xie.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  ADAMANT DRI PROCESSING AND MINERALS GROUP
     
Dated: December 14, 2018 By: /s/ Ethan Chuang
    Ethan Chuang
    Chief Executive Officer

 

 
 

 

 

Management Entrustment Agreement

 

This Agreement is made and entered into on December 10, 2018 in the People’s Republic of China, by and between the following parties:

 

 

Party A: Shenzhen Dingshang Technology Co., Ltd

 

 

Registered business address: 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen

 

Party B: Adamant DRI Processing and Minerals Group

 

Registered business address: Chunshugou Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province.

 

WHEREAS:

 

1. Party A is a limited liability enterprise organized and validly existing under the laws of the PRC, with business license registration number: 91440300699088287X.

 

2. Party B is a corporation organized under the laws of the State of Nevada, which owns all of the equity of China Real Fortune Mining Limited, a BVI corporation, which owns all of the equity of Real Fortune Holdings Limited, a Hong Kong limited company, which in turn owns all of the issued and outstanding capital stock of Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a Chinese limited company.

 

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.

 

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 grants Party B the right to manage all operations of Party A and acknowledges that Party B will have all rights and authorities of Party A’s investor, shareholders and Board of Directors as more fully set forth in this Agreement. Party B agrees to exercise the aforesaid rights and responsibilities in accordance with the terms and conditions of this Agreement. The sole shareholder of Party A has issued Power of Attorney (“Power of Attorney”) to Party B by on the same day as this Agreement. Unless and until this Agreement terminates, the entrustments granted herein and in the Power of Attorney shall be irrevocable.

 

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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:
     
  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 for its 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 be limited to the right to make major decisions, 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

 

  (1) Pursuant to the Power of Attorney issued by the shareholder of Party A on the same day as this Agreement (“Power of Attorney”), Party B shall have the right to participate in the shareholders’ meeting of Party A, vote on the matters proposed at the meeting, suggest the holding of shareholders’ meetings 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 and 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;

 

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    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.

 

  (2) Party B shall have the right to designate candidates to be the directors and supervisors 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 to 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 cash 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 at the direction of Party B.

 

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 an annual budget and settlement scheme to the shareholder of Party A.
     
  (3) Party B shall on a quarterly basis file financial statements to the shareholder of Party A, and prepare the annual financial statements of Party A within ninety (90) days after the end of each fiscal year, and provide them to the shareholder after they are audited by the CPA firm.

 

1.4.4 Assets Management

 

  (1) Party A shall deliver a list of all its assets on the Effective Date of this Agreement (“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 operations of Party A.
     
  (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.

 

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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 before the Effective Date 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.

 

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 after the end of 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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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 Party 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 shareholder 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;
     
  (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:

 

  (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:

 

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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;
     
  (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) without the prior written consent of Party B; and
     
  (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.

 

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Article 4 Rights and Obligations of Party 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.
     
  (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 acknowledges that Party A is dedicated to the provision of a complete set of intelligent digital implementation plans for different exhibition center projects and the provision of the most innovative model designs for different exhibition centers and real estate business. Party A was founded on December 24, 2009, with the registered capital of RMB1 million, and is located at 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen. Party A has delivered to Party B its financial statements for the quarter ended September 30, 2018, which Party A represents are accurate and complete in all respects.

 

5.2 Each party warrants and represents to the other party, on the execution day of this Agreement, that:

 

  (1) It has 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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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.

 

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.

 

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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.

 

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.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement specified on the first page of this Agreement.

 

Party A: Shenzhen Dingshang Technology Co., Ltd., (seal)

 

Legal Representative or Authorized Representative (signature): /s/ Jing Xie
  Jing Xie

 

Party B: Adamant DRI Processing and Minerals Group

 

Legal Representative or Authorized Representative (signature): /s/ Ethan Chuang
  Ethan Chuang

 

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Statement

 

Date: December 10, 2018

 

I, Jing Xie, having an address at 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen agree that Shenzhen Dingshang Technology Co., Ltd. may sign the Management Entrustment Agreement with Adamant DRI Processing and Minerals Group, which irrevocably entrusts in Adamant DRI Processing and Minerals Group the right to manage in all respects the business of Shenzhen Dingshang Technology Co., Ltd. including the right to receive all of its profits and this consent is given by me according to the laws and the Articles of Association of Shenzhen Dingshang Technology Co., Ltd.

 

Stated by: /s/ Jing Xie                                 

 

Jing Xie (ID No. 612324199007184046)

 

  10  
 

 

 

EXCLUSIVE PURCHASE OPTION AGREEMENT

 

This Exclusive Purchase Option Agreement (this “ Agreement” ) is entered into by and among all the parties below on December 10, 2018, in the People’s Republic of China (“PRC”): 

 

Party A: Adamant DRI Processing and Minerals Group, a corporation organized under the laws of the State of Nevada, with its address at Chunshugou Luanzhuang Village, Zhuolu County, Zhangjiakou, Hebei Province. Adamant is the owner of all of the equity of China Real Fortune Mining Limited, a BVI corporation, which owns all of the equity of Real Fortune Holdings Limited, a Hong Kong limited company, which in turn owns all of the issued and outstanding capital stock of Zhangjiakou Tongda Mining Technologies Service Co., Ltd., a Chinese limited company.

