Puda Coal Inc PUDA

Settlement offer by Tang and Wizell=100K personal assets

[coldheat]

As former directors of Puda Coal, Inc., the Independent U.S. Directors are named insureds under three insurance policies: (i) a primary layer through Federal Insurance Company, part of the Chubb Group (Chubb); (ii) a first excess layer through the Peoples Insurance Company of China (PICC) based in Beijing; and (iii) a second excess layer through HCC. The PICC policy states that it becomes the operative primary layer of insurance upon exhaustion of the Chubb policy, and the HCC policy states that HCC has no obligation to pay defense costs or other loss unless and until the PICC layer is exhausted. The Chubb policy was exhausted in May 2014.1 In October 2014, PICC denied coverage of the claims in this action against the Independent U.S. Directors through a formal letter by its Chinese counsel, the AnJie Law Firm, despite the fact that Chubb accepted coverage on the underlying policy of those claims. The PICC letter stated that the claims do not fall under the coverage of the Policy in accordance with PRC laws and provisions of the Policy, without any further explanation. PICC and the AnJie Law Firm have ignored our numerous attempts to reach them by email or telephone about this wrongful denial of coverage. Since the exhaustion of the Chubb policy in May 2014, this Firm has not been paid for any defense costs incurred on behalf of the Independent U.S. Directors in this action and the related Delaware action. The amount of unpaid defense costs is substantial, and the Independent U.S. Directors lack sufficient personal assets to pay for those costs. The provisions in the PICC policy require that any disputes must be resolved via arbitration or litigation in China under Chinese law. The Independent U.S. Directors believe they have a strong motion for summary judgment, and also believe that the existence of any Section 11 damages against them is questionable, given Plaintiffs counsels statements on the October 22 call with the Court. Nevertheless, the Independent U.S. Directors were willing to contribute $100,000 from their personal assets to settle at this time to avoid uncertainty, and to be included in the notice of settlement and other joint papers in the pending settlement between Plaintiffs and Defendants Macquarie and Brean Murray. The Independent U.S. Directors also have agreed to assign certain rights to Plaintiffs to pursue additional payment from PICC. Respectfully submitted, /s/ Mary K. Dulka Mary K.