 

Party B: Jing Xie, a citizen of the PRC with Chinese identification No.: 612324199007184046 and PRC passport No.: E91973264 with an address at13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen; and

 

Party C: Shenzhen Dingshang Technology 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 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen.

 

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 the only shareholder of Party C and duly holds 100% of the shares of Party C;

 

(2) Party B agrees to irrevocably confer upon Party A an exclusive option to purchase all the equities Party B holds in Party C, so that Party A or a 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.

 

(3) Party C agrees to irrevocably confer upon Party A an exclusive 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 Party B agrees 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 hereby irrevocably confers upon Party A the exclusive option to purchase all the equities Party B holds in Party C (“ Equity Purchase Option ”).

 

  1  
 

 

  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 proposed by Party A, unless the laws of the PRC require another format. The Exercise Period under this Agreement may be extended before the expiration date through mutual agreement by all parties to this 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 procedures prescribed by Party A or its Designee 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 and Party B shall not grant any Security Interest on the Object Equities during the term of this Agreement. 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 the Equity 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 and shall take such steps to preserve Party A’s right to purchase the Object Equities as Party A shall reasonably request.

 

  1.2 Exclusive Purchase Option to the Object Assets. Party C hereby irrevocably confers upon Party A the exclusive option to purchase all of the assets of Party C (“ Assets Purchase Option ”). The Equity Purchase Option and the Assets Purchase Option collectively are referred to as “ Purchase Option. ”

 

  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, in the case of the purchase of less than all the assets, a percentage thereof (as defined hereunder), provided that the laws of the PRC at that time permits. Party C agrees that upon exercise of the Assets Purchase Option, Party C will enter into an assets transfer agreement (“ Assets Transfer Agreement ”) with Party A or its Designee in the format proposed by Party A or its Designee unless the laws of the PRC require another format.
     
  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.

 

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  1.2.3 When Party A exercises the Assets Purchase Option, Party B and Party C shall ensure that all other shareholders of Party C, if any, 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 exercises 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.

 

  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) enter into an Equity Transfer Agreement in the format reasonably requested by Party A or its Designees with such modifications as are required by the laws of the PRC;

 

  (c) revise the Articles of Association of Party C together with Party A and/or its Designee to ensure that Party A or its Designee may own the Equities of Party C;

 

  (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 any requested 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.

 

  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, to 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.

 

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  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 in the format reasonably requested by Party A or its Designees with such modifications as are required by the laws of the PRC;

 

  (b) convene a shareholder’s meeting to pass the resolution to approve the exercise of the Assets Purchase Option; and

 

  (c) together with Party B and all other 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).

 

  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 it 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 or the Assets Purchase Option when exercised by Party A, the purchase price of the Object Equities 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 1,000,000 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 net 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.

 

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.

 

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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. Party B is the only shareholder of Party C;
     
  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. Party B will not grant any Security Interest in the Object Equities or any right to purchase the Object Equities;
     
  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 Agreement or Assets Transfer Agreement, nor the performance of the obligations under this Agreement, any Equity Transfer Agreement or Assets Transfer Agreement 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;
     
  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  
 

 

  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;
     
  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. Party C will not grant any party the right to purchase any of its assets or grant a Security Interest on its assets to any party;
     
  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;
     
  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.

 

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  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.

 

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.

 

  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

 

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  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

 

  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 borne 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;

 

  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 C.

 

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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.

 

  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.

 

  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 WHEREOF , all parties have signed this Agreement on the date specified on the first page of this Agreement by their respective authorized representatives.

 

Party A: Adamant DRI Processing and Minerals Group    
Legal Representative or Authorized Representative (signature): /s/ Ethan Chuang    
    Ethan Chuang  
       
Party B: Jing Xie (signature): /s/ Jing Xie      
       
Party C: Shenzhen Dingshang Technology Co., Ltd., (seal)    
Legal Representative or Authorized Representative (signature): /s/ Jing Xie  

 

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Power of Attorney

 

I, Jing Xie, a citizen of the People’s Republic of China (the “ PRC ”), with Chinese Identification Card No.: 612324199007184046 and PRC passport No.: E91973264 and the holder of 100% of the shares of Shenzhen Dingshang Technology Co., Ltd. (“ My Shareholding ”), having an address at13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen, hereby irrevocably authorize Adamant DRI Processing and Minerals Group., Ltd. (“ Adamant ”), which is the owner of all of the equity of China Real Fortune Mining Limited, a BVI corporation, which owns all of the equity of Real Fortune Holdings Limited, a Hong Kong limited company, 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 ”) to exercise by itself or through China Tongda the following rights relating to My Shareholding during the term of this Power of Attorney:

 

Adamant 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 Shenzhen Dingshang Technology Co., Ltd. and/or sign the relevant resolution(s); 2) exercise all the shareholders’ rights and shareholder’s voting rights I am entitled to under the laws of the PRC and the Articles of Association of Shenzhen Dingshang Technology 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 Shenzhen Dingshang Technology Co., Ltd.

 

Without limiting the generality of the powers granted hereunder, Adamant 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. So long as this Power of Attorney is in effect, I shall not exercise any of the rights available to a shareholder of Shenzhen Dingshang Technology Co., Ltd.

 

Except as otherwise provided hereunder, Adamant 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, Adamant 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.

 

All the actions related to My Shareholding conducted by Adamant shall be deemed as my own actions, and all the documents related to My Shareholding executed by Adamant shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by Adamant.

 

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Adamant 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, Adamant 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 Shenzhen Dingshang Technology 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 Adamant through this Power of Attorney, and shall not exercise such rights by myself.

 

By:  /s/ Jing Xie  
Jing Xie    
December 10, 2018  
     
By:  /s/ Yunlong Zhang  
Witness:  Yunlong Zhang Chinese Identification Card No.: 429001197808274616
December 10, 2018  

 

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Equity Pledge Agreement

 

This Equity Pledge Agreement (this “ Agreement ”) is entered into by and between the following two parties below on December 10, 2018 in the People’s Republic of China (“PRC”):

 

Party A : Jing Xie, a citizen of the PRC with Chinese identification No.: 612324199007184046 and PRC passport No.: E91973264 with an address at 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen; and

 

Party B : Adamant DRI Processing and Minerals Group, a corporation organized under the laws of the State of Nevada (“Adamant”), with its address at Chunshugou Luanzhuang Village, Zhuolu County, Zhangjiakou City, Hebei Province, which owns all of the equity of China Real Fortune Mining Limited, a BVI corporation, which owns all of the equity of Real Fortune Holdings Limited, a Hong Kong limited company, 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”).

 

In this Agreement, each of Party A and 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 the only shareholder of Shenzhen Dingshang Technology Co., Ltd., (“Shenzhen Company”) and duly holds 100% of the shares of Shenzhen Company;

 

  2. Shenzhen 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: XX 91440300699088287 and its address at 13B-1 South Garden Fengye Building, Southeast of Nanshan Street, Nanshan District, Shenzhen.

 

  3. In order to ensure that Party A and Shenzhen Company perform all their 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 Shenzhen 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.

 

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 that Shenzhen Company and Party A and other related responsible parties perform all obligations and liabilities under the Onshore Agreements, Party A pledges the Pledged Equities (as defined in Section 4 herein) under this Agreement to Party B, including Adamant and China Tongda, 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, including Adamant and China Tongda, to collect the fees (including legal fees), expenses, interests, losses, liquidated damages and compensations that Shenzhen Company and/or Party A shall pay under the Onshore Agreements, and civil liabilities that Shenzhen Company and/or Party A shall bear in case the Onshore Agreements wholly or partially become null and void due to any reason.

 

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  1.3 Unless consented to in writing by Party B, after the execution of this Agreement, the pledge under this Agreement will be terminated only when Shenzhen Company and Party A have performed all the obligations and liabilities under the Onshore Agreements and Party B confirms such fulfillment in writing. If Shenzhen Company or Party A 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;

 

  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.

 

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  2.2 Party B presents and warranties to Party A on the day of execution of this 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 Shenzhen Company, Party A, 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 Shenzhen Company and/or Party A to Party B, and the damages and other fees that are payable by Shenzhen Company and/or Party A to Party B due to the default.

 

4. Pledged Equities

 

The Pledged Equities are 100% of the shares of Shenzhen Company which Party A duly and legally holds and all rights and proceeds of or in relation to such equities. Party A holds 100% of the shares of Shenzhen Company.

 

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 in favor of such of Adamant and China Tongda as Adamant shall direct, 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 Shenzhen Company to write down the matter about such pledge of equity into the stock ledger of Shenzhen 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:

 

  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;

 

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  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 Shenzhen 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.

     
  6.9 Party A will not cause or permit Shenzhen Company to issue shares of its equity to another party without the prior written consent of Party B.

 

7. Exercise of Pledge

 

  7.1 Subject to Clause 8.3, Party B may dispose of 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 Shenzhen 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 Shenzhen 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 Shenzhen 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;

 

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  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;

 

  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 waives 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 Shenzhen 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.

 

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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.

 

  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 Shenzhen 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.

 

  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.

 

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  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 borne 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.

 

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 equities 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 Shenzhen 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 Shenzhen Company not to distribute any dividends, or adopt any profits distribution plans other than distributions made to Party B; if Party A shall be entitled to collect any interests other than distribution plans of dividends and profits, Party A shall instruct Shenzhen 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.

 

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  16.4 During the term of equity pledge, if Party A subscribes new capital contributions to Shenzhen Company or accepts an equity transfer of Shenzhen Company (“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.

 

  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.

 

  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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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: Jing Xie : /s/ Jing Xie  
  Jing Xie  

 

Party B: Adamant DRI Processing and Minerals Group

 

Legal Representative or Authorized Representative: /s/ Ethan Chuang  
  Ethan Chuang  

 

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